Queenstown's property sector remains firmly a buyer's market despite an almost 25% gain on prices on December's lows, but the likelihood of further month-on-month price degeneration remains, with no sign of recovery in sight.
The Real Estate Institute of New Zealand statistics for January, released during the weekend, notched up a 4.3 % decline in median Wakatipu house prices, from $585,000 in January 2008 to $560,000 last month, for the Central Otago Lakes district area.
REINZ spokesman in Queenstown Adrian Snow said last month's $560,0000 median price was up 24% on the "extraordinary low" of $450,000 struck in December and activity remained "relatively strong".
ASB chief economist Nick Tuffley said prices continued to decline gradually and were now nearly 8% off their peak of late-2007.
"The distribution of sales within price points remained fairly steady, though that doesn't preclude better quality houses being bought in the lower price categories; money going much further than the REINZ price declines imply," Mr Tuffley said in a statement.
Mr Snow said the Reserve Bank's lowering the interest-driving official cash rate (OCR) to a record low of 3.5% was "stimulating interest in purchasing" but was yet to have any effect on sales.
Unlike Australia, where the inverse applies, 80% of New Zealand mortgage holders are on fixed-term rates and falling interest rates have little or no short-term benefit.
Mr Snow said with banks' deposit rates dropping to between 3% to 4.5%, and their lending rates around 6% to 7%, some investors were resuming "actively purchasing" for investment and security.
"We're seeing the very early signs of the property market recovery," Mr Snow said.
However, he said the January-on-January decline of 4.3% gave the best snapshot of the market performance.
"It confirms real estate agents' opinions that downward price pressure remains with no suggestion of any immediate recovery in values or sales price," he said.
While Wakatipu sales were on a par, month-to-month and against a year ago, nationally house sale numbers were down to a record low of 3706 homes, the lowest in the 17 years since records began.
In January 2008, a total of 54 Wakatipu homes (41), apartments (4) and sections (9) sold for $35.3 million compared to last month when 60 homes (43), apartments (6) and sections (11) sold for $33.4 million.
The median days to sell Wakatipu homes was 65 days last month, compared with 119 days in January 2008.
Apartment selling times moved similarly, to 71 days from 125.
Mr Snow noted property sellers remained "hesitant" to await some price recovery, while buyers were being cautious and "negotiating hard", with people shopping for homes in the less-than $700,000 bracket making "good use" of falling prices.
"The market is firmly in favour of the purchaser and it appears that this state will remain so for a little while to come," he said in a statement.
Earlier in the week, Mr Snow told the Queenstown Times the annual number of forced mortgagee sales around Wakatipu of between 50 and 60 was expected to rise again this year.
About 80% of these sales were bank and finance company foreclosures in the managed apartment and commercial development sectors.
