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Increased property sales in New Zealand dismissed as a seasonal blip

Some organisations have been reporting sales incrases of up to 40% and lowering interest rates have been hailed as stimulating interest in the real estate market.

But this is just the usual post holiday period bounce, according to ASB economist Jane Turner. She explained that although figures from the Real Estate Institute showed that property sales were up when they are adjusted to take into account seasonal pick up they are a lot less attractive.

When adjusted the figures show sales volumes increased only 8.3% and that overall volumes are 18% below the levels of a year ago.

'We place little weight on this so-called recovery. The trend in house sales remains flat despite some monthly volatility with housing demand yet to make a convincing recovery' she said.

'While large declines in the mortgage rate have prevented housing demand falling further, the level of house sales remains weak. Potential house-hunters are either waiting for house prices to fall further or feeling cautious due to economic uncertainties. Higher deposit requirements are another hurdle for first home buyers,' she added.

Also the length of time it takes to sell a property has increased from 59 days in January to 62 last month, according to Goldman Sachs JBWere investment research director Shamubeel Eaqub.

'Prospective house buyers are able to take their time in a low demand market. Unwillingness to accept lower prices may also be holding time to sell dates high. The housing market remains oversupplied and we expect this to continue to push house prices lower,' he said.

Median house prices were also not the best measure of house prices because the data was not adjusted for changes in the composition of sales. QV housing data was adjusted and showed that house prices are down 8.9 per cent for the three months to February compared to year-ago levels, he said.