The pressures on the property market are unlike anything seen before in 40 years in the industry, a real estate boss says.
Photo: RNZ / Nate McKinnon
House prices are continuing to fall and properties are taking longer to sell, new figures show.
The latest Real Estate Institute price index, which measures the changing value of properties, increased 3.7 percent for the year ended May, compared with a 6.3 percent rise in April.
The seasonally adjusted national median house price was up 3.1 percent from May 2021 to $840,000.
But the month-on-month price decreased 3.1 percent from April this year, when it hit $875,000.
The median price excluding Auckland, was up 7.8 percent to $730,000 year-on-year while in Auckland it fell 1.9 percent from a year ago to $1,125,000.
Residential sales volumes fell 28.4 percent and in Tāmaki Makarau dropped by 38 percent from May last year.
Barfoot and Thompson managing director Peter Thompson. Photo: Barfoot and Thompson / Getty Images
The managing director of Auckland's largest real estate agency, Barfoot and Thompson, Peter Thompson said the volume of sales has dried up driven by uncertainty within the real estate market as well as the global economy.
There was a seven-year real estate cycle, he said, with the last big decline in 2008 and prior to that 2001.
"When you start seeing those cycles go into that mode it's natural that people just take their time at the start of that and see where we go," he told Morning Report.
He has been in the industry for 40 years and has not seen a similar cycle - interest rates rising, the global economic crisis and the Russia-Ukraine war which was affecting the supply chain.
Shortages of timber and gib board were examples of why construction costs were increasing and that was feeding into the supply of existing homes.
"I think prices won't fall as much as what people are talking about, but vendors do need to be negotiable with their price, they need to meet the market."
He was predicting a flattening off and then a slight decrease until the end of the year before prices might start to lift next year.
Banks were demanding more proof of the valuation of a property prior to lending, which was understandable, and they had stopped pre-approval of loans which was affecting the willingness to buy at auctions.
However, auctions still worked well to bring people to the table, Thompson said.
"I think prices won't fall as much as what people are talking about" - Barfoot and Thompson managing director Peter Thompson
He would prefer that the Reserve Bank left the OCR at the current level so that those with mortgages knew where they stood financially for a few months.
Thompson was expecting to see a drop in the number of salespeople in the industry because there were fewer properties being sold.