Housing Market Showing Signs Of third Wind

MEDIA RELEASE: 2 FEBRUARY 2007

Housing Market Showing Signs Of third Wind

The housing market strengthened in the December quarter, according to the Mike Pero Mortgages-Infometrics Property Cycle Indicator (PCI), with the Auckland district leading the way.

Nationally, the PCI was -2.65 in the December quarter compared with -5.91 in the September quarter (a PCI value of ­10 shows a strong housing market downturn, while +10 shows a strong upturn).

³Mike Pero Mortgages recorded very high levels of lending activity in the December quarter,² says Mike Pero Mortgages Chief Executive Jeff Staniland, ³with a record $200 million of mortgages written in November and a record for December of $140 million.²

³Our record months support the stronger PCI figures for the December quarter, which together seem to give credence to the Reserve Bank¹s view that the housing market could be gaining a Œthird wind¹ momentum.

³Mortgage activity has remained strong in January.²

National sales volume growth in the December quarter was 9.3 percent ­ a three-year high.

The time it took to sell a house in the December quarter was only two days longer than a year earlier, another sign of improving strength in the housing market.

House price inflation bounced above 10 percent after a weaker result in the September quarter.

Apart from Auckland (PCI +3.13), housing markets gained momentum in Nelson/Marlborough (+3.78), Southland (+1.28), and Wellington (+3.53).

The weakest areas were Hawkes Bay (-6.67) and Manawatu/Wanganui (-6.35).

³There is a risk the Reserve Bank may raise rates this year but recent low-inflation data may reduce that risk,² concludes Jeff Staniland.

Summary of the main markets

Auckland: an improvement in the December quarter. Sales growth rose 13 percent (a three-year high), house price inflation was higher than September, while properties sold almost as quickly as a year ago. Rising immigration looks set to sustain the Auckland market¹s momentum over the coming six-nine months.

Wellington: the market regained momentum after a sluggish September quarter. House price inflation was 16 percent (a 2.5-year high) and the time taken to sell was actually shorter than a year ago. Job security appears to be outweighing the effects of interest rate uncertainty.

Canterbury/Westland: while the PCI remained negative for the tenth quarter, it was at its highest level for a year. Sales growth was 15 percent (the best since 2003) while price inflation was 9 percent pa. The West Coast may suffer a correction during 2007 but Canterbury remains on track to achieve a soft landing.

Weblink: www.infometricsproperty.co.nz

ENDS