Homes selling at record speed

By JIM EAGLES, business editor

Houses sold faster last month than ever.

Real Estate Institute statistics for August, issued yesterday, show the median number of days for a house to be sold was just 25, a record low.

Until the present boom started, the quickest monthly figure was 39 days, set in October 1999.

For most of 2000 a sale was taking about 50 days and in January 2001 it rose to 64 days.

But the present boom has seen houses sell with increasing speed.

In August last year a property took a median 35 days to sell, dropping to 31 days in September, 29 days in April this year and 28 days in July.

The August figures also set records for the volume of sales and the median price.

Last month the median house price was $215,000, up 2 per cent on July, 16 per cent ahead of a year earlier and the highest level yet.

Deutsche Bank, which calculates a three-month moving average to eliminate volatility, said it showed the rate at which the median price was increasing was 14.8 per cent, up from 13.3 per cent a month ago.

The institute said that during August 3642 houses were sold in Auckland and 10,138 nationwide, another record high.

Seasonally adjusted, the volume of house sales nationwide was 15 per cent above the previous month and 32 per cent higher than a year earlier.

Deutsche Bank said that when seasonal factors were taken into account Auckland sales were actually 1.2 per cent lower than in July.

But this was more than offset by continuing strong sales in the rest of the country, especially Waikato-Bay of Plenty-Gisborne, Manawatu-Wanganui, Nelson-Marlborough and Canterbury-Westland.

Deutsche Bank senior economist Darren Gibbs said this showed the housing boom was nationwide, not just an Auckland phenomenon, and therefore was being driven by more than just migrant flows.

"There are obviously other factors at work," he said, "and interest rates is a big one.

"While our interest rates are still high by world standards, New Zealanders think they are low, and that's what matters."

Auckland Barfoot & Thompson real estate agent David Armstrong said a quick sale was not necessarily a good sale.

"I don't let mine fly out," he said.

"You could let them all sell in one day if you wanted to, but then you don't get a good price for your vendor."

Christchurch Harcourts agent Jackie Maw said their market had "gone ballistic".

The August sales occurred before Reserve Bank Governor Alan Bollard issued his warning that if soaring house prices went too far they could lead to higher interest rates.

But although there is increasing evidence that relatively low interest rates are a big factor in the continued boom, the bank is still expected to leave interest rates where they are for some time. The market consensus at present is for a first tightening in March or April.

With Mr Bollard's warning hanging heavily over the industry, institute president Graeme Woodley said he thought demand might dampen a little.

The next 12 months, he predicted, would see "a period of consolidation rather than any major changes in values".

But Mr Gibbs said anecdotal and historical evidence suggested the boom would continue.

"Once entrenched," he said, "past episodes of house price inflation have usually continued until stopped by rising interest rates, and even then with a lag."

The present boom was "still at a relatively early stage ...

"It could have a couple more years in it yet".

Further reading: nzherald.co.nz/property