House sales show 10% rise

House prices rose 1.9 percent last month and the number of sales shot up 10%, based on the Real Estate Industry of New Zealand's (REINZ) recently introduced price index.

September REINZ figures published today showed 6464 dwelling sales last month, up from 5878 in August and 4499 in September 2008.

Last month's total was also about 550 ahead of September 2007, but was below the September totals for the preceding five years.

The median number of days taken to sell dwellings edged down to 33 last month from 34 in August, and was well down on the 52 days in September last year.

The median price last month was $350,000, up from $346,750 in August, and 6.1 percent ahead of the $330,000 in September 2008.

In Auckland the median price was 8.3 percent ahead of a year ago at $455,000, in Wellington it was 8 percent up at $378,168, and in Canterbury/Westland 7.4 percent ahead at $311,500.

Waikato/Bay of Plenty was just slightly up at $315,000.

ASB economist Jane Turner said housing demand continued to be underpinned by a lift in net migration and low interest rates.

The Reserve Bank was likely to be uncomfortable with the amount of tightness in the housing market.

On its own, the housing market may see the Reserve Bank favour a rise in interest rates, sooner rather than later, she said.

But that would need to be traded off against the fragility of the economic outlook and the high New Zealand dollar undermining export competitiveness.

"The current heat in the housing market is taking some time to cool, with supply sluggish to respond," Ms Turner said.

While agent data suggested new listings were increasing, it had not been enough to meet demand resulting in house prices continuing to be bid up.

The "very low" number of days to sell suggested more house price inflation pressure was likely in the next few months, she said.

The strong housing market and rising house prices were likely to attract new listings and encourage new building, and she expected the supply and demand imbalance would soon correct.

The NZIER index showed that for the three months to September, housing prices increased 2.5 percent, while compared to 12 months earlier, the price index was up 5.3 percent.

Housing prices were 4.4 percent below their November 2007 peak.

In the Auckland region, housing prices last month were 9 percent above those in September 2008, according to the index.

In Wellington prices were up 8.7 percent, in Christchurch the increase was 10.2 percent, and in other South Island areas the rise was 1.5 percent.

In other North Island suburbs housing prices were down 0.3 percent from a year earlier.

The price index for residential sections fell 1.5 percent in the September month, although it was still up 1.8 percent for the three months to September, REINZ said.

Residential section prices were 6.3 percent lower than the same month last year.


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