Sellers hold the power as house shortage bites

Pent-up demand and record-low interest rates mean some buyers face a long search. Photo / Supplied

People selling their homes hold the power as a worsening shortage of property listings combines with strong demand from buyers.

Figures released yesterday by Realestate.co.nz show the number of homes for sale in New Zealand has dropped to its lowest point since January 2008.

And the industry says the shortage will be long term as a lack of easy finance and political urgency slows new development in areas such as central Auckland.

Realestate.co.nz's monthly property report also showed that in June the national inventory of homes for sale dropped below 30 weeks for the first time in four years, to 29.8 weeks.

The long-term average is 41 weeks.

Inventory is measured by the projected number of weeks it would take to clear existing stock of unsold homes on the market.

"For the first five months of 2012 sales are 25 per cent up year on year. But over the same period new listings were only up 6 per cent," said Alistair Helm, the site's chief executive.

"Each of the key regions - Auckland, Wellington and Canterbury - registered some of their lowest levels of inventory on record in June, simply because buyers have been so active."

He said the shortage of listings in almost every region of the country had now reached a critical point.

"With inventory levels so low, not one region of New Zealand can now be described as a buyer's market.

"If properties do go to auction you're seeing very aggressive bidding and some quite incredible prices achieved for what in some ways have been pretty ordinary properties."

Mr Helm said high demand for homes pushed average asking prices up to record levels last month, but that had reduced slightly in June to a seasonally adjusted average price of $424,315.

"It will be interesting to see how the ongoing demand for property affects asking prices over the remaining winter months."

The housing market has heated up as rock-bottom interest rates pit investors and first home-buyers against each other in the bid for a limited number of property listings.

Pent-up demand combined with record-low interest rates have seen some buyers face a long search for a suitable property.

Real Estate Institute of New Zealand chief executive Helen O'Sullivan said the data was more confirmation of a long-term trend that was set to continue.

She said the demise of finance companies had meant funding for new developments was scarcer.

Political will to address the housing issue in cities such as Auckland was also questionable, Ms O'Sullivan said.

"The Auckland Council set a target of building 70 per cent of the city's growth within the existing [urban] city limits for the next 30 years. And that's created some pressure points. You see community groups opposed to intensive developments in their area, and yet people aren't that interested in living in intense housing developments a long way from the city."