Record rents for Auckland

Over March average rents rose 4.7% in seasonally-adjusted terms on the prior month, up 8.2% on year-ago levels.

Barfoot & Thompson said the March data was "unequivocally strong", with seasonally-adjusted turnover up 11.4% on February - the strongest turnover in 15 months - and the average sales price rising to a record $581,190.

"When you combine the increase in weekly rents with the rise in property prices, it flags that accommodation in Auckland is in short supply," said Barfoot & Thompson managing director Peter Thompson.

"The rental increase also coincides with landlords reacting to the new taxation rules around investment property, and firmly fixing their focus on improving the operating return from rents."

New listings were also up 5.5% on the month, though down 7.3% on year-earlier levels.

Total listings declined 2.7% from February, and are down 7.3% on year-earlier levels.

While the average selling price was up on the month, the company said a relatively high number of very expensive property sales had skewed the figures.

"Barfoot & Thompson sold 14 homes valued at more than $2 million in the month, which compares with four in March 2010. Furthermore, there were 89 sales over $1 million, which is the highest level since March 2007," the report said.

The company cited demand issues for the rise in prices and rents.

"The big lift in average rent shows that demand for property to rent is high. The number of properties Barfoot & Thompson have let remains high (816 dwellings). The letting figures are steady on February's level (817 units), and down 0.9% on year-ago levels. We expect that rents will remain high over the year ahead, as demand remains high, and the low level of construction over recent years limits the overall housing stock."

Westpac said that while rent averages can be a volatile measure, "the latest result indicates that the anecdotes of ‘rental market madness' in Auckland may have more substance than we thought."

Thompson said that despite the rise in prices, he didn't believe another housing market bubble was forming.

"Rather, March may represent when confidence returned to the Auckland housing market with values stabilising."