Latest BNZ-REINZ survey shows marked drop in number of potential house sellers seeking appraisals, which points to likely further price rises

A sharp drop in the number of  potential house sellers seeking appraisals is a further pointer toward a heating house market and further price rises.

The latest BNZ-REINZ Residential Market Survey shows that a record net 19.4% of real estate agents responding to the survey have noticed fewer people seeking appraisals in June.

In addition, a record net 21.4 respondents see this as a "sellers" market, while a net 48.3% (some way short of a record, but still high) see the likelihood of further prices rises.

BNZ chief economist Tony Alexander says the falling off of demand for property appraisals would imply increasing upward pressure on house prices unless it was also being matched by an equal backing off of buyers.

"That is not sufficiently suggested by our other indicators - therefore the result portends further house price gains," he says.

Real Estate Institute figures for May released last week showed that sales hit their highest level for a May month in six years. Auckland's median price hit a new record high, while nationally house price inflation was running at 8.7% for the 12 months to May. In Auckland the figure was nearly 15%.

A shortage of houses listed for sale is helping to drive prices up. Auckland's biggest real estate company Barfoot & Thompson recently reported that its listings during May were at historically low levels.

The heated state of the house market, particularly in Auckland, is causing consternation within the Government, local authorities and the Reserve Bank.

The Auckland Council and Government have signed a housing accord deal, which is targeting an extra 39,000 houses for the country's largest city. However, the council and Government are currently at odds over the legislation to enact the accord, which as drafted would give the Government the power to over-ride the council. See our housing accord articles here.

And the Reserve Bank is threatening to apply "speed limits" on the extent to which banks may lend to customers with low (20% or less) housing deposits. But Prime Minister John Key has stated strongly that he would like to see first-time buyers exempted from such a limit, while the RBNZ has indicated it doesn't want to apply such an exemption. See our articles on the RBNZ's new "macro-prudential tools" here.

Alexander says the latest BNZ-REINZ survey data "add up to a rising market", with listings in short supply and construction below average still.

"So what does our survey of 439 licensed real estate agents tell us this month? The most significant result is that a record net 19% of agents say that they are receiving fewer requests for property appraisals from potential vendors. This tells us that the supply of listings is continuing to dry up. Unsurprisingly then a net 48% of agents feel that prices are rising and a record net 21% consider it to be a seller’s market," Alexander says.

"The results strongly show a still rising residential real estate market with falling listings and rising prices with both investors and first home buyers continuing to be strongly present in the market."

While there's increasing concern being publicly expressed that the heated state of the housing market will drive first-time buyers away, the BNZ-REINZ survey shows that's not happening yet.

A net 32.3% of agents responding to the survey said they were seeing more first-time buyers in the market. This is, however, down on the 33.5% figure in May and well down on the record 48.5% figure seen in February last year.

"This is the fourth month in a row that this measure has declined, but it remains close to the average result of 35% and tells us that no substantial change is underway in first home purchaser interest," Alexander says.

The issue of overseas-based buyers snapping up houses, particularly in Auckland, has become a subject for frequent debate. Alexander has himself said he favours the idea of some control being placed on offshore-based buying.

The BNZ-REINZ survey has in recent months been seeking information on the domicile of house buyers and also whether they intend to live in New Zealand or not.

The survey came up with a figure of just 3.6% of people buying houses in New Zealand and not intending to live here.

This month the survey asked how many vendors - that is sellers of houses in New Zealand - were actually based offshore. And this has produced a result of 4.5%

"This is interesting because taking the many sampling uncertainties into account the proportion comes close to the proportion of sales we estimate are to people offshore who do not intend shifting to New Zealand – some 3.6%," Alexander says.

"The implication? There could be close to zero net transfer of NZ home ownership occurring to offshore investors.

"Further study is needed to verify this result especially in the context of the development of any government policy regarding controls on foreign purchasing of NZ property."

*This story has been amended to clarify that fewer appraisals are being seen as sought by potential house sellers, not buyers.

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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24 Comments

Yee Haa !! I love watching this Awklund property price show !! Everyone spouting forth their own "spin" for their personal gain, in both business and salaried positions.
 
When did you last hear a NZ (oooops Austraylian)  bank employed economist actually say in this market, prices could go down or remain flat.....of course they will say they always go up, they are relying on you SK, big daddy et al to go out there and pay these prices, so they can maximise their returns on the mortgage interest payments !!  
 
What will happen when all those overseas buyers realise the NZ$ is dropping and the value in their own currency is decreasing, for that recently purchased,  at a frenzied auction, deelitefull 4 bdm Mt Roskill do up ??
 
Big ups to Shamubeel Eaqub on last night's Sunday programme for actually telling it how it is !! ....all you people should take a math class. 

C Horse - if you get a chance, Nicole Foss (The Automatic Earth) is going to be in Auckland soon (end of the week I think). The current talk takes 2 hours (it's different to the last one, more big-picture) and of course you use it to further your thinking, not to blindly believe, but it's a must-do. Not one of the audience did that 'rustle, rustle, I'm bored now' thing - and 2 hours is a long time....
I can't remember when I last heard such an integrated argument, nor exprienced such an incisive intellect.
 
Sobering, was the commonest comment......
 
 

I couldn't find any dates listed for a Nicole Foss talk in Auckland next week. I would be interested to go along if anyone has details

Don't know who these folk are, but I found this:
http://www.theawarenessparty.com/?page_id=3262
 
We got word-of-mouth invited to the Oamaru one, and I heard there about her heading back up to AK. Will ask further.

AE says North Island is finished, rather annoying as I missed it as well.
:/
http://theautomaticearth.com/Finance/nicole-foss-new-zealand-and-the-end...
podcast to listen to.
regards

Indeed...a big picture person, though I think her timing is out....but then understanding the human aspect is fraught with problems...
regards

Hi C Horse, I suspect that every economist in the country is predicting Auckland prices to keep going up because that's where they're going and they're only just getting started.  Feel free to look at my posts here going back years where I predict this exact scenario to happen.  Prices will keep going up because nothing is being done about the supply situation in Auckland and demand is steadily increasing.  I would suggest you take a economics class 101 where they should teach you the rule of supply and demand and it's effect on prices. 
 
And before you write me off as "spouting forth their own "spin" for their personal gain"...  I don't want prices to keep going up, it's what I think will happen.  My prediction is we'll be above 20% year on year growth (in Auckland) by the end of this year and double digit year on year growth until 2017 when it will taper off.  I was right in the naughties and I've been right so far this boom too.
 
The fact that the mainstream media is only just starting to do special TV stories about the Auckland market should tell you what stage of this boom we're in.  How many people would have watched last nights program and started thinking "I want a piece of that action"...

Hi Happy123 ....sorry I have taken Eco 101 and I am aware of supply and demand.
 
However, what you are relying on for your scenario to keep happening,  is for everything to remain the same  ie interest rates to stay low (for NZ anyway) the NZD to remain at around 80 US cents, local unemployment to decrease, NZ wages and salaries to climb (fat chance there !) , Nats to stay in power, record dairy prices to keep coming, the US and the EU to get completely back on their feet, cheap oil  etc etc etc
 
20% year on year growth would mean my B&T 2 bdm unit in Mt Eden would be worth $950,000 in 2016 ....would you pay that ??? and for that matter who would? ...gladly take offers at $800K +   though :) ...... fat chance there too haha
 
Anyway, at the end of the day,  I think at least one or more of the factors above will come into play and at least the price growth in Auckland will taper off.
 
Just my opinion ... I just don't want to subscribe to the "greater fool" theory, where everyone is ultimately relying on someone to come along and pay their "perceived" price .....
 
 
 

"relying on for your scenario to keep happening..."  all demand side factors, your ignoring (again) the supply side; people have to have a roof over their head, it's not optional. 
 
Interest rates, there are all sorts of fixed low rates on offer right now, even is OCR goes up it will take 3 - 5 years to bite proper. 
 
NZD, your guess is as good as mine. 
 
NZ salaries...  Your referring to the old affordability measure of 3.5 times average annual household income, which is completely flawed as it assumes that buyers are starting from $0.  This is incorrect because buyers these days have everything from money from baby boomer parents, OE savings and equity in their old house to get them started.  This could be upwards of a 200k deposit which completely destroys the old, antiquated affordability measure. 
 
"Nats to stay in power, record dairy prices to keep coming, the US and the EU to get completely back on their feet, cheap oil..."  Are just not as important as you think, all of these things exist now and we've got 15% year-on-year increases. 
 
"my B&T 2 bdm unit in Mt Eden would be worth $950,000 in 2016 ....would you pay that ???"   The retiring couple who just sold their 4 bed Mt Eden for 2m + and want a 1m left over for the batch purchase.  That's who. 
 
History is on my side, every 12 years house prices double, fact. 

Oh dear. Auckland prices and fundamentals diverging. Who's bringing the popcorn?

The un-asked, un-touched, un-mentionable, un-answered question is :-
 
Are the leaky-home-owners unloading their leakers
The current over-heated, frenzied, buy at-all-costs market should have cleaned them all out by now
Problem solved

Think BH got out too soon.. could be another 100K in his back pocket if he sell today !!
That'd be a nice little red convertible to cure mid-life crisis or a fast bicycle!

Maybe some of the leaky dungers are being snapped up by unsuspecting foreign investors... now there's a solution!
China Times ad.... great sophisticated Tuscan style villas for sale in premium suburb of Remuera, a bargain at 700k... be quick!

Off to the naughty corner for you Mathew! (hehe)

Now there's a solution and a half.
Immigrants (read Chinese) are only allowed to buy plaster homes.
Problem solved.

I take that you haven't heard of the Triad and what they will do to people who peeved them off..  missing fingers wasn't caused by a saw accident!

Further to the item about the 21 year old student buying $5 million Auckland property, freehold, no finance. Here is a bit of colour and balance to show it's not a racial issue .. they are being ostracised in their own country .. no sympathy at home .. it's a class issue ..

you probably wont see this touched by the over-sensitive nz media
 
Headline "Views split in China over French student attack"
 
Beijing: China's internet users have reacted with outrage to reports of a racist assault on six Chinese students studying in France, while others denounced the victims as children of wealthy officials.

The Chinese embassy in Paris said it "strongly condemns" the assault. The attack was widely criticised on China's most popular social networking service, Sina Weibo, which is similar to Twitter.

One of the victims was the daughter of a retired senior government official, the head of the student's school said. Chinese media carried reports of the attacks on Sunday, but did not mention the victim's political connection.
 
The topic of politicians sending their children abroad to study provokes widespread resentment in China. It is rarely discussed by the tightly controlled press, which seldom comments on the family life of senior officials.
 
Still, some (china) internet users speculated that the students were wealthy. "Those who can afford to study abroad are either the children of government officials or rich families," one user said. "They're not worthy of sympathy," another user said.
 
Others reading English-language reports turned their anger on the students. "Even foreigners can't bear with the migration of corrupt officials and are punishing them abroad.
http://www.theage.com.au/world/views-split-in-china-over-french-student-attack-20130617-2ocuq.html

When even the sellers, sitting on nice capital gains, can see it's a bad time to sell (and so become a buyer), the market's cooked. Or maybe it's just getting crispy.
It's the curse of the spruiker - over hype the market and both sellers and buyers desert the market.

By your argument Kimy, we will be even better off if rates are lower...and super wealthy if they were zero...!

Most economists actually Wolly....(say rates should be lower) at least the non-austrian ones anyway).
regards

House price inflation has already added a minimum of $1million plus to my equity within the last 12 month
 
I suppose you have asked for a pay rise at your day job since since the buying power of the NZD is so obviously on a downward trend - Isn't the Reserve Bank of New Zealand charged with the responsibility of maintaining the value of the nation's currency or do we ignore that facet of the charter as we do many others, including aspects of the law?

Kimy but who gonna save you when revolution comes?  
Anyway on a serious note, I know of four people (my old man included) are prepared to quit their Auckland properties for one reason or another.  The outlook is a bit dim and 2014 would be interesting if Russell gets hand in the pot!

The cost of debt is too cheap right now...the ocr should never have been cut to 2.5....the intended consequence was a porking of credit based activity and that's what we have...it's being sold as recovery and growth to the masses, too dumb to know otherwise...remove the credit and the house of debt will collapse...

Great, yes lets collapse, how prey do ppl then eat with all the banks closed? each other maybe?
regards