The average price of homes sold by the country's largest real estate agency hit a new record high last month, although the number of homes it sold was down.
Harcourts' national average selling price was $594,693 in July, up $18,749, or 3.3%, compared to June's average of $575,944, and up 15% compared to July last year (refer table below).
Around the country, the biggest annual increase in the average price was in the Central North Island, which includes real estate hot spots Tauranga and Hamilton, where July's average price was up 31% compared to July last year.
That was followed by Wellington +19%, Northland/Auckland +15%, Christchurch +10% and the rest of the South Island +8%.
At the same time the amount of stock available for sale is falling, with Harcourts having a total of 5572 homes listed for sale on its books at the end of July, down 1741, or 23.8%, compared to the 7313 it had available for sale in July last year.
'Immigration needs effective planning'
Harcourts chief executive Chris Kennedy said record immigration levels paired with poor planning around infrastructure were the root cause of the current market conditions.
"In Auckland the revised Unitary Plan should begin to address the housing shortage with massive construction and housing intensification proposed," he said.
"However until this happens, the average Auckland price will continue to trend up," he predicted.
And Auckland's housing shortage would continue to drive demand in other regions at a time when the stock they had available for sale was also lower than normal, he said.
He also said it was "an outstanding time" to be selling a property and that the government needed to take responsibility for immigration and its flow on effects.
"Immigration is important to the country's growth and economy but it must be paired with effective planning," he said.
"The government needs to own the problem and act swiftly.
"We all want New Zealand to remain a place sought out for our amazing lifestyle and living conditions," he said.
| July 2016 | June 2016 | July 2015 | |
| Auckland/Northland: | |||
| Number of new listings | 596 | 708 | 752 |
| Number of sales | 587 | 651 | 668 |
| Average selling price | $949,756 | $909,733 | $828,024 |
| Central North Island: | |||
| Number of new listings | 391 | 454 | 438 |
| Number of sales | 403 | 457 | 527 |
| Average selling price | $455,895 | $433,391 | $347,475 |
| Wellington Region: | |||
| Number of new listings | 289 | 274 | 322 |
| Number of sales | 294 | 293 | 291 |
| Average selling price | $422,364 | $437,123 | $354,055 |
| Christchurch: | |||
| Number of new listings | 350 | 479 | 492 |
| Number of sales | 413 | 428 | 426 |
| Average selling price | $521,850 | $496,409 | $472,724 |
| South Island excluding Christchurch: | |||
| Number of new listings | 228 | 297 | 229 |
| Number of sales | 235 | 256 | 235 |
| Average selling price | $364,783 | $371,941 | $337,811 |
| Total NZ | |||
| Number of new listings | 2009 | 2280 | 2393 |
| Number of sales | 1986 | 2150 | 2178 |
| Average selling price | $594,693 | $575,944 | $517,566 |
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43 Comments
Harcourts chief executive Chris Kennedy said record immigration levels paired with poor planning around infrastructure were the root cause of the current market conditions.
He forgot to mention
- having zero purchase tax (lowest in the world)
- fact no loan to income restrictions
- 46% of buyers are investors... so far too many
- that foreign students and temp workers are buying 13,500 houses a year and paying zero stamp duty.
13500 a year is approx 1000 a month. Roughly half the houses that Harcourt sell.
WAKE UP NZ
I think you'll find the majority of NZ'ers are very happy with the house price increases. I think the people that will not be happy are those FHB's that now can't buy an investment property due to 40% LVR's. There should have really been an allowance for FHB's to buy an investment home on 20% other than new build's. Rule of thumb though says stick with villas as new builds tend to be a little bit leaky at most and tacky in the least.
You may be very surprised, who among us here demanding change, are, in fact, baby boomers. I will start with me. I strongly suspect many of those who argue the point we put forward are in fact, not baby boomers. I can think of at least two right off the top of my head.
Good, because you've got the numbers to have some influence.
I know you're not all smug dickheads, but there are certainly some doozies who make a lot of noise.
Oh, the other day I was reading threads in a property investor forum where they were starting to freak out that local property speculators and landlords were being outbid by the Chinese and that the government should do something to help them. Oh the irony..
I suspect this is a wind up Keywest but, nevertheless, not too sure about the villas - some of the worst housing IMHO. Usually draughty, high maintenance, badly orientated, no outdoor covered areas, poor outdoor flow, uninsulated, small rooms, large waste-of-space hallways, elevated floors - poor access and leaky, yes leaky. New builds? Well you can build whatever you like and the rules around weathertightness pretty much ensure no problems there. Some of them have the elegance of a shipping container and the internal ambience of the inside of a fridge but surely your choice if you're building new.
with home ownership by kiwis falling your majority is heading towards minority, what then?
within ten years
there will be more rentier friendly policies, already happening
home owners will face GC tax, first versions will have the house you live in exempt
government housing costs will rise so other services will have to be cut or upper tax bracket pay more
so I say to all those investors of housing make what you can now and have a future plan because the time will come when it changes away from you.
as for those of us homeowners we just have to hope we are not to affected by the backlash
The major problem is they do not vote at all, and I can see why when I look around the world. Never saw anything like the Bernie Sanders and Donald Trump things in the USA and yet Trump makes it through while Sanders got ground down by the machine, in what often looked like pretty dubious ways. I just hope there are others, Elizabeth Warren maybe who can carry the torch of change for him, and I wonder where our Bernie Sanders is, who could get the non voters out of their armchairs. Watch out, if it happens.
So what stage are we at?
The investment stage - positive cashflow allowing a return on investment and/or interest and repayments.
Speculative stage - outgoings covered, no net return.
Ponzi stage - cashflow now negative and can't cover expenses, interest and repayments.
The dreaded minsky moment! From Wiki:
"This is likely to lead to a collapse of asset values. Meanwhile, the over-indebted investors are forced to sell even their less-speculative positions to make good on their loans. However, at this point no counterparty can be found to bid at the high asking prices previously quoted. This starts a major sell-off, leading to a sudden and precipitous collapse in market-clearing asset prices, a sharp drop in market liquidity, and a severe demand for cash"
Looks to me like we are firmly in the final stage and have been for some time.
The banks now require 40% equity which means that if you borrowed the max and your net rental yield was 2.75% of the value of the property then your rent = 4.6% of your borrowings or enough to service your interest only mortgage and have some left over profit before accounting for any capital appreciation or asset depreciation for tax purposes.
The jump from investment to speculation looks to be nigh on impossible with the 40% LVR requirement!
No bubble while we dont classify students and temp visa workers as foreign buyers.
No bubble while nz media don't understand that Australia and Canada state students and temp visa workers are foreign buyers. (Even though make up 32% of resident buyers)
No bubble when students and temp workers buy 13billion nzd with of housing in Nz each year.(13,500 houses)
No bubble while we have zero purchase tax yet Australia, Canada and Singapore do.
No bubble while National deny there is a crisis despite the fact that John Key claimed it was a bubble in 2007 when prices in Auckland were 500k lower.
No bubble when prices have gone up more under nationals watch in the last 8 years than every other year since time began. Auckland up 500k.....to approx 1million. Before national came in power prices were 500k in Auckland.
So from 4billion years ago to 2007 auckland prices gained 500k
Now in the short space of 8 years of Nationals open to the world investment housing policy prices have gone up by the same amount.
Crisis I say. Vote the first party that
1. Knows what a foreign buyer is
2. Taxes them 15% when they buy existing homes
Sure everyone with a house worth $1m or more should sell it and cash up. Then we can have homeless millionaires on the streets as well.
There's no wealth creation, the houses are still houses. They just have a higher price because there's an extra $1.5b NZD being created each month, and the "wealth" can only be realised by selling. There's plenty not to like about the distortion created by central banks around the world. RBNZ and the Government are propping up the exponential price increase in housing which is going to turn into a massive problem.
If you can exit the property market at the peak and rebuy when prices fall then good for you. That doesn't mean that the country is doing well.
Yes the madness continues but for how long?
How The Block NZ’s live auctions perfectly illustrated Auckland’s housing crisis
http://thespinoff.co.nz/featured/16-08-2016/how-the-block-nzs-live-auct…
There is a great NZ Film archive footage from 1946 on YouTube stating NZ was in a housing crisis due to the war and 40 thousand extra homes were needed and that renting stock was poor and below par. It did make me laugh as all of the above think that this housing crisis is new, the fact is housing has always been in crisis as is a highly sought after asset that we don't have enough of.
wow as if it was yesterday ... !! .... here is the film
https://www.nzonscreen.com/title/housing-in-new-zealand-1946
Agreed, It also means that it is a chronic problem ... neither this Gov or the previous ones had the vision to solve this issue for decades or to put a system in place to avoid it from happening .... it is all done by last minute patching ( because we are a poor country) and cannot afford planning and spending upfront to avoid problems , ...lol, just like building roads!! .. But we have much less problems than the rest of the world to worry about ..
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