The fact that house prices are rising at a much faster rate than rents shows it's not just a supply and demand problem fuelling the market, economists say.
The Real Estate Institute’s latest data was released today and shows that houses are selling for more than 30 years’ worth of rent on average.
In 2002, houses were selling for more like 18 years' rent, on average.
Westpac’s economists said the increase was the key sign that a shortage of housing stock was not the only thing driving prices.
Chief economist Dominick Stephens said: “Physical shortages should affect both rents and prices - witness Canterbury, where rents went through the roof following the earthquakes. By contrast, financial factors such as low interest rates or speculation affect only prices. Today's high-and-rising house price to rent ratio indicates that financial factors are at play. Our finger is pointed firmly at low interest rates.”
The REINZ data shows the number of sales in January was up 21 per cent on January 2012. The month’s turnover was the highest for a January month in five years.
The national median price rose 4.2% compared to January 2012 to $370,000 but eased from the record $389,000 in December 2012. Auckland’s median house price was up 8.1% to $509,250.
Chief executive Helen O’Sullivan said the residential real estate market has begun 2013 well.
“The residential real estate market has begun 2013 in good shape with a more than 20% increase in sales volume on this time last year. The national median price eased from its December level, although it remained 4.2% above the level reported at the same time last year. Given the highly seasonal nature of the housing market, prices and volumes tend to ease from their year end levels in January, as marketing campaigns for many properties in the upper price bracket don’t begin until the latter half of the month.”
There were 4933 unconditional residential sales in January, an increase of 860 sales compared with the same time last year and a fall of 14.3% compared to December 2012.
All but one region recorded increases in sales volume compared to January last year, with Southland recording an increase of 40.4%, followed by Northland with 38.5% and Auckland with 26.7%. Only Southland recorded an increase in sales volume in January compared to December, with a 2.5% increase, while Taranaki recorded the same number of sales as December.
For the month of January, Canterbury/Westland recorded the shortest days to sell at 31 days, followed by Auckland with 33 days and Nelson/Marlborough with 40 days.
Nationally there were 449 dwellings sold by auction in January representing 9.1% of all sales, almost double the number of sales by auction compared to January 2012.