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14 Nov 2014

House Prices Pick Up in Spring

The New Zealand property market enjoyed a healthy spring, with median house prices up across the country and values in Auckland reaching a record high in October.  Activity increased across the board according to the Real Estate Institute of New Zealand (REINZ), with strong prices joined by rising sales volumes and improved 'days to sell' figures.

The national median house price reached $430,000 in October, up $10,000 from September but still $10,000 below the record peak of March 2014.  Prices have increased by $22,000 since October 2013, with nine regions recording an increase.  While 76 percent of upward movement in the last 12 months has come from Auckland, prices in Canterbury/Westland and Waikato/Bay of Plenty also added to the strong results.  Together, these three regions accounted for 94 percent of price movement over the year. 

Nationally, 6608 dwellings were sold in October, up 11.8 percent from September and down 2.4 percent from October 2013.  However, sales are often higher in October, with seasonally adjusted figures bringing growth down to 3.9 percent for the month.  Sales volumes were up across the country, with 11 regions recording an increase compared to September.  Otago recorded the biggest increase with 28.8 percent, followed by Taranaki with 27.4 percent and Southland with 27.1 percent.

"There has been a noticeable increase in the level of activity in the real estate market in October, with sales up almost 12 per cent compared to September, and down only 2.4 per cent compared to October last year. Activity has increased across the country, with the largest monthly sales increases in the South Island. We have also seen an increase in listings across most of the country, although in many places the number of listings remains below that of previous years," said Helen O'Sullivan, REINZ's outgoing chief executive. 

October also saw a slight improvement in the 'days to sell' figures, with dwellings taking one day less to sell in October compared to September at 34 days.  While the median number of days to sell was three days longer than a year ago, both Taranaki and Northland recorded an improvement at four days and two days less respectively.  According to the REINZ report, "Canterbury/Westland recorded the shortest days to sell at 29 days, followed by Auckland at 31 days and Wellington at 32 days. Hawkes Bay recorded the longest number of days to sell at 52 days, followed by Central Otago Lakes and Northland at 51 days."

The Reserve Bank remain wary of the active market conditions, with RBNZ Governor Graeme Wheeler making recent mention of unsustainable house price inflation:  "We would like to see house prices over the long term increase no more than the rate of nominal income growth. Hopefully, as we start to get the supply response coming in with increased building and the special zones up in Auckland, we'll see some better balance in the housing market in terms of supply and demand."