Property Market Slightly Less Negative

May 18 2011

A monthly analysis of the New Zealand housing market in April reveals the continuation of a recent trend towards the market becoming less negative.

The Mike Pero Mortgages-Infometrics Property Cycle Indicator (PCI) is released monthly, prepared from an analysis of changes in house sales, price movements and the time taken for properties to sell.

Mike Pero Mortgages Chief Executive Shaun Riley says the PCI fell to a negative 10.0 (-10) last September and stayed there until December.

“The PCI still being below zero in April indicates the market is still in downturn,” he says, “however it continued to become less negative in April and is now at -6.55

Mr Riley says sales volumes in April were down 4.2% on a year earlier.

“That’s a slightly stronger result than in March, as sales volumes in Canterbury/Westland started to show signs of recovery following February’s earthquake,” he says.

“The median house price dropped back $5,000 from March’s high, but was still up 1.1% from April last year.”

Mr Riley says the third component of the PCI, the average length of time on the market for properties, was stable when compared with March (seasonally adjusted), and up three days from April 2010.

Mortgage rates were unchanged in April.

Background information
• The Property Cycle Indicator is prepared from an analysis of changes in house sales, price movements, and the time taken for properties to sell
• The monthly data is sourced from the Real Institute of New Zealand
• The Property Cycle Indicator runs from minus-10 to plus-10
• A Property Cycle Indicator value of -10 shows a strong downturn, while +10 shows a strong upturn in the housing market
• Lower sales volumes are usually the first indicator that a market upturn is coming to an end, followed by properties taking longer to sell
• House prices are usually the last variable to change direction
• House prices may still be rising, even though the Property Cycle Index is negative and showing a downturn
By incorporating the three variables, the Property Cycle Indicator gives a much better, and earlier, indication of shifts in the market.

ENDS

© Scoop Media