NZ house sale prices, volumes climb in December as Auckland drives market

Thursday 15th January 2015

New Zealand house sale prices and volumes rose in December as an undersupply of available property and migration fuelled demand in Auckland drove the national market.

The number of sales rose 24 percent to 7,064 in December from the same month a year earlier, while the national median price climbed 5.4 percent to $450,000 with a tight Auckland market accounting for 98 percent of the price increase, the Real Estate Institute said in a statement. The volume of house sales rose 24 percent to 2,743 across the Auckland region in December from a year earlier, while the median price was up 13 percent to $678,000.

"The real estate market remains split between Auckland, with strong demand and price growth, and the rest of the country," outgoing REINZ chief executive Helen O'Sullivan said. "Vendors are simply not coming forward in large enough numbers to meet the demand, despite the strong price rises seen in Auckland over the past three years."

Auckland has been a major driver for the national property market in recent years as increasing net migration has bumped up supply, while underinvestment after the global financial crisis left supply unable to cope. That prompted the Reserve Bank to impose lending restrictions on low-equity lending in October 2013, and the central bank last year raised the official cash rate 1 percentage point to 3.5 percent to head off the threat of future inflation.

The central bank's restrictions on high loan to value ratio lending stifled activity in cheaper housing, with governor Graeme Wheeler saying he sought to protect first home buyers from taking on too much debt when interest rates were set to rise, and turnover in properties below $400,000 made up 41.8 percent of total turnover in December, compared to 44 percent a year earlier.

Christchurch, the country's second biggest city, also contributed to the rapid increase in house prices in recent years after a series of earthquakes devastated the city and destroyed large swathes of housing stock. That's since abated, with the REINZ data showing Christchurch sale prices were flat at $420,000 in December from a year earlier, while turnover rose 23 percent to 647.

Wellington turnover climbed 33 percent to 766 in December from a year earlier, while prices increased 3.8 percent to $360,000, and Dunedin turnover advanced 14 percent to 156, while prices edged down 0.2 percent to $265,000.

The stratified housing index, a price measure that strips out peaks and troughs in the markets, rose an annual 6 percent, with Auckland leading the increase at a 13.5 percent pace, followed by a 3.7 percent lift in Christchurch prices.

Fitch Ratings today estimated New Zealand house prices will rise a more modest 2.5 percent in 2015 with higher interest rates and building programmes to boost supply in Christchurch and Auckland and keep the gain in check.

The median number of days to sell was 32 days in December, unchanged from a year earlier, and two fewer than in November, REINZ said.

BusinessDesk.co.nz

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