House prices in supply constrained Auckland and Canterbury will keep rising due to supply constraints, ASB economists say, following figures from Realestate.co.nz showing both remained firm sellers' markets.
Realestate.co.nz's Property Report covering October, shows inventory levels of houses for sale in the two cities remained "well below" long-term averages despite listings in Canterbury rising, while asking prices of houses listed for sale during October hit new highs.
ASB economist Jane Turner noted the number of new house listings nationwide on realestate.co.nz edged slightly up over October, although remained low.
"New listings lifted strongly in Canterbury, which is an encouraging sign as this is one of the regions struggling with low supply. However, new listings in Auckland continued to decline and further exacerbate existing supply constraints," Turner said.
Seasonally adjusted figures showed 1,315 new listings in Canterbury over the month, up from 1,147 in September. Meanwhile, there were 3,618 new listings in Auckland, down from 3,637 in September.
The total number of houses available for sale on the website continued to decline on a national basis, suggesting the small increase in supply over October was insufficient to meet the level of demand.
"Housing inventory remained largely unchanged in Auckland, while inventory edged slightly higher in Canterbury on the back of stronger listings," Turner said.
"With supply remaining low relative to demand we expect house prices will continue to increase, particularly in Auckland and Canterbury, until there is a meaningful increase in the supply of new houses. The building consents figures out on Wednesday suggest that a gradual recovery in residential construction demand is taking place," she said.
"The listings figures demonstrate the housing market remains tight, particularly in Auckland and Canterbury. We expect house prices to continue to increase in the regions where supply constraints are most acute.
"At present the RBNZ remains relatively relaxed about housing market pressures and the acceleration in house price inflation. For the time being, the RBNZ will remain focussed on offshore uncertainties and near-term weakness in CPI inflation," Turner said.
"As such, we expect the RBNZ will leave the OCR unchanged until September 2013."
New asking price high
The nationwide property market continued to show signs of confidence and heightened activity compared to the past few years, realestate.co.nz said.
"The confidence amongst sellers bringing their properties onto the market has pushed up the (seasonally adjusted) truncated mean asking price to a new high of NZ$445,529 – the highest level since the collection of data began in 2007," it said.
"This rise in asking price was noticeable right across the country, with Auckland reaching a new record high of NZ$611,864, and Canterbury reaching a new high of NZ$414,070."
November also began with a good rise in new listings nationwide (up 12% on October 2011), and this rise had lead to some balancing of the property market in both Wellington and a number of provincial regions.
"While inventory levels across the country balanced in October, the market remains a firm sellers' market across 12 of NZ’s 19 regions. Overall stocks of unsold houses rose slightly to 33 weeks of inventory (long term average = 40 weeks). Both Auckland and Canterbury remain firmly sellers' markets, with overall inventory levels continuing to remain well below long-term averages," realestate.co.nz said.