NZ house price median up to record NZ$360k, but stratified index falls 0.9% in December (Update 3)

The national median house price rose to a record of NZ$360,000 in December, up 1.4% from November and 9.6% from the year before, figures released by the Real Estate Institute of New Zealand (REINZ) show. However, a new REINZ house price index designed with help from the Reserve Bank shows nationwide house prices fell 0.9% in December. (Update 3 includes comment from ASB economist Chris Tennent-Brown about subdued market activity and what it might mean for the Official Cash Rate) There were 4,957 house sales in December, down from 6,056 in November, but up from 4,302 in December 2008. "It is concerning there was less than 5,000 residential properties sold in December, but the sale time of 33 days is one of the shortest for the year, which goes to show those properties sold were well sought after," REINZ president Peter McDonald said. "House prices have definitely stabilised and appear to be slightly gaining, which is a positive sign. The median house price for December 2009 was up 1.4% on the previous month so, while the median price for December 2009 was a record high for that time of the year, it's a case of steady as it goes," McDonald said. In an interview with interest.co.nz, McDonald said he thought the fall in sales was due to a lack of quality stock rather than buyers holding off.

"I believe that we still are short of good stock and the fact (of the sale time of 33 days) suggests that there's more competition out there for those properties that are on the market," he said. "That's what's really kept that median rising - where it's gone to NZ$360,000, it's more about a lack of good listings and extra competition (between buyers)." "There's people out there looking, people entering the market every day looking to buy again. The confidence has come back in from the buyers big time, and so it should, because interest rates are are still very affordable and the economy looks to be tracking on quite well." Ebbing demand pressure? ASB economist Chris Tennent Brown said the figures suggested subdued demand and slight increase in seasonally adjusted days to sell houses. He still sees an OCR hike in April. Here are his full comments.

At this stage a lift in days to sell, the run-off in turnover, and dip in the stratified house price index suggests that demand pressure may be ebbing after a period of recovering demand outstripping modest supply.  Mortgage approvals from the RBNZ continue to suggest low activity levels, although the holiday period is typically quiet, and we will have to wait until February's data to be more confidence in the housing trend. Supply of houses for sale and construction activity have been sluggish to respond to the pick up in demand and lift in prices observed over 2009.  In the RBNZ's view, the recent strength in the housing market is temporary, and will slow down as interest rates rise and construction recovers.  The nascent trend in the closing months of 2009 suggests some loss of momentum.  The RBNZ is, therefore, likely to be comfortable with its December MPS stance of remaining on hold until "around the middle of 2010".  We continue to see the overall balance of inflation risks as pointing to a slightly earlier start, in April.

Median up, stratified measure down The difference in movements between rise in the vanilla median in the REINZ measure and the stratified RBNZ-REINZ measure could be explained by the higher proportion of properties sold in the upper price brackets. In December 2009, 42% of properties sold were worth more than NZ$400,000, which is up from 35% in December 2008 and 39% in December 2007. Here is the release from the REINZ:

Figures released today by the Real Estate Institute of New Zealand (REINZ) revealed the median residential house price rose in 11 out of 12 districts last month (December 2009) compared to the same period the previous year. The national median of $360,000 was up 9.6 percent on the corresponding figure of $328,500 recorded for December 2008. It was also up $5,000 on the median price for November 2009. The largest gains were Nelson/Marlborough, up 14.5 percent to $343,500, followed by Southland up 10.8 percent to $184,000 and Hawke's Bay, also up 9.4 percent to $290,000. Northland was the only district to experience a drop in median prices, down just over 2 percent to $306,000 Real Estate Institute of New Zealand President Peter McDonald says it's an appreciating market fuelled by a shortage of properties for sale but is looking optimistic for 2010. "House prices have definitely stabilised and appear to be slightly gaining, which is a positive sign. The median house price for December 2009 was up 1.4 per cent on the previous month so, while the median price for December 2009 was a record high for that time of the year, it's a case of steady as it goes," he says. "It is concerning there was less than 5,000 residential properties sold in December but the sale time of 33 days is one of the shortest for the year, which goes to show those properties sold were well sought after," Mr McDonald says. The total value of house sales in New Zealand in December was $2.15 billion, which came from the sale of 4,957 houses. There were also 655 more houses sold around the country than in December 2008 but still down 640 on December 2007. The breakdown of the values of the properties was 165 for $1 million plus, 617 for $600,000 - $999,999 and 1,289 for $400,000 - $599,999 and 2,886 under $400,000. Auckland sales accounted for $918 million of total sales in December. Canterbury/Westland and Waikato/Bay of Plenty were the next greatest value at $283m and $272m respectively with Wellington not far behind at $253m. The national median for days to sell in December was 33, 12 fewer days than the corresponding period a year ago. Sales were quickest in Wellington at 28 median days and in Canterbury/Westland and Otago, where the median days to sell was just 29.