House prices struck a new median price record of $389,000 last December, up 9.6 per cent on the same month in 2011, the Real Estate Institute of NZ (REINZ) said this morning.
The Auckland median price was up 10.5 per cent to $535,000 compared to December in the previous year, REINZ said.
REINZ said 74,000 houses sold during 2012, a 21 per cent increase on 2011 and the highest annual total since 2007.
Sales by auction grew by 68 per cent over the year, with sales by auction growing by 87 per cent in Auckland and by one third across the rest of the country.
The number of sales in December 5,754, fell 22.8 per cent from the month before, but this was strongly seasonally influenced. After being adjusted for this, sales were roughly in line with the month before.
REINZ chief executive Helen O'Sullivan, said that despite the strong growth in sales volume, the number of sales compared to the total number of dwellings in New Zealand remained well below the long run average and substantially below the peak volume of 2003 when more than 120,000 residential properties were sold.
The REINZ Stratified House Price Index, which adjusts for some of the variations in mix that can impact on the median price, was 6.7 per cent higher than December 2011 but eased 0.6 per cent from November. The Christchurch House Price Index set another record high in December and was up almost 12 per cent compared to December 2011.
The key drivers for house prices in 2012 were the Auckland and Canterbury/Westland regions, which together made up over half the real estate activity in New Zealand, where supply constraints resulted in significant price gains.
"The strength of these two regions is starting to spill over into other parts of the country with Central Otago Lakes and Wellington both seeing more invigorated markets, particularly in terms of sales volumes," REINZ said.
Canterbury/Westland's median house price moved up 1.7 per cent compared to November to a new record median price of $351,000, although Auckland's median house price fell by $5,000 to $535,000.
"REINZ figures suggest the housing market remained fairly steady over December," said ASB Bank economist Jane Young. "Encouragingly for the Reserve Bank, it appears the housing market did not pick up any new momentum having stabilised over the past few months. Nonetheless, new house listings remain at very low levels and the imbalance between supply and demand should continue to underpin further increase in house prices, particularly in Auckland and Canterbury where supply constraints are most acute."
The Reserve Bank said at its December Monetary Policy Statement it was comfortable with recent housing market developments, particularly in the context where credit demand remained subdued, said Young.
"Nonetheless, the Reserve Bank was more wary of the risks a stronger housing market could present to monetary and financial stability targets. There are indications that credit demand has started to pick up. The Reserve Bank will be watching housing market and credit developments closely over the coming months."
Young said that if pressures were to intensify, the Reserve Bank may consider the option of using "macro prudential tools" to ease pressures in the market.
She said she continued to expect the Reserve Bank would leave the OCR unchanged at 2.5 per cent until December this year.
REINZ said a key development during 2012 had been the growth in sales by auction, with the number of properties sold by auction growing by more than two-thirds compared to 2011.
The growth in auction sales was particularly strong in Auckland where almost two of every five sales are now by auction.
The trend in auctions is evidence of the continued tightness of some parts of the residential real estate market where demand is increasing, but supply remained constrained, the institute said.