The first month of the 'spring selling season' saw the the number of houses sold jump 10 per cent from the month before, while the national median house sale price was steady, rising 0.9 per cent.
Figures released this morning by the Real Estate Institute of New Zealand (REINZ) show the national median sale price was NZ$350,000 in September, just below its peak of NZ$352,000 in November 2007.
There were 6,464 sales over the month, up from 5,878 in August and 4,499 in September 2008.
When compared to the same month last year, sales were up 2.9 per cent.
Newly appointed REINZ President Peter McDonald said the figures "indicate improved confidence of buyers and sellers in the marketplace".
"We're seeing a slow, but steady, appreciation in sale values and we're now back to the prices being fetched in the corresponding period in 2007 when the median was NZ$351,500," he said. There were 5,894 sales in September 2007.
Jane Turner, economist at ASB Bank said the demand for homes had been underpinned by a lift in migration and low interest rates.
Turner said the Reserve Bank was "likely to be uncomfortable with the current degree of tightness in the housing market."
"While agent data suggests new listings are increasing, it has not been enough to meet demand resulting in house prices continuing to be bid up. The very low number of days to sell suggests more house price inflation pressure is likely over the next few months," said Turner.
A strong housing market and rising house prices were likely to attract new listings and encourage new building, she said.
"We expect the supply and demand imbalance will soon correct. However, in the meantime house price inflation has been slightly stronger than we had been expecting."
"The Reserve Bank has voiced concerns around the sustainability of a housing-led recovery. The current heat in the housing market is taking some time to cool, with supply sluggish to respond," said Turner.
On its own, the current housing market might mean the Reserve Bank would favour increasing interest rates sooner rather than later.
"Although this needs to be traded off with the current fragility of the economic outlook and the high NZ dollar undermining export competitiveness. While we do not expect the Reserve Bank to increase the OCR until June 2010, we see the risks skewed to an earlier start," said Turner.
House prices in September were up in all but three out of 12 districts compared with 12 months ago.
Northland was down 4.20 per cent from a median of $297,500 to $285,000, and Hawkes Bay fell 2.48 per cent from $271,742 to $265,000. Central Otago Lakes was down 15.62 per cent from $480,000 to $405,000.
The biggest rises were in Auckland, climbing 8.33 per cent from a median of $420,000 to $455,000; Taranaki which rose from $256,583 to $283,000 (up 10.29 per cent); and Wellington, up 8.04 per cent from $350,000 to $378,168.
Bernard Doyle, economist at Goldman Sachs JBWere said sales volumes were "starting to settle down" but prices had made strong gains when compared to a year ago.
The 'quality adjusted REINZ price index' showed year -on -year growth of 5.3 per cent.
"This is particularly the case in the urban centres with an average of 9.3 per cent year-on-year growth across Auckland/Wellington/Christchurch. This suggests to us an element of supply squeeze as construction activity catches up with the sharp turnaround in housing demand," said Doyle.
He said the latest sales data "supports our view that residential construction activity will continue on a recovery path."
"For monetary policy, the increase in house prices will be another sign to the Reserve Bank that low interest rates have a limited shelf life. However we suspect the Reserve Bank will also view an element of the price strength as transitory, reflecting supply constraints, rather than the emergence of a new price bubble," said Doyle.
Nationally, properties took a median of 33 days to sell compared with 34 in August and 52 in September 2008.
"Again for days to sell we're back to 2007 figures which was a comparable 32 days," said REINZ president Peter McDonald.
The REINZ's new Housing Price Index, created with help from the Reserve Bank of New Zealand, increased 1.9 per cent in the September month, while prices in the three months to September were up 2.5 per cent from the three months to August.
The index rose 5.3 per cent from a year ago, and shows house prices in September were down 4.4 per cent from their November 2007 peak, the REINZ said.
- NZ HERALD STAFF/ INTEREST.CO.NZ
