Auckland's annual rate of house price inflation, which had soared to nearly 20% by June, then eased back to 13.9% in July, surged again to 17.9%.
Nationally the rate of house price inflation surged to 9.5% - which is already very close to 10% peak the Reserve Bank is forecasting for later in the year. Auckland's rate shot up 6.5% in the past month, helping to give a national increase of 2.1% during the month.
BNZ chief economist Tony Alexander has already said he doubts house price inflation will peak at just 10% during this 'up' cycle.
Near records
The national median price is now just $10,000 below its record high, while Auckland's median price is just $2000 short of record levels.
The heated state of the market has been of concern to the Reserve Bank, which is introducing "speed limits" on high loan to value lending from October 1 in an attempt to protect financial stability and to partially rein in prices - particularly in Auckland. See here for articles on LVRs.
The Government for its part announced new measures aimed at alleviating the politically-loaded situation of first home buyers being potentially locked out of the market by rising prices. There is currently a big shortage of houses available for sale.
ASB economist Christina Leung said there was a dip in house sales over August, but the trend remained one of continued strength in housing demand reflecting the effects of low interest rates and recovery in net migration.
Listings boost not enough
"Despite signs higher house prices are encouraging sellers to put their houses on the market, the improvement in new house listings has not been enough to keep up with continued strong housing demand.
"These supply constraints are particularly acute in Auckland and Christchurch, and have underpinned relatively strong house price inflation in these regions. We expect it will take some years for the housing supply and demand imbalance to correct," she said.
In the meantime, housing constraints were likely to underpin continued house price growth, but the pace of price growth "should ease over 2014" as construction accelerated and as interest rates increased.
"The RBNZ have announced restrictions on high LVR mortgage lending that will take effect from 1st October, and have assumed these restrictions will be equivalent to 30bp worth of interest rate increases. Nonetheless, we expect continued housing market pressures and a lift in inflation as NZ economic activity gains momentum will prompt the RBNZ to lift the [Official Cash Rate] in March 2014.
REINZ, the most up to date source of real estate data in New Zealand, said there were 6548 dwelling sales in the month of August, up 8.5% on August last year but 3.4% lower than July.
The national median price rose $5000 compared with July to $390,000, and is now just $10,000 below the record median set in March 2013.
Strong activity
REINZ chief executive Helen O’Sullivan said that agents from around the country were reporting strong activity from first home buyers moving to secure properties ahead of the Reserve Bank’s LVR changes.
"However, the reports suggest that this is occurring more in the regions, rather than in Auckland and Christchurch where we are seeing the greatest price pressure."
She said there were signs of a slow down in sales volume growth.
"A key factor is the continuing lack of listings, which limits the stock of properties available for sale and reduces choice for buyers. Agents report across the country that potential sellers are taking a ’wait and see’ attitude both in terms of rising prices and what effect the Reserve Bank’s new lending policy will have on the market.
"This uncertainty in the short term is exacerbating the problem of supply, although there should be a traditional lift in properties for sale as Spring takes hold."
New records
The rate of house price inflation is measured by the REINZ Stratified Housing Price Index, which adjusts for some of the variations in mix that can impact on the median price. It reached a new record high in August and is 9.5% higher than August 2012. The Auckland Index also reached a new record high in August and has risen 17.9% compared to August 2012. The Christchurch Index is up 6.1% and the Wellington Index is up 4.4%.
Compared with August 2012 the national median house price increased by $20,000 (+5.46%), with 12 regions recording an increase in the median price.
Three quarters (75.1%) of the increase in the national median price compared with August last year occurred in Auckland and 8.4% occurred in Canterbury/Westland.
"Together these two regions accounted 83.5% of the increase in the median price between August 2012 and August 2013," O'Sullivan said.
Three other regions are at or near their highest median prices. Nelson/Marlborough recorded a new record median price of $366,500. Compared with August 2012 Hawkes Bay recorded the largest increase in median price, up 15.7%, followed by Manawatu/Wanganui with 11.6%. Auckland’s increase was 11.4% and Canterbury/Westland achieved 5.8%.
Volumes up
Sales volumes in the Auckland region increased by 12.6% compared to August 2012 with noticeable strength in Manukau City and Rodney District.
(See here for full regional break-down.)
Compared with July, Auckland sales volumes eased 3%, but there was a "solid" increase in Rodney District.
On a seasonally adjusted basis Auckland's sales were flat compared with July.
Compared with August 2012 the median price increased by $57,500 (+11.4%) to $563,000, with prices increasing the most in Waitakere City and Outer Auckland.
Auckland's median price rose by $11,000 (+2.0%) compared with July, with Waitakere City again showing the highest increase.
The region's median price is just $2,000 below the all time high hit earlier in the year.
Auckland strongest
Overall the Auckland region remains the strongest housing market in the country.Auckland's days to sell remained steady at 29 days compared with July. The number of days to sell improved by one day compared with August 2012. Over the past 10 years the number of days to sell has averaged 33 days for August in the Auckland region.
O'Sullivan said the shortage of listings remained an issue across Auckland, with potential vendors taking a wait and see approach.
"Upcoming LVR restrictions are meaning that first home buyers are out in force looking to secure properties before the changes."
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