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Auckland driving rise in house selling price expectations, in contrast to rural “hangover”, report says (Update 1)
December 1st, 2009The upward trend in home sellers’ price expectations is being driven by the main centres of Auckland, Wellington and Christchurch, while rural New Zealand faces an extended property market “hangover”, the latest market report from realestate.co.nz says. (Update 1 includes report highlights.)
The Auckland market in particular is driving rises in asking prices, realestate.co.nz CEO Alister Helm said. The latest report on the month of November showed an ongoing shortage in properties listed in the main centres, with rural New Zealand being hit with slower sales coupled with a swelling of inventory levels, Helm said.
“While national price expectations continue to rise, this is mainly driven by the Auckland market. In the provinces by contrast, slow sales during October and November increased the available stock of properties up to an inventory level of just over 51 weeks,” he said.
Here are the highlight’s from the November property market report. Realestate.co.nz lists over 94% of all listings currently marketed by real estate agents in New Zealand:
Commentary
The steady growth in listings seen over the past 3 months have begun to outpace the rate of sales of property across the country leading to a further growth in inventory levels in November – taking the equivalent of stock on the market to 36 weeks. That is to say, based on the current rate of sale, it would take 36 weeks (8.3 months) to clear all the stock. The lowest point of this property cycle was reached in June when inventory reached a low of 31.5 weeks (7.3 months) – since then it has grown for 5 successive months.
The current rate of sales of property from REINZ statistics shows a 12 month total (Nov 08 – Oct 09) of 67,197, this is up 10% on the prior 12 month period but down 31% when compared to the 12 months to October 2007.
This growth of inventory is not even across the country with the major centers seeing inventory falls whereas provincial NZ is where the significant inventory rises are being seen. The biggest rises are being seen in the Central North Island, Northland, Marlborough, Gisborne and Southland.
Asking Price
The vendor’s expectation of asking price for properties coming onto the market in November grew slightly to $419,586.
This price represented a 1.9% rise in asking price when compared to the moving average of the past 3 months (Aug/Sep/Oct).
The asking price of new listings in November last year was $404,913 representing a 3.6% year on year increase.
New Listings
The number of new listings coming onto the market rose slightly to 13,857, from the October total of 13,550.
Despite the uplift in listings during November the level of new listings over the past 12 months continues to show a 11% fall with 147,813 new listings in the recent 12 months as compared to 165,690 in the prior 12 months spanning 2007/8.
Inventory
The overall level of available inventory as measured by equivalent weeks of sales grew again in November – the 5th consecutive month of rise from 31.5 weeks in June to the current level of 36.0 weeks.
Whilst inventory tends to rise approaching Christmas the levels this year are up on the 33.9 weeks in 2007 but down on the extreme peak of 52.6 weeks in November last year – a time when property sales stagnated.
Tags: Alistair Helm
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December 1st, 2009 at 10:37 am
Yep…she’s dead on the water in Marlborough..has been for more than a year..too many dreamers asking too much for too little with too few having the loot to make an offer….
December 1st, 2009 at 11:04 am
I agree partially with Wally, prices have gone nowhere for a year or two, making them still overpriced, in our region.
December 1st, 2009 at 11:43 am
This whole “home sellers’ price expectations” measure is just too weird. Hey, I have a potato, I reckon its worth $500 – doesn’t mean its worth $500 or that anyone will be willing to part with $500 to buy it off me.
December 1st, 2009 at 11:54 am
Sam, if you reckon the potato is worth $500 you may list it for sale at $500. I might be looking for a $300 potato, see your listing, think it’s too expensive and not put a bid in.
Your potato may only have real market value of $250. I may have been willing to give you $300 for it (=good deal for you). But because you have an over-inflated idea of how much your potato is worth, there is no sale (which means the potato market will slow).
Which is possibly what is happening in the housing market at the mo…
Cheers
Alex
December 1st, 2009 at 12:11 pm
Alex,
A question for you. How many property related reports will be released for this 2 weeks? Can you make a guess?
December 1st, 2009 at 12:17 pm
Grandy,
We should have barfoots later this week, one on property tax just about to be published, QV and REINZ halfway through the month and perhaps a couple on interest rates just for good measure.
Cheers
Alex
December 1st, 2009 at 12:19 pm
Sam : Can your potato squawk or talk ? The pet-shop sold me a dead parrot …………….Anyone want a Norwegian Blue ? It doesn’t cost much to feed .
December 1st, 2009 at 12:34 pm
That explains why Auckland’s malls are full of people !! The good times are here again and just in time for Christmas too.
December 1st, 2009 at 12:43 pm
In Morrinsville in the heart of the Waikato, real estate is dead. Farms, houses, bare blocks, nothing is selling. Shops are barely making wages. Work is drying up, agricultural contractors are struggling to survive, maize plantings are down 50%. Machinery and car sales are not happening. Things are very tight. The money must be in the cities now.
December 1st, 2009 at 12:50 pm
Sam,
Just for clarification the “asking price expectation” which you refer to as home sellers expectation is calculated from the truncated mean price of the 13,857 listings added to the realestate.co.nz website in November. These aggregated listing prices are what individual agents have set as the specified price or mid point of a non-displayed price range which is required for every listing on the site.
Whilst the absolute number is not a true measure of anything other than marketing of a “recommended advertised price” – the trend analysis of the data points is valid as an indicator of market sentiment ahead of time. This is because sentiment which leads to price setting of listings added in November will not be seen in actual sale price data until at the earliest February 2010.
Alex – a big thanks for making the potato analogy – I have heard of the famous tulip bubble, but cannot recall the potato bubble! – good analogy!!
Alistair Helm
CEO – Realestate.co.nz
December 1st, 2009 at 12:57 pm
Alex how on earth do you think that a potato may be worth $250? Is this a magic potato? Can I view it or demo it before I buy?
December 1st, 2009 at 1:03 pm
Sam – you’ve got it all wrong – you may think your potato is worth $ 500, but there are a shortage of good quality potatos and plenty of buyers depsparate to get into the vegetable market before interest rates rise again.
You really should auction your potato to get the best market value. With just a small investment of $ 3,000 in a markleting campaign we will ensure you get a much better offer than Alex’s $ 300, which is perhaps what you might expect to pay for a cross-lease potato, and is an insulting offer.
December 1st, 2009 at 1:11 pm
I brought a potato for $100 and did some renovations on it and made it a french fry, its now worth $1000. Good colour and been deep fried in olive oil, mint condition.
December 1st, 2009 at 1:15 pm
Nice one, Sam/Alex. You’re the good sort, but small percentage out there, that lists your potato with a price and a title that reads ‘By Negotiation’. Since the market is steaming with hot potatoes, I’m gonna be a mug and list mine for Auction. The council values my potato very well, and even better, the land it ‘grows’ on even more.
If the market doesn’t cool down soon in Auckland, and interest rates rise, then I think the regions could be hit even harder.
I have a feeling that my potato won’t get sold, when at least your one has a price on it – people will just pass me up and go find one with a price tag at least!
December 1st, 2009 at 1:22 pm
Speaking as someone who has been looking for a nice potato for my family to enjoy (not to sell on to other potato fanciers), I can’t be bothered with any potato for sale that doesn’t bother including a price. Am I lazy or realistic – if you want to sell the potato put a price on it.
Also, I have noticed the recent trend (In ChCh) of potato prices going up and not selling.
December 1st, 2009 at 1:22 pm
I think it is wise that people stop thinking about potatoes, move to Asia, learn Chinese, and eat rice. The only way for NZ to ever afford to eat potatoes is if we trade something in order to get the income earnings to buy them. Regardless of our high opinion of our our self worth in the global scheme of things, there is no successful historical example of a country that has sustainably built an economy on trading potatoes.
December 1st, 2009 at 1:37 pm
I keep hearing the standard of our potatoes is not up to scratch. They leak, look ugly and have poor insulation, not overly watertight.
Leaky potato syndrom is a blight on the industry. Plus people like Potato speculators like Alex are accumlating sacks of potatoes and not paying there dues.
Have a look overeas where much better potatoes are available having just had massive price drops.
Just you wait the collapse is coming for the potato market.
December 1st, 2009 at 1:39 pm
@ Novo – I too have been looking for a potato for my family, but unfortunately here in Auckland, if you discount those potatoes with no price attached, you have nothing to look at (other than potatoes that are so rotten that they haven’t been able to be sold via other methods…).
December 1st, 2009 at 1:43 pm
That’s not right, j.c. Didn’t the Irish have an economy based on potatoes? It came to a bit of a mashed end, though, in 1840 odd….and now….
http://www.globalpropertyguide.com/Europe/Ireland/Price-History
December 1st, 2009 at 1:50 pm
You folks are all classic and I’m honestly cracking up reading all your posts. Regardless of our differing points of view, these forums seem to be were the most interesting/opinionated people in NZ hang out.
December 1st, 2009 at 2:10 pm
is that price per ounce of pot?
December 1st, 2009 at 2:17 pm
I own an average potato grown in southern England which I purchased after selling my large potato in Auckland in 2004. Much as I’d love to purchase even an average potato in the Auckland veggie plot, sadly the exchange rate for trading in potatos between the UK and NZ has fallen by almost 40 % over the last 18 months. I was thinking of downgrading to a prune in North Auckland but my budget at present will not even stretch to a sultana. Hopefully in due course the value of British potatos will recover while I wait for the Auckland pototo market to crash allowing me to trade in for a sunny Auckland pototo with sea views ….before my brain becomes totally sauteed…..
December 1st, 2009 at 2:43 pm
Things ain’t so flash in our spud patch either.
Few genuine buyers in Northland and a ton of inventory. We had good overseas inquiry a year ago but this has largly fizziled out with the the higher dollar and even worse property market for our UK purchasers.
I blame the lack of decent paying jobs. Should be a good time for retired folk and others wanting to get out of the cities though.
December 1st, 2009 at 3:00 pm
Seen a dramatic drop off in Christchurch, almost ground to a halt in some segments of the market. The mighty Harcourts have managed to get NO people through over 2 weekends through an open home, the other one of ours they had we have decided to rent out instead.
I dont see a “Hickey Collapse” but its going to be slow and flat for a while. Better off in gold stocks at the moment.
And yes we do pay CGT, we do repay any claimed depreciation and no there is no special advantages of investing in property than anything else.
December 1st, 2009 at 3:40 pm
$ 500 for a Murphy ? I predict a ” Hickey Collapse ” in the potato bubble . It will be bubble and squeak !
December 1st, 2009 at 3:46 pm
Even if your potato is not worth $500 there could be some advantage to listing it at this as it might implant in the minds of some purchasers that the taty is worth something in the broad vicinity of this (the more unique the potato the better this might work) and they will assess subsequent price action relative to this initial price.
Anchoring biases are deep seated in the human mind and hard to overcome. If your potato starts to go moldy and someone puts in a ‘cheeky offer’ of say $325 they might think they are getting a 25% discount (wow what a steal!!).
December 1st, 2009 at 3:51 pm
You’ve just done the “I can sell your potato” course at the institute, haven’t you Marky Mark….”Well done, what steal, sir….”
December 1st, 2009 at 3:53 pm
@MarkyMark
Yes true, anchoring biases can be good if done properly. But (BIG but), they have to start at a realistic level. Someone with a $300 potato budget will not look at a $500 potato. The famer selling the potato is the only one who knows he will massively discount, everyone else thinks he is a turnip with unrealistic expectations for his potato. Real potato agents need to wake up and realise that a 2 day course does not make them more intelligent than an average buyer, the real world does not go ‘make an offer, counter, counter’ – just yes/no/can’t be bothered.
December 1st, 2009 at 4:02 pm
i think you should bury this potato as it has eyes all over it and is obviously of no use to anyone and worthless – here i’ll take it off your hands and bury it in an old Lot somewhere.
trash and treasure – forest through the trees – people don’t appreciate appreciation.
December 1st, 2009 at 4:04 pm
A bit of music for the rainy afternoon… “Bohemian Bankruptcy”
http://www.youtube.com/watch?v=w5EFEQ9aY6o
December 1st, 2009 at 4:29 pm
Financial Headlines.
Mobile Army Surgical Hospital (MASH) needed to triage huge Potato Plot on site.
Agents Eyes big Blue Chip Company resurrection, Plot thickens.
Chips are down.
All eyes are peeled for the suckers.
BB’s says….A blight on them all.
Court says they will rua the day.
Ire-land eyes resurrecting pot-cheen business. Ayes have it.
However, early Potato famine brashly blamed for fiscal downturn, though imported POME FRITS and an oil well spudded in near frozen assets expected to chip in further revenues to save a key figure.
Or..
Alternatively Potato producers add derivatives and sell to Kentucky or a Dubai-ous island building nation in the Middle East, either way we feel they are FRIED.
More news…
It is a plant Mcdonalds says, though we can still add value and could make into spirit and put in a KEG for a very large ST BERNARD to carry on a business he is interested in moving to AUSTRALIA.
100% proof…too. That’s the SPIRIT.
Potato HEADS.
Makes my blood BOIL.
December 1st, 2009 at 5:39 pm
Bohemian Bankruptcy fantastic. Makes more sense than the original song!
Not enough detail Gareth! Still trying to figure out why you would want to tax capital equipment, a depreciating asset?
Any answers out there?
December 1st, 2009 at 8:23 pm
From the Herald;
“The three metropolitan regions were showing characteristics more akin to a sellers’ market, the report said.
That had prompted some speculation of an emerging property bubble, but the broader data clearly refuted that assertion.
- INTEREST.CO.NZ, NZPA”
From above;
“The overall level of available inventory as measured by equivalent weeks of sales grew again in November – the 5th consecutive month of rise from 31.5 weeks in June to the current level of 36.0 weeks.”
Anyone else confused?
December 1st, 2009 at 9:47 pm
Expat – the devil as ever is in the detail.
Across the whole country the level of inventory is rising – up to 36 weeks stock based on the current rate of sale – the long term average is actually 36.8 weeks.
The metro areas (Auckland/ Wellington/ Canterbury) the level of inventory is 25.5 weeks against a long term average of 31.2 weeks – indicating a relative shortage of listings indicating a sellers market.
The provincial areas (all areas excluding the metro areas) the level of inventory is 51.2 weeks against a long term average of 53.5 weeks – indicating a more balanced market – albeit rising over the past 4 months from a low of 42.8 weeks, certainly not indicating a buyers market.
I trust this helps to bring clarity.
December 1st, 2009 at 9:57 pm
Here is ANZ’s view on housing:
“NZ house prices still look expensive based on fundamental valuation metrics (based on price to income, serviceability on fixed mortgage rates, and rental yield), which does not give it a sustainable feel.”
From:
http://www.anz.co.nz/resources/2/f/2f5b4a80407e217eabaafbd5d7811059/MarketFocus-20093011.pdf
Such a different opinion to Tony Alexander who has said outright that price to income ratios mean diddly squat in terms of where housing values are going
Personally I think ANZ’s argument is stronger. Logically there must be a limit to how far the price to income ratio extends, and I think we are at that limit. And with interest rates only rising from here, wage growth muted, and net migration likely to drop, surely the prospects for significant house price rises ala Alexander’s predictions are slight.
December 1st, 2009 at 10:57 pm
Thanks for your response Alistair. Thats a fair point about the divergence between the main centres v. the rest.
However I still challenge the notion that low inventory indicates the lack of a bubble. In my 24 years trading in the financial markets I can assure you that just before bubbles burst ‘inventory for sale’ is always low, almost by definition.
December 1st, 2009 at 11:04 pm
Here’s the US picture…
http://1.bp.blogspot.com/_pMscxxELHEg/SwqvGiXm-uI/AAAAAAAAG28/T7IM_koghnY/s1600/EHSmonthsOct.jpg
…shame if you bought in low inventory ‘05
http://2.bp.blogspot.com/_pMscxxELHEg/SwwLL2lQPTI/AAAAAAAAG4M/97tu2yJsHIg/s1600/Q3PriceReal.jpg
December 2nd, 2009 at 12:37 am
Hmmm $500 potato, $300 potato, and $250 potato!
Sod it – I’ll grow my own.
Bag of seed spuds only cost $10. I’ll grow enough to flood the market.
Then we will see where your $500 potato is Sam.
December 2nd, 2009 at 2:34 am
Two months ago we looks at some houses on the fringes of Auckland. This week we got a call from the agent asking of we were still interested, to which I replied once the price comes down. The agent then went on to explain that both vendors were entertaining offers around the $450 for their potatos, which was $80-100 less than original.
We took another drive around the area last weekend, with a lot more for sale signs at the gates and looked in the agents window with a lot more on offer.
One agent said, “Nothings sold for a while so no one knows where the market price is at, we (agents) know it’s down, but something needs to sell so we can convince vendors to drop their price if they want to be realistic and sell”.
We applied for a bank loan two weeks back and it’s taken until now to get the Ok, I’m glade about the delay as we could have jumped into the market and already have saved a considerable amount on the two houses on our shortlist that have dropped their prices by a big amount.
Looking at the BBC business news with even more trouble in Abu Dhabi, Japan, US, China & GB I think I will enjoy Xmas and look in the new year.
On another matter the NZ media has rose coloured glasses on and keep Kiwi’s in a sheltered life on financial matters in the world.
December 2nd, 2009 at 4:53 am
I’m with Rev…
We have been looking for a few months now at property on the North Shore in Auckland and we are finding Sellers have unrealistic expectations of what they might get for there potatos.
In the last two weekends I’ve seen quite a few Auctions being passed in because of these unrealistic expectations… Some go back on the market at a lower price and some stick to there hefty price tag… i’d say the later are testing the market and the former have done something silly like start to build elsewhere or have bought already based on the “Prices at there highest in ten years” hipe….
I to may wait til after Xmas…
December 2nd, 2009 at 6:25 am
Can anyone tell me what commercial proprty in Auckland is doing at the moment?
December 2nd, 2009 at 10:06 am
Not difficult to sell $250 potatoes to rice eaters for $500. They can’t tell the difference between Ilam Hardy and Agria.
December 24th, 2009 at 4:26 pm
I have purchase many publications and some av materials intended to RE-learn Chinese. Heller’s approach is the effective and easy to follow.