House prices rose a modest 1.4 per cent in December, but ended the year nearly 10 per cent up from the year before.
Sales figures released this morning by the Real Estate Institute of New Zealand (REINZ) show the median residential house price rose in 11 out of 12 districts last month when compared to the same month the previous year.
The national median of $360,000 was up 9.6 per cent on the corresponding figure of $328,500 recorded for December 2008. It was also up $5,000 on the median price for November 2009.
In Auckland, housing prices in December were 9.7 per cent above those in December 2008 with housing prices in Wellington up 9.5 per cent, and Christchurch up by 5.8 per cent.
Other South Island suburbs were up 8.6 per cent and other North Island suburbs were up by 4.2 per cent- also up from the year earlier levels.
The REINZ Monthly Housing Price Index - a more accurate measure of nationwide real estate movements, fell by 0.9 per cent to 3253.4 in the December 2009 month.
In the three months to December, housing prices increased by 2.8 per cent. Compared to 12 months earlier, the REINZ Housing Price Index increased by 6.4 per cent.
Housing prices are 3.8 per cent below their November 2007 peak.
Real Estate Institute of New Zealand President Peter McDonald said a shortage of properties available for sale was fuelling the market.
"House prices have definitely stabilised and appear to be slightly gaining, which is a positive sign. The median house price for December 2009 was up 1.4 per cent on the previous month so, while the median price for December 2009 was a record high for that time of the year, it's a case of steady as it goes," he said.
McDonald said it was concerning that fewer than 5,000 residential properties sold in December. There were 655 more houses sold around the country than in December 2008 but still down 640 on December 2007.
Bernard Doyle, economist for Goldman Sachs JBWere said the 2010 outlook for the housing market "appears a lot more balanced than last year".
"We do suspect house prices to post modest gains over the year. However, this is likely to be at a more gradual rate of increase than over 2009, with interest rates set to rise, net migration gains potentially to slow as the Australian economy outperforms, and the labour market remaining subdued."
"The wildcard, of course, is also around changes to the tax treatment of housing," said Doyle.
The Tax Working Group is due to report back its recommendations to the Government this week and Doyle said he suspected housing would be a key pillar of its recommendations.
