Barfoot & Thompson's October sales down 38% year-on-year but prices set new records

Property / news

Barfoot & Thompson's median selling price sets new record of $1.15m in October as real estate agency ends month with lowest number of residential properties available for sale at the end of October in at least 20 years

2nd Nov 21, 10:59am by Greg Ninness

Sales at Auckland's largest real estate agency continued to climb back towards normal level in October in spite of the continuing Covid-19 restrictions.

Barfoot & Thompson sold 814 residential properties in October, up 148, or 22%, from the 666 it sold in September.

However that was still 505, or 38%, shy of the 1319 properties it sold in October last year.

New listing numbers were much stronger with the agency receiving 2012 new listings in October. This was up by a whopping 106% from the 977 new listings received in September, and almost back to the 2119 new listings it received in October last year.

However the total amount of stock the agency had on its books at the end of October remained relatively low at 3041, down 23% compared to October last year.

That is the lowest number of residential properties Barfoot has had available for sale at the end of October in at least 20 years. That suggests supply of stock remains tight as we head towards the peak summer selling season.

Consequently it was not a surprise that selling prices remained firm in October, with both the average and median selling prices setting new records.

The average selling price was $1,188,946, which was marginally above the previous record of $1,183,602 set in July. The median selling price was $1,150,000, up $20,000 from the previous record of $1,130,000 set in August.

Of all the properties sold by Barfoot & Thompson in October, 71.3% sold at prices above $1 million.

"Given the constraints under which the market was operating, it was an outstanding month's trading," Barfoot & Thompson Managing Director Peter Thompson said.

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53 Comments

by CWBW | 2nd Nov 21, 11:11am 1635804660

Market re-pricing has began. Current owners with an iron fist and diamond hands will not sell until bidders offer a realistic price that reflects their properties' true underlying value.

The availability of properties for sale will depend on the bid-ask spreads. Real estate agents will be wise to inform potential buyers of the new dynamics affecting property valuations.

2022 to the moon.

🚀🚀🚀Be quick! 🚀🚀🚀

by realterms | 2nd Nov 21, 11:14am 1635804855

Self-parody. Brilliant.

by tothepoint | 2nd Nov 21, 11:25am 1635805536

The reality is that the housing market is still striding ahead.

TTP

by bw | 2nd Nov 21, 11:16am 1635804993

Contributing to the increase in average and median prices was focus returning to higher-priced properties.

What's the general rule?

"(a) If prices are going to rise, buy the most expensive you can to get the maximum advantage. (b) If prices are going to fall, sell the most expensive you have to reduce your risk"

One of those two wisdoms is going to be right!

by CWBW | 2nd Nov 21, 11:56am 1635807403

That's a little straw man dichotomy.

Higher priced doesn't mean it's expensive.

Expensiveness is bounded by buying ability and is relative. Good sized plots may be higher priced but offers many more times it's value over smaller plots. I would say many higher priced properties are actually cheap compared to their future potential.

by HW2 | 2nd Nov 21, 3:27pm 1635820029

Every new property owner has a reason why their new property is better than all the rest.

by Orontogosh | 2nd Nov 21, 11:47am 1635806827

Market re-pricing has begun. Current buyers with a bit of sense will not bid until owners accept a realistic price that reflects their properties true underlying value.

by CWBW | 2nd Nov 21, 11:59am 1635807551

Safe voyage on your journey.

by Orontogosh | 2nd Nov 21, 1:20pm 1635812423

Cheers! Good luck to you too. Keep your chin up and remember if you need to start fresh you can always just sell your NZ property and hopefully its enough to buy a plane ticket to Australia.

by Small Kev | 2nd Nov 21, 11:48am 1635806938

Location location location

by Brock Landers | 2nd Nov 21, 11:53am 1635807209

🤡🤡🤡Be quick! 🤡🤡🤡

by VTHO | 2nd Nov 21, 12:16pm 1635808562

Sorry, I'm pretty new around here. Is this a satire account?

by Brock Landers | 2nd Nov 21, 12:27pm 1635809241

Part satire, part senile.

by HouseMouse | 2nd Nov 21, 11:18am 1635805119

Yep, it's the one final hurrah before increasing mortgage rates kill the market next year.

by Carlos67 | 2nd Nov 21, 11:28am 1635805725

Is that now a final acceptance that rates are going to rise HM ? Those that predicted there was not a snowballs chance in hell that they would go up have gone very silent of late. What I do see is a possibility however is that after a steep rise they could very well use a further crash to all time lows to keep the economy going. Fact is we appear to be out of ammo trying to keep the current financial system afloat.

by HouseMouse | 2nd Nov 21, 11:38am 1635806323

Never said they wouldn't rise. It's the extent of the OCR rise that I have questioned. I am still skeptical it will go above 1.5%, I think the economy will weaken quite a lot next year and demand will be sucked out of the economy.

by fortunr | 2nd Nov 21, 11:45am 1635806751

You predictions go flatly against what swap markets themselves are clearly predicting. And what they are already predicting is an OCR with a peak closer to 3% than 2%.

by HouseMouse | 2nd Nov 21, 11:54am 1635807261

They are 'predictions' not prophecy. Market predictions have often been wrong, right?

I guess time will tell.

If the OCR goes to 3% NZ's economy would be decimated. That's the main reason I don't think it will happen. The market is underestimating the impacts.

by Brock Landers | 2nd Nov 21, 12:05pm 1635807930

Two things to consider:

- Would it really be decimated? Why?

- If it were decimated, is that a reason for it not to happen? We have an inflation targeting central bank whose job it is to throttle the economy to control inflation. The decimation would be engineered.

by HouseMouse | 2nd Nov 21, 12:25pm 1635809151

Responses:

1. I think it would, don't you? Why do I think it would? - mainly because our domestic economy is so reliant on real estate, housing, construction and consumption. Demand in these sectors will be decimated if mortgage rates are 6 or 7%, and that decimation of demand will in turn decimate the economy. We would see significant job losses in: real estate, design services (broad category: including architecture, engineering, surveying, planning), construction, trades, finance, retail, hospo. And significant job losses hardly sets the scene for that other 'go to' for the NZ rockstar economy - high immigration. Why or how can you open immigration floodgates when unemployment is increasing significantly?

2. The RBNZ's mandate is not *solely* about controlling inflation. Yes, it is it's central mandate, but remember it also has mandates around employment and financial stability, both of which could be significantly affected if the OCR went above 2%, let alone 3%. And do you really think the RBNZ is *truly* independent - I certainly don't!

by Brock Landers | 2nd Nov 21, 12:40pm 1635810021

The economy will slow down with rates at 3% but it wont be "decimated". That's whole point, to throttle inflation being generated by an economy running too hot. The alternative is crashing the economy, which is what runaway inflation will do.

Immigration policy has been decoupled from logic for a long time. I don't expect that to change.

The RBNZ will pay as much lip service to those other secondary mandates as it did when rates went down.

by HouseMouse | 2nd Nov 21, 12:48pm 1635810485

'Decimation' might be an over-statement, but not by much.

Fair enough, I like to see different opinions.

Haven't changed my view though!

by Notgreedykiwi | 2nd Nov 21, 12:16pm 1635808604

Just because 10% of NZ paid too much on their houses in the last one year doesn't mean increasing interest rates will decimate the economy. It will certainly decimate them and. Most of the speculators.

So they need to reap what they show. Its the law of the nature.

by HouseMouse | 2nd Nov 21, 12:24pm 1635809081

That's simplistic.

How about existing mortgage holders who have owned for at least several years? You don't think significantly higher mortgage payments for those who re-finance will drag money out of the economy?

How about the massive residential development sector? You don't think significantly higher mortgage rates coupled with massive increases in construction costs will tip that sector and it's employment over? You think there will still be a lot of appetite for FHBs to pay 850K for a two bedroom shitbox at mortgage rates of 6% plus?

And you don't think these things will flow on to other parts of the economy? For example to a tourism sector already on edge, without international tourists, let alone a shrinking domestic market?

by Notgreedykiwi | 2nd Nov 21, 12:49pm 1635810549

It will bring the balance back into the economy. Existing home owners, before this ponzi scheme started over an year ago, did buy the properties at a rate of interest which was higher and they can service their loans. They didn't buy at extra inflated pieces too. So yes they will not be impacted and economy will have no issues.

Only the stupid and greedy ones who over leveraged themselves in the last year or so will have reap what they sow.

You seem very naive in what you know about economics. Are you one of those who bought in the last 18 months of ponzi schemes going on?

by al123 | 2nd Nov 21, 1:56pm 1635814577

Only the stupid and greedy ones who over leveraged themselves in the last year or so will have reap what they sow.

Not so, unfortunately. I think you forget what it was like late last year. At that point, we had had over a decade of governments of both stripes complaining about the housing crisis while in opposition but deliberately fanning the flames of it while in government. We'd had at least a decade of repeated predictions of house price falls that never eventuated. Toward the end of last year two things were clear: (1) house prices were a runaway train. (2) there was no reason whatsoever to expect the government would do anything other than make things worse for first home buyers.

So I don't think FHBs who bought then were stupid and greedy. They had, at that point, been carrying the can for others' stupidity and greed for over a decade in the form of rapidly increasing rents. They faced a choice between continuing to rent at increasingly extortionate prices, or buying in what was clearly a rapidly rising market that they had every reason to believe the government would at the very least allow (if not encourage) to keep rapidly rising. And now it looks like they are going to carry the can - as most of them have been for their entire adult lives already - yet again for others' stupidity and greed when it comes to housing.

by HouseMouse | 2nd Nov 21, 2:13pm 1635815605

I'm not really going to bother to reply to your comment, as you are the one who is clearly naive.

Other than to say I bought two years ago, and the recent valuation I got is up 35% on purchase value, so I'm not worried at all. It would take an epic crash, which I don't think will happen, to put me in to a minor degree of negative equity.

I do worry about people who have bought in the last 9-12 months though, as I think a correction of 10-20% is a real possibility. But it's pretty unfair to call them 'greedy', especially if they are FHBs desperately trying to get on the property ladder in a world that says prices never fall.

BTW, I've been calling a significant house price correction in 2022 for at least 1-2 years.

by Carlos67 | 2nd Nov 21, 11:23am 1635805381

"666 it sold in September." - The devil is in the detail.

Orr has spoken, stop being naughty children and buying all the houses. Time to sit back and relax and wait for your winning lottery ticket to come through the mail in December in the form of your new RV.

by Brock Landers | 2nd Nov 21, 11:49am 1635806976

These are unusual times with Labour's lockdowns being a handbrake on the number of listings.

by printer8 | 2nd Nov 21, 12:14pm 1635808465

Brock

. . . but seemingly possibly more importantly to the both the seller and potential buyer, not the prices.

by Carinaz | 2nd Nov 21, 11:53am 1635807193

Number of house available for sale should not be headline but headline should be : HOUSE PRICE CONTINUE TO RISE TOUCHING NEW HEIGHT.

Misrepresenting though is a fact but is like half full or half empty.

by CWBW | 2nd Nov 21, 12:48pm 1635810483

I think a better title would be, "House prices broke through its resistance level and is searching for a new high!"

by Notgreedykiwi | 2nd Nov 21, 11:53am 1635807209

Yeah put all our millions in property because that's the only thing to do in NZ. There is no other industry anyway.

Keep buying from each other at inflated prices and think we are becoming a rich nation.

Let's import more uber drivers who will serve us until eternity and pay the rent on our investment properties.

We are a deluded bunch really.

by AJ123 | 2nd Nov 21, 12:23pm 1635808983

No surprise, this was expected. The asking prices are insane to give an impression as if the seller is selling land on the moon.

Just want to see how low this current Govt. go to make this country not liveable for the average kiwi.

Now no action can save it, as you can't put life in a dead man.

by HouseMouse | 2nd Nov 21, 12:33pm 1635809599

Ok, let people commit to their predictions and be accountable for them, let's see where we are this time next year!! I'll record them.

I say the OCR will be no higher than 1.75 this time next year (just being a tad more cautious, given inflation is up there)

Others? Come on, commit! 2.5%, 3%?

by Miguel | 2nd Nov 21, 12:46pm 1635810418

Predicting where the OCR will be sounds like a fools game. You have a little emperor in charge, who has been given a wide range of (sometimes conflicting) mandates (Inflation, Financial Stability, Maximum sustainable employment, and now a consideration for house prices?).

Will inflation take precedence over maximum sustainable employment? Will financial stability mean not letting a bubble pop, or avoid it getting worse? Trying to predict the outcome of the decisions of a small group of people with little to no accountability sounds like a fruitless exercise.

by HouseMouse | 2nd Nov 21, 12:53pm 1635810810

Fair points!

But as a commentator I really respect, I would be interested on where you see things going, at his stage - with all the caveats you have provided above.

Are you more bearish like me, or more bullish like the vast majority here?

All those competing objectives you mention are the basis for why I don't think he will take the OCR very high (ie. 2% or higher)

Coupled with the fact that I don't buy that the RBNZ are truly 'independent'.

by Miguel | 2nd Nov 21, 2:50pm 1635817833

Right now all i can think of is the Keynes quote: “The stock market can remain irrational longer than you can remain solvent.”

Nothing about the current "markets" makes a lot of sense, as the artificially low interest rates have distorted everything. And that artificial pricing isn't going away. Can they keep it up for another 6 months or 6 years? I suspect no one knows for sure.

by Rob Reid | 2nd Nov 21, 3:29pm 1635820167

1.25%

by Whatwillhappen | 3rd Nov 21, 4:49pm 1635911346

by Fairlyfrank | 2nd Nov 21, 12:41pm 1635810069

NZ will be affected by what happens on the world scene orr will not be able to determine outcome of international pressures this is what has bought nz unstuck before. The interest rates will be determined by international markets and events if they climb in rates to 3% / 20% there is nothing orr can do but follow he is not the king he thinks he is .

by Rob Reid | 2nd Nov 21, 1:16pm 1635812207

Yeah, Evergrande etc, Zillow etc in the US, are the trends I follow, not the village news. All our borrowed finance will go into housing, so the only relevant question is the quantity and price of available borrowing.

by bw | 2nd Nov 21, 1:05pm 1635811525

(From Oz, but how different are we?)

This is truly insane. 20% of total outstanding mortgage debt at Westpac was written in 2021 It just goes to show how much demand was brought forward.

by Averageman | 2nd Nov 21, 1:18pm 1635812286

When interest rates get back to normal, and more and more people are teleworking from alternative locations, the crying from the "last fool" community can totally be ignored. Remember that you did this to yourself.

by Orontogosh | 2nd Nov 21, 1:27pm 1635812835

Interest rates at normal normal, old normal or new normal?

by Pragmatist | 2nd Nov 21, 4:26pm 1635823565

Indeed, using words like "normal" without putting a figure to them leaves a ton of wriggle room, put a number and a date on it Averageman.

by Basil brush | 2nd Nov 21, 1:56pm 1635814612

What is crazy in all of this is the majority of (voting) kiwi's are comfortable with the housing situation. Or more accurately, not angered enough to vote in change. Until that sentiment changes, do we really expect any different outcomes?

I for one put no blame on the sitting government. They floated the idea of a capital gains tax and almost all voters poo-poo'd it.

by HouseMouse | 2nd Nov 21, 2:17pm 1635815844

Fair point. Successive centrist governments, red and blue, have simply been a reflection of the majority of centrist kiwis who vote them in and who are very happy for the value of their houses to keep appreciating markedly, without thinking for a moment beyond their self interest in terms of what the downsides of that might be...

by Crazy Horse | 2nd Nov 21, 3:29pm 1635820154

Here's a little laugh for y'all ....... showing the property "bulls" just how much things have changed, even since March this year ..... I have deleted his name, as in all fairness, I asked an honest question and he had the respect to give me an honest answer ......

by Crazy Horse | 17th Mar 21, 9:06pm

XXXXXX .....as you have done very well out of property and are always "spot on" with your predictions and have ultimate foresight into all such matters, regarding residential property investment , where do you see, say Auckland prices in 5 years time (2026) ? .....honest question for you.

I look forward to your answer and thank you in advance.

by XXXXXX | 18th Mar 21, 8:48am

Crazy horse - No one is ever spot on but a calculated estimate can be close. Following the property cycle that some on here ignore bla bla the Auckland market should peak at the end of 2024. Between now and then further rises in the 25-35% would be my pick.

I truly can't see this happening .......anyway best of luck to those that do.

by Doggog | 3rd Nov 21, 8:34am 1635881686

People tend to only talk about the debt in the market. All this borrowed money ends up in people's bank accounts. They have created a huge amount of money looking for a place to go.

by Whatwillhappen | 3rd Nov 21, 4:58pm 1635911923

Bitcoin's price has increased from $58k USD in March 2021 to $62k USD today, dipping to $35k in June. Since March your portfolio if BTC increased 8%. Not bad, but hugely variable. But if in property would have gone up 20% or so. Also hugely variable

by Small Kev | 2nd Nov 21, 4:05pm 1635822331

Delta or Delta v2 will spike again after Christmas seasons(if we open up), new restrictions will come into play, everything will be under pressure if the rates keep going up…

by Doggog | 3rd Nov 21, 8:41am 1635882075

They overestimated the effect of Covid-19 on the economy at the start. I have a feeling they are about to underestimate the current damage and how quickly it can bounce back. Higher interest rates will mean interesting times.