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Barfoots says house sales and prices still strong in April
Auckland's largest realtor, Barfoot & Thompson, reported 809 sales in April at an average price of NZ$502,726. The number of sales over the month were still below those in 2006 and 2007, which recorded 829 and 899, respectively. Barfoots recorded 453 sales in April 2008.
Sales were down from 924 in March, but this was due to the traditional seasonal downturn in April, Barfoots said. The average price over the month was up 2% from March, but still down 3% from April 2008 and 5.6% from 2007.
"Traditionally April sales volume and prices can fall away markedly compared to March," Managing Director Peter Thompson said.
"It is a seasonal factor, so to get an increase in price in April with only a modest fall in the number of homes sold compared to the previous month is heartening," Thompson said.
"It demonstrates the housing market has found strength at its present level, and with confidence returning an increasing number of people are prepared to make buy and sell decisions. There is a catch up surge going through the market as people follow through on long held intentions to upgrade, invest in a property or free up equity," he said.
"There is a widely held belief that the housing market is extremely quiet with prices dropping. That belief is wrong, and April's average price is in line with the average price achieved for the first quarter of this year."
wassup Hugh P and Philbest
wassup Hugh P and Philbest ? is this kosher ?
Last April had no Easter
Last April had no Easter in it - this April did. So there was more trading days last year and sales were up nearly 80%. This suggests that the Auckland housing market is looking pretty strong.
Whatever. 4,000 agents leaving the
Whatever.
4,000 agents leaving the industry (25% of all) tell the real story. Average doesn't mean anything without knowing the full breakdown. And sales are up because lemming like kiwi's listen to rubbish like this. Or desperate to get out before the real carnage starts more like.
Once again. Our debt is at record levels, unemployment is over 5.5% and going to 10% in no time, interest rates while lowish are heading up long term, toursim is down 10% plus, companies are folding left, right and centre, but yeah property is going up again.
Look in your local rag at house prices and remember what they cost 1-2 years ago. You can see they have come down and are continuing to do so. Look at Glenfield, Beachhaven, Sunnynook etc, Lots of property under $400k. A year ago pretty much none.
Buy now and loss 10% by Dec, go on I dare you.
Wait for the unemployment data
Wait for the unemployment data goNZ! Mix in the current building consent figure(morbid) add a touch of budget blues and a wee twist of rising inflation, bake at 600 degrees in the real market worldwide recession before reading the ashes.
A dumb time to invest in property but if you are able to buy and sell privately in a short space of time, then it makes little difference.
Also prices are now starting
Also prices are now starting to tumble across the ditch, which will impact property prices here also,. Here's a link for more info..
http://business.theage.com.au/business/new-signs-of-property-decline-200...
"FRESH evidence of house prices falling across the country has been released by the Australian Bureau of Statistics.
Prices of established houses fell an estimated 2.2 per cent in the first three months of this year, and 6.7 per cent in the year to March 31, according to an index prepared by the bureau."
The property market is like
The property market is like a sky diver who has reached terminal velocity and
discovers both shutes are missing. For quite a while our sky diver will ponder lifes moments and even dream of landing on the very steep snow covered downslope of a very snow covered very high mountain ........splattttt.
Sales volume fell 12% from
Sales volume fell 12% from March to April. My understanding is that the majority of sales took place in the first half of April - the second half was considerably less active (Alex - could you get Peter Thompson to give us that breakdown?).
A more representative measure of the average price that B+T provide is a 3 months rolling figure. That remained stuck at its recent low of $502K (the same as the March 2009 rolling figure), which is some $42K off the peak 3 month rolling period (March/April/May 2007); you have to go back to the period Sept/Oct/Nov 2006 to record a similar low.
"Sales volume fell 12% from
"Sales volume fell 12% from March to April"
Seasonally adjust the numbers and you'll see that April was pretty damned strong relative to recent history.
I'm not saying that people should be buying houses - but this is data. This is telling us that people in Auckland ARE buying properties. We can't just ignore it because we don't think they should be ...
i don't trust barfoots' spin
i don't trust barfoots' spin but if prices are stabilizing at this point - and it's just a point, a snapshot, meaningless in the wider scheme of things - then an underlying factor may be that kiwis are rushing in with a mentality still tied to the bubble. they think they're getting a deal because they still remember recent house prices and use them as their yardstick. typical of the behavior inherent in an asset crash. these people are calling the bottom way too early and it'll happen a few more times before we hit the real bottom of the market. the mkt will keep going down with false steps along the way. when the psychology of the mkt changes and people disregard the bubble as an anomaly fueled by cheap easy credit - a situation that won't be coming back anytime soon - then they'll start looking at what houses are really worth in the current economic climate and prices will have a chance of bottoming out. roll on that day!
hmm how about this (all
hmm how about this (all real events on the North Shore).
I had two friends with property on the market. 1 near Pinehill, the other in Beachhaven. The first had the house on the market for 3 days at $560k (wanted a quick sale for personal reasons), got an offer offer $540 which then fell through. Sold two days later for under $520k. So just on the market for 1 and a bit weeks but was probably worth about $600k at least (and nearer $650k last year). This will turn up in the stats for April, but as its a higher value house it will drag up the mean, bring down the days to sell, even though is sold for a lot less than it should....
Other has had a house for sale for nearly a year, now on the market for $360k. Will be lucky to get $340 as no first timers buying. It won't appear on the sales stats, won't drag down the mean, and once sold will have been through about 4 agents thereby skewing the days to sell profile.....
So the above looks good in stats, but the underlying theme is all bad.....
There are some similarities between
There are some similarities between the way the water recedes from the beach, drawing in the poor fools who go to grab the stranded fish, only to be caught naked by the wall of muddy surging Tsunami. Bit like the banks and the cheap credit Bollard is responsible for isn't it. The suckers rush on in to get the cheap money, only to be trapped when the wall of rate increases arrives at a speed they cannot outrun.
The US money supply has increased by 10% in one year. Now what might that mean?
So.... in a few days
So.... in a few days time QV will come out with a story reporting "House sales/values fall in April"
and the head of the Real Estate Institute will be quoted "There has never been a better time to buy property"
"The US money supply has
"The US money supply has increased by 10% in one year. Now what might that mean?"
Inflation? I am on the sidelines waiting for a better time to purchase a house (to live in with my family) and I must say that I am concerned that if we are hit with a wall of inflation, I would have been better off buying now.
Inflation will erode my deposit if I wait, but bring down the value of my mortgage if I buy now.
Am I right in thinking that those of us on the sidelines only benefit if house prices come down in real terms rather than just nominal terms?
WOULD BE INTERESTING TO HEAR
WOULD BE INTERESTING TO HEAR THE REAL ESTATE SALES VIEWS FROM OTHER REAL ESTATE COMPANIES AND HOW THEY SEE THE MARKET,SEEMS TO ME BARFOOTS ARE THE ONLY COMPANY THAT RUSHES TO THE MEDIA TO PROMOTE THEMSELVES.HMMMM.
Matt N - for the
Matt N - for the seasonality arguement to hold much water I think you would have to therefor see sales volume now lift from April into May (traditionally volumes have been strong in March, then move down in April then bounce again in May (this is what happend in the B+T data both in 2008 and 2007 - around a 15% bounce or more in those years between April and May). I can tell you now I doubt VERY much this is going to happen. May will almost certainly be LOWER in volume terms than April. April got a boost in its first 2 weeks with the strong carry over from March.
Thompson also knows its very unlikely May well be stronger than April (so any 'seasonal trend breaking' will be carefully glossed over) - in fact he is carefully laying the groundwork now for lowered volumes in the next months. Thus, from this article published elsewhere:
''Thompson said he anticipates the number of homes sold in coming months would follow the traditional seasonal pattern and decline through winter before increasing in spring.''
http://www.stuff.co.nz/business/personal-finance/2385997/Auckland-housin...
The 'traditional' seasonal pattern is for May to be stronger than April - but as you can see Thompson is already trying to rewrite history because he knows it almost certainly isn't going to be so this year. When May volumes come in lower than April he will tell us that this is the 'seasonal pattern'. Only it wont be - not at least as far as 2008 and 2007 were concerned.
I dont know who else
I dont know who else is getting sick of all the negativity around the property market. there are a few easy ways for first home owners to get on the property ladder, vendor finance is quite an easy one to pull off with the amount of people out there desperate to sell and makes for an easy deal with the bank.
A few deals I have done recently I have secured either no or very low interest payments on 30-40% of the current market value/asking price over a term of 5-10 years so I really dont care if prices drop 20% for a few years as I wont be left with negative equity to keep the 1st mortgagor(bank) happy during my vendor finance term. By the time I have to eventually pay off the vendor loan should surely be long enough to be able to revalue the first mortgage to clear the vendor easy enough with only modest growth needed over the full term.
The value drops that are going on really only affect you if you want/have to sell and if youve been silly enough to get a 95% loan in the past on a property that you had no scope to easily improve to build in a % buffer then fool you.
My opinion is there are great deals out there all over the counrty and alot of people willing to do a deal on excellent terms so If you cant afford to buy the house of your dreams yet then think outside the box with your terms and look to the cheaper areas to tie up some good deals for the future that way when things do start taking off again atleast you should have made some decent money to put toward the home you want.
I cant help but think if people who have never owned a property before keep reading doom and gloom then they will never make the move, that doesnt help any of us if the property market completely dies.
Realist that is what I
Realist that is what I have been saying for nearly a yr now
A $600k sells for 520k thats 13% down..to be able to even make a sales, and perhaps 600k (???) would not be what it was worth in Nov 2007 right?
It doesnt take many of these over the previous ave, in a market that is selling far less houses to slow the 'real value' figures down on a dropping market
It like saying "mortgee sales have tripled, therefore huge numbers of people are in serious trouble!!" The look at the actual numbers in relation to total sales or even the population base...
Or saying the Ave person/household earns the ave wage....they dont...10% earns extremely high wages/salaries, and the Ave Joe blogs is will below the national ave income.
Theres stats and then there is commonsense and reality.
We have 80% more chance of an accident within 1 km of home, and 80% more chance at an intersection.. but walking home from the train station doesnt stop dieing on the open road....
Nickk, actually it would do
Nickk, actually it would do us all good if the property "market" completely dies. Imagine a world where 50% of take home pay didnt go into servicing a mortgage, that should be the dream, not owning 11 houses.
Sam_M , don't forget when
Sam_M , don't forget when the wall of inflation arrives you will receive a much higher return on your savings. Equities will fall. Mortgage rates will rise, putting even more pressure on a market being hammered by high unemployment and falling incomes.
Were it not for these economic truths and the massive household debts being carried by only 40% of property owners, then maybe property would rise. But it won't.
So you are better off waiting for the infaltion and not locking up savings in long term bonds which will fall in value.
my hair dresser was high
my hair dresser was high and low today....his wife , a lawyer , lost her job last week so he did the sums on his 3 storey upmarket home in birkenhead and put it on the market that night....it sold within a week for a fraction more than he paid for it 2 years ago on the basis of being vacated by the end of next week.
the h/dresser charges me 45 bucks for a snip'n'clip so he knows how to coin it...hard to know what to say about this anecdote really ??!
rock on elves.
I've just returned to Auckland
I've just returned to Auckland from overseas and am holding off buying out of a fear that the market contains a bubble element. A couple of of things i don't understand:
1. I've seen a lot of comments to the effect that property price rises have been fueled by 'cheap credit'. Although this may be true of the UK and US is this really true of NZ? Haven't rates here always been 2%+ higher than other countries? To a certain extent hasn't any price bubble occurred in spite of credit rates?
2. I agree that the US (and UK) are destined for inflation as a consequence of large fiscal deficits which won't close and which will be funded by the printing press. Does inflation (even hyperinflation) in the US necessarily lead to inflation in NZ? Doesn't that require the RBNZ to crank the presses?
Absolutely right Fairfax Drouk, expectations
Absolutely right Fairfax Drouk, expectations of house price inflation seems to be perpetually present in NZ, its very sad! and in the long term will continue to hidebound the economy. Only Govt. action can finally squeeze it out I fear (long gone in Ire. UK and Spain) and that wont happen !
@Jill - I am with
@Jill - I am with Professionals Real Estate in central Auckland and operate the Pt Chevalier office. I have been in real estate since 1983 and have so far this year attained over 40% market share in my area so I think I have some credibility with regard to a report from the coalface!
If anyone had told me late last year that I would sell almost $12,000,000 worth of homes in the first 17 weeks of 2009 like a Tui advert I would have said yeah right!
However that's exactly what has happened. Most of the homes I have marketed sold within two weeks of the first advertisement being placed. Two thirds of the properties had multiple offers presented and two sold for more than the asking price!
Recent open homes in the $500,000 to $800,000 range are seeing very large numbers through - almost the same as we saw during the boom. This one www.nz.open2view.com/Property/202162 had around 90 people through it on the weekend even though Saturday was 10 degrees and raining.
Some homes are selling before they even make it to the first weekend of open homes.
The fact remains that the prices being paid in my area are well down on the $669,000 peak achieved in 2007 - the median in Pt Chevalier in the first quarter was $570,000 so that's a drop of $99,000 or just under 15%.
This drop in value combined with interest rates that are still well down on last year (despite the recent increase in longer term rates) seems to be the catalyst that has seen a pretty reasonable amount of activity eventuate.
On the other hand stock levels are low - there are around 38 homes for sale in Pt Chevalier right now whereas for most of last year there were consistently 60 or 70 available at any one time. Many people refinanced when rates were under 6% for 3 or 5 years fixed and took their homes off the market.
Right now I could sell 25 additional homes in the $450,000 to $800,000 range if I could actually convince more people to sell - we have over 600 buyers registered in our buyer database!
As far as May goes I fully expect it to remain busy but will go with the flow. June and July are usually much quieter and to be honest I will be looking forward to a break.
Many people are now holding off selling until Spring expecting the market to continue improving - are they right or wrong? I have no idea - markets just happen. Nobody knows where it will be in the next 6 months let alone 1 month.
All I know is that if you want your house sold right now and you are prepared to accept less than your home was worth at the peak then we can sell it.
Matlok - NZers perceive those
Matlok - NZers perceive those 2% more expensive interest rates to have been cheap, and certainly credit was pretty easy.
Ross - you seem to have benefited nicely from the agents who have left the industry ;)
Its interesting you quote 15% down, yet the Barfoot and the official stats are less than 10% down (I think). Is a market 15% off its peak a good thing? Does it change the psyche of expectations of continued rising prices?
Matlock, no so much "cheap"
Matlock,
no so much "cheap" credit as readily available credit. Given the rise in house prices that seemed to be a one way street people were getting 100% Loan to valuation (LVR ) loans.
People with existing equity who wanted to buy investment properties were doing things like borrowing to buy those properties and negative gearing them. But one of the wrinkles was that for some of them, they couldn't service the debt with rent and their own income, even with the negative gearing tax credit. Solution? Borrow more than the property was worth and use the extra to pay the mortgage. When the house prices were going up way more than justified by rent returns who cared? The plan would be to sell if required. Or wait for rents to catch up so that the rent would pay for the mortgage. Because everyone knows that house prices double every 7 to 10 years. And that property never goes down in New Zealand. (Its different here I'm told)
The ponzification of housing has run a long way in New Zealand. Bollard is desperate to keep the ponzi scheme alive.
Regarding the RBNZ cranking the presses. I suggest you have a read of Steve Keen's website
http://www.debtdeflation.com/blogs/2009/01/31/therovingcavaliersofcredit/
and
http://www.debtdeflation.com/blogs/2009/05/04/debtwatch-no-34-the-confid...
and
http://www.debtdeflation.com/blogs/2009/04/06/steve-keens-debtwatch-no-3...
In all of this you have to make your own mind up what to do.
Fear of missing out because of house prices kicking up again due to low interest rates?
Fear of paying too much due to house prices falling due to massive unemployment?
Fear of paying too much due to house prices falling due to unemployment AND rising interest rates due to a currency collapse because of the large debt levels carried by NZ as a whole. (relatively low public/government debt. Very High Private debt)
I would recommend you have a look at Chris Martenson's web site as well. He puts out some great information on an infrequent basis. At the moment he is calling the current rally a bear market rally. And that if you rode the share market down then this rally is a good time to get out.
If Martenson's call that there is another downward leg to the share market is true, examine the share market, Look at the shares you would want to buy at 20 or 30% below their current price. And if there is another downward leg to the share market, buy those shares. Do your due diligence. And only buy those shares you think would be good value for money.
Can someone answer this from
Can someone answer this from Matlock? It is a good question:
"2. I agree that the US (and UK) are destined for inflation as a consequence of large fiscal deficits which won't close and which will be funded by the printing press. Does inflation (even hyperinflation) in the US necessarily lead to inflation in NZ? Doesn't that require the RBNZ to crank the presses?"
Ross, Thank you for your
Ross,
Thank you for your contribution. What do you think is driving the boom? Are the buyers locals or are you seeing a surge of expats and new migrants? Where I live the market is also very busy, listings are in short supply and prices are down around 15 %.
Given the interest in housing in your area and the shortage of supply- what do you think is stopping prices from moving back up to boom time levels? You would think that the imbalance in supply and demand would start to drive prices up again.
IMO it is fair to
IMO it is fair to say that so many people have been waiting to buy or sell that we have reached a point in time where there are people prepared to have agents bring them together to do a deal.
it is really nice to have the willing buyer willing seller starting to kick in. people have run out of patience on both sides of the equation, especially with the now lower prices of homes and interest repayments - so much easier to bring a deal to the table when it is not all about ego, but business and lifestyle needs.
this is the time when everyone has numb hands as they have been sitting on them too long, the tingle is starting to hurt, so movement is starting to occur and although the first bit of bloodflow is uncomfortable, we all know the feeling will come back now things are moving again, and in time we will have to give the odd glance to the few still in a paralyzed state - sitting on their hands moaning about moaning.
if the banks were playing by the rules it would be taking off like a rocket, so all eyes on the minister of finance...
Re> inflation and the US/Uk
Re> inflation and the US/Uk printing presses.
Well think of it this way - in US terms and in terms of commodities (take oil as an example - a very good example, since increases in the price of oil feed through in dozens of inflatioary ways, everything from the cost of moving goods, to the cost of growing food).
If the US prints money (which it is) and increases the money supply (which it is trying to do) the net effect is to have more dollars chasing those barrels of oil. Result - the price of oil goes up (in US$ terms). Since so many commodities are priced in US$ the whole commodity complex starts to move up (in US$ terms). In effect the same thing which was happening in the period 2005-mid-2008.
Then ask yourself what happened to inflation during that period in NZ?
1. Could the surge Ross
1. Could the surge Ross is talking about just be that sellers are now more realistic so buyers and sellers are able to deal but as he says 15% off?
2. Re inflation - Japan has been printing money for years now and running massive deficits, yet they are still battling deflation. It is possible that the combination of credit deflation, capital destruction and demographics means that the same will occur in those countries printing now.
3. Didn't Barfoots previously supply numbers on numbers sold AND new listings? Would be interesting to see if the high levels of inventory are declining to back up their bullish spin.
Carlos - regarding "high levels
Carlos - regarding "high levels of inventory" - I'm in the Waikato so can't comment on the Auckland market, but down here there has been a huge reduction in the number of listings since the end of last year, so it would seem the oversupply of 2008 has been largely mopped up in this neck of the woods anyway...
well done ross for being
well done ross for being successful in business, you're obviously good at what you do. my sister is an agent in devonport and she's flat out busy too. houses are moving there but she has many stories of houses going for way under expectations - especially at auction but not just, and also of vendors taking their houses off the mkt because their expectations weren't going to be met so they instead rent their places out, but for rents way below what they thought they were going to get. they won't bite the bullet re selling but they complain and then bite the bullet re the rent they get. these reluctant landlords are willing to take some pain for what they hope is the short term, waiting for prices to come back up again.
barfoots and other vested commentators enjoy bandying about a notion of latent demand in the mkt, like there's a huge surge of cashed up or well financed buyers just waiting to jump back in. well, with current financing conditions and with first time buyers still priced out i just don't buy this. and there's another side to this also. these reluctant landlords i talked about above are all latent supply. and when this supply hits the mkt there is a good chance the vendors will be under financial pressure and will really need to sell. in my humble opinion they're just putting themselves in a more vulnerable position. this new supply and the situation of the vendors providing it will further depress prices.
so regarding ross's local mkt observations, i just can't see this increased buyer interest as more than a bump in a long downward trend in the market. there are major economic problems afoot - rising unemployment, worsening business conditions, balance of trade problems, financing problems. all these factors have been listed by other people here and they are real and continuing. kiwis are hugely vulnerable to these problems because of low rates of pay, low levels of personal investments and spectacularly high debt levels. when times are tough we just don't have much to fall back on apart from selling a few assets - like, er, houses.
there was and is no reason for house prices to be at levels that are such high multiples of incomes and rent. it's simply not economically sustainable. the only reason for these high prices really is that people thought - and obviously some still do think this - that high prices are the new norm; that in the world we live in now that's just how it is. the notion of what constitutes housing value moved substantially in the last few years. i think this paradigm is shifting and we will reach a tipping point where people just say no to paying overinflated prices. then let's see how vendors disagreeing with potential buyers works out. show me an industry where businesses saying their customers are wrong has worked out. maybe monopolies can set their price points but they end up being broken up by antitrust actions. to everyone else the customer has to be king.
btw - totally bugs me that nz agents are doing no price mkting - negotiation, p.o.a, tender etc. i live here in l.a. and no agent, from right across the spectrum - bel air/malibu through to compton/watts - would dream of leaving the price part of the mkting mix out. it's the most important element - the starting point for negotiations, a statement of what the vendor's expectations are and basic information as to whether the property is in the buyers price range. why do nz agents do it? it seems to just make it harder for the buyer. which is a cracking mkting strategy... lordy.
targrossbilly, no price marketing probably
targrossbilly,
no price marketing probably works better in a sellers market where the mad market is pushing prices up in a rush.
In a buyers market, the buyers should take advantage of a psychological concept known as anchoring.
What ever figure is the first figure mentioned in negotiations tends to act as an anchor for subsequent negotiations. If the seller has a high price on the property that is the anchor. If the buyer puts in a low ball then that may become the anchor (the seller may use the CV as their anchor but if you low ball then you can try to change the anchor) If the seller won't put a price on the table, be bold and put one on yourself. That is, low ball. And don't feel shy. If they are foolish enough to not put a price on in this market then offer one.
Anchored in the sellers mind might be a figure like the CV. Work to change that initial anchor by throwing in a low ball way below CV.
We might then start to see a change in behavior and agents / sellers starting to put prices on their properties.
If you want to read more about the concept of anchors in negotiating behavior google on "kahneman anchor"
In the meantime, I've noted on a number of different blogs / forums that there are other people like you who are put off by properties that have no price on. And guess what, lots of people making those comments say they can't even be bothered looking.
It may be in your interest to go for some of those no price marketed properties because I feel that a segment of the buying population will avoid looking at those properties. Especially if they have a choice between a property that is going to auction or one with a price on. I wouldn't be surprised if you have less competition in that scenario
re: pricing, the real estate
re: pricing, the real estate weasels are suckering vendors into thinking its a sellers market (for a season) therefore dont price, but pay me a lump sum for 'marketing', trust me I'm a real estate professional.. Lordy lordy lordy.
Bigs ups to Brader for calling it honest and getting buyers and sellers to meet at market prices, guess thats why hes shifting stock.
Well said Ross you certainly
Well said Ross you certainly are the real deal "SOVEREIGN" in a market of uncertainity ,sounds to me a SPRING auction could be on the cards ,of course it could take 150,180,210 DAYS TO GET A RESULT,but then who is counting.
The full Barfoots release will
The full Barfoots release will soon be on the website at http://www.barfoot.co.nz/Market-Info.aspx
The most incredible thing about the April result is that Barfoots sales volume was UP 79% compared with the same month last year.
Was reported last week that listings are down - New house listings fell 34 per cent in April, but asking prices have remained stable says research from real estate website realestate.co.nz. The total number of new listings last month was 10,453, a fall of 21 per cent on March and a 34 per cent fall on April last year.
With all the bad news about the global economy, unemployment etc many will find it difficult to understand how housing is doing so well.
Ross Brader Says: "@Jill -
Ross Brader Says:
"@Jill - I am with Professionals Real Estate in central Auckland and operate the Pt Chevalier office.........
......The fact remains that the prices being paid in my area are well down on the $669,000 peak achieved in 2007 - the median in Pt Chevalier in the first quarter was $570,000 so that's a drop of $99,000 or just under 15%....."
We knock the realestate agents, then one comes along with no BS...Give credit where credit is due.
Just going back to some
Just going back to some of the earlier comments about "pent up demand". Truth is, there's been pent-up demand for houses by people who can't afford them for years. If sellers want to tap into this demand, it's easy. Drop your prices.