The housing market maintained its strong upward trend in February, helped by improving household incomes, low mortgage rates and constrained supply, Westpac said in an analysis of today's real estate data for February.
"House price inflation remained relatively modest, and dominated by Auckland and Canterbury - the two regions with supply constraints - but is still on track for our forecast of an overall 3.5 percent increase this year,'' Westpac said.
The bank said the pickup in housing turnover in itself was unlikely to rattle the Reserve Bank, which incorporated a stronger housing market in its March monetary policy statement.
Westpac said however that its concern was that the Reserve Bank may be underestimating the inflationary consequences of a housing recovery.
Real Estate Institute of New Zealand (REINZ) data showed Auckland, Waikato and Canterbury continued to trend higher, each region racking up a monthly rise in sale numbers of around 4 percent.
There were also sharp gains in some of the smaller regions - Taranaki, Marlborough and Southland - albeit following unusually weak sales in January.
Price gains remained largely concentrated in Auckland (up 8.7 percent) for the 12 months to February, the fastest pace in two years, and Christchurch up 7.1 percent).
Section prices nationwide have also been heating up, rising 5.9 percent in the past year.
REINZ said the volume of sales was up by 37.0 percent or 1666 sales in February compared with the same time last year, and is the best February result the market has recorded since 2008.
The national median house price remained steady for the third straight month at $355,000 and is up $5000 (1.4 percent) compared with February 2011.
"While the volume increase is significant, it is worth noting that the February 2012 result is just 65.9 percent of the 9357 sales recorded in February 2007,'' REINZ said.
In line with the usual pattern for this time of year, February sales volume increased by over 50 percent compared to January.
However, on a seasonally adjusted basis the national total was up just 3.0 percent.
All regions apart from Otago and Canterbury/Westland recorded double digit growth compared to February last year.
For the month of February, Otago recorded the highest lift in prices for the month (up 6.3 percent), followed by Hawkes Bay with a 4.6 percent gain and Waikato/Bay of Plenty and Northland, both up 3.3 percent.
REINZ chief executive Helen O'Sullivan said while agents are seeing more activity and more positive sentiment from buyers in most places, this is not translating into significant price increases.
"Agents in a number of areas continue to report listing shortages. Despite the increased number of transactions, buyers are remaining cautious with the days to sell measure down by just one day, and still above the long term average,'' she said.
