Yesterday, the Real Estate Institute of New Zealand (REINZ) released its house price indices for the month of February 2013, which revealed an ongoing strengthening of housing prices across the country.
The growth of median stratified house prices across New Zealand strengthened to 8.1% in the year to February, with Auckland (+11.6% YoY) and Christchurch (+12.3% YoY) leading the way and Wellington (+3.6% YoY) lagging (see next chart).
New Zealand house prices are now 4.8% above their late-2007 peak, driven by strong gains in Auckland (12.3% above previous peak) and Christchurch (10.2% above previous peak), with Wellington once again lagging (still -1.0% below previous peak):
In real (inflation-adjusted) terms, however, house prices remain below their late-2007 peak in all major markets, although Auckland has almost fully recovered (see next chart).
The immediate outlook is for further price growth. Mortgage rates remain near record lows:
And the growth of mortgage debt has picked-up considerably over the past year:
The inventory of unsold homes has also fallen sharply just as sales volumes have risen (see below charts).
As noted on Monday, the RBNZ needs to expedite the implementation of macroprudential controls on mortgage lending before the situation gets further out of hand.
