Annual house price inflation in Auckland is now running at just under 20%, according to the latest monthly figures from the Real Estate Institute.
The REINZ Stratified Housing Price Index, which adjusts for some of the variations in mix that can impact on the median price, shows that Auckland prices were up 19.8% in June compared with a year earlier. The index hit an all-time high for Auckland.
The annual inflation figure compares with just 14.8% a month earlier.
On a national basis, house price inflation is 8.4% higher than June 2012 and eased very sightly compared to May. The Christchurch and Other South Island Price Indices also hit new record highs in June, with the Christchurch Index is up 10.6% and the Other South Island Index up 7.3%.
REINZ data shows there were 6135 unconditional residential sales in June, equal to the number of sales in June 2012, and a fall of 20.5% compared with May 2013. However, on a seasonally adjusted basis the volume of residential sales was up 0.6% compared to May, and up 6.1% compared to June 2012.
The national median house price increased by NZ$2000 (+0.5%), from NZ$392,000 in May, to NZ$394,000 in June. Compared with June 2012 the national median house price increased by NZ$22,000 (+5.9%), with seven of the 12 regions recording an increase in the median price.
Auckland's median price eased back from last month's record NZ$565,000 to NZ$555,000, but the month's median price was nearly 25% higher than for the same month just two years ago.
See here for regional figures.
REINZ chief executive, Helen O'Sullivan said the shortage of listings right across the Auckland region was "becoming a major concern for many agents". Demand remained strong from both first home buyers and investors, she said.
Auckland's biggest real estate firm Barfoot & Thompson last week reported its house listings were at an all-time low, while Realestate.co.nz reported the national housing inventory was at historic lows.
Although the national annual house price inflation figure has eased somewhat in the past month from 8.7%, the very high Auckland figure will do little to sooth the Reserve Bank, which is now talking up its prospects of introducing "speed limits" on high loan to value lending as a way ensuring continued financial stability and potentially of taking some heat out of the housing market.
The bank's concerned that a sudden sharp fall in property values could cause financial stability problems. Interest.co.nz analysis of past household credit figures suggests households might be more vulnerable to the effects of a bursting housing bubble this time around than they were in the run-up to the last housing boom in the early 2000s.
ASB economist Christina Leung said recent construction data indicated the stronger house price growth in Auckland was starting to encourage house-building demand.
"However, we expect it will take a few years for new housing supply to catch up with the growth in housing demand, and the housing market likely to remain tight for some time.
"The acute housing supply shortages in Auckland and Canterbury are driving continued house price growth in these regions, and the true extent of housing demand may be stronger than housing turnover figures suggest," she said.
"Elsewhere, the lift in housing demand has been more modest."
Leung said the RBNZ had indicated it was looking to introduce restrictions around growth in high loan-to-value lending later this year, with finalised changes scheduled to be announced in mid-July.
"We expect this will have a limited effect on housing market pressures, and still consider the [Official Cash Rate} as the most effective tool in reducing housing market pressures. We continue to expect the RBNZ to first lift the OCR in March 2014."
REINZ director Bryan Thomson said price levels in Auckland and Canterbury were having an increasingly significant impact on the national picture. Canterbury recorded the largest increase in median price compared with June last year, and Auckland the second largest increase in median price. Together both regions accounted for 99.6% of the NZ$22,000 increase in the national median between June 2013 and June 2012. Price gains in most other regions had been minimal.
"The continuing strength of house prices in Auckland and Canterbury is being driven by the rising imbalance between supply and demand, with the number of properties coming to market from new builds and existing owners falling well short of the demand for housing. The number of houses available for sale is an issue for most regions in New Zealand; however, the problem is most acute in Auckland and Canterbury.”
“There appears to a change in market behaviour with rising prices and demand for housing in Auckland and Canterbury not being enough to increase the number of listings. While the growth rate in sales in Auckland has averaged around 20% for the past two years, the growth in the number of listings has been almost negligible. Normally we would expect the number of listings to increase more rapidly coming out of a downturn, but as yet, this does not appear to be happening.”
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