Price jump 'catch-up after 1990s'

By JO-MARIE BROWN

The cost of buying a home in Auckland has soared by 8 per cent over the past year, but one expert says this is just a return to the norm after the late-90s slump.

Residential sale statistics released by the Real Estate Institute of New Zealand yesterday show the number of dwellings sold in Auckland over the past year has increased by 43 per cent.

Homes selling for the highest median prices were found on the North Shore at $295,000, followed by Auckland City at $285,000, and metropolitan Auckland at $263,000.

Median prices have risen the fastest in Waitakere, up 11.9 per cent since July 2001, to $215,000, while North Shore and Auckland City homeowners have both experienced median rises of around 10 per cent.

Papakura was the only Auckland district to record a 12-month slip in median prices - down 4.2 per cent to $169,000 - but it also had the highest growth in house sales, with 83 dwellings sold last month, compared with just 46 in July last year.

REINZ Auckland district president Erich Oettli said the figures looked impressive, but in reality sales were returning to normal after a downturn in the late 1990s.

"If we compare this with the last two or three years, it does look like a spectacular shift, but I think we're back to the market we've been used to in Auckland for the last 30-odd years," Mr Oettli said.

Overall, median house prices in metropolitan Auckland have risen 8.1 per cent to $263,900 over the past year, with a similar growth rate pushing median house prices nationally to $189,000.

National REINZ president Rex Hadley said the survey results also showed a record number of houses could be sold in New Zealand this year.

The most houses sold in a year was in 1996, when 89,413 dwellings changed hands. So far, 58,812 homes have new owners this year.

"This is the highest number of sales ever recorded for July ... at this time of the year we would usually anticipate an easing in the total number of sales and median price," Mr Hadley said.

Thanks to a healthy dairy industry in recent years, Taranaki enjoyed the biggest rise in median house prices, up 14.7 per cent to $111,000 in the 12 months to July.

Elsewhere, median house prices in the Waikato, Bay of Plenty and Gisborne have risen 3 per cent to $167,000, while Wellington's prices rose 7.8 per cent to $205,000.

Mr Hadley was optimistic house prices would continue to rise. "It's an investment that Kiwis know and understand.

"A lot of people look at their home as an investment."

The REINZ hoped last week's decision by the Reserve Bank to hold the official cash rate at 5.75 per cent - with a subsequent drop in mortgage rate - would also boost house sales.

The Reserve Bank raised its key interest rate last Wednesday, but downplayed the chance of more rises as weak stock markets depress the global economic outlook.

The pause followed four consecutive 25 basis points rises, which earned the Reserve Bank the title of the world's most aggressive central bank of the current tightening cycle.

Economists polled after the lift said they expected the bank to keep the 5.75 per cent cash rate at its October review, but numbers were split on the chance of a further 25 basis-point rise in November.