Average property price will fall to $300,000: economist
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The average sale price decreased to $388,894 this month from $393,240 last month.
However the market slowdown is only just beginning according to one economist. Darren Gibbs of Deutsche Bank is predicting that by the time the market hits its bottom, the average sale price will be $300,000.
He is picking that house prices have a further 10% to fall, saying they are too far out of equilibrium with incomes and rents.
QV spokesperson Blue Hancock says the drop in average sale price reflects more activity at the bottom end of the market, and less at the top, rather than any significant drop in value.
“Many investors may be seeking to reduce their exposure to increasing mortgage costs, and having made good capital gains over the last few years are now looking to sell,” says Hancock.
Gibbs agrees many investors may have to sell, saying he’d be surprised if many investors would have foreseen how quickly the market would come off. The pressure on interest rates from the credit crunch couldn’t have been foreseen either.
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