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Home owners, agents hike listing prices back to peak levels due to ‘turning market’
April 1st, 2009Media speculation about the housing market ‘turning the corner’, and lower interest rates, contributed to a rise in the median asking price for listed homes in March back to the peak levels last seen in October 2007, property listing site Realestate.co.nz said in its NZ Property Report released on Wednesday.
Vendors may be setting unattainable price expectations following speculation about a turning market, Realestate.co.nz CEO Alistair Helm said. Helm also noted that competition for listings between agents led them to accept vendors’ high listing prices because they knew they could negotiate down to the buyer’s expectations.
The national median asking price for listed homes in New Zealand rose to NZ$399,000 in March, matching its pre-recession peak in October 2007, Realestate.co.nz data showed. March was the second consecutive month in which price expectations rose. March expectations were up 5% from February and up 1% from March a year ago.
“The current state of flux in the property market may be setting unattainable price expectations in the minds of vendors as to the worth of their properties,” Helm said.
“Contributing factors include recent media speculation that the market may be turning the corner, along with the lower interest rates that have been available through much of the first quarter,” He said.
“An interpretation for this rise in asking price is to understand the motivations of sellers and real estate agents. The sellers see media coverage presenting a degree of market resurgence, albeit with falling prices.”
“With limited numbers of new listings, agents are eagerly courting sellers to win listings. With sellers eager not to capitulate on price, they set a higher asking price in the knowledge that they can negotiate down to the buyer’s expectations. Agents counter this by informing sellers that property only sells when priced to current market price but fail to convince sellers when threatened with potentially losing the listing.”
“The outcome is a divergence between selling price and asking price. It is hoped that the presentation of these facts, in this report for the first time, will bring attention to sellers’ expectations enabling greater visibility and transparency in the market.”
Tags: Alistair Helm, House prices, Interest Rates, Mortgages, Real Estate Agents, realestate.co.nz, REINZ
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April 1st, 2009 at 12:24 pm
Once Bollard gets his way and the 5 year fixed mortgage rate goes below 4% the homes will sell quite easily at the higher prices so just a matter of time. So just hang in there sellers – it may take a while but it will happen.
April 1st, 2009 at 12:36 pm
Reckless, wow, what a comment from a Bank Manager – maybe she/he won’t seem so bullish when their job is in threat – and if he or she carries on with this attitude it will only be a matter of time! More concerning is it’s this sort of attitude that gets other more innocent customers into trouble – some thought please before you post a comment like this – maybe that’s why you didn’t post which bank/branch.
April 1st, 2009 at 12:38 pm
Once house prices drop 30% from peak, all first home buyers will afford to buy. So, just hang in there buyers – might not happen in this life time, but it will happen.
April 1st, 2009 at 12:40 pm
Obviously, dese guys haven’t read the good Doctors latest missive:
http://www.doctorhousingbubble.com/real-homes-of-genius-when-a-home-sells-for-12-million-the-next-logical-price-is-499900-volatile-week-ahead-for-a-troubled-stock-market-today-we-salute-the-los-angeles-housing-market/
And Alex, Alex, why not add a qualifier like ‘Perhaps they’re just talking their book. Huh? Ya reckon?’
Then we would have small-j journalism, not mindless recycling of playaz dreck…
April 1st, 2009 at 1:00 pm
Waymad
Happy to provide rope for book talkers to hang themselves.
We prefer to show rather than tell.
But our sympathies are quietly with you
cheers
Bernard
April 1st, 2009 at 1:43 pm
Well put Bernard
April 1st, 2009 at 2:40 pm
A 5 year fixed rate of 4 % ! Dude, I wish you were my Bank Manager.
April 1st, 2009 at 2:40 pm
Its that ‘mean’ stat again, just as the mean stat for sales doesnt represent actual drop in house prices.
More higher priced houses being advertised, which would relate to a similar stituation after the 80s crash…the high flyers over comitted.
April 1st, 2009 at 2:48 pm
Seems strange that “talking up” the market is trying to stoke the fire that pushes homes out of the financial range of most people. Have the real estate people not yet figured out that the number of people that can afford to buy is only going to fall, due to job losses etc.? And the number of houses for sale is only going to increase, with baby boomers retiring and “downsizing” or realizing their assets? No number of expats and new houses is going to fix that. Just wait till the end of the year, when the US currency devalues, food prices hike, and petrol starts becoming an issue.
I’m not a doom and gloomer (actually, I am….) but when will people realize that there ain’t no going up after this going down…..
April 1st, 2009 at 2:49 pm
Are with Steptoe..
Would be good to see data from industry to show the skew of the data..
We would expect a normal distribution.. but more likely skewed to higher properties..
April 1st, 2009 at 3:10 pm
To bring some answers to the questions in regard to this report.
The asking price is the “median” price – that being the midpoint of 13,284 listings – this is the largest sample set of any report within real estate. By comparison the sample set of monthly sales stats from REINZ is around 5,000 currently.
Median is more relevant and statistically valid number to be used in relation to property given the diversity of housing stock on the market. As a reference point the average price shows the same trends and % movements just off a slightly higher base.
In response to waymad’s comments – we have no agenda. We are a real estate website – we earn our income from the industry subscribing to the site matched with advertising income. In the last month 377,000 unique browsers came to the site and judged the site valuable – we are not trying to sell anything – we just feel that the statistics behind the database of the site can be a valuable guide for property owners, buyers and sellers.
April 1st, 2009 at 3:28 pm
I am interested by these comments regarding the normal distribution of listings against price – this is something that can be produced for analysis. I will work on this in the next few days and post it on the Unconditional blog on the realestate.co.nz website
April 1st, 2009 at 3:33 pm
This is a just a small bounce, things will keep dropping.
Land prices are simply too high and unsustainable.
Was pricing up a potential apartment development in Glen Innes today. Based on current land values, construction costs, professional fees, Council fees and developer’s margin etc. we came to the conclusion that the potential 2 bedroom, 80 square metre apartments would have to go to market at about $430,000 to stack up.
This is way too high for a low income suburb like GI. Such units would only attrarct a rental of about $350 pw at best. Thats a return of only about 4%
To make this sort of development stack up we’d need either:
1. Land prices to drop 50% and rents increase say 10-15%; or
2. Land prices to drop 30% and rents increase 30-40%
April 1st, 2009 at 3:46 pm
Good Aprils Fool comment ay!!!
April 1st, 2009 at 5:15 pm
Is this an “April Fools” posting or are New Zealanders really that big fools?
We have one of the worst housing bubbles in the world, and the size of the various nations housing bubbles are directly related to the severity of their economic crashes at the current time. OUR one has a long way to deflate yet. Any re-inflation along the way thanks to low interest rates or whatever, is just economic Darwinism.
April 1st, 2009 at 7:23 pm
Does anyone get that the bank manager might not be a bank manager???? I will return to being “Anonymous” now that you get my point….
April 1st, 2009 at 7:57 pm
Would a bank manager really have a clickeable name that goes to banksrbatards.com – LOL!
I reckon that real estate agents have discovered that buyers are offering so much lower than asking price that they have decided let’s put prices up. For example seller wants $300,000 – in the past would have asked $319,000 and got close to that, now buyers will offer $250,000 so the answer is put asking price up to $395,000 and buyer will offer $320,000 and think he got a bargain when the seller would actually have been happy with $300,000.
That’s what I reckon’s happening – what do you think?
April 1st, 2009 at 8:18 pm
I think Bank Manager theory is correct!
I looked at properties all summer on trademe
in my area — and every time I go back the same properties
come up – nothing is selling. I don’t think many people have
20% or even 10% saved it takes for a deposit.
Prices are going to have to drop a lot- to sell.
April 1st, 2009 at 9:27 pm
A lot of you seem to think that if a median moves up a bit, it must be skewed by higher priced property selling (or in this case being listed) – yet if it moves down a bit, it’s because the market is collapsing and nothing to do with more lower priced property selling! Personally I prefer to view at least a years worth of data, as monthly movements don’t always mean a lot.
In my opinion the REINZ stats have been a bit erratic lately due to low sales volumes, though I appreciate Alistair’s is based on a substantial 13,000 listings. This is a great example of how the internet has made the world a lot more “instant”. In years gone by, no-one would have had any idea what the median list price across companies was.
Thanks Alistair!
April 2nd, 2009 at 1:50 am
Great April Fools story. It suckered a lot of people in.