House prices firmed up last month, but turnover remained low says the Real Estate Institute.

The REINZ Monthly Housing Price Index shows house prices increased 0.6 per cent in June. In the three months to June, housing prices were flat, rising by just 0.1 per cent. Compared to 12 months earlier, the index was up 4.2 per cent.

Prices are now 4.5 percent below their November 2007 peak.

The national median residential property price rose to $352,500 during the month, says REINZ, 3.67 per cent higher than the same time last year and ahead of the previous June record of $347,500 recorded in 2007.

Canterbury/Westland had the biggest jump in prices, up 10.2 per cent on June last year, while prices fell by 11.1 in Southland during the same period.

The median house price in Auckland during June was $445,000, up 2.3 per cent on last year.

REINZ president Peter McDonald said the figures showed the "post-Budget blues" had not come to fruition.

"We are not seeing the forecast fall in prices," he said.

However people should be careful not to take the figures as a sign that house values were still rising, he said.

"They are purely the median of all sales during the month and can be impacted by the number of properties sold at either end of the price bracket," he said.

Residential property transactions fell from 5206 in May to 4575 last month, against sales of 6040 during June last year.

"The signs of pent-up demand being released subsequent to the budget remain limited and we are beginning to question this expectation,"
said Philip Borkin, economist at Goldman Sachs JBWere.

"We do not envisage a sharp fall in house prices. Given the stickiness of the market, this would require a marked increase in distressed sales and we only place a small probability on this."

ASB Bank economist Chris Tennent-Brown said he expected housing activity to remain weak over the rest of 2010.

"Demand has weakened since last spring's burst of activity for a variety of reasons. Tax changes have reduced the attractiveness of holding investment property, net migration is slowing, and interest rates have been rising."

"The tax changes announced in May do not seem to be triggering a wave of sellers, or additional listings," said Tennent-Brown. "Other housing data show listings remain very low. Tight supply of houses for sale, combined with a low level of housing construction mean that the market is not oversupplied with property. "

This was helpful for preventing a large drop in prices. On balance, Tennent-Brown said he expected prices to decline slightly over the year and for sales activity to "remain muted".

The median number of days to sell increased from 43 in May to 45 during June - although in some regions the figure was much higher suggesting significant regional differences in the state of the property market, said REINZ president McDonald.

The median number of days to sell in the Central Otago Lakes region was 86, while in Auckland it was just 38 days.

June figures also suggested vendors were being more realistic in assessing the market value of their home, with the gap between listing and selling prices only four or five per cent, McDonald said.

The total value of residential sales, including sections, in New Zealand during June was $1.96 billion, a decrease on the May total of $2.27 billion.