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Barfoot’s average price down 8.6% in January from December (Update 1)
February 4th, 2010Auckland’s largest real estate agency, Barfoot and Thompson, said its average sale price in January was NZ$505,301, down 8.6% from December, but up 0.5% from January 2009. Sales traditionally fell away over the holiday period to 583. This was down from 648 in December, but up 13.2% from a year ago, Barfoots said. (Update 1 includes full release.)
Here is the full release from Barfoot and Thompson:
The traditional exodus of people from Auckland over the summer holidays trimmed the average price of homes sold in January, but the sales of homes, both in terms of prices and volume, eclipsed those of January last year.
“The average sales price for January of $505,301 was 0.5 percent higher than in January 2009, and the number of sales at 583 was 13.2 percent higher,” said Peter Thompson, Managing Director of Barfoot & Thompson.
“While the average sales price is down 8.6 percent on that achieved in December, this was not unexpected, as there is traditionally a retreat in prices during January.
“In 2009 the fall back between January and December was 1.3 percent, in 2008 7.5 percent and in 2007 9.2 percent.
“This reflects that the buyers of higher priced properties tend to be away on holiday during January, rather than house prices actually falling.
“It’s a social factor that can be seen in the data every year.
“Another indicator of strong activity was the number of new listings at 1118, up 22.3 percent on December and up 21.1 percent on January 2009.
“January is always one of the slowest months of the year, yet in week four of the month we sold 210 homes, 31 more than in week three and 84 more than in week two.
“Traditionally, we don’t see that type of build up in momentum until February.
“2010 has started very positively, and in Auckland at least people are continuing to have confidence and interest in housing.
“Our trading in January showed no signs of a reaction to speculation of possible changes in regard to taxation on property.
“We would expect that if there is going to be, we would see signs of it in the next quarter.
“Until there is greater certainty we would expect the market to remain as normal.”
At the beginning of February Barfoot & Thompson had 5703 properties on its books, 15.6 percent less than in January 2009, but the highest number at the start of a month for eight months.
“Sellers are re-entering the market, and their numbers are slightly higher than buyers, which is keeping choice at a reasonable level and contributing to prices remaining stable,” said Thompson.
Rentals
Weekly rents are on the increase, and the average rent achieved by Barfoot & Thompson in January was $401, up $17 on that in January 2009 and up $12 on that in December.
“This is only the second time the average rent has topped $400, the last time being in October 2009 when it rose to $403,” said Thompson.
“Scarcity of rental accommodation in Auckland is contributing to the average weekly rent increasing.
“There are more people looking for accommodation than properties available.
“In December, the average weekly rent was $389, but in January we achieved on average rent that was 3 percent higher.
“Demand is always high at the beginning of a year as students return to the City, and people follow through on decisions made over the summer break or arrive to take up new jobs.
“This year, however, there are more potential tenants than properties on the market, particularly in areas such as the eastern and western suburbs of the City, and the North Shore.
“If people see something acceptable they snap it up immediately and are prepared to meet the landlord’s asking price.
“There is no one reason causing the shortage, rather it’s a combination of some landlords selling investment properties, the influx of people into the City pursuing job opportunities, immigration, and fewer tenants relocating.
“This is the first time the average weekly rent has exceeded $400 in January, and may be an indicator that rents have moved up to a new benchmark from the mid $380s, where they have been for the past two years.”
The company rented out 784 properties in January, on a par with the 791 in January 2009 and up 28.3 percent on December.
Tags: Barfoot and Thompson, House prices, house sales, Peter Thompson
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February 4th, 2010 at 12:58 pm
…down 8.6% from December, but up 0.5% from January 2009…
They make me laugh, they market falls horrendously, but wait, we’re still up 0.5% (virtually nothing) over the year.
February 4th, 2010 at 1:00 pm
Those dead cat bounce predictions are coming true. Up 10% over the year, but back down 10% now,
February 4th, 2010 at 1:07 pm
Down …up …down…up…I gave up reading rubbish from B&T long ago.
February 4th, 2010 at 1:24 pm
B&T have been far closer with their prediction then any of you clowns
February 4th, 2010 at 1:31 pm
He doesn’t make any predictions – 99% of the press release is making up reasons why the stats are ok/good.
You might notice they’re never bad stats. Ever. Not even once. There is always a positive spin.
February 4th, 2010 at 1:33 pm
Think you will get any pork in the budget shorts?…I mean being a believer in property always rising in value, you must be expecting a few slices…surely!
February 4th, 2010 at 1:38 pm
Just like interest.co.nz never has any good stats and always has a negitive spin or caveat.
February 4th, 2010 at 1:43 pm
Brilliant piece on the Australian real estate market – but very relevant here. Recommend reading it….
http://www.marketoracle.co.uk/Article16958.html
February 4th, 2010 at 1:44 pm
@shorts
Caveat emptor……
February 4th, 2010 at 1:48 pm
Shorts – we’re in a recession. Why are you expecting positive statistics?
February 4th, 2010 at 1:52 pm
Wally – I’ve made my money out of property and won’t be going back for seconds anytime soon. I’m happy with a small mortgage that will be paid off in 5 years. We are still looking to trade up in the next few years so not too worried if house prices fall as we would come out better off. Reducing the top tax rate would more then offset any land tax for us – although I think canning depreciation to reduce property prices and tax refunds and introducing stamp duty to increase the tax take is the wat to go.
February 4th, 2010 at 2:01 pm
With the comments John Key made about property in the noon news ,the crash in real estate prices will go into freefall, if sullen Cullen made the same statements when he was cracking the whip,by now the whole country would be talking about it. I recommend all investors check out Newstalk ZB noon news.
February 4th, 2010 at 2:09 pm
And here it is
“Goodbye tax break
04/02/2010 13:12:01
Related AudioRelated Stories
Prime Minister John Key has made it clear that landlords are about to lose their tax breaks.
The Prime Minister will outline the Government’s tax plans at the opening of Parliament on Tuesday, but today he has said he is not in favour of imposing capital gains tax. However landlords are in his sights.
“There’s $200 billion currently invested in rental properties. Last year, the Crown didn’t make money out of those rental properties. We actually lost $150 million. That’s the tax we paid back.”
Mr Key also says the figures regarding personal tax rates indicate something is not right. He says it is problematic when 45 percent of the top 100 people on the rich list last year did not pay the top tax rate. Half of the high flyers on the government’s tax working group also did not pay the highest rate.
Mr Key says he will address land taxes next week.”
February 4th, 2010 at 2:10 pm
Actually….slapping a special tax on bare sections would be a good way to stir the pot. Force the unused land to be built on or sold. Increase the tax each year. Oh that would cause some fear. Imagine being hit with a half percent tax on the CV rising by an extra half every year, right up to 10%! Thems what ’sell’ in the family to avoid the increases would be hit with a sales tax each time….2%! Oh what a wicked thing to think about.
February 4th, 2010 at 2:13 pm
Here’s a precis on Key’s comments from xtra…..unusuallly clear for a politician
http://nz.news.yahoo.com/a/-/latest/6760542/goodbye-tax-break/
Squeeze him some more Bernard.
February 4th, 2010 at 2:13 pm
Ships of fools if you believe any that comes out anyone with a vested interest in property, just look for the white shoes and run run as fast as you can so as you are not the last fool left with the bag complete with wet bottom. Barfioots mouthpiece reminds me a doctor says how well the operation went evan as the corpse is wheeled out
February 4th, 2010 at 2:15 pm
Property is gonna come down and crash like crazy. It has to happen. We can’t continue to support this ridiculous situation. Families can even by a house on Queen St next to the theater anymore. Mt Eden is a respectable suburb. Its all gone to hell. NZ property is doomed! Get out now! Get into shares. Safe, non-leveraged shares. Trust the corporations! Please tell EVERYONE you know.
And then send me their addresses. And I shall appear with s&p agreement, good terms and a builder called Mike.
February 4th, 2010 at 2:17 pm
Shorts made money out property and left someone else with the bag of pooh just waiting for the bottom to fall out, coz that’s how it goes in the property game
February 4th, 2010 at 2:24 pm
Sean – I agree completely. Property owners are just plain evil.You can’t make a person richer without making someone poorer. Thats why people like you and me help out so much in the community and send money to feed the starving. AM I right. Puh! Property people. They are such bad, bad people.
February 4th, 2010 at 2:28 pm
How dare anyone bag property. Listen to these guys. You could be like them in a couple of months. (I particularly like Don Ha’s photo – someone I’d trust my life with)
http://www.propertytutors.com/ME2/dirsect.asp?sid=6584FD04B5384114B7022B2927D0C230&nm=Tutors
February 4th, 2010 at 2:29 pm
@john s
better be quick…. cashed up ex pats en route too, maybe rent it to them with an option to buy….
And all those real estate salespeople/evangelists circling.
don’t forget to insulate it properly, and put a heat pump in eh….
February 4th, 2010 at 2:32 pm
Anyone else heard the chap from AMP Office Trust (APT) on Radio National , whinging that if Jelly Key removes the depreciation allowance from property , commercial property trusts profits would fall , and the ability to pay dividends would be reduced ?
Don’t they make enough revenue from rentals , to create a profit ? Must be an expensive head-office , if a depreciation schedule is so vital to the company’s success .
February 4th, 2010 at 2:33 pm
@garkenro & ruru
Its nothing different from what they have been saying for ages, I guess we will have to wait for something more difinitive…
Interesting about the rents in the article above tho.. of course taken with a grain of salt!!
February 4th, 2010 at 2:39 pm
Max – good idea.
February 4th, 2010 at 3:02 pm
A special land tax on bare unused land is a great idea, as it stops derelict sections and stops land banking. Upper Hutt for instance is blighted with bare land andunused commercial properties, and some have been empty for over ten years. It would be great to build houses on these properties, but the owners have got no incentive, because they can sit on the land and expect it to rise in price without having to do anything.
February 4th, 2010 at 3:18 pm
“Prime Minister John Key has made it clear that landlords are about to lose their tax breaks.”
That there will be changes to property tax deductions have been telegraphed by the TWG. Why else would the Government let their findings be made public. The PM and Bill English have also made ever more strident hints, like this one today, that there will be changes.
Landlords you have had sufficient warning so don’t complain when it happens. If you run at a loss and claim tax deductions to keep yourself afloat or claim benefits, it is YOU that are in the Governments sights so you’d better get it sorted now.
DO NOT SAY THAT YOU HAVE NOT BEEN WARNED. The government is not going to send you a note you fools.
February 4th, 2010 at 3:34 pm
As always the pessimists are on fine form here.
Monthly stats don’t mean a lot as more sales could of been in cheaper houses this lowering the monthly average you get the same result but in the other direction when more of the top end of the market sell by raising the average.
Neither of these sernarios give a true indication of real average house prices, as most stataticians will tell you the true average is gained over a longer period of time perhaps 12 months would be more appliciable when talking property, just because a bussiness has a bad month doesn’t mean its about to go broke therefore just because of an inaccurate monthly average doesn’t mean property is about to dive, as all the PESSIMISTS above suggest.
What we are really see here is a stable proprty market after all isn’t that what we want. Not the increases that we had in the boom times.
I read these bloggs periodically and tend to find them going over the same old ground, and the predictions always make me laugh as yet to date these pessimists have been wrong every time.
February 4th, 2010 at 3:41 pm
Well said Rod
Bring on the landtax/crash/price decrease and increased yields, I’m preapproved and ready for a bargain
February 4th, 2010 at 3:41 pm
“What we are really see here is a stable proprty market after all isn’t that what we want. Not the increases that we had in the boom times.”
Not at all, what most people on here want is for housing to come back down to affordable levels, not for house prices to crash.
Though the 2 might not be mutually exclusive.
February 4th, 2010 at 3:45 pm
Rod,
“just because a bussiness has a bad month doesn’t mean its about to go broke therefore just because of an inaccurate monthly average doesn’t mean property is about to dive, as all the PESSIMISTS above suggest.
”
You illustrate perfectly the folly that guides ppty speculators today. BUSINESS has little to do with capital gains and EVERYTHING to do with GENERATING INCOME. Based on average rental yields ppty investors have been having a bad month since 2003. Only when values crash will yields bring business minded people to the market.
February 4th, 2010 at 3:46 pm
Ludwig,
For another excellent analysis of the Australian housing market have a look at this report from David Denning. He is a US analyst with a New York Times best seller that moved to Melbourne a few years back.
http://www.dailyreckoning.com.au/reports/property-swindle.pdf
Interestingly house prices in Australia have risen since this report was written and according to the latest Demographia study Australia now has 4 out of the 5 most expensive housing markets in the English speaking western world relative to income.
What could go wrong?
NZ shouldn’t be too smug though as we are only just behind Aus and have a higher overall cost of living (think imports such as petrol relative to our dollar). Also if the Aussie market goes it will take the NZ market with it.
Ludwig Said:
February 4th, 2010 at 1:43 pm
Brilliant piece on the Australian real estate market – but very relevant here. Recommend reading it….
http://www.marketoracle.co.uk/Article16958.html
February 4th, 2010 at 3:50 pm
Guess it not as bad as some share prices… While ago, bought some Telecom at $5 something, Auckland Airport at 2.80, the warehouse at 5.. Luckily I didn’t have many..
February 4th, 2010 at 4:02 pm
@ Jimmy – “BUSINESS has little to do with capital gains and EVERYTHING to do with GENERATING INCOME.”
Muahahahaaa… you just described a job, not a business. Nothing wrong with that if that’s what the owner wants.
“Based on average rental yields ppty investors have been having a bad month since 2003.”
Actually, the properties you could easily buy in 2003 at an 8%+ yield are now yielding around 12-15% on purchase price and worth twice as much… so myself and the others that bought sensibly are not having a bad month. Never let the facts get in the way of a bold statement eh!
February 4th, 2010 at 4:08 pm
Jimmy so whats the difference between property investors and bussiness minded people. Property is supply and demand, plenty of property investors are also bussiness people.
The problem is that in NZ there is nothing else to invest in confidently, did you know that real estate is called real estate because its REAL you can see it, touch it, live in it if you are desperate not like shares, bonds and unit trusts or manufacturing bussiness.
The only thing wrong with property is its affordability, however time will fix this as it has done in the past.
You like other pessimists know very little I’m afraid, I fell sorry for you Jimmy.
February 4th, 2010 at 4:21 pm
“Property is supply and demand, plenty of property investors are also bussiness people.”
Exactly, increase the supply of affordable housing for people to buy and then “property investors” will find themselves in a real market competing for the available customers, not renting to some poor sap who has no other choice given the exhorbitant prices.
February 4th, 2010 at 4:26 pm
I think most property investors have been having their best months ever since 2003!
February 4th, 2010 at 4:38 pm
@Dave S – is now a good time to buy rental properties, and will the extraordinary run-up since 2001 be repeated, given we’re topping out debt levels, bottoming interest rates and very average economy? If not, smugly stating you have had (average) rental growth, but fantastic capital gains, is adding little to the discussion. What’s a property bought in 2007 look like? Why is it a better buy now?
@Rod – I think the point is that its interesting watching Barfoots change the story to match the numbers. Confidence in real estate **today** may be misplaced. I’m sure it feeling “real” doesn’t make people in large parts of the USA feel good about it.
February 4th, 2010 at 4:40 pm
Andy_M,
Affordable sounds nice but the reality is that compared to the US and UK, our affordable houses already look like flimsy, painted cardboard boxes! Land prices, we have the ability to reduce but building costs have skyrocketed over the last few years due in no small part to China sucking up all the natural resources they can get their hands on. In a way, it’s similar to lamb prices. We pay far more than we should because most of it goes offshore to markets who out-bid us.
February 4th, 2010 at 4:40 pm
Right on Paul
Andy M I am a Builder there is only one way to make affordable houses reduce the land cost or material cost, can’t see either happening in the foreseeable future, catch 22.
February 4th, 2010 at 4:45 pm
Rod: Or go back to tradesmen’s rates at the pre-boom levels.
February 4th, 2010 at 4:53 pm
@ IanC
2001-2007 could be repeated once the market stabilises again and if credit ever becomes as easy to get as it was then. It depends on whether or not we learn our lesson and put in place something to prevent it. The proposed taxes won’t make any difference.
Considering all the people on here smugly predicting the demise of the property investors as they cut out blind folds and put a fresh coat of paint on the machine-gun, I thought I was quite restrained with just the facts!
Rental growth has been slow the last 2 years but before that it’s been good. Since 2002-2004 my rents have increased by around 70% and I tend to charge about average or slightly over.
In 2007, it was very difficult to buy a rental with a decent yield but now, 7%+ is very achieveable. In fact, I was talking to someone today who is selling at a 7% yield. I’m not saying that now is a great time to buy. I think any time is a good time to buy if the potential to earn a reasonable return is possible.
February 4th, 2010 at 4:57 pm
“Huf Haus is a provider of customizable prefab kit homes”
we could do it though, sell ‘em to Aus as well?
http://www.channel4.com/4homes/on-tv/grand-designs/episode-guides/walton-huf-haus-revisited-08-06-04_p_1.html
do our own version.
3-days to assemble……….
KiwiKoop
February 4th, 2010 at 5:03 pm
IanC Says:
“He doesn’t make any predictions – 99% of the press release is making up reasons why the stats are ok/good.
You might notice they’re never bad stats. Ever. Not even once. There is always a positive spin.”
I think they have everything around the wrong way m8
What they NEED is a massive drop, houses become actually affordable
the Agents sell more houses make more money
The agencies make more money
Their shareholders would be far happier
The 1st home buyers would be happy
The only down side would be posters here at interest.co.nz would be bored…
February 4th, 2010 at 5:03 pm
That will never happen Ruru those pre boom rates, well we were on those same rates for about 10 years before that . As i’ve said before why can’t trades people earn good money why should IT and bankers and other careers get high saleries. With-out us trades people pretty hard to run a bussiness outside, from what i’ve heard computers dont like the rain, accountants can’t do book keeping outside, banks would be easy taggets outside, but you will find builders can handle it as we build those buildings Sun Rain Wind or hail so get lost ruru
February 4th, 2010 at 5:04 pm
DS – 7% doesn’t stack up without capital gains though (or an easy/cheap way to materially ratchet up the rent in the short term) especially if you think the economy will recover and interest rates rise with it … in which case if you think the market will “consolidate” you wait before buying.
I don’t believe anything the govt is hinting at will cause a large impact to prices, unless there are a large enough number of grossly over-leveraged property owners who find themselves in difficulty creating a flood of selling. I definitely see this as unlikely.
It could, however, shift the balance making a first home buyer (or people early on the property ladder) the marginal buyer rather than investors. This should make sure that house prices going forward reflect wages and interest rates (which should move together – conditions leading to strong wage growth should be met with a high OCR).
Almost all the risks are to the downside for prices. I don’t think people realise that.
February 4th, 2010 at 5:08 pm
Andy M I am a Builder there is only one way to make affordable houses reduce the land cost or material cost, can’t see either happening in the foreseeable future, catch 22.
Decrease in the land cost, why didn’t I think of that. The real component of housing that has doubled since 2003.
hopefully the gummint while come up with something tangible from the RMA working group.
If land prices went back to 2003 prices plus the rate of inflation prices of houses would be a lot more affordable. By my calculations a piece of land that cost 100k back in 2003 should be worth no more than 135k now, but in reality it will be worth 220k+ at today’s prices. Therein lies the problem. The solution is holding the price as it is now for 10-15 years by increasing the supply. But of course NZ being densely populated will lead to ever higher land prices.
February 4th, 2010 at 5:09 pm
Rod – “I am a Builder there is only one way to make affordable houses reduce the land cost or material cost, can’t see either happening in the foreseeable future, catch 22.”
I’ve been looking at building for about 6 months. There are plenty of heavily discounted sections about – whether or not they are rock bottom yet is debateable. For instance out at Gulf Harbour, a nice spot if not everybodies cup of tea, original remaining sections of developers and resales seem to be at 50-60% of what they were 2 years ago.
Material costs are a different story. I was dismayed looking at Australian prices (allowing for exchange rate difference) They have greater variety at hugely cheaper prices. Concrete, cladding, insulation, timber flooring, hardware… you name it it was much cheaper. Considering CER and the fact Auckland is closer to the East coast of Aussie than Perth, what’s going on. Are we being fleeced by suppliers here, many of which are trans tasman companies?
February 4th, 2010 at 5:20 pm
@ IanC
It depends on the person and the property. That’s 7% on asking price with 100% finance. There’s an old saying that the best investments are made, not bought. Your response actually highlights the source of a lot of the problems with the property investment sector. I would consider buying at 7%, if I could renovate or develop to increase my returns. But new punters wanted to come in and buy at a X% and then do nothing. Property is not at all a passive investment, so looking at it and saying the yield isn’t high enough like it’s some sort of term deposit is a perspective that just doesn’t gel. A whole lot of people bought on a ridiculously low yield and are now freaking out because they’re realising the reality of dealing with tenants! Ha!
February 4th, 2010 at 5:21 pm
@ Davesmyth
In 2007, it was very difficult to buy a rental with a decent yield but now, 7%+ is very achieveable. In fact, I was talking to someone today who is selling at a 7% yield. I’m not saying that now is a great time to buy. I think any time is a good time to buy if the potential to earn a reasonable return is possible.
The only reason that you can obtain these levels of return is the shortage of housing.
If there were sufficient supply of houses to buy, then rental returns would fall given the large amount of investors out there.
Imagine a situation where there were say 90 real tenants for every 100 rental properties. What do you think this would do to rents given the mindset of the average investor.
February 4th, 2010 at 5:32 pm
I’m not sure that would necessarily happen Andy M – I think enough investors would sell (they might not like the price) to get back to what I consider to be “equilibrium” (for Auckland, it looks like rents at something like 30-40% of income —> people simply can’t pay more).
DS – agree 100%. However, without wishing to dig up old discussions, a reasonable number of those same investors (with unrealistic/naive expectations) have been / are swayed by the cashflow benefits from tax treatment.
February 4th, 2010 at 6:49 pm
What a classic:
“Half of the high flyers on the government’s tax working group also did not pay the highest rate.”
February 4th, 2010 at 6:53 pm
Barfoot price drop probably because the wealthy top end buyers were at their baches all through January and they will no doubt be out buying in the next 12 weeks now that they are back in the City.
February 4th, 2010 at 6:53 pm
i’m just sick of all this dicking around ,month by month , with spin from so many different angles and people with vested interests in property and real estate companies.
from here on out it will slide down picking up momentum until it levels out around midway next year…and about bloody time.
all these false lulls have done is confuse the ” sheeple” and stall the bloody inevitable.
have a look on trademe property…228 new listings for auckland since tuesday and rising daily…sections and 300-400K rentals are being listed like mushrooms as smart prop. investors bale now to wait until the dust settles next year.
if you’re into property for tax reasons then your day is done….but if you want someone to pay your mortgage on an investment prop.as a rental and let it trickle up as a super policy or long term then you’ll be fine.
just let’s get this bloody crash over and done with so everyone knows how to plan their lives accordingly.
there’ll always be opportunity and one mans downfall is another persons gain!
rock on elves!!!!!!
February 4th, 2010 at 7:11 pm
Why isn’t this Harcourts spiel on the front page of NZ Herald or Stuff like previous monthly results? Oh, I forgot – only Sing when you’re winning.
February 4th, 2010 at 7:24 pm
“Just like interest.co.nz never has any good stats and always has a negitive spin or caveat.”
This is how it generates its profit, as long as people keep coming here debating everyday. Thanks specially to the doomsters
February 4th, 2010 at 7:39 pm
anyway, its going to be up and down up and down from here until the next silly boom.
Its time to buy and pay the mortgage off as quickly/much as you can (if you can). Saving in a way.
The more cash you “save” in the bank the less you are going to get back later.
Just watch out for those doomsters who are actually property investors in real world on here trying to scare people off from buying, so they can get out there and buy up all the good deals while everyone else is hesitating…
February 4th, 2010 at 7:44 pm
small kev,
no chance that those with property to sell, or those who benefit from sales (for example real estate agents, mortgage brokers, valuers etc) might come on here and try to scare people into buying?
February 4th, 2010 at 8:07 pm
small kev,
Pfffft……….
February 4th, 2010 at 8:19 pm
jeez, small Kev…what are you smokin’?
February 4th, 2010 at 8:26 pm
this came in half an hour ago from the esteemed Tony Alexander chief economist for the BNZ
read on:
HOUSING MARKET UPDATE
January Weak In Auckland
According to the monthly data from Barfoot and Thompson, which accounts for about one-third of Auckland residential real estate activity, sales were unusually weak in January. Only 583 dwellings were sold which was a minor 13% gain from January last year that compares poorly with the 41% annual gain in December and 58% gain in November. In rough seasonally adjusted terms sales actually declined near 25% from
December and were the lowest for any January since 2000.
The result says one very clear thing. While the housing market is off its lows there is no rush of people into the housing market either looking to snap up bargains or gear up large for investment or occupancy reasons.
This gels with the absence of any acceleration in household borrowing which continues to sit at a low level of 0.2% seasonally adjusted growth a month. The low levels of floating mortgage interest rates may be insulating household cash flows at a time of high unemployment, but the rates are not encouraging higher borrowing let alone anything resembling a speculative surge.
The prices measure reported by Barfoot and Thompson fell in the month to $505,000 from $553,000 in December. This sounds bad but at this time of year sales of high priced houses fall away and in previous years the time period has produced some large average price declines. We await the stratified measure from REINZ in a week or so to see what really happened. But there is a good chance the measure has pulled
back again after easing 0.9% in December.
There is still no evidence of a great rush of listings – meaning both buyers and sellers are still sitting back by and large from the market following a swirl of activity in the middle of last year. There were 1,181 new listings received in January which was a 21% rise from a year ago not out of line with the 12% annual gain in December. In January last year listings collapsed to be 37% down from January 2008 following a 10% fall in December 2008. Therefore the lift in the annual growth rate this year reflects mainly the depressed listings of last January.
However, total listings were 5,703 at the end of the month, a 16% fall from January 2009 which was better than December’s 22% decline. Listings rose 272 between the two months compared with a rise of 325 in 2008, 20 in 2007, 119 in 2006, and falls of 192 in 2005 and also last year of 236. The rise in listings this year is on the high side and consistent with January sales turning out to be low.
The results overall contribute to a picture of a housing market which easily came off its lows last year as buyers snapped up bargains. But continuing upward momentum has not yet developed and in light of a tax change of some sort coming along it would not be surprising if things remain relatively subdued for the first half of this year. After that things will depend upon….stay tuned ..elves!
February 4th, 2010 at 8:29 pm
“no chance that those with property to sell, or those who benefit from sales (for example real estate agents, mortgage brokers, valuers etc) might come on here and try to scare people into buying?”
Obsoletely, its both ways.
But most people are already trained to not listening to them (agents…etc), even if the information they get from these people are sometimes genuine advices, people still think they are rubish.
And this is perfect for those people who I’ve decribed before to leverage this fear factor for the good of their own interest, because people fear and positive news duing times like this are always just hypes.
Always boths ways.
February 4th, 2010 at 8:34 pm
When past reports showed prices “up” – some would say prices would go up further so buyers should not wait or it would be too late.
When this report shows prices “down” – seems the same group would say it’s good time to buy……, couldn’t be a better time etc…..
Well, looks like more reports are on the way in this 2 weeks for this month.
Guessing time – would the next few reports be similar in its trend? Anyway, whichever the trends may be, some would still believe it is good time to buy. If you think so, then go buy buy buy, buying spree, let it be over and done with a big bang. Sick and tired.
February 4th, 2010 at 8:44 pm
“small kev,
Pfffft……….”
“jeez, small Kev…what are you smokin’?”
I don’t smoke, and dale probably needs to have his keyboard fixed.
People know what i m talking about know what i m talking about.
February 4th, 2010 at 8:58 pm
This is going to make me sound like a real estate agent…but i m going to say it anyway, and i have said the same fews days ago.
Went to an oversea property investment seminar in Shanghai China while i was there few weeks back, key focus of the whole event was promoting property investment in Canada, Australia and New Zealand, and man was it a big event!! (one of the many similar events in China?)
People there have too much cash and they are afraid of their cash losing value and are desperately looking for places to spend/invest the printed cash.
If those people i saw were to buy properties here….then we better get building.
I hope they all go to Australia.
The ordinary kiwis are slowly losing their places without even knowing it, its been happening for the last 20years and its too late anyway…
Dont even think about capital gains, just owning a home will be totally impossible if they don’t pick the right time to do it! Who cares about capital gain? I just want my own house.
February 4th, 2010 at 9:02 pm
keep your powder dry, small Kev…good buying is not too far away..hang on till spring this year!
February 4th, 2010 at 9:12 pm
A nice spin there from Mr Alexander, doing his best to kept optimism in housing up!!!!!
Independant bank economists?
February 4th, 2010 at 10:07 pm
Hi Alex,
When are the REINZ and QV reports, and the REINZ-RBNZ index coming out for this month?
February 4th, 2010 at 10:33 pm
@small kev
That is why we need some form of protection to prevent offshore people buying our houses. Our houses are built in NZ, by NZers, so really it should be NZers who are buying them, not people from high wealth countries who are buying them for investment. At least they would be hit by any land tax. Perhaps they should have a higher land tax for those people who don’t live in NZ.
February 4th, 2010 at 10:40 pm
They have a lot further to go which again will lead to a massive collapse of US andsome foreign banks involved in securitised ARMs.
February 5th, 2010 at 7:42 am
Hi Grandy,
REINZ on Friday the 12th, and we think QV on Monday.
Cheers Alex
February 5th, 2010 at 8:11 am
Should be a big news/blogging week next week with John Key making his annoucements
February 5th, 2010 at 8:37 am
Looks like a big news week everywhere. Check out http://www.marketwatch.com. That’s a lot of red ink. Oil down $4 overnight , gold down $48, DJIA off 2%. The copper bubble is doing exactly what the oil bubble did, down over 50c/lb in a week.
February 5th, 2010 at 9:08 am
Copper down ……….. Bugger , there goes me retirement plan . Have to sponge off the government ( i.e. tax-payer ) instead . ……… . Meebee I should wait , they might all be up next week . Gotta learn to be a ” long-term-investor ” . .. ..Another 7 days should do it .
February 5th, 2010 at 11:48 am
Love this from Tony Alexander today:
In December there was a small 2.4% seasonally adjusted decline in the number of consents issued around
the country for the construction of new houses and apartments. This followed growth of only 0.1% in
November and is quite interesting. It suggests that just as dwelling sales recovered from very low levels but
eased off late last year, so too are dwelling consent numbers not shooting up in a straight line. This says to
us that while it is very reasonable to speak in terms of rising activity for home builders, home furnishings,
building materials etc., it is not reasonable to speak in terms of a residential construction boom.
This is significant for house prices because it means the small (unmeasurable) shortage of accommodation
already in place is going to become worse. Population growth is above average due to above average net
migration inflows while annual dwelling construction at just 14,425 is well below the normal construction level
of 23,000 estimated approximately by various bodies as being needed to meet population growth.
One of our central themes for the housing market has been and remains that prices will be supported by an
accommodation shortage. The latest consent figures tell us we seem to still be on the right track with our
shortage-driven analysis and hence our lack of concern about sustained price falls as a result of whatever
house tax changes will occur in this year’s Budget.
COMMENT:
TA says the “small (unmeasurable)” shortage of housing is going to get worse. If this is “unmeasurable” how does he know there is a shortage? And maybe there is a shortage but its very small?
And he, like all the other economists, very simplistically looks at crude immigration data without analysing the trends behind them. It is quite clear that the increases in net migration are due to fewer young kiwis leaving. Therefore the gains in net migration are unliekly to be driving any significant increase in demand for housing as many of these young kiwis not going overseas will be stayoing at home or flatting.
He really is trying his best to talk housing up
February 5th, 2010 at 11:55 am
I am not sure how a drop is sales is supposed to correlate directly to a increase in construction. Surely if the affordability for both are out of whack, then both figures would decline despite what the demand is, because once people can’t afford houses, it doesn’t matter what the demand is, they simply can’t afford it.
All that will change will be our occupancy rates, and the number of adults in each dwelling (currently ~2.8 isn’t it?)
February 5th, 2010 at 12:31 pm
There can’t be a shortage of homes otherwise there would be thousands living in caravan parks or under bridges.
There are hundreds of vacant apartments, and judging by the rash of 3-4 bedroom homes that are appearing empty on Trade Me, hundreds of vacant rental properties in Auckland. Its just not enough buyers or renters think they are affordable and/or appealing.
So too holiday homes. They sit vacant most of the year. If they were the right price people would buy them to live in and work locally or commute.
If there was the demand builders would be developing all those discounted sections on Auckland’s periphery. First home buyers can’t afford them even at discounted prices.
You are right Brodie, the occupancy rate will climb as young people stay home longer and families and older people with a spare room or two take in boarders