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Housing's price surge was criticised yesterday by a leading economist who attacked the Reserve Bank for lack of action and warned of a frenzied pre-Christmas consumer spend-up.
Tony Alexander, the BNZ's chief economist, said the Reserve Bank's monetary policy was having no effect on the housing sector where prices rose $11,000 nationally last month.
Volumes were up too - from 8671 sales in September to 8857 last month - and the time it took to sell a house dropped from 31 days to 29 days; two measurements economists watch to gauge the strength of the market.
Mr Alexander said these factors indicated the housing market was showing little sign of cooling and a strong and swift response was required.
"It's remiss of the Reserve Bank to not be seriously looking at measures to curb this because it's driving the export sector into the ground and taking the country with it," he said.
"The Reserve Bank has made a complete hash of monetary policy and pussy-footed for the last few years. No one is scared of them."
He also warned against people being delighted with the house price rise just released by the Real Estate Institute, saying it should not prompt them into a pre-Christmas spend-up. He is concerned the latest figures will make people feel more wealthy, leading to a flurry of credit card or hire purchase commitments.
The institute said October sales figures showed the national median lifted from $313,000 in September to $324,000 last month.
The figures came out just a week after Reserve Bank Governor Alan Bollard warned people's preference for investing in houses rather than shares would condemn the country to weak economic growth.
But real estate agents are delighted with the spring push. Mike Elford, the institute's vice-president, said several factors had combined to cause the latest price surge.
"Clearly, there has been a lot of pent-up demand over recent months and this has manifested itself in October, driven by increasing buyer demand, a shortage of listings plus more confidence among vendors," he said. "The extent of the increase, especially in some regions, has come as a pleasant surprise."
Interest rates were encouraging people to buy more houses. "Apart from the arrival of fine weather which always spurs the market, other external factors such as a temporary easing in interest rates in October may also have some bearing," Mr Elford said.
