National median house prices pass $500k to new record

New Zealand's national house price gained to a record high in May, rising above $500,000 for the first time, as five regions hit all-time highs.

The median national sale price jumped 10 per cent to $506,000 in May from a year earlier, while the number of properties sold increased 14 per cent to 9,075, according to the Real Estate Institute.

New Zealand's housing market is on a tear, driven by record migration and low interest rates, particularly in Auckland, the country's largest city, where the government and Reserve Bank have introduced measures to try to slow house price growth. Five regions hit record high median prices in the latest data, although Auckland's annual rate of increase lagged behind the national average at 7.5 per cent to $805,000.

"As 2016 progresses we are seeing regional markets such as Waikato/Bay of Plenty, Central Otago Lakes, Northland and Hawke's Bay strengthening in both prices and sales volume, while the large main centre markets of Auckland and Canterbury are taking a back seat," said Institute spokesman Bryan Thomson.

"The growth in activity across the regions is now exceeding the influence of the Auckland market on national statistics," Thomson said. "This is shown in the fact that Auckland's median price is rising slower than the national median price, and Auckland's share of sales over the past two years has fallen from 40 per cent to 34 per cent."

Auckland was the only region to see an increase in the number of days it took to sell, increasing by three days to 32 days from a year earlier. On a national basis, the number of days to sell a property declined by four days to 31 days.

ASB economist Kim Mundy said the May data once again showed that Auckland was no longer the sole driving force of New Zealand's house price growth.

"Tired of being ignored, the regions continue to pick-up pace."

"New Zealand's housing market activity is increasing strongly on the back of robust demand. Outside of Auckland, low interest rates and displaced Auckland demand is responsible for driving demand," said Mundy.

"The RBNZ's concerns about the Auckland housing market are from a financial stability point of view. The latest REINZ data do not change our view that the RBNZ will cut the OCR by 25bp in August and November."

Deutsche Bank economist Darren Gibbs said today's data confirmed that the property market remained very active, that inventory remained very low and that this was driving significant price appreciation.

"We think this report increases the likelihood of a further macro-prudential response from the RBNZ over coming months, especially if it feels compelled to cut the OCR to protect its inflation target."

Regions which hit a new record median price in the month include Waikato/Bay of Plenty ($419,000), Taranaki ($343,250), Wellington ($465,000), Canterbury/Westland ($435,500) and Central Otago Lakes ($707,250).

Nationwide, available properties for sale fell 41 per cent compared to May 2015, with Hawke's Bay and Wellington hardest hit, followed by Auckland and Otago.
The sale of million dollar homes showed the largest increase over the year, with a 32 per cent rise in the number of homes sold, while the proportion of sales of homes under $400,000 dropped 4.4 per cent.