12 Apr 2013

National median house price hits record high

8:55 am on 12 April 2013

The Real Estate Institute says national house prices have hit record highs, driven by housing shortages in Auckland and Christchurch.

The institute released data on Thursday showing the median house price in March reached $400,000 for the first time, an increase of $30,000, or 8%, since this time last year.

Real Estate Institute chief executive Helen O'Sullivan says 8128 houses were sold in March, the highest number of house sales in a month since May 2007 and a jump of 23% compared with the previous month.

Ms O'Sullivan says Auckland and Christchurch are responsible for 90% of the price increase.

"The Auckland and Christchurch markets are behaving quite differently to the rest of the country and while we're seeing a significant price movement upwards in Auckland and Christchurch, outside of those two areas the price movements are actually relatively modest."

She says there's a real danger that prices in those cities are skewing perceptions of the overall market.

But Ms O'Sullivan says Auckland and Christchurch are bringing confidence to the market which should hopefully spur construction activity.

She says the last three years of consent figures in Auckland have been at two-thirds of the long term average and the city has not stopped growing in that time.

Ms O'Sullivan says given the supply issue in Auckland it is likely that house prices will continue to increase there.

But she says outside of Auckland and Christchurch modest increases will be more likely along with continued improvements in volumes of houses sold.

"From our point of view price is only one of the three main metrics that we look at when we're looking at the housing market. The 'days to sell' measure and the number of transactions are actually far more important in terms of the confidence that people have in the market."

Ms O'Sullivan says an increase in the number of houses built would be necessary to take the pressure off price increases.