Market sentiment now favoured sellers in 14 regions, realestate.co.nz figures showed.
The Reserve Bank faced a dilemma of balancing a supply-constrained housing market fuelling a lift in credit growth against a muted economic recovery, ASB economist Jane Turner said. Commenting yesterday on the latest listings provided by realestate.co.nz, Ms Turner said the December and January figures were interpreted with greater caution than usual, given the limitations of seasonally adjusted monthly data over a small sample.
''Nonetheless, the results suggest the housing market has potentially tightened up further in December, with supply failing to respond to the increase in demand in 2012.''
Ongoing tightness in the housing market would continue to place upward pressure on house prices, she said.Housing market activity was often disrupted over the Christmas break, and caution was needed in interpreting monthly seasonally adjusted estimates over this period, particularly given the relatively short history of the data set, Ms Turner said.
New listings fell a seasonally adjusted 8.4% in December, led by a 22% decline in Auckland listings. In Otago, new listings in December were up 14.7% at 290, up 72.5% in Southland at 314 and up 12.6% in Central Otago-Lakes at 331. Canterbury listings were down 4% at 962 and the West Coast was down 35.1% at 63.
Auckland, Waikato and Otago were most affected by low inventory levels, stocks of unsold homes falling to record lows of 13.9 weeks of inventory in Auckland, 31.5 weeks in Waikato and 20.4 weeks in Otago, each well below their long-term inventory levels.
Inventory levels across the country remained low and the market remained a ''firm sellers' market'' across 16 of New Zealand's 19 regions, realestate.co.nz said on its website.
Total houses available for sale fell 4.6% in December, led by a 13% decline in Auckland inventory. The stock of houses available for sale in Auckland has fallen to just 14 weeks of sales - the lowest recorded by realestate.co.nz, although records only go back to 2007.
The Otago asking price held its own compared with most of the other centres. The Otago asking price in December was $277,733, down only 0.4%, compared with Canterbury's, which fell 4.1% in the month to $389,273 and Central Otago-Lakes, where it fell 12.8% to $515,869. A record high asking price was seen in Southland, where it rose 3.6% to $264,028.
In light of the weaker economic growth figures, ASB economists now expected the Reserve Bank to keep the official cash rate on hold until December 2013. The bank had previously forecast the first rise in September, Ms Turner said. ''However, we believe the central bank will not be able to tolerate the momentum in house prices and credit growth for much longer, as it poses a risk to both monetary and financial stability objectives.''
There was a growing possibility the Reserve Bank would opt to use macro-prudential tools at some point in 2013 in order to ease pressure in the housing market, Ms Turner said.