Auckland house prices slid 8.6% last month amid an ongoing decline in sales, even as more properties are put on the market.
The average sale price dropped to $505,301 last month from $552,933 in December, according to Barfoot & Thompson, the city's largest real estate firm.
The number of sales dropped 10% to 583, even as the number of new listings rose 16% to 1,118. At 5,703, the total number of houses on Barfoot's books was the most for eight months.
"The Auckland housing market capitulated in January, having held steady in the face of rising mortgage rates through the second half of 2009," said Michael Gordon, economist at Westpac Banking Corp.
"Weak sales and a rise in the supply of unsold homes can only put downward pressure on prices."
The revival in property prices last year helped underpin the economy's recovery as it dragged itself out of recession during the June quarter, though economists say this has been overstated amid weak sales volumes and mortgage approvals.
The prospect of property as an investment also came under scrutiny amid the release of the Victoria University-led Tax Working Group's report which advocated the introduction of some kind of tax on land.
Central bank Governor Alan Bollard has also been critical of the tax incentives for property investment, which contributed to him facing difficulty reining in the market.
Barfoot & Thompson managing director Peter Thompson talked down this notion, saying "our trading in January showed no signs of a reaction to speculation of possible changes in regard to taxation on property".
January is traditionally a slow month for property and momentum is unlikely to build up until February, he said.
"Sellers are re-entering the market, and their numbers are slightly higher than buyers, which is keeping choice at a reasonable level," he said.
The real estate agency's property management division recorded a gain in average rent to $401 a week, from $389 in December.
Source: Landlords.co.nzcomments powered by Disqus