A low level of sales activity in the Auckland housing market was bucked by an active rental sector, according to Barfoot & Thompson.
Property sales in Auckland fell 5% between December and January and while prices firmed somewhat they remained 2.6% below the average price for 2010.
While the level of house sales remained low, there was more activity in the rental market.
The average weekly rent in January was $5 higher than December at $416 and up $15 on the year earlier.
"The lift in rents started in July last year, and January's average has set a new benchmark," said Peter Thompson, the Barfoot & Thompson managing director.
He also said rental supply was running short in Auckland.
"Although we let 810 properties in the month, up 3.3% on the number in January last year, we are still short of supply."
"A shortage of properties to let combined with landlords looking to improve their operational returns on their investments is behind the rent increases," he said.
ASB economist Chris Tennent-Brown said that while January is one of the quietest months for sales, it remains a busy month for rental activity, especially in Auckland.
"We expect the Auckland market is tighter than many other parts of the country."
When it comes to house prices, Barfoot & Thompson reported January prices firmed up 2.1% to an average of $515,693, but this remains 2.6% below the 2010 average of $529,648.
"While turnover was modest, price movement was in a narrow band," Thompson said.
Thompson cited the lack of new listings for the modest sales volumes.
He said January's new listings were down to 896, a quarter lower than January last year, though up on the December figure of 737 - the lowest in a month for more than a decade.
"It's a lack of sellers that is holding back market activity. What buyers are lacking is choice," he said.
Westpac said that while sales had fallen 5% between December and January, coming off a decent lift in sales over the preceding months, sales are only 3% lower than a year ago.
"Although house sales fell and average prices rose this month, the overall market trend appears to be sideways, with sales prices pretty much stabilising. We continue to expect the housing market will remain stable over 2011, representing a modest improvement over last year's weakness."
Tennent-Brown was less optimistic however.
"The fundamentals for housing remain unsupportive, migration is low and affordability is still stretched. In addition, while mortgage rates are low, they are significantly higher than early 2009, and are expected to rise slowly over the years ahead."