Market not slowing, Westpac says

The annual rate of house price inflation has dropped from 10% at the beginning of the year to 6.9%, according to Quotable Value.

But Stephens says citing that drop was like driving through the rear-view mirror – “the latest developments are lumped in with 11 months of history".

He says the market slowed sharply earlier in the year but then rebounded towards the middle of the year.

“There was regional variation in the intensity of both the slowdown and the recovery. The market is currently displaying little directional momentum, and may be suffering from a case of pre-election jitters, but it isn’t really accurate to describe this as a ‘slowing’ market.”

He conceded the recovery in turnover as the year progressed had not been as stark as the recovery in price inflation.

“This juxtaposition is most marked in Auckland, where prices have been rising rapidly but sales have continued to slide according to at least one major real estate agency."

He said one reason could be the election, combined with the November revaluation of Auckland properties for rating purposes.

"[This may have] caused both buyers and sellers to pause for thought. If so, we should expect a pickup in house sales late this year and early next year, without any associated change in price trends. In any case, the current rate of housing turnover is consistent with annual house price inflation in the mid-single-digits, based on past relationships.”