March housing market strength no flash in the pan - BNZ

In his Weekly Overview Alexander says the market is seeing an upturn led primarily by a shortage of houses, especially in Auckland, where sales rose 10.5% in March and 11.5% over the March quarter.

"As regular readers will know my fundamental view is that there is a shortage of dwellings in New Zealand and that this shortage is greatest in Auckland. Therefore I don't believe the strength we have seen in March is a flash in the pan that will fade. The chances are these are the first decent signs of the cyclical upturn in the housing market getting underway."

Alexander said he believes prices will begin to increase in response to the combination of rising sales and constrained supply - but that the increases may not be seen for some time.

"In the used house market there are many vendors who upon seeing the discussion about a strengthening market will bring their properties to market," he said.