Prices dip, but not enough for many

House prices fell an average $12,500 last month, the REINZ has reported. Photo / Janna Dixon

New Zealand recorded a $12,500 national median house price drop last month, but a survey due out on Monday could show the country's homes are still highly over-priced and big price falls would be necessary before we achieve better world standards.

Yesterday, the Real Estate Institute of New Zealand said November's $367,500 median price and 6008 sales slid to $355,000 and 5312 sales, but chief executive Helen O'Sullivan said that was the best December since 2007 and Auckland showed its strongest sales volume turnover since 2006.

Waikato/Bay of Plenty, Manawatu/Wanganui, Taranaki, Nelson/Marlborough, Canterbury/Westland and Otago all had their high December sales number in four years, she said.

Next week, the eighth Demographia International Housing Affordability Survey is released, and it is expected to show that New Zealand's housing market prices are still exorbitant.

Last January, Demographia said with incomes taken into account, Auckland and Tauranga were less affordable than New York.

Low incomes and high house prices had left Kiwis badly off and prevented many from owning property, it said.

Of 325 cities and regions, New Zealand ranked with Australia, Britain, the United States, Canada and Ireland.

Yesterday, Goldman Sachs economist Philip Borkin said a recovery was under way and activity in the housing market improved in the final two months of last year.

He said poor figures in the two months previous - September and October - "were weighed down by the distraction of the Rugby World Cup rather than anything more fundamental".

He added that while New Zealand house prices remained overvalued in many studies, he believed that there would still be positive house price growth in the future and there would be no sharp correction.

ASB economist Christina Leung said strong Canterbury house sales were encouraging, citing 787 sales last month.

"There has been volatility in Canterbury housing turnover since late 2010, reflecting the many disruptions in the wake of the earthquakes," she said.

"We expect Government and insurance payouts will support a continued recovery in house sales in the region as households relocate over the coming year."