House prices hit 10-year high amid declining sales numbers

The national median house price rose to $355,000 last month, from $350,000 in September, according to the Real Estate Institute of New Zealand (REINZ), with the median value increasing in seven of the 12 districts surveyed.

The volume of sales declined 5.8% to 6,091 from a month earlier as the shortage of properties continued to keep Spring listings low and helped bump up prices.  

"The rises aren't, in most cases, dramatic, but slow and steady over the past few months as confidence returns to the market," said president Peter McDonald. "I believe the market will firm even further with the better economic news we're hearing more and more frequently."  

The revival in house prices has underpinned New Zealand's economic recovery, and stoked speculation Reserve Bank Governor Alan Bollard will have to boost interest rates earlier than anticipated. The central bank said that "house prices still appear high relative to incomes, which may limit scope for a sustained rise," in its Financial Stability Report out earlier this week.