Since then, Barfoot & Thompson’s clearance rate has plummeted, according to Sykes, prolonging sales times and sending prices lower.
Sales have plunged nearly 35% and median house prices are down 7.5% over the past year.
Brendon O'Hagan/Bloomberg/Getty ImagesNew Zealand is at the sharp end of a global housing market squeeze that has grim ramifications for the world economy.
But even if the correction in prices is mild, a housing market slowdown could have severe consequences because housing transactions in turn boost activity in other sectors of the economy.
“In an ideal world, you’ll get a bit of froth blown off the top [of house prices] and everything is fine.
House sales in Britain were 32% below the previous year’s level in September, according to official figures.
“A decisive increase in unemployment is a very big danger for housing markets,” said Slater of Oxford Economics.
Qilai Shen/Bloomberg/Getty ImagesA drag on the economyMost market watchers are not expecting a repeat of the 2008 housing market crash.
But even a modest a fall in house prices will knock confidence, causing homeowners to cut back on spending.
A slowdown in activity will also deal a blow to many other parts of the economy because of the housing market’s links to builders, lawyers, banks, moving companies and furniture stores, to name a few.
“An additional negative factor, compared to the [global financial crisis], is that the Chinese housing market is also in a downturn,” according to Slater.
“So rather than offsetting the impact on world output of a global housing downturn, as was the case after the GFC, the Chinese housing sector is contributing to the slump.”— Laura He contributed to this report.
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