Jan 10 Housing Market Shows Slight Drop-Off
“Although the nationwide PCI was still positive in January 2010, the steadying of the housing market has dropped off. Sales volumes in January were 1.1 per cent lower than a year earlier, the first decline in activity since February last year,” says Mike Pero Mortgages Chief Executive Shaun Riley.
“The median house price dropped $10,000 from the previous month, but was still up 7.7 per cent from January 2009.”
The Mike Pero Mortgages-Infometrics Property Cycle Indicator fell slightly to a positive 5.23 in January, from 6.67 in December. The Property Cycle Indicator is a sensitive measure of the housing market and includes three main factors: changes in the number of houses sold; changes in price; and the time taken for houses to sell.
The third measure of the Property Cycle Indicator, the time taken for houses to sell, was up from December 2009.
“The average number of days to sell property showed its typical seasonal increase in January, up 10 days from December 2009 to 43 days. However, this figure was still 16 days less than in January last year.
“Northland was the only North Island region where the housing market gained momentum in January according to the Property Cycle Indicator. Its PCI was 3.56, up from 3.35 in December 2009,” says Shaun Riley.
Auckland slipped slightly with a PCI in January of 7.88 (down from 8.67 in December) and Wellington lost ground with a PCI of 7.10 (from 9.37 in December).
In the South Island, the Central Otago Lakes region is back in positive territory after two and a half years, with a PCI of 0.30 (up from -0.15 in December). Southland’s PCI increased to 2.28 in January (from 2.20 in December). Canterbury/Westland’s PCI was 2.71 (a decrease from 3.97 in December) and Nelson/Marlborough’s was 2.30 (from 3.08). Otago also lost ground with a PCI of 2.64, down from 3.54 in December.
Rents continued their gradual strengthening in January, up 0.4 per cent from a year earlier.
During January floating mortgage rates held steady at 6.0 per cent for the fourth consecutive month. Fixed mortgage rates were also largely unchanged from last month.
Background information
- The Property Cycle Indicator is prepared from an analysis of changes in house sales, price movements, and the time taken for properties to sell
- The monthly data is sourced from the Real Institute of New Zealand
- The Property Cycle Indicator runs from minus-10 to plus-10
- A Property Cycle Indicator value of -10 shows a strong downturn, while +10 shows a strong upturn in the housing market
- Lower sales volumes are usually the first indicator that a market upturn is coming to an end, followed by properties taking longer to sell
- House prices are usually the last variable to change direction
- House prices may still be rising, even though the Property Cycle Index is negative and showing a downturn
By incorporating the three variables, the Property Cycle Indicator gives a much better, and earlier, indication of shifts in the market
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