House sales and prices revive in Feb

Wednesday 11th March 2009

New Zealand home sales rebounded last month and prices picked up, suggesting cheaper borrowing costs are stoking a revival of interest in the real estate market.

Home sales rose to 5,228 in February, climbing back from the record low 3,706 in January, according to the Real Estate Institute of New Zealand. That�s still below the 6,356 homes sold in February 2008. The median house price rose to $330,000 last month, from $325,000 in January and is down from $337,500 a year earlier.

�While we must take a cautious approach, the February figures seem to indicate that lower interest rates and real estate as an investment options are having a positive impact on the market,� said REINZ president Mike Elford. �The bounce back from the horrific January figures is welcome but we must still acknowledge we�re dealing with light volumes compared with recent years.�

Banks have pared their mortgage rates in the face of the steepest central bank easing cycle since the official cash rate was introduced in 1999. Governor Alan Bollard is expected to cut the OCR by 50 basis points to a record low 3% tomorrow, which may spur a further round of mortgage rate reductions.

�February house sales are showing accumulating signs of stabilisation,� said Shamubeel Eaqub, economist at Goldman Sachs JBWere. �While the level of sales relative to population remains low by historical standards, improving mortgage approvals and stabilisation in sales is encouraging.�

Sales rose in all districts expect Central Otago Lakes, where the number of sales fell to 76 from 78.

The median price in Auckland was little changed at $421,500 from $422,000, with 1,590 sales, up from 1,149.

In Waikato/Bay of Plenty/Gisborne, the median price rose to $316,000 from $304,250 and sales jumped to 712 from 458 the previous month. Hawkes Bay sales climbed to 182 from 155, with the median price rising to $267,000 from $259,000.

Wellington�s median price rose to $375,000 from $362,500 and sales almost doubled to 639 from 396. In Canterbury/Westland, there were 815 houses sold, up from 562, while the median price rose to $290,000 from $285,000.

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By Jonathan Underhill

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