House prices have reached a new high in the top of the south, the latest Real Estate Institute figures show.

However, the market was smouldering, rather than on fire like the frantic Auckland market where there were huge numbers at open homes, said Real Estate Institute Nelson Marlborough spokesman Paul Hedwig.

The median price across the Nelson Marlborough region reached a record high of $353,000 last month, beating the previous high of $351,750 recorded in February 2008.

Prices were up across the region, but strongest in Motueka compared with both August 2012 and September 2011.

In Nelson city the median price is now $339,750, in Richmond $422,500 and in Motueka $385,250.

Mr Hedwig said it was pleasing to see a potential recovery in pricing, with the lift due to a lack of stock in the market. However, the rise was not matched by a high volume in sales.

The sales trend was described as flat.

Mr Hedwig said buyers were generally those buying their first or second home or upgrading.

He said he could not recall a cheaper time to buy with a 2 or 3 per cent difference in mortgage rates compared with two years ago. "That's a big saving in mortgage payments for families."

Home affordability in Nelson Marlborough improved 3.6 per cent over the last quarter to August, the latest report released today from the Massey University Real Estate analysis unit shows. Auckland was the only region where home affordability declined over the past year.

The housing price index nationally increased 0.6 per cent in September to a new record high, showing a gain of 5 per cent in the past 12 months. The index adjusts for some of the variations in the mix of properties sold, which can move the monthly median house price up and down more sharply.

Nationally, the median house price was up 6 per cent in the past 12 months to $371,000.

Auckland's median house price moved up 1. 9 per cent compared to August to a new record median price of $515,000.

T D Securities head of research Annette Beacher said house price inflation had been climbing since July 2011. Concerns were rising about the rapid pace of price rises in Auckland, resulting from people leaving Christchurch and years of next to no new homes being built, she said.

The average days to sell fell from 46 in February to 33, "traditionally associated with double-digit house price inflation".

New Reserve Bank governor Graeme Wheeler would need to tell financial markets and policymakers how he would react, if at all, "to this surge in asset-price inflation", Ms Beacher said.

The next review of the official cash rate is on October 25, though the central bank is expected to leave the cash rate at 2.5 per cent for some time. T D Securities expected the first move up in rates in March, while most expected a move later in April or June.

Meanwhile, extremely low levels of Auckland and

Christchurch houses for sale were behind a fall in national house sales in September, says ASB senior economist Jane Turner.

Reinz said the number of national house sales fell 6.8 per cent to 5653 from August, although sales remain 8 per cent above the same time last year.

“We believe the dip in turnover in September is due to lack of supply rather than easing demand.”

Ms Turner doubts there will be a meaningful rise in supply, outside of the Christchurch rebuild, given limited capacity within the construction sector.

Compared with the number of households in New Zealand, the monthly level of sales remained about 23 per cent below the average seen in the past 20 years, according to Deutsche Bank.

Reinz chief executive Helen O'Sullivan said the total number of new listings nationally had grown from August to September, but not enough to meet market demand.

“This means properties have turned over faster and prices have increased,” she said.

HOW MUCH?

REINZ median house prices

September this year last year

Nelson city $339,750-$335,000

Richmond $422,500-$388,500

Motueka $385,250-$263,000

Nelson/Marlborough $353,000-$326,000

- © Fairfax NZ News

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