House prices and sales rebound

House prices and sales rebounded last month and further price gains are expected - albeit at a slower pace.

The median house price rose 2.4 per cent to a record $302,000 last month and was 7.7 per cent above the same month in 2005, the Real Estate Institute of New Zealand said.

Institute members sold 10,094 houses last month, a 27.3 per cent rise on February but 3 per cent lower than a year earlier.

"The market's confidence has returned after the uncertainty arising from rising interest rates and the disruptions of the holiday period," said the institute's president, Howard Morley.

The number of days taken to sell a house fell to 33 last month from 37 in February.

Morley said prices were not expected to rise as sharply as they had in the past two years.

"The rate of annual growth has been slowing, as would be expected ... The price-growth curve is flattening out and the market appears to have reached a comfortable plateau."

The Reserve Bank, which has repeatedly cited the housing market as an inflationary concern, left the interest rate at 7.25 per cent last month after increasing it by a total of 2.25 percentage points since January 2004.

The central bank has said it does not expect to raise rates further in the current cycle but has also ruled out a rate cut this year because of persistent inflation.

However, many analysts expect the Reserve Bank to lower interest rates by the end of the year given the rapid slowdown of the economy, which marked its first contraction in more than five years in the fourth quarter.

The bank has said it expects the housing market to cool rapidly, and prices to fall by the end of the year under the impact of higher interest rates and lower immigration, previously a key driver of housing demand.

Prices rose in five of the 12 regions, fell in six and were unchanged in the other.

Northland was up from $275,000 in February to $280,000, Auckland was unchanged at $385,000 and Waikato/Bay of Plenty was down slightly from $280,000 to $272,500.

Hawke's Bay prices rose from $255,000 in February to $277,750. The Manawatu/Wanganui median was down from $190,000 to $179,500. Taranaki fell from $249,000 to $225,000.

Wellington increased from $305,000 in February to $323,000, Nelson/Marlborough fell to $280,000 from $290,000 and Canterbury/Westland fell slightly from $267,125 to $266,050.

Central Otago Lakes was down again from $445,000 to $395,000 in March. The Otago median rose from $210,000 to $219,000.

The Southland median rose to $129,000 from $125,000 in February.

Over the year, Manawatu/Wanganui had the biggest rise - 15.8 per cent - closely followed by Hawke's Bay, up 15.72 per cent, and Northland up 15.7 per cent.

- NZPA