Barfoot & Thompson, who sell more than 40% of all residential real estate in Auckland, sold fewer houses in December that in any month since April 2012.
But they sold them for a record average of $700,387 they said in data released by the firm today.
That represents a 12.2% gain on the same month a year ago.
Median prices (the middle of the market) are rising fast too with these prices up more than 14% over the same month a year ago to $629,000.
The restricted supply is fueling the gains.
There were only 631 new listings reported by the firm in December, the lowest level since records are available in January 2001. The previous low was 697 in December 2012.
Sales exceeded new listings for only the second time in thirteen years.
The 'lack of choice' is becoming acute. The 2,969 listing available is the third lowest level over the same period and contrasts starkly with the high point of 7,538 in March 2001 - after more than ten years they have less than half the properties available for sale.
In 2013, Barfoots sold 13,123 properties, up from 11,710 in 2012 and 9,346 in 2011. They listed 17,999 new properties in 2013, up from 16,140 in 2012 and 14,648 in 2011. By our count, they failed to sell 5,317 in 2013, down from 5,603 in 2012 and 6,584 in 2011 - the drop-out rates declining over three years from about one third to less than one quarter of all listings available.
Barfoot & Thompson are one of the earliest real estate firms to release their data, giving an advance look at volumes and prices in the upcoming QV and REINZ releases later in the month, in the nationals largest housing market.
Here is the Barfoot press release:
Overall, Auckland’s housing market remained buoyant, finishing the 2013 year with a December residential average price of $700,387, the highest ever, although sales of property under $500,000 have declined.
“Seasonal trends which traditionally see higher value properties traded have not been offset by recent Reserve Bank changes and nor would they given the next three to four months of high summer season,” said Barfoot & Thompson Managing Director, Peter Thompson.
The median price in December was $629,000, a 14.25 per cent increase against the December 2012 median of $550,500.
The average median for 2013 increased by 8.7 per cent over the past year to $578,815 which, given the pressures on supply and the stable and low mortgage lending rates, is modest.
In December, 817 residential sales were made. Although this is down on December 2012 figures, it was the second best December in the last 10 years.
“The year ended with lack of choice again becoming an issue with new listings for December at 631. At month end we had 2969 listings on our books," Mr Thompson adds.
“These figures tell a compelling story about the strength of the Auckland housing market, an improving economy, and people’s belief that residential property continues to represent a dependable medium to long term investment."
“With listings being so restricted, and buyer demand so high, it suggests that as we enter the New Year, the Auckland real estate market will experience a strong first quarter.”
Barfoot Auckland
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73 Comments
Yes Crazy Horse , the 5 year yields for property speculators have been phenomenal.
If one bought an "average" Auckland house ( in say Glenfield) in March 2009 ( middle of GFC) for $450,000 with 5% deposit and sold it at the new "average" of $700,000 your yield on your outlay of $ 22,500 would be over 1000% . Of course this ingores any negative gearing effects
Over the same period , the bank would have given you 3% per annum and after withholding tax you would be left with 2% , and adjusting for inflation , you would have been in negative territory
Click the "number sold" tab on the graph - speaks volumes. We're probably seeing the dregs of pre-approved mortgages being used up.
Average pricing going up is completely unsuprising given the LVR change, but eventually with very little "new blood" entering the market it will be more difficult to climb the ladder.
I'm seeing the same thing. Properties in the $400-600k range aren't selling in the area i'm watching. It was all auctions just a few months ago, now it's all by negotiation and priced. Once the rates starting going up we'll see some real action in this range I think.
Not just 400-600K range. Much of Ponsonby, Parnell, Freemans Bay, Grey Lynn, few months ago everything was on auction. Now majority are by negotiation..
And this article; why average sold price beind quoted here?? Should that be median price as quoted in all previous reports????
Please don't be an idiot guys. You know more than I do - this report and all the stats are for properties that have been sold, not those that are yet to be sold. To be honest, 700k will fail to buy a single house in the street I live in and I'm not even living in a posh street but quite a posh suburb I must say :)
I think Grammer is a great school....
I was in Glenn Innes a few weeks ago... A guy pointed out an ex state house on a full site that just sold for $710,000 . Street is chiltern cres... nothing special... ( parts of GI do have great sea views)
I was amazed... Good old working class Glen innes ..$700,000 +
SK my son went to AGS up to 2011 and now Marist in Brisbane. Looking back, my he was an average student and if you are an average kid in AGS, you will always be an average kid in AGS.
At his new school, he's constantly challenged beyond his ability. Pick up two musical instruments, learning Japanese, doing very academically and in sport.
And I am not the only only one holding that view about AGS
..Way to fudge the numbers and just regurgitate the pompom wavers propagagnda guys. I look forward to some actual analysis.
Questions: Why does this report use average at all? What is an "average median"? Why does anyone suggest FHB were ever in this market? Why would anyone see this as a true representation of the market? Who listens to "sales speak"?
It is purely statistical there are no "gains" here, the top end is still selling due to Imported money and churn created by the 1% kids upgrading, because they can. The bottom end has slowed due to less speculators able to use high LVR loans to negatively gear or flip, new entrants unable to justify the numbers just for a roof and fewer listings as properties are held.
The RBNZ have built a fence at the top of the cliff here to stem the flow of lemmings.
After all it's only Auckland, who cares?
if you don't know what an "average median" is then you really shouldn't be moving forward until you find out what it is. It's basic maths, it's all over google, and until to can comprehend that, which is the simpliest of indicators, you really shouldn't be risking your money.
(in short: an average is the mathematical term to say that a single number (price, in this case) is used to represent a group of numbers (house prices, in this case). What the term "average" doesn't tell you is _how_ that representative number was chosen.
Was it the most common number? (mode average)
Was it the halfway point between the two most extreme numbers? (range or spread average)
Was it a range average, but with outliers removed (eg a historic settlement or someone paying for a special something) (conditional spread)
Was it all values added together, then divided by the population size? (median average, which is common...but entirely fictional..figure)
Was conditionals applied to that median? Or perhaps weightings applied because some sales were more notable than others (eg house % margin in Kingseat might not be the same as the house % margin over all of Auckland, so using one of those figures to represent the other group would result in a less than accurate resultant model.)
my sister is an agent in auckland. she's seeing purchasers more wary, less eager to pull the trigger. a lot of properties being passed in at auction and then selling afterward by negotiation. she's seeing a really mixed bag prices wise - some properties selling way under expectation, some way over still, though...
Teaser Headline: Prices up, Volumes down in Auckland Housing Market
Article Headline: Barfoots average Auckland sale price in December exceeds $700,000 for first time, volumes sold decline
The tyranny of incomplete data
Because Barfoots merely publish averages without segmenting the data, either of the following could be true
(a) all of the sales could be low end properties at substantially higher prices
OR
(b) all of the sales could be high end properties at substantially lower prices
Barfoots do publish median price data. It's in the story.
They also publish a lot of segmented data.
We do our own analysis of the data they publish before we write our story. We keep long data series of their reported data.
Why would you jump to a conclusion like that? All real estate industry transaction data is based on individual transactions and meets the standards set by the REINZ. I am sure Barfoots would be happy to discuss methodologies with you - they are always very forthcoming when we make enquiries. Never had an issue with their data - and they are more forthcoming than most.
If one sees AKL as a special part of NZ or a part that is far tied up with the world capital/property markets compared with any part of NZ, he will suddenly realise that the current house price is justified.
I cannot remember the exact but there is an economic theory on property price. That says property prices (or price to income ratio) of a city that is aging and labour force being substituted with immigrants from capital rich countries, tend to converge to the property price levels (or price to income ratio) of countries where most and richest immigrants are from. The converging rate depends on how far apart property prices were between the host country and guest countries.
Maybe we are just seeing AKL house price converging.
Yeah, you cannot go wrong with property. Though I might prefer a hotel.
Anyone got any cash?.
You might be skating on thin ice for a while, like all these bad debts, mounting up.
The opportunities are endless.
Plenty of suckers paying 700E per night, in the meantime.
What would they pay, if a 95% reduction, I ask myself.
This making up money out of thin air and then on-selling as a derivative, is mind boggling.
Pass the parcel.
The Euro way.
My way??.
Bought owt, lately, or do you have your money tied up in India.??
This story is really about a dearth of affordable housing ....... the prices dont reflect the reality in Manakau , Mangere , Otahuhu and Clendon . The number of sales in these areas in relation to population is low .The averages there are not the same as Greenhithe , Milford or Takapuna
Barfoots are a very reputable and credible organisation , so we can trust them to report their sales accurately.
We need to be wary of averages . They have a habit of creating impressions that are far from reality
Lets say you have 5 houses in a sample
3 in Manakau sell for $350,000
1 in Greenhithe sells for $1,200,000
and 1 in Takapuna sells for $1,500,000
The AVERAGE price is $750,000.............. is it really reflective of the sample ?
I think not .
The data is just data until you know how representative it is of the group it's modelling.
To make the data into information, you'd want a graph showing; range/spread, sd, volume, and period., at the least. Then you can weight the data according to it's shape. (eg few sales? high volume in one part of market? binomal peaking/wide sd?)
Last price sold of what? (the same property??)
over what period?
in which segmentation?
in which land zones?
Valuers look for similar properties in similar area, going off the last _published_ sales data, and then make some voudoo adjustments depending on the company/valuer/law.
However that "one off price" technique even for filtered data is inaccurate for value, and fortunately for Valuers is often self-prophesising which is why it's held up under such light scrutiny (and why prices are so easy to manipulate)
You have to read the fine print - its a 6 month rolling average - 3 bedroom houses only
Source: Barfoot & Thompson analysis of its sales over the last six months to beginning of December 2013 for three bedroom properties. Calculated using average sales price for three bedroom properties. Suburbs with less than four sales of three bedroom properties with Barfoot & Thompson not included
How many 3 bedroom houses are there in Remuera, Epsom, Mission Bay, Kohimarama?
Wonder how they classify a 3 bedder + games room + studio + entertainment room?
A 3 bedder I guess
Definitely not mode
They publish the mean above as $621,000
The Headline "Average" of $700,000+ is arrived at as described
If you have the time examine the segmented data as per David Chaston's post above, sum the averages for each suburb included and then divide by the number of suburbs, and look at the fine-print at the bottom of the schedule http://www.barfoot.co.nz/Rentals/Stories/November-suburb-breakdown.aspx
The problem with that methodology for properties where no two are exactly alike, is in any one suburb there could be 4 properties sold in month 1 thus achieving inclusion, and then none in the following 5 months, or conversely, none in the first 5 months and then 4 in the last month
Look at Three Kings suburb for November and then flick back to the previous month - you'll get the picture - right next door to Mt Roskill - hardly the flashest of suburbs.
Guys I don't really know whether you read stories or not.........
Median prices (the middle of the market) are rising fast too with these prices up more than 14% over the same month a year ago to $629,000.
The November median price is $621,400, so the median price has driven up by 1.2% in just one month.
---------------------------
Barfoot & Thompson is just trying to publish the milestone number in the news (over 700k average). Trying to be explosive but not dishonest.
http://www.johnkay.com/2013/11/30/why-london-homes-remain-affordable-it…
http://www.lrb.co.uk/v36/n01/james-meek/where-will-we-live
Oh look London is having a housing crisis as well, how strange it is.
Or you could live in the regional South Island like I do and have seen very little price gains at all, let alone a slowing of price growth. In fact, inflation adjusted, my house is still below 2007 peak. One home for sale in my area is asking around 700k (originally closer to 800k) and it's sat there for 18 months. Most properties 700k + don't move.
I for one wouldn't be stupid enough to buy a house for $700000, that was worth only $450000 in 2009. Nor would I lend to someone who would. This is going to end in tears I think. In the UK they are saying that there is liekly to be another crash due to house prices over there also getting out of control...again. We never had that crash here in NZ, so it could mean something worse could happen in NZ.
NZ property did take a bit of a tumble after 2007, but nothing like the UK.
The government is pumping prices over there - the country is an economic basket case and this is the only way Joe public can start to feel wealthy again. Of course it will all come crashing down again.
Not sure we'll "crash" in New Zealand (unless interest rates rocket), we don't have the major problems the UK had like bank failures. We'll probably see prices stagnate and inflation nibble away at them, similar to 2007 - 2011.
I for one would not value a house on a historic price.
It is worth what it is in todays market.
A friend of mine [was offered] did not buy a 2 bedroom flat in Mission Bay at $375,000
He thought the sellor was being greedy, he asked me what the sellor had paid for the place.
Typical kiwi thinking, looking at the sellors wallet, not at his own wallet.
A year later the market has moved 15%
Flat now worth about $431,000
increase of $56,000 - over $1,000 a week increase for year.
The market should go 10% this year -
lack of building, lack of buildable sites, Chinese money, increase in cost of materials by F, supply constraints by F, Auckland Council taxes, Auckland Council meddling and incompetance, lack of Traddies, Proffesionals adding to costs and delays and creating more problems and being part of the problem rather than problem solvers, lack of developers finance et al....
Despite all the points you make to support ever increasing prices, you're missing the fundamental - affordability.
The average household income in Auckland is $70-80k, with increasing interest rates and the LVR restriction that income simply cannot service the level of debt required to buy.
You can argue that investors and foreign money will pick up the slack but if they are seen to be truly dominating the market we'll see democratic action taken to fix it.
Ultimately these prices and these year on year increases are unsustainable. Your friend may well come out on top.
Are you kidding me? Average individual income would be 80 - 90k in Auckland so assuming a working couple living together, the average household income should be between 150 - 200k. An average house price of 700k would be about right for wider Auckland, but for the top 20 suburbs (so called million dollar club), the median house price would be well over $1 mil.
I forgot to mention increasde immigration.
Desptite thge best efforts of the Helen Clark Govenment to keep New Zealand a low wage economy to protect their voting base, some areas have down very well.
There are a lot of Auckland Council workers [and other government and Quango emplyees] in the $100,000 to mid $200,000 bracket and if the have a working spouce, well.
Demand for the higher quality housing and the better suburbs will only increase, not decrease, why don't you google buildable section Mission Bay for sale....
You are completely out of touch with reality.
Interest readers may be pulling that sort of income, but Joe Kiwi certainly isn't.
Auckland:
the median household income was $70,616 for the Auckland region (NZ.STAT tool).
http://www.statschat.org.nz/2013/12/10/its-all-in-the-definition/
New Zealand:
http://www.stats.govt.nz/browse_for_stats/income-and-work/Income/NZInco…
"and found the $29,600 figure is for the usually resident population count aged 15 years and over. In other words, this includes everyone who is not in paid employment: all the students, retirees, parents who are staying at home, those on benefits and not working etc."
"Using Statistics New Zealand’s income survey data for the June 2013 quarter (Excel spreadsheet), the median earnings for people in paid employment was $45,864. This figure is only from those earning wages and salaries and/or self-employment income"
We should be so thankful that those non paid employment people don't have to pay for rent/housing, food, clothing etc.... we should only count those who matter....
Alas grasshopper, In the real world, just because X = $X does not mean Y = $Y. Lok at the price of Gold for instance.
But going back to your comments, I did not say the average Aucklander could afford a house in Mission Bay. Some suburbs are very exclusive, but the people who live in them are not average.
What you forget the the"Average Income" includes all the non-productive members of Society.
People with a Gold Card, people collecting a benifit, students etc...
All the non productive who inb the real world have susidised public transport and priority travel over the productive in Bus lanes.
Thtat is irrational, but is the reality.
New Lynn is average, can your average couple afford a flat there? If not, they can afford a flat in Kelston or Sunnyvale.
You need to remember there are lies, dammed lies and statistics,,,
http://en.wikipedia.org/wiki/Lies,_damned_lies,_and_statistics
But at least you are watching and trying ti figure it out, as a friend told me...
There are those who make things happen, there are those who watch tinngs happen and then there's those who say 'what the F*** happened'
It is the percentage of Aucklanders and others who can afford a Millilion dollarr property that set the price in the non average suburbs and their confidence and perception of the housing market and their ability to obtain and sevice finance that set the market price.
It's always been bloody hard to by a house.
good point
Your terminology would be better referring to non-income-earners rather than non-productive Your point reveals the fallacy of HP's average income to average house price of 3:1 increasing to 6:1
Using his methodology, as the number of non-income-earners in the population increases so the ratio of house value to household income increases. That could be reflected in the levels of unemployment of 3% when the base ratio was 3:1 compared to current levels of unemployment of 6% and ratios of 6:1
I am with rjf on this. If the problem was medium incomes were falling not house prices rising, due to the effect of rising number of non-productive people in societty, i.e the elderly, then you would expect home ownership rates would be rising as more elderly people own homes compared to young adults. But home ownership rates is falling rapidly.
ZZ the point I was trying to make was all other things being equal, in a society with a rising average age like we have you would expect the home ownership rate to also rise. Because people have longer to gather the resources needed to purchase their own homes. The fact that our home ownership rate is falling while we have an aging population indicates something is seriously wrong. What exactly is up for debate.
Brendon: There is a problem with your proposition. The other day Kate put up a link to a newspaper article about the property market in Invercargill where 40% of the houses in Invercargill are rentals that are "owned" by out-of-town and overseas property investors - and given the current love-affair with property investing that number is only going to get worse - particularly in Auckland
Iconoclast there is nothing wrong with my proposition that all other things being equal, a society with more older adults compared to a society similiar in all other ways except they have more younger adults will have a higher home ownership rate. Due to the simple fact that older adults have more time to gather the resources need to purchase a home. As NZ is transforming demographically from the latter to the former but home ownership rates are falling not rising then logically all other things are not equal. Something has changed.
Is it restrictive planning rules, that prevent home buyers from substituting away from inflated existing house prices by building a new home?
Is it cheap credit conditions?
Is it excess demand from foreign buyers possibly combined with cheap foreign credit?
is it that property investors have some advantages over FHB so outbid them?
Is it something else?
I think it is all of the above, but restrictive planning rules is the most important effect. Inflation in one good or one companies prices is not a problem until you restrict the market from providing an alternative. It is the restricitve planning rules that allows all the other things to have such a dramatic effect.
Read the stats. Non earners ("non productives" as you put it) aren't included in the second set. It's earners only.
You seem to be saying that only those earning way above the median income should be able to buy a median priced property. You are accepting that the market is distorted. Judging from your rambling, confused reply and cliché arguments (lies, damn lies etc.) I might have touched a bit of a nerve with my dose of reality!
We could go take out a million dollar mortgage (yes we're one of those high earning couples you refer to), but we don't think we're getting a million bucks worth of house for our efforts due to an overheated market.
RJF, please and others, please note.
It would be insane not to take out the highest mortgage of your career.
What are you, afraid of a little debt?.
If you earn a fraction of what all houses will rise up to, you will be left behind in the rush to gain a home of some distinction.
I am sure you are all living in the best you can do, based on past performance.
But you should get all geared up like crazy and go for broke.
Because you should always bet on the side of frantic inflation,not a fall, which is usually indicated by the free fall in interest rates to stave of any uncertainty and when these rates fall, to nothing, bet all your income and any more that your parents can afford to leverage up that yield exponentially.
If your parents are not cash rich, ask them to borrow on the house as much as they can and put yours and their shirt on this certainty.
I am a Housing Salesmans nightmare, as I will not charge you anything like a 4% premium to buy any property, you desire. The seller will pay that. You should never err on the side of caution, in matters housing and finance.
I will even lend you money at 3% to accomplish your hearts desire. 2% if over 2 million.
I will even fix a rate for 30 years.
I have made millions and billions for people, who have listened to my advice in the past.
Please reconsider and send a retainer for my services to seek out the mortgage funds, which are freely available to me.
It will only be 1% of any purchase price, insignificant in the big scheme of things.
Cheques can simply be made out to my off shore Bank,
Payable to.
Ponzi and Associates,
Bank of Nigeria.
Your participation is urgently required.
Please note.
My true pen name is Madoff, it used to be Madeoffwithyermoney, I shortened it to fool the non-believers out there.
Please note. This is Friday and the joke is, some people will believe anything.
Did you ??.
PS. Talking to a realestate agent of my aquaintance today, things are sticking here, quick sell up in Awkland, we need the money, it has stopped flowing to the provinces.
Hurry, hurry, he is not laughing, it is no joke.
Based on the figures I've seen, the rate of growth in prices in Auckland is well above the global trend. While I think Aucklands trajectory has many more years to run unless something dramatic like restricting foreign ownership happens, I do not think that even if you consider Auckland to be a "global" city rather than a NZ one it can keep diverging from the global mean forever.
I forget nothing. I just negotiate the problems, as do others.
It is those with assets that appreciate daily, in their imagination, leveraged up to the hilt, I really appreciate.
So do the Fractional Reserve banks.
So do the Real Estate Moguls.
So do the Government.
So do the accountants.
So do the renters.
So do the IRD.
So do the Car Yards.
Couldn't negotiate their way out of a paper bag, some people.
They have all made me what I am today.
I am indebted to you all. And no one in particular.
Keep on borrowing, in fact borrow more.
It does not alter my ego, one jot.
Many thanks.
House price predictions for Auckland anyone? My crystal ball says perhaps another 12% increase in 2014 and 10% in 2015. Large net migration gain mainly into Auckland and lack of new builds completed in 2014 likely to ensure these price increases will take place even if interest rates increase say 1%.
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