Property sales in New Zealand are at a ten year high and will continue to move upwards in 2010 but they are causing concern among economists.
Real Estate Institute sale figures revealed that sales last month had pushed the national median to $355,000, which President Peter McDonald said set a record for the past 10 years.
‘For the first time we are over the peak of prices in 2007 which is a very reassuring milestone,’ he said. Prices rose in seven out of 12 regions and it took only 31 days to sell, down on 33 days in September and 47 days this time last year.
Although it has been cities leading the price surge, property prices in provincial and coastal areas will pick up in 2010, says the head of a national real estate company.
Prices will firm as rural export revenues improve, interest rates remain low and demand returns for holiday beaches and sections, according to Bryan Thomson, chief executive of Harcourts.
‘Compared to the dark days of 2008 there has been significant improvement in the residential real estate market in the main centres this year but in other locations and segments of the market things have continued to be challenging,’ Thomson said.
‘In the major metropolitan centres there has been a marked increase in the volume of house sales and prices have been positively impacted in recent months by the imbalance between supply and demand, but overall sales numbers in most locations remain below historic averages,’ he explained.
‘In 2010, however, I believe that in addition to ongoing solidity in the residential marketplace in the main centres there will be an improvement in the provinces too, stimulated by attractive floating mortgage interest rates, far better than predicted unemployment figures and positive immigration,’ he added.
However, NZIER principal economist Shamubeel Eaqub said New Zealand could not afford another property boom. ‘If this housing juggernaut continues, there is a very real of threat the economy will experience another, perhaps more severe, recession,’ he said. He added that prices are high compared with income and because of a shortage of listings.
And Westpac research economist Dominick Stephens said that a longer term property slump could result from the real estate market being too hot at present.