Who’s Counting

House sales are down 30 per cent compared with a year ago, with prices expected to fall 5 per cent this year and remain flat for the next five years.

That's the grim prediction from Westpac's economists who say residential property prices have "screeched to a halt, with essentially zero price movement in the past eight months". Prices stopped dead in April last year, they say, after rising by $8000 a month. Had it not been for New Zealand's strong economy, wage growth and a 21-year unemployment low, house prices would have fallen earlier and more aggressively.

Tony Alexander, the BNZ's chief economist, and Nick Tuffley, chief economist at the ASB, both expect price falls as opposed to the current slowing of growth in house prices.

Alexander says that for the first time in four years he is prepared to predict prices will fall probably about 1 - 2 per cent. He's not expecting anything like the 4 -5 per cent fall in house prices in 1998.

Another significant sign the housing boom is over is a comparison of the average number of days taken to sell a property. Alexander says in June last year that was 30 days and by December 2007 that figure was 39 days.

The big issue in the NZ market is affordability, Tuffley says, with house prices high relative to individual incomes. "The market won't do anything spectacular in the next five years." he says.

"If it was my kid wanting to buy a house, I'd be telling him to hold back for a few months to see what happens."