House prices
The real estate industry (REINZ) reports that median house price annual year-on-year increases have slowed this year from just under 20 percent to about 13.5 percent by the end of the year. The decline was somewhat more marked in Auckland where the annual increase fell to 7.7 percent. We expect the increase in sale prices for houses to continue to slow in coming months, but the increasing costs of building and the cost of land are likely to maintain some upward pressure on prices further out. This upward pressure will be accentuated in areas where population is growing, the benefits of the recent strong economy are most evident, and in areas where capital expenditure and development is strong.
The Department regularly commissions estimates of actual building costs. Dwelling construction data for the six-month period ending July 2004 indicates that the cost of building a typical dwelling was approximately $1,160 per square metre compared with $1,057 per square metre in July 2003.10
The cost of constructing non-residential buildings is also rising. The year-on-year quarterly increase in the non-residential buildings cost index for December 2004 was 10 percent.
