Median house price leap

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As if to vindicate Reserve Bank governor Don Brash’s decision to raise interest rates, the latest real estate sales figures show the median house price at a record in February and sales activity at its strongest since March 1996.

Wednesday, March 20th 2002, 6:12PM

by Jenny Ruth

The median house price jumped from $175,000 in January to $186,000 in February. That’s 7.2% higher than the $173,500 median price recorded in February last year. While sales activity has been strong for several months, this is the first clear sign of house price inflation.

The number of homes sold in February jumped to 8,733 compared with 6,771 in the traditionally slow January month and well up on the 6,182 sold in February last year.

Earlier today, Brash raised his official cash rate (OCR) from 4.75% to 5%, citing the strength of the housing market as one of his concerns.

Real Estate Institute president Rex Hadley says "the entire real estate industry will be thrilled" with these figures, but they aren’t surprising in the current economic environment.

"Residential property has always provided a ‘snapshot’ of the public’s attitude to the economic environment." Among the positive influences are positive net migration, still relatively low interest rates, increasing job opportunities and significant wages growth, Hadley says.

Nevertheless, he says it would be unwise to expect that sales volume or the median price will stay at these levels through 2002, even though he expects the economy to grow strongly.

February’s transactions were worth $1.97 billion, well up on the $1.41 billion worth of residential property sold in January.

The institute’s figures show that activity in all of the 11 regions measured improved in February from both January and from February last year.

But the median house price fell in two regions, Northland and Nelson/Marlborough, in February compared with January, rising in the other nine regions. Compared with February last year, the median price fell in Northland and Canterbury/Westland while rising in the other nine regions.

In the key Auckland market, which is likely to be among Brash’s major inflation concerns, the number of homes sold jumped from 1,895 in February last year and 2,288 in January to 3,120 this February.

While Auckland’s median house price fell from $247,000 in February last year to $245,000 in January, in February this year it jumped to $258,000.

TOTAL DWELLINGS MEDIAN PRICE

COMPARISONS FOR FEBRUARY 2000-2002

REGION	FEB00	FEB01	JAN02	FEB02
Northland	131,000	156,000	160,000	155,000
Auckland	240,000	247,000	245,000	258,000
Waikato/BOP/Gisborne	156,000	163,000	165,000	166,000
Hawkes Bay	127,000	128,000	135,000	138,000
Manawatu/Wanganui	112,000	113,000	98,250	114,000
Taranaki	112,500	100,000	100,000	105,250
Wellington	184,000	189,050	191,000	200,000
Nelson/Marlborough	145,750	146,500	158,000	147,500
Canterbury/Westland (incl Sth Canterbury)	141,250	147,000	140,000	145,000
Otago	96,000	101,500	98,000	109,500
Southland	82,750	79,000	80,000	85,500
NZ Total	$171,000	173,500	$175,000	$186,000

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