By Bernard Hickey
Auckland's largest real estate agency group, Barfoot and Thompson, has reported generally flat sales and prices in August from July, saying buyers and sellers remain in a standoff.
Barfoot and Thompson, which is the first agency chain to report sales figures for August, said it handled 758 sales in August at an average sale price of NZ$531,042. This volume was down from 778 sales at an average NZ$530,191 in July.
Sales volumes were up 18.9% from 637 in August a year ago and the average price was up 3.9% from the average NZ$510,978 in August a year ago.
Barfoot and Thompson Managing Director Peter Thompson said the average selling price had not varied by more than NZ$10,000 in the last 4 months.
“This is unusual in terms of price movements, and shows just how stable property values are at present," Thompson said.
“Normally the market is weighted to either buyers or sellers. It is not common for it to be balanced like this for such a long time. There are eager buyers, and in historical terms not that many homes are for sale, but this is not affecting the prices on which buyers and sellers are reaching agreement," he said.
“Buyers are not prepared to go beyond what they believe a property is worth, while sellers are not accepting what they consider unrealistic offers."
Thompson said new listings rose 22.1% in August to 1,282 from July.
"Given the approach of Spring,and the historically low level of new listings in July, this does not represent a major leap in new listings," he said.
“The overriding sentiment of buyers and sellers is one of taking a realistic view of the state of the economy, and applying that to their decision making. Overall, this year we are selling between10 percent to15 percent more homes than last year, with modest increases in prices," he said.
Thompson said that the arrival of Spring normally led to more activity in the housing market and he anticipated listings to continue to increase with moderately higher sales volumes.
(Updated with more comments, detail, chart below)
Barfoot Auckland
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53 Comments
Keyzer
And here's what Peter Thompson said:
Barfoot and Thompson Managing Director Peter Thompson said the average selling price had not varied by more than NZ$10,000 in the last 4 months.
“This is unusual in terms of price movements, and shows just how stable property values are at present," Thompson said.
cheers
Bernard
Mortgage interest rates at cyclical lows; and it's all gone spookily quiet on the property front. I wonder where the 'unquantifiable amount' earthquake-fix money is going to come from?.....Not from property owners, would it be?..those very people who own the assets that are going to be at risk and need insuring....Calm and storm, come to my mind.
The real story emerges from the asking price strata. In July all the activity was at the bottom end (PI's getting out, first home buyers getting in), a little bit of action in the middle band (600k to 900k) and in the million-plus market it would take nearly two years to clear current inventory (from REINZ data).
According to this article though, $1M plus are selling like hotcakes.
http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=10749449
It says that in one suburb the average tipped one million, and not a very representative suburb at that. The only surprise here is that for Mission Bay it wasn't already, and note that Devonport actually dropped. The REINZ data is hard, and speaks volumes about volumes. It is saying that, for 2011 so far, about 5% of houses in the million-plus bracket are selling on any given month.
But a quick check on Trade Me, which includes the listing date, suggests that the RE agent is telling porkies, there are houses from June and July sitting unsold, andthey don't appear "difficult", unless of course, difficult also includes "over priced".
Which if you are the sort of ppl with money that see a) notable Inflation and even hyper-inflation and b) Huge risk in share markets and commodity markets and c) Probable tax gouging by a Govn needng money but no CGT (ie ahmmering PAYE) then investing in top end homes makes some sense....I suppose....
If you are like me however and see deflation and house price collapse of 50~90% and a huge, long depression due to Peak oil then this is the last thing you should be doing.....but we can see well enough from the PIs in here they believe in the top para....
regards
All I see is no opportunity to buy a solid house in a safe area without having to live off bread and water for 25 years! I'll stick to Otahuhu and the savings regime and hope you're right, otherwise my future days will be spent in remorse wondering why I didn't follow all my friends across the ditch...
What is astonishing is that from 2008 to now the annual number of salesof houses has fallen by 2/3 rds and the number of Real Estate Agents fell from something like 25 000 to less than 10,000 .
In any other market, be it a stock exchange , a commodities market a retail sales market or even car sales volumes , such a fall is called a COLLAPSE.
The only two things keeping this from becoming a real collapse is Dr Bollards very low interest rates and Asian Migrants .
There is some anecdotal evidence that migrants are keeping the demand up in Auckland . Someone told me they estimated its 2 out of evey 5 sales in Auckland is to someone who has been in NZ for 5 years or less.
But surely they would just hold on to their own and sell in better days? But by driving down demand they then may be forced to sell outside the boom time because they've lost their jobs and the rental income servicing those huge loans just isn't cutting it. I just don't see how they did themselves any favours.
Better days? They might never come...besides...there's a little thing called re-mortgaging, for investment properties. Now I don't know how deeply the banks etc. look at investment property mortgage roll-overs these days, but if the LVR goes up too much, it could prove difficult to refinance. There are all sorts of vested interests in keeping 'property always going up'. After all, it's any employees job to 'talk up' the product that they are selling; no matter what they really think of it.
I'm buggered if I understand any of it, to be frank. I just see the collective approach of the RE agents over the last three years to be a form of self-mutilation. But as you say, at the individual level of analysis the picture maybe somewhat different - perhaps here the whole is not greater than the sum of its parts...
The environment that caused property cost increase well not return untill debt is addressed and stability comes back to the NZ economy. The dynamics of socioty has changed, increased cost of living and reduced incomes. The wealth (investment) and employment loss. Next generation less affluent. Natural disasters on the increase. Smart people are moving to places one can make a living. Having ones wealth tied up in a costly high maintenance inflexable asset that is not increasing in value is not an attractive investment along with the worry of becoming responsible for the debt. Renting is a better option as its affordable, flexable and low maitenance. Also there are plenty of properties out there to rent.
It is easy to invent all sorts of "classic symptoms" and talk yourself into believing them. Just make sure, if you are a first home buyer indeed, to watch things closely, not rely on hearsay and not miss the boat - I've seen a lot of it before.
For investors, bottomed out markets offer good opportunities...
Flatlining would be a fair summation for myself of todays market.
Boatman,I feel you may have stretched the figures out to 25,000 agents somewhat(17k?) and in to 10,000 from about 12k for emphasis.A lot have dropped but most were only pseudo agents holding licences at a cost of $80 odd before the REAA came in and with a $700 odd fee plus REINZ fees these pert timers/inactive salesepeople have gone or voluntarily suspeded their licences.
Sales have not reduced by 2/3 and from where and when can be anybodys use of statistics.
As for the classic symptons comment of a falling market Alex,I would call it a classic sympton of a lack either seller or buyer knowledge and education from the agent.
Kiwisaver is giving New Zealand's provincial property market a boost. First Home buyers back in the market....
http://www.nzherald.co.nz/personal-finance/news/article.cfm?c_id=12&objectid=10749272
I sold my last house in 2010. I don't think it would be worth today what I got for it last year.
Nothing in our area is going up.
I have made four offers to purchase a replacement home over the last five months.
The vendors in all cases have been reluctant to negotiate. The houses are still on the market.
I am not prepared to pay their ridiculous prices so will just wait till they get realistic.
Obviously lots of other buyers are doing the same thing.
Purchasing a house is a major financial, emotional and time commitment; people well only sell as a last and desperate resort for fear of the huge loss/debt and damage to personal life.
There are a lot of peole currently in that situation, unfortunately the inevitable well occur as there are no funds for the excessive borrowing that has occured in the last 20 years, only further wage contraction and budget cutting (austerity measures) further reducing our standard of living.
It is not fair on these people how the Governmant, banks, real estate and media falsly manipulate the property market. In the end the truth well come out.
If you bought a share for $5.00 in September 2007 and it was still worth $5.00 today, what is your 'real' capital return ? ... zilch, zip, nada !
As an investment, NZ residential property is dead.
If prices do not increase, there is no return on your investment..... if fact with all the mortgage interest costs, rates, maintenance etc it is a loss making entity.
Why do we give these RE agents, bank economists and all those with a vested self interest so much media time ?!?
They will never actually say how things "really" are, as it is not in their own financial interests to do so....... really these monthly "chit chats" with Peter Thompson et al are just "advertorial"
Just a side story. Last Saturday, Brisbane had their opening of the Riverfire festival. Where RAF showed off their latest purchase, the F18 Super Hornet (very impressive and loud) followed by the Army in their Black Hawk helicopters, at 7PM they unleashed an impressive 30mins long firework show. There were thousands and thousands of people watching and enjoying the show along the river fronts. I was standing near a group of 5 people, the whole time they were complaining about the noise, the waste of resources such as fuel, time and not to mention the damaging effects to the earth. Somehow, that reminded me of this forum.... Relax, take a deep breath! B&T guy is entitled to his opinion.
Chairman, finally a positive comment worth reading. There's so much self interest in so many comments here. It's quite a task wading through the crap looking for the good ones like yours. PT really reports simple facts with a bit of spin based on his many years experience at the top of the real estate industry. It's easy to swipe at the agent and even easier to do it anonymously here online. I guess we'll never stop it happening, but at least we can sift through and read the more balanced relevant comments.
Don't you get paid a dividend on shares? - so your return on investment would be the dividend, not the capital gain.
Likewise if your property hasn't increased in value it doesn't mean "there is no return on your investment" - rent is a return on investment. Price increases are a capital gain.
" I never thought I’d see a real estate agent quoting a prediction that Australian homes could fall in value by 60%."
Quite right, Roger. But to expand a bit on the original author's view - which is just one of many about, at the moment!: " (He) said that if there was one country in the world he would place his money in the looming financial crisis, it would be Australia.He also has urgent warnings for Australians; property prices and stock market will fall, in line with a long term global deflation that has already started to take hold around the world. (He) believes that the world is entering a long term deflation and deleveraging of debts is the only solution to this stage of the economic cycle. No amount of Government stimulus will reverse this situation and he believes particularly that private debt is too high and must come down".
Only those who sold, SK, made anyhting last year, no matter what it was. Nobody 'makes' a cent until the cleared cash is in the bank. Until then, asset holders, especially holders of fickle illiquid assets like property, have an asset of unrealised and approximated value. But here's the cool thing...Any debt that is used to back the asset is absloutely defined on each and every day.( PS: Good luck with your new earthquake premiums; just the first of many ways the Government will find to claw back the money it has had to outlay)
The point is, that while you were banging on about how bad an investment property is, the guy in the example has become 300k richer.
300k richer from doing the opposite of what you advised.
(over and over and over and over)
If you want to look at something fickle, try www.cnbc.com or www.nzx.com
Get your descriptors correct.
My only suggestion is that the peeople who listened to the prevailing 'wisdom' on this site - hopefuly not too many - have missed out on a large capital gain.
Simple as that.
From another perspective - perhaps some of you should feel bad - as in a sense you are 'offering advice' blogging on here 'as if you know what you are talking about'
Some young people may have missed out getting their first house a year ago because of you - and now they need to find 16% more cash.
I think you are talking rubbish. There is no "prevailing" wisdom on this site at least whether to buy or not, it seems pretty balanced in terms of numbers, and its up to adults to make their own decisions....and its not over til the fat lady sings....
So we have 2 opposing camps the "bigdaddy's" of this world who think Olly is a god incarnate, and can do no wrong. The others such as myself who think its a huge bubble and its going to pop and olly is a twit.....prospective PIs can read and make their own minds up IMHO, it is their money after all.
So to look at what you have said,
I might be missing somethng but, the central suburbs where houses cost 1mil+? have gained, where everywhere else has lost a % or stagnated?
So young ppl who bought anywhere else but in the area that they couldnt afford, have, if they are lucky broken even? but are wearing a huge downside risk ....This is sensible? uh no....
Feel bad, I certainly do not....when it pops I will feel bad not saying anything to the ppl around me who are gambling heavily in property, (and have commented that their property is down in value this year btw) but you are right in that I am not offering advice. Im biting my tongue in the meantime Im taking my own actions, Ive sold everything I can that is an investment (like shares) and paid down all the debt I can....Im that sure this is going to pop and leave ppl with decades of misery....I will hurt but I will survive this.....unless the drop is 90% and not 50% ish.....in which case I will really hurt.
regards
What example, SK?( your $2 mio sums don't appear to equate to anything in the story) Did you listen to Peter Barfoot's words? "People appear to be trading down". etc...Oh, and this story uses' averages' price, the mean, not the median usually used in most other figures..and in that context, 'flat prices' it looks grim if the 'dowtraders' are selling higher prices property to buy lower priced ones. That should push the mean up, not leave it flat! What does that say about the underlying median?
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