Jan 15 (BusinessDesk) - New Zealand house prices continued their climb to a record high in December, driven by price gains in Auckland and Canterbury due to restricted supply.
However, a number of factors suggest this is unlikely to force a change to the official cash rate this year.
December figures released by the Real Estate Institute of New Zealand show the national median house price stood at $389,000, up 9.6 per cent on December 2011.
The REINZ Stratified House Price Index, which smoothes out peaks and troughs in median prices, rose 6.7 per cent over the same period.
The highest median price rise over the year was Auckland's 10.5 per cent increase, corresponding to a stratified index rise of 8.6 per cent.
Canterbury's median price increased by 8 per cent to a record high of $351,000, with the stratified index rising 11.8 per cent. The Wellington, Otago and Queenstown markets experienced more modest price rises over 2012.
The Reserve Bank of New Zealand noted the strengthening housing market in its December 2012 Monetary Policy Statement.
It cited rising house prices, particularly in Auckland, and rising construction costs in Canterbury accompanying increased consents as two potential inflationary pressures in the housing market, warning that increased prices and household spending could push up inflation if low residential construction continued to restrict supply.
However, the RBNZ projected house price inflation would level out in coming years as long as housing stock increased and households continued to be cautious in their level of credit demand.
"Given household focus on (debt) consolidation, it is unlikely that the current pick-up in house price inflation will have the flow-on impact to household spending that was seen through the mid-2000s," the RBNZ said.
The RBNZ was likely to keep a close eye on the housing market this year for signs of inflationary pressure, but leave the OCR unchanged, suggested ANZ International Senior Economist Jane Turner on the back of today's REINZ figures.
"Encouragingly for the RBNZ, it appears the housing market did not pick up any new momentum having stabilised over the past few months," Turner said. "As an indicator, it suggests the annual rate of house price inflation should stabilise around current levels (currently around 6-7% on a nationwide basis)."
The median number days to sell had remained largely stable at 36 days across the country, indicating the rate of house price inflation would likely remain similarly steady.
"Nonetheless, new house listings remain at very low levels and the imbalance between supply and demand should continue to underpin further increase in house prices," Turner cautioned.
"If pressures were to intensify, the RBNZ may consider the option of using macro prudential tools to ease pressures in the market."