Housing Market Continues Downward Spiral

Housing Market Continues Downward Spiral

The property market has continued its downward slide in September, according to the latest Mike Pero Mortgages-Infometrics Property Cycle Indicator (PCI).

“The nationwide PCI has dropped to its lowest possible figure, -10, for the first time in two years,” says Mike Pero Mortgages Chief Executive Shaun Riley.

“This latest figure suggests that house prices will come under further downward pressure in the coming months.

“House sales volumes in September were down 33 per cent from a year ago, the biggest annual fall since the height of the financial crisis in late 2008.

“The Canterbury earthquake accounted for some of the renewed weakness, but sales activity weakened even if the Canterbury/Westland region is excluded. But the median house price held at $350,000, unchanged from both September 2009 and August 2010. Last month was the first time in over a year that the median house price has not been higher than a year earlier,” he says.

The Mike Pero Mortgages-Infometrics Property Cycle Indicator fell to a negative 10.00 in September, from -9.80 in August. The Property Cycle Indicator is a sensitive measure of the housing market and includes three main factors: changes in the number of houses sold; changes in price; and the time taken for houses to sell.

The third measure of the Property Cycle Indicator, the time taken for houses to sell, was unchanged from the previous month.

“Property took an average of 43 days to sell in September, exactly the same as for August 2010, but up ten days compared with September 2009.”

Auckland remained steady with a PCI of -10.00 (same as in August) and Wellington lost ground, dropping to a PCI of -10.00 (from -8.87 in August). Northland -5.87 (-6.71) and Manawatu/Wanganui -9.19 (-9.22) were North Island regions to show a slight improvement.

Canterbury/Westland’s PCI dropped further to -9.25 (a decrease from -7.87 in August), as did Nelson/Marlborough’s, with a PCI of -8.80 (from -7.40). Central Otago was the only South Island region to gain some ground with a PCI of -3.89 in September, up from -5.45 in August.

Rental inflation continued to edge higher in September, reaching 3.7 per cent per annum.

Floating mortgage rates were unchanged in September, at 6.4 per cent. There continues to be some downward pressure on fixed mortgage rates as the Reserve Bank has steered away from further Official Cash Rate (OCR) increases in the near-term.

ENDS

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