September's sales at Barfoot & Thompson were at their lowest level in nine years, with the bottom end of the market the most badly affected

September was a miserable month for the Auckland housing market, with sales at the region's largest real estate agency hitting a nine-year low.

Barfoot & Thompson sold 658 residential properties in September, down by 37% from the 1051 it sold in September last year and the lowest number of properties it has sold in the month of September since 2008.

However, while sales volumes were low, both the average and median prices of properties sold edged up slightly in September.

September's median selling price was $860,000 compared to $820,000 in August, but still below the March peak of $900,000.

September's average selling price was $928,213, up from $918,926 in August but also still well below the March peak of $968,570.

Both the average and median selling prices were also below where they were in October last year.

However the rise in prices may have been a result of the mix of properties being sold, with the middle to upper end of the market generally being more buoyant than lower end at the moment.

"A contributing factor to prices edging higher in September was that two thirds of all sales were of properties for in excess of $750,000, with 38.6% reaching a sale price in excess of $1 million," Barfoot & Thompson managing Director Peter Thompson said.

"Properties in the higher brackets tend to be less affected by uncertainty about potential future price movements."

Looking ahead, the Auckland market could be headed for a difficult spring selling season, with Barfoot having a total of 3829 residential properties available for sale at the end of September, up 25% compared to the 3060 it had available at the end of September last year and the most properties it had on its books in the month of September since 2011.

Barfoot signed up 1414 new listings in September compared to 1260 in August and 1536 in September last year.

Thompson said sellers were prepared to accept prices that were close to those that had prevailed over the last six months, but were rejecting low offers, while buyers were also active.

"There are a significant number of buyers actively searching and those that are realistic and prepared to meet the market are making a purchase," he said.

Barfoot Auckland

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171 Comments

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14

I hope RE agents were sensible and put money aside to see them through the tough times ;-)

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12

They do indeed put it aside by handing it to their car sales agents in trust - in return they get a shiny new merc to use. When sh... hits the fan they can go back and hand in their merc for 20% of the value and a bag of pot noodles, to get them through the hard times. Stop me if I'm being too cynical...

And let's not forget they also buy properties and build negatively geared property portfolio's too.

That's nice of you gingerninja, to care about the RE agents

Sounds like a mountain of pent up demand, waiting to be released.

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New listings rising, sales collapsing, inventory falling. Interesting conundrum, since there still 6 months of unused inventory. In the past 81 months , the three months of lowest volume have occurred in 2017. October sales have collapsed further.

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National can spin all the sh!t they want about having a robust economy.. but with household debt at such extreme levels.. forces will take over..

Considering it was election month, is anybody even remotely surprised? Anything other than a disaster month would have been a shock.

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D-back exactly. We shouldn't take any of the slowdown in the market seriously should we? Because first there was winter, Chinese New Year, elections... so many things to excuse the slow down...and there won't be any more factors to affect the market from now on. In fact, all I can see is blue skies on the horizon for the housing market ;-)

Don't forget interest rates are on the rise also....oh wait, maybe I should have a quick look at yesterday's headlines to see if that is the case :P

Elections occur how often ?

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22

It's human nature to be blindsided by downsides and to overstate upsides, especially when you have skin in the game or your ego invested.

Notice how none of the bulls can explain where more money can come from to push prices up further. Zero rationale for how prices can continue to be so out of sync with wages etc. Zero comment on typical market cycles. NONE OF THAT APPLIES to NZ housing bulls. Just endless endless tiny anecdotes or individual examples of a house sale here, or there. Endless repetition of MSM who are known (in NZ) to use almost no editorial or investigative journalism, so not presenting any kind of scope or balanced perspective. They mostly just print to keep their sponsors happy. Zero acknowledgement of how changing market sentiments typically play out (ie slowly at first, before building downward traction).

I dont know what housing bulls say but the money to push the market higher over time could come from:

Drop in interest rates
Migrants coming to reside in NZ
Growth in wages
Inflation
Scarcity
Inequality
Overseas buying
Changes to LVR restrictions
Changes to bank lending standards
Parents helping children
Increase in the number of occupants per home

In terms of your points:

"Zero rationale for how prices can continue to be so out of sync with wages"
House prices track affordability not wages
"Zero comment on typical market cycles"
Typical market cycles only see modest corrections
"NONE OF THAT APPLIES to NZ housing bulls"
Too many capitals used to take anything beyond this point seriously as clearly your emotions took over.

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Do people even read what they write?

Drop in interest rates - More debt fuelled money, cos that will end well
Migrants coming to reside in NZ - so more NZers homeless so we can house the rich of other countries
Growth in wages - at 1% wage growth you are going to be hoping for about 30 years of house price stagnation before the fundamentals even get close, let alone allowing wage growth to push prices up further
Inflation - disappearing again like that magic rabbit.
Scarcity - of housing?
Inequality - this will push prices up because rich people will gouge even more from our economy?
Overseas buying - As above, turning the immigration tap higher at the expense of kiwis?
Changes to LVR restrictions - depends if they go up or down
Changes to bank lending standards - they wish
Parents helping children - still not enough money in the system for it to push prices higher, if anything they should drop as boomers sell down
Increase in the number of occupants per home - overcrowding, of course, is a great solution to increase house prices, especially when we are one of the few first world countries with third world crowding diseases like rheumatic fever.

Most of the factors you list are likely to drop prices rather than increase them via homelessness and kiwis dying hence dropping demand. Or a failing economy. The rest sound like you believe Santa Claus is real and coming to have cookies and milk with you in 3 months time.

I read what I write yes, you did not read what I wrote. I listed the factors that can push housing higher over time, I did not pass judgement on them.
You have a material error in your post:
"Growth in wages - at 1% wage growth you are going to be hoping for about 30 years of house price stagnation before the fundamentals even get close, let alone allowing wage growth to push prices up further"
Because affordability, not wages, drive house prices you don't need income ratios to align with historical averages for prices to climb. Income is filtered through interest rates before effecting house prices. Because of this if interest rates stay where they are, then you do not need to wait 30 years for fundamentals to realign.
Further to this point it is not net real wages that matter, but nominal wage growth.

My bad Laminar, I assumed this was a rational list of likely factors that were possibly going to eventuate. But you never stated this, but included a broad list of unlikely possibilities which could push up house prices in an open ended time frame. Not sure what point you were trying to make. Broken clocks are right twice a day, and broken housing markets will have rises at some point each century.

That is a rational list that people can evaluate for themselves to help discern the direction of the market over some period of time that interests them.
Most broken clocks these days tell no time at all.

Drop in interest rates - how low can they possibly go? 1.5%?
Migrants coming to reside in NZ - maybe a reduction in numbers will result in a pay rise. Increased inflation here we come
Changes to LVR restrictions - I brought my first house with a 5% deposit 15 years ago and 10% was normal for non fhb.
Changes to bank lending standards - 40 / 50 year terms anyone.

Would prices rise or drop? They would be more affordable. What would happen to rents?

Well, with small deposits and 40-50 year terms I'm not sure you could distinguish 'owning' a home from rent, since after decades of paying you'd still have almost no equity.

The UK currently offers 2 year fixed rates at 0.89%. Our rates are about 4.5%. In order to get to 0.89% we need to halve the effective rate more than twice. That implies there is enough gas in the tank for housing to double in value somewhere between 1 and 2 times. Home ownership rates would plummet and wealth inequality would explode but thats not even the end of the road. This game can carry on for much longer if central banks are willing to get strange and most implications have been that central banks are willing to get very strange. Luckily our central bank seems reasonably sane.

I disagree. As the interest rate lowers, the principle repayments start to dominate rather than the interest payments. So, a 25 year term $100,000 mortgage at 4.5% costs $128 a week, reducing to 0.89% only reduces payment to $86. At that interest rate, the same weekly payment would allow a ~$150,000 mortgage, so a 50% increase in house prices rather than a 300% increase.

Technically you're right if you are talking about interest only, but if everyone is fully committed and only just paying interest only mortgages, how does anyone end up owning a house?

Hi mfd

There are two markets to consider, the principal and interest market which would increase in value by ~60% and the investment market which would increase by a number closer to 5 fold.
Consider a property of $500,000 that yields 5% and has 25% costs and an interest rate of 4.5%, it makes a $3,750 loss in the first year, reducing as rents rise. Lets set that as fair value.
If rates drop to 0.89% the fair value moves from $500,000 to an eye watering 2.5 million.
These forces compete with each other which is why I say something like 1 or two doublings as bank repose/standards likely moderates the rise.
From this we can extrapolate that drops in interest rates reduce home ownership rates (investors can make more of the drop in rates than home owners) and increase the fair value of housing.

Forces:
+60% and +500% which i would weight towards home owners as most homes are owned by home owners, but i give a substantial weighting to investment as it is a big part of the modern market place and rate cuts would further exacerbate that, Thus +100% to +200% is my best estimate and includes assumptions about behavior changing towards longer home loans, more help from parents etc, increased crowding, slightly rising incomes, wealthy buyers coming to live here, reduced home ownership rates and factors like less psychological pressure to fully repay a home loan by retirement as the proportional equity release is higher for most when they downsize. Who knows how all those factors play out but behavior can be expected to adjust and allow for price rises as destructive as that probably is to growth.

Why blame the election? If this were true good times must be just around the next S-Bend then right?

There wasn't a noticeable dip for 2014 election.

The Sept '16 sales were a low point anyway and the Sept '17 sales are less than half the Sept '15 number. Clearly no panic yet - but not looking good for the future.

Property market may suffer several years of price stagnation but a price collapse in key population centers is beyond imagination.

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Not beyond my imagination

Don't get caught catching a falling knife.

It was enormously beyond imagination in 2007 USA and elsewhere, but we now know how wrong the so called experts were. Yet we and other countries have stupidly recreated the same situation. As to demand alone holding up house prices read about the great depression, especially in the USA.

The situations in NZ and US are simply INCOMPARABLE.

Time will tell.

Yeah, you are right. They were building a lot of buildings in America, pre-GFC. We don't build anything much in Auckland.

Decades of stagnation approach.

Yep, it is worth expanding on your point. As I understand it, our house prices are higher in comparison to our incomes than USA was before the GFC - 6x vs 5x median household income, and we don't have non-recourse home loans like USA had, so if prices crash, those underwater with mortgages can't just give back our house keys to the bank and move on with life. A significant portion of the population will go bankrupt, and the banks will likely need to be bailed out by the government after all the savings accounts are taken first under our OBR resolution which the USA did not have.

Explain exactly why this is the case Chinese investor with an ulterior motive.

The situations in NZ and US are simply INCOMPARABLE. There is ramped greed, heaps of cheap money, taxi drivers and students buying multiple houses and of course those property seminars. Then comes the buyers remorse and fear. One could argue that there isn't the housing supply sure but when all those who arrived in recent years to work head home disillusioned after the bust, creating an accommodation surplus = COMPARABLE (especially like Ireland)

Yes, you are right, their fundamentals were better.

You won't have to try and imagine it soon. It will be a very stark reality.

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Strip away the Chinese money and mass immigration and there isnt much left holding prices up beyond what locals can afford.

Price collapse occurs when sufficient numbers of buyers are required to meet the market.

- Divorce
- Job loss
- Changes in employment location
- Retirement downsizing to free up capital to cover living costs
- Inability to meet consumer debt demands
- Inability to import foreign funds to meet mortgage payments

Price collapse occurs when sufficient numbers of buyers are required to meet the market.

- Divorce
- Job loss
- Changes in employment location
- Retirement downsizing to free up capital to cover living costs
- Inability to meet consumer debt demands
- Inability to import foreign funds to meet mortgage payments

Population growth means nothing if the confidence fails leading to price collapse. Lenders don't trust, buyers shun risk. This day will come soon because it's a normal thing to happen and even more likely after 10 years of cheap printed money flooding in, that's not even ours. Please spare the "this time its different" speech because debt is debt, greed is greed and fear is fear no matter the times! I suggest a spiral will begin soon with mass loss of employment created bybooming real estate!

average and median prices are up 2 months running so not all bad news at a glance. But they do mention that the lower end of the market it stalling

NZ Herald headlines the same data as " Average Auckland house price up $40,000 last month"

Ever the spruiker.
http://www.nzherald.co.nz/property/news/article.cfm?c_id=8&objectid=1192...

That Anne Gibson creature is loathsome.

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Just a complete lack of journalistic integrity

Yes, Anne Gibson should be lynched for reporting facts that don't suit you Brock & D-back.. lol

Even this article acknowledges, I quote "while sales volumes were low, both the average and median prices of properties sold edged up slightly in September"

Click bait journalism. A real estate company sold a lot of high value properties and from this she generated a headline on general house prices in Auckland. Please explain how this is accurate?

"September's median selling price was $860,000 compared to $820,000 in August"
You may not like it but it's still true ad accurate

The difference a headline makes....

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Sadly my experience is that far too many of our population only glance at headlines. I am quite disappointed in those of my retiree generations that I associate with in exercise groups. Too many remain ignorant or perhaps uncaring of others most affected by the current state of New Zealand. I suspect apathy due to having a somewhat comfortable standard of living being a major reason. Too many use the silly argument "we had to strive to get our homes" while ignoring the current fact that now the ratio of income to house prices is much to enormously lower than when I bought my first house on a single income. However, another issue is obviously very important to many older voters and that is those persons that choose to have large numbers of children that they cannot support themselves without taxpayer inputs. This group is having an effect on voters probably out of all proportion to their numbers.

Please don't use the retiree brigade as an example of the present day problem.
What do you want them to say ah sorry about your problem here have some of my assets I won't need them.They did'nt make the decisions to get into debt. They dealt with their problems at the time, the same as this generation is going to have to deal with theirs. NOW that could lead to problems that the Retiree brigade would sit up and take notice of.

No sorry don't cut it.
What I'd like to see is a recognition from the boomers/retirees that current taxation and other policy settings are making it far more difficult for our young people and non asset classes than it should be. Sad to say, most of my generation are in denial.......happy to keep working, watch the portfolio grow, get super at the same time.... and not give a toss about the young going backwards.

Feel free to make voluntary contributions to 03 0049 0001100 27 if you think that will make a difference. Many parents, myself included are almost certainly looking at sacrificing a comfortable retirement to make sure their children get on the ladder in some way, believing Labour's promise of houses for all is a load of crock.

.....no that wont help so I won't donate. Never mind.....the current scenario is unsustainable, largely due to the tax setting steering cash into unproductive housing and stagnant assets. As a consequence, you will be asset tested on retirement, the nest egg for yourself and children gobbled up in care, living, health, tax and asset correction. Maths will ensure that.

Many parents, myself included are almost certainly looking at sacrificing a comfortable retirement to make sure their children get on the ladder in some way, believing Labour's promise of houses for all is a load of crock.

"Houses for all" is perhaps an overly broad description. I certainly advocate for a return to NZ's history of policies that encourage the creation of affordable housing, however. It certainly helped in the past. We can also see useful supply efforts at play in other countries, e.g. Finland.

https://www.theguardian.com/housing-network/2017/mar/22/finland-solved-h...

The words in the ad campaign were unequivocal "Better healthcare, better schools, better transport, cleaner rivers and homes for all."

Are you interpreting these as immediate outcome promises, statements of aspiration, detailed policies, or what?

I would suggest they're clearly statements of aspiration or vision, and quite distinct from the policies that were then detailed at a lower level (e.g. ambitious build targets, a KiwiBuild visa scheme etc.). At the very least, it's encouraging to have a political party actually displaying some interest in housing as a component of a functional society again.

My note that it's perhaps an overly broad description reflects that yes, I acknowledge it's a high-level very broad statement. But certainly up there with the statements of ambition made by National back in 2007 when they had ambition to address the housing crisis.

It depends which lens I view it through. The reality lens view is that it was aspirational as it's not possible. My political lens sees it as a promise that I'll regurgitate time and time again when the Labour/Green/NZF coalition is announced.

BTW: The irony of the situation is that I almost voted NZF to vex National because I saw their housing actions as too interventionist, witness their support of the UP program without what I see as satisfactory existing owner representation and Nick Smith being willing to put the weight of the Government behind the Three Kings fight, on the side of the developers.

Yeah, I viewed it as a long-term goal, more akin to similar in the 20th century. Certainly not something that'll be achieved in 3 years, but a road to be started down with significant effort.

My political lens sees it as a promise that I'll regurgitate time and time again when the Labour/Green/NZF coalition is announced.

There's a certain Joyce-ness about that ;-) You may have a future job in his Ministry of Propaganda heh.

I certainly do view some of National's carry-on as interventionist in the wrong way - e.g. taxing a chunk of my tax money to supplement company wages (via Working for Families) and property investors (via the Accommodation Supplement, rather than creating the right incentives and disincentives. And increasing FHB grants, something that only serves to boost house prices. All of these seem perverse, for a supposed right-leaning, free-market and "own two feet" party.

I'd suggest it's also ironic for those who benefited from earlier governments' more interventionist approaches (through boosted supply, Housing Corp loans etc.) to be stridently against any sort of moves Labour's suggested. Note I am not targeting you with this, but more see it as a wider symptom in the situation right now.

Well that's OK, as long as your kids are lucky enough to have rich parents then why change the status quo. What about all those kids who's parents didn't make a fortune from untaxed capitol gains? Bad luck I guess. Go national!

IQ and wealth are correlated, and IQ is highly heritable, so yeah bad luck I guess.

Skudiv, what are your thoughts on wealth vs health?

When asked what surprised him about humanity the most, the Dalai Lama replied:

“Man. Because he sacrifices his health in order to make money. Then he sacrifices money to recuperate his health. And then he is so anxious about the future that he does not enjoy the present; the result being that he does not live in the present or the future; he lives as if he is never going to die, and then dies having never really lived.”

So is IQ truly correlated to wealth? Is it really that intelligent to destroy your health and well-being just to become wealthy - or it is possible to become wealthy without the effort simply because you have a 'high IQ' as you put it?

Having thought about this a lot, I respect people who are old and happy, not old and wealthy. Because it must take a lot of effort to get through life without it corrupting your character.....sometimes you meet people who are old, happy and wealthy - but to be honest with you I haven't met that many. Most are divorced, or die young, or have become irreparably distorted by life's experience (there are some on the site...) - perhaps because they've pushed too hard and haven't found the right balance. Or their focus on wealth has, without their realisation, made them naturally greedy. And greed and happiness don't correlate...and isn't the point of life to be happy? So it is really that smart (IQ wise) to desire wealth?

In my experience IQ is only one ingredient for achievement (not necessarily in financial terms). You also need EQ, ambition, motivation, persistence, resilience and a bit of luck e.g. right place right time. I don't know what you define as wealthy, but I'm happy, not divorced, not distorted by life's experience and hopefully won't die young.

Well, we could all accept that if it is the case that the people "blessed" with IQ can use that to gather wealth around them, then those who were "blessed" with brawn should be able to do use that for the same purpose. Seems only fair.

Isn't that situation the origin of the Glasgow police force in the early 1800s?

My kids don't have rich parents. We are comfortable with one un-mortgaged home, admittedly in an area where it's likely the children would be mortgage free if they chose to spend their inheritance in another location (highly likely as we live in heavens holding pen where there's nothing to interest the sub 40s).

Aside from TOP, no-one is currently proposing CGT on the family home, so go anyone but TOP.

So your wealth can feasibly protect your immediate children. Hopefully they don't have 2 or 3 kids each, as they'll progressively move down the ladder as inherited wealth becomes inadequate to hold them up.

Certainly would be easier for the grandkids if NZ actually started working on solutions. The more they're dependent on inherited wealth or marrying rich the less they'll actually be able to depend on making their way under their own steam.

Inherited wealth usually comes at a time when it is not *needed*... nice at any time, sure, but certainly not at a stage at life where that money could be used optimally. I'm not sure on NZ stats but average age to receive inheritance is 53 in the UK. So this might help with pensions but it won't be helping with those tough child rearing years, getting on the property ladder or deal with crippling university debt.

Each generation adapts. It would have been nice to be empty nesters at 40 with a small mortgage, like my parents, but that is not my lot in life (they received inheritances at 56 & 60) . My experience is more likely to be empty nest at 60 and then feeding resources to my children, relying on inheritances somewhere in my 60s/70s to refill the pot.

Who knows what family sizes our descendants will have, what their priorities will be and/or where they will choose to live? As a group, my family have not maintained their number, neither have my wife's family. The majority live happily in places other than Auckland. They can't see why there is an obsession with Auckland house prices as their locations suit them. Horses for courses.

Should they instead have said, Auckland property up 40K as crash gains momentum?

Very nearly right - the headline should read 'house prices up $40000 as sales volume crash '

Perhaps what is happening is the poorer properties are not selling and the ones left (the better ones) lift the overall price for that month.

One word for you John: Sell everything, the end is neigh!
Just kidding, that was 6 words...

Oh-okay thanks Herald for the heads up. I will now go out and buy a house - NOT!

To you cynics: divide sales in Auckland by number of sales staff and yo will get an average income of (pa) $70,000. As some do a lot better than others, median will be lower. Not riches some of you seem to assume. Similar to what is referred to as "bankers" when what is meant are CEOs of large investment banks, not normal banking.

You need to be dividing sales commission by number of sales staff. Then subtract overheads at 20-30%.

They must be pretty lazy. Every 1mil Auckland house they sell nets them 20 odd K.

Stay positive everyone:
September's median selling price was $860,000 compared to $820,000 in August.
September's average selling price was $928,213, up from $918,926 in August.

It's slowing climbing up again!

Double-GZ.... Even the NZ Herald's spruiker article acknowledges that this $40k is skewed by the disproportionate sale of high-price-range-houses. Both reports on the figures specifically state this.

Exactly right. High-price-range-houses are what I am focusing on. Haven't you seen my previous posts on all the high end prices? ;-)

Double-GZ Sure, i've seen your comments. However, housing markets don't peak or trough evenly. Although ultimately, they do tend to follow trends up or down.

So for instance, in London it is the luxury housing market in London that is losing value, while the rest of the UK is continuing to grow. But over the last few months, that UK-wide growth has been slowing little by little. As a trend this suggests that in a year or so, the market as a whole will be down.

A housing market is pyramid shaped ultimately. It requires the buyers at the bottom of the market to keep things moving. There might be specific reasons that certain higher-valued areas of Auckland are still higher than they were 12 months ago (some pent up demand), but there is no denying that the rate of growth has almost disappeared. So even though price drops haven't occurred in this area (yet) the trend is still observable.

The trend is irrefutably negative (lower prices in many areas, lower volumes, lower RE agent profits, banking issues, lower investor activity, extraordinarily high household debt levels, immigration has peaked). And more importantly, this trend is relatively recent and very slow moving but it *is* still moving and is is moving downwards.

Well depends on what trend you are looking at because the long term trend looks pretty good :-)

Laminar,

There is a lot of debate as to whether property investment is a good long term investment. It really depends when and how you invest in property. Several measures over the long term have shown that shares offer better returns (and are considerably less hassle, more liquid etc). Adjusted for inflation, property in NZ has grown 1.8-1.9% per year since 1965. There have been peaks and troughs and obviously since 2012 has been a massive peak. Before that was mostly stagnation. And pre-2008 was another massive peak, so in the last 15 years, property has been very attractive. Especially in the context of tax, where it beats other investments.

But I can't see that any investor who has bought in the last few years and is negatively geared is going to be dismissing the trend and holding on for the longer term. As their capital gains disappear and they are topping up on the mortgage and rates because the rent isn't covering costs, the downward trend will be painful. Those who bought yonks ago, and have a nice positive cash flow, including money aside for maintenance costs, will be absolutely fine, it's only really the jonny-come-latelies to the specuvestor party that will get burned. And that is also a regular feature of most asset boom/bust cycles. Proper investors are no way near as adversely affected.

Shares on a cash basis outperform property on a cash basis but geared property outperforms geared shares. Its not reasonable to look at 1965. From 1986 till today property has a compounded annual growth rate net of inflation of about 3.5%.
If you can provide a link for the 1965 data I can evaluate that.

Laminar; here you go http://www.interest.co.nz/property/87961/adjusting-inflation-gains-house...

Cash vs geared is a major factor, I agree. But we also can't deny how much more hassle property is.

Ive completed the calculations and ill first note that you dont know how to calculate an average growth rate. You have used a simple aritmatic mean.
If you buy a stock for $100 and it goes up by 100% in a year and then down 50% in the next year then the change is as so: $100, $200, $100 but the average growth rate is (100%-50%)/2 which is 25%. The compound average growth rate however is 0%.
The CAGR for your series is actually only 1.01279 or 1.3%.
First in order to complete the evaluation you need to include rent but more notably you should simply discard that data series as its unreasonable to use NZ data before we floated the currency and got to grips with inflation.

Gingerminja excellent point it is the socionomic trend that has changed
That is irrefutable

There's no attempt from B&T to say high end prices are doing well, just that they make up a higher proportion of sales than previously which skews the overall average. The sales data per area do not show spectacular increases compared to last September in the more expensive areas, quite the opposite.

https://www.barfoot.co.nz/market-reports/2017/september/residential-sale...

Not sure if you're confused or deliberately misinterpreting the data.

I am not confused.
Eastern Suburbs (Postcodes 1050 and 1071)
Sep-17: $1,205,391
Sep-16: $1,191,541

Still +1.2% increase YoY. Stay positive.

Agree with you, DGZ.

The evidence is that those postcodes are holding up well, despite weaker market conditions.

And so is Postcode 1011.

These are all preferred locations close to the CBD - so not too surprising.

I gotta love people that selectively use statistics. From what I've seen tothepoint is a rather blatant offender in this regard. Average sales prices do NOT equate to average value. All it takes is a few outsized sale prices to completely skew the average. As for the median, all it takes is a shutdown in the lower priced portion of the market to skew the median. I watched this happen a bit over a decade ago, and had some rather strongly worded conversations with the RE agents of the time where I attempted to help them see the light. Silly me... they were offended as to my "lack of understanding" about the market. All I can say is that I sold my home and watched its value drop by about 50% over the next few years. Over a decade later, that home has almost returned back to the value that I sold for in '06... neglecting the cost of inflationary losses.

When a market turns, it typically starts with a softening in the lower end of the market. This slowly translates to higher portions of the market. The fun aspect is that when the lower end of the market stops turning over, the average and median sale prices increase. One needs to look carefully at the comparable sales in order to understand the health of the market. Trumpeting the "increasing average" sales price... good luck with chasing that!

I totally concur Yankiwi. Statistics, damn lies and statistics. Beware of the fine print!!!!

So, not even keeping up with inflation? Impressive.

A life restricted to Auckland postcodes & pretending he’s doing well with 1% growth
That’s our DubleD
Have a nice day

If there was no 40% LVR rule then median and average prices would be well down - probably back to where they were 2 years ago. The bigger proportion of higher value sales creates the impression that prices are holding but that is simply not the case.

I overheard this on the train few weeks back from Onehunga to City
现在不要在奥克兰买,等待6个月,更好地在悉尼买

Not sure if that was a sound advice (•◡•)

It translates as "Do not buy in Auckland now, wait six months, better buy in Sydney."

An important read especially it seems for Chinese investors. Sydney may become a very hot market. http://www.stuff.co.nz/world/australia/97540127/50c-temperatures-are-com...

I'm going to Barfoot & Thompson's main auction in town (Shortland St) in less than 1 hour, will report on latest results.

Thank you for the report below Yvil, that's really good to know. This time last year there were reports that the auction rooms were full of people of Chinese descent. Could you please relay if that was the case today?

Also, did you go to the auction as an interested buyer, seller, or real estate agent? Genuinely curious, not trolling you here.

Thanks for the chart Greg and for being able to scroll it back to 2001 :-)

I am calling Auckland Market Bottom in July/August 2017 ... I think the market will inch its way up from here ... albeit very slowly and at lower sales volumes - property speculative buyers are Gone, A lot of Investors are chained down with LVR and market uncertainty , so 2016 sales volumes can hardly be repeated .... This spring (and summer) will confirm the New Normal going forward for a while until some serious Supply catches up with the current Demand in the market.....Lower interest rates are likely to encourage more purchase in the next 12 months before the tide starts turning around.
Quality homes will hold value ( as usual) ... as always Location Matters .. and the $1M + homes will gradually appreciate unless they are a very old pig with lots of makeup ...

up
16

Thanks for the daily humor.

Wow big call Eco bird...cant see any reason prices will not fall further..think we have a loong way to go before settling. Demand is just not there for NZ shit boxes...sorry quality 60-70 year old homes. Lots of apartments still to be completed too, watch that space.

Really? I think you might be 5 years too early!

Eco Bird for PM!!

Echo-bird,

How does your rather strong call go with the fact that sales volume is a leading indicator of sales price? That is, when sales volume is decreasing, house prices tend to decrease in the future. In order for this last July/August to be a bottom, one would be expecting that the sales volumes would be increasing. This is most decidedly not the case as based on the data presented here in this article and elsewhere. In fact, this particular article is noting a rather exceptionally low sales volume for September. How does that portend for the near future???

Volume and prices has been disconnected for a while - S&D formula was manipulated and the market is finding its own ways to react:
http://www.sharechat.co.nz/article/78d14946/auckland-house-sales-slump-3...
There are fewer people who can afford to buy now ( or have access to money) and owners are not in a rush to sell if they don't have to...
the movers and shakers of the market ( immigrants and speculators are almost gone) so stagnation is expected but Value / Location hence Prices will Hold Firm.
I could be proved wrong, but that is my reading Today according to my info, observations, and contacts in this market ...

Eco bird. Thing is there might only be limited buyers left. Yes. But there’s 2 groups of sellers. The small % group that brought houses over the last 3 or 4 years and yes may have payed to much so mighted sell if prices are to low for them but 80% of the people in Auckland didnt play the housing market over the last few years. So because of this they only payed half or more than half of today’s house prices for there house. People sell houses for millions of reasons and these people will more than likely meet the market which will be what today’s FHBers can afford and get finance for. Heres a novel idea for the investors that brought houses over the last 3 or 4 years. Keep it for what it was intended for and pay if off over the next 30 years. Something today’s 30 to 40 year olds never thought of nor has the patience for

I think it would be more accurate to say......."I am calling Auckland Market Bottom in July/August 2027"

You probably think I'm joking don't you? Think again.

Ha, ill add that call to the "50% down in 3 years".

July /August 2017 is the bottom for Auckland ... this is a serious call ...
People can laugh as they like... But few facts are highlighted here for the wise -
throw away the old low-volume low-price book ( houses are not commodities) .. that scenario only works in stable balanced markets -- We are in an unusually starved and disoriented market ATM - there are many factors restraining market movements thanks to Gov, RBNZ, and Banks interventions Plus record house prices and record Demand coupled with insufficient Supply, Scarce and difficult Lending conditions ...

Most buyers in this market will be the ones who can afford to secure a loan to buy Good Homes or New in Auckland ( homes which retain Value).... as you saw today cheaper and tired homes do not sell easily , these will become undesirable ( as have been for the last 9 -12 months) , dirt cheap and sit there for ages to sell if ever!... hence , in addition to what I mentioned in my previous post, low volume will prevail and Quality homes and New Built will be going UP in price ( as Yvil just reported from a B&T auction sample today) ...

Watch the space - it wont happen overnight , but surely heading that way this summer ( no matter who will be in Gov in two weeks time.

Nah, it's time for you to eat humble pie Birdy prices and sales are continuing to fall we can all see that!

lol ... You should have gone to Specsavers :)

If people can't afford to buy at over inflated prices it will continue to decline further. The Chinese foreign buyers are gone and they're not coming back for the foreseeable future, the gravy train has stopped and all your left with Money Launders who are going to realize that it's not worth investing in a declining market.

The AKL property will bottom out around $600k which is on the cusp of residents affordability.
And those paper millionaires will be dragged down too. I've see it all before. Hang on to your hard it's going to be a bumpy ride!

If Winnie goes with Labour the decline will be accelerated

lol, Ok , if you say so ...
$600K eh? ... which ones , the homes in Parnell or Ponsonby? ...Sure, why not !!

https://www.trademe.co.nz/Browse/CategoryAttributeSearchResults.aspx?sea...

Goodness me 1426 listings of $600k or less. I'm flabbergasted LOL!

You can scoff all you like that won't stop declining prices from pulling over all prices down. Especially with the continuing pressure from China to restrict money laundering.
I'm surprised how welcoming you are to criminal elements to your neighborhood DGZ, I'm sure you're just as corrupt.

Um, quite a few of those in the list are homes for removal, car parking spaces and 1 bedroom flats. Then you've got a whole raft of leasehold properties, leaky buildings and then we get into the places that are closer to Whangerei and Hamilton than Auckland.

Sorry forgot the LOLs, ROFLs etc...

I am calling Auckland Market Bottom in July/August 2017 - this market is about to get ugly with many bottoms. Which one are you calling?

The chart is really interesting, I second Yvil on that. I think it would be safe to say that sales volumes are firmly entrenched in a downtrend. Thus it would take a higher low to reverse before you could call an end to that trend.

Let's face reality here - not only are we in a cyclical market downturn we have the 40% LVR investor rule that has made it impossible for most to purchase a rental property in the lower price brackets. Looking at the last two elections the month prior to the election did not see a significant downturn in sales volume so we cannot blame the election campaign. What will we say if data for October and November are the lowest sales volumes since 2008 - will you be convinced then that this is a full on downturn?

Not sure how Barfoots can operate on such thin volume - think they have about 80 offices so that's only about 8 sales per office and there are 20, 30 or 40 salespeople in each office - could be mince for Christmas dinner at that rate of sales!

Sell the Beema - buy Nissan March (by March)

Monthly Annual Monthly Annual
price change price change sales change sales change
Central Auckland -8% -17% -78% -42%

A closer look at B&T data shows that heavily reduced sales in the apartment rich central Auckland led to a disproportionate share of higher value properties being sold. Not this "higher value properties maintain their price" BS!

"September's median selling price was $860,000 compared to $820,000 in August"

I just don't agree with this blaming the situation on the election. What about the other two elections since 2008. This is about unaffordability and a market correction.

I blame overpopulation or the incentivizing on having more children than our resources can support.

I just walked out of this afternoon's Barfoot & Thompson's auctions in Shortland St.
10 lots for sale, 4 sold, 6 passed in.
Sold houses:
65 Summer St, $2.1 Mill
36b Buckleys rd, $2.4 Mill
27a Lewin rd, Epson $2.65 Mill
8 Duders ave, Devenport $1.97 Mill
There seemed to be a very clear trend, lower prices homes were passed in, higher end houses sold.

Yippee! I'm so pleased to see all the over $2M sales. Zachary will be happy as 2x of the addresses are in Epsom ;-)

Based on talking to a new purchaser in Kohimarama, that Epsom money is being recycled into 1071. Empty nest is a common reason for the move along with the desire to live close to the beach (walking is big in the Bays), rather than get in the car to do it. Other buyers are French, Russian and Asian, although the latter don't seem attracted to the beach. I'd be surprised if many are big mortgage holders.

It does look like the 2M plus houses in very good order do reasonably well at auction. Under that and sale by negotiation seems to be the way to go.

Lots of potential in 16 Martin Ave if it could be bought for under $3Mil but suspect it will be more like $3.5Mil.

Hahaha yes it's a complete do-up! I also think it will go for around $3.5M, and with a view over Orakei Basin and out to Hobson Bay and beyond it doesn't matter it is not in DGZ!! As a true blue human of Remuera I always love KENNY and MARTIN <3 <3
https://www.bayleys.co.nz/1751329

I wouldn't crack open the champers yet DGZ China is cracking down on money laundering even further.

Checking the previous sale prices and CV of the properties that did sell there is no evidence of a decline in prices. Still picking it will happen, but hasn't happened yet

Same with 35 Allum Street that sold for $2.33 million (170% CV) on Monday, at auction.

65 Summer St, Ponsonby has a CV of $1.22 Mill, sale price of $2.1 Mill = 173% of CV

The leafy suburbs have always done well and will continue to do so. Do up the inside and outdoor area and flick it in a years time for $2.6Mil in that location.

To me, the fact that lower end houses are not selling but higher prices houses are, means the slowdown in house sales (number of houses, not values) is due mostly to the 40% LVR and bank lending restrictions. (not foreign $, not interest rates , not affordability, not the election, etc...)

65 Summer sold for $1.4m in Feb - looks like a quick $200k renovation then sold today for $2.1m - tidy $500k profit less tax, interest, commission etc. can still make good coin off a quick makeover in this market.

35b Buckley last sold for $2,180,000 in August 2015 - cashing out after expiry of 2 year brightline perhaps?
27a Lewin last sold $1,100,000 Dec 2006
8 Duders Ave last sold $810,000 Oct 2005

65 Summer St Ponsonby, $2.1 Mill. Previously sold in Feb 2017 for $1.4Mil.

Nice capital gain.

.

Maybe, maybe not, it is now fully renovated, how much was spent on the renovation ?

My mistake I was looking at the previous listing from Feb prior to this renovation. Nice looking place and can see why it sold for $2.1Mil.

Wow what a transformation. Love the new kwila deck at the back - it's a sun-trap! I'd say they spent 1/2 mil on the reno. Well done to the developer *Clap Clap*

Very interesting at Shortland St. That keeps the average price and median price high if the lower priced houses don't sell. Conversely it doesn't tell the whole story re the stalling in first home buyers purchasing.

surprising they only had 10 lots up for sale

To be fair everyone knows that the market inAuckland has to plateau at some stage and with all the forces in play it is holding up particularly well.
Lvr's , elections etc. was always going to stop it a bit and if those two forces weren't happening the market in Auckland would still be good.
Chch property sales are slower than previously but still large number of sold signs.
Reality is that if not as many sales happening then first home buyers may not be buying and therefore landlords are happy.
From experience I do know that we have never had a tenant leave one of our properties owing money as we always check them out thoroughly and keep on top of the rent situation weekly and always hold 4 weeks bond.
Tenants are dumb if they are bad tenants as they will have trouble renting another property from professional landlords, but I do know that not all landlords do the property checks.

Keep an eye out for a catalyst event to trigger the bubble bursting...it'll come from off shore, won't be predictable and will happen fast once you hear about it. Our economy is very much exposed to the global one, that's why it's called globalisation, of which we're big proponents of here in Nu Zilund. Let's hope that the global power players keep a steady hand on the tiller.

It's obvious from the multitude of comments above - amassed in lightning quick time - that the nation's interest in residential real estate remains vigorous.

The reality is that NZers have an on-going love affair with property. They can't get enough and their enthusiasm for it remains impenetrable.

Nothing draws a crowd quicker than a media item on property!

I think you mean it's obvious the NZ government want NZer's to have a love affair with property to prop up the ponzi scheme they're running and keep the banks happy. Describing any market as impenetrable should ring alarm bells

surely property bulls must be starting to worry now. Is it just me that thinks a left coalition government is highly likely now. The Teal deal really highlighting the desperation National Face. I would of thought going forward this is the biggest risk for the housing market. Pre election no one but National talked about house prices at all because everyone knows what needs to happen although actually saying it would have been political suicide for the left. First 100 days removal of foreign buyers soon after big reduction in immigration, followed by changes to tax around housing investment.........Looks like the game is up housing can finally move from being the cash cow to a place to live. Thanks MMP

All the politicians understand property market is too big to fall and will do everything in their power to, at the very least, ensure the market holds at current levels.

And Jacinda bought her first house in Ponsonby last year so isn't about to let property prices crash.

Too big to fall!! more alarm bells .........Yeah the banks will be rescued but not us.

Jacinda is going to keep up property prices over all of nz to save a few $100 thousand on her house. She make more than that in a year. Haha . Anyway in every downturn government, RBNZ , banks , RE MEDIA. every man and his dog try and stop a downturn and never manage to do it. Specially this one. It’s massive in every aspect. Then theres peters , end of story right there

Downturn ? What downturn?

I'm calling it. We're entering a deep recession. Our rockstar economy was predicated on two things, mass immigration and foreign purchasing of houses and businesses. The latter has obviously slowed to a trickle despite the above comments. A huge amount of damage has been done to tomorrow's would-be upper middle class by selling their houses to the Chinese. Doctors lawyers and engineers, if they stay in NZ they'll be poorer than comparable boomers. As Steve keen notes high private debt is a problem and recessions correlate with the second derivative of debt wrt time. When that goes negative as it seems to have done then the proverbial hits the fan.

How right you are Pat. I've see several IT companies recently go under due to the high running cost of trying to be globally competitive in Auckland.
We have the highest property and rent prices in the Western world, It's high time to let the market cool otherwise there will be no legitimate business left in AKL and that will be a recession that we'll never be able to recover from.

So what are you going to do about your predicted recession fat pat ? Calling it won't help you, what are you gonna do ?

I emigrated to Germany.

Here is an updated report on the Housing Market by John Bolton, sound familiar? ..:

https://www.squirrel.co.nz/blogs/mortgages/housing-market/latest-on-hous...

Your linking skills are inspired today Eco! One trademe link showing carparks and houses for removal for under $600k and this one to a mortgage broker, saying everything is fine with the house market. Brilliant stuff, it's almost as though you're looking for articles to confirm your bias, if only there were a snappy psychological name for that.

You must mean the coverall term for posters in these threads i.e. Zealot: a person who has very strong opinions about something, and tries to make other people have them too.

I agree the property bulls on here are quite tiresome and persistent.

Trademe listings for Kohimarama are now at 17, of which 10 or could be considered current/fresh (listing date less than 60 days). This is a suburb with 2,970 dwellings. Liquidity is drying up, but prices are still high.

Doesn't sound like the makings of a 30% price reduction by 30/9/18. Bears, what am I missing here?

who knows about 30/9/2018.
The property market might be in the hand of that young Kim dear leader. If he press that red button we'll be stuffed..

I actually think the Trumpster is more of a worry in that regard, especially as Mueller (sp?) closes in. The Korean dear leader just needs to show he has the wherewithal given the examples of Sadam and Gaddafi and what happened to them when they surrendered their WMDs.

If John Key's $20,000,000 home sale is included in these figures that alone would add $30,000 to each of the 658 sales average.