House prices hit record levels in three NZ regions

Median house prices in a number of New Zealand regions rose to their highest ever levels last month, according to new figures from the country’s Real Estate Institute.

New Zealand Property Market

New Zealand Property Market

Residential house prices in Auckland, Canterbury/Westland and Nelson/Marlborough are currently at all time highs, while overall house prices increased recorded their largest annual increase for six years.

The latest figures show that the median price in Auckland rose to NZ$565,000 from NZ$555,000 in April, the biggest monthly gain of any region. The median price in the Canterbury/Westland region is now NZ$360,000 while in Nelson/Marlborough the median price has reached NZ$353,625.

Overall, the national median house price increased by NZ$1,500 (+0.4 per cent), from NZ$390,500 in April, to NZ$392,000 in May. Compared to May 2012 the national median house price increased by NZ$23,000 (+6.2%), with 11 of the 12 regions recording a price rise.

Approximately 82 per cent of the increase in the national median price compared to May last year occurred in the Auckland and Canterbury/Westland regions.

The latest REINZ figures also show that there has been an increase in house buying activity. A total of 7,714 homes were sold nationwide in May, compared with 7,104 in April and 7,175 in May last year.

The figures lead to a real worry that NZ could be heading towards a property bubble. The REINZ is warning of a potential shortage of new listings as the market heads into the traditionally slow winter months, particularly in Auckland. “There are too few houses coming to market in the Auckland region creating an imbalance between supply and demand and driving up house prices at both the regional and national level,” said REINZ chief executive Helen O’Sullivan. “The low level of new builds is well below trend, making little impact on the available stock of residential properties for sale.”

The Reserve Bank of New Zealand is currently considering placing limits on high loan-to-value home mortgages in an attempt to take the heat out of the property market, which it says could pose a significant risk to country’s financial stability.