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Barfoots sees “exceptional” December; starts 2010 with lowest January listings in 2 years (Update 1)
January 7th, 2010Auckland’s largest real estate firm, Barfoot & Thompson, said activity in December was “exceptional” as its average sale price continued to rise, hitting a 24 month high of NZ$552,933 (up 0.5% from November). Sales saw their usual fall from November, from 862 to 648 in December, but were higher than December sales in 2008 and 2007, Managing Director Peter Thompson said.
Barfoots had 965 new listings during December, the highest December month in two years, although at the start of January it “only” had 5,431 properties on its books, the lowest for a January in two years, Thompson said. (Update 1 includes chart.)
Thompson said he expected to see the traditional pattern of prices falling away a little in January, but that they would then firm for the remainder of the warmer months.
“You have to go back to the height of the 2007 property boom to see comparable prices,” Thompson said.
Barfoot’s average monthly sale price in 2009 was NZ$522,297. This was 1.7% higher than in 2008 and 3% below 2007, he said.
“In reality, the prices of houses did not fall sharply from their 2007 highs because owners did not accept the lower prices on offer.”
“What has yet to return to 2007 levels is the average number of monthly house sales, with 2009’s monthly average of 782 being down 14.5 percent on the average number of homes sold monthly in 2007.”
“However, they are up 43 percent on the average number of homes sold monthly in 2008.”
Here is the full release from Barfoot & Thompson:
Auckland house buyers again showed their belief in the stability and future of the region’s housing market, with sales in December averaging $552,933, the highest average monthly price in 24-months.
“You have to go back to the height of the 2007 property boom to see comparable prices,” said Peter Thompson, Managing Director of Barfoot & Thompson.
“Unlike 2007, however, buyers are committing on the basis of value for money and lifestyle decisions, rather than expectations of substantial capital gain.
“Activity was exceptional for a December, and we sold 648 properties, our highest number of sales in a December for two years, and were 40.6 percent higher than in December last year.
“Regardless of how you analyse the sales data, sellers are now achieving almost a similar price for property as they would have at the height of the 2007 property boom.
“Average monthly prices have now increased for the past three months, and the average monthly price for 2009 of $522,297 is 1.7 percent higher than that for 2008 and 3 percent down on that for 2007.
“In reality, the prices of houses did not fall sharply from their 2007 highs because owners did not accept the lower prices on offer.
“What has yet to return to 2007 levels is the average number of monthly house sales, with 2009’s monthly average of 782 being down 14.5 percent on the average number of homes sold monthly in 2007.
“However, they are up 43 percent on the average number of homes sold monthly in 2008.”
Mr Thompson said the sales activity statistic was the real story of what happened to property following the end of the 2007 boom.
“Properties did not change hands as the majority of sellers would not accept the prices on offer.”
Mr Thompson said that he anticipated market prices would remain stable in the first quarter of 2010.
“While interest rates are comparatively low, buyers are conscious that rates are likely to rise in 2010, and given that prices rose each month for the last three months of 2009, rising interest rates are not seen as a deterrent.
“Buyers are balancing that with a quiet confidence in the economy and their job prospects.
“New listings in December at 965 held up well, and were the highest for a December for two years but we entered January with only 5431 properties on our books, our lowest number in a January for two years.
“Taking all these factors into consideration, I anticipate we will follow the traditionally pattern of prices falling away a little in January, and then firming for the remainder of the warmer months.”
While monthly sales values have strengthened, average weekly rents have fallen for the second consecutive month and at $389 in December are 3.5 percent below their peak in October.
The average weekly rent for 2009 was $388, the same as for 2008.
Tags: Barfoot and Thompson, House prices, house sales, Interest Rates, Peter Thompson
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January 7th, 2010 at 11:17 am
$ 552 933 is ” value for money ” in Auckland . Yet rents averaged only $ 388 / week in 2009 . ………….. How is a gross yield of 3.18 % deemed to be good value , unless one is highly leveraged ? Down here on the Pig Island , commercial properties are available in that price area , yielding 8 – 9 % . And good professional tenants . Still a no-brainer to me , where to lodge the surplus shekels .
January 7th, 2010 at 11:21 am
What about the other indicator, volume of sales…….
January 7th, 2010 at 11:25 am
i’m tired of harcourts and barfoot spin…let the cards fall where they may.
if you stand on your head on one tree hill at midday , statistics show that auckland house prices are going sideways,upwards and down…rock on elves!
January 7th, 2010 at 11:40 am
@ Roger Thompson
Owner occupiers don’t care about yields… I can’t believe that investors are pushing prices up with yields like that!
January 7th, 2010 at 11:47 am
I asked the dogs what they thought of B&T’s sideshow and they laughed. Smart buggers!
January 7th, 2010 at 11:49 am
Is there an argument that many “property investors” are actually “amateur investors” who are largely focussed on setting themselves up with a property portfolio to fund their retirement years?
In which case, they’re not really going to be interested in the immediate yields, as many of them have day jobs to cover their day-to-day living expenses anyway.
They’ll be happy with any rental income subsidising the mortgage(s) until the loan amounts are completely paid down 25 years or so into the future, at which point they can retire and take the entire yield as taxable income.
If somebody has got themselves half-a-dozen rental properties completely paid for and kept reasonably well maintained by the time they are 60, the rental will keep them financially secure and living in reasonably fine style into their old age.
It just seems to be a retirement plan/concept that many Kiwi’s have firmly lodged in their minds – perhaps this is why many people are less bothered about what look like low levels of immediate return than they could be?
January 7th, 2010 at 11:54 am
“rental income subsidising the mortgage”
Run the numbers in Auckland and see how that works out for ya…
January 7th, 2010 at 11:54 am
How strange then that most of their listings in Gulf Harbour (where I hope to purchase upon return to NZ) , have been there for well over a year, with both homes and sections gradually falling in price and still no interest…. I must be imagining things…
January 7th, 2010 at 12:04 pm
rob of the north – “Sales saw their usual fall from November, from 862 to 648 in December, but were higher than December sales in 2008 and 2007, Managing Director Peter Thompson said.”
“What has yet to return to 2007 levels is the average number of monthly house sales, with 2009’s monthly average of 782 being down 14.5 percent on the average number of homes sold monthly in 2007.”
January 7th, 2010 at 12:04 pm
True enough , Dave Smyth : But logic dictates that you opt for a commercial property of that price / form a LAQC and negative gear , and rent the place you live in . The commercial property will pays it’s own mortgage , with a surplus ( maybe ) left-over to assist your weekly rent of the house .
January 7th, 2010 at 12:07 pm
Sue they have 5431 on the market yet in December only 648 sold.
At an average 782 sales per month through 2009 Barfoots have 7 months stock on the books and no doubt listings will outnumber sales in Jan/Feb when more homes hit the market.
January 7th, 2010 at 12:12 pm
Average weekly rent is distorted by the large number of apartments in the mix.
Just try and find a 3 bedroom house in a decent Auckland City suburb for rent at $338 per week – there are virtually none available unless you want to live in one of these things: http://tinyurl.com/ycuop6o
A landlord friend just rented an old 3 bedroom ex-state house in central Auckland for $750 per week!
January 7th, 2010 at 12:16 pm
Just waiting for a further press release from B & T that says “lowest January listings in Auckland frustrates pent up demand and increases prices” ….just more BS from self interested parties. Also remember peeps the banks are in this residential real estate trough right up to their necks and the last thing they want is any sort of value adjustment that will decrease their equity in this zero sum game ….
January 7th, 2010 at 12:32 pm
Exactly Sue. Of 12 properties I have on my shortlist they have all gone one way down in price some $80k in three months and only one sale.
This is within 40 minutes of central Ak.
I do think there are a number of people in Ak who are oblivious to whats happening in the world, get paid and buy into huge debt.
For those I suggest they read the BBC, NY Times and look at overseas news.
I’m seeing more shops close in Ak and a lot of my suppliers and service providers are dropping their price without me even asking.
I’m all cashed up after selling my central Ak house and just waiting for that right lifestyle property to come up at the right price and it’s coming fast…over the last year I’d say to the tune of $100k.
I don’t care what Sh%# the agents spin to hype the market, at the coal face there are better and better options coming on my list.
Now if the government started printing money or interests shot up I may jump and buy, but not at the moment as my short list of properties get better all the time.
There should be a big “Health Warning” on news on any info that comes from those that have an invested interest the housing market. Becoz your health will be impacted in the log term.
January 7th, 2010 at 12:37 pm
I rent a brand new one bedroom apartment and carpark in auckland cbd for 340 dollars which comes to about 17,500 dollars per year. I would guesstimate the apartment would have been purchased for about 300k which gives the owner about a 7% return. Sounds great until you subtract management fees (I guess 20 dollars a week? – likely to be higher) and body corp + ARC rates (together comes to about 2.5k – another guess). Now the return is 4.7% and that is assuming $0 spent on maintenance! These are very conservative estimates the real return is probably even lower and this is for an apartment! Hoping for capital gains in the apartment market in my opinion is more risky than stocks as body corps only ever go up over time.
A 5 year term in an aussie bank currently gives around 8% (before tax) so the only feasible reason I can think of why people might be using apartments (and housing) as rental investment is they must be leveraged to the hilt and using LAQCs. It just doesn’t make sense when there are far safer with more liquidity options available.
January 7th, 2010 at 12:39 pm
I’m rapidly coming to the opinion that Real Estate Companies are the best run, managed, productive sector of our economy.
How do they keep convincing people to buy all this crap, and pay more every year.
I seem to keep my undies on for longer than most people keep their houses.
Briliant – full marks.
January 7th, 2010 at 12:44 pm
Has anyone tried to estimate the median house price for Auckland by:
Taking the median auckland household income after tax;
Subtracting the median auckland household expenses;
Assume that mortgage interest rates are at the 3 year level;
Assume a 5% deposit saved;
Using the “NPer” formula in Excel – add the above estimates and a variable for house price after deposit;
Fix the “NPer” output at 30 year mortgage term max (assumption).
Keep changing the house price variable until you get the maximum under the above constraints. This would then be the calculated median house price for auckland given the above assumptions … or maybe a ceiling level under the given inputs? It gives quite an interesting answer anyway…
January 7th, 2010 at 12:49 pm
flash of inspiration , bloody brilliant , KW John : If we wanna slow the efficiency , the smooth running of the real-estate industry , we need MORE government involvement ! A Kiwi Realtor run by the government , with full tax-payer subsidies [ good enough for KiwiBank / KiwiRail / et al ] ………..That’ll munt the real estate industry in a decade , meebe less . ………… . Get some of those managers and agents out of private real estate firms , and into private productive industry . ………. I like it : Kiwi Realtors : ” The Government in Bed with You , ‘cos We Care ” .
January 7th, 2010 at 12:55 pm
As an aside:
What stops any two related parties ( workmates; friends; father/son etc) ‘renting’ each others houses for the same nominal sum, say $200 p/w-making the cashflows zero-, and claming all the taxation benefits of interest offset, depreciation, negative gearing etc.?
They both get to live in their own actual houses, and only inconvenience is swapping the mail for each that goes to the ‘wrong’ house?
If nothing stops this, then isn’t this a way of putting owner/occupiers on the same footing as investors taxation wise, as both classes of hosue buyer have to compete for the same product, but only one gets the benefit of taxation relief.
January 7th, 2010 at 1:04 pm
Roger:
Brilliant, took me a while – but I love it.
There’s bound to be ex-estate agents out there who’d jump at the chance of a civil service pension.
The govt books would never look so good…
Exceptional Sir
Couple that with Danish Mortgage bonds? – Done and Dusted.
True blue sky thinking …..
January 7th, 2010 at 1:55 pm
Nicholas,
Great idea. It would require a bit more thought but I agree that it’s a great idea and makes a mockery of our tax system. But why stop at two parties, this could be a viable proposition for multiple parties. I’m surprised Mike Pero hasn’t created a franchise business from it.
January 7th, 2010 at 2:00 pm
Chris Dodd has dropped out of the Connecticut senate race. Peter Schiff with a chance against Mark Blumenthal? Does it matter?
January 7th, 2010 at 2:08 pm
No point in stopping with real estate…let’s have us a State Builders SOE and we already have Heatley in there snout buried deeply. It would go hand in hand with RT’s “Kiwi Realtor”. Wakey wakey Bill….here’s another couple of ways to make sure there is more waste, more borrowing, a bigger deficit ….don’t hang back….splurge man splurge.
Hey RT…it’s getting out of hand mate…50K in 3 days and no tax to pay…I’m down to tea…all the shampain has gone!
January 7th, 2010 at 2:31 pm
Could it be that I picked the wrong copper pit to pile into .?………….. Don’t think anybody is too surprised by that , least of all me ………….Back to Gummy Bears and a ponder of the vicissitudes of life ………….yummyyyyyyyyyy gummy !
January 7th, 2010 at 3:08 pm
Roger….
Did you say anything about a state building SOE?
January 7th, 2010 at 4:12 pm
Half of Barfoot’s semi-skilled workforce will be out on their arse in the next downturn. Maybe not this year (although it might be, when interest rate increases bite), maybe not next, but with unsustainable growth of this sort, it will be soon.
Crack on.
January 7th, 2010 at 5:32 pm
forget the spin about house sales etc , wait for the tax changes the tax working group are working on I read the NZ Herald today and I dont think many of the sugesstions put forward will be actioined it will be more of the same the best investment will be property Take Note BERNARD here comes the next bubble it will be housing thats what works best for the Goverment be it the Nats or Labour the banks will make sure of that they have to much at stake , and also there will be more taxes for the average family as in married with kids that dont have any way to reduce their taxable income taxes can come in many forms ie direct or indirect. I often buy the NZ Herald even though I live in the capital I noticed today that the Goverment is going to give some of our tax money to familys that otherwise could not aford it, that is to send their kids to elitist schools page A3 today. now the sum is 2.6m . We have sent our kids to private schools in wellington to do that we have worked very hard and long to pay and this is after we pay 39 cents in the dollar ,now my point is this NZ is a social welfare State through and through the housing investor tax reduction is one example there are many the 2.6m school fund is another so my response is join them if you dont you will be left behind.
Baz
January 7th, 2010 at 6:03 pm
@Baz, your right they wont change a thing re tax. I bet in 5 years the people of Noddyland will still be busy selling houses to each other and exporting dried milk and dead animals.
January 7th, 2010 at 6:44 pm
KW John : Any industry at all , if you want to cripple it , will be stuffed by increased gumnut involvement . ………
….. . Soon after they enter , the gumnut will start seeing a zillion zones that need more red-tape and political-correctness . They’ll deluge the sector with so much legislation and compliance costs , that encumbents will be forced out . And with massive tax-payer subsidies , the gumnut enterprise will expand beyond any need or commonsense …….Soon a monoploy will be theirs …..
…..And one day you wake up and you see WINZ , and ACC , and brother – you gotta hold back the tears !
January 7th, 2010 at 7:05 pm
AWWWWW…
Roger I thought you wanted to play too…..
But you don’t really do you.
The “Real Estate Industry” ???
Well I wonder if Walter does then.
January 7th, 2010 at 7:36 pm
Are you wanting an argument ?
I’m confused you see
…on the real estate industry
..we both agree
But I’m happy to play
…the game that you name
Pick any one pollie
…and I’ll say ” shame ! “
January 7th, 2010 at 7:51 pm
I take it their release said exceptional … and you folks made sure to put it in quotes to ensure we all understood it was “them” that used that “word”.
I got a great laugh when reading it.
I honestly thought, given the title, December was a proper Xmas cracker … only to find it a dud with one of those really bad jokes inside.
January 7th, 2010 at 9:14 pm
Sorry Roger,
In middle of proposal to Kiwibank about them opening an estate agency.
I’ll make sure to credit you with the idea (that is your real name isn’t it).
Government guarantees quality of housing
Proper house surveys – compulsory
Preferential rates through kiwibank
Free advertising
Brilliant, quite brilliant. Thanks again
January 7th, 2010 at 9:57 pm
Happy to assist : and a few nuggets to add to the KiwiRealtor dream :
Subsidise fees , progessively down to zero , 25 % for each child you have . ( similar to WFF ) .
Restrict fees to 65 % of normal if you have a Gold Card .
Charities go fee free , all 22 000 of them registered in NZ .
[ that'll crunt Harcourts / Bayleys / Barstool & Thompson : All who dare to be efficient in an industry that we don't like , be warned , government is about to join your cosy little party !!! ........Aha haaaaaaaaaaa ! ]
January 7th, 2010 at 10:33 pm
Roger….
Your taking the mick – I can tell you know.
Hmmm…flat fee or commission based.
Got to be competitive so we’ll opt for commission in the first instance…
Establish ourselves, then screw them by asking:
Q. “Does the person who paints your house expect a percentage of the house sale
price?”
A. “Well nor do we anymore”.
Now what else…..
Q. More than one home – second one a ‘business’?
A. Business rates it is then
chortle chortle.
Keep em coming Rog
Oh don’t much like KIWIREALTOR – too American.
Hows about KIWI… no, lets drop the baby words now, we’re selling houses remember.
Suggestions?
January 7th, 2010 at 10:56 pm
On a more serious note…..
Could someone with brains take these apart for me:
http://online.wsj.com/article/SB122360660328622015.html
http://kathleenbarrington.blogspot.com/2009/10/danish-mortgage-model-is-one-to-back.html
Seems so … civilised (careful they’ll have you for this sort of terminology).
Thanks
January 8th, 2010 at 5:30 am
Houses are now more affordable
http://www.nzherald.co.nz/nz/news/article.cfm?c_id=1&objectid=10619035
January 8th, 2010 at 5:57 am
KW John : Is Kathleen Barrington taking the piss ? ” Why don’t our politicians take the next flight to Copenhagen and find out whether the Danish model could work here ? ” …………….Is she for real ! Every politician on the planet was there a few weeks back for the global warming malarky . And the only thing they came back with was snow tans . As for the Danish model , she cleared off for warmer climes to exhibit her Danish sweet delights , with cherries on top .
January 8th, 2010 at 8:38 am
Hey, lets all start posting under other posters names. Won’t that be fun?
January 8th, 2010 at 9:09 am
I have watched Barfoot and Thompson over many years and found their press releases to be reasonably honest and factual. They tell it as it is in both good and bad times.
Just because the property market may not be doing what you expected there is no need to rubbish their releases.
January 8th, 2010 at 9:51 am
I think one has to look at what product B&T sells, Gavin. They do not sell houses, they sell turnover.
January 8th, 2010 at 9:54 am
Eventually it may be impossible for Kiwis to buy their own home
http://www.stuff.co.nz/business/personal-finance/3214010/Ownership-dream-unrealistic
Property commentator Olly Newland said New Zealanders would inevitably realise the home ownership dream was unrealistic.
“A lot of people will come to the correct conclusion that renting or leasing is cheaper and we’ll end up with a large number of landlords and people will see leasing as a way of life, just as you lease cars and televisions.”
He admitted most people aspired to own their own home but what had driven that beyond reasonable expectations was that two incomes were needed to own a home.
“That’s changed a lot in my lifetime. That’s because people spend more, and expectations rise; instead of one set of knives and forks they want five, instead of one TV they want three.”
January 8th, 2010 at 9:58 am
i still don’t care about barefaced and thompson or any of the others…check out prices in gulf harbour on hibiscus coast…under 500K buys you a whole lotta house!
January 8th, 2010 at 10:02 am
Exactly rob, plenty of houses under milion as well
January 8th, 2010 at 10:03 am
And when that filters thought to the average kiwi brain, TBM, market turnover in the selling business will fall markedly, and the reverse in the rental market. Witness Harcourts’ push into the rental market in a large way down here in Christchurch. Then we will likely get to the ‘correct’ situation of rents being higher than the cost of (out of reach) ownership, but property prices being relatively lower than where they are now compared to the average gross household income. The only question is how we get there. Lower house prices or higher wages. In an import driven economy I have my own view on the answer that question.
January 8th, 2010 at 10:03 am
Lots of blue chip left overs up in gulf harbour I hear rob
January 8th, 2010 at 10:06 am
Yep, 28YO, and a significant number of ‘new’ BlueChip appartments to hit the Auckland market before March, I believe.
January 8th, 2010 at 10:21 am
Interesting points people make about the government getting too much involved in things.
One of the interesting things I note, is the more the people complain, the more the legislators will regulate to fix the complaining.
Therefore we need to complain less……. mind you then this site might not be so popular and some people will have nothing to do with their day.
On the flip side, complaining is fun. We all need/want to feel important and knowledgable.
January 8th, 2010 at 11:55 am
Roger:
Thanks for looking – disappointed that you had to just pickup on the easy snipe though. Even I could have managed that one.
Anyone else?
http://online.wsj.com/article/SB122360660328622015.html
http://kathleenbarrington.blogspot.com/2009/10/danish-mortgage-model-is-one-to-back.html
p.s. are those naughty old estate agents posting on this thread too…. no names eh.
cheeky boys….
January 8th, 2010 at 12:16 pm
Good to see that what has been happening is now being published in the media. For sale signs are springing up all over the show, and there are plenty with sold stickers now on them – a sure change from the faded for sale signs, with sticker over sticker covering the auction, sole agency, tender closes by date etc
so… new listings new buyers same old game, but prices are stable and rising…
PS: Hey BH, Hope you didn’t sell your house in MT Eden yet – it will be worth more and more as the days go on.Perhaps next time you want a publicity stunt pick on some other sector… like you did with the Crafars – now that was prime journalism…. a real meaty story…
Leave the idiot talk to KT – wow, he sure did fall into that trap boots and all, nice it was only him and not the entire country – looks like the lemmings have developed thinking for themselves “no I am not jumping off the cliff” good to see you hit the picks too…
January 8th, 2010 at 12:17 pm
cripes…. I didn’t mean all of you… wow. rumbled the lot of ‘em.
January 8th, 2010 at 1:04 pm
hmmm…. why is that i always seem to kill the thread when i talk commonsense? does it still irk you that much????
January 8th, 2010 at 1:12 pm
Go away Mr President. I’m the irksome one who wants to be last.
p.s they’re down the pub… Friday
All talking about the commission they’ve earnt.
January 8th, 2010 at 1:47 pm
PRES o POP : That is why I want Alex / Bernard to cobble together a Prognostications 2010 thread . So by year’s end we can see amongst the notables / the smart / the insiders / and myself , who got it most wrong ( a 30 % fall in residential property prices , for instance , didn’t BH get egg on his face, 2009 ) , and who really are the clever dicks in our neighbourhood .
January 8th, 2010 at 2:15 pm
The message posted under “Wally” at 8.38am this morning was not posted by Me because I was not online being away from the cabin.
January 8th, 2010 at 2:21 pm
Aha ! Was wondering …. .. Doesn’t Alex have the ability to track whoever posts a message ? Dirty pool to use someone else’s name .
January 8th, 2010 at 2:25 pm
Yes, his server will have a timed record of the connection and it is a simple matter to identify the fool. Been to town so no way it could have been me and the dogs wouldn’t risk their tux biscuits on such a dumb move.