Barfoot & Thompson's median selling price drops 5.2% month-on-month in July but sales volumes rise 12%. Median Auckland selling price barely above $800,000 with highest July sales volumes in three years

Barfoot & Thompson's median selling price drops 5.2% month-on-month in July but sales volumes rise 12%. Median Auckland selling price barely above $800,000 with highest July sales volumes in three years

Barfoot & Thompson's average and median selling prices both declined in July, while sales volumes were up at the real estate agency, which is Auckland's largest.

The median selling price of residential properties sold by the agency was $800,500 in July. That's down $44,500, or 5.2%, from $845,000 in June, and lower than it was in July 2018 ($810,000), July 2017 (810,000), and July 2016 ($840,000).

Barfoot's median is now barely above $800,000, a figure it has not been below since March 2016.

The average selling price was $919,648 in July, down $20,297, or 2.2%, from $939,945 in June, but up slightly from the July 2018 average of $912,487.

However Barfoot's sales volumes picked up in July with 879 unconditional sales, 93 more than the 786 in June. That's also up 49, or 6%, from 830 in July last year, and up from 747 in July 2017. That gives Barfoot & Thompson its best sales for the month of July since July 2016 when 1034 properties were sold.

"The modest fall in both average and median prices was enough to unlock sales numbers," Barfoot & Thompson Managing Director Peter Thompson said.

"The fall in prices has contributed to a greater number of sales conditional on buyers selling their own property going ahead."

There was also a lift in new listings with the agnecy signing up 1154 newlistings in July, up 14% on July last year and up 9.2% on July last year.

That is unusual because July is usually the lowest Month of the year for new listings apart from December, when listings tail off as the market prepares to virtually shut down over the Christmas-New Year period.

Barfoot's total stock levels were also down at the end of July, with a total of 3864 residential properties available for sale, down  5.4% compared to June and down 6.1% compared to July last year.

That was the first time that Barfoot's total stock has dropped below 4000 since September 2017.

The drop in stock numbers and the fall in prices suggests vendors are getting realistic in their price expectations and are meeting the market to achieve a sale. 

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113 Comments

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11
up

So there's my 5% drop from peak. Next question is whether the falls remain in the 5-10% decline band, or drop more than 10%....

11
up

Hi Fritz

the median peak in Auckland was $900k, in March 2017. It is now $800k. Not totally fair comparison because March is usually higher than July
But see my responses within this section. My forecast is bottom at $670k in late 2021. That would be a median fall of 25.5%. Of course the median is a distortion, like all stats, easily misread. It is falling because more of sales are made in lower brackets and higher brackets can afford not to sell and hence their sales are dropping more (roughly 35-40% drop compared to under 800k which is 7%). People buying same 3-4 beds they bought 6m ago are not paying that much less. Still way higher than in 2012, which was "normal" pre-influx of hot money flows from China. Sales in Auckland, total, are 41% lower than in 2013 and reason is v obvious

For me the HPI is the gold standard, so lets see what that next says.
I doubt prices will be down 11% using HPI. maybe 5-6% down?

If you are right with your prediction for 2021 I got a bottle of JD's for you.

Deleted by user

If prices dropped that much then investors would be buying them 100% debt and immediately making a profit so that makes absolutely no sense. But show you maths and perhaps itll be a pleasant surprise because honestly at that sort of discount id borrow everything i could and buy absolutely anything i could.

Mike's point is actually that the median price will drop that much mainly because the higher priced properties simply stop going on to the market. Thus the median of what *is* sold will drop. Thus it will look like "prices are dropping" when the main component that leads to the fall in the median price is the mix of houses being sold.

I cant see the sales mix dropping the median 25%, id love to see the maths on that.

1) they need to be able to get 100% finance to do that.
2) how would they immediatly make a profit.. even interest only on $600k has $2000 montly payments, so once you have mortgage payment and insurance rates you are maybe breakeven at best

They leverage existing assets.
Say you take a current 700k house getting a fairly dismal 500 pw, then you crash its price by 25%.
Now you are buying at 525K, costing ~20k pa in interest and earning 26K in rent.
As you can see its an absurd statement.

My head is spinning trying to make sense of all your non-logic and heroic assumptions.

Laminar has made the calculation based on paying interest only terms, not P&I payments.

Those that borrow on business banking, commercial borrowing terms can borrow on an interest only basis and are subject to different terms & covenants when compared to retail borrowers.

Retail borrowers are able to borrow on interest only terms subject to LVR & servicability constraints.

Laminar. Are you assuming that rents are going to stay the same in your understanding of things?. Generally rents and prices collapse together after a building boom and a credit bubble. Rents tend to have a lot less pressure when the builders (don’t earn as much) or just leave the houses they were renting during the credit bubble when the building stops..

Toppertee do please explain to me how it is rents will decline? Try to avoid nebulous statements like 'generally'.

If you are right I will match Jediknight's bottle of JD with a bottle of champaign.

Getting married Feb 2021, and the Fiancee has made it clear she would prefer not to continue flatting with 6 others for too long after getting hitched... So that timing works perfectly for us. Fingers crossed you are right.

We should all congregate with a bottle of JD & champagne no matter the result, I'm sure we'd put all our differences aside and have a great time

Losing teams shout, this should be easy for us eh

My pick is 15-18% by the end of 2020 then it will bottom out, but that's depending on the looming GFC and the trade war between the two bullies

Fritz, way more than -10%. I’d say -20%+ over a number of years, like Perth has been experiencing.

Perth is a war zone. House prices and rents have been dropping for 5-6 years. 20% falls is deceptive as its Corelogic's measurement and manipulated to some degree. In reality, you're talking falls of up to 40% in many places. Mandurah is even worse. And remember, Mandurah is where much of the 'gold rush' worker income from the mining boom was invested in 'you can't go wrong with bricks and mortar.'

my pick is 25 - 30% , which boringly represents a return to mean

Did you follow the BNZ files article? Another stumbling block for one of the big 4....

My pick 20%

The fact that sales no.s was up is a good sign that people are still buying big time in Auckland.
Plenty of new stock coming onto the Auckland market will be the effects of the new ringfencing policy that will affect negatively geared investors.
Interesting times in the Auckland market.
Very steady in Christchurch without the prospect of any significant declines whatsoever, which is a great time to be buying right!

Sorry but sales made in Auckland are not fairly to be described as big time. They are (total sales) for last 6m, for instance 41% below what they were in 2013. Compared to 2016 first 6m, they are 13,000 compared to 20,863. That is, 37.7% down. In the 600-800k bracket sales are 30% down on 2016. hardly "big-time". Prices are still way too high and this is plainly reason for when sales go up or down. Despite barefoot remarks an figures re increase in apartment sales in Central Auckland, sales of apartments in last 6m are 39% below 2018.

B & T’s latest data represents a minuscule drop in Auckland house prices.

For a proper perspective, Auckland house prices increased by 93% (yes, you read that correctly) between March 2009 and June 2018. [Source: The Listener: August 18, 2018]

What we are seeing now is that a relatively small drop in Auckland prices leads to a relatively large increase in sales volumes.......

Any further lowering of interest rates (OCR) is likely to reinforce this effect.

TTP

11
up

Median in March 2017 was $900,000. So $100,000 drop is not minuscule it is 11%
Anyone can cite convenient dates and figures.
Prices fell 15% 2007-11 for instance, in Auckland.
Sales volumes have risen at lower end, not mid range, as Barfoots make quite plain if you read it in their residential report, which has detailed figures per suburb and sub-city of Auckland. central Auckland (read - apartments) accounts for all the sales increase. Sales fell in Rodney and Manukau and were flat in NSC. Interest rates have bene falling since 2011. Sales have been falling. Not linear effect, sorry. Total sales in Auckland are 41% lower than in same 6m of 2013.

wow! TTP was sent to the headmasters office!!!

Comparing March figures, which are usually the highest of the year with July figures which are the lowest (with December) is not right.
The only really meaningful comparison is to compare a month with the same month the previous year

What we are seeing now is that a relatively small drop in Auckland prices leads to a relatively large increase in sales volumes.......

When adjusted for the number of working days, sales were up 1.3% in July 2019 compared to July 2018. And prices were down 1.2%. So to get back up to an average point of around 1000 sales a month we should see around an 18% fall in Auckland prices?

You seem to have changed your tune! What a DGM!

Hi Miguel,

not sure if the DGM comment was addressed to me but thought I might respond to DGM as an appellation in general. Laws of economics are pretty accurate in many respects: if prices go up, demand tends to fall. Price of property is largely dependent on amount of credit banks will give. This has been tightened in last 6m. Sales have dropped a lot. Prices have risen an awful lot since 2011 and sales have fallen a lot. To me, these are facts, not perspective. If by DGM you refer to my forecasts for prices, yes that is a perspective but it is based on the laws just illustrated. Most Aucklanders do not have the income to afford prices over $800k, because mortgage take sup too. much of their (joint) income. Hence foreign money was largely responsible for price surges for property above that level. That inflow of external money has now ceased. So, prices will fall. $670k represents a figure I selected due to its relationship to 2008 prices. It would represent 3% pa rises over that period, in median terms. In 2012-16 prices were rising about 14% pa. Plainly, in comparison to income rises in same time period, that is not sustainable. Things that cannot continue, end.

13
up

No not at all, I was poking fun at TTP.

I think your comments in general have been some of the most insightful and informative i've read. Keep up the good work.

I also believe the whole "DGM" term being coined here is symptomatic of way people with a vested interest have tried to paint rising prices as a universally good thing. It has been anything but. It benefits Banks (more lending), people with multiple properties (around 10% of the population) and people looking to exit the market or downsize. At best its overall a neutral or negative for the majority of the population. And who pays for it all? The last ones in the door (i.e. FHB's buying at the top).

Hi Miguel,

You reckon I’m DGM, eh?

My position remains (as per my post above) that the Auckland housing market is remarkably resilient......

Three years after one of the longest price surges in living memory, Auckland house prices are very little changed.

The almighty “crash” in prices that the DGM predicted for so long turned out to be a mere figment of their imagination.

Miguel - with all due respect, I suggest you take some lessons in “reading for meaning”.

Further - clearly you haven’t studied the measurement/analytics of price elasticities.

TTP

12
up

I was taking the piss out of you by using your incredibly flawed conclusion, that a small fall in prices resulted in a large increase in sales. As my example showed, when properly adjusted for the number of working days, the increase in sales was less significant than the price movement (assuming you actually want to base conclusions on such small samples of data) . Perhaps read it in that context and my post might make sense? I'm aware the tone of a written post is often easily confused.

And do you really think anyone doesn't know your views by now? You copy and paste the same diatribe on every article - I think it would be tough for anyone to have missed it.

20
up

TTP, this constant repetition of what is essentially "So what, I still made money in the past!" seems like an emotional reaction whenever things don't look good in the present.

Everyone knows that a golden run happened across the last decade or so, for anyone who was around at the right time to have bought before it. Discussions now are about the present and the possible futures.

Of what relevance is re-reminding people of having made money in the past?

He likes to think that since there was no crash in Auckland in the past X years, it can never happen. Just watch his definition of a crash change as time goes on.

@TTP "What we are seeing now is that a relatively small drop in Auckland prices leads to a relatively large increase in sales volumes"
I was wondering if this is the same thinking when you talk to someone in Ireland or Spain or Portugal or Greece..

TM2, I think you are a RE agent drumming up more business in CHCH...
There's an old say that if you have a good business that making you money, why let anyone else into the game!

Interesting to note (above) how badly Miguel, Rick Strauss & Chairman Moa react to a reality check on Auckland house prices.........

Indeed, a good dose of reality soon whips the DGM into a frenzy.

TTP

11
up

Frenzy? How 'badly' did Miguel, Rick Strauss & Chairman Moa react? They seem very rational and relaxed to me. Every reaction that doesn't agree with your views is bad? Is calling others frenzied not an overly emotional reaction?

I almost gave ttp a 'like' for the comedy value of his comment

Possibly the only exciting thing for living in Palmy North other than watching the algae grows in centennial lagoon/lake/pond

Hi Chairman Moa,

You imply that I live in Palmerston North???

Wrong assumption.

In fact, you’re wrong in every-which-way. At least you’re consistent in that respect.

TTP

oh.. my bad! Sorry..
How's the weather in Bunnythorpe ?

Hi Chairman Moa,

Sorry - don’t know where Bunnythorpe is??

Suggest you try phoning the meteorological office.

TTP

This looks like projection.

Yawn. #trolling

10
up

It goes to show that if vendors are ready/fleixable with price, are still able to achieve sell.

As they say that maerket determines the price : Earlier when $800000 house went for a million or million plus - justification was that market determines and now when 1.2 Million house goes for a million or $900000 it is the same logic that market determines the price (So RE agent should not justify as one off as NOW are many such one off :)

Domino effect at play - process has just started. Good for FHB and Genuine Investors and BAd for speculators and money Launderers.

Also potentially not great for FHB's who bought between 2016 -2018

Have you noticed the spruikers are out of action, they are consoling those FHBs

Different focus. If you look at the different years in which the owner-occupier purchased, then there are likely to be very different return outcomes, and conclusions.

1) the property owners who purchased in 2009 who are up 93% over the last 10 years (Tothepoint)
2) first home buyers who purchased from 2016 onwards
3) potential first home buyers / owner occupiers who are currently looking to buy

Choose which ever you consider to be relevant to your own needs, and purposes.

The professional investors who consistently beat the market by 20%...

Not everyone has such amazing talent though. Also, people who tend to beat the market don't always get everything right. Warren Buffet has lost billions in some transactions.

Wouldn't confuse brains for a bull market

Whyvil will be along shortly. He has just got to finish washing the Elephant cubs. (Who knew they had cubs?)

They are calves indeed, not cubs, my bad, thanks for thinking about me

happens when one makes up stories !!!

And how do you know I made this up? You don't, you're just saying this because........ (fill in the blank)

I'm SENSIBLE

Surprise surprise DGM fritzy we bought a do-up in ellerslie in 2016 from a keen seller and that place was a good and great buy for us. Eventually it might be my kid's first home, getting onto the ladder early, tick tick

There was some sales mix impact on the median sales price as outlined below. Will be interesting to see REINZ HPI data impact.

From the B&T report

“A feature of July’s sales was the relatively high number of sales of property in the under $500,000 price category, which at 15.9 percent of sales was significantly higher than we normally see.

“It points to the higher number of apartment and terrace housing sales showing in the monthly statistics, and the growing acceptance in Auckland of this form of housing."

Hi CN,

You rightly emphasise the relatively high number of lower-priced dwellings / apartments making up the latest data......

Of course, this has the effect of dragging down the average price.

TTP

What it also tells us is that the only properties FHB can afford are in the lower end brackets. It's almost as if the average price should actually be closer to that 500k bracket than it is now.

In residential report from Barfoot online it is apparent that apartment sales in Central Auckland are v largely responsible for increase in sales. This has pulled down median price a lot. Also, where prices are up (like Rodney where rise was considerable) sale sale down. Conclusion evident. Also, need to look at trend. In January 2019, the comparison wit January 2016 was that median was up $67k. In July it was down $41k. NSC flat compared to last year. Barfoots has about 33% market share but not necessarily in all areas. So REINZ figures more reliable.

Possibly the most interesting statistical series I would want to see, is sales-pairs comparisons. I.e. repeat sales of the same single family home, run into 3 month moving averages, over time, an apple per apple comparison ,as per methodology of USA Case-Shiller index.There are enough "same house , un-improved"re-sales in total in Auckland , to derive this, is any one doing the stats?

Possibly the most interesting statistical series I would want to see, is sales-pairs comparisons.

Good man. The only problem is that the sales volume might be too low to look at a granular level (by small town, suburb, etc).

For all the talk of median vs average, from the graphs they seem to track pretty much identically, over time. From that it would seem March 2017 was the peak for prices, and that either measure is as accurate as one another (except maybe from one month to the next).

But peak in Sales was back in March 2015. It seems intuitive that Sales would be a leading indicator - but Sales falling for 2 years prior to the peak in Prices? That's quite a lag - for those with a greater view of history, does that match what we've seen elsewhere?

Underlying message, drop the price please coffee and squashed advo shops near agent offices are going to the wall. Agree appartment sales could swing stats, what would sales look like without?

Would not want to be a developer of unfinished appartments right now. If we follow Aussie a lot of chinese could walk on their appartment deposit and avoid settling. In a declining market thats double wammy time. Boosters off, glide momentium expiring and gravity is taking over. Air bag of lower interest rates has almost no air left in it.

Wheres that popcorn...

"Falling prices unlock sales" sorry?
Sales increase was in bracket under $500k by look of it and there are no details given re what sold because price was reduced. Sales of apartments were reason for sales number gain. These are mostly cheaper than houses obviously

Under $500k bracket could be due to Slumlords exiting the market, offloading properties that would need a lot of work to be brought up to standards?

https://www.stuff.co.nz/national/politics/114700141/public-housing-waitl...

National housing spokeswoman Judith Collins has repeatedly criticised former Housing Minister Phil Twyford for the waitlist growth, saying his policies are to blame.

"More people are leaving the rental market as landlords and just saying 'I can't be bothered it's too hard'," Collins said earlier this year.

Has Judith provided any evidence to support her claim? Or just a Trumpian "people are telling me".

I do not like Judith. And you are right to ask for evidence. However, the significant increase in number of people on government housing waiting list can be a potential indicator of some truth to this claim. Otherwise, how the number have increased by this much? where were these people until now (obviously not in government houses)? It should be safe to say at least some of them are coming from private rental market?

We're also told we've been seeing significant increases in population each year and we're not keeping up in housing supply. Coupled with rising costs of living (per ANZ's measure of inflation, 2.8%). Also the potential for movement between regions. We're not told where the increases in requests for help are occurring. In addition, we're now picking up the infrastructural deficit from previous years, including the attempted then later reversed sell-off of HNZ stock. We've also been seeing market gains in regional prices suggesting increases of investor activity.

All of these are possible factors, hence trying to find out more about what the actual drivers were. Judith is promptly jumping on a bandwagon, but I'd just want to see whether she's any substance for doing so.

This is it folks, it has begun. RE agency media release language can only spin what’s happening so much. I’m expecting falls in NZ at least as much as Australia, and I don’t think Australia is done yet. Bubbles burst. Currently a slight bull trap there as the govt, RBA, and media are doing their best to revive the market; .5% is not a turnaround, and Perth is in serious trouble.

... and surely there must be a flow on effect from Donald Trumps trade war with China ... the Don is the tungsten tipped bullet which may stray into the Kiwi armour plated property market , and pierce it fatally . .. a little collateral damage ...

Sure but I don’t think our housing market bubble bursting is going to need any outside catalyst to be honest. I think the bubble will implode on its own, but yes, a worsening world economic environment could accelerate the decline.

I think GBH was being sarcastic

don't think he was

You're correct : the Don's jack booted approach to foreign relations and trade threaten us all ... trade wars go global ... we're " safe " so long as it stays between China & the USA ... in deep poo poo if it spreads outwards ..

Two factors affecting the modest increase in comparable sales ,Barfoots auctions and sales rates have bottomed and flatlined. Where auction sales have previously given an immediate boost,and skewed the data upwards , on the way down the reverse occurs until the bottom is found . As negotiated or more delayed sales filter thru , monthly sales may receive a modest boost Second , one monthly sale has had an effect.
10B/ 57-59 Wakefield Street, 10C/ 57-59 Wakefield Street, 10G/ 57-59 Wakefield Street, 10H/ 57-59 Wakefield Street, 11B/ 57-59 Wakefield Street, 11C/ 57-59 Wakefield Street, 11F/ 57-59 Wakefield Street, 11G/ 57-59 Wakefield Street, 12A/ 57-59 Wakefield Street, 12B/ 57-59 Wakefield Street, 12C/ 57-59 Wakefield Street, 12F/ 57-59 Wakefield Street, 12G/ 57-59 Wakefield Street, 12H/ 57-59 Wakefield Street, 13B/ 57-59 Wakefield Street, 13C/ 57-59 Wakefield Street, 13F/ 57-59 Wakefield Street, 13G/ 57-59 Wakefield Street, 13H/ 57-59 Wakefield Street, 14B/ 57-59 Wakefield Street, 14C/ 57-59 Wakefield Street, 14F/ 57-59 Wakefield Street, 14G/ 57-59 Wakefield Street, 14H/ 57-59 Wakefield Street, 15A/ 57-59 Wakefield Street, 15B/ 57-59 Wakefield Street, 15G/ 57-59 Wakefield Street, 15H/ 57-59 Wakefield Street, 2A/ 57-59 Wakefield Street, 2B/ 57-59 Wakefield Street, 2C/ 57-59 Wakefield Street, 2F/ 57-59 Wakefield Street, 2G/ 57-59 Wakefield Street, 3A/ 57-59 Wakefield Street, 3B/ 57-59 Wakefield Street, 3C/ 57-59 Wakefield Street, 3G/ 57-59 Wakefield Street, 4F/ 57-59 Wakefield Street, 57Gf-59 Wakefield Street, 57Gg-59 Wakefield Street, 5A/ 57-59 Wakefield Street, 5B/ 57-59 Wakefield Street, 5C/ 57-59 Wakefield Street, 5F/ 57-59 Wakefield Street, 5G/ 57-59 Wakefield Street, 6C/ 57-59 Wakefield Street, 6F/ 57-59 Wakefield Street, 6G/ 57-59 Wakefield Street, 7A/ 57-59 Wakefield Street, 7B/ 57-59 Wakefield Street, 7C/ 57-59 Wakefield Street, 7F/ 57-59 Wakefield Street, 8A/ 57-59 Wakefield Street, 8B/ 57-59 Wakefield Street, 8C/ 57-58 Wakefield Street, 8F/ 57-59 Wakefield Street, 8G/ 57-59 Wakefield Street, 9A/ 57-59 Wakefield Street, 9B/ 57-59 Wakefield Street, 9C/ 57-59 Wakefield Street, 9F/ 57-59 Wakefield Street, 9G/ 57-59 Wakefield Street,

Very insightful. Thank you.

That is over 60 transactions at that same address. I read that there were 124 residential units to be constructed. Is this due to settlement date on the new apartment building, Fiore Wakefield at 57-59 Wakefield St?

These are studio and 1BDRM apartments - most likely targeting students and single / young couple occupants, possibly targeting non owner occupier buyers - http://fiorewakefield.co.nz/

There are 23 apartments listed for sale (I haven't checked if there are any duplication of listing of the same property by different agencies). 23 apartments is about 18% of the residential units constructed - https://www.trademe.co.nz/Browse/CategoryAttributeSearchResults.aspx?sea...

They're asking $705,000 for a 1BDRM for the 11D unit (which has been listed for sale since Dec 2018, so are they selling?) - https://www.trademe.co.nz/property/residential-property-for-sale/auction...

Also note that if you adjust July 2019 transactions for the above at a single address and exclude them, then July 2019 transactions for B&T would be less than that for July 2018.

Also remember the narrative is that there is a housing shortage in Auckland, and there should be strong demand for housing, so why aren't these selling like hotcakes? They've been listed for sale since Dec 2018 and yet still remain unsold 8-9 months later.

Surplus of apartments or sales in 2019 wouldn’t be down 39%

Mikekirk29

You mentioned on another thread:
"Next stage of housing collapse is when developers and builders flood market to cover extra payments required by their lenders."

What are the extra payments required by their lenders? Can you please elaborate further. Please assume that we know nothing about construction financing terms, construction loan repayment schedules.

Wondering if the development at Fiore Wakefield could be subject to these cashflow risks that you mention, as 18% of the project is still unsold.

Housing expert called John Tookey I think at Auckland univ wrote an excellent piece showing how build cycle gets going too late and economic cycle downturn undermined it. Lenders begin asking more interest on renewing loan agreements. The lack of cash in hand due to falling numbers buying off plan plus not following through on deposits means builder or developers are pushed to put more on market at lower prices than would in good times. This raises supply as demand declines due to reluctant buyer mindset. This is part of down cycle. Market is now over supplied relative to demand from buyers sitting on sidelines with deflationary mindset. This is next stage that really makes for serious price falls

Yep classic signs of bubble collapse

This is what happened in Arizona, which was the epicentre of the GFC. It was combined with poor lending practices (which I'm sure will be surfaced here before too long). However, overbuilding, too late, precipitated the entire problem. There wouldn't have been millions of repossessions if sellers could have sold when the loan rates adjusted.

This is similar to where Auckland is heading (although repos are unlikely to play such a large part). The news is full of stories of increases in consents, and there's plenty of info about vacant homes, which puts paid to this 'shortage' crap. I expect this will really catch up with us mid-2020 when prices will really tank. We've just started, and unfortunately a few people are so excited to see prices drop to 'extremely unaffordable' (rather than 'insanely and ridiculously unaffordable') that they are jumping in - which is still providing a bit of a prop to sale volumes and prices. New homes are already flooding the market in Rodney, and they are already discounting. When new homes are selling for less than resale, it means everyone's prices are going down. That time is already here, but will intensify over the coming 12-18 months.

A good measure of when to buy is simply to compare what you can get renting vs buying (unless you're specuvesting and just reliant on capital gains). Once you can get a positive yield with 10-15% down, you could say the market is somewhat balanced. It's not some kind of great deal if you have to commit $200k in capital to achieve mortgage payments that are higher than rent on a similar property. If values are declining it's madness. I'd never buy a rental that I couldn't lease for at *least* the cost of my mortgage. Otherwise, whether landlord or owner-occupier, you're playing with fire.

There is no 'bounce' off the bottom. Values will slide and slide and then bobble around the base for plenty long enough to get in and get a good deal. That time is not now. Not by any means. I'd say declines until mid-2021 and a total drop of 20-30% from peak.

Probably all sold to Kiwibuild

Cowpat, so that would explain the higher number of sales and also the lower median price

I don’t think that’s a list of recently sold apartments Yvil.

Hmm.. According to that data the 12 months to July 2019 sales volume was 8.577 billlion (9209 sales), and 12 months to July 2016 was 11.04 billion (12964 sales). But there was a report a while back saying that agents were short about 300 million (from memory) in commission over the same time period. A 3% commission resulting in 300 million implies a drop in volume of 10 billion, but the published barfoot numbers say only a drop off of 2.4 billion. Sure there are other companies selling houses but I would have thought barfoot had the lion's share.

300 million commision drop would have been the lost opportunity from the lack of kiwibuild sales that were promised and priced in to agent expectations. 10,000 kiwibuild houses pa at 600k each is 6 billion. 300 million missing commision at 5 percent average commission per home.

But wasn't Kiwibuild just taking houses that were already being built? That's what I kept reading on the Interest.co comments section. Has Kiwibuild taken houses that were going to be built and then.....just not gone and built them? Making the houses disappear and leaving agents with a gaggle of homebuyers but no houses to sell?

Excellent piece of research. Someone may well be clearing or offloading at low prices. I will check REINZ in 10 days time

Great work. Perhaps someone offloading a lot of property in one deal. About 80 sales in one block. Last July was 33 sales in central Auckland for Barfoots so this block v distorting on sales picture and median

Let's see if the Auckland median falls significantly in the July REINZ figures. Although I think the HPI is a better measure of where the market is at there is little doubt in my mind that the general public pay more attention to the median. So once the median starts falling it'll have a greater impact on overall market sentiment, which will likely lead to a faster correction than we've seen thus far.

A falling market can also really whack new construction. The fact that construction costs etc have been rising doesn't matter so much when prices are rising every year. It doe matter when they are dropping.

The data looks like an improvement on face value but as some commentators have noted there is a huge booking of sales in one apartment block. Take these out and volumes are again down on a July 2019 vs 2018 basis.

Add on top of that a rise in listings and it seems the real story is people are getting nervous and moving their sales plans forward.

What happens to the median when the apartment block is taken out? Would be good if someone could run the numbers...

HH, yep that would have been helpful. I think to be honest two stats ~ one for existing homes and one for new builds would provide a lot more granular detail and trends would he much easier to see.

Where there is equity to be banked and where it can be achieved meeting today's naive buyers, the selling and price declines will continue. Barfoots press release tell us there are still plenty of vendors that need to sell into this still weakening buyers market.

Lol. How does it feel to lose 40k per month per property, suckers? I'm asking the reams of people that used to skite to me how much they were making per month on their houses, wrongly claiming that it was more than anyone could make doing something productive.

$40K per month on what value of property ? I'm still not seeing it myself, asking prices still above the market peak in 2016 on everything I would be interested in purchasing. Perhaps on the very high end value properties in the $2M plus, then sure its possible but not in the $1M area.The impact of the falls is very different across the market depending on the property value now that the money laundering has ceased. Very few kiwi's can afford the high end prices and those sitting in them shouldn't feel so smug about it either, its all good with what you think its worth......right up until you come to sell it.

Carlos, I think prices have fallen well below 2016 peak on some places already but it's taking time for agents to tell vendors about what's really happening and to have their price expectations adjusted.

183 Orakei road is a good example. Place has just gone unconditional for a tad over 1.9mm. This was advertised at 2.5mm a year ago and has taken that long to sell.

It's a nice house. Not a jaw dropper but good location and decent sized plot. Move in condition.

This is what I'm seeing in a microcosm ~ vendors need to move price down to actually sell. And the price is still dropping.

Just looking in Millwater for example. Yes I agree they have been listed for a long time but asking prices still way over RV's. Yes the prices may be dropping on paper but that is irreverent if the vendors are not repaired to sell and eventually just pull the listing, after all how many people are really desperate to sell or have to sell ? Still not seeing "Panic" selling at this stage of the game. Clearly there are sellers who realize its time to cash in, its stated in the listing, i'm not seeing desperation however.

I agree, many vendors in this price bracket are still reluctant to move on price. I guess not many are having to sell.

Drop in stock is due to 2 things: lack of willingness to sell at upper reaches of market where buyers have dropped most and second people not getting price they want pulling listings

Ignoring 2016. A bubble year. When we’re the sales volumes last at the level of this July which is pretty much 15% below the bubble? Given the increase in total stock levels since? Are Barfoots losing market share?

Yes gradually they are. Auckland total sales first 6m this year down 23% cf 2018. This trend won’t improve in winter as last winter sales were unseasonably up on 2017. So this winter will come in at least 25% lower than last

Granny Herald seems awfully quiet on all this bad news, just saying....

They don't bite the hand that feeds them :)

The agent we bought with said to me this week, that the "premium" was off Wellington prices. Things still selling in good time, but less upward pressure on prices.