Property editor of the NZ Herald

High prices likely to stay - agents

Lack of new supply and continuing demand expected to keep house costs up, especially in Auckland, Christchurch.

More than 38 per cent of Auckland sales are by auction, says the Real Estate Institute. Photo / Janna Dixon
More than 38 per cent of Auckland sales are by auction, says the Real Estate Institute. Photo / Janna Dixon

Pressure looks likely to stay on house prices in the year ahead, particularly in Auckland and Christchurch, experts say.

Peter Thompson, managing director of Auckland's biggest agency, Barfoot & Thompson, expects a bit of a holiday lull then a quick pickup.

"While we may see some easing of average prices during the Christmas/New Year period, during the prime summer trading months of February and March average prices are likely to return to the low $600,000s."

Hayden Duncan, chief executive of New Zealand's biggest agency network, Harcourts, says lack of new supply and pent-up pressure will keep prices high.

"The outlook for the country is one of an environment with continued low interest rates and housing stocks remaining tight," he said.

"With limited building planned, particularly in Auckland, it will have the impact of fuelling on-going price increases.

"If you are pondering on what the best time to buy is, it's now."

Harcourts reported November sales of more than $1 billion. The northern region, including Auckland, had a 23 per cent annual rise in written sales and Christchurch a 15 per cent jump.

Auctions were becoming increasingly popular, said Harcourts' MarketWatch for December.

"Prepared buyers are gaining quick wins at auction throughout Auckland, with a 148 per cent increase in new auctions for November, year on year. Angst remains around availability of stock for buyers," it said.

Economist Rodney Dickens can see little changing in 2013, and refers to what he calls the housing affordability time bomb.

"Super-low mortgage interest rates are only partly disguising the section affordability challenge," he said.

"But low mortgage interest rates don't overcome the dramatically larger hurdle would-be new home owners now face when it comes to accumulating the deposit needed to buy a section.

"It should therefore be no wonder that residential building is running well below average."

Statistics NZ showed new house building was on the rise, recording 16,410 consents issued in the year to October, up on 2011's 13,615.

Reserve Bank governor Graeme Wheeler expressed concerns about housing debt in the latest financial stability report.

"Households are also relatively indebted due to the substantial rise in borrowing over the past two decades," he said.

"House prices are rising, particularly in Auckland, in the face of housing supply constraints.

"Excessive credit growth could worsen housing market imbalances given that house prices appear overvalued on a number of measures."

Real Estate Institute chief executive Helen O'Sullivan said Auckland activity was now starting to spill over into other parts of the country, where increased buyer activity had been noticed, although some remaining markets were yet to see this effect.

"The lift in national sales volume to a five-year high and the new record medians in Auckland and Otago is indicative of the real estate market gaining in confidence," she said.

"Volumes remain well below the previous market highs set in the period from 2003 to 2006, indicating that tight supply remains the key factor behind increasing prices."

Ms O'Sullivan also noticed Auckland auction numbers rising and believed that would continue this year.

"With more than 38 per cent of all sales in Auckland completed by auction, and more than one in five sales by auction across the country during November, we are seeing something of a change in the way both buyers and sellers are approaching the market," she said.

- NZ Herald

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