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05-08-2008

Property drought worsens during the wet months

NZHERALD

There aren't enough homes on the market to satisfy cashed up buyers, says one of the big Auckland real estate firms.

A "drought of properties" had been caused by cautious vendors adopting a "wait and see" attitude through the winter months.

The traditionally slow winter months had been made even worse by what Bayleys describes as a "lack of confidence in the housing market.

Median house prices fell by 2.15 per cent in June - from $345,000 in May to $340,000. That fall followed on from a 1.42 per cent drop the previous month.

Real Estate Institute of New Zealand national president Murray Cleland said in a release today that much of the drop in sales volume could be attributed to a severe shortage of property 'stock' on the market - making buying choices markedly harder.

"It's certainly noticeable that there are considerably fewer 'for sale' signs up outside homes. That's a trend across New Zealand - from the larger cities through to smaller towns." said Cleland.

Bayleys managing director Mike Bayley said many of his sales people had databases brimming with potential buyers who were struggling to find suitable properties.

"There's no shortage of buyers as far as we're concerned," said Bayley. "We have substantial numbers of buyers with money ready to get into the market, yet there simply aren't the properties out there for them to choose from," he said.

"We're not talking about buyers without approved mortgage capabilities... these are astute home owners and investors who are highly liquid, have seen that the market is close to bottoming out after a year of gradual declines, and are looking for somewhere to invest in now.

Bayley said the company's books were "full of these individuals" - inlcuding ex-pats who were returning home cashed up with British pounds or US dollars.
Other investors had sold out at the peak of the market and were now re-entering "at the other end of the scale". First home buyers watching "the affordability gap close" were also in the market.

"Sales people are pulling out all the stops to encourage vendors to get into the market, but the winter malaise has set in. With the official cash rate dropping last week and Reserve Bank governor Alan Bollard hinting at a second round of cuts in September, the conditions are certainly primed for our customary winter phase to end in August rather than October," said Bayley.

 

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