High asking prices and a surge of listings on Realestate.co.nz point to a hot summer for the housing market

High asking prices and a surge of listings on Realestate.co.nz point to a hot summer for the housing market

The average asking price of homes listed for sale on Realestate.co.nz hit an all time high of $497,840 in November.

There was also an increase in the number of new listings, with 13,512 homes being newly listed for sale on the website in November, an increase of 2% on November last year.

"The New Zealand property market continues to be robust, with a very healthy number of new listings heading into summer," Realestate.co.nz marketing manager Paul McKenzie said.

"The new all time high in the average asking price reflects the confidence of vendors across the country, rather than in one particular region."

Around the regions the average asking price was up in nine regions compared to October and down in 10, with the biggest increase occurring in Central Otago/Lakes where the average asking price jumped 12% to $747,781, making it the most expensive region in the country and surpassing Auckland where the average asking price climbed 4.6% to $731,588.

ASB economists see potential for further macro-prudential tools

ASB senior economist Jane Turner noted house listings data indicates the Auckland market is becoming tighter, while supply in Canterbury is beginning to lift.

"Weeks of inventory is a good indication of market tightness, - total inventory divided by the current rate of sales. This measure continues to decline in Auckland, falling to 13.7 weeks in November. Auckland housing market pressures had started to ease slightly following the introduction of high loan-to-value ratio (LVR) lending limits and 100 basis points of Official Cash Rate (OCR) increases by the Reserve Bank," says Turner. 

"However, in recent months, the trend in weeks of inventory has reversed and conditions in the Auckland market have started to tighten again. During this time, the Reserve Bank indicated the OCR is on hold for some time and NZ swap interest rates declined. Against the backdrop of an increasingly competitive lending environment, some fixed-term mortgage rates have fallen."

"Meanwhile, housing demand remains supported by improving household incomes, increased job security and very strong net migration inflows. Barfoot & Thompson noted strong demand in Auckland over November, with strong auction attendance and very high prices not deterring potential buyers. While the market is not yet as tight as August 2013, the Reserve Bank will be wary of these recent developments as the housing market enters its seasonal peak," said Turner.

The Auckland housing market tightening indicates house price pressures could intensify, she added. 

"Given net migration inflows into Auckland have been outpacing Auckland housing construction, the Reserve Bank will be very wary of the implications on house prices given they are already very stretched relative to incomes."

"We expect the Reserve Bank will leave the high LVR-lending restrictions in place until the second or third quarter next year with the potential for further macro-prudential tools to be introduced.  At the Reserve Bank Monetary Policy Statement next week we expect the Reserve Bank to indicate it will leave the OCR on hold for an extended period, while reiterating its tightening bias," said Turner.

Westpac economists have also raised the prospect of the Reserve Bank digging anew into its macro-prudential toolbox, and Finance Minister Bill English yesterday acknowledged this was possible.

*Refer to the charts below for average asking prices and new listing numbers on Realestate.co.nz for all regions in November.

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This is crazy

Look at the drops elsewhere though, or the break evens.
regards

Auckland house prices are getting like Sydney,  but without the same income levels to sustain them

Well you can look at the earnings to house price ratio. Sydney is about 9 to 1? and Auckland 6 to 1, so Auckland could yet go up 50%...
Not that I think thats sustainable.
regards