Short supply and steady gains have helped property prices in New Zealand reach a new peak, with median values up almost 10% from 2008, and homes selling in under a month on average in some areas. But the prospects for 2010 are uncertain, as impending interest rate hikes and declining demand could dampen the market mood. See the following article from Property Wire for more on this.
Residential property prices in New Zealand have hit an all-time high but economists are concerned about higher mortgage interest rates that could dampening the market.
The latest figures from the Real Estate Institute show that average property prices rose in 11 out of 12 districts in December 2009 compared to the same period in 2008.
The national median of $360,000 was up 9.6% compared with 2008 and up $5,000 on the record median price for November 2009.
The largest gains were Nelson/Marlborough, up 14.5%, followed by Southland up 10.8%, and Hawke’s Bay, also up 9.4%. Northland was the only district to experience a drop in median prices, down just over 2%.
Real Estate Institute of New Zealand President Peter McDonald said there is still a shortage of properties for sale making the 2010 outlook optimistic.
‘House prices have definitely stabilized and appear to be slightly gaining, which is a positive sign. The median house price for December 2009 was up 1.4% on the previous month so, while the median price for December 2009 was a record high for that time of the year, it’s a case of steady as it goes,’ he explained.
He also said it is encouraging that properties are selling faster. The national median for days to sell in December was 33, 12 fewer days than the corresponding period a year ago. Sales were quickest in Wellington at 28 median days and in Canterbury/Westland and Otego, where the median days to sell was just 29.
But not everyone is optimistic. Bernard Doyle, New Zealand investment research strategist at Goldman Sachs JBWere, said that if the figures are seasonally adjusted a different picture emerges. ‘Seasonally adjusted house sales declined 3.5% month-on-month in December, the third consecutive monthly fall. Sales turnover is now 17% below the levels achieved in April, 2009,’ he claimed.
He said he believes that recent fixed mortgage rate increases are contributing to an easing of housing market demand. ‘The 2010 outlook is a lot more balanced than last year. We do expect house prices to post modest gains. However, with interest rates set to rise and the labour market remaining subdued, any rise is likely to be gradual,’ he added.
ASB economist Jane Turner believes the market might be heading downwards. ‘Demand pressure may be easing after a period of recovering demand outstripping modest supply,’ she said.
This article has been republished from Property Wire. You can also view this article at Property Wire, an international real estate news site.