Brakes go on - big dive in house sales

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New Zealand's biggest housing market is in the grip of a slowdown.

Figures from Auckland's largest real estate agency show a big turnaround in sales.

Barfoot & Thompson said the average house sale price fell more than $14,000 last month, the number of unsold homes was rising, people were slower to buy and the number of sales was declining.

Another agency, Harcourt's, said prices in its northern region - which included Auckland - had fallen.

Sales in the northern area were down 25 per cent in the 12 months, it reported.

BNZ chief economist Tony Alexander said the market had slowed considerably, and the latest figures were unequivocally weak.

"Properties aren't selling and prices are not rising, so the housing market is going through a period of adjustment," he said.

The slowdown was orderly but the weaker market could last for quite some time.

"It looks like the housing market is going to be relatively flat for perhaps a couple of years and then if there is an upturn further down the track it is unlikely to be a particularly large one," he said.

Goldman Sachs JBWere economist Shamubeel Eaqub said the housing slowdown was becoming more evident.

The market had been hit by high interest rates and falling migration.

"The Reserve Bank will be relieved to see the housing market finally slowing because it has been a significant source of inflation, directly through higher construction costs and indirectly in terms of the wealth impact on consumption."

An orderly correction would be best for the country, but the accumulation of over-valuation in house prices meant this could not be taken for granted.

Barfoot's figures were an important bellwether, because they covered 34 per cent of Auckland sales and 12 per cent of New Zealand sales.