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House prices continue to gather steam and were 10% higher in March than a year ago, likely to underpin the Reserve Bank's resolve to keep pressure on raising the interest rate-driving official cash rate (OCR).
While the decline in sales of less expensive homes, imposed by the central bank's loan-to-value ratio (LVR) restrictions, may have skewed statistics to create a higher median price, house price inflation still takes centre stage.
The OCR is expected to rise another 25 basis points to 3% on its April 24 review, with another two hikes anticipated during the rest of the year.
ASB economist Daniel Smith said overall sales were now down 10% on levels a year ago.
''According to our seasonally adjusted estimates, the slowdown in activity continues to be most acute at the lower end of the market, where sales below $400,000 are now around 21% lower than in the month before the Reserve Bank's LVR restrictions came into effect.''
The national median house price for March rose 10%, or $44,000, to $440,000 on a year ago, while sales numbers were down 10% to 7315 homes, but numbers were up on February by 19.4%.
Real Estate Institute of New Zealand (REINZ) chief executive Helen O'Sullivan said the March results further defined the divide between the drivers of the current market - Canterbury and Auckland - and the rest of the country.
''Despite the easing trend in volumes, the median price continues to reach new highs. However, this may be due to the dominance of Auckland and Canterbury in the sales data and a noticeable shift in sales towards high-value properties,'' she said.
In Otago, the median sales price rose from $247,500 a year ago to $265,000, while the separate Central Otago Lakes region fell from $475,000 to $460,000. Within that index, Queenstown's median price was up 17.6% from $546,000 a year ago to $663,000, and $33,000 higher than the median for February.
Otago REINZ director Liz Nidd said yesterday first-home buyers were ''cautious'' and investors were taking a ''wait-and-see'' approach.
''Vendors are being realistic about their pricing expectations, although the number of listings is lower than expected for this time of year,'' she said. Mr Smith said the housing market pressures had eased only slightly, and possibly even picked up a little during early 2014, and the REINZ's stratified house price index continued to track upwards.
''The index was 2.0% higher in March than in the previous month, which was the strongest monthly increase since May 2009,'' he said.
He said looking at the three-month moving average of prices, annual price growth in Auckland appeared to have stabilised at around 14-15%, having peaked at 17% in August 2013. Prices in Canterbury had been a little more volatile but annual growth was tracking around 9%, in line with the national average, Mr Smith said.