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Barfoot's 'golden autumn' goes on; house sales up again
Auckland's biggest real estate agency group, Barfoot and Thompson, has reported sales volumes in June rose a further 5.8% from May and are up 54.9% from June a year ago, while its average house sale price fell 2.3%. These figures are closely watched because Barfoot and Thompson is the biggest agency in the biggest market and these are the first sales results for the month of June just completed.
"The golden autumn that the Auckland housing market has been enjoying since March continued in June," Barfoot and Thompson said. It sold 861 properties in June at an average price of NZ$521,791, which was down 1% from June a year ago.
"The Auckland housing market has made a remarkable recovery from the challenges experienced as a result of the past 18 months of economic downturn," Barfoot & Thompson Managing Director Peter Thompson said.
"No-one was forecasting the speed, strength and solidity of the recovery in house sales activity, or the prices that are being achieved," Thompson said.
"It's hard to dismiss the robust sales of recent months as a temporary reprieve in the ongoing decline of housing values. For the past six months we have sold on average 747 properties a month, which is on average a third more than the average of 561 for the same six months last year," he said.
"At the same time values have remained firm, and for the last six months the average sale price has been $510,896, close to last year's 12 month average price of $513,597," he said.
"The strength of the Auckland housing market can be added to the list of "˜green shoots' indicating that the economy in general and people's confidence is starting to stabilise."
Thompson said finding new listings was a big challenge with total listings falling to a 20 month low of 5557.
Barfoot and Thompson said demand for rental property remained strong. It let 735 properties in the month, the highest number ever in June, at an average rent of NZ$388 week, which was up from an average NZ$379 in May.
"For the past six months the average weekly rent has fluctuated from a high of $399 (in April) to a low of $379 (in May)," said Mr Thompson.
"Over the past six months rents have stabilised at an average of $387 a week, which is in line with the average for 2008."
I hope the doomsayers take
I hope the doomsayers take notice. The Auckland house market bottomed out in Dec 2008- Jan 2009. It has been continuing to firm since then. Just watch what happens this Spring.
Gravity defying! 1000 jobs lost
Gravity defying!
1000 jobs lost each week and dairy payout possibly below 4 $ has no effect on the most important and inflated asset class in NZ.
less people in paid job to have a 20% deposit and less revenue to the country.Common sense tells me you are wrong Gavin
If prices resume an upwards
If prices resume an upwards trend, by every reasonable measure (unless we get runaway inflation), it will be a bubble.
Good or bad - you can choose Gavin.
chandra, never has ,never will.
chandra, never has ,never will.
So what is all the excuses for this months performance from all you doom sayers. Throw your computers away and go fishing. You will learn more.
Ianc, time you took up
Ianc, time you took up another occupation. You are hopeless at second guessing the housing market.
Oh goody!; houses too expensive
Oh goody!; houses too expensive for the average Kiwi, but that doesn't matter as we can still afford a TV to watch Lifestyles of the Rich and Famous.
ps
this is a bit old (1978) but it is a plug for a system of land taxation.
http://www.cooperativeindividualism.org/prentice-perry_on-housing-market...
Any talk of another surge
Any talk of another surge in residential property pricing is wishful thinking.
It'll bounce around this value/volume for some time to come (though not anything like the 10+ years some commentators are suggesting).
jh - I can't believe anyone can seriously advocate for tax as an answer to anything. Tax is a disease not a cure.
Did they say that prices
Did they say that prices fell in June?
In most markets, falling prices on rising volume is not a good sign, but I guess RE is different somehow.
I thought the same thing
I thought the same thing DC. More people selling houses but getting less for them - we'll have to wait and see if that trend continues I guess. If it does, it depends on which side of the fence you sit on this housing debate as to whether that's a good thing or not. I personally believe that it makes sense and would be surprised if it wasn't a trend. But I don't have a crystal ball (unfortunately).
Prior to last election The
Prior to last election The Landlord says noted:
"Meanwhile the National Party released its immigration policy. You may wonder what this means for the property market. It is clear from research that immigration is one of the key drivers of house price growth.
The logic is simple. If you import more people into the country, then you need more houses. Supply and demand means that prices are then pushed up, this is particularly so in Auckland.
While the latest immigration numbers show the number of people coming into New Zealand is starting to rise, the Nat's policy looks like it wants to increase immigration levels even further. (Although it is unclear what sort of number they are targeting.)
This policy is, arguably, a plus for people who want house prices to rise. (But may be not so good for first home owners wanting to buy.)
My guess has always been that property investors lean heavily towards the right rather than the left. (This was made clear in an email newsletter I saw from one developer this week.)"
http://www.landlords.co.nz/blog/heat-rising-in-housing-policy
a trade off situation huh? Never mind the govt can spin that (blame it on low wages and turn it back on the workers who need to upskill. Emthasize the "brightest and best" heading to Australia).
Barfoots have more sales than
Barfoots have more sales than last year. So what, how many real estate agencies went out of business in the last two years. One would expect a big outfit like Barfoots to get more listings, therefore more sales. As for the medium price, yeah thats a good judge of whats going on. Real good.
Its the 'eye of the
Its the 'eye of the storm', that patch where it looks like the storm is over, but the worst is yet to come.
good to see Tony Alexander
good to see Tony Alexander FINALLY acknowledging today that the significant gains in net migration are being driven more by fewer kiwis leaving than by lots of cashed up immigrants arriving
See page 13 of his report:
http://www.bnz.co.nz/binaries/w020709.pdf
he's a bit slow, I've been making this point repeatedly over the last 3 months
its obvious that this is less inflationary in terms of the housing market
william, thats a very good
william,
thats a very good point - less agencies meaning more sales per agency.
Although in balance i hate to say it but it does appear NZ's housing crash is taking a breather, not a bottom or a new boom, but a breather .... price falls will resume in due course. Interest rates are artificially low and the alternative investments have been massacred (shares) or are punished by the IRD (bank deposits). Interesting to see the global mood has quickly soured again, a realisation that you there is no such thing as a quick correction when facing unprecedented levels of debt on ALL fronts. I view this housing breather as the same thing - naive optimism. Reality will return, either through rational behaviour returning because people wake up again OR rational behaviour returning because people are forced into it via higher interest rates, unemployment (and fear of unemployment) etc, sinking rents, or retirement cashing up.
I'm sorry property bulls. But how can anyone seriously think NZ can maintain the second most expensive property in the world by increasing our obscene debt levels whilst our productivity is reducing (see Milk prices) during a new era of debt deleveraging is beyond me. Markets can stay irrational for some time, not all time. Wake up!!!!
I'm one of the doomsayers.
I'm one of the doomsayers.
"No-one was forecasting the speed, strength and solidity of the recovery in house sales activity, or the prices that are being achieved," Thompson said.
Barfoot's is really good news. :-)
Unemployment is rising fast - to a stage of a domino effect ?
Next question ......
Those green shoots are heading
Those green shoots are heading skyward...No?
The fact that the golden
The fact that the golden weather goes on and on is both good and bad the way I look at it...
Its good news for those families who have worked hard, did manage to buy a home and continue to live there and their sole asset hasn't lost too much value. Oh and good for the banks of course !!
Of course its bad news for people who continue work hard to save to buy a home, only to find that the "kiwi dream" is getting further out of reach. I really am not sure how anyone could be happy to see others in a situation like this. I really feel sorry for young kiwi's who are struggling to get into their first home because of the absolute greed of some.
Why can't we create incentive
Why can't we create incentive for investment in other asset classes rather than a boring old tax YAWN!!!! Surely NZ can come up with some ORIGINAL ideas?????
spidy, how about REMOVING tax
spidy,
how about REMOVING tax on savings. Not original, but certainly effective.
oh - i forgot, we
oh - i forgot, we need the tax on savings to offset the tax not paid by negatively geared property owners.
Why can’t we create incentive
Why can't we create incentive for investment in other asset classes rather than a boring old tax YAWN!!!! Surely NZ can come up with some ORIGINAL ideas?????
spidy sense this space is for you.
Mike Bayley from real estate
Mike Bayley from real estate agency Bayleys has a very balanced commentary on the New Zealand property market, taking into account much of the economic perspective of the wider economy.
I found his comments on the website, which is linked....
http://www.bayleys.co.nz/Our_Services/propertyLIVE
Hi Everyone The house price
Hi Everyone
The house price is dropping, comparing with May 2009 and June last year. It is exactly what we predicted on this site months ago. I cannot see any signs of housing booming. Why you guys are not cheering?
Event the rent is not going to anywhere.
Property is always seen as
Property is always seen as a 'safe' investment, with good capital gains. NZers have been yet down by the systems in other classes of investment, due to our weak laws and weak regulation, and NZ regulators not having the resources or staff to check the companies they are supposed to regulate.
Look at Finance companies, Unit Trusts (eg ING/ANZ), and these comapnies have been able to get away with a lot. We need to be tough like they are in the US with Madoff, and actually protect investors.
It's not that it has
It's not that it has been a safe investment Rob, it's more a case of property being a govt protected investment where returns are guaranteed through a never ending 'more immigrants' policy. Guess what most politicians invest in? The trick is to realise this rort on the economy will never end. Then you judge at what point in the cycle the rort is at. Right now it's still too far from Nov 2011 for the screw to be turned. It's the time when those in the know buy up large on huge margins. Then come 2011 and the gates are opened, it becomes time to sell. In reality the whole economy is just big cash cow for the money men. Somewhere in the stink you will hear calls for structural reform and inquiries, committees and policy research but nothing will change.
Scott C. - yep thats
Scott C. - yep thats a pretty good article but Bayley - like many others - falls into the trap of equating a net migration boom with an immigration boom
there is a big difference
Viking - I don't think
Viking - I don't think you read what I posted. I said **if** they go up, it will be a bubble. That's not a forecast, its a statement. They might go up and, as with any bubble, there will eventually be repercussions.
If you want a forecast out of me - my 6 month view is that prices will rise modestly (up to 5%) based on Barfoot numbers, flat/down for REINZ and sideways for QV, but it depends on a number of factors.
Spidy Sence - Hey here
Spidy Sence - Hey here is an idea on avoiding this whole bloody credit fiasco and maybe even the boom bust cycle that seems to be getting even more and more extreme.
It is quite simple: every seven years all loans are written off (or implicitly loan terms all expire at the same time). Call it a form of forced de-leveraging before it creates problems. It means that no one ever lends excessive amounts resulting in inflated asset prices and people are not tied to a life time of debt.
But then the bank lobbys will throw a fit.
wally, I do agree with
wally,
I do agree with a lot of what you say on this site, but you do seem to contradict yourself. I am sure you have made the point on many occasions that property is a terrible investment as it is over priced. You seem sometimes to argue that all though it is overpriced, it will be kept overpriced by govt policy. If thats the case then it is a good investment (but maybe not as good as copper) even if its only due to govt policy.
Did I read somewhere that
Did I read somewhere that the RB is suggesting the banks get more of their borrowings from within NZ?
Apparently the RB is not prepared to do this in a heavy-handed way. More a hint (as usual no real action)
If it did happen I would get a better rate on my savings and that would be passed on to mortgage holders and the good side is that NZ becomes less depedent upon Japanese housewives who would get less interest.
Immigration. It is significantly the young delaying their big OE and they are not the buyers of houses, not yet anyway.
Frankly I believe the recent ups in the house sales are 'noise' rather than a signal and once other factors filter through that noise will reduce.
Got my AMP 2008 annual
Got my AMP 2008 annual reports yesterday for my Personal Retirement plans. My returns for the past year ranged from -18.0% to -36.7%. Even if you lose 10-15% on property it still makes investing property look attractive. Where's my tax refund......
gatoh - a 10-15% fall
gatoh - a 10-15% fall in a 50% geared investment property is a -20 to -30% fall in equity.
Re IanC: Or to put
Re IanC:
Or to put it another way. Borrow 85% to 90% on a mortgage and loose 100% of your investment! More than 15%...it really gets nasty....
True enough Jimmy, it all
True enough Jimmy, it all hangs on govt policy. That's dangerous. If I had to lay a bet I would pick policy keeping it expensive. But it can still be a poor investment decision if the policy is to hold prices high and keep them there. It's a question of opportunity cost. The more I read and research the ongoing nightmare, the more I am convinced we will see a surge in growth centred on India and China, which leaves the anglo world in the debt hole behind it. If that happens, Aussie will do ok and maybe us too. The growth gains will be in the export sector and in commodities, especially meat. We have had huge changes in govt policy in the past which slammed into what were thought to be safe rural property investment decisions. Who knows!
My bet is that the
My bet is that the India/China consumtion fix is some conciderable way off. Something like 40% of the consumption of the planet WAS done in the States. There is no one, right now, that can take over. The total developed world mass is not big enough. It will evolve, but I have to think that debt retirement has a long way to run.As you say, Wally, who knows!
Gearing can be a killer
Gearing can be a killer for investments. It can also make you very rich.
The fact that property has always been supported by bank lending is only because they see benefits for them. Coupled with generally increasing values part of which has been natural inflation has seen the advocates of property investment crowing incessantly.
Today there are many other types of investment that offer the same gearing and often much higher levels. Foreign exchange investing for one offers in effect a 99% mortgage and one percent change in the rate can double your money or knock you out. Not only that but you can do that in a very short period. It is the greatest casino known.
gatoh's AMP investment has a huge overhead to overcome before it earns anything with layers of advisors/managers etc creaming off their share. Would property investment do any better?
Just keep waiting everyone. An
Just keep waiting everyone.
An extended period of consolidation is when the time is right.
Wally, I hope you are
Wally,
I hope you are wrong on the govt policy, but even allowing for it I think houses will continue to fall for the simple reason that you need a big capital gain to offset the massive rent v costs scenario (assuming long term average int rates of > 8 %). Even with govt friendly tax laws and immigration, you reach a point where capital gains can not grow at higher rates than wages cos households are committing the maximum they can commit. I think we have pretty much reached that stage - and once big gains are no longer a possibility, then the silly money will leave because the gains are not big enough to offset the loss.
And who knows with govt policy - sometime govt have to act rationally (eg roling back an unaffordable welfare state in the 80s). the evidence is unequivocal that NZ is choking on household debt - our CA has ballooned over the past 15 years despite increasing productivity, and its all down to mortgage interest payments. Every year we maintain highhouse prices, another batch of FHBs adds more to the debt than is being paid off. This can not last, and will end, either at the hand of the govt, frightened overseas lenders, or heaven forbid NZers waking up.
"Morning", jimmy
"Morning", jimmy
Very well said jimmy -
Very well said jimmy - it's my view as well, that there will be a crunch time ... one day. I just no longer think its right now.
I did, however, notice the QV survey indicated that most of the buying could be from investors (and very little from first home buyers). Note selection and response bias, so treat "statistics" with caution:
http://www.stuff.co.nz/business/personal-finance/2563209/Investors-marke...
The survey also found that 31 percent of respondents said they were either buying investment property, or selling off investments, up from 23 percent who cited this reason previously. By contrast, first home buyers' intent to buy fell from seven percent to just four percent over the same period.
mmm, interesting views IanC and
mmm, interesting views IanC and Jimmy.
Like you I think property is taking a breather, and like you I wouldn't be surprised if it dips again.
In a previous post Rodney Dickens seemed to imply that that was his view - a mini recovery and then another correction
time will tell
There should be a third
There should be a third category in that survey, IanC.
1)FHB
2)Investors, and
3)those terrified of missing the boat on a chance to repay debt/and or survive in their old age as they see no other way of accumulating a safety net.
Don't get too excited guys.
Don't get too excited guys.
Take yourselves to the moon and look down on NZ house prices from a worldly perspective.
Price movements will not be smooth. There will be statistical noise month to month.
Forget about these data points - they mean nothing in the scheme of things.
At issue is the longer term trend of house prices and from a macro perspective, they have but one way to go - South !
The recession hasn't even started here as yet.
Watch the inexorable increase in unemployment around the world.
Why do we think we are immune ?
We'll were not - just be patient and think in time frame of years.
Watch our commodity prices and export volumes.
They are what drives our economy.
Remember in real terms the S & P took 25 years to get back to 1929 levels.
Forget a month's data point of very inconsistent data.
If low priced apartments don't sell one month - median prices will rise.
Hardly something to get excited about.
If you believe in green shoots - then beware there's not a another man behind him with a bucket of Roundup who looks like a Depression.
We really have a problem,
We really have a problem, the spivs have an enormously disproportionate hold on this economy ! House price inflation drove interest rates up in nz and the threat of a resumption of, prevents them from falling any further. The dollar remains high, external demand for our exports suppressed etc. etc. The NZ disease !
We are part of this
We are part of this world, especially in good but particularly in bad times and as soon as we recognise and accept this as a nation, we can try to make changes. To make the situation seem better then it is doesn't help.
Listen to this (Nassim Taleb) :
http://www.cnbc.com/id/31706523
more read: http://www.cnbc.com/id/31713614
more read:
http://www.cnbc.com/id/31713614
Answer: Sell that property investment
Answer: Sell that property investment you haven't bought yet and buy it back when it gets cheaper. Hence make a big profit.
OK, tell me I am stupid but that is exactly what you can do with shares, currencies etc.
Why buy into real estate when there are so many other opportunities around.
Ignorance of the options other than real estate is no excuse to "buy bricks and mortar" cos they cannot take it away and especially the land it is built on.
As the most recent contributors here are commenting, the whole economic structure is on shifting ground currently and real estate is not immune however solid the physical soil beneath it.
Jimmy, I do agree. We
Jimmy, I do agree. We are stuffed. But the fools will waste billions trying to keep the corpse looking healthy. There is now, no way to make the 180 billion in household debt go away. The banks are desperate to hold property prices high to protect their bottom line. The govt will do what it can to keep them up for fear of banks being downgraded. It's a sick policy. Sooner or later the rubber band will snap and that's why I will not invest in property.
My question - Are there
My question - Are there any statistics that separate out holiday coastal property from big city residential?
While the economy is still reasonably healthy and unemployment and interest rates reasonably low I can just about understand why residential house prices have remained stable (contrary to my expectations) but for the life of me I don't understand what supports coastal property.
Holiday coastal property isn't "a place to live" (except for a month per year), it doesn't generate rental income and yet would incur significant costs - rates/utililties/maintenance costs & potentially mortgage costs.
Although a coastal property is a lovely place to spend a few weeks over summer and I have an emotional attachment to the kiwi bach I can't see what is supporting the boom prices.
The vast majority of NZers
The vast majority of NZers rely on dailly TV "news" broadcasts and the "journal" junk in the following half hour for info on "economic" affairs. What happened ? What went wrong here ? why do people accept such offal ? Theres little "news" and no decent comment or analysis. I'm damn sure it wasnt as bad when I was growing up here in the 70s and early 80s. The weekend papers are little better. Anything (and I challenge you to prove me wrong) of value (esp. analysis) is lifted from the wire or the uk papers.
Both the papers (comment esp) and the eve news broadcasts are delivered at the level of "there were these two guys in a pub..."
Eastie - I totally agree.
Eastie - I totally agree. Mainstream media in NZ is garbage.
Unfortunately I believe that is a product of our small insular population.
the herald has a monopoly in Auckland and it shows. Apart from a few good writers - I'm thinking here of Fran O'Sullivan and Liam Dann - their writing is crap.
there are a couple of old hacks there that should just pack it in
Well, I sure hope B&F's
Well, I sure hope B&F's "Golden Autumn" doesn't turn into a "Golden Shower". I am not surprised that housing in our largest urban center remains stronger than the real estate market outside of Auckland, but the greater economy is hurting. I wouldn't break out the champagne just yet though: A hungry government sits on the sidelines, looking for tax revenue from somewhere. You fellas in real estate best hope it isn't you.
Which is why sites like
Which is why sites like this are so valuable to people who want to try and find out what maybe is really going on.
It is not so much just the articles on here, but the way they are thoroughly critiqued, from what appear to be 'experts', the amateur enthusiasts and those with their own experiences.
I used to be one who used to believe the headlines, simply because, where else was there ready access to data.
For what it's worth, I think it is impossible for house prices to start lifting again, purely on the criteria of affordability. Leaving aside the shrinking commodity prices, rampant job losses, much tighter credit and a debt situation overall that leaves us so exposed.
Agree with you on Fran O'Sullivan
o.k elves..here's the truth! y/day
o.k elves..here's the truth!
y/day i was talking to a canny property investor friend.
he told me that now when he goes for a bank loan, the banks are pricing out the ability to repay a mortgage loan, on a baseline of 8%, irregardless of current rates.
obviously this means that this is where they see rates averaging in the not-too-distant -future.
so those who are jumping in now because rates are low are in for a nasty shock when the go to re-fix or come off floating.
their house will probably be worth less than they paid for it and their mortgage is a lot higher
it's just fairydust to think that there's some sort of revival in the RE market.
barefoots and hardcourts have a vested interested in talking up the figures...so what if more houses sold last month compared with same time last year?
the fact is houses are still selling for LESS every month and that's all that matters!
only fools and horses and those that have to buy, are making the figures look fancy.
as for immigration...analysis shows that's just a nonsense...mainly based on the kiwi drift o/seas slowing right down mixed with incoming students ,agricultural workers etc.
it's a boring refrain to keep chanting but buy if you have to, live in a house you like but don't believe that housing is a place to make money off cap. gain.
and here's the kicker..be scared, be very scared when you note that tony alexander, BNZ chief economist, in his weekly overview of the economy has suddenly gone from raving about housing picking up , to being cautionary in his tone!!
find a fresh dream...and hang onto your job.
it's not about the money, it's about enjoyment!
rob, infact with regards to
rob, infact with regards to immigration, 44 categories have been removed from the list, thus reducing the number of people eligible to qualify .. so even immigration is tightening its reins.. also Paula Benett was astounded how many people were getting onto the dole and they concedded the reason was that immigrants were taking up a lot of the jobs and the locals had to get onto the dole...
John - except for areas
John - except for areas where there are marked skill shortages, they should freeze immigration until the economy picks up
and a cut of 44 categories is a good start
@ Eastie - It sucks
@ Eastie - It sucks being a little bit smarter than their target market doesn't it : ( Don't take it personally brother, if they did put more relivant comment/analysis or even thought into their stuff 70% of their audience would be scrambling for the remote. "uuuuuummm dis is boring, I think idol's on 2"
Just be thankful you're not in aussie. What they pass off as hard hitting journalism is usually nothing more than a poorly disguised infomercial. Anyone seen ACA with Tracey Grimsure????????
It's really good to see
It's really good to see more outspoken bulls on here at last.
You can't get over a dead cat bounce until sentiment turns the wrong way :)
Mr. TA, pleae have a
Mr. TA, pleae have a read of http://www.stuff.co.nz/national/2564482/Redundant-migrants-forced-out
so whats going to happen to immigration? thanks to all your predictions about house shortages
10.55 AM BLOG NOT SURE
10.55 AM BLOG NOT SURE IF IT IS KNOWN REGARDLESS OF THE REPORT MIGRANTS FORCED OUT?In Australia they are much more punitive ,under the Aussie Scheme a migrant who becomes redundant has automatically 28 days to quit the country EVEN IF THEY ARE SETTLED,it is causing great angst to the many thousands who are affected
A continuim of vested interests
A continuim of vested interests all giving their 2 cents worth with no realistic outcome.
Have a read of this Australian article where I think you can replace the references to Australia with NZ.
http://www.dailyreckoning.com.au/house-prices-always-go-structurally-hig...
in-australia/2009/07/02/
Jimmy, how can you "think"
Jimmy, how can you "think" of replacing Aussie with NZ??? two different contries/economies????
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