Fresh record for Auckland house prices

Property

'Winter cancelled in Auckland' says REINZ, reporting August home sales up 16% year on year with 2.5% increase in national prices

10th Sep 12, 2:21pm by Amanda Morrall

By Amanda Morrall

National home sales volumes rose 16% year-on-year last month and prices 2.5%, according to the Real Estate Institute of New Zealand's (REINZ) latest monthly report for August.

REINZ data shows there were 6,035 unconditional home sales last month, an increase of 843 sales (or 16.2%) compared with August last year and an increase of 2.2% compared with July.

The national median house price increased NZ$9,000 from NZ$361,000 in July to $370,000 in August. The Auckland median price, meanwhile, rose NZ$5,500, or 1.1%, to a new record high of NZ$505,500.

The national REINZ Stratified Housing Price Index, which averages sales prices for common groups of houses and is developed alongside the Reserve Bank, rose 1.3% month-on-month to 3,420.1 to a new record high. The Auckland and Christchurch stratified indexes also hit fresh record highs.

Meanwhile there were 533 sections sold in August, the most in one month since October 2009, with a median price of NZ$191,500 versus NZ$170,000 in July.

REINZ's chief executive Helen O'Sullivan said Auckland home buyers were increasingly driving the national market having snapped a seasonal lull in the winter months.

“Normally at this time of year we see a dip in sales volumes; this year, apart from the weather, winter was cancelled in Auckland. Across the rest of the country while we are continuing to see rising sales volumes, prices continue to reflect the general caution around the economic outlook," O'Sullivan said.

"In many parts of the country we are also seeing shortages of houses available for sale, often a market feature at the end of winter, although expectations for a rush of listings in the spring are not strong.”

O'Sullivan said, however, that the market remained in recovery mode.

“This increased level of activity does need to be seen in context of an overall housing market that is still subdued and with prices yet to catch-up with increases in the consumer price index over the last five years.”

Nelson/Marlborough recorded the highest lift in prices for the month of August with an increase of 9.6%, followed by Taranaki with 7.3%, and Southland with 5.9%.

Compared with August 2011, Auckland recorded the highest lift in prices with an increase of 11.6%, followed by Canterbury/Westland with 6.2% and Wellington with 5.2%.

All regions recorded increases in sales volume compared with August last year, with Northland recording an increase of just under 31%, followed by Auckland with 25.6% and Taranaki with 22.2%. Seven regions recorded increases in sales in August compared to July, with Central Otago Lakes recording a 25.0% increase, Southland an 11.2% increase and Nelson/Marlborough an 8.9% increase. Taranaki recorded a 14.0% fall in sales in August compared to July, with Manawatu/Wanganui recording an 8.2% fall and Wellington a 2.8% fall in sales.

The national median days to sell improved to 35 in August from 38 in July and 39 in August 2011.

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43 Comments

by 28_29 yr old | 10th Sep 12, 3:02pm 1347246133

Auckland up 11.6% in a year.Wow. Pretty hot. Lots of confidence in the market ;)

by Gummy Bear Hero | 10th Sep 12, 7:35pm 1347262514

Ummmm , so Uncle Ollie Newland is still right ....... absolutely bang on the money ......

..... and Bernard Hickey is .......... leaving the building ....... ooooooops !

by Crazy Horse | 10th Sep 12, 3:10pm 1347246617

......just musing, I wonder what the current private debt levels are for the good folk of Aotearoa ?? Can anyone answer that question, thank you.

Anyway, forget all that, let's keep the party going!!! ....get out there and BUY, BUY, BUY at any cost to your financial and mental well being (gotta keep the banks in clover) ... becoz you know the MANTRA ... "ya can't lose with property maaaates" ...

back to musing .... all this reminds me of those aussies, that said for years on end, this 'commodites boom' will go on for ever ...AND EVER .... and ever

by StanGoodvibes | 10th Sep 12, 3:47pm 1347248832

knock yourself out...

http://www.treasury.govt.nz/publications/reviews-consultation/savingsworkinggroup/finalreport/19.htm

by Crazy Horse | 10th Sep 12, 5:13pm 1347254008

thank you StanGoodvibes

Here's a little something from said report ....

New Zealand’s level of debt is too high.

Its net foreign liabilities are 85% of GDP, a similar level to the troubled nations of Europe. Australia is at 58%.

This liability makes the New Zealand economy vulnerable.

Sudden events over which we have no control could cause a dramatic and damaging fall in the economy, or we simply face a continuing deterioration in the economy and living standards.

Increasing saving is essential to reduce the vulnerability

. Saving, the difference between what we earn and what we spend, must be increased – especially in the government and household sectors.

But do not expect the masses of "mortgaged to the hilt, to the banks" slaves to pay much attention ..... "The Block" crowd et al

by StanGoodvibes | 10th Sep 12, 6:45pm 1347259505

Well yes personal debt is far too high both in NZ and Oz (in Oz it's cracked over a 100% of GDP so not sure how old that 58% figure is or how come it's so far off the mark), but fortunately with The Great Deliveraging underway ppl are paying down debt at a good clip so we may all get away with it.

NZ's ongoing balance of trade deficit is something else altogether...

by John | 11th Sep 12, 10:58am 1347317926

The great deleveraging is a myth to make everyone feel good, household debt has risen, but as a percentage household assets it has fallen, the amount to be paid back is increasing, but as this is at a lower rate than the increase in household assets then we are deleveraging, (Cue Tui ad)

When the values of the assets fall at a faster rate than the fall in household liabilities we will then be doing the opposite of deleveraging which is leveraging.

Debt values do not change, you owe what you owe, saying we are paying down debt when we are actually (incurring) borrowing more debt is effectively using a dervative to reflect what you want to happen, unfortuantely the derivative on which deleveraging is based is flawed.

Like they say all boats float on a high tide.

by Von | 10th Sep 12, 3:15pm 1347246956

Wow - good for Auckland however I would venture to suggest not true for South of the Bombay Hills. Houses grossly overpriced in our neck of the woods in the Lower North Island. I know because we have been trying to sell our home and have been advised by the agent that we could get between $150,000 to $200,000 less than the QV. Homes are selling for less than Quotable Value - anything over $500,000 between 7% and in some cases 35% below QV. Most are on the market for an average of between 6 months and 1 year. Also if you look at realestate.co.nz you will see on average 400 to 500 houses for sale in most small districts in the North Island. Waihi Beach for instance over 450 houses for sale and some of them have been listed three years ago. So could I respectfully suggest that perhaps a clearer picture of the real housing market within New Zealand be given by the Real Estate Institute.

by Kate | 10th Sep 12, 5:37pm 1347255466

Just curious, Von, when were your valuations redone in the Hutt City area last?

I often find that in the year or so post valuation it takes the market a bit of time to (willingly) catch up (if there's been a valuation rise that is!).

by Von | 10th Sep 12, 6:36pm 1347259012

We are in South Wairarapa and valuation was done two years ago and we requested a further one from QV when we placed our home on the market six months ago. It went up by $25,000!! That valuation is not reflecting the market here however and my view just money making by the council to reflect in our rates. The data I have is from sales in the area in the last 18 months - depressed, depressed, depressed - the market and me!!!! However we are not going to be greedy and take what we can get as we are lucky - mortgage free and built our home 11 years ago. My gut feeling is that this is the beginning of a depressed market and it will take about 15 years to come back. I'm of an age that I've been through all of this before. House bought in Auckland (Remuera) in 1987 for $600,000 - passed in at Auction in 1990 at $350,000!

Add: the reason why the price went down - mortgage interest rates in 1987 around 9% (Gasp from the younger folks) which rose to (another big gasp coming) 18% in late 1990-1991! The reason for selling for me was moving back South. I had money in the bank which was paying (gasp) 13% per annum!!!

In the words of the song, History Repeats - Beware Auckland is all I can say!

by 69er | 10th Sep 12, 6:37pm 1347259029

Von we considered moving over the hill and looked at some really nice places in Masterton, but reality sank in when we realised there would be little chance of finding employment close by- and a daily commute over the hill to Welly would have lost it's novelty value pretty quickly. Of all the places we looked at and placed on our watchlist, only one has disappeared in the last year! Having said that, I've been unimpressed by the quality of real estate reps in Masterton.

by Stephen Hulme | 10th Sep 12, 7:13pm 1347261197

Hi Kate - Hutty City QV revaluations are as follows for my Eastern Bays residence:

as of 01 Sep 2004 +36%

as of 01 Sep 2007 +41.18%

as of 01 Sep 2010 -12.50%

latest OV value 61.95% above 1999 purchase price.

by Von | 10th Sep 12, 8:01pm 1347264089

Stephen - Our valuation here in Greytown up 100% in ten years - doesn't mean a thing. When you want to sell it - house is only worth what someone is willing to pay for it! In a good market - could be double the valuation; in a bad market - try QV $790,000 sold for $505,000 three weeks ago. Been on the market for 18 months. (Not our house - we are still trying to sell). Thats the reality out of cities here in NZ.

by DC | 10th Sep 12, 3:41pm 1347248464

It's such a shame for Auckland that it has supply issues due to incompetence’s at council / government level. Availability of land, leaky homes, high consent fees... The higher house prices go the more cash is heading to the banks.

by SK | 10th Sep 12, 3:45pm 1347248713

Ching Ching Bling Bling.

Wait for Matt in Auck to come and tell us that the market is actually very weak and people should be afraid.

by Matt in Auck | 10th Sep 12, 4:15pm 1347250505

good on you sK.

I don't really care anymore, to be frank. I'm happy to now be owning a 3 bedroom townhouse in a central Adelaide suburb for 400K, earning as much as I did in Auckland, with a cost of living about 20% cheaper, in the "fifth most livable city in the world". If Aucklanders want to keep paying stupid money to each other for crap houses, and stupid money for petrol, clothing, groceries etc, then so be it!!!!

by Chris_J | 10th Sep 12, 5:03pm 1347253425

But Matt you could have spent that $NZ500k ($AU400k) on a townhouse in Auckland. It would have bought quite a reasonable house on the North Shore in 2008/9, it still would get something not too bad now.

If you'd come to ChCh with it's coming construction boom (probably higher wages in the near term), you'd have been able to be a good quality house in a good area for that money.

Property is still cheap here. The grass isn't always greener...

by notaneconomist | 10th Sep 12, 5:59pm 1347256743

Chris_J - I'm sorry Chris but I'm going to have to disagree with you. Wages are crap in NZ and the young ones are not going to work their butts off for the lowly rewards NZ employers pay. NZ employers are the ones who are the problem - they are actually a bloody joke. As an employer I have always paid workers well but I know damn well that I'm in a minority.

Some builder labourers in Canterbury are only getting paid $19 per hour and are expected to use their own vehicle to run around in. And we both know how much they are getting charged out.

MInimum wage applies to far too many employment types. A check-out chick in an Aussie supermarket gets paid over $AU20 per hour well that makes the Canterbury builders wage above really crap.

A good Personal Assistant in Aussie will start at $AU80K. First year accounting and marketing graduates start at a minimum $AU60K in Aussie where as in NZ they would only get paid $NZ30K in their first year.

While house prices might seem to be pretty good in NZ its the means to pay their mortgage off that is the problem especially if people are on wages. People want to travel and actually have a quality life and be able to afford kids and do things with their kids if they choose to have them, not scraping by.

I have already lost children to Aussie and I can see exactly why they shifted. Get on any flight to Aussie and their are heaps of parents each and every flight going to visit their children.

by notaneconomist | 11th Sep 12, 8:50am 1347310203

Mist42nz - I fully understand farming it's a beast of a game severely hindered by compliance and interference by both local and central Govt. Many farmers are working for less than minimum wage. The trouble is that most people outside of farming or busines do not realise what the costs are in time and money in completing the compliance isssues and then the media distorts the picture further by sensationlising farming issues of the few farmers who probably shouldn't be in the industry e.g. dirty waterways, animal health etc. Which has the effect of more compliance and bureaucracy.

The current system of propping up wages with the WFF subsidy is nothing but a subsidy to employers. The minimum wage does nothing other than set a baseline of minimum requirement. Employment law also sets minimum requirements that must be met, both have significant impacts upon employers and employees as the natural cycles of the labour market is interferred with.

Whether someone is employed or self-employed doesn't actually matter. Everyone is swapping their time for money. Everytime Govt interferes in this process there is a winner and a loser of that deal. I would rather create win win situations where everyone benefits not the current distorted market situation. The status quo in the long run is not beneficial to the whole economy as business gets artificially propped up and the employee gets poorly paid so the country has a lose lose situation. It is the short term gain - long term pain at work.

I have no problem with Chris_J investing in housing, housing is really only stock on hand. And good on him if he can money out of it everyone needs somewhere to live. But the market is not efficient, supply and demand has been distorted, the cost of labour is distorted, the costs of living are distorted and many people have become disillusioned and hence they are voting with their feet. The economic impact of losing the bright, intelligent, motivated individuals will haunt this country. NZ needs these head strong individuals here as they are the economic shakers and makers of the future.

Most NZ Employers need the biggest kick up the butt to get them off their lazy arses and back into agressively competing within the market place. If this kick is timed with giving one to employees at the same time then NZ will be a better place. Time Exchange = Money Exchange, and too many people are living in a dream.

by speckles | 10th Sep 12, 9:22pm 1347268943

Well said, don't worry about Chris he often likes to spin this line :-) I think he is taking the pXss.

by Chris_J | 11th Sep 12, 6:55pm 1347346509

Not sure your wages estimates are quite right notaneconomist.

When I graduated 12 years ago, most found first jobs around $40k and above in NZ. Even for a dud degree it's $40k and up today.

In the same breath you complain about semi skilled labourers only getting $40k. Well that's not that bad.

There are and will be a lot of project management, construction and consultancy roles coming to ChCh which will pay high 5 figures.

It's not all doom.

by notaneconomist | 11th Sep 12, 7:32pm 1347348732

Chris_J - my wage estimates are actuals. Advertising and Marketing degree -Marketing job in Tauranga $30K now in Brisbane starting salary $70K. Accountancy degree with Post grad diploma - Christchurch $30K now in Brisbane financial managment $65K starting salary, Accountancy degree with post grad diploma - wellington $30K now in Melbourne $70K. CA in Chch offered $40K - London offer GBP120K plus retainer.

I have an extensive list of similar stories.

In regards to builders in Chch - the skilled labour should be getting far better pay from employers. While the licensed builder scheme has caught some people out who are now having to complete the necessary theory and competence testing to gain their licensing, the price being paid is certainly not in line with the average builder hourly rate of $46 for the region. Skilled labour is probably more important than most university qualifications. Most Uni qualifications still require on the job training and many of the Uni qualifications could actually be taught on the job.

It's the tradesmen and women who will rebuild the city, they deserve to get paid well as they will be providing the most long term value.

Now $40K might seem like a good wage but take off the PAYE component and they are only getting about $650 to $700 per week in their hand depending on hours worked. Take off their fuel costs of anything between $60 to $100 per week and these people are not getting a very good deal. These builders have to have their own tools, vehicle and some are paying rent back to their bosses for housing. There are reports floating around that 400 local builders have left Chch - well I don't need to wonder why.

by Matt in Auck | 10th Sep 12, 7:37pm 1347262640

but Chris you've missed an important part of my comment re cost of living...

petrol, groceries etc a good 20% cheaper here in Aus compared to NZ

AND (cue libertarian bashing....)

Someone like me who earns a relatively good salary (but overall household income is just above average cos missus doesn't work) can get family assistance

by doublegz | 10th Sep 12, 9:22pm 1347268961

Hi Cris_J, My 4a Lingarth St house finally sold for 1.175 mil (cv 910k) - patience is the key don't you think? Bought in Aug-2008 for 680k - not bad profit over 4 years aye?

by doublegz | 11th Sep 12, 10:57am 1347317860

For this one it would be double grammar (Auckland Boys Grammar & Epsom Girls Grammar) and the proximity to Queen St in Auckland CBD (~3km). These 2x factors are worth between 300k to 500k themselves depending what the primary requirements are.

by Chris_J | 11th Sep 12, 6:45pm 1347345926

I'm amazed you got that doublegz, I bought an almost as good double grammar zoned property in Epsom for late 800s 3 months ago. I thought the position down below the road would have severely limited your price, it just shows how strong the market is.

by Kate | 10th Sep 12, 5:43pm 1347255817

Well, being a neutral couch observer from here in the mighty Manawatu - the Adelaide tourism commercials sure look a heck of a lot more exicitjng than that 'big little city' Auckland one :-). Every time I see that (what is it, an entry gate?) shot I think it's an ad for a zoo.

by SK | 10th Sep 12, 5:46pm 1347255994

Yeah - wtf does 'big little city' mean anyway - which is it?

by Kate | 10th Sep 12, 5:48pm 1347256127

Big smoke, no fire?

by speckles | 10th Sep 12, 9:45pm 1347270302

I think it is very true..in reality I have been taking my daughter to Auckland for a holiday once a year for a week, my wife will only stay for the weekend and is bored with the place..use to work and live there a few years back and have a cental city property there, I'm partial to the place and love the boating. The problem is in reality Auckland has not much more to offer than a large town (what we call main centers) and actually very little point of difference to many location in NZ. It certainly does not have the same package of retail, entertainment and other options of an international city. It really has not developed well for a city of 1.5 million people. Hate to say it but the women in my life want me to give up on the place :-) At least for a holiday.

by Gummy Bear Hero | 10th Sep 12, 10:11pm 1347271860

I was thinking of taking my daughter to Auckland for a week ..... but she's not such a bad kid , why punish her 'like that .......

...... and myself , too ....

by Matt in Auck | 10th Sep 12, 7:35pm 1347262532

South Australia is awesome (do you concur GBH?). Flinders are fantastic, Kangeroo Island, Barossa, Riverlands (house boating) etc

They speak a bit funny though.....letter "h" pronounced "haitch", hostel pronounced hosTELL, folk pronounced (by some) FOLLLK

where the bloody hell are ya?

by Gummy Bear Hero | 10th Sep 12, 7:39pm 1347262780

Yup , SA has alot to see & do ....... nice warm climate ........ and direct flights into Asia from Adelaide Airport , now .......

........ Clare Valley / Coonawarra / Coober Pedy / Adelaide Hills .......

Something for everyone !

by Matt in Auck | 10th Sep 12, 7:49pm 1347263389

great festival scene too for those who love their live music:)

by Chairman Moa | 10th Sep 12, 3:56pm 1347249389

我要購買更多的房子

by OMG | 10th Sep 12, 5:35pm 1347255355

My wife's still laughing!

by Muppet King | 10th Sep 12, 4:01pm 1347249714

Its obvious why they are so high. Auckland is the best city in the world. Everyone who wants to live in New Zealand wants to live in Auckland because of all the jobs. In fact, everyone that lives in NZ wants to live in Auckland, because its such a beautiful city. It's the best city in the country. They're not making any more land in Auckland so of course prices are going one way! And if you own a rental in Auckland its even better, because the rent pays the mortgage and the capital gain is the cream on the top! Prices can only go one way, UP UP UP and away!

by Muppet King | 10th Sep 12, 4:10pm 1347250211

Lets be honest guys, its not as if we're at the bottom of the world. Its not as if Warren Buffett refers to our country as the place you would go if economic disaster hits the world. Everyone in the world wants to live in one place. AUCKLAND. Its a supercity, literally. Prices should be going up 200% every year. That would properly reflect how good this city is. It has everything you could possibly want in a first class city.

by Crazy Horse | 10th Sep 12, 5:20pm 1347254424

I realise you are probably taking the mickey but MK ... how many countries and cities have you visited in your "property investor" life ?

by Kate | 10th Sep 12, 5:46pm 1347255960

Nah, it hasn't got Chicago White Sox ball games.

by doublegz | 10th Sep 12, 9:28pm 1347269285

Latest QV Stats.

Top 15 suburbs on average house value - enjoy :)

1 Herne Bay $1,870,556

2 St Marys Bay $1,474,944

3 Parnell $1,323,000

4 Epsom $1,152,056

5 Stanley Point $1,121,833

6 Takapuna $1,106,556

7 Remuera $1,094,278

8 Mission Bay $1,046,000

9 Ponsonby $1,042,556

10 Devonport $1,028,111

11 Westmere $1,015,889

12 Freemans Bay $962,667

13 Mt Eden $954,444

14 St Heliers $940,389

15 Cambells Bay $938,389

by PeterPen | 11th Sep 12, 3:22am 1347290567

The bubble in house prices will continue for at least as long as the US, EU, UK and Japan keep printing money thereby flooding AUS/NZ debt markets and depressing interest rates. So it is hard to see any end to it. If the world economy improves all the money flushing around the system will have even more of an inflationary effect, and if the world economy does not improve, US, EU, UK etc will print yet more.

Inflation is the name of the game. Real-estate not a bad hedge against it. Wouldn't know why anyone would invest in "real" businesses, creating real jobs and real progress in a situation like this. Those types of investments will continue to be undertaken in Asia, however, cementing the decline of the "West".

Anyways, everyone enjoy as long as the party lasts! The end will probably be unpleasant enough.

by speckles | 11th Sep 12, 8:22am 1347308556

I would give you comment of the day already. Living in North Canterbury our neighbour has listed his small block with modern home (I think modest home) a week ago, he mentioned he was looking for 3 million, he has had two offers already through buyers agents, one from Auckland and one from overseas, the latest counter offer is already at 3.2, I looked at it with him this morning to discuss the conditions, interesting to see how it plays out. The property has some special features however if I was spending 3 million here you could buy 200 acers for 1.5 and still have 1.5 to build home plus outbuildings to your specifications. It is simply excess money looking for a home.