Auckland house prices took a dip in May after three months of rises, while sales lifted 3.3% to climb 12.2% above year-ago levels, according to the latest Barfoot & Thompson data.
"In May the average price of $529,284 was down 2.8% on April's average price and down 2.5% on May's average last year," said Barfoot & Thompson managing director Peter Thompson.
"It reverses a three-month trend where the average price for the month was higher than that for the preceding month."
Thompson said the company sold 889 properties in May, a quarter more than in April, and 12.2% more than in May last year.
"This combination of rising sales and the average price easing demonstrates that prices are not starting to overheat," Thompson said.
"The major issue facing the Auckland market remains lack of choice for buyers. In May we listed 1169 new properties. While this was up 13.2% on new listings for April, it was down 15% on new listings in May last year.
"At the end of May we had only 5249 properties on our books, the lowest number for 20 months."
The reduced supply of property on the market was commented on by ASB economist Jane Turner.
"Stronger housing market activity has seen the total supply of houses available for sale on the market steadily decline over recent months, with the number of houses available for sale down 12% on year-ago levels."
Turner said the combination of an increase in net migration and low interest rates has underpinned an increase in demand, and coupled with the low level of listings, the housing market had become surprisingly tight with nationwide house prices up around 6% over the year.
However, she said the life in activity appeared to be confined to Auckland.
"Nonetheless, the Barfoot & Thompson data highlights that housing supply in Auckland is becoming tight, particularly after a few years of low construction activity, and supports our view of rising house prices over the coming year."
She said the lift in Auckland activity suggested confidence in the household sector is gradually recovering, and that allied to a rise in business confidence over April and May, the RBNZ will take encouragement that lower interest rates are helping boost the economy.
"However, the RBNZ will want to see a pick up in demand that is more widespread across the economy. We continue to expect the RBNZ will leave interest rates at current levels for the remainder of 2011, until it has seen evidence the NZ recovery has gained a firmer footing."