Auckland median house price reaches new record after 25.4% annual jump

See also: Housing market was running red hot in September

New Zealand's median house price rose to a record in September, led by a 25.4 percent annual jump in Auckland's median price to an all-time high as demand for property in the city spread into nearby regions.

Some 8,174 dwellings were sold in New Zealand last month, up 5.3 percent from August, and up 38.5 percent from September 2014, the Real Estate Institute said in its monthly release of home sales data. The national median price increased 4.2 percent in the month, for an annual gain of 15.4 percent, taking the measure to a fresh record of $484,650.

The Auckland median house price rose 4.2 percent in the month to $771,000. The national average price, stripping out gains in Auckland, was at a fresh record of $365,000, increasing 4.7 percent in the month, and 8.3 percent from a year earlier. (See graph below)

The Auckland property market has been a persistent concern for policymakers as record inbound migration swells the population in the country's biggest city and the pace of new home construction has failed to keep up with demand in spite of policy interventions attempting to improve supply. That's pushed up prices to high levels relative to household incomes, something the Reserve Bank sees as a risk to the wider financial system in the event of a sharp downturn.

Demand is now overflowing to nearby regions, with Waikato/Bay of Plenty recording a record median house price of $390,000, up 10.5 percent in the month, for an annual gain of 16.9 percent. The number of sales was up 8.9 percent in the month for 1,619 homes sold, compared with August, and was 84.8 percent higher than in September 2014.

"There is continued evidence of Auckland investors and first home buyers spreading to other regions causing a 'halo' effect, most notably in Northland and Waikato/Bay of Plenty," REINZ chief executive Colleen Milne said. "These regions have recorded very strong sales growth so far during 2015, and this is now starting to be seen in the median price data. There was also a very strong increase in auction sales for Waikato/Bay of Plenty."

In Wellington the median house price increased 2.7 percent in September from August, for an annual increase of 3.3 percent to $413,375. Sales volume increased 7.1 percent between August and September, with 720 houses sold, a 22.7 percent increase on the same month a year earlier.

Canterbury/Westland reported median prices increased 1.9 percent in the month, for an annual gain of 1.7 percent to $420,000 while volume slipped 0.1 percent between August and September, at 862 houses sold, 9 percent higher than in September last year.

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(BusinessDesk)