The winter housing slump is showing no sign of abating, with median prices falling by 2.15 per cent in June - from $345,000 in May to $340,000 accordng to official numbers released today by the Real Estate Institute.
This latest fall follows on from last month's drop of 1.42 per cent.
The biggest June house prices declines were seen in Manawatu and Wanganui - both down nearly 14 per cent.
ASB economist Nick Tuffley said the slowdown in the housing market was continuing, judging by the price and days to sell performance. However, house sales had stabilised after their considerable tumble earlier in the year.
"We expect continued weakness in the housing market. To date sales turnover has borne the brunt of the adjustment. Going forward we would anticipate that weaker prices will pick up some of the adjustment process and that sales turnover will not weaken to the same extent."
Tuffley said that given the glut of listings on the market the median price "appears to be holding up comparatively well."
"Mortgage rates dropped over May and June, which may have given the market a little support in the short term. However, there is still a considerable adjustment process to play out in the housing market through a combination of prices weakening further and some vendors taking their house off the market."
The Reserve Bank would, said Tuffley, continue to expect further weakness in the housing market, given that the demand/supply imbalance remains and household are coming under financial pressure from all fronts.
Today's data did not increase the chances of the Reserve Bank cutting the Official Cash Rate (OCR) on July 24, but neither were they "an impediment to doing so."
He still expected the Reserve Bank to wait until September to cut the OCR, "but it will be a close call".
Pending retail sales and inflation numbers may make a difference to this assessment.
Deutsche Bank economist Darren Gibbs said that the figures showed that house prices were a little more resilient than he had expected based on anecdotal evidence.
"However, with buyers for the most part remaining on the sidelines (pending an expected decline in home prices and lower mortgage interest rates), we continue to expect that a sizeable decline in residential property prices will be recorded over coming months as sellers become more realistic about pricing in the face of ongoing increases in the number of property listings and long selling times."
Auckland and Wellington fared worse than the national average in the REINZ figures, with prices falling 2.24 per cent and 2.26 per cent respectively.
The Auckland median price fell from $447,500 to $435,000, with the metropolitan Auckland median falling from $451,000 to $440,000.
The median house price in Auckland eased to $435,000 in June, from $447,500 in May (June 2007: $445,000). In total, 1,466 houses sold, up on the 1,388 sold in May (June 2007: 2,687).
Waikato/Bay of Plenty/Gisborne
The median price for a house in the Waikato/Bay of Plenty/Gisborne region rose to $316,000 in June (May 2008: $310,000; June 2007: $325,000). 581 houses sold (May 2008: 582; June 2007: 1,136).
Sales volume eased in the Hawkes Bay in June with 136 houses sold (May 2008: 173; June 2007: 285). The median price eased to $261,000 (May 2008: $265,000; June 2007: $268,100).
The median price for a house in the Manawatu/Wanganui region fell to $213,750 in June, from $224,500 in May (June 2007: $248,000). 196 houses sold (May 2008: 226; June 2007: 363).
The median price for a house in Taranaki fell to $255,000 in June, from $285,000 in May (June 2007: $265,000). 135 houses sold, down on the 158 and 203 sold in May 2008 and June 2007 respectively.
Wellington's median price eased to $366,500 in June, from $389,500 in May (June 2007: $375,000). In total, 458 houses sold, down on the 534 sold in May (June 2007: 788).
The median price for a Nelson/Marlborough house eased to $335,000 in June, from $337,000 in May (June 2007: $335,000). 169 houses sold, ten less than the 179 sold in May (June 2007: 206).
666 houses sold in Canterbury/Westland in June, up on the 619 sold in May (June 2007: 998). The median price also rose to $299,000 from $296,000 in May (June 2007: $305,250).
Central Otago Lakes
61 houses sold in June, down on the 79 sold in May (June 2007: 91). The median price rose to $514,000 in June from $490,000 in May and $420,000 in June 2007.
177 houses sold in Otago in June, down on the 183 sold in May (June 2007: 281). The median price eased slightly to $225,000 from $240,000 in May (June 2007: $230,000).
Sales volume increased in Southland with 152 houses sold (May 2008: 148; June 2007: 258). The median price eased to $182,500 from $200,000 in May (June 2007: $177,750).
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