Cyclical recovery underway in housing market

The residential housing market has started a cyclical recovery, with rising turnover and prices, decreasing days to sell, a spike in listings shortages and the entry of first home buyers into the market, according to BNZ.

In the banks Real Estate Overview chief economist Tony Alexander said, "we anticipate improving prices and activity over the coming couple of years, however there will be restraint from easing net migration inflows over the coming year, rising interest rates, high household debt and possibly a structural lift in the savings rate, and already high house prices compared with incomes."

Around New Zealand in June there were 5,228 properties sold, a 14.3% rise on June 2010, and in the June quarter sales were 6.6% ahead of a year ago and roughly 15% ahead in seasonally adjusted terms from the March quarter.

However, while the market is picking up, "at just 56,042 the number of sales in the year to June was still extremely low by historical standards."