Black March for bottom end of property market

Sales fell to 5129 in March compared with 6356 in February, which was less than half the 10,989 sales in March 2007, and lower than the January 2008 sales figure of 5186 – a month affected by the holiday period.

There were 3125 sales of properties worth under $400,000 in March; 60.9% of total sales compared with 64% in February and 62.17% in March 2007.

Sales of properties worth under $400,000 fell 23.18% compared with the overall sales drop on February of 19.3%.

This lead to a contrary increase in the national median selling price for the month, pulling the national median price up from $337,500 in February to $349,000 in March. However REINZ president Murray Cleland says many prices around the country are weaker.

He attributes the collapse of “the bottom order” to the lower end market being more susceptible to confidence issues and negative media headlines, while the upper end has relatively more resilience.

There was a slight improvement in the ‘days to sell’ number this month – it fell nationally from 50 in February to 40 in March, compared with 27 in March 2007. However Cleland expects further market weakening in coming months based on the March figures.

“Add to that the likelihood of a growing number of properties coming on the market either through bank-forced sales, or through the collapse of property investment schemes, which will put more pressure on the market”.

BNZ chief economist Tony Alexander says Cleland’s comments are on the ball.

The investment properties people have been buying, says Alexander, are those sought by first homebuyers, so the increasing number coming on the market is good news for home affordability.

However he says he’d be surprised if first homebuyers come back into the market before the end of winter because “there’s still a way to go – prices will keep dropping”.