NZ March median house price hits new record high

New Zealand house prices hit a new record high last month, ignoring central bank attempts to take some heat out of the market, according to the Real Estate Institute of New Zealand (REINZ).

Thursday, April 19th 2007, 12:00AM

by The Landlord

On the back of rising house prices in Auckland, the national median price rose 2.5% in March to $343,500, to be 13.7% above a year ago.

The median price in Auckland rose 3% for the month, to $443,000.
National sales rose 17.4% from February to 10,989 houses sold, while days to sell fell to 27 days from 32 days.

Last month, the Reserve Bank raised its benchmark Official Cash Rate (OCR) by 25 basis points to 7.50%, to help put the brakes on inflationary pressures which have been driven in part by surging house prices.

Retail banks, which have kept mortgage rates low because of stiff competition, have finally taken heed. Two-year fixed mortgage rates have risen around 50 basis points since the Reserve Bank's hike, to an average 8.79%.

However, the housing market was apparently unconcerned by rising interest rates, REINZ president Murray Cleland said.

"Both the Auckland market and the national market overall are clearly not prepared to be subdued by the OCR increase.

"Most mortgages are on a fixed rate so many people take the view that whatever pain they will eventually endure from rising mortgage interest rates, is at least postponed until their fixed rate mortgages roll over," Cleland said.

"As a savings medium, the residential property market is currently hard to beat and as much as the popular focus is on the cost of a mortgage, the fact is that homeowners have enjoyed a significant increase in the equity in their homes in recent times, which is feeding through into our current economic prosperity."

Economists have warned that house price growth is not likely to continue at current rates, although there has been no sign of a decline.

A slowdown in apartment construction helped boost Auckland City's median price, which had been influenced by the large volume of cheaper apartment sales, Cleland said.

Five of the 12 regions saw median prices decline, six rose and one was steady.

The regions with a falling median price were Northland, down 1.3% to $306,000; Hawke's Bay (down 1.5% to $268,000), Taranaki (down 1.7% to $260,500); Central Otago Lakes (down 5.6% to $416,000); and Southland (down 4.8% to $157,000).

Wellington's median price rose 1.2% to $375,000.

Against March 2006, Manawatu/Wanganui led with price growth of 27.8%, followed by Southland with 22.6%.

Did you know you can compare house price and rents for individual areas in the Housing Statistics section of Landlords.co.nz. To see how price stack up and graph historical prices click here

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