New Zealand residential property sales plummeted to its lowest level for a July in a decade, as rising interest rates, slower population growth and tax changes took their toll on the market, according to figures released by the Real Estate Institute.
Nationwide sales slipped to 4,411 last month from 4,575 in June and were down 26.7% year-on-year, according to the REINZ. That's still higher than the record low of 3,666 sales in January.
The REINZ Monthly Housing Price Index showed nationwide prices also fell in July, down 1.2% to 3191.5 from June. In the three months to July, the index shows housing prices decreased by 1.1%.
"Given the weakened fundamentals for housing demand, including slowing population growth, rising interest rates and change in tax policy, we expect house prices will come under pressure over the second half of the year, falling around 3% over the next year," said Jane Turner, an economist with ASB.
Compared to 12 months earlier, the REINZ Housing Price Index increased by a paltry 1.8%.
According to REINZ the trend was strongest in Auckland, Wellington and Christchurch where prices remained higher than they were in July 2009.
In Christchurch prices up 7.4%, Auckland up 1.7%, Wellington up 1.1% and other North Island suburbs up 2.2%. Prices in South Island suburbs other than Christchurch were down 2.7% from July 2009.
The total value of residential sales, including sections, in July declined to $1.83 billion, a further decrease on the June total of $1.96 billion.
The national median number of days to sell stayed at 45 for July which is longer than the 37 days of July 2009 but an improvement on the median of 58 days in July 2008.
REINZ spokesperson Peter Thompson said "winter is traditionally a slow period for the property market", and that an uplift in sales volumes can be expected in the spring.