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However, while volumes and prices have been gathering pace, the potential for a housing market bubble to begin reforming appears to have eased, allaying the Reserve Bank's immediate concerns. While the median national price hit a record $389,000 for December, up almost 10% on the previous December, prices around Otago increased only slightly to $247,500, on declining volumes, Real Estate Institute of New Zealand data released yesterday showed.
''Ongoing strong demand drove robust sales volume growth in the residential property market during 2012, with the number of sales up 21% on 2011 and at the highest level since 2007,'' REINZ chief executive Helen O'Sullivan said in a statement yesterday.
There were 74,000 house sales during 2012 worth a total $33.95 billion.
Ms O'Sullivan said the record median price and strong sales volumes for 2012 were likely to continue this year. However, sales numbers were ''substantially'' below the 2003 peak, when more than 130,000 properties were sold.
ASB senior economist, Jane Turner, said the figures suggested the housing market had remained ''fairly steady'' during December.
''Encouragingly for the Reserve Bank, it appears the housing market did not pick up any new momentum, having stabilised over the past few months,'' she said yesterday.
Nonetheless, new house listings remained at very low levels and the imbalance between supply and demand should continue to drive
increases in house prices, mainly in Auckland and Canterbury where supply constraints were the most acute, she said.
Auckland prices did record a dip during December, but that followed strong growth during October and November.
''House listings data indicate new supply remains very low in Auckland and this is likely to continue to place upward pressure on house prices in the new year,'' Ms Turner said.
Canterbury prices were up 12% on year-ago levels, having recorded strong growth over the past few months and supply remained tight, she said.
In the Reserve Bank's December monetary policy statement, Ms Turner said the bank commented it was comfortable with recent housing market developments, particularly in the context where credit demand remained subdued, but she cautioned yesterday there were indications that credit demand had started to pick up.
While reiterating earlier predictions the Reserve Bank would keep the interest driving official cash rate at 2.5% until December, she said the Reserve Bank would be ''watching housing market and credit developments closely over the coming months''.