REINZ says Jan house sales rose 25% year-on-year to 4,073 for best Jan since 2008; National median price steady v Dec at NZ$355k

House sales volumes in January hit their highest level for four years, the Real Estate Institute of New Zealand (REINZ) says, with the national median house price steady from December at NZ$355,000.

However, REINZ's Stratified Median Housing Price Index, which is compiled using methodology supplied by the Reserve Bank and strips out the 'skew' associated with more houses selling in certain price brackets, shows a national drop of 1.4% in January and a 5% drop in Auckland. Both are down 3.8% from the last market peak, with the national one up 4.3% from January last year and Auckland up 5.7%.

REINZ said there were 4,073 unconditional sales in January, up by 25.2% or 821, from January 2011 making for the best January the market has recorded since 2008. The national median house price remained steady at NZ$355,000 in January from December, REINZ says, and is up NZ$15,000, or 4.4%, versus January 2011. A record high of NZ$367,500 was recorded last November.

“A shortage of listings is still apparent in many areas with agents in a number of regions, including Auckland, reporting shortages of properties available to market and increasing levels of buyer frustration,” said REINZ chief executive Helen O’Sullivan.

“Prices remain relatively stable despite the supply pressure, which probably reflects the reluctance of buyers to over extend themselves while economic uncertainty continues," O'Sullivan added.

O'Sullivan said January sales numbers are 1,243, or 23.3%, lower than December's 5,316, but, on a seasonally adjusted basis - taking into account seasonal variations such as the New Year break - the national total was down 4%.

Median days to sell rises

The national median days to sell rose by 12 days in January compared with December, from 35 to 47 days; however on a seasonally adjusted basis the number of days to sell remained steady, REINZ said. Over the past five years the median days to sell has averaged 41 days across New Zealand.

Only one region - Southland - recorded a decline in sales volume compared with January last year, with all other regions apart from Taranaki recording double digit growth.

Compared to December, Taranaki recorded the highest lift in prices for the month at 6.7%, followed by Manawatu/Wanganui 6.5%, and Northland 5.5%. Compared with January 2011, Taranaki also recorded the highest lift in prices 11.4%, followed by Otago 9.7% and Canterbury/Westland 8.3%.

Last month REINZ said property sales volumes rose 5.6% in seasonally adjusted terms in December from November with the Auckland market recording its best sales in a December month since 2006 and the house price index for Auckland rising back to all-time highs. REINZ reported total property sales in December of 5,316, which was up 21% in raw terms from December 2010, but down from 6,008 in November.

Economist reaction

ASB economist Jane Turner said housing turnover remained broadly steady over January, lifting 0.9% by the bank's seasonally-adjusted estimates.

"Over the past six months the housing market has witnessed a very gradual pick up in demand, and we expect this trend to continue," said Turner.

"Canterbury housing turnover appears to have only dipped slightly in January, once adjusting for the usual seasonal decline. This is an encouraging result given the potential for the large aftershocks in late December to have disrupted activity. We expect Government and insurance payouts will support a continued recovery in house sales in the region as households relocate over the coming year."

Turner said the recovery in housing demand remained a gradual one.

"Government and insurance payouts, low interest rates and ongoing recovery in incomes will underpin further recovery in demand over the coming year. However, the current pace of net migration outflows is one factor that is likely to be weighing on overall demand. The supply of housing remains low, particularly in Auckland and Christchurch, which has resulted in tight market conditions which will underpin further increases in house prices over the coming year," said Turner.

"Overall, we expect the Reserve Bank to remain fairly relaxed around the housing outlook. The increases in house prices are modest, and largely reflect the limited supply of housing. These pressures will start to alleviate once reconstruction activity commences."

Westpac's economists said there was little in the figures to worry the Reserve Bank about a housing boom.

"House sales were flat in January after a strong run-up in recent months.  The upward trend seems to be intact and is becoming more consistent across regions," Westpac's economists said.

"Prices, which tend to lag behind sales, are still accelerating, although at far from a pace that would leave the Reserve Bank concerned about a renewed housing boom.  We expect a 3.5% rise in house prices over this year, helped by improving household incomes, low mortgage rates, and constrained supply in Auckland and Canterbury."

See REINZ's full press release here and its residential market statistics here and its regional commentary here.

(Update adds comments from ASB's Jane Turner and Westpac's economists).