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Barfoots says house prices down 3.2% in September from August as listings jump 12%
October 5th, 2009Auckland’s largest real estate agency group, Barfoot and Thompson, has reported its average sale price fell 3.2% in September from August to NZ$514,890 after listings rose by 12% to 1,466.
Meanwhile sales volumes were 917 in September, which was the second highest for Barfoot and Thompson in 2009, reflecting a ‘Spring bounce’, Barfoots said. The average price was however up 3.8% on September a year ago.
“This was the third consecutive month our average price for the month exceeded that for the corresponding average in 2008, and I take that as a good indicator that house prices on a year on year basis have stopped falling, said Peter Thompson, Managing Director of Barfoot & Thompson.
“At the same time, prices are not overheating. There was a better balance and controlled feel to the market in September than has been the case for some time,” Thompson said.
“The views of buyers and sellers as to what is a fair price are coming closer together. It shows that Aucklanders are prepared to put aside their concerns about the economy over the medium term, and are starting to act on their plans around their future.”
Barfoot & Thompson let 701 houses and units at an average weekly rent of NZ$384 in September, which was down NZ$15 on their high point in April.
Tags: Barfoot and Thompson, House prices, Housing, Peter Thompson, Property
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October 5th, 2009 at 11:49 am
It takes a real estate agent to say that a 3.2% drop from the previous month is actually a price rise!
From the price chart of average house prices it seems to me that there was an initial and sudden fall after the peak late 2007 we have more or less been bouncing above and below the price level of Jan 2008 since then. We are still down from the peak in nominal terms and when you factor in inflation house prices continue to decline in real terms.
I think that flat house prices is the best outcome for NZ. People can still sell up and move if they need to and it improves affordability over time.
October 5th, 2009 at 12:18 pm
Wow, this is great news for renters. Weekly rent has come down $15. I realise that Dominion website did report the rent data, but not in the Nzherald. This paragraph on the drop of weekly rent was not found in the nzherald report, so sad indeed. They only reported on the house sale data. Did anyone realise it. Nowadays, got to really read both websites and more importantly interest.co.nz website. Thanks Bernard and his team.
October 5th, 2009 at 12:34 pm
Yep Grandy its all about supply and demand. The supply has increased through listings and the demand is going nowhere fast – the result: price falls as reported here.
Mightn’t see many more falls over summer, I suspect its going to be really flat for a while
Good news on the rental front, it really is a good time to rent! And with rents down there’s no way house prices are going to push up much
October 5th, 2009 at 12:49 pm
Low yields (rental returns) have had no impact on house prices at any stage in this boom. It has been all about capital gain and expected future capital gains.
October 5th, 2009 at 12:52 pm
How would a Land tax impact on this current situation?
October 5th, 2009 at 1:14 pm
prices down expectation up – let’s play ping pong. I bet there are a number of accidental landlords letting go of their properties who just want out and to survive so not really expecting to be the market leaders in price surges – this is likely to be a contributing factor in the recent blip to recovery. it will also eventually reduce supply of rental properties, and once again supply and demand – and as rents have a long way to go up rather more so than prices have a long way to fall. take the suckers out of the game, and then it is just about everyone wanting a place to call home – to own or rent it doesn’t really matter as long a there is a sense of ownership…
October 5th, 2009 at 1:19 pm
We are stuffed- largely correct, although with less bullish expectations on capital gain now surely rental yield starts to become a more important consideration?
And that is very poor at present, and with rents flat / going down slightly there is no fast improvement in sight in that respect
Lets see what happens to net migration in 2010 too – do fewer international students come here with the strength of the dollar, as well as fewer immgirnats form the UK (currency impact as well as diffculty selling homes) and do more kiwis start going to Aus again?
October 5th, 2009 at 1:33 pm
I checked the ave. price chart, it seams the ave. price is changing a bit every month(please have a look). So don’t take this reading seriously.
October 5th, 2009 at 1:36 pm
If we are just hoping for other economies to recover so that ours will recover, then we are in deep trouble. If we can’t create jobs via the productive investments and external demand, then we are also in trouble. So long as Kiwi dollar is still strong relative to others, then it will continue to hurt our export sectors; less tourist visitations, less international students to come and would ultimately affect rental market and indirectly affect property market in the longterm. There are just too many problems to address. Would the property market look good in the near term?
October 5th, 2009 at 1:40 pm
confusing article, average house prices up or down, was this the same clown that thought prices would contue to rise as spring supply increased, obviously didnt to economics 101
October 5th, 2009 at 1:59 pm
Nat – prices were down Sept 09 versus August 09, but prices Sept 09 were higher than Sept 08
EMCD – prices will be a bit up and down I suspect over the next 12 months, overall I expect prices to be flattish
October 5th, 2009 at 2:01 pm
Are we going to hear a cracking sound, or will it be a tearing screech when Mr Market turns up and deals to Noddyland as it has to be ! The overleveraged are set to be gutted and then told by the liars how lucky they are being in Noddyland because they have such a great govt, so skilled and working sooo bloody hard to protect their perks…..oooops I mean the peasants.
October 5th, 2009 at 2:15 pm
so i guess all thsoe wealthy immigrants are putting pressure on rents, hence the drop.
October 5th, 2009 at 2:30 pm
In Christchurch in the last couple of weeks the noxious POA /tender priicing is back. Seems Harcourts central think tank has issued a directive to non-specific pricing so prices can ratchet up again. Bad move boys — you’re about to nip a brief rally in the bud.
BTW, I’m amazed that anyone with a house to sell will let half their daily paper advertisement be swallowed up by a real estate agent’s picture! Make sure you approve all ad copy, words and pix.
October 5th, 2009 at 2:36 pm
ruru
i agree that agents should be the ones paying to have their dials in the ads – cheeky buggers asking the vendors to subsidize their marketing of themselves…
also asking retail and paying wholesale for those same ads…
October 5th, 2009 at 2:40 pm
PoP, the RE mob are in the Poop. The spring splurge is turning pear shaped.
October 5th, 2009 at 2:47 pm
Grandy: Don’t worry about our economy; the Govt’s gonna dig up a recovery! The classic softening up process for buggering a few more wilderness areas has begun. First, threaten to mine a World Heritage area. Second, leave the row to boil until October 31. Third, when the pests are all nicely focused on saving Fiordland say “Nah, we wouldn’t do that; too important etc etc” and announce some other hideous strip-mining plan somewhere. I don’t know what it will be, other people will have a better idea: seabed? uranium? black sands?; something we’ve got somewhere.
October 5th, 2009 at 2:50 pm
ruru – interesting observation. I have also noticed in ChCh that there have been a substantial number of “deadline sale” advertisements with no price guidance. I have kept an eye on a few and called the Agent after the deadline. In every case the property has failed to sell.
Interestingly my lease has just come up for renewal and I, truthfully, told the Landlord that I had seen another house for rent that was $30 per week less than my current rent. The landlord offered to match the other rent if I signed a lease for another year. I can’t understand why deflation is supposedly bad!
October 5th, 2009 at 2:53 pm
ruru – interesting points, why leave the row to boil until October 31 ? Is there something due for October 31 etc ?
October 5th, 2009 at 3:04 pm
Andy – thats interesting re: your lease situation
My lease is up for renewal this December, I wasn’t expecting to negotiate downwards but would certainly oppose any increase
October 5th, 2009 at 3:22 pm
@ Matt in Auck, Bulls and Bears, again ! It’s going to be bloody, one way or another….
“The Reserve Bank ( of Australia) is scared that (their) home market, which already looks very expensive compared with the US, UK and other developed nations, is about to go into the stratosphere”
http://www.businessspectator.com.au/bs.nsf/Article/Whats-pushing-rates-up-pd20091005-WJ3R2?OpenDocument&src=sph
My bother in law asked me what was going to happen to houses, when I was in Sydney a few months ago. I told him that we were in for a nasty correction down that will last for 9 years ( ’cause I am always right and know everything!). He held out…… till last weekend…..
October 5th, 2009 at 3:59 pm
Grandy: From front page of the Press today: Ministry of Economic Development officials are presenting their review of the Crown Minerals Act to energy and Resources Minister Gerry Brownlee and minister of Conservation Tim Groser by October 30.
Why is a former top trade official (Groser) now a lowly Minister of Conservation? Why is Brownlee, other than being a good party hack, now Minister of Digging Things Up if it’s so vital to the national interest, as he claims?
Also flagged in the last few months has been the vast undersea deposits of valuable stuff in our huge (compared with the size of NZ) EEZ. Would make sense to dig that up, generously agree not to strip-mine Fiordland, and haul NZ out of the economic mire. I’m just of a suspicious nature I guess but when I see a standard PR technique so blatantly being deployed it makes me wonder.
October 5th, 2009 at 5:50 pm
The inlaws just sold their 1970’s 4 beddie in Pakuranga after 2 weeks on the market for $620K. I was sure they would struggle to get $500K for it – and I’m an glass half full kind of guy. They had 2 other offers in the high $500’s as well.
October 5th, 2009 at 6:24 pm
Ruru, Brownlee got the Ministerial job because he was in charge of turning out the sausages and sauce at the Nats BBQs for the last 9 years.
October 5th, 2009 at 6:37 pm
Wait for the QV index figures they’re the only ones to take seriously as they account for the type of property sold. If prices actually have fallen id be putting it down to increased supply and increasing long term interest rates, as well as talk today of fixing the ‘hole’ in property tax in the rental market which is likely to spook the big guys with dozens of rentals enough to atleast shed a few of there holdings.
http://www.nzx.com/news/economy/2931127/The-hole-in-property-tax
October 5th, 2009 at 6:37 pm
Shorty – good for your inlaws, not good for the gullible person who paid that sort of stupid price, no doubt believing all the hype that prices would ramp up again any time soon !!!
but hey, eveyone is free to do what they like with their money!
October 5th, 2009 at 7:13 pm
Shorty..
don’t go saying things like that, even though true, it upsets the doom sayers intensely, and it is not nice to mess with their “we will wait until properties are a penny a piece” logic – please refrain from your idea of good stories, as good stories here are all about the end of the world and falling property prices as that was the mantra of their worshiped leader (until he wised up to the truth of the matter)
nice tale though for the dreaded likes of myself….
October 5th, 2009 at 7:50 pm
President – as I said nice for Shorty’s in laws, there will always be cases of people who do well and good on them, but I’ll watch the official stats to see whats happening with house prices and at the moment they are down / flat. Thats not doomsdaying its just the facts. I don’t base any of my analysis on one offs and anecdotes.
The facts show housing supply to the market is increasing, and demand is fairly static
good luck if you think that means house prices will ramp up
October 5th, 2009 at 8:55 pm
for those genuinely interested in housing, what caused the global problems and what can be done to fix them, this report from the USA hot off the press describes one man’s view on why excessive planning regulation is to blame (note the author is an infamous libertarian Planner basher!) :
http://www.cato.org/pubs/pas/pa646.pdf
I don’t agree with his views that the urban ring fence should be abandoned, but I think there is a case for cities like Auckland to consider releasing the limits somewhat in the occasional strategic location. Couple that with liberalising planning rules within the urban limits
October 5th, 2009 at 8:59 pm
Matt – “and at the moment they are down / flat” – depending on what timeframe you look at. The REINZ median is now about the same as March/April 2007, but it has also increased 7% since it’s January 2009 low point of $325,000
Prices over 2009 so far haven’t been down or flat
Personally though, I expect more sideways yet…..
October 5th, 2009 at 10:15 pm
Murray – well if you take prices over the last few months generally speaking they are “flat”
but you are right obviously they rose a bit earlier in the year
Like you I suspect sideways movement from here for quite a while, I’m not convinced that the fundamentals support price gains but neither do I think things will drop away much
I wouldn’t be surprised that there is a small dip (maybe 2-3%) in the winter of 2010 though as net migration starts to reverse, interest rates start creeping up, and unemployment shoots up a bit further lagging behond the economic recovery
Basically I think prices will be about the same, or very slightly higher, in 2012 as they were in 2007
October 5th, 2009 at 10:20 pm
MiA,
I fear this Auckland ‘urban ring fence’ issue is a smoke screen laid down by the libertarians who are determined to blame the market disfunction we consistently witness to government ‘intervention’ .
Looking at the REINZ figures over the last 8 years for example I see Auckland prices up 80% whilst the national figure is 92%, no big Auckland issue there.
Take a look at what happened in Nevada, Florida or Dubai (definitely not regulation-friendly states), they managed to combine a massive price bubble with massive amounts of new construction.
October 5th, 2009 at 10:28 pm
I’m still wondering about Bernard’s now withdrawn prediction that we”ll see a 30% drop from the (was it?) November, 2007 peak.
As reported in another thread – the NZ dairy bubble might be the “subprime of the South Pacific”. I don’t know how widespread agri-lending is across our banking institutions, but wouldn’t such an event cause our banks to retreat from all forms of property lending while they repair their balance sheets?
October 5th, 2009 at 10:55 pm
it was always a suckers rally….one last frenzied flight like moths to a flame and then mr.market will continue to wallow its way sideways and down.
i’m over this housing thing…it’s just bloody nonsense!!
October 6th, 2009 at 1:40 am
Glad that Barfoots are showing a normal suply demand relationship unlike the REINZ spruiking the ‘asking prices’ up line in order to hook sellers (and their marketing budget).
I guess we’ll see which way the market is heading in a few more weeks, is Oct/Nov normally peak?
October 6th, 2009 at 8:45 am
Matt – I think the issue is quality. There is still a shortage of quality properties. When we were looking
(Nov 08) most properties in our price range (under $500K) in the areas we were looking were dumps. We got lucky with a desperate vendor and paid 80K under his asking price and 70K under his GV. We still had to spend $50K on renovations to get what we wanted.
October 6th, 2009 at 9:21 am
Expat – I think there is something to the libertarian’s argument, but I think they overstate it.
It seems to be fairly widely acknowledged by economists of all political leanings (even the left leaning Krugman) that over zealous planning regulations were a significant factor in inflating housing bubbles.
I think the key is that the overzealous regulation needs to be reduced, but not reduced so much as to undermine environmental considerations
October 6th, 2009 at 9:22 am
Shorty, can I be cheeky and ask if you used YOUR money…or the banks.??
October 6th, 2009 at 12:02 pm
Could be a good time to transfer your NZD$ to GBP and buy real estate in the UK and enjoy very low interest rates, a profit on the property when the market there recovers and also make a killing on the exchange rate when it gets back to 0.35 and you bring your money back to NZ. See the bargains at http://www.rightmove.co.uk
October 6th, 2009 at 12:07 pm
Bit of both. We were lucky that we made $130K on our previous properties which were 90% geared over the last 7 years. We also brought back $80K from our stint in europe and have inherited $50K. We repaid over $100K of the mortgage with our normal wages. We now have a $120K mortgage (fixed at 5.95% for 5 years in Feb).
October 6th, 2009 at 12:24 pm
I am wondering if some accidental landlords are now re-listing to sell before interest rates rise more for purchasing and with the possible threat of some sort of tax(Land tax) in the wings?
By the way, can anyone explain what the land tax suggestion means- is it a one off payment or an annual payment on properties over and above rates, or what?
And what would this mean for rents?
October 6th, 2009 at 12:26 pm
Actually it’s a good time to change loot to au and buy gold/copper shares.
October 6th, 2009 at 12:26 pm
Lara – thats an ironic possiblity isn’t it!!!!!!!! ha!
October 6th, 2009 at 12:53 pm
Lara,
Not sure I agree re the british housing market, still overpriced. US shoudl definately be considered.
October 6th, 2009 at 1:52 pm
Wally -do you get any return on gold in the interim or do you have to buy and sell it?
October 6th, 2009 at 2:30 pm
The return comes when you flog the stock Shorty. Although there are several mining companies paying a div. The capital gain is best because the tax is just on the first 5% of gain at your personal tax rate. So if your shares bring a 100% return, you pay say 30% on the first 5% of gain, whatever that figure is. Then you wait until the kiwi spits the dummy and change the currency back for a taxfree gain. Great fun. Not without risk but then what is. 99% chance that the USSA$ will decline pushing up copper prices. To that end, your investment is a currency hedge. The real gain comes when the demand for copper outstrips supply, which is what is expected. The only new large deposit is the Mongolian discover and it’s years away from being a productive mine. The contract has still to be signed.