House prices keep rising

Those who thought the housing market was slowing had better think again: both the median house price and the volume of sales reached records in March.

Thursday, April 24th 2003, 8:03AM

by Jenny Ruth

The latest Real Estate Institute figures show the median price jumped to $200,000 in March from $195,000 in February and from $186,000 in March last year. That’s a 7.52% increase between March last year and March this year.

The number of homes sold rose to 10,747 worth $2.66 billion compared with 9,624 worth $2.29 billion in February and the previous record in November of 9, 932. There were 9,742 houses worth $2.23 billion sold in March last year.

"Despite some market commentators predicting a downturn for the property market, March‘s figures only reinforce our belief that the residential market is both stable and healthy," says institute president Graeme Woodley.

"Certainly the level of activity recorded indicates that the New Zealand public still has an active interest in property, not just as a home, but also as an investment," he says.

Woodley says New Zealanders see the property market as a safer haven for their savings than many other investment vehicles. "Indeed, given the poor performance of equity markets and managed funds, it is not difficult to see why so many New Zealanders are placing their capital into residential property," he says.

Ulf Schoefisch, chief economist at Deutsche Bank and one of those expecting the housing market to at least cool, notes that at least the March year-on-year figures aren’t indicating rampant house price inflation. The year-on-year increase peaked in January at 10.5%.

Schoefisch says today’s figures make it less likely the Reserve Bank will surprise us with a rate cut at tomorrow’s official cash rate (OCR) review. But he still thinks that, with other economic indicators pointing to a slowdown in domestic demand, the central bank will cut rates in June.

The OCR, from which floating mortgage rates are set, has stood at 5.75% since July last year.

The key Auckland market recorded more modest house price inflation than the national average, the median price rising 6.47% to $279,500 in March from March last year and dipping slightly from February’s $280,000 median price. The number of Auckland sales rose to 3,758 from 3,069 in February and is the highest level of sales since 1996.

Compared with February, the median price rose in seven of the country’s 11 regions, fell in three and was unchanged in Manawatu/Wanganui. Compared with March last year, prices in all but one region rose. Manawatu/Wanganui was again the exception with an unchanged median house price. The latter region was one of only two where the number of sales fell compared with February, the other being Otago. Compared with March last year, activity rose in all regions but Nelson/Marlborough.

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