How high could house prices go, particularly in Auckland?
Some experts are predicting the revival in the market may not be shortlived, with two of the most bullish saying Auckland prices could hit a median of $1 million within the next 10 years.
The prediction by Olly Newland and Auckland Property Investors Association president David Whitburn, that house prices will double by 2022, comes as Auckland hits a record median sales price of $500,000.
House prices last doubled between 1996 and 2006.
The mini boom in Auckland has seen sales times hit record lows in some suburbs, and basic properties in popular areas like Westmere being marketed as "entry-level" and likely to sell for $1 million.
Newland said prices were being driven up by council charges, the cost of raw materials, the loss of houses in Auckland and Christchurch because of leakiness and the earthquakes, population growth and low interest rates.
"It is possible that house prices could double in certain parts of the country because of the shortage we have in the main centres, especially Auckland. We haven't built anything cheap for the past few years."
He said the Government should consider offering GST breaks or grants to first-home buyers who opted to build, or allow people to cash in their Working For Families tax credits as a deposit on their first homes.
"All we need to do is have a debate about what can be done to help the first-home buyers. I know it's hard to believe but we've just gone through [prices doubling] and history tends to repeat itself."
Whitburn expected the price increase to happen within nine years. "Most of this growth will be in the last five years of this period as this recovery phase takes extra long to get through." "With Auckland under-building by over 9000 houses a year to meet current demand ... this city is extremely likely to outperform others."
To double in nine years, house prices would need to rise an average of 8 per cent a year.
Ann Hartley, Auckland Council Regional Development and Operations Committee chairwoman, said it was taking steps to address affordability.
She said new zoning options and urban land requirements would be incorporated into the new Unitary Plan. The committee had endorsed a two-stage approach for a strategic action plan. Stage one would focus on tools to improve supply and affordability. These would include assessing the impact of regulatory fees on housing costs, using council development partnerships to increase housing, improving consent processes and incentives for upgrading existing houses.
But Realestate.co.nz chief executive Alistair Helm cautioned against generalisations such as those Whitburn and Newland were making.
He said though prices doubled up to 2006, inflation was about 4 per cent. With inflation currently under 2 per cent, to reach 8 per cent growth each year would be more difficult.