'Chronic lack of supply' raises house prices

'Chronic lack of supply' raises house prices

Auckland's housing problem is becoming everyone's burden, with prices continuing to reach new highs across much of the country, new Real Estate Institute data shows.

A "chronic lack of supply" has driven up median house prices in Waikato/Bay of Plenty, Taranaki, Canterbury/Westland and Otago.

The national median price for April was $490,000, a $35,000 (7.7 percent) increase on the same time last year.

Excluding Auckland, the national median price rose $29,000 to $382,000 in April compared to April 2015.

REINZ says the "halo effect" of rising house prices in the regions is spreading.

Chief executive Colleen Milne says their latest report confirmed strengthening prices across the country.

"Anecdotal evidence suggests that investors outside of Auckland are increasingly looking to real estate investments to improve their yields compared to bank deposits.

"First home buyers are also taking advantage of low mortgage rates, putting pressure on the number of properties available for sale," she says.

On a seasonally adjusted basis, the number of houses sold last month rose 12.8 percent compared to March. REINZ says that suggests the normally expected drop in sales between March and April was "far smaller" than usual.

Compared to the same time last year, all regions recorded an increase in sales volume.

In April, there were 8568 unconditional house sales, an increase of 18.4 percent on April 2015, but a 10.1 percent drop on March.

But on the other side of the fence, the availability of property for sale dropped by more than one third over the past 12 months -- some regions has a decline of 50 percent.

It also took less time to sell a property, with a drop of more than 20 percent over the past 12 months in nine of the 12 regions.

Wellington had the fewest properties for sale with 7.7 weeks of supply, followed by Auckland on 11.6 weeks, and Hawke's Bay with 12 weeks.

Compared to April last year, the number of properties for sales has dropped by 35.7 percent.

This morning, the Reserve Bank said it was worried about house prices, particularly in the regions.

However, Governor Graeme Wheeler said house prices outside Auckland are "generally much lower relative to incomes".

The vast majority of Wellington's house prices saw double-digit increases, with the median house price rising $43,750 (11 percent) compared to April 2015 to $455,000 -- that's just short of March's record $459,000.

Sales volumes in April increased by 23 percent across the region, with Upper Hutt seeing 73 percent growth, 50 percent in central Wellington and 32 percent in Eastern Wellington.

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