Prices in October rose in seven out of 12 regions with Auckland, Wellington and Christchurch leading a recovery which has now set a record for the last 10 years.
Figures from the Real Estate Institute show that sales last month pushed the national median to $355,000, some $3,000 over the peak of November 2007.
Prices are nearly 6% higher than a year ago and $5,000 higher than in September.
The time it takes to sell has reduced to 31 days, down on 33 days in September and 47 days this time last year.
But the sudden price surge has left economists worried. Shamubeel Eaqub, NZIER principal economist, warned against another credit-fuelled housing boom.
‘The recession was an opportunity to purge many of the imbalances accumulated in the economy over the past decade, but this has not happened.
If this housing juggernaut continues, there is a very real of threat the economy will experience another, perhaps more severe, recession,’ he said.
The trouble is that property prices are still very high compared to income, interest rates and rents and they are rising because of a shortage of listings.
Low interest rates have made houses more affordable and rising net migration has added to the demand, economists point out.
‘The housing market remains tight with low supply continuing to put pressure on house prices.
House prices increased 3.3% over the three months to October, which is an annualised rate of 13.1%,’ said ASB economist Jane Turner.
The banks are also concerned. Reserve Bank Governor Alan Bollard has warned of a future debt-fuelled, housing-led boom of the kind that preceded the recession.
But some are less worried. According to Westpac research economist Dominick Stephens that market is hot at the moment but he is predicting a longer-term slump.
And Peter McDonald, president of the Real Estate Institute, predicted the good times would not only last but get better.
‘I believe the market will firm even further with the better economic news we’re hearing more and more frequently,’ he said.
‘The price rises aren’t, in most cases, dramatic, but slow and steady over the past few months as confidence returns to the market.
For the first time we are over the peak of prices in 2007 which is a very reassuring milestone,’ he added.
