Residential housing may have hit bottom, as sales improve

The median price for homes across the country rose for the third month in a row to $340,000 from $335,000 in March, according to the April sales figures released yesterday by the Real Estate Institute of New Zealand.

The length of time taken to sell a house in April dropped to 42 days from 44 days a month earlier. The total number of homes fell to 6,210 from 6,694 in March.

"Sales have certainly been pretty strong over the last three months," said Robin Clements, economist at UBS. "Better sales usually precede better volumes, and it looks like things are getting better."

Residential property values fell 9.2% in the 12 months to April 30, an improvement on the 9.3% decline recorded in the year to March, according to QV Valuations. Last week, Barfoot & Thompson, Auckland's biggest real estate agency, found the city's property prices rose 2.2%.

Comments from real estate agents in the latest BNZ Confidence Survey found conditions had improved since the previous report, with increased interest from buyers. Sellers were still wary of the market.

Turnover continued to be strong in Auckland, with 2,081 properties changing hands, down from 2,190 in March.

After seasonal adjustment and trading day factors, Deutsche Bank estimates the number of house sales rose 18% month-on-month following a 9.2% increase in March.

"Activity levels have now moved clearly off the historic lows seen last year as households have quickly responded to the very low interest rates now on offer," said Darren Gibbs, chief economist at Deutsche Bank.

"The level of sales activity has lifted 57% since November and now stands at the highest level seen since November 2007."

Sentiment has lifted as Reserve Bank Governor Alan Bollard last month slashed the official cash rate to a record-low 2.5%, and said interest rates would remain low until the latter part of next year.

Longer-term fixed mortgage rates have failed to abate in the face of a very low OCR, and Bollard's comments are believed to have been directed at them.