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Barfoots’ house sales up 65% in August; prices up 5% in a month (corrected)
September 3rd, 2009A mood of quiet confidence that now is the time to act has taken hold in the Auckland property market, Auckland’s largest real estate group Barfoot and Thompson said. (Corrected after Barfoot & Thompson corrected August average price figure in press release.)
Managing Director Peter Thompson said Barfoots sold 830 properties in August, which was up 6.5% from July and up 65.3% from August 2008. Barfoot’s average sale price in August was up 5% from July to NZ$530,023 NZ$532,023, although this was more a “timing adjustment than related to values,” Thompson said. The average sale price in August was up 1.5% from last year.
“The average price in August is below that achieved in May, and 2 percent ahead of June, which suggests July’s average was on the light side,” he said.
“Keen interest has returned to the Auckland market,” he said. “Buyers feel prices are attractive, they can afford the repayments, and are comfortable about their future job prospects.”
“However, it’s not a case of the market taking off. Rather, the mood is one of quiet confidence that the time has arrived to act.”
“Buyers remain restrained and selective, but are committed to completing transactions, and this is lifting market activity across all geographical areas.”
Barfoots listed 1,309 properties during August, the second consecutive month listings had been above 1,300, Thompson said.
“A factor preventing the Auckland housing market returning to a nice balance is the low number of properties for sale,” he said.
“At the start of September we had only 5212 properties on our books, the lowest number for 19 months.”
“Given current high sales activity, we would anticipate more sellers will now enter the market.”
Tags: Barfoot and Thompson, House prices, house sales, Peter Thompson
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September 3rd, 2009 at 1:02 pm
I’m struck by the huge disparity between the experience of the recession here when compared to the United States. We’re both in the West but living in parallel universes sentiment wise.
Large chunks of the American way of life are unraveling and the people feel it personally – unpayable debts, negative equity, sunk 401ks, rising taxes, and diminished incomes and public services.
I suspect that not all of the Auckland house buyers are reading the Top 10 @ 10 every day for week after week. If they did they’d be scared to death to do anything let alone buy a house at near peak prices and at historically low interest rates. The only reason to buy any asset at the moment is as a speculative hedge against inflation.
September 3rd, 2009 at 1:13 pm
“they can afford the repayments, and are comfortable about their future job prospects.” and there in lies the trap. Soon they will find rates rising and unemployment will get worse and then stay high for an extended period of time. Good luck to the buyers, for they will need it. NZ is on the same planet as the USSA and the UK and Spain and Ireland and Iceland etc etc. This belief that we have escaped the pain, is hogwash. No doubt the govt will support the banks in this effort to keep the bubble going but Mr Market will arrive sooner or later. I suspect the first hint of trouble will come when another govt debt sale fails for want of fools prepared to invest in Kiwi govt bonds. At some stage the inflation will rear its ugly head and Bollard will have no option but to shove the ocr up. By then the bank rates will already be on the way up.
September 3rd, 2009 at 1:45 pm
Simple Marky Mark, we didnt have the excesses they had in the States and the UK as our banks were far more prudent in terms of valuations and affordability. 120% mortgages from northern rock etc. and the sub prime self certifying mortgages from countrywide, notice our banks are writing off / provisioning less than 2% of assets.
Critical to the difference too is the excess supply where in some US cities you have 9 years supply of houses empty and up for sale. Thanks to councils, building regs, and RMA supply will always be limited here which will hold up prices.
No need to be scared to death or life will pass you by and you will end up a bitter twisted person trying to find any reason why the sky is going to fall in.
September 3rd, 2009 at 2:03 pm
David, if the time is right to buy, get out there and buy them. Borrow all you can because rates will never rise, right?. You take no account of the banks here being dependent on funds from the parent banks in Aus! You fail to see the aussie market is tottering on a bubble of ruddbank loot soon to dry up. Down will go the bank profits and out comes the red ink. Guess what happens then to the cost of funds tossed across the ditch to pork this market? Not only that but you continue to avoid looking at the shortage of credit on the world market. Or are you a QE person who thinks it does not matter? We know you think the market will always go up, ok, what we want to know is how you see the market avoiding the rising cost of credit. Help us out here David, tell us how it will be done. Even Ben Bernanke will be interested.
September 3rd, 2009 at 2:21 pm
David,
I’m not so sure that we don’t have the excesses. Most Kiwis have placed all their savings eggs in a single basket, housing, having precious little if anything in the bank or in shares (reference the RBNZ report out a couple of months back). This sounds unbalanced to me. Kiwis also have consumer debt levels to rival the best of them.
We appear to have followed the same debt driven consumer economy which has borrowed from the future and driven up asset prices exactly like the US and the UK.
Thinking that the sky is going to fall in doesn’t make one twisted. In fact its the opposite the secret to happiness is to expect the worst and then be pleasantly surprised.
September 3rd, 2009 at 2:22 pm
David, my words exactly. Wally and Mark seem to suggest we put our lives on hold until all the planets are back in alignment.
With all due respect to Bernard, I think ‘reading the Top 10 @ 10 every day for week after week’ is one way to send yourself into a serious nervous wreck. 18mths ago I got sick of reading all the doom and gloom on a certain property investment forum, so I just stopped reading the negative sentiment and bought a house I could afford for the family. Happy with my purchase and glad I got on with life as no houses have since surfaced in our suburb that would better the one we got.
September 3rd, 2009 at 2:28 pm
Yeah David, listen to Wally. People don’t buy houses to live in – they buy them purely to speculate on or for investment return. As soon as interest rates start rising such that houses are no longer productive investments everyone will decide to stop living in houses and then you’ll see the bubble burst…
…and your suggestion that supply and demand has any effect on price is absurd…
…and, as is pointed out on this site ad nauseum, there should be capital gains tax and GST on rent and interest. The reason for this is that if you make a person pay a greater proportion of their income on housing then that person will have more of their income available to invest in the sharemarket.
House prices in Auckland are enough to make one want to move to Sydney where wages are 10% higher and houses only cost twice as much.
September 3rd, 2009 at 2:36 pm
Wow, maybe should forget about terms like unemployment rate, recession, property bubble, affordability of housing, current account deficit and so on; and just jump on the bandwagon or might just missed it all. Seems many people are so rich that they are buying up houses. Are they borrowing to buy or buying with their savings? Perhaps, it makes no difference whether borrowing to buy or not! Seems like there is no recession going on….. The banks should be quite happy lending and the buyers should be happy borrowing. Everyone seems happy ….. cheers.
September 3rd, 2009 at 2:39 pm
Some light reading for you AB and David and Tim!
http://www.theage.com.au/news/business/money/property/when-home-is-a-debt-trap/2009/08/24/1251001856347.html
September 3rd, 2009 at 2:53 pm
Wally, what are you trying to tell us with that article? that Government housing grants will effect the market when they withdraw them just as much as they did when they implemented them?
September 3rd, 2009 at 3:04 pm
It could be this that Wally is refering to, Tim, from:
http://www.debtdeflation.com/blogs/2009/08/30/debtwatch-no-38-the-gfc%e2%80%94pothole-or-mountain/
“First Home Buyers who were enticed into the market by the additional $7,000 geared that up with additional debt by at least a factor of 4, to result in something like a $35,000 price jump for sub-$500K houses. But the sellers of those houses—the real beneficiaries of the Boost—then received an extra $35,000 in cold hard cash. They then used this as a boost to their own deposits on their purchases of houses further up the chain—and if they also geared by a factor of 4 (ie a 80% marginal level of gearing, which is well within current lending practice), then the prices they paid for houses in the $750K-1.5M range would have risen by $140,000.
This works in reverse as well. When the Boost is withdrawn, not only will sellers of sub-$500K houses find that buyers have $35K less to spend than during the boost, the sellers of $750K-1.5M abodes will find their buyers short about $150K compared to during the boost. 2010 could be an interesting year for Australian house prices.”
September 3rd, 2009 at 3:06 pm
Wally, you obviously invested money in shares or/and have some deposit on bank. I understand your frustrations, but you really sound ridicules
September 3rd, 2009 at 3:18 pm
No Tim. The market is a trap for FHB. I know there are a heap with low debt levels and plenty with none but for those being sucked in at this time when the bubble in prices remains in place, it is recipe for disaster. Perhaps you can tell us what will happen when the cost of credit rises?
September 3rd, 2009 at 3:23 pm
In aus and here, the housing markets are like that aussie boat in the America’s Cup race at the point where there was a loud BANG. The crew stood and looked at each other. It was some time before it dawned on them that yes the bloody boat would sink. Some had forgotten the lump of lead on the end of the keel. How many today have already forgotten the fact that there is a shortage of credit out there. You can’t imagine your way out of the shortage and the QE stupidity just makes it worse. The boat will sink.
September 3rd, 2009 at 3:33 pm
Well done Tim.
Wally I am not sure of the relevance of first home buyers or the highly indebted suffering as if that is something new, we were doing mortgagee sales during the boom times so nothing new there. If the sky was going to fall in I would have guessed it has happened and it isnt quite as bad as this website would like. Peeking out from behind your mothers skirts in trepidation is no way of living.
Marky Mark, NZers have 91 billion in deposits at registered banks then of course there is the super funds, PIEs, Kiwisaver, Unit trusts, the sharemarket and we havent even started with the debt market or private investments. To think that the only savings scheme NZers have is rental property is miles off the mark.
September 3rd, 2009 at 3:35 pm
Jerry, why is Bill English off overseas?
September 3rd, 2009 at 3:35 pm
Yeah AB, David and Tim – listen to Wally! That Australian government is super sly because they know that if they give someone an A$14K grant to assist in building a house they will get around 4x that back in the taxes that result from the building of that house…
..and we all know exactly what that is going to mean for the cost of housing in New Zealand don’t we…
September 3rd, 2009 at 3:47 pm
Hi Wally, if cost of credit rises, then there might be a credit crunch here. Is that the correct answer? Seems nobody is trying to give you an answer!
September 3rd, 2009 at 3:49 pm
Whoa. I kind of agree with everyone which is pretty lame.
Ludicrously over valued (and frustrating) property market, but banks being more prudent than they were in UK, Ireland, US and Spain.
My boring opinion is that prices will bounce around like they have over the last two years for a few more years yet, with no credit to re inflate and no seller interest in selling down.
My huge fear is that I am wrong and we face an Iceland/US/UK/Spain/Ireland meltdown driven by people clammering over each other to get onto a property ladder, whatever that means.
Hickeys comments reference the sovereignty of our banking system is more insightful than I think was given credit for yesterday.
September 3rd, 2009 at 3:52 pm
They avoid it Grandy because there is but one answer and they don’t like it. I think I would have difficulty in getting David to agree that affordable property is better for the country than unaffordable property.
September 3rd, 2009 at 4:13 pm
Wally is absolutely correct – affordable housing would be fantastic, but we don’t have it purely because of investors and speculators.
We know that speculators and investors are to blame because over the last 10 years the greatest capital gain has always been where there are the least investors and the least capital gain has been where there are the most investors.
The solution is NOT to increase the supply of dwellings to meet the demand.
As everyone knows the best way to make houses cheaper is to make them more expensive, preferrably through taxation, then people won’t buy them and they will get cheaper.
September 3rd, 2009 at 4:16 pm
Hi Wally, the lesson from the recent credit crunch in US is something easy to understand but hard to accept by many. It is easier to assume we would not be affected and leave the credit crunch or financial Tsunami to others. Isn’t that happier for now? Until things are really bad, then …. who knows what??? By then, you are well remembered. By then, it might be too late for some. It is always better to read more widely into happenings in many other economies and to reflect on ours, cheers.
September 3rd, 2009 at 4:21 pm
Grandy the credit crunch has passed you might have noticed the odd headline this time last year, Lhemans, Bear Stearns, Merril, Northern Rock etc.
Rates wont rise until the end of the recession and we see some inflation but with a supportive fiscal policy we wont see the madness we saw under spendthrift Cullen thank god,, Bollard is on hold for 12 months at least.
Property is quite affordable, one of mine I have for sale for 219k is hugely affordable for the young couples looking through, most have saved a deposit and with mortgage costs of around 300 pw and combined incomes around 1300 pw its not much of a stretch. Most seem to want to buy, rent out a room and pay the mortgage off as soon as possible. I get quite heartened by the attitude of the couple of dozen people who have looked through.
September 3rd, 2009 at 4:27 pm
C’mon David – that’s not fair. You can’t really think first home buyers would be happy in a $219k house. First home buyers deserve at least a small villa in Ponsonby and that’s over $700k – extremely unaffordable.
September 3rd, 2009 at 4:28 pm
Yeah Grandy that’s true but I can’t sit back when I know our govt is refusing to curtail a property splurge not because they are thick idiots but because they are concerned any change in policy will hurt their support base which is heavily invested into property speculation and the renting rort. It is as clear as crystal that the beehive mob are going to tweak it here and pork it there, to keep it going long enough for the rank and file to sell out and head for the other tax loophole. Oh yes there is another one. Only then will the boom come down covered in spin done up to be a great govt policy change. If Mr Market get’s sick of the games going on down here, what took place in Iceland will be repeated.
September 3rd, 2009 at 4:35 pm
…looking forward to settling into their 3 bedroom wooden tent in Kawarau. Heartening that it will only take thirty years to pay that bad boy off.
September 3rd, 2009 at 4:38 pm
If they could legislate to hammer property prices you would plunge the economy into a deeper recession. I have mates who are builders, plumbers, landscapers my son drives a digger and I would hate to see them all lose their jobs which are property related to keep Bernard and friends happy by stopping investment.
Not sure who wins if we all sit in our houses by candlelight and pay down debt as quickly as we can. We cant all be super productive exporters toiling away 24/7 for the greater good in some North Korean planned economy.
September 3rd, 2009 at 4:39 pm
“Rates wont rise until the end of the recession” rubbish is the only comment here. “to keep Bernard and friends happy” an uncalled for comment.
September 3rd, 2009 at 4:40 pm
ab / David
I presume that 219LK property is not in Auckland, if it is it would have to be a shoebox apartment.
Ab – lame and tired comment re: the Ponsonby villa. Its the same old lame garbage you hear every now and then to the effect “All those young ones just want everything now unlike in OUR day”. Fact is many FHB’s just want a tidy no frills house in an average suburb like generations past wanted – nothing flash, just solid and secure in a safe area (not a villa in an expensive central Auckland suburb). But in Auckland even just a middle of the road house in a middle of the road suburb is going to cost you circa $450-500K minimum – not an easy proposition on a household income of circa $70K
September 3rd, 2009 at 4:41 pm
Its a 2/3 bedder in Christchurch in an inner suburb, sure its made of wood and 70 years old but its a very tidy first home and a great stepping stone.
September 3rd, 2009 at 4:45 pm
Sound like something on Sherbourne St., St. Albans. Probably rents for circa $250 p.w. and get’s the sort of tennant that needs a skip to clean out after a trip to the tenancy tribunal ( experience speaking there !) and an order for $10 p.w. reparations that Baycorp will never manage to get……..Ahh, renters…
September 3rd, 2009 at 4:51 pm
David – please don’t be rude about North Korea, they have property affordabilty we can only dream of. They have also discovered that if you make food expensive then people don’t buy it, which reduces demand therefore making it cheaper. As Wally has pointed out this economic approach needs to be applied to the NZ housing market.
Matt – Ponsonby is only expensive because of property speculators and investors. If they could be driven out Ponsonby would be extremely affordable for FHB’s.
September 3rd, 2009 at 4:52 pm
David, what an interesting example of a $219K for first home buyer. Is that what you used to describe the property market buying trend? Where is the $219K property located, its proximity and place place place (PPP), would that be what a family is comfortable to have children later or to upgrade again and take more loans when salary is not moving in line? The average price in Auckland is above $500K plus as indicated in today’s news, so $219K is just way below the percentile. That is not a good call.
September 3rd, 2009 at 4:53 pm
Well that’s good David, it pre dates the rotting house era and if you’re selling to FHB we are sure you will have insulated the underfloor and the ceilings and the exterior wall cavities, checked and replaced any borer damaged structure, fitted double glazed windows and replaced the wiring and the plumbing, repiled where necessary and replaced any rusty roofing and guttering and downpipes before giving it a coat of quality paint. Not to forget fitting an approved heating system. You did all that, didn’t you?
September 3rd, 2009 at 5:00 pm
Stepping stone to what?
Investment in residential property has its place, that is for certain.
But remove the emphasis from residential propety to super productive exports and we will all be better off. It doesnt have to be one or the other.
But it is good to hear another perspective, this site is pretty down on the old property investing.
Matt, you must have bought a house by now, surely
September 3rd, 2009 at 5:04 pm
ab, I want the cost of credit increased to reduce demand so the prices fall. Better to have families borrowing less at a higher rate, don’t you think. That’s what Bollard was trying to do with the ocr back in 07 but too many were on fixed terms so the impact in prices was not there. If most had been on floating, then a move up in the ocr would have throttled the bubble. The other problem was the Labour fools hell bent on blowing the bubble because it brought them another term in power, which resulted in certain people getting bigger pensions.
September 3rd, 2009 at 5:08 pm
Hi Wally, maybe we should have monthly unemployment data and foreign debt information compiled and released monthly as in the case of property sales monthly updates.
Perhaps, Bernard could look into the possibility of compiling such data (unemployment rates etc..) to update on a monthly basis in this blog. That might help the wider audience. Thanks.
September 3rd, 2009 at 5:09 pm
Harriet rent would be around 260 and from bitter experience a property manager and good landlord insurance is a must.
Grandy it is a quiet street and close to a good primary school and 10 minutes to the CBD, 3/4 of the population dont live in Auckland but then the wages are higher up there. Unlike some of the speculations on here this is a REAL example.
Wally it is re painted, re wired, has a heat pump and insulation, plumbing is 9 years old as is the bathroom and kitchen. All the weatherboards that were rotting have been replaced prior to re painting the outside, spouting is all plastic, roof is good but might need replacing in 5 or so years. No double glazing and as you would expect the floor is not perfectly level but doesnt need re-piling.
Fits in perfectly for the welcome home loan and a great start for a young NZ couple wanting to get ahead.
September 3rd, 2009 at 5:18 pm
Wally – you spend so much time posting on this site you have obviously lost touch with reality. Your conspiricy theories are entertaining, but a bit repetitive and half the time you seem to be conversing with yourself. Spamming various threads does not make for robust discussion.
September 3rd, 2009 at 5:22 pm
David I thought the welcome home to greater debt govt handout applied only to new homes. The floor is uneven because the piles are shot. Good to hear it has had some work because many of those old heaps need bulldozing. I’m told brand new places cost $1000 a sqm. So if we say the section is worth $40000, toss in the remaining 179ooo on a new house. That’s a better option David. Isn’t it? Hey, Shorty’s woken up. Where you been Shorty?
September 3rd, 2009 at 5:24 pm
Fairfax – no show!
There’s no way I’m going to pay the kind of prices necessary to get a run down dunger in a less than average suburb with poor schools and a long commute when I could pay a smaller amount per week in rent and get a good house in a good school zone with a short commute.
I have shares in my employer’s company which has been paying average returns of 30% over the past few year so thats my investment. I keep my eyes open for good land deals as I would like to build (as an architect I obviously don’t have to pay architect’s fees!), but only if the right site comes up at the right price, there’s no hurry when you are still in your early 30s and making good money form other investments
no hurry whatsover
September 3rd, 2009 at 5:27 pm
Saw another one in spreydon for $219 this week too David, with some landscaping and a new driveway it would increase the value 20%, bargains are still out there. Im guessing you rent wally?
September 3rd, 2009 at 5:29 pm
Wally your figures are the wrong way round, the section is worth 179 and the piles are not shot I had them checked before I redecorated the interior. She is a bit like me and not completely on the level anymore, physically speaking of course, but still sound.
September 3rd, 2009 at 5:30 pm
Matt in Auck – FHB in Auckland need to be looking in suburbs like Papatoetoe. 15 – 30 minutes commute to CBD with good train link. You can buy a decent free standing home on a decent section for under $400K and a 2 bedroom unit for under $300K. Of course you have to be prepared to live next door to immigrants and pensioners. Fairly safe place to live as well. No issues with burglaries or breakins in our 4 years there. Schools are an issue, but then FHB usually won’t need to worry about those for a few years anyway.
September 3rd, 2009 at 5:32 pm
Buyerinchch, I saw it too and wondered why the agent took photos of it half flooded ! Quite nice on the inside with all that lovely wood panelling.
Be perfect for a FHB who could do the work themselves over a few years and have a lovely home.
September 3rd, 2009 at 5:36 pm
Wally – been flat out at work with the year end audit and more importantly our brand new baby.
September 3rd, 2009 at 5:37 pm
Yeah, had a laugh at the “water feature” out front, great buy for someone. Thought it was too good to be true, imagine multiple offers in already.
September 3rd, 2009 at 5:44 pm
All the best with the bubba. They usually are brand new, heehe.
September 3rd, 2009 at 5:50 pm
Matt in auk, what say you on the container homes? Some cracker stuff out there. You’re lucky with those skills. buyerinchch, yep, I rent alright, paying $90 a week. Bit off the beaten track but hey who cares. I might buy and build in 2010. No hurry.
September 3rd, 2009 at 6:08 pm
Wally – that makes perfect sense. You want cost of housing to be increased so that people can’t afford them so house prices will drop – sounds like a perfectly logical approach to me.
Matt in Auckland – one issue for the FHB is that Council don’t care if they can’t afford a house. When I complained to one of the authors of Plan Change 2 that the new rules were going to make housing unaffordable the response was “only the rich can afford to buy in NY or London, why should Auckland be any different?”
September 3rd, 2009 at 6:42 pm
Wally : Ours’ was an old baby : started nagging me at birth . A female , similar to her mother , so I am informed ! I thought it was a boy , ” what a boy ” I exclaimed to the midwife . ” sober up , fool ” she said , ” that’s the umbilical cord ” ………..Bugger ! Brand new babies must be wonderful .
September 3rd, 2009 at 7:09 pm
The debate about property on this blog has taken the form of a mission, the passion and emotions so evident ,it has diverted the focus to find the multitude of reasons that are relevant. Not every one buys a house as an investment or for speculation. Before I am shot down as property pusher,I must say, I want cheaper housing as well and i commented previously I am renting. Has anyone compared the cost of contruction/m2 & council fees in NZ with other counties ?
September 3rd, 2009 at 7:48 pm
# Wally Says:
>Perhaps you can tell us what will happen when the cost of credit rises?
Wally, that’s simple… Gov will be concerned about the poor deprived house owner, spending will stop, RB will decrease the OCR to encourage spending… Gov will put pressure on banks, rates will lower, home owner saved.
September 3rd, 2009 at 8:25 pm
Be wary of stats …
It is not all it seems, always … remember in March house prices had dropped almost 11%.
Therefore, (e.g.) on a high of 550,000 that is $489,500 (year on year).
However, the actual drop occurred for almost 18 months (not 12). So, the actual drop may be approx. 15%, giving $467,500.
Now to regain a 15% house prices, we need value to rise more than the drop because the percentage change in on the gain (not loss).
i.e. a 5% month on month is 23,375 increase, so that makes the house valve $490,875.
Then (IF) we get another 5% rise over the next few months that makes it $515,400.
Then (ANOTHER) 5% is $541,200 (see we are still not at the original top value yet.
Then another 5% is 27,060 = $568,260 … now were up!
But we have had a 20% rise to get there …. yeah right
Another aspect is the monthly numbers don’t tell us much, i.e. trend … it could be a start to a long-term increase, it could also be equally likely a spike … followed by a dip.
Or even a plateau, little ups/ downs over time that don’t go anywhere.
Monthly stats are like watching stocks …
For houses, its better viewed over 5 year periods, or at least yearly if your speculating.
Furthermore, an average is actually just that … it doesn’t tell you anything about low or high value houses.
I just wonder where the $$$ are going to come from for a sustained increase!
September 3rd, 2009 at 8:33 pm
Just remember that the government has to borrow $200,000,000 per week just to stop NZ Inc from going down the gurgler Billy Boy is overseas now making sure that the overseas lenders keep lending to us, because if they dont, its Good night, Goodbye and Good luck!
September 3rd, 2009 at 8:40 pm
Well said stats man, bit of perspective and good numbers. I figured at home we are off 10% then factor in 5% inflation since then which took us down 15% in real terms. That is 75k in lost equity Wally which should make you smile, and I m guessing a couple of years to get back from where we were 2 years ago.
Come on Bernard how about another call for a further 15% fall in value ! You should get a guest blog on The Standard you would be amongst friends.
September 3rd, 2009 at 8:45 pm
bobby : As I’ve said before , the Gumnut doesn’t have to borrow $ 0.2 billion per week . It chooses to . Bill English would rather do that , take the ” easy ” option , than do the right thing . The tough medicine , is for Gumnut to cut its expenditure . But John Key got elected upon a promise to keep all of Michael and Helen’s spending programmes in place……..Which begs the question , why did we bother changing leaders at all ?
September 3rd, 2009 at 8:55 pm
Hi stats man, you got the point. I like what you said, “I just wonder where the $$$ are going to come from for a sustained increase!” Basically, the $$$ could come from international borrowings. It appears to be the case where banks here are borrowing from overseas etc…. Is this going to be good for the country if banks got to borrow from overseas to substantiate home loans in this property market? What are the implications? Why would the banks need to borrow from overseas to lend to home buyers? Is this good for the country? Not many would like to hear the answer(s).
September 3rd, 2009 at 8:57 pm
Roger: I fully agree with you, and yes, nothing much has changed.
September 3rd, 2009 at 8:58 pm
Nomad :
COSTS OF BUILDING….
I run a well established Construction Company building new homes.
I would be interested to see how NZ’s construction costs compare to O’Seas ~ I think NZ’s costs would be very very high for an average home @ 150m2 on a $250 k section
I see this caused by a number of factors being
INDIRECT TAXES
~ Council development fees from @ $10k to $50k per house
~ Council reserve fund contributions at average of @ $20k
EXCESSIVE CONSENTS COSTS
~ Resourse Consent $3K to $5.5k
~ Building Consents $4k to $7k
MONOPOLY UTILITY PROVIDERS
~ Power Plynth $4k to $7.5K
~ Water Meter/ Connection $1K to $4.5k
MONOPOLY SUPPLIERS
~ Many of NZ’s suppliers are monopoly suppliers who domonate the material supply
sectors & get big big profits to the NZ builders & buyers detriment
I can tell you that the majority of respectable building co’s make bugger all
return for the risks they operate under
You add up all of these costs and it gets pretty scary & unafordable for our clients
These matters need to be brought under control before new housing becomes affordable
PB
September 3rd, 2009 at 9:01 pm
ab – good point. The so-called leftist urban planners are not so socially minded as they think they are. as you say the planning rules are hindering affordability
Shorty – are you sure its a 15-30 minute commute from Papatoetoe? Maybe if you leave at 6.30am in the morning?
I would have thought at rush hour it would be 45 minutes plus?
September 3rd, 2009 at 9:02 pm
You don’t need a property agent, David! Just a couple of mates from Aranui and $50 to deliver the Notice to Quit. It’s suprising how fast the property comes back to you for re-rental. I learned the hard way, Nice guys finish last. As I said… Ahh , rentals….
September 3rd, 2009 at 9:03 pm
@Roger
The reason we changed leaders was to get rid of Nanny State of course, to decriminalise smacking !! Oh bugger ….so much for that!!
September 3rd, 2009 at 9:16 pm
Matt in Auck and Wally
I highly recommend you guys to go to open homes, auctions, talking to REs instead of bloging on this site. You know that you will talk reality if you only visit this site once or twice a week when you spend times on the market.
I am appreciated your blogs and enjoyed them all the time.
I will be buying in NZ next winter so I hope the NZ market will take off at the end of 2010.
September 3rd, 2009 at 9:18 pm
Poor Builder: I have to agree with you also. The costs of building a new house in NZ have become ridiculous. I was talking to a builder today and I asked him what a nice average quality home would cost per square metre. He said to work around the $2000 mark. Add on all the other rip off charges, section cost etc and its no wonder housing in NZ costs so much
September 3rd, 2009 at 9:21 pm
Interesting article titled “why can’t we build an affordable house?”:
http://www.wilsoncenter.org/index.cfm?fuseaction=wq.essay&essay_id=476601
September 3rd, 2009 at 9:26 pm
Aussie Cash Buyer
Thanks for the advice but no thanks.
I know overpriced housing when I see it.
I have no interest in joining the masses in yet another doomed round of frenzied house buying. I’d rather have my precious money in my company’s shares collecting a return of 30% (OK maybe at 15% for this year, still not bad)
But I’m happy for you or anyone else to participate, thats the beauty of individual freedom!!!
Have a good evening
September 3rd, 2009 at 9:27 pm
Wally’s is a wally
September 3rd, 2009 at 9:56 pm
thank you ,Poor Builder, for commenting on contruction price, I have been to quite a few building companies and have consulted with many private builders for full contracts and labour only and project management and combinations, the estimated cost has been around $1800-2200/m2, even if the section prices fall , the cost of construction is too high. Business in NZ are monopolies just like the media, look at Progressive Food,they own different brands and one can not expect any true competition. IMHO We can talk and crow about expensive housing until we are blue and nothing will change unless all the factors are taken in to account,ie; the cost of construction,council fees, land supply, minimum deposit, Banks role creating bubble,implemnting the existing laws at least to recover taxes etc, the approach so far has been attacking speculators and advocating more taxes rather than dealing with the issues. I voted for NATS for a change but I see no change.
September 3rd, 2009 at 10:07 pm
NZ has the highest new home construction rates in the Western world and it will be even worse in Auckland when the supercity is in power.
September 3rd, 2009 at 10:14 pm
I have noticed the house prices in England have started to build up again.
The prices i think had hit rock bottom, then a lot of the houses on the market was snapped up by the buy to let market, these people then spend there money on renovation work on propertys which in turn helps other industrys i.e. builders, plumbers. plasterers
September 3rd, 2009 at 10:43 pm
What does this mean?
… “timing adjustment than related to values,” Thompson said.
Now lets look at this … “The average sale price in August was up 1.5% from last year.”
Aug 08 prices where down about 3% at that stage.
Using $500,000 for example. A drop of 3% is $485,000
Not accounting for inflation, and if one had borrowed 50% at interest of 6% – 8% (2 year roll-over) costs 15,000 – 20,000 pa.
Real terms down $30,000 to $35,000.
Now prices are up 1.5% on Aug 08, so the house is worth $492,300.
Point is, monthly and yearly % changes don’t reflect the actual value change.
It is better to use the peak (possibly around Dec 2007), otherwise one is measuring changes against rises and falls, which makes seeing the real change more difficult.
September 4th, 2009 at 12:49 am
..and an once gold will be US$ 1000 by next Friday-
..and Crude oil will be US$ 80 p/barrel by next Friday-
..and Sept/Oct will bring some unpleasant worldwide surprises-
..and most comments here about “K’s”, % and figures need to be corrected by tomorrow-
..and Key may..-
..and most prices are going up-
..and life is more expensive-
..and banks are greedy-
..and mainstream journalism don’t inform that the recession is grinding down people’s money-
..and unemployment is rising-
..and more businesses are closing-
..and we just don’t know what’s next-
..and spring is here and the birds sing their songs like we do-
..and a glass or two of fine wine-
..and it is bedtime now-
September 4th, 2009 at 2:53 pm
I despair. Is this what the Auckland market has come to? Who would pay that for this? Worst part of Northcote too. We have around $500,000 to buy mortgage free but I’d rather poke out my eyes with a sharp stick than stump up for the rubbish in this price bracket. Even the overpriced Aussie market offers better value than here. If I could persuade the wife and kids I’d be in the sun on the Gold Coast tomorrow. I’d rather take by chances with the spiders than toxic mould.
http://www.realestate.co.nz/1124647?max_price=500000
September 4th, 2009 at 2:58 pm
Steve K, buy a section in snottsville and have the containers delivered. The neighbours will offer you a fat profit to sell. Do the same a few times and wallow in the clover.
September 4th, 2009 at 3:03 pm
I’d rather live in a caravan at the beach than most of what passes for affordable housing these days. Maybe an old house bus and park up outside Bill and John’s place.
September 4th, 2009 at 3:07 pm
Wally where do you live ? Some friends suggested I pop you , sorry , pop over , and discuss a business proposition .
September 4th, 2009 at 3:14 pm
Steve K
That is just absurd (price $399K) but typical of the joke property has become.
I looked up on my property system, that site is surrounded by Housing NZ, the IHC, and a church
hmmm hmmm
and its a pretty slummy ex HNZ unit itself
truly absurd
BNZ report is worth a read for a joke, TA reckons the fact that rents are stable / falling is explained by factors outside of supply and demand, and that the fall in rents is not explianed by a lack of demand(???). Also interesting to see his yield chart that showed rental yields at 6% plus until about 04/05. Now they are about 4-5% max:
http://www.bnz.co.nz/binaries/w030909.pdf
September 4th, 2009 at 4:01 pm
Matt
I agree with you – what a joke.
As an ex landlord, I can tell you I tried to charge as much as I could. When I struggled to get good tenants (or any tenants) I knew I was charging too much. So in some ways TA may be right – landlords don’t want to lose tenants in this environment but that is because there is a lack of demand!
September 4th, 2009 at 4:11 pm
Perhaps nothing of note, but I remember a piece of advice given me decades ago by a very wealth investor, as:
“When people start talking about the trend fundamentaly changing, the trend is just about to change”
Coincidentaly Tony Alexander comments:
“…..the debate shifts to whether structural changes have occurred so the trend needs to be changed. Is it possible that structural changes have occurred so that house prices in New Zealand now sit permanently higher compared with incomes in the past…”
September 4th, 2009 at 4:16 pm
Down at the marina the number of “liveaboards” keeps increasing. $160pm liveaboard fees plus $350pm berth rent. No extra for power, water, laundry supplied etc etc…
September 4th, 2009 at 4:22 pm
No worries Fat Tony, I got a heap of pizza ready to fend you off.
September 4th, 2009 at 4:59 pm
“It is better to use the peak (possibly around Dec 2007), otherwise one is measuring changes against rises and falls, which makes seeing the real change more difficult.”
Exactly, and this is often done overseas but for some reason never done here (maybe the real estate agents and bankers can tell us why that is).
Reality is prices are up 1.3% from the bottom, based on the most accurate index the QV index, which accounts for the type of property sold. Median figures from 800 sales in auckland mean very little, whos to say half of them were not million dollar mansions that sold for 700k, a loss but still making the median figure appear high.
Last time we slashed interest rates (around 1998, and magnitude was not as big as present cuts) prices bounced while rates fell. This makes sense as for every cut another chunk of buyers gets thrown into the demand side of the equation.
Once rates had bottomed and slowly ease back up, we saw further prices falls up to 2002 as no new buyers were being added into the demand side, although unlike current situation unemployment was falling so there was some added upward pressure in that regard.
http://img197.imageshack.us/i/housingfactors.jpg/
September 5th, 2009 at 1:15 pm
Reading everyones comments Im Gen Y, But why is everyone so negative ?? I was schooled in NZ and cant seem to remember the how to talk it up like and think like a looser class?? Life is way to short to worry about what Bernard said would happen which has’nt happened or some other economist selling a book or how to service, making money in business and also in property is all speculative no one is clever enough to see into the future?? If our economy is going to explode why hasnt it already happened yet?? Why does’nt everyone just chill out and get out and smell the rose’s !!! And stop fueling the fire negative B.S.
September 5th, 2009 at 1:58 pm
$200,000,000 per week !!! Only if don’t add up the bills and bonds, otherwise lots more … download excel spreadsheets here.
http://www.nzdmo.govt.nz/publications/data
September 5th, 2009 at 2:22 pm
NEWBY, I can see the future!
I can predict EARTHQUAKE’S ! and PANDEMIC’s and HOUSING CRASHES..
ISN’T THAT CLEVER!
September 5th, 2009 at 2:43 pm
Oh before i go get the washing in 99.9% chance of a rattle in NZ in the next 15hours.
September 5th, 2009 at 2:48 pm
newby : Who’re you calling ” negative ” ? I’m sure as hell not !
September 5th, 2009 at 2:51 pm
Gen Y Newby? that’ll be the lot paying the higher taxes just to cover the fiscal debt interest bills. A pleasant present from Helen and John. Do enjoy, Newby, oh and ta for the pension son.
September 5th, 2009 at 3:13 pm
http://www.urbandictionary.com/define.php?term=looser
Maybe they decided you didn’t need the class.
September 5th, 2009 at 3:23 pm
Craig,
“Once rates had bottomed and slowly ease back up, we saw further prices falls up to 2002 as no new buyers were being added into the demand side, although unlike current situation unemployment was falling so there was some added upward pressure in that regard.”
Also unlike current situation, in 2002 property was not grossly overpriced relative to the vast majority of reliable indicators. Its easier to pump air into an empty rather than an already inflated balloon. The existing out of whack prices are the most important consideration when trying to predict what lies ahead. If the next 20 years of growth are already priced in you need to wait 20 years before real growth can start again.
Interesting also to see the article today re Japan population halving by 2050. It would seem there are many wealthier countries than us who in the future will be competing for our “guaranteed” immigrant stream. Japan will be needing an extra 50 million over the next 40 years. China maybe another 300 million?? Not to mention europe, countries like Spain, Sweden and Italy have horrendously low birth rates.
September 5th, 2009 at 3:37 pm
Seems to me there is an opening for something else to be put in the bread dough besides folic acid!
September 5th, 2009 at 3:47 pm
Negative …
I think the best way is being “real” … both negative and positive at the same time.
Being too much of one or the other is stupid.
e.g. think the glass is half full, but the fluid might be toxic
Just try to keep to the facts, which in itself is difficult because the facts are perceived by humans (may be even manufactured by us too!).