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Barfoots sell 920 houses in Auckland in December, average price $624,015 up 8.9% from a year earlier, a rise of $50,944

Posted in Property Updated

The average price of houses sold by the major Auckland real estate agent Barfoot & Thompson rose by more than $50,000 in December from the same month a year ago to $624,015.

This is an 8.9% gain.

The firm's listings continued their decline, mirroring the broader market measures, making the supply situation very tight. In fact, if you removed the leaky homes from this listing inventory, the situation is even tighter.

There is serious competition in the Auckland market for existing weathertight homes, and demand far outstrips supply.

The level of new listings in December was the lowest for the firm since January 2001 when current records are available. The level of total listings on their books is a similar record low.

Barfoots sold 11,710 properties in calendar 2012, the lighest number since 2005 when they sold 12,044.

Each month the low level of new building consents continue, the pressure rises. November building consent data will be released tomorrow (Wednesday) for November. First home buyers now have limited options in Auckland.

Here is the press release from Barfoots:

The average price of homes sold in Auckland increased by $41,590 or 7.7 percent in 2012 to $584,715 when compared to 2011’s average price.

“While this is the highest percentage increase in five years, it follows on three years of average price increases that failed to keep pace with the rate of inflation,” said Peter Thompson, Managing Director of Barfoot & Thompson.

“December was another month of strong trading, with 920 sales in the month at an average price of $624,015.

“This was the highest number of sales in a December for eight years.

“The average price achieved remained high, with it being down less than $4,000 on November’s all-time record average price of $627,721.

“The average price for each of the past three months has now exceeded $600,000, setting a new benchmark.

“While new listings in December are normally relatively low compared to the rest of the year, this December’s new listings at 697 were exceptionally modest, and the lowest recorded in a month for the past decade. They were down 17.6 percent on those for last December.

“It was also the first time in the past decade when we listed fewer homes in a month (697) than the number of homes sold (920).

“At the end of December we had only 3,410 properties on our books, the lowest number since records have been kept, and 10.6 percent lower than we had at the end of November. 

“December’s trading followed the same trend experienced for most of the second half of 2012.

“87 homes, or 9.5 percent of all homes sold in December, reached values in excess of $1 million while 42.8 percent of all the homes sold were for less than $500,000, in line with the percentage for this price category in November.

“With new listings and the total number of listings being at all-time lows, and with mortgage lending rates forecast to remain steady for the first half of 2013, the outlook for the early part of this year is for prices to hold on to the gains made in the last quarter of 2012.”

We welcome your help to improve our coverage of this issue. Any examples or experiences to relate? Any links to other news, data or research to shed more light on this? Any insight or views on what might happen next or what should happen next? Any errors to correct?

We welcome your comments below. If you are not already registered, please register to comment in the box on the right or click on the "'Register" link at the bottom of the comments.

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131 Comments

Will this have a flow on

Will this have a flow on effect to provincial cities?
Low interest rates, flight from most investment vehicles, asian buyers, cocooning,plus the fact NZ a very desirable place to live. Maybe house pricing is a value placed on the natural environment, personal freedoms & ethical society - where did all those come from?

Try renting a place in Melbourne or Sydney - likely to be a chinese landlord.. they know high value when they see it.

Looking at trademe property,

Looking at trademe property, there are 1998 homes for sale in Auckland city which is about one per 225 people. There are 768 for sale in Napier and 771 in New plymouth which is about one per 65 people. There are 1995 houses for sale in Whangerei (almost the same as Auckland City), and 2327 in Thames / Caromandel! 

Also keep in mind that a reasonable percentage of the houses for sale in Auckland are leaky, and the supply gets even smaller.

An obsession with unearned

An obsession with unearned income from capital gains in property makes for an ethical society? Interesting but I would say the value is misplaced.

Who think high property price

Who think high property price will make NZ rich? It merely makes NZer FEEL richer -- it is an illusion.

High property price got nothing to do with how much milksolids, logs and meat NZ produces and exports. It is a game of letting more $ flowing in the system, regardless where the $ is from.

Easy $, bad $, illegal $ and foreign $ are all now blending with NZ's hard earned $. NZers, your $ is simply diluted and the value of your $ is going down!

 

Hi Winston..

Hi Winston..

Easy $, bad $, illegal $ and

Easy $, bad $, illegal $ and foreign $ are all now blending with NZ's hard earned $. NZers, your $ is simply diluted and the value of your $ is going down!

 

Too true, and I now find the ever increasing cost to secure building insurance is blighted by a painfully thin accommodation allowance in the event of fire or any other destructive action denying me residence in my home. NZD 20,000.00 is hardly enough to cover six months alternative rented accommodation - is it a tent thereafter in the middle of winter?

Just make sure you time your

Just make sure you time your disaster right if the prospect of living in a tent in the winter does not appeal

Rule of thumb: NZ should open

Rule of thumb:

NZ should open (is already openning) her doors for investment to  tradeable sectors. They need $ and sharp minds to enable NZ keep her comparative advantages.

NZ should control her doors for investment to non-tradeable sectors. They got nothing to do with NZ's international competitiveness.

It is Simens Ltd that makes Germany richer.

It is Apple, Google etc that make USA richer.

It is Toyota, Sony that make Japan richer.

It is Hyndai, Kia that make Korea richer.

It is the tradeable sector, competition and high-tech that make a country richer.

No country becomes richer by entering the loop of selling and buying its own land and house.

Dead right Xing.  And it's

Dead right Xing.  And it's folk pumping cows that give us the standard of living we have.  Not that many of the financial gurus on this blog will admit so.  A nation earns by doing stuff - not by shuffling it around.

Well said Mist42nz - and the

Well said Mist42nz - and the trouble is people focus all their time on energy on the individual components and thus can't see the full picture. 

 

If someone doesn't have the capability of building wealth they sure as heck can't manage someone elses wealth.  The Politicians and Bureaucrats who created this fiasco of stealing wealth creators efforts should be held to account. 

 

Politicians and Bureaucrats are constantly violating the individuals rights to make their own wealth. Defiling those who with honesty and integrity create wealth is a practice entrenched in every parasite who's life depends upon it's host. 

 

It is well known in psychology what the damaging effects of controllers and manipulators does to the recipient. Small to medium sized business is constantly abused by the controllers and manipulators in every area of Government. Most big business has become more cunning and simply got into bed with the parasites.

 

Controllers and manipulators are brilliant at feigning empathy and sympathy.

 

 

 

 

There's plenty for it.....

There's plenty for it..... starting with restricting foreign ownership of property except under certain conditions. At least then, any move that the reserve bank or NZ retail banks make will have an effect. Right now any moves to interest rates, LVRs etc would just tilt the balance toward or away from more foreign investment

Don't look too far. 

Don't look too far.  Singapore implemented all of the above and more; restrictions on foreign ownership, currency control, LVRs, higher duty on purchasing properties other than the first home.  higher interest rates on second mortage etc..

And does it work on cooling the property boom...Nope, last few years the increase on average house price per year was well above 10% and as high as 20%.

Wow doesn't beat thinking

Wow doesn't beat thinking about what it might have been if they hadn't introduced restrictions.

Nope do that, then actively encourage de-centralization

Surely the house price

Surely the house price difference should already be discouraging de-centralisation?

http://www.economist.com/blog

http://www.economist.com/blogs/freeexchange/2011/03/global_house_prices

I think the policies in Singapore worked!

Just look how flat Singapore house price was during the credit booming period (2002 to 2008) and compare that with NZ.

On top of that, you are comparing 

NZ -- 4.5 million ppl and 268,000 km2 land

SP -- 5.3 million ppl and 710 km2 land

I'd say Singapore has done much better.

oh, sure, 268,000 km2 you

oh, sure, 268,000 km2

you might want to revise your numbers and extract from that all the areas that are incapable of occupation, such as, lakes, rivers, mountain ranges, otherwise you will have people looking to build on top of Mt Cook and Mt Aspiring and Mt Egmont .. aaah why not add in the Southern Alps.

Would discounting the number

Would discounting the number by 50% make you happy?

still 134,000 km2 vs 710 km2

I was there few weeks ago,

I was there few weeks ago, they are trying hard to stop the chinese buyers tide.. Spent few days in London, NY, Paris and Milan most premium properties are being snapped up by rich Russian and Chinese.  So NZ isn't alone

Hong Kong land area 1104 km2

Hong Kong land area 1104 km2 - population 7 million and growing

Question is chairman, would you live in either HK or Singapore?

Nope, no thanks.  What I am

Nope, no thanks.  What I am saying is NZ isn't the only country that experiencing the mass of overseas buyers full of cash and itchy to buy. Rightly or wrongly they will get around the restrictions or go somewhere else.

Singapore is a sterile and

Singapore is a sterile and mind numbing conglomeration of large shopping malls.

HK is great.

North Korea has very strict

North Korea has very strict policy of allowing foreign buyers to purchase properties.

These cities have always had

These cities have always had many overseas investors, certainly a broader group than Auckland is seeing. All the troubled Euopean investors are piling in there as well.

 

The first month in a decade

The first month in a decade that sales exceeded new listings.

The situation in Auckland is going to get much worse or much better depending on where you are standing.

Looked at this house in

Looked at this house in Hauraki Corner on the weekend that failed to sell at auction. Has a CV of $740k. The overseas seller had an offer of $900k but turned it down thinking he should get over $1m. It was brick and tile but not in a good road and on a back section. We snorted with derision at their price expectation and walked out. \

Either the market is mad or we are for not buying one of these bargains.

 

the market is mad

the market is mad

Thats just ugly and bargain

Thats just ugly and bargain it is not!

It's on the western side of

It's on the western side of Lake Road, away from the Beach. Would have got the price if it had been on the eastern (Hauraki Gulf) side which is highly prized. Brick and Tile is good. Two level not so good. Grammar Zone is good. Cheap fencing, pretty poor. A property that has been split into dual occupancy so not a lot of land, and within walking distance of a lot of very old state housing. Would need to see what 19B looks like.

I think it is worth between

I think it is worth between 1.1 and 1.2 mil looking at the pics.  I wouldn't sell it for under 1.2 if I were the vendor.  This house will achieve close to 2 mil in 5 years time based on the location.

Ya drimmin!

Ya drimmin!

Go and google.maps 19A

Go and google.maps 19A Northumberland Ave .. the one in front is an old style 1940's 1950's brick and tile .. nice and neat but .. the sub-division is crappy .. low cost .. low class .. a quick flick .. shared drive from the street which splits off into a seperate drive just beside the front house with a centre fence to create a sense of seperation .. and then look at the houses to the left and right .. and up the street .. not worth anywhere near your $1 million .. not within a bulls roar .. the poor subdivision pulls the value of the front house down substantially which in turn depresses the value of the rear house .. at $1 million you'd be paying $700k for 300m2 of land in a crappy area

Having lived in the area i

Having lived in the area i can assure you Hauraki corner/Belmont is not a crappy area, location is fanatastic - 5 minute walk to Takapuna Beach,good schools etc a Mill for that particular property would seem on the high side, however seaward side of Lake Road add another 800K for that particular house, something slightly gentrified 2 mill plus and thats based on QV.

Currently living in the area,

Currently living in the area, I can tell you it is a good area, but it is no Takapuna or Devonport (where you can buy a similar sized villa for $1.1m). This road is not great and the surrounding houses are nothing special. This is not seaward side and to get to the beach, you have to walk to the end of Clifton Road as near to the house is all cliff. The garden is not great as it is the same small width around three sides of the house so no arwea for kids to run around.

Having looked at it, I would have expected the house to sell at early to mid 800s.

Agreed it is not a crappy

Agreed it is not a crappy area.  Remember the vendor turned down a 900k offer so I think they might be looking for mid 900 to 1 mil.  It is possible to achieve that but might have a wait for a while before the offer comes in, probably with conditions.

Apologies for the poor choice

Apologies for the poor choice of words, casting aspersions on all those Belmontians and Hauraki Cornerarians. Should have said "crappy street" (ie the immediate surrounding houses). The interior pictures of the house looks a million dollars. Must be the best house in the street. Kiwimm? Why did you turn your nose up, snort in derision, and walk away? Care to explain.

Was certainly not a million

Was certainly not a million dollars inside. Dated kitchens and bathrooms. To get a view in the master bedroom, they have put the bed in the middle of the room. Other bedrooms were small. Layout was strange with a 2 beds on a half level. Garden was not practical, fencing poor. Neighbouring houses were low quality.

Saw a much better house in a better street sell at auction for $894k a few weeks earlier and that was a high price. The agent said the vendor is looking for $1.05m+. I had valued it as low to mid 800s in my head before the agent spoke up.

How much do you think this is

How much do you think this is worth?

http://www.trademe.co.nz/Browse/Listing.aspx?id=545899879

Based on the fact it is also

Based on the fact it is also west of Lake Road,.. a long walk to Takapuna Beach not alot.

doublegz ... didn't think the

doublegz ... didn't think the west was your side of town...

... but that is in the "golden triangle", and given an inferior property on the same size site at 12 Duart St (close to state houses on the south side of Mt Albert) sold for $1,375,000.  Then I'd say take the GV bump on 45% and work upwards from there...

... if you're serious you probably need to be upwards of $1.45m ...

 

On the Hauraki property, $9s isn't unrealistic for that.

 

All the whingers need to realise that if they want a cheap home that it'll be cheap for a reason:

http://www.realestate.co.nz/1919691

  ... but how can you complain at $95 grand - if it lasts longer than 5 years you'll be quids in, then give the house away for compost and sell the land for profit!  If this is boom pricing what do you think it is worth??

http://www.realestate.co.nz/1938108

  ... but $250k for a solid 1960s b&t stand alone house on over 800m2 AND probably subdividable in Papakura isn't the end of the world is it?  If this is boom pricing what do you think it is worth??

http://www.realestate.co.nz/1897112

  ... but $259k for a 1960s w/b house on a full almost 600m2 section with a $315k GV in Ranui, is this really unaffordable?  If this is boom pricing what do you think it is worth??

 

Oh Chris_J, nice to hear from

Oh Chris_J, nice to hear from you again - it's pleasantly unexpected!!  The golden triangle house belongs to someone I know.  The current CV is before the big renovation was completed.  The downstairs area was dug out and new living room, bedroom, study, bathroom and a separate utility room were created.  Downstairs open out to the lawn, pool, vege patch & orchard beyond and you will also find a big standalone studio by the pool.  Big renovation upstairs too with new layout and kitchen.  The vendors spent a lot of money doing it up in the last 2 years.  I won't be surprise if it goes beyond 1.8 to 2 mil.  Is this realistic?

Who knows how high that one

Who knows how high that one could go, if it gets to that late $1s level it could be a record for the area for that size section.  I think $1.6-1.8 maybe realistic, beyond that is a bit frothy...

I think you are right

I think you are right Chris_J, very wise indeed.  I hope they can still make some money if it is between 1.6 and 1.8 mil.  I am not too sure of the Mt Albert market, all I know is that Lloyd is one of the top streets there together with Allendale.  Anyway a similar house and section at 18 Rangitoto Ave in Remuera (pictured in http://www.nzherald.co.nz/nz/news/article.cfm?c_id=1&objectid=10849753) sold for 2.9 mil last year.  Can you please tell me, with your knowledge, why is there such a big difference bar the double gz factor?

Also on a different note, I think you will be interested in this: 116 Arney Road was bought by a famous NZ interior designer Neil McLachan for 1.4 mil a year ago.  He spent just over 1 mil doing it up including moving the house forward by at least 8 metres so that he can accommodate a pool, a big deck and a studio on top of the garage at the back, also to improve the view over the Sky Tower amd museum from the living room and master bedroom.  He has done an immaculately job I thought when I was at the open home (http://www.trademe.co.nz/Browse/Listing.aspx?id=536031515).  The property was passed in during the auction (highest bid 2.5 mil) and it is now lingering in the market.  What are your thoughts on this and do you think late 2 to 3 mil would be too ambitious for this prestigeous address?

doublegz, you know the value

doublegz, you know the value of location, but it's not everything.  A perfect house in a top Mt Albert street might break $2m but probably only if someone really falls in love with it!  In the higher price ranges location is important but just because you have it, doesn't mean you can spend endless amounts of money and expect to get it back!

At the moment it doesn't seem to make too much difference if a property is in a top Mt Eden, Epsom or Remuera location, it's more about the house, the position, the view and the land.  In Parnell, St Mary's Bay and Herne Bay, people pay for the address.

It seems the days of Arney Crescent or similar being a must have address are over.  Hamilton Rd, Argyle St etc now seem the places to be!!

But realistically $1.5m doesn't buy much of a house anymore, so Lloyd Ave will certainly be well in excess of that!

Oh dear, Arney may not be

Oh dear, Arney may not be desirable anymore in comparison to Herne Bay, St Marys Bay & Parnell (I agree with your view by all means) but still one of the best streets within Remuera i.e. it's not a piece of crap...surely the house will go for over 3 mil?  I hope Neil is doing the right thing :)

My guess for Lloyd would be offer around 1.8 mil but someone who really falls on love with it might offer close to 2 mil which is the top of my expectation.  Good luck to the vendors :)

Keep us posted

Keep us posted

Lloyd auction brought forward

Lloyd auction brought forward to next Tuesday as a result of multiple pre-auction offers.  The opening bid will be the highest offer.

Its a small world doublegz,

Its a small world doublegz, playing golf yesterday, property came up at one point and one of the group is looking at Lloyd street, they are ex-Christchurch...

What a small world - age and

What a small world - age and family size?

couple, late thirties, both

couple, late thirties, both work, one kid, sold their chch property for 1.35 and were were mortgage free before selling. 

42 Lloyd Ave sold yesterday

42 Lloyd Ave sold yesterday under the hammer for 1.78 mil.  Buyers are a young couple in their 30's with 2 kids.

Mortgaged to the hilt

Mortgaged to the hilt

Buyers sold their Chch

Buyers sold their Chch property for 1.35 and were were mortgage free before selling.

Yeah I see that you already

Yeah I see that you already said that, I think I need to learn how to read :P

When you outlay a lot of

When you outlay a lot of expenditure on doing an old property up with a view to re-selling, you have to bear in mind the target market. You can do a full restoration, and leave it at that, or you can restore and extend. At $1 million and above your target market is not going to be young first home buyers. The best potential are couples nearing retirement, but they will be looking for single level, low maintenance, without a swimming pool. The Lloyd Avenue has been over-capitalised with the addition of the lower level plus the swimming pool. Which limits the target market to middle aged couples without little nippers under 10. The value is in the land. The over-capitalisation has hand-cuffed the property for the next 20 years or so.

I don't quite agree with you

I don't quite agree with you icon unfortunately, many of the first home buyers I know have budgets in excess of 1 mil.  Like Chris_J mentioned, 1.5 mil doesn't buy you a lot of house anymore these days which is true for Central Auckland.  I reckon a couple in their mid-30's with 2/3 kids might just snap up Lloyd Ave :)

P.s. they didn't do it up with a view of reselling but they have to move overseas due to unforeseen circumstances...

As I said above .. keep us

As I said above .. keep us posted .. be interesting to know the eventual sell price and the age demographic of the buyers ..

Ok will do :)

Ok will do :)

...many of the first home

...many of the first home buyers I know have budgets in excess of 1 mil.  Like Chris_J mentioned, 1.5 mil doesn't buy you a lot of house anymore these days which is true for Central Auckland.

I am so pleased there are people prepared to borrow this much money to allow our banks to finance the trade deficit shortfall - as it cannot be the case that the world's 11.0 million High Net Worth Indivduals all live in Auckland.

 

 

Welcome to Auckland - FML

Welcome to Auckland - FML (http://www.facebook.com/fml)

One million is possible

One million is possible however at 1.5 million you are certainly in the tail and that is where they are heading so i agree few first home buyers.

That fact that they have not

That fact that they have not undergrounded the services in that street would deter me from buying - really brings down the tone of the street.  Is this common in the old Auckland City areas?

What fact Kate? 

What fact Kate?  Undergrounded which street - Arney Rd or Lloyd Ave?  They have all been done properly with council consent.

I looked at them both in

I looked at them both in Street View - poles and wires up and down both streets.  Perhaps the Street View pics are out of date?

Kate, may be you are correct

Kate, may be you are correct for Lloyd due to volcanic rock.  For Arney, the "wires" you see is the new UFB (http://www.chorus.co.nz/ultrafast-broadband) going in through overhead for street front properties.

Oh, dear, that's awful

Oh, dear, that's awful - ruining the look of the neighbourhood at the taxpayers expense. Criminal.

UFB is still in its infancy

UFB is still in its infancy so far only Albany, Herne Bay, Ponsonby & Remuera can have it.  The processes have not been tested properly and they have been rolled out to meet govt deadlines hence the "short-cut"  and the 'mess' you are seeing :)  Apparently if you are in a ROW (right of way in shared driveway situation) or are living in a MDU (multi dwelling unit) you still can't have UFB as there are no established processes.

Your last house for $359k

Your last house for $359k (not $259k as you stated) is definitely boom-priced. Compare the cost to the one of only two cities in NZ not experiencing a boom (median price to median income multiple <3). This house has the same land area, same floor area but better inside for $169k:

http://www.realestate.co.nz/1937756

Interestingly, if you divide the price by the median multiple for Wanganui found here then multiply by the median multiple for Waitakere you have:

$169,000 / 2.44 * 5.45 = $377,480 which is very close to the Auckland value.

Hugh P will be pleased by that piece of analysis :)

So, using the same logic, to find the fair long-term value of a property divide its price by the current multiple and multiply by 3.

Using the multiples can also tell you the average price drop each area would experience if they reverted to fair value.

  • North Shore -60%
  • Auckland City -60%
  • Manukau -48%
  • Waitakere -45%

#sitsbackandwaitsforthistimeitsdifferentarguments

on the fair value basis then

on the fair value basis then a house i bought in 1996 for about $370K on the northshore would be worth $360K. assuming it is valued at $900K, about right i would assume based on sale values recently in the area. As there is more than a tent on the land, services,trees,landscaping etc, then the land is worth nothing on fair value logic. any takers for 758sqm for 0.

FYI in NZ we dont have a

FYI in NZ we dont have a 'fair value' system. We have a capitalist system where items are priced at the maximum that the market will stand.

kiwimm, dangit the agent made

kiwimm, dangit the agent made a typo with the list price!  (A bit too cheap at that level!).

However you are in dreamland on the market price bearing any relationship to incomes.

 

Why?  Because how is it relevant that the median retiree's household income is maybe $30k PA and that the median student's income is perhaps $12k PA  and that the median unemployed couples household income is perhaps $20k PA?  Those households won't be getting new mortgages to buy for obvious reasons.

So exclude all of them, then look at who actually can buy - working people or working families, perhaps with a median income of $100,000+ in Auckland (across the whole city), then you can realise that current prices are not actually that out of whack with what people can pay.

Remember a teacher and a police officier with say 7 years experience (likely aged under 30), working in Invercargill will earn about $150k PA - enough to buy a fairly reasonable home in that city with a multiple of ONE!

Hey Chris_J, I recently spent

Hey Chris_J, I recently spent some time in Central Otago and visited Jack's Point and Lake Hayes Estate (Queenstown), Peninsula Bay and West Meadows (Wanaka).  I absolutely fell in love with the area.  Do you think it is worth buying a piece of land with mountain and lake view say around 300k and build a holiday home?  Do you think that area is likely to prosper in the long term assuming no dramatic natural disasters.

I could answer this however

I could answer this however as is address to Chris_J I will first await his answer ;-)

Feedback from anyone is

Feedback from anyone is welcome especially the old timers here like you speckles and SK :)  I love the area so much even Cadrona Valley (there are lands across the road from Cadrona Hotel for sale).

P.s. I think Chris_J might be at the gym at this time of the day lol~

I'm a residential landlord

I'm a residential landlord doublegz, so I don't need to go to the gym to keep fit!  Still in holiday mode though...

Anyway Lakes/Central is a topsy-turvey market where fortunes have been made and lost.

As a rule the prime older areas of Queenstown and Arrowtown have performed best.  Quaint rural areas have also down well.  Big spralling subdivisions and windswept rural blocks not so.

Jack's Point is an absolute flop with hundreds of developed sections unsold.  Stealing them is the only sane thing to do there ... if you're brave!

I don't think the market for vacant land has bottomed out yet.  The market is completely saturated, however there may be some scope for profit from speculative building (on a section you have stolen) since the supply of new homes is clearing. 

I know the area very well so can detail some of the turbulance:

Say in Clyde a standard section in 1980 cost $12,000, by 2002 it was worth $18,000, in 2007 worth $125,000, today worth $85,000 (if you can get it).  Not a good investment (except in 2002).

In Bannockburn a subdivision of lifestyle blocks (1ha) went mortgagee in 2000.  Originally $80-100k each, the cheapest sold for $16k at the mortgagee auction I recall.  Today they would be worth around $180k.

At Pisa Moorings, sections that originally were marketed at $180k in 1996, ended up selling for half that in 1998 and by 2001 were marketed at $33k, in 2006 they were back in the $180k+ range, today they are available at $100k.

Prime properties in Central Qtown (say an old crib on 600m2 high density) went from $150k in 2001 to $750k in the peak and haven't fallen back all that much.

Stone cottages in Central that were $30-40k in 2001 went up 10 fold and have settled somewhere in between.

Volatile is an understatement but anything prime has done well.

Check out the QLDC website which gives rateable value histories free on the search (back to 2002).

http://rates.qldc.govt.nz/cgi-bin/mksform?form=rating/rapp

The land value portion of the RV for a family members lakefront home went from $450k to just under $2m over the past 10 years - so you can say prime property has been a fairly good thing to own.

I live in Queenstown and

I live in Queenstown and there is a definite lift in activity around here, agents appear to be busy and a number of quality builds being undertaken around the region, hard to find a builder right now. None of the activty seems to be speculative, chris j is on the money, can't beat prime or something with a twist. Stay away from old poor insulated homes,subdivisions under flight paths.

Jacks Point is increasingly gathering favour with working locals, land seems to have hit rock bottom.

if you are going to build ensure you have plenty of fat in the budget, as it will cost you more than building the same house in Auckland.

Long term good property within 15 minutes of the QT airport can't be a bad thing, just incase you get basin fever and need to see the Sea.

 

Thank you all for your

Thank you all for your sensible advice on Central Otago especially to Chris_J, 45south, speckles & KH.  I really am fallen in love with Wanaka, Queenstown, Lake Hayes & Cadrona and would love to retire in one of these areas.  However I am now thinking why not just stay at hotels everytime I go down there for holiday - I can still have a good time!!  When I am ready to retire, I can sell all my properties in Auckland, including our family home and have a big fat budget enough to buy/build a comfortable home down there and retire.  Wouldn't this be a better plan?  Give me a reason why I should buy or build a holiday home now and not wait till I am ready to retire.  Note that I don't have enough rental properties in Auckland to call myself a real property investor.  Appreciate your feedback all :)

Wise thinking doublegz....Try

Wise thinking doublegz....Try operating a camping van or bus instead of hotels...the Arrowtown public camping ground is first class and affordable...that way you can escape..

 

 

Great Summary Chris.  Rumour

Great Summary Chris.  Rumour has it the lowest section price at Pisa Moorings bottomed out at 22K sale price.  oooowe for somebody.

Hi Speckles, what's your view

Hi Speckles, what's your view on Central Otago in general?

I think Chis_J has set the

I think Chis_J has set the scene well. I love the area and anyone could be excused by being seduced...the demographics and headline stats add to what appears a compelling outlook....however most will pay for it financially, especially now.

The time to act was a couple of years ago and then that was still high risk strategy at bottom prices. Today there is such shadow inventory, google Kerr, Torchlight and co and see if you can get a peak behind the confidentiallity agreements signed. They have reasons they want it confidential.

In the areas you suggested scarity of inventory there is not...will not be for a very long time IMHO.

The old prime areas are the only calculated risk I would consider. Toursim is a very fragile industry....unless you can buy into a architchural consulting firm then you can skim off everyones else holiday home dreams...that would be a good investment. 

Approx. 80% of the private work is for high net worth aussies building around Wanaka and Queenstown currently. Actually has been for a number of years.

I could take you around whole areas where holiday homes predominate and have visitors a couple of weeks a year...hope none of these buggers need  their money out quickly...

Chris_J highlights the less sxxy parts of central Otago however they are lot more affordable for kiwis and do change hands with a  more liquid market. The Dairy industry from the south is also a interesting development to the area...

 

 

 

No better place on the planet

No better place on the planet to be and to live.  Inspiring to wake up in the morning.  So do it.

Beware however that the place is also full of thieves and sharks.  Who have moved in from a fiasco elsewhere and are trying it on again.

Absolutely agree with the comments others have made.

 Perhaps if you are thinking holiday move into some of the more accessable areas away from Queenstown and Wanaka.  A smaller investment that makes the variable values and the possibility of being locked in more palatable.

Thank you all for your

Thank you all for your sensible advice on Central Otago.  I really am fallen in love with Wanaka, Queenstown & Lake Hayes & Cadrona and would love to retire in one of these areas.  However I am now thinking why not just stay at hotels everytime I go down there for holiday - I can still have a good time!!  When I am ready to retire, I can sell all my properties in Auckland, including our family home and have a big fat budget to buy/build a house down there and retire.  Wouldn't this be a better plan?  Give me a reason why I should buy or build a holiday home now and not wait till I am ready to retire.  Appreciate your feedback all :)

I would of thought the point

I would of thought the point of using median household incomes was as a guide when comparing house price affordability to past affordability and also overseas markets.
I presume there has always been students and retirees including.
The point is Aucklands house price to median household income is comparatively high.

It's not too high, average

It's not too high, average Auckland house price is only about 8 times the median household income - still single digit :)

I will use London as an

I will use London as an example as it has the same problems as Auckland only on a bigger scale.

The UK as a whole is 3 million houses short with London being in the worst position. Only 5500 housing units are being added to London each year for a population of 8m people. (Auckland granted 4,442 consents last year for a population of 1.4m people) It has very stricter planning and building regulations than Auckland. Immigration pressure is huge from Europeans and the global rich.

London's peak was 7.2 in 2007 and fell to 5.4 in 2008 before the government inflated their way out via printing (aka can-kicking). The previous London boom in the 80s rose to 5.8 then dropped to 2.6 (yes, that is 2.6 times median earnings including poor people).

But this could never happen in Auckland?

Ugh, soooo 70s.

Ugh, soooo 70s.

One million might not be too

One million might not be too far off the mark. Take a look at this dump for 3/4 million which ``the last tenants did not take kindly to...''.

It's when property is at it's

It's when property is at it's most "buoyant", is when all those folk who have been stuck with lemons for 10 years or more come out of the woodwork and unload. The test is, being able to recognise the lemons. And there are an awful lot of lemons on the North Shore.

"house prices could double in

"house prices could double in the next few years"
Olly Newland

Anyone want to disagree with him now?

Yes I do, totally.  The

Yes I do, totally.  The present earnings to price is about 6 to 1, what we would see is 12 to 1 higher than even Sydney was at its 9 to 1 and look how soft Sydney is now. Saw some comments on how the price gouging in chch is driving away tradies....what you are talking about is is the same effect on a grander scale. fat chance.

Now if wages double, ie we have huge inflation then anything is possible, so is that real doubling or just an inflation fudge? We wont of course, stagnation is as good as its gets, I think there is more risk they will half.

So hey put it in your diary every january for the next 5 years and lets see how it wokrs out.

regards

We will see landlords hanging

We will see landlords hanging by their necks from lamposts before we see property prices double again.

Olly: I wouldn't bet against

Olly: I wouldn't bet against you

Because .. something is seriously out of whack

(a) At the top of the cycle .. new build costs should be below existing house prices
(b) At the bottom of the cycle .. new build costs should be above existing house prices

While the reverse continues you are on safe ground .. while this current market is at an apparent top of a cycle, the cost of new builds should not be higher .. suggesting it has a way to go

New build costs should always

New build costs should always be above existing house prices becasue people pay a premium for new and taylor made.  If house prices go up then so do section prices so why would you ever expect new builds to cost less than existing homes?

Another apology for a poor

Another apology for a poor choice of words. When referring to the "price" of an existing home I'm referring to the value of the house excluding the "market price" of the land. Whenever researching properties I always assess the two components seperately.

Saying that house prices

Saying that house prices could double over the next few years cannot be disputed. 

But it's like saying that Jesus could return for the final reckoning by Xmas 2015. 

I cannot dispute the possibility, reagrdless if I believe in Jesus or not. 

So what prophet Newland says is essentially meaningless until after the fact.

And even then, the drivers for that outcome may be different than what the guru preaches. 

Ultimately, I'm not sure why people think these prophets are so important, unless they want to be a property investor in the mold of Olly.

I think its a herd thing,

I think its a herd thing, they like to feel that everyone thinks like they do so they must be right, suggesting an underlying fear its going to pop.

regards

 

Olly was referring to main

Olly was referring to main centers when it comes to massive price hikes in the near future. He has said
that properties in small country towns and life style blocks will continue to languish for the foreseeable future.
So long as building costs exceed used houses the crises will continue of that he is certain.

Which main centers? I want to

Which main centers? I want to know the street address of this property which is going to double in price!

 

Here is the list - watch for

Here is the list - watch for the prices to double within 10 years:

1          Herne Bay       $1,913,333
2          St Marys Bay   $1,566,889
3          Parnell             $1,295,333
4          Epsom             $1,178,833
5          Stanley Point   $1,146,611
6          Remuera         $1,139,389
7          Takapuna         $1,125,278
8          Ponsonby        $1,095,000
9          Westmere        $1,063,722
10        Mission Bay     $1,062,667
11        Devonport       $1,042,333
12        Freemans Bay $1,008,389
13        Mt Eden          $1,001,667
14        Cambells Bay    $994,994
15        St Heliers          $963,889
16        Kohimarama     $956,000
17        Grey Lynn         $934,444
18        Castor Bay       $923,889

I guess you have to buy the

I guess you have to buy the newsletter to get the lowdown on where the action is.

No disrespect to self-made millionaires such as Olly Newland, but gurus and prophets are a dime a dozen. But the guy's opinion is quite over-rated considering that almost any codger who has bought a property since the 90s has made money for jam. The only difference is that Olly bough a swag of them, but that's his business, before property investment became as popular as supporting the All Blacks. 

Who's saying that Olly was not lucky choosing his path to become a property investor? Anyone who doesn't accept luck as part of their good fortune is insincere in my opinion. But it doesn't mean that Olly's experiences will eventuate for others in the future. 

Having bought "since the

Having bought "since the 90's" is not correct. Olly has been buying since the 60's so his hands on experiences of booms and busts, of making or losing fortunes gives him an insight that few others would have. His first book "The Coming NZ Property Boom" (1978) was spot on and a collectors item today,

If you read his opinions he is definately not throwing out wild guesses but makes measured pedictions which are much more accurate than most others.

In his recent books he correctly predicted the last boom  ("The Rascls Guide to Real Estate" 2002)  the subsequent down turn ("The Day The Bubble Bursts" 2004) as well as the apartment fiasco, the collapse of finance companes, the current up surge, the rise in rents. the effects of low interest rates, the drought in housing, etc etc.  His latest book ("The All New Rascals Guide" 2012) is a must read to see what he says is coming next.

My guess is that over half his predictions will come true and that's a lot better that the still wet-behind-the-ears "gurus" that comment on this site or in the general media.

My guess is that over half

My guess is that over half his predictions will come true

So he is more accurate than a coin toss?

Coins only have two sides and

Coins only have two sides and thus two choices.
Property has a multitude of sides and thousands of choices.
Tossing a coin to make investment decisions is like playing Russian Roulette.
Strictly for those who want to commit financial suicide.

A coin still has 2 sides (and

A coin still has 2 sides (and an edge) all you are doing is picking which coin to toss.

For your investment allyou are doing is ignroing that a flips side is possible and the consquences. 

Just the fundimental of the normal earnings to price ratio and that  ratio is 3 to 1 and we are are 6 to 1 today.  Yet Olly etc says we can go to 9 to 1, in the real world this has never happened and satyed there, (I think sydney was there briefly) a big ask IMHO.....

 

regards

It would land on its edge if

It would land on its edge if David Bain was involved.

Anyone who relies on capital

Anyone who relies on capital gains to make money is a speculator, not an investor. A real investor wants an income. The 1-3% being earned by private investors on housing would not be touched by professionals.

Gearing up with a mortgage and betting on house prices is a gamble pure and simple. Many people will find this out when (not if) prices crash. Ironically, after the crash, housing will become a sensible investment as yields will increase to a reasonable level.

Its good to have a

Its good to have a new doomster on the site who ignores facts because they are desperately hoping for a property market crash.

Many have come, been proven wrong, and departed tail between legs before you - how long will you last?

Yeah you put the boot in

Yeah you put the boot in SK....these 'doomsters' gotta be rubbed out...there were none in the UK or Greece or Spain or Ireland or Iceland and certainly there were no property 'doomsters' in the USA....

Kiwi property bubbles never end..we are different...we never see prices take a dive...on with the spin and cheap credit flow....

You got it - well observed -

You got it - well observed - NZ is indeed a different country to those that you mention - and so has its own set of circumstances.

Any other earth shattering observations today?

Well I never.....crikey SK

Well I never.....crikey SK did you know there were some who made the same comment as you have....yes there were...in Spain...Greece...Latvia...Ireland....the UK....the USA...Iceland...............aint that something SK....they all used the very same comment....their country was indeed different with separate circumstances that would prevent a property collapse in prices....hahahahahaaaaaaa

When I read your posts Wolly,

When I read your posts Wolly, I always seem to get that guys voice from the Magnus Penrose whiteware adverts stuck in my head as your voice over. Am I close?

You sound like John and

You sound like John and Adrienne from Magnus Benrow lol FML (http://www.facebook.com/fml)

Longer than you as I have no

Longer than you as I have no downside risk :)

Please let me know when this

Please let me know when this crash in Auckland will occur?

Is it imminent or are you just another one saying:

'it wont happen over night but it will happen etc'

yawn yawn.

I love it when people quote

I love it when people quote Rachel Hunter on financial websites...

I have the exact date but if

I have the exact date but if I tell you it will give you a chance to get out of the market on a high (not that you'd listen to me anyway).

I also have the winning lottery numbers for next week and the next winner of the Melbourne Cup.

.Helped a friend in Massey

.Helped a friend in Massey over the break spruce his house up .

 

.He tells me it's valuation is 370k and is hopeful of getting 450k

I thinl he is dreaming as massey doesn't seem to be an area that people are buying in.

 

Massey, get that book "Feng

Massey, get that book "Feng Shui for Dummies", dress it up accordingly and it will be sold in a flash...

Massey is messy fullstop lol~

Massey is messy fullstop lol~

A great place to get the hell

A great place to get the hell out of.

$624015 less ( agent's

$624015 less ( agent's commission + base fee + marketing costs + gst) = Actual Sale Price. How about revising this figure and giving us some real data which isnt skewed?

 

Lotta blind fools

Lotta blind fools around.

 

That's an expectation that 25,000,000,000 can be spent, more than last year, right?

 

Money is a proxy - for the purchase of 'bits of the planet'. No more, no less. Did the supply of 'bits of the planet' increase? No. For example, every 11 days, there has been a billion less barrels of oil available, and not a hell of a lot happens without oil. That includes the activities which pay off long-term mortgages.

 

Some of that increase will be debt, so it will default as it's not underwritten (and long term it can't be). The rest has to produce inflation - more rampant than would have been the case if depletion-rates were followed. Same houses, same planet, more numbers - can't be any other result.

Im not sure where you

Im not sure where you (specifically) get inflation from, still.   For instance I will take a very simple example to describe why Im confused with what you say so I need to understand your reasoning.

I certainly agree that this excessive debt simply has to be defaulted on, these are in effect IOUs for work which can never be done. So in effect money is an iou for work, so taking it circular, money simply will disappear just like debt but mabe the mechanism differs.

Lets look at an example, say a $1million farm, pay in cash.  Its NET profit is say $100k / annum, so a 10 year payback, 10% return.  So really the problem is for paying more the price to earnings ratio.  Is the farm worth 2million? that means a 20 year payback or 5%. Then consider that the farm's output is based on fossil fuels, its output without fossils fuels is I think at least 50% less.

So that 2million farm now has a $50k NET profit (more likely a loss), 2.5% OK getting bad.  The problem I see is that while there is so much electronic money in existance that it cant buy the limited assets there are, buying wont stop that depreciation/loss of capital.  You could buy the farm for $5million or even 10million but all you get back is $50k....realistically all the farm is worth at sale time is, $500k.

regards

 

 

Fair comment. We're saying

Fair comment. We're saying the same thing; the underwrite won't match the expectation.

 

I think folk get confused when they forget that money is just a proxy - when they mentally assign it some real worth. No guarantees of that.......

 

I suspect that the cranially-incapacitated re real 'worth', are also the bleaters-on about it being this or that other's fault. Govt is a popular blame-shift recepticle, but there are others.

You are quite correct SK that

You are quite correct SK that NZ values are not fair - unfair even.

Join the revolution comrade.

Join the revolution comrade.

You'll be saved when the

You'll be saved when the revolution comes..  ummm may be not..