New Zealand property market gradually recovering momentum

Residential property sales increased in January 2012

Residential property sales in New Zealand increased by a quarter in January from the same month last year, the latest figures from the Real Estate Institute show.

The number of transactions increased by 25% to 4,073 last month from January 2011, when it recorded its worst month ever, and was down 7.4% from December.

The national median sale price was unchanged at $355,000, and up 4.4% from the same month last year.

The REINZ stratified house price index, which strips out monthly variance in proportion to high or low value properties, fell 1.4% in the month to 3253.8, and is 3.8% below the peak in 2007, but up 4.3% on an annual basis.

‘Prices remain relatively stable despite the supply pressure, which probably reflects the reluctance of buyers to over extend themselves while economic uncertainty continues,’ said Helen Sullivan, REINZ chief executive.

In Auckland, the median house price rose 4.7% to $471,000 from a year earlier, with sales up 27% in January. In Wellington house prices gained 4.1% to $385,000 from January 2011, while sales rose 15%.

Christchurch prices rose 2.3% to $337,444 and sales increased by 4.1%, and in Dunedin prices gained 11% to an average of $245,000 with sales up 35%.

‘The supply of housing remains low, particularly in Auckland and Christchurch, which has resulted in tight market conditions which will underpin further increases in house prices over the coming year,’ said Jane Turner, economist at ASB.

‘Agency listing data show the housing market is particularly tight in Auckland as supply of new houses remains low, and has created upward pressure on house prices,’ she added.

Westpac Bank chief economist Dominick Stephens said the upward trend in house sales is becoming more consistent across regions.

‘Prices, which tend to lag behind sales, are still accelerating, although at far from a pace that would leave the Reserve Bank concerned about a renewed housing boom. We expect a 3.5% rise in house prices over this year, helped by improving household incomes, low mortgage rates, and constrained supply in Auckland and Canterbury,’ he explained.

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