House market sizzles

A massive 5.8 percent surge in average house prices in the past month has sent Auckland house prices to a 22-month high.

Rental prices also shot up - by the biggest monthly amount in seven years.

Real estate firm Barfoot & Thompson, which lays claim to selling around one in three homes in the country's largest city, said today the prices achieved in the Auckland market in October were "exceptional".

"We have not seen average prices comparable to this since December 2007," managing director Peter Thompson said.

According to the firm's figures the average sales price across the Auckland region in October was $544,745.

The new figures are further confirmation that the housing market is bouncing back extremely quickly from its slump last year.

Buyers are being encouraged by low floating mortgage rates, while the big downturn in the construction industry that started in 2007 is leading to a shortage of new homes. Strong population gains through migration are also contributing to upward pressure on house values.

This surge in house activity will be of concern to the Reserve Bank, which will fear that it could lead to inflation.

Thompson said the house prices achieved in October put average prices 4.8 percent ahead of where they were in the same month last year.

"Sellers returned to the market in strength, and we listed 1676 new properties in October, the highest number in a month since March 2008.

"At the same time buyers’ responded to attractive interest rates and greater choice, and we sold 871 properties, an increase of 73 percent on the number sold in the same month last year," Thompson said.

"It is a sure sign Aucklanders have shrugged off their concerns about the future, and are moving forward with their plans around home ownership."

Rental activity was also strong, with the average weekly rent achieved by Barfoot & Thompson’s property management division lifting over $400 for the first time to $403, a whopping 4.9 percent increase on the levels of just a month earlier.

"This is the first time average weekly rents have climbed above the $400 mark, and the increase in average weekly rents over those for the previous month was $19, or 4.9 percent," Thompson said.

At the same time last year the average weekly rent was $385.