Average Auckland house price rose above NZ$600,000 for 1st time in October, Barfoot & Thompson says, reaching NZ$618,707

Average Auckland house price rose above NZ$600,000 for 1st time in October, Barfoot & Thompson says, reaching NZ$618,707

In October the average price of a home in Auckland broke through the $600,000 ceiling for the first time, setting a record average price of $618,707 according to data released by Auckland's largest real estate agency today.

"This is an increase of nearly $33,000 or 5.6 percent on last month’s average price, and is 4.4 percent higher than the previous record price of $592,396, recorded in August this year," said Wendy Alexander, chief executive of Barfoot & Thompson.

“October was one of the most active selling months we have ever experienced."

“It was a case of demand far out stripping the number of properties up for sale."

Sales for the month at 1,081 were up 11.6% on those for September and up 48.7% on those for the same month last year.

“Even though we listed 1,645 new homes during the month, our highest number of new listings in 31 months, and the highest in an October for three years, it was insufficient to meet buyer demand, particularly at the top end of the market."

There were 119 sales of homes for a price in excess of $1 million, the highest number in this category ever sold by Barfoots. They have now made 763 such sales in 2012, a 64% increase on the same period in 2011.

“The only time we have ever sold more than 100 homes for in excess of one million dollars in a month previously was at the height of 2007’s sales activity, and at that time the average monthly selling price was $564,000" said Alexander.

At the end of the month Barfoots had 3,835 properties on their books, the third lowest number in more than a decade.

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

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Its just getting crazier, isnt it???

Reserve Bank missing in action (or inaction).
No clearer sign that the old one trick pony circus (OCR, and inflation target) is no longer fit for  purpose, if it ever was.

That puts Central Auckland @18.5% increase on the year.
Truly a wonderful start to the week.

Lets hope the rest of Auckland can have some good price gains also next year rather than just central Auckland. If prices rise 18.5% in one year that could be the start of a good bubble upwards and any good rises towards the top of affordability I will be looking to cash in.

Seems that it's NOT all about Central Auckland any more.
Eastern up 11.5% and apparently even South Auckland up 25% which seems hard to believe - but I suppose thats the only area a lot of people can afford now.
The ripple effect in action.
 

massey here we come.

Well that's put me off buying for another 6 months :)

Leave Auckland now while property is still affordable elsewhere in the country or Australia closes the door.

Whats the best growth area in Auckland over the next 1-2 years ?

It's ridiculously fierce in Grey Lynn - I think that will continue - it's Aucklands Surrey Hills - but with more land.
I like Te Atatu Peninsula for something more manageable.

I'm guessing the housing supplement queue down at the WINZ office.

LOL

I am going to say this till either someone listens or I am blue in the face. Ban all foreign landlords and non-resident investment in residential property, then watch the market find its true worth!!

Yes, but go find a politician to listen to you. They are too busy looking after their own interests.
If one were needed this is another reason for not letting a multi-millionaire to be incharge. His reality is on a different planet. probably wondering how he could possibly be worth so much less than a thick brained sports star.

Where are your figures that show how foreign buyers are influencing the market?
Perhaps frustration is manifesting itself as xenophobia in some people.

My figures comes from the same place as your accusation of xenophobia. How come wanting to see that the people of THIS country can afford to live in THEIR country is interpreted as xenophobia. And you know as well as I do that NZ properties are advertised for sale overseas, so these people are actively marketed to, could that be because none of them bother with NZ real estate or none of them realise we have no capital gains tax, or that as a landlord they can get free money from WINZ (or whatever their incarnation du jour is). 

Exactly - so you have no evidence at all.
I suppose these foreigners who are taking all the houses are also taking all your jobs, except for the ones who are on welfare - taking all your tax money.
Real life is not talk back radio.

SK: if you followed the conversation last week and read the article by the Olliver Newland, there in the comments is the confirmation you need, right from the horses mouth, Olly's Alter Ego, and he isn't wrong.

I didnt catch that - Are you able to re-post the info in here?

SK: Here: http://www.interest.co.nz/property/61784/opinion-olly-newland-looks-year-retrospect-and-reviews-what-come-your-view
 
Read the full article: Newland Predicts Prices to Double in a few years .. read the comments by BigDaddy ..

The dinosaur is a smart guy no doubt - but I dont see any actual figures on how much of this chinese money is buying auckland residential property.
Perhaps there are no stats - only personal experience.
My experience is that in Central West Auckland - I very rarely even see an asian person at the auctions - let alone bidding. (Grey Lynn, Westmere etc) - and these are supposedly the hottest suburbs in town. So I dont see an asian influence there.
In the Grammar Zones it may well be a different story - but prices there havent inflated as much as the aforementioned areas.
 

I have personal first hand knowledge of a friend, inner suburb, who received an un-solicited approach from new arrivals from HK, offering unconditional cash, name their own price.
 
No there are no official statistics, (and there won't be) There has been enough anecdotal evidence over the past year in comments here on interest.co.nz, from people who are in-the-know. Plus, Olly has close contacts in the industry who will be keeping him fully informed on current trends and pressures and where they are coming from.

Well then perhaps we will see them branching out from espom and remmers and invading Westmere and grey lynn shortly.
http://www.forbes.com/sites/kenrapoza/2011/06/20/where-rich-chinese-are-buying-real-estate/
This article is about the effect of chinese money last year in Vancouver - now Auckland feels the same effect?

Could this money not be tracked? If not directly then by its down stream effects? The person that is cashing up in Auckland goes where? Spends their unearnt capital gain on what? Or puts it on a low risk term deposit perhaps?

18 out of Barfoots top 24 salespeople for the 6 months ending Sept 30th were Asian agents!
http://www.barfoot.co.nz/Info/News/Stories/Top-25-Salespeople-Sept-2012.aspx

Anyone still think Olly Newland was wrong?

The Auckland market is scorching hot. When people are greedy be fearful, and when they're fearful be greedy.

I feel bad for first home buyers though, can't even get a look in, they've all been pushed out unless they take on crushing debt, I can't even buy a small unit in the suburb I grew up in without taking on a huge debt, its a real shame.

It really is crazy out there! Greed and fear everywhere! SOLD stickers all around.
Olly was right!
I'm sitting on the sidelines for now watching my paper profits and rents happily increase. Not a good time trying to buy
It will slow leading up to Xmas and with the new listings coming onto the market in the new year.......but then again it may not....... :)

It will not slow down- it will get even more hectic as better weather and more free time becomes available over the holidays.
The avarage price will reach $700,000 within 6 months.

And who is going to buy these overpriced houses when owners need to sell up or retire?
Fewer and fewer people will choose to take on these extreme levels of debt to buy a house.

Why do you make the ASSUMPTION that buyers who are competing and pushing up prices have a need to take on "any debt" let alone "take on extreme levels of debt to buy a house"

What was that figure of cash that has left China since 2001?
$3.8trillion
That would buy 38 million houses in Auckland each priced at $1million.
I don't think we have that number.
;o)

While ago I read there was something like 70 trilions being saved between Japan, China, Germany  and they were itching to divest other than leaving the in the banks - but that was quite a while ago before the Greece event.

Based on previous bubble behaviour, I am assuming that a lot of people buying now are mortgaging themselves to the hilt, desperately trying to get on the property ladder 'before it's too late', encouraged by low interest rates, low housing supply and rising capital gains.   And people who are negatively gearing.   Correct me if I'm wrong.  I'm on this site to learn.
I am making an assumption that house prices over 5 or 6x the median annual income (and rising) equals extreme debt for many NZ families.  It doesn't seem sustainable to me.  If the economy keeps diving and if house prices keep rising while incomes stand still or drop then I assume there will be a smaller pool of people who can afford to buy these homes when people want to downsize/ cash in on their capital gains/get divorced.
Do you have a break down of who is buying iconoclast?  I wonder how many are local or foreign investors buying properties outright.  Lucky them. 
 

Probably the best example of what is going on was provided by Basel Brush about three months ago of a non-resident Chinese buyer who paid $1½ million for a house out in beachlands somewhere with a CV of $800,000. Purchaser was not even in the country. The transaction was done via phone hook-up. A case of price no object. That type of transaction is cash. There is no facility to arrange a local mortgage. It's cash talking.
 
That type of transaction then produces a "Domino Effect". The next purchase as the seller moves on somewhere else mortgage free. The one initiating transaction triggers off a series of transactions.
 
Anyway stick around. Just listen to the chatter, and connect the dots.

To see your future, watch Vancouver and Aussie.   Think I'll sit this one out.  Enjoy your paper profits...for now.  They don't count until the cash is in your hands, following a sucessful closing. 
 
Looks like China's market topping http://online.wsj.com/article/SB1000087239639044444590457804399137155815...
 
China operating at stall speed
 
Seems few people have figured out currency flows.  While NZD strengthens, it makes out exports more expensive for others, so they buy less.  Makes paying your mortgage harder, too.  Aussie banks loves those Kiwi mortgage profits!  Interest rates will be lowered again to continue the madness, I predict, as I have been saying for some time.  Eventually all countries will be at 0%, not by choice.  It always ends the same. 

Its great at the moment.   Property is realising the dream for many with the boom in our cities.  Considering many parts of the world are in recession us kiwi's know when to have a boom in the economy with house price appreciation. We can forget about the rest of the world problems with US Fiscal Cliff, Israel V's Iran = Higher oil prices, Greece Exit of Euro and collapse of the EU and China hard landing 2014. When this all happens we can ignore this and continue to have a housing boom in NZ. Rock on low interest rates.

There is certainly a lot of dreaming going on.

I know 2 Greek people who just moved here. Very thankful, and ready to work. 

I take it this comment was said with tongue in cheek!

Len !   - do something before it really Browns off the poor first home seekers. Maybe a Muldoonist intervention is called for e.g an Auckland House Price Reduction and Compulsory Urban Land Aquisition Amendent Bill  would  do the trick.    Hugh or Bernard could help us with the fine print,especially the  bits needing house price forecasting...
Or get Wheeler to smack the OCR up 2% and see what happens

Canadian bank downgrades, due to personal debt levels, now in the works
Australian average household debt is worse - Aussie banks will need Kiwi profits to survive!  Make sure you make those mortgage payments on time!  Australia needs your money! 
A huge part of recent record bank profits, on a per capita basis, puts NZ input at the top.  Thank you New Zealand!
 
Canadians feeling smug-but it's all group-think, from an ex-pat's perspective
 
Household debt not much better in New Zealand.  Do you really think that if Canada and Australia have a correction, that we will be excluded, for some special reason?
 
 

YES!

Yee Haa !!
Now is the time to make that moove..... all you  lil' critters out thar
Grab that Chineeeese "funny munny" while you can, by selling your overpriced, mouldy, damp centraal Auuckland propurteee ....and head for them hills !
Say good bye to the banks....now that my favorit bank has posseed up and left town on the black hoss..... grab some land n rustle up some grits on da fire with no mortgaaage an live happilee ever aftar !  .
.......but seriously, there are two things that would stop this stupidity BUT they won't happpen ....
1. minimum LVR at 20% (banks would hate it) 
2. 15% tax on purchase price for overseas investors not living in enzud ....Hong Kong has done this BUT our beloved leader has already tied up the FTA with China ... so that won't happen as well.
We live in stupid times .............. but the "Sheeple' can't see the wood for the trees.
 
 

The lunatic equine has it 100% correct. If I'd bought a house in the last few years I'd be cashing out now and waiting for the effluent to impact the spinning blades of doom.

Add
3. NZ residents (not citizens) also to have a minimum residency say 5 years before they are allowed to buy without the 15% tax. i am told the be resident you must spend minimum numbers of days each year to retain residency. Some of these characters are commuting to businesses overseas and never intend to reagrd NZ as their primary domicile but are insuring themselves with a bolt hole when the proverbial hits.

Demand from mainland immigrants now accounts for 29% of all new homes in Vancouver, China Daily reports.
In London, China buyers accounted for 28% of all prime London property sales and 54% by sales value in the prime central London area, where houses go for 5 million pounds ($8 million) on average, according to a recent report by Savills research.
(forbes 6/20/2011)

Olly’s predictions are coming true.
Read his Feb 2012 column here:

“The property investment market waits for no one and the current statistics already underline the fact. The coming improvement in prices, rents and profits will likely escalate very rapidly to make up time and consequently leaving behind the fearful and the timid”.

http://www.interest.co.nz/property/57976/opinion-i-have-good-news-you-now-time-come-out-hiding-and-get-stuck-property-investin

just a reminder, he also said a dangerous bubble might be developing

These reports are extremely suspect. Specific data selected, interpreted to suit and skewed to spruk the property market back to G.F.C levels.
Don’t be a sucker! The signs are all wrong - property and banks boom; but real wealth - exports and employment shrink, while cost of living soars; surely anyone with sense would realise something’s out of kilter -  not right?
Better to sit back and let the desperate and greedy commit to the huge debt of worry.
Besides, inevitably housing supply well increase to meet societies need for affordable shelter.

The problem is that the alternative is that the government doesn't want to rock the boatload of existing home owners and protects them from the reality of a crash. They do this by introducing more and more incentives and handouts for people to be able to afford the inflated prices rather than allowing market forces to bring the prices back to sensible values.
 
Think increased Working For Families payouts. First home grants (especially to ethnic minorities and those with spawn), schemes to allow people to get into homes with zero deposits and even interest-free government loans, all to keep the housing market embers glowing as long as possible.
 
I fear it'll be a good number of years yet before NZ housing takes a long overdue tumble... and that's from someone who'd desperately like it to happen tomorrow.

 

Maybe it will, Esprit. I'm in same position as you, and yes, it is depressing right now. Only in in hindsight will we know whether chasing this market ends up being a good thing, or not.
 
At least we have a choice and freedom to play our hunches.
 
IMHO, chance of this market doubling over next couple years, is about same as major correction down, so a toss up.
 
Many of the same things are happening here that precluded the big crash in USA though, if that's of any consolation.
 
All I know for sure is that the market is a widowmaker, and will take it all away once you allow yourself to think of yourself as genius.
 
Does that sound like some of the folks you know?

 

Sounds like pretty much every first home buyer I know... all have had to borrow significantly more than they were initially budgeting for when they started doing their sums.

How can an average Kiwi with 50k income afford to liven Ak?

The same way they do in Australia, you come home to your McMansion and eat cat food for dinner.

They save about $5k, they crack open their kiwisaver (let's say $15k for a couple) and they borrow $480k on a $500k house because at 4.9% and for 30 years they only pay $590 per week on their mortgage as opposed to the $620 per week they'd be paying renting. It's perfect!
 
 
 
 
 
Until interest rates hit the giddy heights of 5.5% or greater....

Everybody seems to think this is a one way market. Few are like that given long enough time line.
 
All these people jumping in now are essentially taking a giant long futures position in the US Treasury market, and better hope during life of mortgage;

  • things in the world economy don't get better
  • and/or when the margin call comes they can come up with the readies 

I for one am leary of having so much at stake in a realm where everybody else has control.

They purchased a house with $150K borrowed 15 years ago.  There's still 50K left to go on the mortgage costing them $3k a year as do their rates 'cos the house is now worth 700K.  Their income is under 50K.

x

SWG Report:
The Government’s role

Clearly, there are serious questions to be asked about New Zealand’s economic policy and how we got into this mess. Why was it not better designed and managed, and more focussed, coordinated and strategic? Did the electorate simply get what it voted for, without realising what was really happening, or have New Zealanders not been well served over the years?

Underlining the current difficult situation, the government is spending at an unsustainable level and running large deficits (the opposite of saving). As a result, it is borrowing a hefty $300 million a week. It needs to return the Budget to a surplus of no less than 2% of GDP as soon as possible.

Looking ahead over the next 20 years or so, the government will face increasing costs from the effects of an ageing population. If the government is to keep its borrowing within a sustainable level (as it must) over this period, its options are to: substantially increase tax revenue, reduce government spending, or increase government sector productivity and performance. The first two options are clearly unpalatable. However, modelling shows that if the government can lift its performance and increase productivity by 2% a year for five years and 1% thereafter, there would be no need to raise taxes or cut government services. The SWG strongly recommends this.

On other government policy issues, SWG recommendations include:

- A much more strategic and integrated approach to policy generally.

- Serious consideration of the impact of the level and variability of immigration on national saving, and the impact that this might have on the living standards of New Zealanders. There are indications that our high immigration rate has pushed up government spending, house prices and business borrowing.

- Improving data on household and business saving.

http://www.treasury.govt.nz/publications/reviews-consultation/savingsworkinggroup/pdfs/swg-report-jan11.pdf

Bruce Jesson talking about the 1987 stockmarket crash. Is Auckland residential property any different?
 
“One of the things I found astonishing at the time was how the entire country was sucked into a speculative whirlpool. It should have been obvious to anyone who could read a balance sheet that what was occurring was a destructive madness….But generally speaking, New Zealand society moved in unison, with business, politicians and the media all shouting the market up and contributing to the ultimate debacle….Middle class New Zealand revealed itself to be greedy and gullible. The financial press showed itself incompetent.”

WTF... I hear you mate, but most of it aint Kiwi money buying up the property... Things are going to get really tough for first home buyers in Auckland and renters... But the Chinese buyers will be smiling happy smiles, as will the people like SK and Big Daddy... but for most of us Kiwis... you'll see...

Bigdaddy calls 700k average in 6months - another 14% increase.
Could even be on the low side looking at Octobers 1 month increase of 5.6%

RAKON cutting nz jobs and moving more work to China. Most likely auck based jobs will go.

High nz dollar, money flowing into nz and into property, result is more and more companies leaving.

Shareholders loving it though.