House prices, sales up in August; institute cautious

After showing winter weakness in June and July, the latest Real Estate Institute housing sales figures and prices unambiguously portray a stronger market, with both prices and sales activity rising.

Tuesday, September 18th 2001, 8:51PM

by Jenny Ruth

Nevertheless, institute president Rex Hadley struck a cautious note.

"The results from August are very pleasing, but it’s just getting back to normal, bearing in mind that 2000 was the worst period in 10 years," Hadley told Good Returns.

But the impact on the New Zealand economy of last week’s terrorist attacks has yet to be seen. "I do not believe there is a commentator in the world that can reliably predict the long term effect of the New York tragedy," he says.

Nevertheless, Hadley expects New Zealand’s Reserve Bank to follow the lead of the US Federal Reserve in cutting interest rates. The Fed cut its benchmark rate from 3.5% to 3% overnight, New Zealand time.

"I think there’s room to move considerably. I would be disappointed if it was anything less that half a percentage point. There’s an argument that it should be higher. Why are we a percentage point higher than Australia?" Hadley says.

New Zealand’s central bank’s benchmark rate is currently 5.75% while Australia’s is 4.75%.

The institute figures show the national median house price rose to $176,000 in August from $170,00 in both July and in August last year.

They show that the number of houses sold nationally rose to 6,976 in August from 6,122 in July and from 5,489 in August last year. Hadley says 7,000 houses sold in a month is normal.

The total value of sales rose to $1.45 billion from $1.25 billion in July and $1.08 billion in August last year.

On a regional basis, five of the 11 regions saw the August median price rise from July, five regions experienced declines and one was unchanged. Compared with August last year, the median price rose in all but two regions, Hawkes Bay and Otago.

Compared with July, activity rose in eight of the regions and fell in three. Compared with August last year, activity rose in all 11 regions.

REINZ PROPERTY MARKET REPORT
TOTAL DWELLINGS MEDIAN PRICE COMPARISONS FOR AUGUST 1996-2001 REGION AUG 96 AUG 97 AUG 98 AUG 99 AUG 01 JULY 01 AUG 01 Northland 112,000 135,000 155,000 140,500 137,500 160,000 147,500 Auckland 220,000 233,000 225,000 230,000 137,500 239,000 240,000 Waikato/BOP/Gisborne 135,000 150,000 148,000 155,000 155,500 162,000 161,000 Hawkes Bay 122,000 119,500 115,000 115,250 135,000 135,000 123,861 Manawatu/Wanganui 106,500 95,000 95,750 101,500 95,000 105,000 103,000 Taranaki 105,000 95,500 92,550 93,500 93,000 96,750 95,000 Wellington 134,250 152,000 160,000 170,000 188,500 190,000 200,000 Nelson/Marlborough 130,000 143,500 131,000 141,500 136,875 145,000 147,750 Canterbury/Westland 130,000 144,000 140,000 145,000 143,000 136,000 136,000 Otago 97,775 87,000 92,000 104,500 99,500 94,500 101,000 Southland 85,000 83,000 75,000 77,750 73,000 84,000 95,000 NZ Total $147,000 $165,000 $164,000 $169,000 $170,000 $170,000 176,000