Wellington house market holds up

Stalling house sales in December led to a fall in the property cycle according to Mike Pero Mortgages, though the sector remained buoyant after a torrid 18 month period.

The Mike Pero Mortgages-Infometrics Property Cycle Indicators, which measures the housing market through a combination of the number of houses sold, changes in price and the time taken to sell, dropped to 6.68 in December from 7.34 a month earlier as a slowing property market was unable to take advantage of rising prices.

A Property Cycle Indicator value of -10 shows a strong downturn, while +10 shows a strong upturn in the housing market.

"Although sales activity showed signs of softening, the median house price rose $5,000 from November to $360,000," said chief executive Shaun Riley.

"Sales volumes in the December quarter were still up 31% from the end of 2008, indicating the housing market remains well in expansionary territory."

The residential property market, which was a source of wealth during the housing boom, has posted weak sales volumes while prices have risen. The median sales prices rose 1.4% to $340,000, even as sales fell to a "concerning" level below 5,000, according to Real Estate Institute data, and the weaker demand for housing is seen as giving central bank Governor Alan Bollard room to keep interest rates low until the middle of the year, as he has previously indicated.

The average number of days to sell a property was unchanged at 33 days, while Wellington was the only city that recorded an upswing in the property cycle indicator, Riley said.

Auckland slipped slightly with a PCI down 0.37 to 8.68. In the South Island the Canterbury/Westland’s PCI was 3.97 (a decrease from 4.64 in November), Southland’s was 2.21 (2.48), and Nelson/Marlborough’s was 3.09 (from 3.21).

Otago lost a bit of ground with a PCI of 3.55, down from 3.89 in November.

Rents continued their gradual strengthening in December, up one per cent from a year earlier, the fastest growth since January 2009.

Floating mortgage rates were steady at 6% through December, while fixed rates were also largely unchanged from November.