Warning issued over February house price rise

Economists are warning against reading too much into the latest house sales data showing big price and volume jumps.

ASB economist Jane Turner said although sales were up 40 per cent in February, this reflected the usual bounce post- holiday period.

Real Estate Institute figures for last month showed 5228 houses were sold, up from January's 3706 and the national median rose from $325,000 to $330,000, trends president Mike Elford said showed activity had returned to the market.

But Jane Turner said adjusting for the seasonal pickup, volumes rose only 8.3 per cent following from the previous months 6.8 per cent fall. Volumes are 18 per cent below the levels of a year ago.

"We place little weight on this month's recovery. The trend in house sales remains flat despite some monthly volatility with housing demand yet to make a convincing recovery. While large declines in the mortgage rate have prevented housing demand falling further, the level of house sales remains weak. Potential house-hunters are either waiting for house prices to fall further or feeling cautious due to economic uncertainties. Higher deposit requirements are another hurdle for first home buyers," she said.

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Posted: 13 Mar 2009

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