20 Feb 2012

House sale boost unlikely, says economist

12:56 pm on 20 February 2012

An economist is casting doubt on a prediction of an increase of buyers in the property market.

The chief executive of property website realestate.co.nz predicts healthy property sales in recent months will spur house sales, which will help stabilise the market.

Alastair Helm said 61,000 homes sold last year, and though listings on were down in the last six months of 2011, they've lifted strongly in February following a surge in sales of 25% in January.

He said listings tend to rise following a period of strong sales as this encourages would-be sellers that the market is strong.

While an increase in listings may not lower prices, he said, it will create a balanced property market with healthy numbers of buyers and sellers.

Real Estate Institute chief executive Helen O'Sullivan also expects sales and listings to continue to rise.

However ANZ National Bank economist Cameron Bagrie says such predictions may be premature.

He told Morning Report that household debt is still too high, people are continuing to save more than they have in the past and the appetite for borrowing is low.

Mr Bagrie says the market will always go up and down, but the big picture in New Zealand and globally is that the housing market is dictated to by the need for households to reduce debt.