Demand drives up house prices

House prices are higher than a year ago, driven mainly by a shortage of listings, the latest figures from Quotable Value show.

Nationwide, values in October were 0.2 per cent above the same time last year, having been 1.1 per cent below in September.

House values were 3.4 per cent up from their low in April, but remained 6.6 per cent below the market peak of late in 2007.

Wellington region values rose 1.6 per cent in the past year, building on a 1.1 per cent gain in September. The average sale price in the region increased to $438,584 from $436,633.

QV said the annual value change was not comparable to updated Wellington City Council rating values recently sent to ratepayers, because those were calculated over two years. The average sale price across the country in October increased slightly to $389,198 from September.

Pieter Geill, of QV Wellington, said a shortage of listings in Wellington and Hutt Valley was putting upward pressure on prices. Increased competition for good houses made selling by tender an effective sales method.

QV valuation manager Glenda Whitehead said the usual spring boost in sales activity was yet to eventuate around the country. "The number of sales has remained relatively static over the past few months, and there is little evidence of an increase in new listings in most areas."

This had led to an imbalance in the market with insufficient properties to meet buyers' demand. As a result of the increased competition among buyers, many houses were selling at prices well above their expected value.

ASB chief economist Nick Tuffley said short-term fixed mortgage rates would rise in the next six months in anticipation of the Reserve Bank lifting the official interest rate some time next year.

Higher house prices were among recent indicators that the economy was looking healthier, he said, and could prompt the bank to start rate increases earlier.

- © Fairfax NZ News