Property pendulum swings more in favour of buyers in Auckland as a rising stock of homes for sale gives them more choice

The latest figures from property website Realestate.co.nz provide further evidence of an easing in Auckland’s residential property market, with inventory levels rising at a time when sales volumes are declining, suggesting the Auckland market is moving further in buyers’ favour.

However the figures also show that the reverse is happening everywhere else in the country, with inventory levels in February significantly down compared to February last year in every region except Auckland.

February is traditionally one of the busiest months for the real estate industry and last month was no exception, with just under 11,801 residential properties being newly listed for sale on Realestate.co.nz during the month, little changed from the 11,989 new listings it received in February last year.

Auckland followed the same trend, with 4294 residential properties newly listed on the website in February, just a tad more than the 4295 newly listed in February last year.

The big difference between Auckland and the rest of the country is in inventory levels, which is the total number of residential properties listed as available for sale on the website.

At the end of February, Realestate.co.nz had 26,110 residential homes throughout the country listed for sale, down 8.9% compared to February last year.

But Auckland went against that trend, with 8645 homes listed for sale in February which was up 27.6% compared to February last year and the highest it has been in the month of February for four years.

Auckland was the only region to record a rise in total inventory last month.

In all other regions of the country, the total number of homes listed for sale on Realestate.co.nz declined.

The rise in Auckland inventory levels comes against a background of slowing sales in the region, and the extra choice this is giving to buyers is likely to maintain the downward pressure on prices that has started to emerge in the last few months.

Realestate.co.nz spokesperson Vanessa Taylor said the number of properties in major centres such as Auckland and Wellington that were being viewed on the website was also down, while online views of properties in provincial centres was up.

In the three months to the end the end of February the average number of Auckland properties viewed on the website was down 10.8% compared to the same period a year earlier, while the number of Wellington properties viewed was down 18.8%.

But in regions where property prices were cheaper, the average number of properties viewed was well up, led by Manawatu/Whanganui +23.6%, Gisborne +17%, Otago +8.6% and Hawkes Bay +7.5%.

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?

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65 Comments

Fake math, Ninness reports fake math.Its not just a Trump thing.

Auction pass-in rates through March/April will be the telling indicator, re the Auckland residential property market.

I'd wager there will be more Auckland homes back on the market "By Negotiation" over the next few weeks, after failing to sell at auction.

Cash buyers - your popularity might increase....... and not just in the short-term. The current downward price correction could play out over a longer period.

Aucklanders. Time to bargain really really hard if buying.

In order to bring things back to an affordable level, that would mean offering $500k under the asking price? Is this what you are suggesting?

Yep that's what we're suggesting, reality has to hit home some time. The top end Foreign Buyers have flown the coop due to the Capital Flight lock down in China.

Kiwi's and new immigrants simply don't have access to that kind of cash and expecting them to massively over extend themselves by borrowing far more than the earn is a road to no economic disaster.

So lets get real people! FTB's make sure you put in 'cheeky offers'!

can anyone who tries this let us know they get on.

It's really a case of finding a Seller who needs to urgently see, therefore they're more prepared to negotiate their price down.

Check out this 2 bed in Pt Chev, passed in at auction and asking $1,049,000. Homes.co.nz puts an average estimate of 1.3 on it and apparently it sold in August 2015 for $1,150,000. Prices are certainly softening but this seems drastic...
https://www.bayleys.co.nz/Listing/Auckland/Auckland/Pt-Chevalier/1670657

Forget what it sold for before, and just for a moment think about how realistic it is for a kiwi buyer/investor person to pay over $1mil for a 2 bedroom place.

Agree, but the move is in the right direction - from "extremely unaffordable" to just "highly unaffordable".

But with an average income of $75,000 in Auckland, surely young Aucklanders will be ready and able to pay this for a 2 bedroom place!?!

If they'd only stop their whining and stop eating smashed avocado, they could easily afford it. Houses have never been more affordable, so we're told!

Your sarcasm is so thick you could butter your smashed avocado'd focaccia with it :)

Just so you know, I'm starting a sideline business: Drive-through Avocado Smashing.

Get your avocado well-smashed and lathered onto your toast on the way to work; no lollygagging around at home for breakfast, we need you youngsters at the office paying taxes for the pensions of the landed old folk gentry.

Agree that it's still a ridiculous price in the scheme of things and things need to change- but leaving that issue aside, I was under the impression that regardless of recent softening the year on year average increase between start of 2016 and start of 2017 was still about 12% as last reported. Makes me wonder what is wrong with the place...or is it an indication of a much more drastic drop in general than is being reported?

Oh and one other reality check point. RE's you're going to have to drop your commission rates. 1% to 1.5% is a more acceptable rate in most developed countries and popular cities like London as an example.

It is interesting to see that new listings today on Trade Me for Auckland houses are already up to 120 and the total available for buyers is now nearly 10,500. Not that long ago the total was around 9000 or thereabouts. That is an increase of 16% over a short period of time. Some will call it a buyers market. I would think that many buyers if they have a reasonable amount of intelligence and self control will be holding off as living at home or renting is pennies compared with what you might save if you are patient. Those who bought in the second half of last year must be getting worried if they have large loans secured by mortgage. No one likes to see their equity going backwards. They were warned but of course the
Auckland market only goes one way and that is up. More and more will panic and more and more will list as the thought of going into negative equity is never an easy thing to live with.

Reality seems to be hitting home for some. I get the feeling there are a lot of people who are overextended.

Look at this one. It's too much house for most families and was only bought in Feb 2016 for $1.5m. I'm guessing the mortgage has suddenly become unaffordable.
http://www.trademe.co.nz/property/insights/address/Auckland/Schnapper-Ro...

Wow, cool service this TM property insights, didn't know it existed.

That property is plaster exterior too. Even if it was done right, it makes it hard to sell.

Yes it's a very cool service. Remind what RE Agents bring to table to justify their commissions?

Yeah it's monolithic cladding, no over hanging eaves and the garage roof looks problematic. The era when it was built was right when the problem builds were happening. Anywhere that rainwater is pooling probably has water infiltration and rot. You never know it might be one of the ones that has little or no problems although I wouldn't touch it without an invasive investigation and a substantial discount.

Although I was looking more at it's history. Someone took a haircut on it between 2007 and 2010. I don't really get having 6 bedrooms myself. It just seems like more to clean and more space than what I'd utilise.

Gordon i assume you are just talking about property investors who bought with the intention of selling in the near future realizing capital gains? If you bought the property as a home as opposed to an investment why should you care as long as you can afford to service the mortgage? Sure if prices do go down drastically (Unlikely) you may feel unlucky getting in at the wrong time however long term Prices will come back up again. You are not just buying a home you are buying all the added benefits of owning your own home i.e. you don't have to worry about increasing rent or having to find a rental, you can make changes to it to suit your tastes/needs.

Unless the bank gets scared that the owner is underwater and calls in their mortgage, forcing the owner to sell their home to limit damage, leaving them homeless and still with large debt to pay back to the bank.

Then they would be bankrupted and the bank would make a loss instead of carrying on status quo. That would be a stupid decision by the bank.........

Fair comment, I have just looked into bankruptcy now. I guess when it gets bad the banks simply go cap in hand to the government like USA in 2008. Nice bonuses for them in the following years I heard.

But really, I think the idea that you can't lose if you buy a house is not correct. You really have to balance the pros and cons of the purchase, and ask if what you are getting is worth the cost. You cannot rely on house prices always going up, and inflation always diluting your debt away to justify the purchase. Too many have already relied on that formula, and the party is going to come to an end one way or another.

Just hit 10,500 right now.

I don't get it, thought there was a housing shortage?

Unless there is an external shock , with local job losses, then you wont see any massive crash.
Remember men go mad in crowds, but comes to their senses one at a time....

You may well see a buyers strike and lower sales for the next six months, remember back to 2005 where the market stalled out, sure that time it regained its breath, but this time I don't think so.

I see several years of -5 to -10% PA ahead and sales to slow right down... if there is a european collapse or china collapse all bets are off

-5 to -10% per annum over the next 3-4 years in Auckland's house prices would be a "soft landing". Agree with you it's not a "massive crash".

I have to agree that a significant event would need to happen. With the latest RBNZ statistics I'm not seeing a change across all of NZ that would cause any sort of collapse leading to job losses, etc. An external event would need to occur unless there is concealed fraudulent activity on a large scale.

I tend to disagree. House prices are so far removed from local incomes that it will only take the "funny money" to leave for prices to drop through the void to local affordability.
http://www.interest.co.nz/property/83349/new-zealand-wins-gold-medal-hou...

having no buyers does help a market correct , but why do the sellors need to sell... in most corrections its on death de bank and divorce

Just as it only takes a few houses to sell at exorbitant prices for a whole market to go up, it only takes a few distressed sales for a whole market to devalue. Suddenly the bank is sitting on billions of over priced assets, which will make them, and rating company's very nervous. Hope it doesn't get to that, but seems a very slippery slope at the moment.

perhaps if an investor realizes their money will earn more elsewhere, they'll cut their losses and shift it there. also raising interest rates in negative equity may make renting look more attractive.

The problem is not many young Kiwis at all will be able to afford to buy, and with wages low and rents going up...why would people with good skills stay in Auckland? Heck, even comparing what you get in Melbourne or Toronto (both with their own booms) makes Auckland look a bit silly.

So those who can will likely start leaving again, meaning effectively the only people who will be able to buy will be those already in the market - or foreign investors.

It's basically a long term strategy that - much like Bill English's approach to the drug-addled youth of New Zealand - replaces young Kiwis with foreign buyers and / or wealthy immigrants.

And why? Well, boomers gotta nest-egg bro.

A market that falls at half the pace it went up (ie lots of 20% up years) but only 10% down years is a correction not a crash.... like on the way up there will be buyers all the way down

buyers may not want to catch a falling knife

I detect a slight degree of nervousness / hope in this comment.
The basis for the statement is very weak.

I think the all bets are off is more likely ... Energy crisis coming right up...

https://www.bloomberg.com/news/articles/2017-02-22/exxon-takes-historic-...

"Exxon Mobil Corp. disclosed the deepest reserves cut in its modern history as prolonged routs in oil and natural gas markets erased the value of a $16 billion oil-sands investment and other North American assets.. ..The reserves are now at their lowest since 1997"

Meanwhile Saudi want to diversify away from Oil ... akin to diversifying away from oxygen.

http://oilprice.com/Energy/Energy-General/Cooking-The-Books-Saudi-Aramco...
"Recent reports and growing skepticism regarding Aramco’s actual worth ..."

Homes for sale in Auckland slam thru the 10500 mark , 10.5 Billion worth of particle board .

One measure of inventory is ...weeks to sell.
http://www.interest.co.nz/Charts/Real%20estate/Housing%20inventory

17 wks is not an extreme ... ( I think the long term average for Auck. is 23 wks.. )
Its easy to get myopic with watching trademe listings.... and think the world is ending.
Once the vulnerable, marginal property owners have been forced to sell... then what.??
A listing to sell is not necessarily "supply".... ( Vendor asking silly prices is not supply... they are "wishful thinkers" )

Historically, residential real estate has real stickabilty to the down side... ie. people dont sell for a loss unless they really have to.

Considering the state of tha NZ economy, within the Global context, ...it is really hard to see a crash and burn in Real estate this yr...???

Real estate agents can tell you the feel of the mkt "today" ( because they are at the coal face ).... but they don't have a clue about ithe longer term state of the mkt.

If prices drop a little ....who knows how that will affect demand..???
supply/demand and prices are a very dynamic thing..

Some people say the foreign investment has been cut off by China.... My view is that after a little time , people will learn to "game" the rules. So who knows if Hot foreign money will return.???
I'm guessing .... it will

Population growth and New home supply and money supply growth are a big deal in the medium to longer term .
I just can't see any kind of big move down this yr..???
( maybe shitty properties that people paid too much for, will decline in value ...somewhat..??..maybe even quite a bit... but does that mean anything, other than the seller might have been foolish .?/ )

What it suggests to me is that New Zealanders need to come to a decision about whether Auckland is to be another Vancouver (continuing to that level), or whether at some point it matters that houses are out of Kiwis' reach.

And that where previous generations and their policies made houses about home ownership and getting people in them, the current bunch of politicians are focused solely on short-termism.

It's time we start demanding a strong Stamp Duty on foreign purchases (anything other than PR, Citizens), limit foreign purchases to new builds, and started looking at what else we can do to reconnect Kiwis with home ownership.

If not, it's maybe time that young Kiwis start to realise that older Kiwis have decided "Got mine, eff you lot" and will do anything to keep their nest-eggs growing even it means a complete and utter deracination of the next generations to do so.

And let the young Kiwis respond to that as they see fit...

still enough money leaking in from overseas to prevent an outright crash. Weird dynamic. Must be bargain time for the few with means to get their money out of China.

10,508 now. It takes a brave man to catch a falling knife. As my broker always says it is better to watch the market stop dropping and then inch up then buy rather than rush in when you think it has bottomed and then it drops further down. As they say "patience is a virtue."

Gordon... With timing and knowledge ...catching a falling knife can be a low risk trade.. with high potential reward.
Inching up can simply be a countertrend as much as a change in trend...
My own experience is with trading FX .... intraday.

real Estate might be similar....
When there really is blood in the street and real fear... that might be a sign to catch the falling knife..???
eg...1991-93 and 2008-2010 with NZ real estate
timing is everything in regards to risk..

just my view.

As they say 'Knowledge is power"

ps... I do agree with you that , patience is a virtue.... If I was buying in todays mkt I'd be patient too.. and very careful.

Blood is not on the street yet Roelof and fear is only just starting hence the sudden rise in listings. I should not have used the the words inching up. My broker actually said give a bit to the next guy and wait for a definite trend up. That takes the risk out of trying to guess when the bottom has arrived. In other words let others take the risk for you. I have no idea what is going to happen in Auckland but one thing is for certain it has turned and it now depends on how much fear and panic hits the market. Fear of holding too much debt when the market is turning. Fear from watching those paper profits moving backwards.

All those saying that any of this might be due to restraint on foreign capital, may wish to have a look at the Melbourne and Sydney and Toronto property markets which are all booming.

True, at the end of the day in an unstable world wealthy people are always going to look to migrate to safer zones i.e. NZ, Canada, Australia. This also applies to investors, they want to park their wealth in these countries and Housing is one tangible investment they can make. It may not be forever but at the moment this is a large factor for the increase in cost of housing here.

Is all people on here got to do is watch the number of listing on TradeMe?
Hardly a worthwhile thing to do?
There are always home owners that wish to sell, whether it is a new job, transfer or a variety of reasons.
People I. Auckland have on paper made hundreds of thousands of dollars over the past few years, while,many on here have sat on the sidelines saying they will never keep rising and I can't afford to buy now!
Let's just see what happens and if all you want to do is comment about how many listings on TradeMe then God you must not have a lot to live for!! !!!

TradeMe listings are but one indicator - albeit probably a reasonable one on the supply side of the Auckland housing market. So people are sensible to keep a watch on TradeMe.

As earlier, auction clearance rates are a critical indicator right now. The high (and growing) volumes of properties now being passed in at Auckland auctions suggests that underlying demand has softened considerably.

When supply increases but demand weakens, it's not rocket science to figure out the impact on price.

I believe it's realistic for buyers to bide their time...... Unless there's a compelling personal/family reason, why would you rush to buy a house in Auckland right now?

You seem detached on how people look for properties these days. Isn't this an opportunity to buy some shares in Trademe?

Why are you so distressed about the rapid increase in the number of Auckland properties?

The Boy I would have thought a 16% increase in listings over a short period of time is significant and the velocity at which they are hitting the market seems to be increasing. You seem to be all over the place and certainly not yourself. You have been going on for ages about how overpriced Auckland is. Is Auckland starting to look a lot more like Christchurch. Increasing listings, dropping prices and dropping rents because of an oversupply? Relax. Soon you might be in a position one day to buy in Auckland in order to diversify your portfolio.

Why would anyone want to buy in Auckland?

If capital gains have ceased there is no good reason to invest in Auckland. There is no real construction going on and so Auckland is the only city in Australasia looking at a decade of high rents. Auckland has bad medium term fundamentals against it attracting business growth.

Agree, management are already seeing talent flight. At the level of highly-skilled workers, not "skilled" as our visa scheme considers the term.

Grandad, I don't give a toss about how many listings in Auckland there are!
Never have or will,own a property in Auckland.
Of course Auckland is overpriced when you compare to other places in NZ that give far better rental returns.
What other investors do doesn't concern me as that is there business.
You never know Gordon, I might sell up and buy shares and then I will have sleepless nights no doubt!

The Boy Auckland is certainly looking overpriced when you compare its prices with the amount you have to pay to buy a house in Christchurch. I cannot believe how cheap they are down there. You pay more for a house in some regional centres. While Christchurch prices and rents creep down slowly but surely we in the regions are enjoying a healthy market. I cannot understand why you did not have the foresight to buy houses in Dunedin for example. It was a no brainer after all. It just shows that one needs to diversify and get out of ones comfort zone.
No wonder you are so angry when your capital and income is going backwards and all your costs and risks are rising. I see the NZIER is predicting rising interest rates today. That will make you angrier. How can someone like you call yourself what you do when all you own are some average properties in a high risk area of NZ where the values went no where and in fact are reversing. I would have a little respect for you if you owned a string of Auckland properties.

Gordon, you really are a laugh!
The average house in Christchurch is around 500k at the moment but has been dragged down by the As is where is prices.
Despite the earthquakes it is still an extremely popular city and is continue to grow again, despite your wrong opinion.
Why would I buy in Dunedinand have my properties wrecked by students.
Gordon, pointless debating it any further and finally haven't got average homes in a high risk area at all!!!!
Certainly won't divulge financial details but I can assure you that returns and capital position not declining at all!
Unless you want to take me up on that offer which still stands.
Take me up on it Gordon, that way it will help my dwindling financial position won't it!

The "as is where is" houses are going to be part of the Christchurch housing landscape for some considerable time - get use to it.

Of course, and opportunities are there!

You don't have to buy student homes just because you have as is where is homes in Christchurch. You could actually buy some quality homes in Dunedin and improve the standard of your portfolio The Boy. By the way you can be a grandad at 35. I am 61 and looking forward to being one some day in the future.

I never considered National particularly bright but they might have hit the Jackpot here! Sell all the houses to foreigners for a fortune, then crash the market and the foreigners will have to sell back to Kiwis for peanuts. Just genius pure genius #bringbackJK

It'd be the greatest swindle of all time!

I think there has been a big slow down in flows from China but interest coming in from other areas. Wealthier migrants are coming from Europe and the US.

.and they won't be buyng million dollar shacks in Auck that's for sure.

I've seen a couple of comments today comparing say a 20 per cent house price rise with a 20 per cent subsequent fall - implying they are equivalent. Not always true of course. If a news item for example tells u there was a 50 per cent rise in average from 600 thou to 900 thou one year a 50 per cent fall the next would be from 900 to 450. Of course not applicable yet as prices clearly have been rocketing up. But something to watch out for.