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Auckland property market ready to boil over

Wednesday 05 Dec 2012 6:35p.m.

Auckland property market ready to boil over

An already hot Auckland property market seems to be boiling over.

The city's biggest real estate company says its average selling price has hit a new record, and tomorrow the Reserve Bank will be making a statement.

The average price for a home sold by Barfoot & Thompson last month was $627,000.

“The high price, the million-dollar properties, we had 146 sales over a million dollars which is quite phenomenal at the current time,” says Peter Thompson of Barfoot & Thompson.

Prices had been subdued in most of the rest of the country, but that appears to be changing.

“Over the last few months you have seen a distinct pickup in the number of house sales outside of Auckland,” says Westpac’s chief economist Dominic Stephens. “I think that's an indicator that in the near future house prices will start rising a little more rapidly in areas of New Zealand outside of Auckland.”

The housing market is one of the factors the Reserve Bank is pondering as it considers whether to move the official cash rate (OCR) tomorrow.

Most economists predict new Reserve Bank governor Graeme Wheeler will keep the OCR at 2.5 percent - but if he does make a move, it's thought he'll cut rates.

Exporters hope such a cut would lead to a lower dollar, but there are no guarantees.  Australia cut its official cash rate to 3 percent yesterday - and their dollar went up.

“The market was so geared up for a rate cut that everyone sold the Australian dollar ahead of the announcement and so when they actually did it, everyone bought the Australian dollar back and that resulted in the Australian dollar lifting higher again,” says Derek Rankin of Rankin Treasury.

So it looks like there is no easy way to lower house prices - or the dollar.

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