Barfoot & Thompson reports that the median price for Auckland houses climbed 5.3% to $621k in November; no sign of LVR impact

Barfoot & Thompson reports that the median price for Auckland houses climbed 5.3% to $621k in November; no sign of LVR impact

Auckland's largest real estate firm is reporting that the median price of houses it sold in November surged by 5.3% to a new record of $621,400.

The median has risen nearly 11% since November last year.

Also, B&T reports that it sold the most ever houses in a month for over $1 million - some 189 of them.

"If the Reserve Bank restrictions on mortgage lending are to have an impact on the Auckland housing market, they are yet to show up in housing activity or sales prices," B&T managing director Peter Thompson said.

The new figures are highly significant, since it is now two full months since the the RBNZ introduced its limits on high loan-to-value lending from October 1, mainly to preserve financial stability, but also with an eye to dampening the housing market - particularly in Auckland.

While October's figures would still have been influenced by people buying houses using up pre-approved mortgages, this should have been less apparent in the latest month.

However, while prices rose again, volumes were significantly down and that could point to future impact from the LVR moves. Additionally, while record numbers of high-priced houses sold, there was a marked drop in the number of houses sold at the lower-price end of the market. Also, the number of houses sold directly at auctions dropped - though B&T doesn't give figures.

ASB has made a seasonally-adjusted estimate that B&T's sales figures actually dropped by 12.5% compared with October's and were down 0.5%  compared with a year ago.

ASB economist Daniel Smith said the November decline in sales could be partly due to the recently-introduced LVR restrictions, "but given that sales have come off [an] elevated level it is not clear cut what the impact might be".

"The most significant change seen in November’s data is a drop-off in new listings following a surge in October. That matches the nationwide trend observed in the November data published yesterday by realestate.co.nz. There may have been an element of sellers getting their homes on to the market before the LVR restrictions fully impacted the market.

"But should new listings continue to run at subdued levels like those seen in November, supply constraints will continue to put upwards pressure on prices. The slight easing in inventory seen as a result of higher listings over recent months will not last long in the absence of more new listings."

B&T said its average sales price increased by 3.2% over that for October to $684,646.

"What has to be factored into November’s sales figures is that it is traditionally one of the strongest trading months of the year, particularly for high end homes," Thompson said.

He said November was less active than October, and "what may have occurred in October was a rush of activity in anticipation that change was about to happen, with people determined to get their property intentions sorted ahead of that change".

B&T's sales numbers in November at 1118 were down 7.1% on the numbers for October, but "in line" with the numbers in November last year.

"In terms of house values and turnover, November represented a solid month’s trading with numbers and values unaffected by any changes that the trading banks imposed," Thompson said.

"This comes as no surprise as structural changes of the type being sought by the Reserve Bank can take many months to flow into the system. If change does occur, it is likely to be towards the end of the first quarter of 2014 before its influence is felt.

"The one segment of the market where potential change may be occurring now is in the sale of homes under the auction hammer. There has been a reduction in the number of homes sold under hammer on the auction floor, but sales have been occurring later following negotiations between the parties.

"This may well be a sign that buyers do not have the same flexibility as previously, and are looking to get confirmation from their bank before completing the purchase.

"In November we sold 370 homes for under $500,000, with strong activity in south and west Auckland. While this number is significantly lower than the 457 sold in October, it is in line with the number sold in September.

"New listings for November were 1665. While 17.4% down on those for October, which were exceptionally high, they were still the fourth highest for any month this year.

"At month end we had 3637 properties on our books, right in line with the number at the end of October."  

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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37 Comments

http://news.harcourts.net/news/files/2013/12/December-2013.pdf
 
The Harcourts one for northern region is up annually 14% to $659,835. Oh dear, naughty people - fancy wanting to live in houses.

It's a shame the prices aren't stratified

I can never figure interest.co.nz's intentions out.  With the LVR regime in place it and its editors are wilfully looking past the inherent weakness emerging in the sector.  When the market had passed the depth of the cycle and was rebounding quickly the constant drone of news was how things were getting worse.
 
Anyway - November 13 sales were less than November 12 sales.  This is just another reconfirmation that seasonally adjusted sales have now peaked and are starting to decline.  Momentum in changes in year on year house prices tend to lag movements in SA sales by about 4 months.  Watch this space

interest.co.nz intentions the same as any in the media; to sell the news... suprise, shock, evoke emotion, get people to read their articles, get website hits so they can attract advertisers (such as the evil banks offering free tvs for getting more into debt...) and make MONEY.
 
 

No point in making any judgments at this early stage. The stats will still be all over the place. I think a good six months is required to see any meaningful trends.

Very true, but auction clearance rates have been declining for months.  That a clear trend of something...

Would love to see the sales figures broken down by price band.
"However, while prices rose again, volumes were significantly down "
This could be sales at the bottom end dissapearing as FHB desert the market.  Means the median is higher on a lower volume of mid to high end homes selling.
If that were the case it's enevitable the lack of sales at the bottom end will have a knock on effect to the rest of the market.  It becomes harder to justifty an 800K purchase when you are comparing it to a 500K bargain instead of the same house at 650K.
 
Less sales under the hammer has certainly been my experience the last couple of months.  Once more buyers catch on to this fact, are they going to be so willing to move up in negotiations when they can just wait for the next house to not sell at auction?

The change in auction listings is like night and day. In September it was almost all auctions in the 400-600k range, in the area i've been watching auctions are now exceptional - perhaps 10% of listings. I've also observed with delight as several properties I've been watching have failed at auction, to be re-listed as negotiation.
 

Shows LVR are working..
FHB homes not selling, very expensive homes still selling well as wealthy buyers are not effected by LVR limits, hence median and average prices will be up a lot. 
Volumes down, and suspect total $ value sold also down as FHB's locked out of market, only able to buy up to 485k which cant buy much in auck (until prices correct)

Quite right - It's also important to note that a lot of pre-approved fanatical FTB will be buying anything with four walls and bidding against each other for the opportunity. Once that behaviour ends we'll start to see the real impact of the changes.
Most of the vested interests are still in the denial/anger stage (see SK below). I expect we'll see more crocodile tears from them early next year - "think of the first time buyers, damn you RBNZ" etc. That's when we know we're in the bargaining stage.
 

In the long term how does a policy that limits FHB choices decrease prices. Once the landlords realise they have a captive market rents and house prices will rise. The way to make something cheaper is to allow a cheaper alternative to exist and let competition reset the market.
 
We need to introduce more competition into the housing market, make existing houses compete against cheaper new houses/residential land. They could be PDK survive the 'peak' communes, it could be Hugh's sprawl, it could be new towns, more state housing or kiwi homes if done right could also help.

If the captured market scenario you mention became a reality, democracy would bring about change. It simply isn't compatible with the Kiwi dream of home ownership which is so deeply ingrained in New Zealand society. There are already rumblings about banning foreign ownership, that sort of legislation would be made more general.
Agree completely on the competition point. Council and government changes, busting of duopolies and an improved public transport system would all help. I particularly like the new towns approach. I think if places like Orewa and Pukekohe became properly commutable that would relieve a lot of pressure.

"Once the landlords realise they have a captive market rents and house prices will rise. "
 
Every household unable to purchase due to LVR regs and forced into renting will be matched by a property not purchased and thus available for renting.  Renters are no more captive than they were before, if you charge too much they will rent from someone else.  If anything the renters will have greater choice if less people are able to become owner-occupiers as the number of properties available to rent is greater and the market more liquid.
 
A decrease in proportion of owner-occupier will do nothing to change the overall supply/demand balance, there are the same number of properties, and the same number of people needing a property.

House prices can still go up while home ownership rates fall. Declining FHB activity doesn't necessarily cause a decline in house prices. Look at the census results over the last decade or so, home ownership is down by a significant margin but house prices have doubled in relation to income. Spain used macro -prudential tools pre GFC and that didn't stop the bubble and the bust.
 
Housing affordability is a political/institution problem between local and national governments, not a monetary problem. Wheeler's LVR and macro-prudential tools might help financial stabilty a little but really he lacks the tools to sort out the housing bubble.
 
Housing affordability wise Wheeler is helpful only in that his actions are putting pressure on the government to stop talking about doing something to actually doing it. He himself acknowledges that by stating improving the supply response for new housing is the long term solution while LVR's are just a temporary measure.

status quo reigns.
party on, Auckland.

Leave Interest.co.nz  alone , they are the least sensationalist  site you can find.
Their journalism is of a high standard , they remain relevant to ordinary Kiwi's , and are non-political .
Other business sites and publications are partisan , often Pro-National .
Their reporting on the mess in the Auckland housing market is informative,  factual and unbiased in that they get views and opinions from all sides

It's about time we level this "playing field" and get back to true market forces .....for a start get rid of corporate welfare in the guise of accommodation supplements (handout for landlords) and WFF .....if a company or business can't afford to pay a decent salary, it shouldn't be in business and taxpayers should not be propping up the wage bill of ABC Ltd  !!
 
In other words ....live within our means, not bludge off someone else and that someone else is, yes you guessed it, the TAXPAYER  !

http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=11166758
'Auckland house prices run hot in November'
This is what 95% of people will pay attention to.

Because thats my non-scientific estimate of how many people uncritically consume MSM only.
Creating the sheep/leeming effect.
 

Random insert here:
 
Just watched this beauty go for $2 million in Meadowbank: 
http://raywhite.co.nz/Residential_Property/Auckland/Auckland_City/Meadow...
It was the best renovation I have seen and bidding was hot and heavy! There's still life in the market. I would put this down to a triumph of good design. Bought by a kiwi lady and judging by hugs, it was for her...
Expectation was around 1.6M. There were lots of depressed couples who were psychologically ready to push the boat out and go to 1.75 or so but it was all over for them pretty quickly. 

Buy a castle in Ireland and you'll have 25% of your budget left to spend on lording it around the local village...
 
8. Glanmore Castle, Ashford, Co Wicklow. This four-bedroom home was built in the 18th century so it's not as ancient as many but it does have flagstone floors, castellated walls and a rooftop terrace overlooking some amazing scenery. It was the family home of the playwright JM Synge. Full renovated, asking €850,000.

http://www.formerglory.ie/property-glanmorecastle.html

 

For the same money you can buy this in Straylia
http://www.realestate.com.au/property-house-qld-bardon-115564543
And unusal name for RE agent, must be true blue Aussie..

positioned wrong end of that street, that is why it is so cheap in Santa Monica...

Good observation speckles ......not a fan of Brentwood ?

New million dollar club
(Qv average value as at 31/10/13)

1          Herne Bay        $1,772,700
2          St Marys Bay    $1,537,750
3          Remuera          $1,321,300
4          Stanley Point   $1,267,750
5          Epsom             $1,255,500
6          Westmere        $1,248,850
7          Ponsonby        $1,209,450
8          Orakei             $1,175,750
9          Cambells Bay  $1,175,150
10        Devonport       $1,121,950
11        Mission Bay     $1,106,050
12        St Heliers        $1,104,800
13        Kohimarama    $1,088,900
14        Parnell             $1,076,500
15        Takapuna         $1,073,250
16        Narrow Neck    $1,008,100
17        Castor Bay       $1,002,250

4 out of the top 7 in the inner west...
 
Seems the mean streets of Grey Lynn and Ponsonby were the right places to buy two years ago...

Another thing to note about the list is all the suburbs are on or near the coast, that gives you the best indication where to buy next. 

Goodness golly, an odd statistic turned up in the census. It appears there is a remarkable number of unoccupied houses around, especially in Auckland. I wonder bhow that happened?

Why do you think there are empty houses in Auckland, Christchurch is obvious but Auckland?
 
A) Do your think that is related to inequality. Lots of rich people owning multiple houses who cannot be bothered with the trouble of tenanting them out?
 
B) Or is it property investors who are targeting capital gains rather than tenancy revenue.?
 
C) Migrants buying housing that they do not need to meet immigration investment requirements? 
 
D) Foreignors buying property as a way of converting printed money for real assets?

Ostrich maybe you should address that question to Raegun. I just took his word for it that the recent census results showed an increase in empty homes in Auckland. I then asked why -giving some options.

He's wrong, there isn't a 'surge' in unoccupied dwellings in auckland.
Still around 33,000 unoccupied dwellings in auckland, similar to 2006. As a percentage of all stock, less unoccuppied dwellings..
Would have thought the 'servere shortage' in auckland would be putting pressure on rents and making it more likely these dwellings would become occuppied. Until I see rents rise sharply then I still don't buy the auckland housing shortage.  It's a reason or justification for the price rises that are purely speculatively driven.  Real problem occurs when we build all these extra houses, then NZ ecomony stalls and all these unoccupied dwellings and extra houses are dumped on the market, and buyers all vanish, leading to significant price falls. 
 

E) holiday houses
F) occupants out of town on census night
G) houses being renovated
 

Goodness golly, an odd statistic turned up in the census. It appears there is a remarkable number of unoccupied houses around, especially in Auckland. I wonder bhow that happened?

"Unoccupied dwelling
For census use a dwelling is defined as unoccupied if it is unoccupied at midnight and at all times during the next 12 hours following midnight on the night of the data collection.
Unoccupied dwellings may be classified as 'empty' or 'residents away'.
An unoccupied dwelling is classified as 'empty' if it clearly had no current occupants and new occupants are not expected to move in on, or before, census night. Unoccupied dwellings that are being repaired or renovated are defined as empty dwellings. Unoccupied baches or holiday homes are also defined as empty dwellings.
A dwelling is classified as having ‘residents away’ where occupants of a dwelling are known to be temporarily away and are not expected to return on, or before, census night."
 
So there's holiday houses, people away, houses being renovated etc.etc. in the Auckland region - so what? How is that odd? 

NOT what raegun wanted to hear. 

For the avoidence of all doubt... all's good in landlord land.