New Zealand house prices hit a 10-year high for the month of October amid a decline in the volume of sales as fewer properties are put on the market.
The national median house price rose to $355,000 last month, from $350,000 in September, according to the Real Estate Institute of New Zealand (REINZ), with the median value increasing in seven of the 12 districts surveyed.
The volume of sales declined 5.8% to 6,091 from a month earlier as the shortage of properties continued to keep Spring listings low and helped bump up prices.
"The rises aren't, in most cases, dramatic, but slow and steady over the past few months as confidence returns to the market," said president Peter McDonald. "I believe the market will firm even further with the better economic news we're hearing more and more frequently."
The revival in house prices has underpinned New Zealand's economic recovery, and stoked speculation Reserve Bank Governor Alan Bollard will have to boost interest rates earlier than anticipated. The central bank said that "house prices still appear high relative to incomes, which may limit scope for a sustained rise," in its Financial Stability Report out earlier this week.
New Zealand property values climbed above last year's level for the first time this year, according to data this week from state-owned valuer QV Valuations. Spokeswoman Glenda Whitehead said the shortage of properties was causing an "imbalance in the market with more buyers than available property."
Rising net migration and reduced issuance of new building consents has kept property supplies under pressure. ASB economist Jane Turner said low supply "is continuing to put pressure on house prices," though falling turnover was probably not indicative of demand.
"The pace of house price increases has been surprisingly robust and, more importantly, there are some early signs that the tightness in the housing market may be spilling over into rentals which will be more of a concern for the RBNZ," Turner said. "Past experience has shown that the longer the RBNZ waits to lean against the housing market, the harder the job becomes."
The REINZ house price index, developed with the central bank, rose 1.3% in October, and is up 5% from the same time a year ago. Still, house prices are 3.1% below their November 2007 peak.
The number of days it took to sell a new house fell to 31 from 33 days in September, and is down from 47 days in October last year, the REINZ report showed.
There was a dip in the number of houses sold in upper price brackets, with the number of properties valued at $1 million or more falling to 175 from 216 a month prior. Sales of houses under $400,000 fell to 3,623 from 3,897.