REINZ reports 6,008 sales in November, up 17% from year ago and 20% from October; New record median price of NZ$367,500

Real Estate Institute figures point to a gradual recovery in the housing market, which is likely to continue over the coming year, ASB economists say.

There were 6,008 unconditional house sales over November, up 17% from the same month a year ago and up 20% from October, the REINZ reported on Friday afternoon.

On top of this, the national median house sale price hit a new record in November, up by NZ$8,500 from October to NZ$367,500. This was up from a previous record high of NZ$365,000 recorded in March.

Auckland strong

Auckland had the largest increase in sales volumes in November from the year before at 26.7% growth, followed by Northland (+25.9%) and Waikato/Bay of Plenty (+21.5), the REINZ said. Only two regions recorded falls compared with November 2010, with Otago down 2.7% and Wellington down 1.9%, it said.

In addition to the national median house price reaching a new record level, the Auckland median house price also reached a new record of NZ$490,000 in November, exceeding the previous record high of NZ$479,500 reached in April 2011. 

"The REINZ Housing Price Index for Auckland is now at the same level that it reached at the peak of the market in July 2007, although most other markets tracked by the REINZ Housing Price Index remain below the peak. Of note in Auckland has been the rapid increase in the number of properties being sold at auction with almost 27% of unconditional sales in November being sold at auction, an all time high for the region," the REINZ said.

The figures come after Quotable Value reported yesterday that Auckland house values hit a new peak in November. See Gareth Vaughan's article here.

'Gradual recovery'

ASB economists said the figures pointed to a gradual recovery in the housing market, which they expect would continue into next year. Further house price rises would be modest, they said.

"Nationwide turnover increased 6.2% by our seasonally-adjusted estimates, and was driven by a 14.8% increase in housing turnover in Canterbury. There has been volatility in Canterbury housing turnover since late 2010, reflecting the many disruptions in the wake of the earthquakes," ASB economists said. 

Government and insurance payouts would support a continued recovery in house sales in the region as households relocate over the coming year.

"Against this backdrop of higher housing turnover, the median number of days taken to sell a house dipped slightly in November. Recent housing inventory data have pointed to continued supply constraints in the housing market, and this is underpinning a recovery in house prices with the stratified measure of prices increasing 2.6% over the past year," they said.

The stratafied measure, which was developed with the help of the Reserve Bank, rose 1.1% from October. It is now 2.3% below its November 2007 peak.

Led by higher priced houses

See the proportion of sales in lower, middle and upper price ranges in our interactive chart below:

(Updates with ASB comments, Auckland figures)

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35 Comments

What?

A national house price record?

But...but...but... Bernard and his interest.co.nz gloomsters said prices were collapsing.

Huh?

.aha ha de haaaaaaaa !. Good one ...

.. .. time to dust off me old Ollie Newland books ? ......

.. Ollie 1 : Bernard 0

Watch how long your deluded optimism lasts this time, as europe falls and world demand drops off a cliff. BOOOOOOOOOOOOOM! goes another bubble!  or is it POOOOOOOOOP?

Does snap, crackle, pop describe it?

Never happen here! NZ property thrives in world recessions. Auckland property is the only real recession proof investment available in this country, probably the world! It's been proved time and time again!

Do people remember there is a 'working group' working on giving the Beehive fools some reasons why house prices are too high..why there is a bubble...and it's due to report to the govt...and the report will be shelved...because as Dunne said on radio this morning the govt has NO plans to do any more than they did in the last term of govt...as thought the tax tinkering was all they had to do....what a bunch of idiots.

Meanwhile the housing that would in a properly managed economy, be priced right for those on low incomes...happens to be the target sector for landlords..and why...because they can harvest the landlords subsidy from the idiot govt...a subsidy that costs in excess of $1.2 billion per year and is rising fast...and the money is being borrowed...isn't that great govt...financed by even more borrowing...stupendously dumb govt...

So the target rental properties are in a bubble of their own...fully supported by the greedy banks...desperate to hang on to their bubble valuations...and who gives a rats if this utterly brainless bit of govt mismanagement ....none of them....the property prices are bloated because idiots in the Beehive hand out a subsidy to landlords via tenants...boosting the demand for renters...

What an absolute total farce.

For nearly 20 years, Mr Dunne has taken a public position opposed to tobacco control. In 1987, while an Undersecretary of Health in the Labour Government, he was reported as describing those who wanted a ban on tobacco advertising as ‘elitist zealots’.1 Since he left the Labour Party in 1994, he has consistently voted against tobacco control initiatives.

http://journal.nzma.org.nz/journal/118-1226/1765/

Now he's the property investors bitch.

This is true masochism.

Read "Driving Productivity and Growth in the UK Economy", McKinsey Institute, 1998, to learn what persisting over the long term with inflated urban land prices, does to an economy.

Also read "Three Cheers for Urban Sprawl" by Martin Durkin.

http://www.martindurkin.com/blogs/three-cheers-urban-sprawl

"....As a result of State planning restrictions, Britons are stuffed into towns and cities like battery-farmed chickens.  We are among the most densely packed people in the world.......

"......to make matters much worse for the Brits, our urban areas constitute a mere 9 percent of total land use.  That’s right - 90 percent of the people crammed into 9 percent of Britain.  Compare that to the 13 percent of land devoted to ‘Green Belt’........

".......The planning system, by limiting the amount of land available to build on, has created an artificial shortage of living space, forcing up the prices of houses and flats to such astronomical heights that many young couples can only dream of affording one.  The less affluent dare not get a job for fear of losing housing benefit.  There are families in London where the children sleep three and four to a room – a tiny room in a dingy flat.  Children who have outgrown their cots are forced to stay in them, sleeping with their legs bent (I have direct knowledge of such cases).  It is impossible to document the sheer bloody misery caused by the planning system - countless examples of diminished lives.  Even well paid professional couples in London now struggle to afford dark, crumbling Victorian houses, in rough parts of town.  Houses built for costermongers and chimney sweeps in the late 19th Century. But it goes far beyond property prices. Soaring urban land values have a knock-on effect, raising the cost of everything, from cinema tickets to shoes.  The land and property shortage (artificially created remember) has pushed all prices up, reducing our quality of lives in a myriad of unseen ways.  Meanwhile, the few remaining patches of green in our towns and cities are fast shrinking and disappearing. Gardens are designated ‘brown-field’ sites to allow more flats and houses to be built.  Houses are horribly divided into tiny disfigured flats.  School fields, parks and squares are shrinking and disappearing at an alarming rate, extra blocks of flats spring up everywhere, like weeds in the cracks.  The shocking effect of Green Belts has been to empty our urban areas of green spaces, and yet, as State planners know fine well, these are the most cherished bits of green in Britain, giving far more people, far more pleasure than ‘the countryside’ (to which so few of us go).  Worryingly, the London Planning Advisory Committee has decided that London has room for 570,000 extra homes.......

"..........As the private housing market was strangled, it was decided that instead the State would build inner-city accommodation for the masses.  They were to be confined to urban areas, forced to live in high densities in high-rise blocks.  Rather than chose their own home in a free market, ordinary people had to apply to the State to be housed and would be allocated one (a very nasty State produced home).  By the 1970s around a third of the British population lived in State housing..........."

 

Get THAT?

".......By the 1970s around a third of the British population lived in State housing..........."

AND:

".......The less affluent dare not get a job for fear of losing housing benefit......."

BRILLIANT stuff to do to your society and your economy, huh?

 

Economically unsubstantiated predictions and predictions based on sound data and understanding of underlying defining factors and their interactions are two very different things.

Ken Moon tries to predict the weather too. Harold Camping predicted the end of the world several times... This is all noise created (at best) in an attempt to achieve controversy…

I wonder how much of the interest (not monetary) in central Auckland properties that are close to work concentrations is due to caution regarding the very strong probablity of very high oil prices.  I would certainly wish to be located within a very affordable travelling distance of my workplace.

Let the Phil Bests of this world make their own very unwise decisions and let them pay the consequences.

In the post-oil post-affordable-energy world, "wealth CONSUMING" jobs definitely have to be the FIRST to go. It makes me laugh that the affordable energy doomsayers assume that all the suburban factories and malls will close, but bureaucracies in high rise buildings will remain untouched by layoffs, and happy apartment dwellers will walk to their offices to keep shuffling paper as normal.

Question: where does the money that pays their wages come from?

Good luck, unemployed mass density apartment dwellers in the collapsed post-affordable resource economy, with growing your own food to eat, burning wood for heat and cooking, recycling, composting, keeping hens, generating your own sustainable power, etc etc etc.

NZ Prices going up.  Australian prices crashing plus all the other benefits that attract so many of our brightest and best = a very large exodus to Australia.

I suspect the properties being snapped up in parts of Auckland are seen as safer places to park cash by the well off....... than in a bank. ....What would that say about RBNZ policies and the debasement of the $kiwi.....

 

Sectors of property markets can and do have their own bubbles and crashes.

Inner city living was partly "allowed" by councils in Akl and Wgtn in the FIRST place, to rescue property investors from the consequences of a serious over-investment bubble in CBD building construction.

NZ has a ridiculous proportion of tall buildings already for a population of 4 million. Urban economies CREATE wealth in factories and primary industries located mostly in suburban areas. The CBD is where wealth is churned and consumed. Disproportionately thriving CBD's are often one element in an economy that is hopelessly imbalanced re wealth creation and wealth consumption, existing on offshore borrowings.

If this part of the economy is the LAST to crash, it bodes ill for the chances of any recovery at all. The productive, "tradables" sector was the first to go; it actually has to be the first to "come back" if we are really going to recover rather than have speculatively-driven dead cat bounces in our economy - driven by more borrowed money of course.

here's the possible scenario:

Uncle Ollie will have so much spare cash from the capital gain on his 76 investment properties.  He'll stage a takeover of interest.co.nz and run it as a new "Richmastery" web site.  In the mean time Bernard Hickey will have a pile of cash (from selling out of his website).  However, BH wished that Labour was in charged so that he can pay back society through Labour's capital gain tax.  He also upgraded from being in Epsom home to St Stephen Ave in Parnell, completed with swiming pool and tennis court, as specified by the Jones' 

Wolly........a direct hit ...10 outta 10....you articulate the thoughts of myself and most of the people i know........................................some wit said ..."theres two sure things in life ...The Universe....and ....Human Stupidity..............................and they're not totally sure on the universe"

Give it a rest Wolly, you are banging on wanting a clamp down on everything that surprise surprise, may not affect you.  Bet you don't call for a reduction in the national super, yet that is the biggest government hand-out by a country mile.  Everybody has their little sacred cows, you are no exception, so move on.

Her's a good idea guys, structure your portfolio for both eventualities :)

Put is down to the fact that the human attention span is about 7 minutes. Whether it has always been that, or if that is just a modern phenomenon I don't know. 2008-2011 is simply too much for the average small mind to comprehend.

Funny, though ... people dont have enough money to spend on Christmas shopping, but enough to pay record prices for the old NZ shed.

However, dont blame the government. It was after all voted in by the not so small group of NZers who own property in order to keep the gravy train rolling.

And it is not just the NZ govt. If the US, UK, EU monarchs had not embarked on bank bail-outs and money printing, the credit market in NZ would have long collapsed and property prices gone back to normality. Heaven forbid!

Just view it as an execrise in inflation politics.

Here is a little exercise.

Go to trademe real estate and bring up the 'rural' tab.

Of 4626 listings 620 of them are "price by negotiation" = I can't get what I paid for it.

But if those properties were allowed to be subdivided..........?

HMMMMMMMM....................

Haha yes, troublemaker.

Mind you the Herald published two years ago that there were enough sections available to satisfy the market for five years, just not in Auckland.

Five years.....!

Alan W Evans discusses the Portland experience in his book "Economics and Land Use Planning". Portland drew an Urban Growth Boundary with "20 years supply" of land for urban growth within it. FOUR years later, prices began to inflate.

Evans says this is because:

 - at any one time, approximately half of farmers will not want to sell their land, period.

- developments typically take about 4 years.

- developers like to have secured their next development site before they have completed their current development

- longer permission processes cause developers to act earlier to secure their next site

- farmers being approached all of a sudden by multiple interested buyers, "get wise".

That is not rocket science, yet planning advocates are in denial and most economists cannot see reality for all the fancy formulas they bury themselves in. Auckland is typical - "FIVE years supply", yippee skip, whoop-de-doo. Who OWNS it all and how much are they selling for, and how much of the price is "planning gain" - given that undistorted markets in the USA get 1 acre sections to market under $50,000?

I did read that bit when you posted it, interesting.

What I think the Herald was referring to was places like Mangawhai or Wellsford, where the sections are already developed and on the market. I have been through places like that and others to see hundreds of empty sections waiting for some gullible prat to pay the inflated prices. Picture hasn't changed in that two years. Even a place like Okakune went stupid and has plenty of sections available.

The underlying problem is, that the "five years supply of developed sections", came in the first place from the "adequate" supply of raw land, on which the incumbent owners or speculators have already MADE the killing that is to be made. The poor old developers now holding them, are victims just as much as first home buyers are.

Yes I accept that. Although I think you see my original point, which reall comes back to the statistics can't be trusted. Heck there are several properties on my road that have been for sale the three years I have lived here. The owners are hanging out for the price they would have got at the peak, the trouble is they won't get those prices. All are on the larger area for a lifestyle block and all are asking over the magic $1 Mil.

On the land development side of things I see a real connundrum. The stranglehold on development (that comes back to a class war) versus what I understand is required to create a sense of community, and further including the issue of resources.

I think I have said before that I don't think the industrial revolution has been solved. Looks like it won't be either:-P

The ideal would be the freedom of development combined with the community knowledge of what works best. I would suspect complete freedom would eventually lead to the point of what works, but the knowledge has been lost and would take four or five generations to accumulate again. Sure you would get it in isolation, but if initial freedom were given you would see ad hoc development while people initially abuse their new found freedom.

Rising steel prices (and concrete) will make wood more competitive of course. What's not to like about wood? It sequesters CO2, whereas concrete is responsible for considerable new emissions.

Patrick Troy, in "The Perils of Urban Consolidation" (1996) points out that a lot of the planned "densification" going on actually creates more emissions in concrete production and construction processes, than it allegedly saves via reducing the amount of sprawled living in wooden houses. The amount saved by "reducing urban sprawl" is in any case far from clear, but is obviously minimal, in contrast to the claims of advocates. Whereas the CO2 from concrete is clearly measurable.

"....A large city is still a massive polluter, it's just more efficient than 3 million beings spread across 1/4 and 1/8 acre sections (which is a massive energy guzzler getting from place to place and getting resources in)....."

I have been trying for years, to find an explanation for the world-leading "productivity" of the US economy that explains why the US "recoups" the apparent "disadvantage" of low density urban form in its cities. 1 acres and larger is common, not just quarter acre. LA is an exception.

This is because the RAW cost of land when "planning gain" is minimised, is well under $10,000 per acre on average. This is why 1 acre sections in US fringe developments are $35,000 and half acre ones $30,000 (most of the cost is the "cost of development" and a modest profit). But in LA and Portland and Britain and NZ and Australia and Ireland, the raw land is more like $1,600,000 per acre, most of which is "planning gain". Hence an eighth of an acre is like $230,000 and a quarter acre $430,000.

But I simply cannot find any conclusive study that proves the low density to REDUCE "productivity", and I am concluding that the low cost of land and the light restrictions on land use and development, MORE than compensate for the still minimal effect of low density on, say, commuting times.

The fact that so many people in the USA still drive gas guzzling vehicles, is a factor of their very substantial "discretionary incomes" compared to people unlucky enough to live in inflated-land-price cities. If you "control" for this, then US energy use is not meaningfully "less efficient" than that in high density cities with similar income levels.

Urban planning that forces housing costs up at the same time as reducing space per person, only "reduces consumption" of anything by de facto taxing people higher and leaving them with less money to spend. The tax is not paid to the government, but nevertheless it is a straight out "taking" - people are paying large sums of money for "nothing". The amounts of "planning gain" and incumbent property owner/investor capital gain "paid into" by the young, COULD have bought a heck of a lot of infrastructure and "green" energy and capital improvements. But had it been framed in public as a tax on the young for these purposes, there would have been an electoral revolt - even the older generations would have been disgusted at the rip-off of the young that was involved. But the young have PAID anyway, for "nothing", and there is barely a peep of protest.

Definitely not true if one is talking about a LOW density CITY with 1 million people versus a HIGH density CITY with 1 million people. Of course piddly little hicksvilles have a high cost per person.

Compare the costs in LA (or Akl) with the costs in Houston, Dallas, San Antonio, Atlanta, Jacksonville, Indianapolis, or Des Moines.

LA, by the way, is the USA's ONLY truly "high density" city, comparable with most European cities, and with Auckland.

This is not so much a factor of how many apartment blocks you have, it is a factor of the average section size, which is mostly a factor of how much "planning gain" land price inflation occurs at the fringe. This "planning gain" inflation of fringe land prices transmits across the entire city's property prices.

I quite coincdentally just stumbled across this little GEM from Robert Bruegmann:

“….In virtually every affluent nation on earth, the old Nineteenth-century industrial cities have exploded outward, allowing densities to plummet at the core as residents move further and further out into low-density suburbia and a very low-density exurban penumbra around that. The city of Paris today has a third fewer residents than it did a century ago, and the suburban and exurban territory around it leapfrogs more or less from the English Channel to Burgundy. In this process, the very distinction between urban and rural has all but disappeared as citizens in almost every part of affluent societies are able to participate in what is essentially an urban culture…..”

Asia consists mostly of people still stuck in the pre-automobility phase of economic development, except as you point out, the microstates of Hong Kong and Singapore.

But note how these used to have powerful manufacturing bases, but now do not, as the price of land has forced out everything except highrise finance, accounting, law, and services? This is not an option for every city in the world, is it? Even if planners think back to front and upside down and say, "isn't this wonderful for mass transit"........

With increased risk in equities, hard assets rise in value. 

 

 

One of the biggest underlying problems in the whole world economy, is that governments have made it "too much hassle" to invest in real businesses that actually employ people. That is one investment category in which there is NOT a bubble.

The "sovereign debt" bubble is even worse than the bubbles there have been in property and the sharemarkets around the first world.

Traders in the finance sector forever get blamed for what is often really the result of herd behavior. The belief that "property prices can never fall" directly causes over-investment in mortgage backed securities, which of itself makes mortgage credit "too easy to get". The traders in the finance sector are just the meat in the sandwich.

Politicians love to borrow money, but half the problem is that far too many people love to lend it to them. ("low risk", yadda, yadda, yadda). This will end in tears. People who think that governments are ever going to "pay it back" are in cloud cuckoo land - look how unpopular Roger Douglas is.

The only thing that MIGHT save the world economy now, is policy settings that make wealth CREATION easy. Far too much "investment" for the last 20 years has consisted of rent seeking, wealth transfers, skimming, "services", and consumption.

But are the decadent citizens of the western world going to allow drilling, mining, pumping, building, emitting, hiring and firing, leaving re-invested profits untaxed, etc etc etc.....? Not when they haven't a clue where ALL wealth comes from in the first place. As I keep patiently explaining to resource doomsayers who think the "solution" is to all live in apartment blocks and walk to our jobs at the ministry of women's affairs.

Yes, I really mean governments in the decadent phase of democracy. A wise Czar would probably do a better job. But so few Czars are wise and kind..........sadly. I also very much doubt that POST-democracy tyrannies are going to be BETTER..........