House sales outperform prices
The housing market continues its seemingly relentless upward climb, according to the latest REINZ/Fairfax Media NZ Housing Market Report, which shows ongoing growth in both house prices and the number of sales in most parts of the country.
The report lists the median selling prices and number of dwelling sales that occurred in the three months to the end of May for almost every suburb in the country, although some suburbs were omitted where the number of sales was too low to provide reliable median price or sales comparisons.
The report then compares those numbers with the same figures for March to May last year, so that readers can get an indication of how much the housing market in their area has changed in that time, whether they live in Kaitaia or Bluff (see table below).
Although it is the median price figures that usually attract the most attention, especially from people who are considering buying or selling a property, the number of sales in an area is at least as important because it provides an indication of the strength of the market.
The report shows that over the last year, the overall number of sales increased at a faster rate than the median selling price.
Nationally, the median selling price of all dwelling sales recorded by the REINZ increased by 7 per cent in the three months from March to May, compared with the same period last year (from $369,000 to $395,000).
However the number of sales grew twice as quickly over the same period, increasing from 20,181 for the three months to May last year, to 22,946 for the same period this year, a rise of nearly 14 per cent.
Even in the red hot Auckland market, where the cost of housing has become a major issue for many, the number of sales outpaced the increase in prices.
In the three months to the end of May, the median price in Auckland was up 13 per cent on the same period last year, while the number of sales was up 18 per cent over the same period.
This suggests the market remains extremely strong, with rising prices underpinned by significant sales activity.
In the REINZ's latest report on the market, chief executive Helen O'Sullivan pointed to a shortage of new listings in many areas, something that could potentially put further upward pressure on prices.
Many people thinking of selling a property delay listing it for sale over winter, waiting until spring when they hope better weather will encourage more people to go out house hunting and sunny days will allow them to present their property at its best.
But with unsatisfied demand for properties from buyers persisting, a decline in new listings could put even further upward pressure on prices.
However that could be tempered by rising mortgage interest rates.
The strong rise in house prices over the last couple of years has at least in part been fuelled by the lowest average mortgage interest rates since 1964.
However that is unlikely to last because interest rates are expected to start rising by the end of this year or early next year, and they could keep rising quite steeply once they start going up.
That could make existing home owners hesitant about putting their home on the market and taking on extra debt to buy a more expensive property, while first home buyers will want to keep a lid on how much they borrow so that they aren't too stretched when rising mortgage repayments kick in.
However O'Sullivan believes the likelihood of rising interest rates could be increasing buyer activity.
"There was a very clearly flagged indication from the Reserve Bank that interest rates will rise by the end of the year, so there's a keenness to get in now while interest rates are low and fix for as long as you can," she said.
So far there was no sign of the usual winter downturn in sales.
"It is holding up very strongly compared to the usual trend at this time of year. Buyers are very active and if they've been looking for a while, I don't think they'll stop just because it's June," O'Sullivan said.
Click on the arrow below to see the latest property data for your district
Sunday Star Times