House prices across New Zealand rose a slim 0.2 per cent in November, says the Real Estate Institute, but those in Auckland have soared nearly 12 per cent over the past year.
Compared to a year ago, the REINZ Housing Price Index has increased by 6.6 per cent. New Zealand housing prices are now 2.9 per cent below the peak of November 2007.
In Auckland, housing prices in November were 11.9 per cent above those in November last year, while Wellington prices were up 4.7 per cent.
For Christchurch they were up by 5.7 per cent.
NZ strategist at Goldman Sachs JBWere Bernard Doyle pointed out that sales volumes had fallen 13.6 per cent over the past two months to the lowest level since March.
"We would be surprised if this signalled a cyclical turn for the worst in housing. However today's data, along with subdued weekly mortgage approvals, suggests the extraordinary bounce over the first half of 2009 is behind us, and the outlook for sales activity is far more balanced from here," he said.
"...it is clear the lagged impact of rising sales activity is still supporting price recovery. However the link between sales volumes and prices is strong - we expect the softening volume activity to cap house price inflation from here," said Doyle.
"House sales are a useful leading indicator for domestic demand. The fact that sales have effectively been treading water since mid-year suggests the pace of demand recovery will fade into 2010..."
Doyle is still expecting the Reserve Bank to start tightening monetary conditions in June next year.
The REINZ Monthly Residential Section Price Index increased by 1.8 per cent in the November month. Residential section prices are 0.3 per cent higher than the same month last year.
- NZHERALD STAFF
