Otago Property Investors Association Inc
Economists are predicting the housing market will stay soft for the rest of the year after Real Estate Institute data showed sales volumes stayed under pressure last month.
Total residential sales sank to 4,575 last month from 5,206 in May, and 6,040 in June last year. That's only the second time in the past 10 years that a June month has recorded fewer than 5,000 sales, the first time being in 2008. The median number of days to sell rose to 45 from 43 in May and 41 days in the same month a year earlier, and is 15 days longer than when the property market peaked in 2007.
Commonwealth Bank of Australia economist Chris Tennent-Brown said the turnover was softer than normal and activity will probably stay in the doldrums through the rest of the year.
"Demand has weakened since last spring's burst of activity for a variety of reasons," Tennent-Brown said. "Tax changes have reduced the attractiveness of holding investment property, net migration is slowing, and interest rates have been rising."
The government's tax changes on property were not as draconian as pundits were picking, halting the forecast flood of properties on to the market. Still, rising interest rates and increasing migration to Australia was putting a dampener on sales as demand tapers off from last year.
Philip Borkin, economist at Goldman Sachs JBWere, said "the signs of pent-up demand being released subsequent to the budget remain limited and we are beginning to question this expectation."
The data comes as State-owned QV Valuations data showed property values declined for a second month in June, and is 4.7% below its peak in late 2007. QV spokesperson Glenda Whitehead said the tax changes had not changed behaviour in the market, with buyers taking a cautious approach to their purchase decisions.
REINZ president Peter McDonald said owners who successfully sold their properties were being "realistic in assessing the market value of their home" with the average gap between listing and selling prices at between 4% and 5%.
"What we have is a genuine rather than speculative market, with people seeking and buying homes to meet their own needs," McDonald said in a statement.
The median sale price rose to $352,500 in June from $350,000 in May, and was up 3.7% from the same month a year earlier.
The association's housing price index, which was constructed with the help of Reserve Bank to give a more accurate gauge of house prices, rose 0.6% to 3230.6 in June, and edged up 0.1% in the three months through June. It rose an annual 4.2%, and showed house prices are 4.5% below their November 2007 peak.
The Auckland median price rose to $470,000 from $455,000 in May, though the number of sales sank to 1,645 from 1,887 month-on-month.
The Wellington median sale price gained to $405,000 from $385,000, with sales down to 485 from 548 in May.
The median sale price in Christchurch increased to $340,000 from $277,500 in May, with sales falling to 473 from 492.
The Dunedin median price edged up to $243,000 from $241,250 in May, and sales dropped to 139 from 154.