New Zealand property prices rose last month but a supply shortage in some regions is starting to takes it toll on overall sales volumes, according to figures out today.
Real Estate Institute of New Zealand (Reinz) said the national median house price rose to $382,000 last month, which was $12,000 more than January but $7,000 below the record of $389,000 set in December.
Residential sales soared to the highest level for a February in six years with the number of sales up 34 per cent on January.
Although 6632 houses sold in the month - an increase of 7.5 per cent on the same month last year - the rate of growth is slowing, said Reinz chief executive Helen O'Sullivan.
In the previous year, from February 2011 to February 2012, sales volumes increased a much higher 34.4 per cent.
Supply shortages in Auckland and Christchurch are the main constraint on total transactions, O'Sullivan said.
"Across the rest of the country activity is more modest which is reflected in smaller increases in regional median prices.
"The continuing reduction in the number of days to sell between this year and last year is also indicative of more buyer pressure in markets across the country."
The REINZ Housing Price Index increased 1.6 per cent compared with January to sit at a new high of 3,544.9.
The Canterbury/Westland region recorded a record high median of $355,000 last month, which was 3.2 per cent higher than January.
The figures reflected the changing market since the earthquakes, said Bayleys agent Chris Jones.
"It's not surprising. We've seen it building especially in the auction room and also the sections that we're selling, there's certainly a lot of confidence building in the market," he said.
February was typically a busy time, "but on top of that we're seeing a lot of the earthquake-affected people either selling or buying", he said.
"Up until now a lot of the properties we've been selling have been earthquake-damaged so now a lot of these properties that have been under repair have come onto the market so there's a lot of renewed interest."
Red zone home owners were also coming into the market after being paid their insurance money.
There was a "massive shortage" of good quality residential properties, particularly in the $400,00-$800,000 range, which was putting more pressure on the market and driving up prices, said Mr Jones.
It wasn't uncommon for auction dates to be brought forward by several weeks because of competition among buyers.
"It's common sense that when you've got more than one person wanting something it does tend to push the price up."
All but two regions recorded an increase in median price compared to January, with Northland up 17.8 per cent to $335,000.
Auckland's median price rose 14.3 per cent $535,000 from February last year, followed by Central Otago Lakes which was up 13.9 per cent to $450,000.
The number of days it took houses to sell fell by two days compared to January, from 41 to 39 days. That number was seven fewer than a year ago.
In Auckland, supply could not keep up with buyer demand in central city fringe suburbs, Barfoot and Thompson Grey Lynn branch manager Andrew Cosgrove said.
"Demand has outstripped supply basically for the last 12 months and I guess that's why,'' he said.
In Grey Lynn and Westmere, the most sought-after features included four bedrooms , two bathrooms and good off-street parking.
Demand could also be measured by changing auction campaigns, which typically lasted only two weeks, compared to the previous three and were often brought forward because of high levels of buyer interest, Mr Cosgrove said.
While the price hike was good news for sellers, there was little buyers could do, he said.
"They've just got to take it as it comes.''
Canterbury/Westland had the shortest days to sell at 30 and Northland the longest number of days to sell at 86.
Of total sales, 18.7 per cent (1,238) sold by auction, which was 80.5 per cent higher than 12 months ago.
ASB economist Jane Turner said improving labour market conditions, low interest rates and an increase in net migration inflows would keep bolstering housing demand over the year.
"The market remains supply constrained, particularly in Auckland and Canterbury where listings have remained very low and total housing inventory has fallen to low levels.
"The median number of days to sell fell in February, implying a tightening in housing market conditions and indicating further upward pressure on house prices. "
Undersupply was the key factor contributing to strong house price increases over the past year, she said.
"Over time an increase in construction may help reduce house price pressures," Turner said.
"In the meantime, the Reserve Bank is likely to become concerned by the continued increase in house prices and the subsequent lift in credit demand, particularly given debt-to-income and house price-to-income ratios are already elevated."
The Reserve Bank has recently released a public consultation on macro-prudential tools.