Marlborough Property Investors' Association

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Buyers cautious as activity remains subdued

House prices extended their decline for a fifth month as a backlog of unsold property sits on the market.

Values have dropped 1.1% since March this year after rising 4.3% in the previous seven months. As a result, values are still 3.1% above the same time last year, but the gap is continuing to close. Values are now 5.0% below the market peak of late 2007.

"The market sentiment remains cautious with little sign of urgency among buyers," said manager Glenda Whitehead. "There is still considerable backlog of unsold property on the market, although the number of new properties being added to this pool appears to have slowed as potential vendors choose to wait until the market begins to show signs of recovery."

The property market fell into a slump this year after returning expatriates and an inflow of new migrants stoked demand amid a short supply of housing. Since then, people are looking to shift across the Tasman again, and property sales have been near decade lows.

Whitehead said sellers were willing to have properties on the market for longer, though they weren't "dramatically dropping their asking prices," though some buyers were struggling to secured funding from "banks or finance companies who remain cautious about lending for property."

The average sales price increased to $409,700 from $407,191 from $404,715, reflecting relatively fewer lower value properties selling over recent months.

Auckland area values rose 5.9% from a year earlier, down from the 6.9% gain in the previous month.

Wellington area values are 2% above last year, down from the 3.2% in the previous month. Christchurch values were 3.2% above last year, down from 4.6% the previous month. Dunedin values rose 2.7%, down from the 3.7% reported last month.