11 Jan 2010

Turnaround in NZ house prices

7:40 pm on 11 January 2010

There was a nationwide increase of almost 3% in house prices last year.

Quotable Value says the average sale price in 2009 climbed to $404,671 which is 4.9% below the market's peak in 2007.

The agency says many buyers have been tempted into the market by the lowest interest rates for several years.

At the same time, a shortage of properties on the market is keeping prices buoyant.

However, valuation manager Glenda Whitehead says the rise has been driven by the main centres.

Many regional markets remain subdued and banks are still cautious about lending.

The Property Investors Federation believes the rise is a temporary blip caused by over-eager property investors jumping into the market too early.

President Martin Evans says investors should not expect to see the big capital gains of 2001 to 2007, when house prices doubled.

He says they should be wary of taking on too much debt.

Quick rebound 'unusual'

The director of Massey University's real estate analysis unit says real estate price cycles normally last seven years, and it was unusual for prices to rebound so quickly.

Professor Bob Hargreaves says prices are being propped up by strong demand - from higher than expected net migration.

There are also fewer houses on the market and new ones are not being built.