Wednesday 11th May 2016
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A "chronic lack" of housing supply is driving up prices across New Zealand, with record median prices reached in four of the 10 regions and sales volumes rising across the board in April, according to the Real Estate Institute.
Record median prices were reached in Waikato/Bay of Plenty ($417,000), Taranaki ($342,500), Canterbury/Westland ($427,250) and Otago ($284,000) last month. REINZ says that shows that the "halo effect" of rising Auckland house prices is strengthening in regions where it's already present and moving onto new regions, driven by what chief executive Colleen Milne called "a chronic lack of supply".
“Anecdotal evidence suggests that investors outside of Auckland are increasingly looking to real estate investments to improve their yields compared to bank deposits," Milne said. "First home buyers are also taking advantage of low mortgage rates, putting pressure on the number of properties available for sale. The strength of the seasonally adjusted level of sales demonstrates that the underlying demand for real estate across New Zealand remains strong, with every region recording an increase on a seasonally adjusted basis."
The national median price rose 7.7 percent to $490,000 in April. Excluding Auckland, the national median price gained 8.2 percent to $382,000. The number of dwellings sold in April fell 10.1 percent from March, REINZ said. Over the past 10 years, the average fall from March to April has been 16.6 percent.
This morning, the Reserve Bank said it's considering whether to impose further home-loan restrictions amid signs that price pressures are re-emerging, especially in Auckland where prices "remain stretched".
Governor Graeme Wheeler stopped short of announcing any specific new measures in the six-monthly Financial Stability Report released today but said the central bank is "closely monitoring developments to assess whether further financial policy measures would be appropriate".
Milne said Auckland had seen a rebound in sales over the past two months, with adjustment to new LVR rules "over." The median house price in metropolitan Auckland is now $840,000, compared to $745,000 a year earlier, and it took an average of 32 days to sell a house in April, compared to 34 a year earlier.
REINZ is reading the Reserve Bank's report "with interest", Milne said, "as the report underpins what our data has described as the halo effect for a while now.”
Nationwide, available properties for sale fell 35.7 percent compared to April 2015, with Wellington hardest hit as supply dropped 57.5 percent while Northland and Hawke's Bay also saw declines of more than half.
“The Wellington region is seeing strong demand for property and a very limited response in terms of new listings," said regional director Euon Murrell. "The weeks of available inventory has fallen by over 60 percent over the past 12 months, with less than six weeks supply available. This is far less than Auckland and Waikato/Bay of Plenty. Prices are rising in response to very limited supply."
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