Housing sales volumes were up in July but price signals were more mixed

Housing sales volumes were up in July but price signals were more mixed

The real estate industry would have breathed a collective sigh of relief in July with the number of homes sold hitting its highest level for the month of July in the last three years, although price signals were less clear.

The REINZ recorded 6118 residential property sales in July, up 3.7% compared to July last year, after a sustained period of sluggish sales activity.

In Auckland, sales were even more buoyant, with 1894 properties sold in July, up 6.6% compared to July last year.

For the rest of the country excluding Auckland, sales were up 2.5% compared to July last  year.

"This is the first time in eight months that we've seen the number of properties sold around the country increase on an annual basis, suggesting that we're starting to see some early signs of growth," REINZ chief executive Bindi Norwell said.

Around the country nine out of 16 regions recorded higher sales than in July last year, with the biggest increases occurring in Nelson +25%, Gisborne +14.9%, Canterbury +14.6% and Marlborough +13.7%.

Conversely, sales numbers were well down compared to a year ago in West Coast -19.4%, Tasman -18.9% and Southland -17%.

However, while sales numbers were stronger, price signals were mixed.

The REINZ's national median price dropped from $585,000 in June to $575,000 in July and was also down in key markets such as Auckland where it fell from $850,000 to $830,000 and Bay of Plenty where it dropped from $596,000 to $578,000.

Compared to June median prices were also slightly weaker in Northland, Hawkes Bay, Taranaki, Tasman, Marlborough and West Coast.

Within the Auckland region median prices were down signficnatly compared to June in the central suburbs where it fell from $990,000 to $860,000 (-13.1%), with substantial falls also occurring in Franklin -6.6%, and Waitakere -2%, while the median price was almost flat compared to June in Manukau and Papakura and up 2.2% in Rodney.

However, the REINZ National House Price Index (HPI) was up 0.2% in July compared to June while the HPI was up 0.1% compared to June in Auckland.

The only parts of the country where the HPI was down compared to June were Rodney in Auckland -3.5%,Waitakere in Auckland -0.6%, Hamilton -0.1%, Porirua -5.6%, Lower Hutt -1.1%, Nelson -0.6%, Christchurch -0.6% and Queenstown-Lakes -5.0%.

According to the HPI, prices across Auckland are down 3.3% compared to July last year.

The comment stream on this story is now closed.

Median price - REINZ

Select chart tabs »

The 'NZ total' chart will be drawn here.
Loading...
NZ total
Source: REINZ
The 'Northland' chart will be drawn here.
Loading...
Northland
Source: REINZ
The 'Auckland' chart will be drawn here.
Loading...
Auckland
Source: REINZ
The 'Waikato' chart will be drawn here.
Loading...
Waikato
Source: REINZ
The 'Bay of Plenty' chart will be drawn here.
Loading...
Bay of Plenty
Source: REINZ
The 'Gisborne' chart will be drawn here.
Loading...
Gisborne
Source: REINZ
The 'Hawke's Bay' chart will be drawn here.
Loading...
Hawke's Bay
Source: REINZ
The 'Manawatu' chart will be drawn here.
Loading...
Manawatu
Source: REINZ
The 'Taranaki' chart will be drawn here.
Loading...
Taranaki
Source: REINZ
The 'Wellington' chart will be drawn here.
Loading...
Wellington
Source: REINZ
The 'Tasman' chart will be drawn here.
Loading...
Tasman
Source: REINZ
The 'Nelson' chart will be drawn here.
Loading...
Nelson
Source: REINZ
The 'Marlborough' chart will be drawn here.
Loading...
Marlborough
Source: REINZ
The 'West Coast' chart will be drawn here.
Loading...
West Coast
Source: REINZ
The 'Canterbury' chart will be drawn here.
Loading...
Canterbury
Source: REINZ
The 'Otago' chart will be drawn here.
Loading...
Otago
Source: REINZ
The 'Southland' chart will be drawn here.
Loading...
Southland
Source: REINZ

Volumes sold - REINZ

Select chart tabs »

The 'NZ total' chart will be drawn here.
Loading...
NZ total
Source: REINZ
The 'Northland' chart will be drawn here.
Loading...
Northland
Source: REINZ
The 'Auckland' chart will be drawn here.
Loading...
Auckland
Source: REINZ
The 'Waikato' chart will be drawn here.
Loading...
Waikato
Source: REINZ
The 'Bay of Plenty' chart will be drawn here.
Loading...
Bay of Plenty
Source: REINZ
The 'Gisborne' chart will be drawn here.
Loading...
Gisborne
Source: REINZ
The 'Hawke's Bay' chart will be drawn here.
Loading...
Hawke's Bay
Source: REINZ
The 'Manawatu' chart will be drawn here.
Loading...
Manawatu
Source: REINZ
The 'Taranaki' chart will be drawn here.
Loading...
Taranaki
Source: REINZ
The 'Wellington' chart will be drawn here.
Loading...
Wellington
Source: REINZ
The 'Tasman' chart will be drawn here.
Loading...
Tasman
Source: REINZ
The 'Nelson' chart will be drawn here.
Loading...
Nelson
Source: REINZ
The 'Marlborough' chart will be drawn here.
Loading...
Marlborough
Source: REINZ
The 'West Coast' chart will be drawn here.
Loading...
West Coast
Source: REINZ
The 'Canterbury' chart will be drawn here.
Loading...
Canterbury
Source: REINZ
The 'Otago' chart will be drawn here.
Loading...
Otago
Source: REINZ
The 'Southland' chart will be drawn here.
Loading...
Southland
Source: REINZ

Volume sales growth - REINZ

Select chart tabs »

The 'NZ total' chart will be drawn here.
Loading...
growth % year-on-year
Source: REINZ
The 'Northland' chart will be drawn here.
Loading...
growth % year-on-year
Source: REINZ
The 'Auckland' chart will be drawn here.
Loading...
growth % year-on-year
Source: REINZ
The 'Waikato' chart will be drawn here.
Loading...
growth % year-on-year
Source: REINZ
The 'Bay of Plenty' chart will be drawn here.
Loading...
growth % year-on-year
Source: REINZ
The 'Gisborne' chart will be drawn here.
Loading...
growth % year-on-year
Source: REINZ
The 'Hawke's Bay' chart will be drawn here.
Loading...
growth % year-on-year
Source: REINZ
The 'Manawatu' chart will be drawn here.
Loading...
growth % year-on-year
Source: REINZ
The 'Taranaki' chart will be drawn here.
Loading...
growth % year-on-year
Source: REINZ
The 'Wellington' chart will be drawn here.
Loading...
growth % year-on-year
Source: REINZ
The 'Tasman' chart will be drawn here.
Loading...
growth % year-on-year
Source: REINZ
The 'Nelson' chart will be drawn here.
Loading...
growth % year-on-year
Source: REINZ
The 'Marlborough' chart will be drawn here.
Loading...
growth % year-on-year
Source: REINZ
The 'West Coast' chart will be drawn here.
Loading...
growth % year-on-year
Source: REINZ
The 'Canterbury' chart will be drawn here.
Loading...
growth % year-on-year
Source: REINZ
The 'Otago' chart will be drawn here.
Loading...
growth % year-on-year
Source: REINZ
The 'Southland' chart will be drawn here.
Loading...
growth % year-on-year
Source: REINZ

We welcome your help to improve our coverage of this issue. Any examples or experiences to relate? Any links to other news, data or research to shed more light on this? Any insight or views on what might happen next or what should happen next? Any errors to correct?

We welcome your comments below. If you are not already registered, please register to comment.

Remember we welcome robust, respectful and insightful debate. We don't welcome abusive or defamatory comments and will de-register those repeatedly making such comments. Our current comment policy is here.

133 Comments

Comment Filter

Highlight new comments in the last hr(s).
15
up

Decent price drop in Auckland on a rise in sales - I guess vendors are getting realistic.

Auckland, year on year:

- Median flat
- Seasonally adjusted median down 0.4%
- HPI down 3.3%
- Days to sell up from 41 to 44
- % of sales by auction down from 20.4% to 14%

12
up

to any any fool on the road, that is defined as a Falling market, not a STEADY one, as claimed by ......

We were promised a crashing market of up to 70% price drops with blood in the streets and fire sales galore.

What we have a market that maxed out in Auckland at -4.4% HPI and has now dropped to -3.3% HPI YOY (so not really "falling" more like has "fallen" from peak and now increasing again (at least over the last 3 months)).

Is this just a reprieve or has the "crash" past?

(see https://www.reinz.co.nz/Media/Default/Statistic%20Documents/2019/Residen...))

Promised by who? Who said 70%? How do you know that we have bottomed out? How is a -3.3% year on year change "increasing again"?

Last 3 months show positive HPI for Auckland.

Clearly an upwards trend! Buy buy buy!

It's a pretty jagged line: https://i.imgur.com/OIL4QQx.jpg

It's jagged, but if you look at the Auckland Region's HPI the crash is there for sure... https://ibb.co/D5LG2fQ

And that, folks, is what we call seasonality.

Lower highs and lower lows.

There is a name for that.

As sales volumes of higher-priced houses decline in Auckland (or so we're told) a fall in the median house price is completely logical/predictable.

With bank lending rates now at a historical low - and with some commentators anticipating further falls - it's foreseeable that Auckland house prices will record a lift over the next 12 months or so.

Oh dear........

TTP

14
up

Well that’s what the RBNZ is throwing the kitchen sink at to try and achieve anyway.

But the reduction in sales of higher end properties doesn't affect the nature of the HPI though, right...

…well we don't know do we? If you do, tell me exactly how the HPI gets around it (referencing to the CV is not the answer)

Well, we do know that the SPAR is relatively robust to composition changes.
Just read my reply to your other comment.

TTP: sales depend crucially on borrower propensity to take on debt and his perception of risk.
This buyer psychology is ignored by economists models.
But it, and demography, are better forecasting tools than theoretical ideas about lower interest rates.
Interest rates been falling 6m and sales have NOT gone up, but down.

also known as "the credit impulse"

@CourtJester We have had to endure comments from posters like bobster, that not only would prices retreat to 2002, but also that banks would be calling in loans. Bobster was not alone. The calls for a drop to 2008, 2002 or even earlier have been common. Comments asserting prices are already down 20%. Many predictions from 2 and 3 years ago claimed we would already be down 25-50% with unemployment resembling Spain and Ireland. Im bearish on prices but it gets embarrassing been on the side that says the most stupid stuff. Most (not all) of the bears have been so fantastically wrong that i take the bulls comments more seriously, slightly up/flat is less wrong than dramatically down. The funniest thing is how overseas funding pressures where going to send or rates soaring and that the RBNZ would be powerless to stop it... Heh.

A good and balanced post cheers Laminar.

world economic gyrations are just showing their face... yeah, auckland is well and truly self dependent to withstand a global downturn...

oh yes, can see one major company prosper.. Fonterra... just the start..

Out of interest, here was July 2018 vs July 2017:

July 2018 vs July 2017

- Median down 0.1%
- Seasonally adjusted median up 0.3%
- Days to sell up from 37 to 41
- HPI up 1.6%
- # of properties up 35
- % sold by auction down from 24% to 21%

Seems like auctions have continued to become less effective over the last two years and as prices are lowering we're seeing more properties successfully sold...though it's taking even longer to sell them. Interesting that the HPI has turned negative since this time last year to join the median, auction rate and days to sell.

HPI graph certainly looks interesting: https://i.imgur.com/OIL4QQx.jpg

ha ha ha. has the crash past! Not in your life. This hasn't even started. The floor is a long way down yet.

Steady, resilient, armour-plated, diffrunt, soft landing.

Hi CourtJester,

You forgot the most important descriptor of them all - "stable".

You need to sharpen up your act......

TTP
P.S. You have mis-spelled the word "different". (Again not a good look for you.)

Thanks RS, are all these figures comparing July 19 to July 18 ?

Edited to clarify they're all year on year, taken from the REINZ pdf. The Auckland HPI graph looks particularly interesting. Intuitively, a trend line would seem to have a slight downward slope, so if things kept that way I guess it would be a gentle deflating of prices over time.

Yep, I have REINZ data for last 8 years, Auckland medians are dead flat. Only North Shore has had a significant 7% drop from 2017 peak. I expect we will see downward movement eventually, but hasn't happened yet.

CV of our home is $2,500,000. Core Logic estimate as at 11/8/19 is $2,413,000 or 96.5% of CV. It's gone nowhere in the last year. As another data point I've been speaking to my FHB Nephew buying in Sydney's Eastern Suburbs. He's being beaten to everything for sale. Isn't Sydney supposed to be on life support?

Sydney has had consistently far higher auction clearance rates than Auckland despite prices falling and the gnashing of teeth from Aussie commentators about low auction clearance rates.

Lots of vendors are pulling sales because cannot get price they want. Lots of those are over $1.2m.
Average prices recorded by QV for sales in Auckland are not dropping much.
Median down 7.7% off peak ($900k) because far fewer high end stuff being put OTM

The depth of winter the property market has generally held up well in terms of both prices and sales. Even in the Auckland market, now coming up three years since the peak, there is no sign of the significant collapse of 20 or 30% predicted by the DGMs.
As to the near future, there is likely to be upward spring/summer seasonal pressure, falling mortgage rates, continuing high immigration rates, falling unemployment, and RBNZ actions (possibilities of LVR moves as well as OCR) all suggesting some certainty of good support for the market. On the downside there is uncertain risk from fallout from the trade wars and a slowing global market spreading.
On balance of certainties - the upsides certainties and the downside uncertainties – one can expect the market, even in Auckland, to continue to hold up well in the short to medium term. In the longer term, I think that most would expect house price rises.
I trust that any DGM comment is substantiated.

Median March 2017 was $900k It is now $830k.
Yes, you can use HPI instead if you like but that is not normally what people refer to when deciding if prices are coming down.
Median is falling primarily because those with stuff over $1.2m are less inclined to sell.
However, a $70k drop is 7.7%
I have forecast 25% drop peak to trough and the trough will not come til end of 2021.
So, it is not a crash but a slide

However, the REINZ National House Price Index (HPI) was up 0.2% in July compared to June while the HPI was up 0.1% compared to June in Auckland.

If the housing market can sustain this current low price growth, it shall bode well for all parties: prospective FHBs, investors, etc. Sudden, large movements in prices are not good for anybody in the long run.
We should all hope that housing slowly returns to its rightful place: a key piece of infrastructure supporting the wider economic productivity instead of the main driver of the economy.

it needs to claw back big time.. the debt on FHB's is enormous..

the RBNZ have hidden the actual extent of the ratio, but just claiming a % above 5 times... they obviously didnt want to spook the market wich is already spooked by other events..

"Sudden, large movements in prices are not good for anybody in the long run."
Except when those sudden large movements are upwards, right?

Hi Greg, any chance we could get the July 19 figures compared to the same month 2018 ?

It is somewhat jarring that in the article the sales volumes are compared to the same month in 2018, while the sales prices are compared to the previous month.

The report itself can be found here, it's not a long read.
https://www.reinz.co.nz/Media/Default/Statistic%20Documents/2019/Residen...

Great, thanks for the link ST

"In Auckland, sales were even more buoyant, with 1894 properties sold in July, up 6.6% compared to July last year."

Strip out the new apartment sales booked en block and what do the numbers look like ?

I think you will find that apartment sales are not counted.
Figures quoted are residential only.

Ok thanks Mike

Do you mean that apartments are not considered residential? Do you have a link to the exact methodology of what is counted etc.?

EDIT: Looks to me like apartments are counted. Have a look at the top of the HPI information page (https://www.reinz.co.nz/reinz-hpi): "A house price index is an analytic tool used to measure house price trends, it is expressed as a scale and can be broken down by geography or key attributes, i.e. apartments in Auckland, three bedroom houses in Invercargill."

Apartments look like they are counted in calculating the HPI.
But REINZ has different categories for sales number and apartments are separately accounted for, NOT in category "residential"
Hence, in July apartment sales were down 19% but residential sales were not

Thanks again mike. I mean that from the point that it does not suit glitzys propaganda

RBNZ technical notes "Unreasonable mortgage commitments are defined as loans that, if measured accurately, could not have
been approved if the decision to approve the loan was based strictly on banks’ serviceability tests, given
what we know about origination standards. These mortgages are not necessarily unserviceable even
if measured correctly, given that current mortgage rates are much lower than the assessment interest
rates typically used by banks."
5 Note that data presented in figures 2 and 3 are not part of the DTI publication

10
up

We bought our house in early May this year. $35k below the RV. No one competed with us on the tender.

Up until recently, everything has been selling WELL above the recent Wellington RV's too.

The growth in NZ house prices was not even, the lack of growth or decline will not be even either. Different regions inflate/deflate at a different pace and time.

Congratulations
A couple of points;
1. You bought well - looking for a well priced buy is more significant than short term fluctuations
2. You are in the housing market long term so short term movements are not significant - long term housing can expect to increase
3. For security and peace of mind, I would now look to paying down the mortgage as much as possible over the next few years to negate risk of increasing mortgage rates.
All up, like the other 72,000 FHB over the past three years, you have a good degree of security for you and your family.

10
up

Hi Printer8 we bought cash, didn't need a mortgage. Would never have taken out a big mortgage to buy with the current global economic uncertainty.

We did buy well. Wellington is a very tricky city to buy in, fault lines, tsunami risks, wind, trees, borer, slips, damp. It took me a long time to figure it all out. Did try for a long time to find a section to build on, but gave up in the end and settled for a major reno. The kind of property we wanted would have cost 1.6-1.8 mil and even then, perhaps not renovated to quite the level we'd want (hardwood double glazing, radiator gas central heating, wall, floor and ceiling insulation etc) or in a central enough location. And we also wanted a character property, so in the end we bought a beautiful, but neglected old double storey villa. The house was almost uninsurable because it still had scrim, hence why only a cash buyer could have bought it, and why we had no competition. But within a few seconds of getting the keys my hubs and I were ripping out all the scrim and we just got our first consent issued so can crack on with getting it liveable. Hoping to move in 10 weeks.

Thatz the spirit gingerninja

10
up

Houseworks, you accused me of being someone that would never buy and I vaguely recall you may also have called me a loser.

I assured you that I would, if I found the right place and when the numbers stacked up.

Well done, Gingerninja,

A nicely renovated character home in central Wellington will make for a great home and a great investment.

Good family homes in central Wellington are as scarce as rocking horse sh_t........

I have friends who have been struggling to find a good home in Wellington for well over a year. Their funding isn't a problem but they're hugely frustrated by the lack of choice.

TTP

Gingerninja in the same way that a tree requires adverse conditions to grow deep roots I hoped that you had the strength to carry out your plans which you obviously do. Some peoples plans are only dreams they would like to do but not get around to. Good on you for being just that little bit different and actually doing it

Well done Ginja, it would be good if more buyers on this site spent less time worrying where the market is heading and more time looking and finding a perfect house for them for a great price.

Gingerninja, you bought a house in Wellington with cash????
Seems very unusual that you had enough cash with the price of houses in Wellington?
Why would you save full price when you would’ve been far better off buying years ago if you had a good deposit because you would be so much better off financially!
What street in Wellington did you buy??

I don't understand how "the HPI takes many aspects of market composition into account resulting in greater accuracy". I like the idea but how is it being achieved, precisely ? Anyone ?

https://www.reinz.co.nz/reinz-hpi

In layman's terms it estimates price growth based on a benchmark price. In this case, the most recent RV data. The logic being that so long as the fundamental price determining characteristics don't change between the RV and sales transaction, the index provides an accurate estimation of true market growth that isn't biased by changes in quality/mix.

In super layman's terms, it is better than any mean or median price series. So, use the HPI always.

Thanks nymad, I understand that but referencing to the CV doesn't take into account the effect of an increased number of higher or lower end sales, which skew the average and median, (what they call market composition) and which HPI is supposed to address

Well, yes, it actually does control for the issue you mention (in large enough samples).
Because the effect is reduced down to one in which the index is based on the growth in the price of individual attributes of a property which makes the index agnostic to the change in composition. You can show this though the fixed effects estimator of which it is, effectively, based.

The core issue you should be worried about with the SPAR is if quality change occurs in the properties over time. This is where the main bias will arise, not from composition changes period on period.

Thanks nymad, so in conclusion nobody really knows how the HPI adjusts if one month has more lower end sales and one month has more high end sales. Nobody seems to be able to explain it in a simple way that makes sense

Yvil, my understanding looking at the math is that the HPI is basically an index average of overs and unders from RV. So their argument is presumably is that all property sales are included thus representing all aspects of the market.

The maths is available in the RBNZ paper which was published when REINZ was looking to them to verify their approach.

Thanks Glitzy, see my reply to nymad above, I don't see how referencing to the CV accounts for higher volumes of lower or higher end sales which skew the average and median

I haven't read the paper, and to be honest can't really be bothered, but one possibility for dealing with composition is by using % above/below RV for each sale.

Again Gisborne at front of charge with homeowners elated as median price surges 7 percent month on month, or about $ 700 a day. Why no headline from REINZ or Bindi.

Well, dead flat in Auckland using HPI. This surprised me, I thought it would be down another 1-3%.
Can't argue with the data, especially when it is robust like HPI.
I still expect drops, though.

Down 3.3% on July 2018 though.

Yeah..where I live on the Shore its a 4% HPI drop YOY.

So if you went in with minimum deposit you've lost almost half of it...if the trend line continues it will be uncomfortable.

And this with still record immigration, record low interest rates and apparently a huge housing shortage. It should be skyrocketing right?

An "affordable" townhouse development on my street is now up to it's 3rd developer and not a brick laid.

Interesting times..given up trying to make sense of it.

Ah yes, those lovely entry level affordable 2br townhouses for $800k each...

And $800k 2-bedroom apartments in the beautiful, desirable suburb of ...Albany.

Haha, no even worse...Glenfield.

And some people already started commenting that this is a sign of an up and coming increase period. Because -3.3% year on year is obviously not a sign of a weak market, but rather and upcoming bull run.

Hi Fritz

can I just say that normally I am in pretty much agreement with you. But on this occasion I will just say that perhaps you SHOULD argue with the data.
It cannot be taken on trust necessarily, that data put out is accurate.
It is often revised (to be fair, usually upwards.)
Prices, I am not really that bothered about. I am referring sales numbers.

Will be interested to see how we go as we are looking to put our house in Mt Albert on the market in September.

Not expecting CV but will be interested to see what buyer interest there is - we are in a 3 BR/1 Bathroom Bungalow - so normally these sell pretty quickly.

I wish you good luck and all the best Grant. In my experience I have mostly found buyers very picky at the best of times. Keep us informed if you are able.

.

Interesting that the Auckland HPI is only up 7% over the past 5 years

I interpreted that as up 7% per year, for the past 5 years.

what!!!

Don't worry - that's probably how Ashley Church interprets it, also.

If he ever turns negative I propose we nickname him Sackcloth and Ashes. Keeps the Church theme.

Nymad said "Don't worry - that's probably how Ashley Church interprets it, also."

How do you interpret it?

Ahh. How it should be?
The expected price growth of any given property in the Auckland region in the previous 5 years is ~7%.
Or from the index series ln(2800)-ln(2600).

How does that differ from what Milkyone posted:

"I interpreted that as up 7% per year, for the past 5 years." (or what Ashley Church would've said according to you?)

I apologize.
I was looking at the incorrect series.

It is a compound growth rate over the 5 year period, so 7% compounded is slightly over 40% increase in a 5 year period.

you might be right, I only had a quick look

Fritz, it's 7% pa compound over 5 years so about a total of 40% up in the last 5 years for Auckland HPI

Correct.
My apologies, I was looking at the incorrect series.

Ouch thats 20k after last months 30k loss median aucklanders. 50k in two months.. everyone needs to buy more..

The marked contrast between REINZ figures and Barfoots, is a little odd.
As I recall, Barfoot stats for July were down and they are biggest Agency in Auckland.
My reckoning is that Auckland residential sales are down in July, compared to 2018, not up 6.6%.
In Hibiscus Coast sales were 37% down in July and 27% for the year to date.
Apartment sales drop improved in Auckland in July but still down 19% on July 2018.
Bear in mind that REINZ quotes sales of residential sales (this does not include apartments and sections.)
They do not make this clear.
Unfortunately, section sales and apartment sales are down the most of any sale category and these are not included in their figures.

Mike thanks for that. The sales in Barfoots numbers included a large batch of completion sales in one block. This may be hiding the real reduction in apartment sales numbers.

I don't see looking at the data on Core Logic how they are coming up with rises in volumes.

If they are using the same data for their HPI then this too is out.

Yes, I find it hard to reconcile Barfoots data and REINZ.

Doesn't seem to make sense given Barfoot have such a material share of the market.

I had a look at the like for like data in property guru and I smell a something very fishy.

Sales in Ponsonby, Remuera, Herne Bay and the eastern Bays are all lower year on year in July ... So where are these extra sales actually coming from ???

They're all Mike Kirk's sales, he has done wonders in his 1 year career as a RE agent

11
up

Hi Yvil

I do not resort to rudeness to contributors, and not to you either.
You know nothing about me.
Not a good contribution. Petty

Agree. Really cheap. Especially as most of us here have pseudonyms while you have put yourself out there.

Sorry guys, I can see how my comment came across as rude. I was just making the point that Mike Kirk has been a RE agent only since 2018, not a very long time

Care to share your name and CV here so that we can make some personal attacks too?

Are you kidding? I've copped more flak than most on this site and I've been very open about what I do and how I live. I didn't think saying that a RE agent sold a lot of properties was such a bad thing

2017

Yvil, Mike and I have provided data to suggest REINZ numbers are not factually accurate. Do you have something of value to add ?

Yes, let's try and keep the debate civil and objective. Hard, sometimes, I know. I'm far from perfect too.

.... and as noted by Glitzy "factually accurate" fritz? Not just a place where any old speculation and toff will do... the more irrational the better. I have noticed that you have moderated your forecasts since when I called you out. Good on you.

Well, as you well know housey, I have been calling for more than one year a drop from peak to trough in Auckland of 5-10%, so pretty much on the money as I am sure you will agree (median peaked at 900k and troughed out at 830k so far). If you can advise how I have been off the mark then please explain.
Unlike some people here I will admit to imperfection in my opinions and projections, because of course as I am sure you will admit it's an imprecise science and even financial geniuses can't get it right most of the time.
So I have been pretty accurate but am man enough to admit that things aren't *quite* as weak as I might have thought. Let's see if things fall down from here whether you bulls can face up to that and also 'man up'. Because what I usually see from bulls is flat denial in the face of the facts, and a real lack of modesty.

A good start might be to use figures that made sense and compare like for like. Median does not compare like for like, it jumps around from month to month. HPI is more stable and you are on record saying that HPI is better. You are also on record saying you are expecting falls greater than 10 percent. That's why I feel I should not bother replying to your tosh. You and the other nancies can keep amusing yourselves like spectators in the stands distracted with your own little games but meanwhile you are missing the action on the field. That's only my opinion

.... if I were you I would be working towards getting myself in a position where I am ready to buy when the right thing comes up. You may already be in that position and just waiting. Thatz fine. At least you would be in a position to buy when you choose but it's a dangerous game and just a distraction for you trying to pick the bottom I think. Apology for the "church" sermon from the Ashley altar.....

I am surprised how well Auckland prices have held up. I've been an investor in Auckland for 36 years and quoted on here a few years ago that the correction would be 7-12%. Appears we probably have hit the bottom but time will tell. My concern is the RB are trying to make money worthless with suggestions of negative interest rates etc. If the returns are really poor on money in the Bank and mortgage rates get sub 3.5% it would suggest fuel for another boom and I don't think that's going to be good for anyone in the long term.

Where do you think all the money for a new boom would come from? More credit? Ridiculously high NZD inflation? Overseas buyers?

More credit of course

I called 5-10% correction from peak to trough, to date it's been between 3-4% so not far off the lower end of my prediction range. But I have been surprised too as I thought the correction would be closer to 10% than 5%. I think it's too early to call the bottom, let's see where we stand end of 2019.

I'm in the same boat in terms of prediction, and I agree it's too early to call. The HPI has been flat for a couple of months because the "hold outs" are waiting for spring. A decent number of them will take whatever is on offer in the next few months. As you say, let's see where we stand at the end of 2019. I expect we'll see some downward movement by the October HPI.

Agreed. Keep calm and carry on, for now.
I still expect the HPI in Auckland to be down at least a further 2-3 % by year's end. But let's see.

Good post. Keep telling yourself that fritzy

And your point?
Or are you just here to throw stones?
Happy to hear alternative arguments. Not that happy to hear cheap slurs and character attacks.
Maybe you can offer some meaningful views on HPI?

If you keep telling yourself that, then you might actually believe it. See also above comments

I agree Shoreman. I was predicting a decline but that was based on an assumption of fixed interest rates returning to 5-6%.

If we are talking about fixed interest rates in the 3%-4% range indefinitely then I think it’s very possible for prices to rise 10%-15% over the next five years. Which is sad because we’d be better off with a correction.

To put things in perspective this is still the 3rd worst sales volume for July in Akld since 2011. Between 2012 & 2016 the average amount sold in Auckland was 2511 so 1894 is still 25% lower than during that period despite the increased population and number of new homes being built

The HPI is down 3.3% yoy in Auckland but that is only on houses that have managed to sell.

What about all these houses that have been on the market for 6 mths plus that cant sell, that are overpriced junk, its only when these start clearing we will see the true change in values.

I think the OCR cuts might breathe a bit of life back into the Akld market for a little while but wouldnt be surprised if by xmas we see the volumes dropping and HPI continuing to regress

Hi GLC,

The July 2019 residential sales should be seen as part of a 3m block, which can then be divided by 3 to give ppm average.
This can be done for 2008 and 2012, any year you like.
Doing that series, the sales in Auckland are THE lowest since 2008 and are 34% below 2012.
As 2012 was last year we had pretty non-distorted sales, relatively unaffected by foreign buyers and credit impulse from those sources, we can safely say that Auckland sales are currently abysmal.
Sales in May-July 2008 residential only, were 4122, giving a pcm average of 1374.
For same period in 2012 it was 7300. Divided by 3 gives 2433
For 2019 it was 4787, divided by 3 gives 1596 pcm (16% up on 2008.)

The 6 month figures for 2008 up to July were even worse: 12,291. In 2019 was 13,554. So this year 6m rate of sales is only running 10% above 2008.
Before 2008, worse figures can only be found prior to 2002.
Only cause of this is prices. These were still within reach of income multiples for FHB in 2012 and are no longer.
We have been quoted RBNZ figures yesterday showing average income for a FHB is $116,000.
That is a TAD higher than average earnings in NZ I think???
Sales rise, or drop less, when prices fall. Otherwise not, not in 2018-19 at least.

Boom Time ?

Lol

Noticed a lot more people at open homes this last weekend. also a lot more investors. Things seem to be a little better on the ground than what they were a few months ago. That's just a general vibe and isn't back by any statistics.

how many properties are you trying to offload?

No i'm a FHB on the Northshore looking to buy in spring. Definitely more people at open homes over the last 2 weeks. But i'm unsure if its because of a lack of listings or if interest is picking up. I guess we'll know in October.

Good constructive comments RD (I wont try and type your name I will cock it up)

Yes, went to two open homes in the last 2 weekends (one by Piha and one in the North Shore). I was surprised at the large turnout from several months ago - both had lots of locals there and from what I could see no overseas investors.

Tsk tsk, "I could see no overseas investors"? Contain your xenophobia please, this is a safe space for overseas buyer deniers.

you seem to be a master of demographics.. to know who are locals and who are not??

Hands up who understands the HPI inside-out ?
I've got a rudimentary understanding, I have some questions someone more knowledgeable might be able to answer. Here's one for starters:
1. The system is not perfect, is it? Page 8 of the RBNZ analysis of 2017 lists a disadvantage of the SPAR system (on which HPI is predicated) as 'depends heavily on quality / consistency of council valuations'.

https://www.rbnz.govt.nz/-/media/ReserveBank/Files/Publications/Analytic...

There are a lot of question marks around the most recent council valuations, aren't there?

...discuss

Yeah CVs are way overused, and add a lot of distortion. Sellers with CVs which are too high really struggle, because the high CV has led them to over-price. And (many) agents are often quite lazy, their analyses seem only to be trying to gauge where the market is relative to CV (e.g. maybe 7-10% below CV now) on average, but not really taking any account of the specifics of individual properties, and the relative inaccuracies of CV.

HPI is always going to be a single number and that's about as useful as a chocolate teaspoon when gauging the market.

As folks have said in the past the only really meaningful way to interpret the market would be to look at volumes traded by value bucket split into existing houses, new builds, apartments new and existing and sections.

But while REINZ boast they have the best data in the market they hide it from the general public, presumably they are scared someone could point out some pretty scary truths about what's really going on.

No data published = no real story.

Calling out the REINZ. Publish your raw data.

Good thoughts.
So you question the value of HPI?
I guess I am too.
Goes a bit against the grain of universal love-ins for it...

In my view the REINZ HPI is meaningless number.

What I'm seeing in the market is as follows:

1. Apartment sales are really struggling, projects are being cancelled. Foreign buyers are drying up. I'm expecting more projects to be tinned.

2. Top end Auckland is falling off a cliff. Tons of new builds with limited bid. Loads of stock being pulled from the market. Old places are trading at land value where developers are low balling offers and still hoping to put up two or three units and make a turn. These places are selling 20%+ below 2017 values.

3. Huge quantities of new builds in places like Hobsonville and new buyers significantly slowing down. Small numbers are being offered in mortgagee sales. (Two in Hobsonville tomorrow at Barfoots).

4. Mortgagee sales in general are starting to tick up in volume but bids are weak. I'm guessing banks are holding back on making mortgagee sales as the market is already so weak they don't want to push the market into a tail spin.

And none of this I got from a HPI. I get it from analysing sales data and visiting a ton of places every week.

Its also why I think REINZ are selling a puppy with this latest report ~ their "analysis" isn't supported by anything I see on the street.

I'm clearly not alone. This is a quite from an article in nanny Herald today.

"House prices have now fallen every month this year when compared with the same month in 2018, and had risen only once in the past 17 months, according to Valocity director of valuation James Wilson."

So to the title of this article ... estate agents breathing a sigh of relief ? I don't think so.

Hi Glitzy,

just to get a bit technical, you may wish to look at sales this year compared to 2017 because that is crux. Reason being that 2018 was a false dawn of increase based on front running OBB. And doing that shows that 2019 is worse than 2017 in Auckland. Sales wise I mean. From my study of sales and prices since 2001 onwards, it is apparent that prices in Auckland do not fall much at all, until sales have dropped 4 years running. Which basically equates to prices will fall a lot after October 2019 because peak sales was in mid 2015.

I do not think that there is a buyer problem at top end YET. But there is a problem with what buyers who are allowed to buy are prepared to offer. Plus big negative is that vendors above $1.4m are not v keen on going OTM because cannot get what they want. So sellers drying up. I agree with all rest of what you say above. Notable that when doing detailed figure stuff, the "likes" dry up.

By the by, what is in REINZ report is not what I see in the numbers and I fail to see why.
The trend in a time series shows what you need to see, which is that Central Auckland sales have stopped dropping, whereas the sales continue to drop further out and Christchurch and Wellington are now catching same disease.
Auckland sales are 34% below what they were in 2012 in last 3m and only 16% above 2008.

Interesting times, eh. I wonder what the market is now for 3-bdr $1.2 million+ non-standalone townhouses (as in Hobsonville) these days.