House prices are continuing their recent upward trend, with the latest housing price index from the real estate industry showing a 1.2 per cent rise in August.
In the three months to August, housing prices were up by 1.6 per cent. Compared to 12 months earlier, the REINZ Housing Price Index has risen by by 2.6 per cent.
This means housing prices are now just 6.2 per cent below their peak of November 2007.
Prices in Auckland were up 4.4 per cent above August last year, with Wellington up 7.5 per cent. Prices fell in Christchurch, down 2.3 per cent.
The number of days it takes to sell a house has fallen, with the median dropping from 36.3 days to 33.4.
Sales for the month - seasonally adjusted - are down 1.9 per cent, but when compared with August last year are up nearly 40 per cent. Prices for the month are up 1.2 per cent, but when compared to last year, are up 2.6 per cent.
Real Estate Institute of NZ president Mike Elford said the noticeable increase in number and speed of turnover compared with a year ago was pleasing, but "it is early days yet, and we still need to be cautious in drawing conclusions from these trends".
Nevertheless, he said, the latest statistics "are in line with other signs in the economy that financial commentators have suggested point to a recovery from recession."
"Like those commentators, we would be reluctant to say the hard times are over, but if the trees are not yet in full bloom, there are certainly buds in view," said Elford.
The median house price in August at $346,750, slightly up on July's $340,000 and almost back to the median of August 2007 when it sat at $350,000. It is well up on August 2008 when the median was $330,000.
"Looking back, 2008 was a disastrous year. I hope we can put this behind us," said Elford.
ASB economist Jane Turner said the shorter time to sell "suggests the housing market has become tighter".
Although the level of demand remained comparatively low on an historical basis, the number of new houses being listed for sale was also low causing some tension between supply and demand.
This was leading to house prices being bid up, rising 1.2 per cent over August.
Turner said the Reserve Bank was "on edge" watching the recent recovery in house prices - warning that further gains will prolong the rebalancing process at the expense of future growth.
"However, the Reserve Bank expects that the recent lift in house prices is likely to be temporary, to which we agree," said Turner. "The recent pick up in demand comes when listings have been very low, causing the housing market to become slightly heated at the minute."
The recent stabilisation in the housing market was likely to tempt potential sellers back into the market restoring the balance between supply and demand, she said.
"We continue to expect house price inflation will remain subdued over the next few years, with appetite for housing tempered by rising interest rates, low affordability and rising unemployment."
