REINZ says median house price hit NZ$400,000 for the first time ever in March; Most houses sold in a month since May 2007

REINZ says median house price hit NZ$400,000 for the first time ever in March; Most houses sold in a month since May 2007

By David Hargreaves

The national median house price has topped the NZ$400,000 level for the first time ever in what was a stellar March for house sales, dominated again by the white hot Auckland market.

The Real Estate Institute said the  number of houses sold, 8128, was the highest level for a month since May 2007, with the number of sales up 23% on February 2013. On a seasonally-adjusted basis, the March figures were 3.6% higher than those in February. Compared with March 2012, the sales numbers were up 11%.

The national median price rose 8.1% compared with March 2012 and was up NZ$18,000 in March 2013 compared with February 2013..

In Auckland, the centre of most of the heat, the median price shot up a further NZ$27,000 in the past month to hit a new record of NZ$562,000. The median price in Auckland is now some 13.5% higher than it was a year ago. The median price in Canterbury increased 12.2% in the past year to a new record high of NZ$359,000. Prices increased almost 20% in Mid Canterbury and by a more modest 8.4% in Christchurch.

There were 3359 houses sold in Auckland during March, which was up 40% on the February figures and nearly 18% on the figures reported in March last year.

Prices increased the most in North Shore City (+16.7%) and Auckland City (+17.4%).  Auckland's days to sell improved by four days compared with February, moving from 33 days in February to 29 days in March. The number of days to sell improved by two days compared with March 2012.

REINZ chief executive, Helen O'Sullivan said the Auckland market continued to lead the rest of New Zealand in terms of price increases and sales volume, with strong price and volume growth in most areas, albeit with relative softness in the southern and outer parts of Auckland.

But she said price levels in Auckland and Canterbury were having a disproportionate impact on the national picture and potentially skewing perceptions of the overall market.

"Analysis by REINZ shows that 90% of the increase in the median price between March 2012 and March 2013 of $30,000 came from just two regions, Auckland and Canterbury/Westland. Together these two regions represent 52% of national house sales, indicating that the remaining 10% of the increase came from the remaining 10 regions which cover 84% of New Zealand geographically.

"There’s a real danger that the Auckland housing market is mistaken for the New Zealand housing market, and that regulatory decisions will be made on the assumption that conditions in Auckland and Canterbury are replicated across the rest of the country.”

As recently as Monday, the Reserve Bank's deputy governor Grant Spencer broadly hinted that the RBNZ might look at raising interest rates earlier if the housing market continued to rise sharply. He referred to the Auckland market as having a supply shortage that was "complex and uncertain".

And last month Prime Minister John Key warned that rising Auckland house prices could force up interest rates for all New Zealanders.

On Tuesday this week international credit rating agency Fitch Ratings warned of the possible adverse effects of an asset bubble in this country. The warning by Fitch followed on from a similar warning in February by fellow ratings firm Standard & Poor's.

Interest.co.nz scrutiny of past REINZ figures suggests that the national median price is now 13.6% higher than the levels reached during the last housing boom in 2007. Howevever, Auckland prices are an eye-watering 24% ahead of their peaks reached at that time - demonstrating just how Auckland-centric the current price boom is.

O'Sullivan said the supply shortages in Auckland and also Christchurch continued to be the main factor in those two markets, resulting in double digit price increases and new record prices, while the number of days to sell reached near record lows.

"Across the rest of the country while activity is picking up, price gains are far more modest. To illustrate this, five regions, representing 24% of sales in March recorded annual price increases of less than 1.0%.”

The REINZ Stratified Housing Price Index, which adjusts for some of the variations in mix that can impact on the median price, is 8.6% higher than March 2012 and increased 2.4% compared with February. The index is calculated using a technique known as stratification, which provides an averaging of sales prices for common groups of houses. REINZ says this approach is considered a more robust analysis of actual house price trends and was developed in conjunction with the Reserve Bank.

The Auckland Stratified Housing Price Index is up 16.1% compared to March 2012, while the Christchurch Stratified Housing price Index is up 7.2%. By contrast, Wellington’s Stratified Housing Price Index is unchanged from February 2013, and up just 3% from March 2012.

REINZ Regional Director Tony McPherson commented on the Canterbury figures that "the shortage of listing continues to be a problem in Christchurch with little sign that it will ease in the coming months. There is strong demand from first home buyers and investors at the lower end of the market, with towns like Rolleston and Rangiora continuing to see steady activity".

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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"There’s a real danger that the Auckland housing market is mistaken for the New Zealand housing market"
Why are REINZ downlplaying the importance of Auckland? I could understand the downplay if Auckland repersented 1% of all house prices, but Auckland represents at least a third of NZ's population.

Because the RB will make stupid knee jerk reactions that affect everything, when the reality is that Chch and Auckland are unique situations - earthquakes and a major supply shortage which won't get fixed until Unitary Plan operative (which the govt want to delay, 'cos they want sprawl instead - even though their own DBH report says sprawl won't provide affordable housing and the Unitary Plan will - duh).

This piece of news is way more important!
http://tinyurl.com/cdyfqft
 
 

What about dogs in tights?
Have you seen a picture of dogs in tights lately?

Got one at home :o)

Surely you are not referring to your partner?
How scandalous!

.

Up 13.5% in a year. Sounds like the the boom Governor Wheeler wants to avoid. He should show us that he is not all mouth and no trousers and put rates up. Go on, I dare ya.

.. and push up the exchange rate, hamper exports, slow down buiiding and increase unemployment. 
Brilliant!

You're forgetting decrease landlords' tax free gain. Shame on me.

2009 is starting to look more and more like the bottom of the market,  time to get valuations on all my 2008-2010 rentals I bought to realise my paper profits lol

you would have to sell them to realise paper profits.
is that what you are going to do.

I can report to interest.co.nz readers that all's well in landlord land.

Yip, nothing like trumpeting about ripping people off who have no other choice other than to pay your thieving rental prices... There is nought you can say that will convince me that you and your ilk are nothing but petty crooks... For shame! You are men without honour!

Everyone has choices - humans are not passive amoeba who have no decision making capacity.

Your Landlord,
The General is right on the money in his opinion of you and your ilk. Real estate speculation is a useless endeavor to which only greedy and useless people with no scruples dedicate themselves. 
Have you ever heard of Maslows' hierarchy of needs. If not, you should look into it. It may make you a better person, although I have my doubts you'll understand it!
Sincerely,
HGW

Wonderul that you've reached a higher level of sancitmony in your endeavors.
ps - it doesnt take too much dedication lately - can be quite easily done from the beach or the pub.

No sanctimony intended, SK.
Simply a bit of constructive critisism attempting to shine a bit of light on the subject than there is more utility than simply money to a job, profession, business, or endeavor. 
Of course, if one is limited to speculation in ones' capacity to make money, then they should become landlords and exploit their fellow men.
Cheers,
HGW

Don,t get to excited we are not going to all be millionaires by Xmas these is more chance of us been broke.If there is not a major change in numbers in April I will fly to the moon on a broom stick.Then all the Clowns ( Realesate agents) and Bankers (wan) will say this is a seasonal change yeah right.
And just for the record there is no shortage of property in Auckland there is a lack of funding for new builds bankers controlling and  manipulating market.They are sitting there rubbing there sort fingered fat hands together waiting for interest rates to go up.

a big WEM..  

No wonder prices are on the rise: "The potential immigrant must invest at least $1,000,000 for at least two years to qualify - ie if keen on a particluar property investment or development site that may only really be worth say $900,000 a potential immigrant may boost the price they will pay to at least $1,000,000 just so they qualify for the scheme."
So it is not surprising that Asians make up around 75% of the auction room crowds!
In addition "You have been in New Zealand as a resident for a total of 184 days or more in each of the two 12-month portions of the 24 months immediately preceding your permanent resident visa application. You do not have to provide any extra evidence, other than your passport"
 

Immigration investment requirement:
Residential property development
For the purpose of these categories, residential property development(s) is defined as property(ies) in which people reside and is subject to the following conditions:

  • the residential property must be in the form of new developments on either new or existing sites, and
  • the residential property(ies) cannot include renovation or extension to existing developments, and
  • the new developments must have been approved and gained any required consents by any relevant regulatory authorities (including local authorities), and
  • the purpose of the residential property investments must be to make a commercial return on the open market, and
  • neither the family, relatives, nor anyone associated with the principal investor, may reside in the development, and
  • the costs associated with obtaining any regulatory approval (including any resource or building consents) are not part of the principal applicant’s acceptable investments.

Seehttp://www.immigration.govt.nz/migrant/stream/invest/investment/investor/questionsanswersinvestor.htm

 

 

Chairman Moa
Can you start writing English I,m not that great at it but you are in another world?
My guess is you are one of 3 things
1.A realestae agent
2.A Banker 
3.One of Len Browns Lefty mates
Which one?

If you are referring to his use of the acronym WEM I suggest a quick perusal of urban dictionary
 
http://www.urbandictionary.com/define.php?term=W.E.M.

umm.. nope I am not any of those 3, but;
1. I wish I took up RE because they are making way more moolah than I have currently
2. see (1)
3. Yes, I know Mr Brown, as I have worked with him before he became the super mayor. Put it this way, I wouldn't trust him to look after my pets. For that reason my vote goes elsewhere. 
Anyway, haven't we got enough stuffs coming out of North Korea - Interest.co.nz is the last place we expected more rhetoric propaganda..
 

What was it that Olly said...  "House prices will double in the next few years, of that I"m certain"
 
At 24% above the last peak that means there's another 76% to go...  Anyone wana put thier neck out and say that he's going to be wrong...

Here's an office story  from Barfoots
 

An agent who was being paid by the week approached his office manager and held up his last paycheck.
'This is two hundred dollars less than we agreed on,' he said. 
'I know,' the manager said. 'But last week I overpaid you two hundred dollars, and you never complained.' 
'Well, I don't mind an occasional mistake,' the agent answered, 'but when it gets to be a habit, I feel
I have to call it to your attention.'
 

 

Consider my neck stuck out. House prices will not double in real terms. It may be possible by government engineered inflation although that is also unlikely.
 
Currently, there is more likelihood of a downward correction. This will likely be caused by an unpredictable black swan event.
 

According to the Reserve Bank inflation calculator:
 
Inflation CAGR 1962-2012 = 6.2%
Housing CAGR 1962-2012 = 8.4%
Difference = 2.2%
Expected doubling time in real terms = 32 years

The housing data recorded at the RBNZ site reflect building input costs, not market sale prices of existing housing stock.
 
May I suggest a snap shot of a comprehensive approach to REINZ data release analysis, courtesy of Colin Riden.  I would have thought this type of statistical review is mandatory for those with a serious investment in NZ dwellings.

My bet is that you'll have lots of different situations play out across the country when/if the unitary plan goes ahead. 
 
Everywhere except Auckland is surrounded by easily develop-able land, think Christchurch, Hamilton, New Plymouth etc.  In these areas the supply side of the equation will increase to meet any new demand and prices will flatten, maybe drop.  This combined with a decrease in demand due to migration to Australia, Auckland, etc and no big worry about inflation. 
 
Auckland, if the unitary plan goes ahead, will have a eventual increase in flats, apartments and terraced houses.  These cheaper properties will be included in the overall 'average price' figure and the median and mean price will drop.  However people will still aspire to a detached house on a 1/4 acre and the supply of these is not increasing, especially in the leafy coastal suburbs.  So with supply staying the same and demand increasing the traditional detached house in Auckland will continue to go up.  The council/government will describe this as a win and that housing is affordable in Auckland.  I guess that will be technically correct it's just that the definition/understanding of a home has changed.
 
Auckland if unitary plan does not go ahead...  Olly will be right and then some. 

Ok guys get this, this will totally weird you out. I saw a place in Grey Lynn, one of the classic "bungalows", totally done up to a high standard, it went for $2,240,000. Great result for the vendor. 1 story, 4 bedrooms probably, just one of those normal bungalows around Grey Lynn, on a quarter acre etc.
A few months ago I am aware of a property in Kohimarama that sold for $1,600,000. It was a mansion, on a huge section, tennis court, swimming pool etc, 2 story with 4-5 bedrooms.
I would have to argue that the place in Kohimarama was FAR superior to the one in Grey Lynn, given that it was a bigger house, on a bigger section, had tennis court and swimming pool, arcitecturally designed etc, so what the hell are people in Grey Lynn thinking????

Common, living in Grey Lynn you get to hang around with cool people like agent Anna aka Robyn or the Ridges.  Kohi.. I can only think of Lorrain Downes.

For starters Kohi is a 10km drive to town (and it is a drive - the locals don't take kindly to anything else). Grey Lynn is like a 2km stroll. The Kohi house might be a leaker. As CM notes, neighbours.
As the central west gets populerer it will get more expensive and richer people move in putting up big fences, security gates and it loses what made it good - then the east will make a comeback.

Bob: "as the central west gets more popular it will get more expensive, and richer people move in, putting up big fences, security gates and it loses what made it good"
 
You should print that out and laminate it - because it holds true of Auckland as a whole - as it has grown - it has lost what made it good

So essentially people pay a huge premiums for run down shacks in Grey Lynn because its fashionable and trendy.
At some point people must say - actually I will take the tennis court and pool and 'grin and bare' the pain and possible social isolation of living in Kohimarama and St Heliers.

 
Sorry I haven’t been back to you earlier have been enjoying playing sport from 10.30am in this great city of Auckland

  1. I think you should take up real estate you have the right make up for it.
  2. See1
  3. So you are a lefty but not mates with Len any more

And North Korea who cares? Only the international police America.
Enjoy the rest of your day at work no doubt you are getting board by now.
P.S I wished I had time to waste writing about other Dickheads (Great Breakers saying)  of Grey Lynn and Kohi were is that?
Go The Breakers this weekend. Have you heard of them they are a great Basketball team from the North shore?

me.. a lefty??  don't think so .. my political allegiance can be summed in this story..
 
An economics professor at a local college made a statement that he had never failed a single student before, but had recently failed an entire class. That class... had insisted that Labour’s socialism worked and that no one would be poor and no one would be rich, a great equalizer.
The professor then said, "OK, we will have an experiment in this class on Labour’s plan".. All grades will be averaged and everyone will receive the same grade so no one will fail and no one will receive an A.... (substituting grades for dollars - something closer to home and more readily understood by all).
After the first test, the grades were averaged and everyone got a B. The students who studied hard were upset and the students who studied little were happy. As the second test rolled around, the students who studied little had studied even less and the ones who studied hard decided they wanted a free ride too so they studied little.
The second test average was a D! No one was happy.
When the 3rd test rolled around, the average was an F.
As the tests proceeded, the scores never increased as bickering, blame and name-calling all resulted in hard feelings and no one would study for the benefit of anyone else.
To their great surprise, ALL FAILED and the professor told them that socialism would also ultimately fail because when the reward is great, the effort to succeed is great, but when government takes all the reward away, no one will try or want to succeed. Could not be any simpler than that. (Please pass this on) These are possibly the 5 best sentences you'll ever read and all applicable to this experiment:
1. You cannot legislate the poor into prosperity by legislating the wealthy out of prosperity.
2. What one person receives without working for, another person must work for without receiving.
3. The government cannot give to anybody anything that the government does not first take from somebody else.
4. You cannot multiply wealth by dividing it!
5. When half of the people get the idea that they do not have to work because the other half is going to take care of them, and when the other half gets the idea that it does no good to work because somebody else is going to get what they work for, that is the beginning of the end of any nation.
Can you think of a reason for not sharing this?
Neither could I.

Chairman Moa
 
Well-done Chairman Moa I enjoy this and the last thing I thought you would come back with. You are now talking some  sense  I new you had it in you. Have enjoyed the banter but I think we should just agree to disagree on something’s and leave it at that.
Have a great weekend.
P.S Have printed this off to keep reading from time to time I think its great.