Auckland still the flagship as home prices, sales build

More than $3 billion of property changed hands last month. Picture / Glenn Jeffrey. Click on 'more pictures' below for a graphic showing June's prices.

House prices have pushed up to new levels, with the national median climbing 2 per cent last month.

But inflation is predicted to eat into the recovering market and dim the sector's fortunes in the longer term.

Real Estate Institute figures out yesterday showed a new national median for last month's house sales of $310,000, up $5000 from May. Auckland prices and sales volumes rallied.

"The signs are Auckland is reawakening and is showing signs that both buyers and sellers now have confidence in the market," said institute president Howard Morley.

He cited an increase in prices throughout many suburbs and higher sales volumes, particularly in Auckland City where prices rose and 1014 properties were sold last month, up on the 1004 sales in May.

But BNZ chief economist Tony Alexander warned that high inflation would quell housing's performance. People would become more cautious about how they spent their money and they would be thinking much harder about their cashflow, he predicted.

Housing was still in a softening phase and any small price blips should not be seen as a reversal of the sector's fortunes, Mr Alexander said.

Mr Morley said the Auckland volume increase and the price rises throughout many parts of the region proved Auckland had more fire and its house prices had rallied because the city had recovered from a price depression. Its median had been artificially dragged down by a high number of cheaper inner-city apartment sales.

"For the first time in a long while, Auckland defied recent trends with a rise in the regional median from $400,000 to $405,000," the institute said.

The Auckland region's median in June 2003 was $289,000. That rose to $323,920 in June 2004, then $366,500 in June last year.

The institute said there were 527 sales on the North Shore last month, 1014 sales in Auckland City and 2897 sales throughout the Auckland region.

National sales volumes were down from 9642 in May to 8428 last month.

Prices in Auckland City were also up 5 per cent in one month which the institute said was a significant rise.

Mr Alexander said the housing market would be flat for the next four years and he was more interested in the length of time to sell houses rather than any price rises.

Institute data showed the median time to sell a house stood at 37 days last month, slightly down on the 38-day median of May but well ahead of the 30-day median in June last year. Mr Alexander said this was evidence that the house sales sector was in a "soft landing phase", which he predicted would remain for some years.

"There's still scope for prices to fall, particularly when the migration numbers turn down and when fixed-rate mortgages roll on to high interest rate levels," Mr Alexander said.

Agents sold property for a total of $3,065,823,868 last month. The biggest volume was in Auckland, where properties were sold for $1,380,614,285. The national median section price is $158,000. Sections are most expensive in Auckland, with a median of $207,500. The institute criticised other housing sales data, particularly from Quotable Value, which it said used averages based on indices, whereas the institute's figures were median prices on unconditional sales.

* A full copy of the latest house sales data is available at www.reinz.co.nz under the residential market news link.