Image A chronic lack of supply is fuelling a regional growth in house prices and sales volumes in New Zealand, according to the latest monthly index report.

Sales volumes hit new levels and median house prices reached new record highs across more regions of New Zealand than ever before, according to the latest figures from the Real Estate Institution of New Zealand.

Record median prices were reached in Waikato/Bay of Plenty, Taranaki, Canterbury/Westland and Otago. The report explains that this shows the growing halo effect of rising prices around New Zealand is strengthening in the regions where it is already present, and moving on to new regions, driven by a chronic lack of supply.

On a seasonally adjusted basis the number of dwellings sold in April 2016 rose by 12.8% compared to March, indicating that the normally expected drop in sales between March and April was far smaller than usual. And compared to April 2015, all regions recorded increases in sales volume.

At the same time, the availability of properties for sale has fallen by over one third over the past 12 months, with a number of regions seeing declines of more than half. Days to sell, another measure of demand has also fallen by more than 20% over the past 12 months in nine of the 12 regions.

The national median price was $490,000 for April, an increase of $35,000 or 7.7% on April 2015, and down 1% compared to March. Excluding the impact of the Auckland region, the national median price rose $29,000 to $382,000 compared to April 2015.

REINZ chief executive Colleen Milne said that the April data confirms the continued strength of the real estate market right across New Zealand, driven by a chronic lack of supply.

‘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 pointed out.

‘The strength of the seasonally adjusted level of sales demonstrates that the year on year median house price rises, excluding Auckland, underlying demand for real estate across New Zealand remains strong, with every region recording an increase on a seasonally adjusted basis,’ she explained.

There were 8,568 unconditional residential sales in April, an 18.4% increase on April 2015 and a 10.1% decline on March. On a seasonally adjusted basis, the number of sales rose 12.8% from March to April. The strong increase in seasonally adjusted sales reflects a smaller decline in sales between March and April than is normally the case. Over the past 10 years the average decline between March and April has been 16.6%.

Sales volumes excluding Auckland, were up 28.8% on April 2015 and up 29.4% on a seasonally adjusted basis. All regions, apart from Northland, Auckland and Taranaki are showing in excess of 20% annual sales growth.

Indeed, Auckland saw the number of sales increase by 1.7% compared to April 2015, the first annual increase in Auckland’s sales volume since October 2015. Compared to April 2015, all regions recorded increases in sales volume, with Hawke’s Bay recording the largest increase of 50%, followed by Southland with 49% and Otago with 35%.

The national median house price rose $35,000 or 7.7% to $490,000 from April 2015 to April 2016. Compared to March the national median house price fell by $5,000 or 1% and excluding the Auckland region, the national median price rose $29,000 or 8.2% compared to April 2015. On a seasonally adjusted basis, the national median house price rose 7.7% compared to April 2015.

Central Otago Lakes recorded the largest percentage increase in median price compared to April 2015, at 25.2%, followed by Waikato/Bay of Plenty at 19.1% and Taranaki at 15.1%. In comparison, Auckland recorded the fourth largest increase in the median price at 12.8%.

Taranaki recorded the largest percentage increase in median price compared to March, with an 8.7% increase, followed by Hawke’s Bay with a 4.8% increase and Manawatu/Wanganui with a 2.6% increase.

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