MIKE PERO MORTGAGES

HOUSING MARKET REMAINS IN DECLINE OVER PAST MONTH
The property market remained in decline during the month of October, according to the latest
Mike Pero Mortgages-Infometrics Property Cycle Indicator (PCI).
“The nationwide PCI has remained at its lowest possible figure of minus-10 for the second
consecutive month and the second month in two years,” says Mike Pero Mortgages Chief
Executive Shaun Riley.
“This latest figure suggests house prices will come under increased downward pressure in
the next few months.
“House sales volumes in October were down 36% from a year earlier, the largest annual
decline since the height of the financial crisis in late 2008. A sharp drop in sales activity in
Auckland was the main contributor to this decline. “
Mr Riley says the median house price stayed the same this past month.
“ The median house price held at $350,000 for the third consecutive month in October,” he
says. “Relative to October 2009, the median house price was down 1.4%, the first annual
decline since May 2009.”
The Mike Pero Mortgages-Infometrics Property Cycle Indicator fell to a negative 10.0 in
September and has remained there since. The PCI is a sensitive measure of the housimg
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 latter factor – time taken for houses to sell - reveals property took an average of 41
days to sell in October. When adjusted for typical seasonal variation, this was the slowest
rate of housing turnover since March 2009.
Rental inflation slowed marginally to 3.5%pa in October.
Both floating and fixed mortgage rates were unchanged in October as the market continued
to expect the Reserve Bank to leave the official cash rate unchanged until at least March
2011.
(See the next page for PCI graphs)
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
For more information contact:
Shaun Riley
Chief Executive Officer
Mike Pero Mortgages
(09) 306 6698 or (021) 287 8727
Mike Pero
(027) 645 3737
[email protected]
Kylie Mayer
Mike Pero Mortgages
Marketing Assistant
(03) 365 3746
National PCI graph
New Zealand!
Property
Cycle Indicator!
15!
10!
5!
0!
-5!
-10!
-15!
01!
02!
03!
04!
05!
06!
07!
08!
Regional PCI graphs follow
09!
10!
Auckland!
Wellington!
10!
10!
5!
5!
0!
0!
-5!
-5!
-10!
-10!
15!
15!
-15!
-15!
06!
07!
08!
09!
10!
06!
07!
08!
09!
10!
06!
07!
08!
09!
10!
09!
10!
Canterbury/Westland!
Otago!
10!
10!
5!
5!
0!
0!
-5!
-5!
-10!
-10!
15!
15!
-15!
-15!
06!
07!
08!
09!
10!
Southland!
15!
10!
5!
0!
-5!
-10!
-15!
06!
07!
08!