Barfoot & Thompson finishes winter with August sales at lowest level in nine years

Property

Barfoot & Thompson's sales levels were grim in August but selling prices remained steady

3rd Sep 19, 10:51am by Greg Ninness

Auckland's largest real estate agency had its worst August for sales in the last nine years, although selling prices remained reasonably steady.

Barfoot & Thompson sold 746 residential properties in August, down from 879 in July (-15%) and 795 in August last year (-6%).

It was the lowest number of properties the agency has sold in the month of August since 2010.

However the low number of sales does not appear to have affected prices.

The agency's average selling price was $930,090 in August, up from $919,648 in July and almost unchanged from $928,266 in August last year.

The median selling price was $830,000, up from $800,500 in July but down from $840,000 in August last year.

Both the median and average selling prices were well within recent price bands, suggesting there continues to be little overall price movement in the market.

The agency also experienced a dearth of new listings, with 1052 new properties coming on to its books in August, down 21% compared to August last year and the lowest number of new listing received by the agency in the month of August for more than 10 Years.

Total stock numbers were also subdued, with Barfoots having 3818 properties available for sale at the end of August, little changed from the 3864 at the end of July but down 5% compared to August last year.

Barfoot & Thompson Managing Director Peter Thompson said conditions were favourable for people considering listing their property.

"Given the near record prices being achieved, and market choice being at its lowest for nearly two years, the incentive to list in the current market has to be strong," he said.

"Sales are being achieved across all price segments of the market, with a third of August sales being for under $750,000, a third between $750,000 and $1 million, and the final third above $1 million.

"Spring just may be the trigger to revive the market," he said.

The comment stream on this story is now closed.

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148 Comments

by Pragmatist | 3rd Sep 19, 10:53am 1567464809

"Spring just may be the trigger to revive the market," he said (with a hope and a prayer)..

by J.C. | 3rd Sep 19, 11:03am 1567465424

People like to think of property markets as somehow following patterns of nature (in this case, the four seasons). While it has some merit, it is really just appealing to emotion. It's really no different to the 7-10 year theory (which I think is a pattern that is completely misunderstood and appeals to people's need to believe in something, much like religion).

by BadRobot | 3rd Sep 19, 12:20pm 1567470020

People wanting certainty in an uncertain world.....

by Shoreman | 3rd Sep 19, 1:24pm 1567473876

JC - Patterns are a hard thing to believe in but history reveals all.
I was introduced to patterns 40 years ago and they have served me well.
Auckland has proven to be very regular on the 9 years cycle +/- 6 months, up cycles starting in the following years 1984, 1993, 2002, 2011, 2020 ?
The market peaking approx 5 years later 1989, 1998, 2007, 2016. I think people can get to analytical needing reason that sometimes is difficult to explain, stepping back and looking at cycles without being analytical can be of great benefit.
I have trusted these enough to make sales and purchases which has made me wealthy.
In this down cycle I have purchased 2 properties.
The cycle suggests 2020 as the start of the next upswing I suspect it will be summer 2020/2021 but time will reveal all.
Happy investing !

by cmat | 3rd Sep 19, 1:38pm 1567474693

The 7-9-10-whatever year pattern is totally, *totally* daft.

It's the belief that the NZ Property market is a metronome that exists in a parallel universe, completely removed from global macroeconomic factors that are ever changing and never the same from one cycle to the next.

Oh no, Auckland property cycles/peaks have nothing to do with what's happening out in the big-wide-world.
It's the 7-9-10-whatever year pattern don-cha-kno.

by GGP | 3rd Sep 19, 2:20pm 1567477213

Nah. If something happens 4 times in a row, that's it, it's locked for eternity. Why would any external factors matter?

by Shoreman | 3rd Sep 19, 2:48pm 1567478922

There are always external and internal factors occuring, over the last 40 years , Dotcom bust, GFC, swine flu, USSR going broke, Asian meltdown, Iraq, twin towers, CHCH earthquakes, finance company failures, Brexit, trade squabbles to name a few.
Of course they matter but life goes on and cycles go on to.
I do not mind/care who takes notice of cycles but for no other reason than interest in all things financial they are certainly worth keeping an eye on.

by GGP | 3rd Sep 19, 3:23pm 1567481032

If I flip a coin once every 10 years, and it lands heads every time, would you gamble millions of dollars on me getting a heads the next time I flip it, 10 years later?

If the answer is no, you should think carefully about what the distinction is.

by scarfie | 3rd Sep 19, 7:06pm 1567494373

Perhaps you have never heard of a credit fueled asset bubble. During your pattern period there have been other trends in place, one of them a downtrend in interest rates. Ever asked yourself what happens when they get to zero? They will.

by Laminar | 4th Sep 19, 1:49pm 1567561764

Given they are not yet at zero you do appear to be confirming the cycle will continue for now.

by J.C. | 3rd Sep 19, 2:00pm 1567476055

JC - Patterns are a hard thing to believe in but history reveals all.

I'm a big believer in patterns too. That's completely different to what I was suggesting. The only questions I have for you are:

1. Is your "cycle" analysis only applicable to Auckland or is it universal?

2. If I applied your cycle analysis to say a market like Perth, would that be reasonable? Why? Let's consider that Perth is not fitting within the parameters of the 7-10 year theory.

by Shoreman | 3rd Sep 19, 2:37pm 1567478225

I have only lived through Aucklands pattern so cannot comment anywhere else, and those who say it's daft are denying the reality of what has happened over the last 40 years.
Will it happen again ? well we will all find out but I have put my money on it continuing as I have for 40 years, it's so simple I think it is easily dismissed/rubbished but it is a hell of an easy way to build a fortune !
See graph below going back to 1992, the highs and lows are easily indentified - 9 years cycle +/- 6 months, up cycles starting in the following years 1984, 1993, 2002, 2011, 2020 ?
The market peaking approx 5 years later 1989, 1998, 2007, 2016.
https://www.google.co.nz/search?biw=1093&bih=524&tbm=isch&sa=1&ei=-LZtX…:

by Yvil | 3rd Sep 19, 3:44pm 1567482242

Shoreman, your comments are easily the smartest comments today as evidenced once again by the lack of thumbs up

by RickStrauss | 3rd Sep 19, 4:55pm 1567486532

Are such cycles absent from countries that have had severe property crashes, you reckon Yvil?

And do such cycles mean that New Zealand is exempt from the possibility of a "rare event" (Taleb) occurring?

Apart from that its remarkable the coincidence of some commentators (not pointing to you) here on Interest.co.nz who see Auckland's historical property cycles as an inviolable indicator of what the future holds, yet disparage ever improving climate modeling as junk science and no realistic indicator of what is to come.

by J.C. | 3rd Sep 19, 3:52pm 1567482752

I have only lived through Aucklands pattern so cannot comment anywhere else, and those who say it's daft are denying the reality of what has happened over the last 40 years.

OK, so it's based on what you've experienced and you cannot explain why the cycle exists in Auckland nor do you know if the cycle is part of some bigger dynamic evident in other cities.

Let's keep it simple. Can the cycle be explained over 50, 80, 100 years? If not, do you think that the cycle may not be what you think it might be? And of course, if the cycle is some kind of natural phenomenon, then it should extend into the future? What if it doesn't? Could the market remain flat for the next 40 years?

by Shoreman | 3rd Sep 19, 6:03pm 1567490587

No I cannot explain the cycle only share my observations.
The fact that we are a growing country would suggest that the likelyhood of the market remaining flat for 40 years is remote, unless our population was to dramatically drop and/or building costs were to dramatically reduce both unlikely.
Japan's experience show's it can happen, their economic meltdown ( in the 80's ) through over valued assets that went to unbelieveable heights caused by currency controls that stopped money going out of the country.
That money from huge economic success had to find a home into shares and property. ( sounds abit like China now ?? )
Japan has never recovered including their property market, add to that their ageing population and lack of immigration ( apparently they have recently started an immigration policy ) their population is falling, currently 2.5 million empty houses across Japan, and expectation of their population dropping 40 million over the next 50 years.

by mikekirk29 | 3rd Sep 19, 4:18pm 1567484339

What happened 1984 to 1994? To price and sales in Auckland esp? Or do we just ignore that as a lost decade?

by Shoreman | 3rd Sep 19, 5:41pm 1567489275

No we don't ignore 1984 - 1994 I couldn't find a 50 year graph on the net, that cycle started in 1984.
I bought my first property in AKL in 1983 and the first cycle I experienced started in 1984.
If I look over numbers from my families properties I can trace the pattern back to 1957, not as clear but still a clear trend.
I think the variation looking forward is probably the % increase will not be as great as the past but the timing will remain.
Humans are shocking at remembering events and joining the dots, the price increases in say the last 2 cycles are well known but most people do not know previous history.
Between 1970 and 1974 as an example house prices doubled, as a kid I couldn't believe it but seeing the same happen as an adult one has to take notice, or miss out on easy money.
I don't make the rules or create cycles but being aware and opened minded can certainly help grown personal wealth.
Always always there are DGM's predicting DOOM, well at some stage they will be right, there will be an event that could cause total collapse of the housing market and our economy, foot and mouth, invasion, massive tide wave ?
But if we live in the fear of 'what if' as many do on here we achieve nothing except envy for those who made decisions and got on with their lives and ignored the DGM's !

by J.C. | 3rd Sep 19, 5:58pm 1567490281

But if we live in the fear of 'what if' as many do on here we achieve nothing except envy for those who made decisions and got on with their lives and ignored the DGM's !

Right. Robert Shiller was portrayed as a DGM. He did win a Nobel Prize of course and it was actually damaging that people didn't actually listen and learn from what he was saying.

Describing critical thought as DGM just because it doesn't fit in with mainstream beliefs doesn't seem to be a smart move, particularly for people who would be better off not participating in bubbles.

by Shoreman | 3rd Sep 19, 6:20pm 1567491656

JC - I guess it comes down to whether one believe's the market is a bubble or not ?
It's been a bubble for a number of decades but has be exceptionally resilient in the face of adversity .
If one believe's as most DGM's do that a collapse is about to happen, then one will not buy into the market a personal choice.
If one believe's that the market is just that a market then one would be much more likely to buy into the market.
I guess my main point is that at any point in time there are always reasons not to buy ( internal and external factors ) and plenty of people preaching doom.
My experience has been as a generalisation the people who preach doom have already missed the boat and are envious of those who have ignored the doom predictions and gone on to have very comfortable financially secure lives.

by J.C. | 3rd Sep 19, 8:45pm 1567500304

I would say an even better approach is to accept that if you believe that asset prices will behave like they have in the past, you'll possibly be wrong.

by CN | 3rd Sep 19, 9:07pm 1567501635

Cause of the housing and credit bubble in US

From the May 2010 FCIC interview with Warren Buffett, a reknowned investor and Chairman and CEO of Berkshire Hathaway

MR. BONDI: As I mentioned at the outset, we’re investigating the causes of the financial crisis. And I would like to get your opinion as to whether credit ratings and their apparent failure to predict accurately credit quality of structured finance products, like residential mortgage-backed securities and collateralized debt obligations, did that failure, or apparent failure, cause or contribute to the financial crisis?

MR. BUFFETT: It didn’t cause it, but there were a vast number of things that contributed to it. The basic cause, you know, embedded in psychology –- partly in psychology and partly in reality in a growing and finally pervasive belief that house prices couldn’t go down and everyone succumbed –- virtually everybody succumbed to that. But that’s –- the only way you get a bubble is when basically a very high percentage of the population buys into some originally sound premise and –- it’s quite interesting how that develops –- originally sound premise that becomes distorted as time passes and people forget the original sound premise and start focusing solely on the price action.

So every -– the media, investors, the mortgage bankers, the American public, me, my neighbor, rating agencies, Congress –- you name it -– people overwhelmingly came to believe that house prices could not fall significantly. And since it was biggest asset class in the country and it was the easiest class to borrow against, it created probably the biggest bubble in our history

by CN | 4th Sep 19, 2:43pm 1567565008

Out of Australia, but likely to be a similar belief in New Zealand.

Most property investors believe past performance is a guide to future
Over half of Australian property investors are breaking the golden rule of investing – they use past performance as a guide for future success.

A majority 56 per cent of property investors said “Australian house prices have always gone up in the past” when asked for the main reason for their confidence, according to a 1500-person survey carried out by ME Bank in November.

Meanwhile 11 per cent said “so many other people are buying investment properties it must be safe”, while just 34 per cent were mainly confident thanks to “advice or analysis”.

https://www.domain.com.au/money-markets/most-property-investors-believe…

by cmat | 4th Sep 19, 11:09am 1567552154

"that cycle started in 1984"

What a coincidence.
What else happened/changed in 1984 and has had an over-arching influence ever since?

by Chairman Moa | 3rd Sep 19, 10:55am 1567464920

3rd day of Spring now, get out of bed and buy some more houses!

by BadRobot | 3rd Sep 19, 12:21pm 1567470093

Not it's not - spring doesn't start for another three weeks....

by Gummy Bear Hero | 3rd Sep 19, 12:26pm 1567470418

.. the daffs are flowering.. the lambs are frolicking ..

And Gummies thinking a little mint sauce and some roast taties are all that's needed to complete this scene . . SPRING ! ... YA-freaking-hooie ...

by Gummy Bear Hero | 3rd Sep 19, 12:22pm 1567470145

... reckon we should start a crowd funding page to assist those agents of B & T who now need to trade down to last years model of Lambourgini ?

by tothepoint - d… | 3rd Sep 19, 5:15pm 1567487712

Hi Chairman,

Good suggestion........

Problem is there's a shortage of good, well-located houses on the market in Auckland.

Vendors aren't keen to sell in the premium locations - such as Ponsonby. The same in other cities, especially Wellington.

TTP

by cmat | 4th Sep 19, 11:17am 1567552677

They're not keen to sell at a certain price.
But many are getting a reality check.

In the past couple of weeks I've noticed a number of listings in premium suburbs that are repeat listings.
i.e. They have been listed in the past couple of years but failed to sell (according to Property Guru).
These properties are coming back to market with far lower price tags - so the vendor was too greedy the first time but they still want/need to move on at some stage...

The question is, how many times will these vendors do the limbo before they finally get the message and come to Jesus?

by J.C. | 3rd Sep 19, 10:58am 1567465128

Bit of basic statistics education when determining composition of sales. Use both the median and the average to understand market skew and the difference between two points in time. Don't just choose the neasure that supports what you want to see (or what the media and vested interests want you to see).

by Cowpat | 3rd Sep 19, 11:02am 1567465324

Third lowest August sales in 20 years , only higher than 2008 and 2010, unadjusted.

August y/y total value sales 2016 -10.868 billion
2017 - 9.148 billion
2018- 8.72 billion and
2019- 8.533 billion

by fat pat | 4th Sep 19, 10:55am 1567551305

and volumes are a leading indicator of prices

by ex socialist | 3rd Sep 19, 11:05am 1567465558

What is interesting is that since January B&T sales have been about 10% below the same period the year before.
It really means that there are 700 less houses that sold in the eight month period. - but that fall off from the previous year appears to becoming more pronounced.

by Boatman | 3rd Sep 19, 11:08am 1567465705

August 2010 was the height of the GFC ............

by CJ099 | 3rd Sep 19, 11:29am 1567466968

Yeah and Foreign Buyers from Asia managed to fill the market since then until they had the plug pulled on them in 2017 mostly by their own Government, wow that had quite an effect.
Better Dwelling article: China’s PBoC Announces An Army of Over 400,000 To Prevent Money Laundering
https://betterdwelling.com/chinas-pboc-announces-an-army-of-over-400000…

by RickStrauss | 3rd Sep 19, 4:56pm 1567486595

More an Atlantic Financial Crisis than a global one, in fairness. Our banks weren't by and large caught up in t.

by CN | 3rd Sep 19, 5:38pm 1567489116

The NZ Government provided guarantees on bank deposits and for bank issued bonds. If the NZ Government hadn't provided these and the banks had liquidity issues, the bank credit environment in NZ would likely had contracted, and there would have been an adverse impact on the NZ economy.

If you want to know more, read former RBNZ Governor Bollard's book "Crisis".

by RickStrauss | 3rd Sep 19, 5:45pm 1567489515

Yeah, on the other hand NZ banks simply weren't caught up subprime and CDS instruments etc. so were less likely to get into those situations where the government guarantees would have been called upon.

by Dgm | 3rd Sep 19, 11:12am 1567465979

it will be great time to be car dealer of mid priced cars.. there will be heaps of trade-in's of the luxury ones for the more affordable ones..

saw an REA driving a suzuki swift the other day.. something unthinkable during the boom of the property cycle..

by Henry_Tull | 3rd Sep 19, 12:16pm 1567469807

So you're not financed a range rover.
The complaint is can't afford to sell!
- even with the engine replaced..

by bw | 3rd Sep 19, 11:22am 1567466522

I hope Doctor Yvil remembers..."Better 3 hours too early, than a minute too late"
I recall a R/E agent telling me in Queenstown years back when I, like many before and after me, arrived doey-eyed and looking to buy a place in 'paradise' :
"I can sell you a place this afternoon," he said, " but it might take you 2 years to sell it".
Buying is the easy bit in an illiquid asset market; selling ....not so...and taking the opportunity to do so into an up-market, is not as easy as it seems. There's always ' one more push up coming' until there isn't....

by Dgm | 3rd Sep 19, 11:43am 1567467835

"I hope Doctor Yvil remembers."...

You're boosting an already BLOATED EGO..

by Yvil | 3rd Sep 19, 12:04pm 1567469058

I remember bw, time will tell… I think the market is bottoming out now, unlike most here, I think there'll be a small upswing in both volumes and prices in late 2019 early 2020… time will tell, let's revisit this prediction April 2020

by BadRobot | 3rd Sep 19, 12:27pm 1567470426

Define small - otherwise your prediction is almost pointless and useless.....

by Fritz | 3rd Sep 19, 12:55pm 1567472128

I have 2 scenarios from here to April 2020 for Auckland:
- if no LVR changes, somewhere between -2% and + 2%
- if LVR changes, +2-3%

by Yvil | 3rd Sep 19, 1:09pm 1567472999

Price increase of about +5% compared to same month of previous year, a bit less if no changes to LVR. (effect of changes in LVR will only be known in March 2020 for Feb data as LVR decision in November is too close to X-mas break)

by Rubb3rduck3y | 3rd Sep 19, 11:21am 1567466510

It's not really rocket science. Ageing population will eventually want to retire out of auckland expecting FHB to take up 600-700k+ mortgages. Only 5-10% of people aged 20-30 could afford repayments on a mortgage that big. The only way prices won't fall is if you lower LVR limits or get interest rates as close to zero as possible or open us for Chinese investment again.

by CJ099 | 3rd Sep 19, 11:35am 1567467315

Umm that last point "open us for Chinese investment again". Sadly for the Real Estate Agents that false economy of relying on foreign buyers (money launders) has gone and is not likely to return in the numbers they did any time soon. Which is a good thing too or haven't you worked out that creating a unsustainable false economy is not a good idea. Better to let the market re-balance to wage earner levels, it's as simple as that if you want a healthy economy.

by theglc | 3rd Sep 19, 12:46pm 1567471591

The National Party disagrees with you

National housing spokeswoman Judith Collins says if she becomes Housing Minister, she'll do her best to reverse the policy.

https://www.newshub.co.nz/home/politics/2018/06/govt-s-foreign-buyer-ba…

by mogador | 3rd Sep 19, 1:11pm 1567473092

She'll need to use her contacts to get the PRC to reverse their clampdown too.

by realterms | 3rd Sep 19, 1:31pm 1567474286

Fortunately, I'm pretty sure I know how likely they are to do that...

by Milkyone | 3rd Sep 19, 2:24pm 1567477456

I asked my local Nat MP, Simon O'Conner to clarify the wording in the recent economic discussion doc the Nats put out, around removing the ban on foreign buyers. This was very recently. He said they have no plans at this stage.

So it is possible they would do it. I kind of doubt it though. Does feel like one of those things that is so "obviously" wrong (allowing foreigners who do not live in NZ to buy existing residential property for investment purposes), that no party could ever reverse it.

by RickStrauss | 3rd Sep 19, 4:58pm 1567486708

I would imagine they would try to avoid making a clear statement of it at election time, then whip the reversal out if they got into power.

Young Kiwis will need to be informed of this possibility. National looks too willing to sell them out for a quick buck unless they conclusively state they will not reverse the foreign buyer ban.

by Averageman | 4th Sep 19, 5:50am 1567533014

Yep my local Nat mp also indicated their plan is more immigration and opening foreign ownership again. They absolutely dont realise thats the primary reason they lost, and will again.

by Nzdan | 4th Sep 19, 6:56am 1567536995

Just do what they've done before, emphatically rule out any chance of the FBB being repealed....get elected.....repeal it. Worked with GST.

by RickStrauss | 4th Sep 19, 9:24am 1567545840

Really callous selling out of young New Zealanders, that would be.

by realterms | 3rd Sep 19, 11:39am 1567467550

LVR limits won't change affordability of repayments. Lower interest rates won't do much, either.

by Yvil | 3rd Sep 19, 12:06pm 1567469219

Generally with interest rates at record low, repayments aren't the issue, the deposit is and if LVR'S get lowered in November, that will surely help with the deposit

by realterms | 3rd Sep 19, 12:14pm 1567469674

Yes. But the point above was re: affordability of repayments.

by theglc | 3rd Sep 19, 12:47pm 1567471677

Yvil, dont forget the stress testing the banks are being stubbornly compliant with

by realterms | 3rd Sep 19, 1:32pm 1567474330

It's almost as if they think there might be stress on the way!

by Pragmatist | 3rd Sep 19, 12:14pm 1567469684

So true. an $800K mortgage without any interest at all will cost you ~$770/week to pay off in 20 years. That repayment (+rates, insurance, etc) will still be higher than the rent on most properties for many years yet.

by HeavyG | 3rd Sep 19, 3:31pm 1567481519

Why would you use a 20 year principal repayment calculation?

An interest only mortgage on $800k is $515 a week at HSBC's current rates. Never mind paying the principal, if the RBNZ does its job 40% of that $800k will have been inflationed away in 20 years. House prices in the future will determine whether you make a gain or loss on exit.

by realterms | 3rd Sep 19, 3:40pm 1567482034

Doing an interest-only calculation is also misleading. Most can't get finance on those terms, even if they wanted to. How about just a straight 30-year P+I?

by GGP | 3rd Sep 19, 3:47pm 1567482424

If you can get, say, 3.6% interest, which is pretty reasonable right now, it should cost you about $850 a week for a $800k mortgage like that.

So only $44k a year. Perfectly affordable!

by CN | 3rd Sep 19, 4:10pm 1567483805

"So only $44k a year. Perfectly affordable!"

For an owner occupier, this depends on their household income.

The median gross household income in Auckland is about $95,000. The $44,000 represents 46% of median gross household income at current interest rate levels. It would be over 50% of after tax income, and this excludes other costs of ownership such as insurance, rates, and maintenance

Note that at 46% of gross household income to service the debt, this leaves less financial flexibility to deal with unexpected changes in circumstances - such as loss of job, illness, or relationship break up, or interest rate increases (which seems a low probability in this current environment).

For sake of context, banks have previously used 25%, now they consider 33% of household income for mortgage payments to be affordable.

Have heard that 43% is the maximum level for all credit payments (mortgage, credit cards, personal loans, student debt, etc.) before there are increases in interest rates due to high debt service to income and the increased risk of the borrower.

by GGP | 3rd Sep 19, 4:21pm 1567484462

Yeah, my comment wasn't entirely serious.

by Pragmatist | 3rd Sep 19, 3:53pm 1567482809

Because thats what I would like to have a mortgage paid off in. No point dragging it out to 30 years, you just pay more interest to the bank for not much reduction in payments.

by Dogboy | 3rd Sep 19, 11:39am 1567467590

Spring is in the air, nek minute

by mikekirk29 | 3rd Sep 19, 11:52am 1567468335

Greg, sorry but you have it wrong way round: "sales does not appear to have affected prices"

It is precisely BECAUSE prices not falling enough or at all, that sales are not improving.

So much for the anecdotal "spring bounce"

by Yvil | 3rd Sep 19, 12:10pm 1567469418

That's very disingenuous, for months you have been preaching that low volumes will lead to low prices

by mikekirk29 | 3rd Sep 19, 12:23pm 1567470218

Yes, eventually. Not, as Greg implies, in ONE month. The two variables do not interact in one month

by fat pat | 4th Sep 19, 5:40pm 1567575600

Chatting with a friend in Cork Ireland a few months ago. She purchased a house last year for 180K (euros). At it's peak it was worth around 500K. The owners had been trying to sell for several years and had "bottom line" of 220K. My friend had a nonchalant sort of take it or leave it attitude going into the sale. In retrospect she squeezed them like a lemon.

by mikekirk29 | 3rd Sep 19, 11:56am 1567468566

We also have to bear in mind, when examining how bad sales are, just how many MORE houses Auckland now has in its stock? So, sales in bracket 500-750k in Auckland, residential only are 48% lower May-July 2019 than in same 3m of 2015, with a lot more stock. Prices still too high, end of

by mikekirk29 | 3rd Sep 19, 11:57am 1567468643

"market choice being lowest for 2 years" - really?
Is that what commentariat keep referring to as a "buyers market?

by cmat | 3rd Sep 19, 2:01pm 1567476102

Whoever (actually) writes these B&T & REINZ updates are expert-level at channelling Orwell.

"Choice" is a euphemism for increasing supply that isn't moving.
Stock, or "choice", might be the lowest in 2 years... but 3,818 in stock is still ~30% higher than August 2015 (2,957).
And in August 2015 they had:
- More than *twice* as many new listings (2,123 in Aug-15 vs 1,052 in Aug-19); and
- 76% more sales (1,314 in Aug-15 vs 746 in Aug-19).

To borrow from Lange - "I can smell the desperation on your breath".

by J.C. | 3rd Sep 19, 12:02pm 1567468920

If you look at Granny Herald's canvas, "near record prices are being achieved on sales of Auckland homes but new listings are lacking."

Comparing both reports and if I wanted to do sentiment analysis among the masses, Granny would get more positive metrics than interest.co.nz

by CourtJester | 3rd Sep 19, 2:46pm 1567478785

"Near record prices" is an interesting wording that basically means "prices lower than two years ago". Like a glass 1% full.

by Yvil | 3rd Sep 19, 3:47pm 1567482468

Indeed because the house prices have dropped 99% since 2 years ago

by RickStrauss | 4th Sep 19, 9:25am 1567545910

Gee, they're really fostering trust in traditional media, the Granny Herald.

by mikekirk29 | 3rd Sep 19, 12:22pm 1567470122

Central Auckland August 2015, BT report says 102 sales.
2019, August = 14 sales
Catastrophic
Also, look at what they are selling for - down about 25% on last August.
Canary in coal mine.
Apartment sales in the 500-750k range, are 53% lower (REINZ) than they were in 2018, in last 3m.

Meaning: supply far exceeding demand. Meaning: prices under pressure as developers being told lender wants more interest to rollover the debt.

by THE MAN 2 | 3rd Sep 19, 12:28pm 1567470533

MikeKirk, you are not a real estate agent at all!
What do you actually do apart from spending too much time on Interest.co.

by Gummy Bear Hero | 3rd Sep 19, 12:37pm 1567471075

I enjoy reading mikekirk29's posts ... the more time he's able to spend here the better , as far as I'm concerned ...

by mikekirk29 | 3rd Sep 19, 1:12pm 1567473125

Thank you kind sir

by Yvil | 3rd Sep 19, 1:12pm 1567473174

because….?

by Dgm | 3rd Sep 19, 1:39pm 1567474765

he adds valuable content !!!

by Gummy Bear Hero | 3rd Sep 19, 2:48pm 1567478909

... in truth ... there's only one regular contributor who's posts make my brain cells power down , and have me reaching for the tinfoil hat ...

But I'm not telling who ... it's a secret ...

by Dgm | 3rd Sep 19, 2:52pm 1567479132

dont be shy, could be me...

by Gummy Bear Hero | 3rd Sep 19, 3:02pm 1567479750

... I'll happily read the weird , the wacky , and the wonderful ... even " The Man 2 "

You're safe Mr Dgm ... you're not the kiwi who power downs my belief in life , the universe & everything ...

by Dgm | 3rd Sep 19, 3:11pm 1567480288

lol... i know i can be a bit of a stretch at times.. :)

by Gummy Bear Hero | 3rd Sep 19, 3:44pm 1567482299

. . after " you know who's " posts , I have to watch 14 hours of YouTube cute pussy cat videos to calm my nerves ...

" there is no peak atoms , Gummy . . There will not be a knock at the door : Jack booted Greens will not be there with cattle prods and baseball bats , forcibly reclaiming your body atoms for recycling and renewal .. "

by Yvil | 3rd Sep 19, 3:51pm 1567482681

I enjoy reading your posts Gummy, brightens my day, unlike most others

by Fritz | 3rd Sep 19, 4:51pm 1567486304

I think there are clues in Gummy's words......

by realterms | 3rd Sep 19, 12:40pm 1567471205

I should think many agents would have quite a lot of spare time, right about now. We can (and do) argue about the direction of prices all day long, but I think (almost) all would agree that both listings and sales are way down!

by Chairman Moa | 3rd Sep 19, 12:41pm 1567471305

TM2, what are you doing here then? Aren't you supposed to be out there looking for properties to buy below market value and rent it out above the rent average for the area?
Pot kettle black!

by THE MAN 2 | 3rd Sep 19, 4:49pm 1567486183

Chairman, I do have a lot of down time, especially when everything is uptodate.
Yes there are repairs to be done off and on but I also have very good subbies.
I don’t tend to spend very much time at all looking, agents tend to contact me!
Off to Europe in a couple of days for a few weeks so will be able to continue to offer invaluable advice to the ones that are open minded, although we all know that there are far more on Interest.co that are not able to take up the advice.

by CourtJester | 3rd Sep 19, 2:48pm 1567478922

"Not able" is not the same as "not willing". I'm in the latter group, like many others.

by Chairman Moa | 3rd Sep 19, 3:24pm 1567481081

Don't forget to claim your trip as expenses to look for investment opportunities.. IRD will be thrilled!

by Mrs The Point | 3rd Sep 19, 5:43pm 1567489418

By Europe he means "Nelson". The NZ Med don't you know.

by Pragmatist | 3rd Sep 19, 3:59pm 1567483148

Can you please not mention your stubbies again.. I was halfway through a late lunch after a meeting with a clients Project Manager, and the mental image of The MAN wearing stubbies popped into mind..

by Chairman Moa | 3rd Sep 19, 4:29pm 1567484990

He sounds like a sugar daddy in hot stubbies.. hairy chest, gold medallion, gold teeth and Jap imported BMW.. raving on about how many houses he owned.

by Mrs The Point | 3rd Sep 19, 5:42pm 1567489345

You've painted an horrific picture there. How will I sleep tonight?

https://www.youtube.com/watch?v=u09CfYmoYz0

by RickStrauss | 3rd Sep 19, 5:01pm 1567486895

That's the problem with Stubbies. Things are importunately prone to pop out.

by mikekirk29 | 3rd Sep 19, 1:10pm 1567473045

Evidently being better informed than you. Answer your own question

by CJ099 | 3rd Sep 19, 4:06pm 1567483577

@TM2: Not all REA's are smash and grab, some actually have a backbone like MikeKirk and understand how to maintain a property market without destroying it in the short term. TM2 do you realize that potential buyers will just exit and or circumvent the traditional property market and build their own homes if the remain priced out. Here, as an example apparently the TinyHouse movement is very popular in Christchurch, since most are earthquake resistance and can be moved easily. Best of all they're affordable starter homes at under a $100k https://www.livingbiginatinyhouse.com/small-passive-house/

by THE MAN 2 | 3rd Sep 19, 4:52pm 1567486355

Bugger all tiny houses in Christchurch.
You have to have somewhere to put them
MikeKirk talks nothing like any agent I have ever known!
If he had that attitude in any real estate office he would be kicked out!

by CJ099 | 3rd Sep 19, 5:39pm 1567489172

LOL :) Ahh.. TM2, go on watch the link, you missed the best bit about the Tiny Houses (Which are mobile, earthquake resistant and fully insulated) can take advantage of living in the Red Zones so essentially live on free land. See who said that Millennial's weren't resourceful, Must be all those avocados on toast.

by mikekirk29 | 3rd Sep 19, 9:11pm 1567501879

Attitude?

by Market Interest | 4th Sep 19, 10:43am 1567550604

Agreed, I'd rather have an REA that understands the market and tailors expectations and strategy towards selling in that market.

And if you're not willing to sell for the going rate, far better never to list in the first place, than to list at high expectations, spend a bunch on marketing, and have soul destroying debrief sessions once a week after open homes and a failed auction.

by theglc | 3rd Sep 19, 12:55pm 1567472105

Wasnt the OCR cut supposed to boost August sales in Akld

REINZ says Akld asking prices down
B&T sales super low
B&T auctions have higher % clearance but still less volume selling under the hammer than last year

Time for another OCR cut maybe....

by Yvil | 3rd Sep 19, 1:18pm 1567473523

How could the OCR cut, which happened in August, boost August sales? Just think for a moment.
OCR cut happens
2-3 weeks later banks start passing on lower rates
Joe Bloggs decides he will buy a house and starts looking for a house, after 1 month he puts an offer to buy a house in which is accepted
He settles the month after
There is at least a 3months deal between the OCR cut and the effects (if any) of resulting sales

by bw | 3rd Sep 19, 1:27pm 1567474054

Would you wait for that long if you thought your scenario was about to unfold? I wouldn't! I'd be in there on Day One after the OCR cut. I wouldn't hang about waiting to compete with the laggards. (NB: Anyone whose a likely buyer has an ongoing interest in what's out there. They don't 'start looking' the day after an OCR cut; they've been doing it for some time?)
So, yes, the OCR cut should have spurred August's figures if the sentiment was there - but it isn't....

by Yvil | 3rd Sep 19, 4:15pm 1567484128

bw your post shows you have probably never bought a house. B&T's reports are on SOLD properties. Do you not understand that people do not look for a house, get finance organised, put an offer on a house or wait for the date of an auction then settle a few weeks later when the house is paid for, all within a month???

by Voiceofreason | 3rd Sep 19, 1:07pm 1567472868

Can we at least admit that in NZ we are afraid of this happening, and it really could: Prices in Perth are now 20 per cent less than Perth’s peak in June 2014, five years ago. Given the very inflated prices we've had in recent years, and still have, I think the probability is quite high. Let's reconvene back here in 5 years or so...
https://thewest.com.au/business/property/perth-house-prices-fall-yet-ag…

by Market Interest | 3rd Sep 19, 1:48pm 1567475294

"The median Perth house price is now $437,558, a fall of 8.8 per cent in the past 12 months."

Large livable (well, save December/Jan unless you have bitching aircon) city with a median house price under $500k. That's starting to look quite attractive.

by CourtJester | 3rd Sep 19, 2:52pm 1567479136

Clearly you haven't been to Hamilton or Palmy North yet!

by Fritz | 3rd Sep 19, 1:07pm 1567472852

Tomorrow's Kiwibuild 'reset' *could* potentially be meaningful for the housing market. But it probably won't. If they announced a credible government led house building programme that delivered 2000 KB homes per year in Akld then it could really affect the market. If I knew I had a reasonable chance of buying a 3 bedroom townhouse for circa 650k, then I would put aside any thoughts of buying a 2 bedroom townhouse on the open market for 700k.
The problem.of course is the govt have zero credibility with KB so we can't have any confidence that they will deliver meaning fully tomorrow...
Sad, but true

by realterms | 3rd Sep 19, 1:21pm 1567473676

Yeah, nah. Could, but won't (as you say).

by Yvil | 3rd Sep 19, 1:25pm 1567473942

But why would you be able to buy a 3 bedroom townhouse in Auckland for $650k? That's the whole point, it can't be done economically unless it's subsidised or in a location where no one wants live. That is also why I insist that, whiles houses are unaffordable vs incomes, they are not unaffordable per se.
THE DAY YOU CAN BUY A PIECE OF LAND AND BUILD A HOME ON IT FOR LESS THAN AN EQUIVALENT EXISTING HOUSE, THEN I WILL AGREE THAT THE EXISTING HOUSE IS OVERPRICED AND THAT PRICES ARE GOING TO COME DOWN

by bw | 3rd Sep 19, 1:32pm 1567474352

So...existing house prices to fall then? Does that satisfy your equation? Because buried in the price of an existing house - is the price of the land.

by Carlos67 | 3rd Sep 19, 1:57pm 1567475870

Existing house prices will not come down unless the cost of new builds comes down, why would they ? People sell their house for every last cent they can get. Houses do not depreciate like most other assets, quite the reverse and because of a number of good reasons.

by realterms | 3rd Sep 19, 1:59pm 1567475973

Houses do depreciate. Not land, though.

by cmat | 3rd Sep 19, 2:08pm 1567476519

Land is just a speculative commodity.

by Basil brush | 3rd Sep 19, 2:38pm 1567478308

Could you explain why land can't and doesn't depreciate?
Kind regards
Ireland

by CourtJester | 3rd Sep 19, 3:20pm 1567480804

Coz we're difrunt

by theglc | 3rd Sep 19, 2:49pm 1567478960

What a load of bolix

Of course houses depreciate and older houses are left behind as technology changes.

You build a house for less that the sale price of an existing 60 year old house you will still sell it for more because it is more desirable being fully insulated, double glassed , probably concrete slabbed meaning less damage from ground contraction and expansion, no rotting weather boards drafty windowa and doors, probably has a heat pump etc, etc, etc.

In Auckland this latest boom has coincided with a period of time where alot of home owners are not maintaining their homes and it hasnt effected the selling price as speculation and foreign money has been pumped into one and all. Its seems that pride in ones home is a thing of the past for some.

This upcoming downturn will expose these embarrassingly under maintained homes and these will among the first to lose value.

by Fritz | 3rd Sep 19, 1:35pm 1567474541

Wrong. It can be done if the government gets economies of scale and sells at no profit

by realterms | 3rd Sep 19, 1:38pm 1567474736

That's a big "if".

by Fritz | 3rd Sep 19, 1:49pm 1567475358

yes it is. In my view, it's very possible though.
However...requires a capable government and bureaucracy....

by Market Interest | 3rd Sep 19, 1:55pm 1567475744

They also have the ability to bypass regulation, which could dramatically slash costs of building centrally. Might lose the vote of the central suburb nimbys, but also likely to win a lot of the younger strugglers, of which I am certain are greater in number. And might even make the central rail link vaguely worthwhile.

by Fritz | 3rd Sep 19, 4:56pm 1567486592

Well, we'll see what they are made of tomorrow.
For me, tomorrow is crucial about how I might start to think about the election. Underwhelming on the Kiwibuild 'reset' tomorrow, and my vote to Labour for the next election is in jeopardy.
I'm expecting wishy washy stuff, eg. 'rent to buy' - care of the Greens.
I really hope I'm pleasantly surprised by this bunch of muppets....

by cmat | 3rd Sep 19, 2:07pm 1567476455

But land is the most speculative aspect of existing house prices - so how does that theorem work (even in CAPS LOCK)?

Seems awfully circular to me.

by GGP | 3rd Sep 19, 2:32pm 1567477978

Land itself can be overpriced, so no matter how many capital letters you use, this doesn't actually make sense.

by brisket | 3rd Sep 19, 2:39pm 1567478377

That's a very circular argument.
"It's not overpriced because it would be cheaper if it wasn't overpriced, and it's not."

by Yvil | 3rd Sep 19, 4:26pm 1567484805

bw, cmat, GGP, brisket, I suppose you have never seen a property valuation and you have never heard about "replacement value"…. for your own good just think properly about my post… if you still don't understand just let it go

by GGP | 3rd Sep 19, 4:24pm 1567484699

Why does it suddenly feel like I'm back on reddit.

by cmat | 3rd Sep 19, 5:04pm 1567487099

I'm staring at a $800m property valuation right now, in front of my very eyes.

Have you seen one of those before?

by GGP | 3rd Sep 19, 6:06pm 1567490776

Help me understand. Here is a hypothetical situation to test if I understand your position:

Economic tragedy has struck and income levels have plummeted. The average income is now about $1,000 a year.

The average existing house is now asking about $1m. To buy a section and build a new house costs $2m.

By your definitions of "overpriced" and "affordable", do I understand it correctly that existing houses are affordable and not, in fact, overpriced?

by CN | 3rd Sep 19, 5:13pm 1567487620

"THE DAY YOU CAN BUY A PIECE OF LAND AND BUILD A HOME ON IT FOR LESS THAN AN EQUIVALENT EXISTING HOUSE, THEN I WILL AGREE THAT THE EXISTING HOUSE IS OVERPRICED AND THAT PRICES ARE GOING TO COME DOWN"

So you mean as long as the replacement cost is higher than the market price of an existing house, prices of existing houses are not overvalued?

Owner occupiers will buy a house that costs less
1) a new build or
2) a comparable existing house

Of course the 10% deposit to buy a new build vs 20% deposit to buy an existing house may have some influence for the owner-occupier buyer, as well as the ability to incorporate own house design in a new build.

It seems that currently, it is cheaper to buy an existing comparable house than it is to build in some areas of Auckland.

1) New build cost at 6 Mara Waina Place, Swanson, Waitakere City, Auckland estimated to be $868,000
a) Section cost $368,000 - https://www.trademe.co.nz/property/residential/sections-for-sale/auctio…
b) construction cost of $500,000 (- 200 sq m house at construction cost of say 2,500 per sq mt)
This is before the owner-occupier has to pay additional costs to rent accommodation whilst the house is under construction - so 12 weeks at 475 per week = $5,700
So total of $868,000 construction cost plus $5,700 in accommodation cost for period of construction = $873,700

2) Existing house in area on similar sized land - CV of $770,000, homes.co.nz valuation of $785,000
https://www.qv.co.nz/property/12-burtons-drive-swanson-auckland-0614/25…

It is cheaper to buy a comparable house of $785,000. It costs $88,700 more (11.3%) to build a comparable house for a total cost of $873,700.

Also is there a financial incentive for builders to build a comparable house if the market price of comparable existing houses is lower than the construction cost of a new build? Is the current cost of construction too high relative to a comparable existing houses?

by RickStrauss | 3rd Sep 19, 5:42pm 1567489375

Turn your CapsLock button off, Yvil. That's not what they meant by Capitalism.

by Glitzy | 3rd Sep 19, 4:17pm 1567484272

I smell a rat. With the huge stock of new houses and apartments being completed why isn't there more stock available ? We know it's not being sold as the sales volumes are down. We know it's been built because of the completion certs issued. But what has happened to all these houses and flats ??

by mikekirk29 | 3rd Sep 19, 4:27pm 1567484869

About 30% of re nz shown houses are not in fact built yet that is why. They are listed as houses but in fact are lots. This makes what is stated as a listing v misleading and inventory level more so

by Fritz | 3rd Sep 19, 5:16pm 1567487817

That's a very good question, which I've been mulling over.
There's a few potential answers.
Here's one - maybe a significant proportion of the new dwellings are being built by 'professional landlords/investors'

Eg. Joe Bloggs owns a house on a full section. He demolishes the house and builds four townhouses, all of which he retains as rental properties. In this scenario, 4 dwellings are consented, but there are no sales transactions.

But this could surely only explain a minority of cases.

Presumably sales of retirement units constitute a sale? Or are they in a different category because they are a licence to occupy? ( I would have thought they would still constitute a sale?)

by rastus1 | 3rd Sep 19, 6:27pm 1567492032

I’m wondering when they build a block of 6 units all the same, are they just listing one? Any thoughts out there?

by realterms | 3rd Sep 19, 6:48pm 1567493314

I've seen both (multiple listings, one for each unit; and one listing for all units).

by mikekirk29 | 3rd Sep 19, 9:15pm 1567502136

Also note that about 8% of listings on Hibiscus Coast are fake because are multiple agency hence duplication but this is Not stated

by CN | 3rd Sep 19, 9:12pm 1567501931

Just a reminder, that the above results are in an environment where there is a reported underlying shortage of houses in Auckland by about 46,000, and strong inward immigration.

"we do have a shortfall of at least 46,000 dwellings we’re a long way from eliminating." - https://www.interest.co.nz/opinion/100853/david-norman-says-auckland-ho…