But hot as it is, economics firm Infometrics is predicting house prices will rise a further 7% to 13% over the next 12 months and that Auckland house prices will increase 19% between now and March 2006.
The national median house price leapt from $215,000 in September to a record $227,000 in October and was 20.7% higher than the $188,000 recorded in October last year.
These numbers indicate that house price inflation is steadily accelerating, despite Reserve Bank governor Alan Bollard’s warnings of a speculative bubble and the increasing likelihood of an interest rate hike soon.
The annual rise in the median house price in September was 16.2%, the same in August, 14.2% in July and 13.3% in June.
In the regions, the monthly price increases were particularly strong in Southland, up 40.5%, Wellington, up 7.6% and Nelson/Marlborough, up 6.8% -- the Nelson/Marlborough median house price was 48.2% higher than in October last year. The key Auckland market was more subdued with a 2.1% increase from September and a 16.8% annual rise.
Activity was also strong with the number of houses sold in October rising to 10,923 from 10, 687 in September and compared with 9,448 in October last year.
Yet another sign of how hot the market is running, the median days it took to sell a house in October fell to a record low of 24 days from 33 days in September. That contrasts with about 50 days on average through most of 2000.
Real Estate Institute president Graeme Woodley, who had attributed September’s steady figures to Bollard’s warnings, says the latest figures are "remarkable but not unexpected."
He now thinks those warnings are unlikely to have any affect until at least the end of the year.
"It is important to remember the market traditionally displays a ‘spring flush’ at this time of the year when both buyers and sellers are probably most motivated," Woodley says.
Rising interest rates and the traditional summer slowdown in activity are likely to dampen the market, regardless of whether Bollard decides to raise his official cash rate in December, he says.
The figures show prices rose in all regions compared with September and with October last year. The number of sales rose in six of the regions and fell in the other five compared with September and was up in nine of the regions and down in the other two compared with October last year.
The Infometrics study, which was commissioned by mortgage insurance company PMI, says the housing market will cool from early 2005 as population growth eases and the sustained period of strong building activity expands the dwelling stock.
