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Barfoot & Thompson reports February sales were lower than those for January; big proportion of sales in high price brackets

Barfoot & Thompson reports February sales were lower than those for January; big proportion of sales in high price brackets

Auckland's largest real estate firm is reporting that February sales of properties were down some 13.6% on those for the same month a year ago.

And the 771 properties sold during the month (compared with 892 in February 2013) was actually lower than the 854 sold during January 2014. ASB estimated that on a seasonally-adjusted basis the February figures were down 13% on those for January this year.

The slowing of the market in February has also been confirmed by latest figures from government valuer Quotable Value.

February/March are generally the particularly busy times for house sales. The last time B&T's January sales exceeded those for February was in 2008, when the market was starting to go from hot to cold in the build up to what would become the global financial crisis.

But the general expectation among economists has been that the full impacts of the Reserve Bank's 'speed limits' on high loan-to-value lending were likely to show from February onwards.

ASB economist Daniel Smith said February’s sales data "provides a hint that the LVR restrictions’ impact on sales may linger for longer than previously anticipated – especially if the drop in sales is mirrored in next week’s more comprehensive REINZ figures".

Westpac senior economist Michael Gordon said the latest figures demonstrated that the housing market "has cooled substantially" since the high-LVR restrictions came into force in October last year.

Sales were now 23% below the cycle peak reached last October, he said.

"The flow of new listings has also slowed in that time, although not enough to match the decline in sales; as a result, the stock of unsold homes rose for a second straight month. 

"Unfortunately the B&T figures don't shed much light on the impact that the LVR restrictions are having on house prices. The average and median sale price series are not quality-adjusted, and as the breakdown of sales shows, there has been a massive shift in the composition of sales.

"The LVR limits have gutted the lower end of the market (the habitat of first-home buyers), while the higher end remains largely untouched (sales of properties over $1m set a new record high in seasonally adjusted terms in February). Consequently, both the average and median price measures are being skewed sharply higher - an 18%yr rise in the median sale price is well out of line with other indicators of what's going on in the Auckland housing market," Gordon said. 

ASB's Smith said B&T’s Auckland February sales figures suggested the slowdown in sales volumes seen over the November-December period "may be carrying over into early 2014".

"January data had pointed to a partial rebound in sales, but this data for February suggest that was short-lived. According to our own seasonally-adjusted estimates, the number of sales in February was the lowest since March 2012.

"If that softness is sustained, and if it is reflected in the more comprehensive REINZ data released next week, it points to a further slowing in demand. We should point out that the Barfoot data has shown quite a bit of volatility over recent months, and a similar drop-off in sales volumes in December was not mirrored in the REINZ figures."

According to the latest B&T figures, in February some 15.8% of the houses it sold were in the above $1 million bracket.

Banks have appeared to be surprised by the way they have managed to maintain high levels of mortgage lending by targeting customers with high deposits through two-tier mortgage interest rate pricing. Those with higher deposits are being offered better interest rates.

As Westpac's Gordon commented, the big moves in the relative number of houses being sold at both ends of the market is throwing both average and median price figures around.

B&T's average and median prices both hit record highs in December.

Then in January the average was $647,207, down from $700,387 and the median price was $580,000, down from $629,000.

In February, both the average and median figures have blipped up again - but on lower sales. The average was back up to $678,533. The February median price was back up to $620,000.

Million dollar sales

B&T said that it had sold 122 homes over the $1 million dollar mark in February, up 60 per cent over the same time last year. Sales of homes $750,000 and above were up 50 per cent on 2013 figures.

Comparing this February's figures with those for February 2013, according to calculations, in the latest month the sales of homes in the under $400,000 bracket (148) made up just 19.1% of the total sales, while a year ago the number (267) made up some 29.9% of the total. This would clearly suggest the impact of the LVRs on the lower end of the market.

ASB's Smith said that according to ASB's seasonally-adjusted estimates, sales below $500,000 in February were almost 30% below January’s level, back in line with the "weak" December numbers.

"Sales between $500k and $750k also fell, while sales of more expensive properties continue to show a lot of vigour – sales over $1m set a new record (in seasonally-adjusted terms). Unless the composition of inventory has shifted significantly, the lopsided drop in overall sales activity suggests that the RBNZ’s LVR restrictions are a major factor, rather than, say, a shortage of supply." reported this week that the number of new listings nationally had plummeted 10.4% in February, and had fallen 5.7% in Auckland.

Listings fall

B&T managing director Peter Thompson said his firm's number of available listings reached its highest level since March 2013, at 3674.

The latest figure is down 7.9% on the 3988 B&T reported having on its books at the end of February 2013, a month in which had it reported an "excellent" number of 1752 new listings.

"We are starting to see a return to listings levels of October and November last year. For buyers, that’s good, they can start to shop around, but greater choice means more competition. Sellers will need to be realistic and not overvalue their assets if they want them sold."

He said February sales figures were "consistent across all price spectrums" with a "slight increase in the number of sales across higher price echelons".

"These signs are positive and an indication that the economy is stable, banks are lending, and buyers and sellers remain confident. But there is more choice out there and that will ultimately affect prices."

Westpac's Gordon said the bank's view had long been that the LVR lending restrictions would bite hardest initially, as first-home buyers dropped out of the market.

"However, over time we expect investors will step into the gap. This, combined with a strong lift in inward migration, should help to limit the fallout for house prices in 2014. Nationwide, we expect the pace of house price inflation to slow from almost 10% in 2013 to around 6.5% this year."

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With the welcome home loan only helping people out in auckland in they want to buy something for 485k or less, its no wonder nothing in the mid range is selling. Only the cashed up can buy in auckland, and they want expensive homes.
Secondary cities have the opposite happening.  In P.N the welcome home loan extends to 300k, yet the median house price is only in mid 200k range.  So a first home buyer can happily buy an above average house with 10% dep, most (if not all) of which can be funded from kiwisaver and the 5k grant. Only a matter of time before all property in P.N starts at a base price of 300k.  I am not sure I agree with price capping....

So who do we believe B&T or  IMO better to wait for REINZ figures each month. 

B&T report is mainly talking about sales.  Realestate is talking about listsings.
If you are comparing listings data from both, then believe, figures include B&T along with all the other agencies.

.... a little lateral thinking is called for , friend .... why don't we get that humungous German built tunnelling machine to make a series of interconnected tunnels under Auckland , then convert them into subterranean dwellings .... thousands of them , tens of thousands ...
And we still get to use the land above ground .... doubles your profit !!
.... trebles it if we construct another layer of tunnels under the first lot !!!

Classy abode , Mr notaneconomist ... a realtor's dream listing ....
... " Uniquely different house , with unobstructed sea views , and easy care section .... needs a little TLC  " ...
We should all be so lucky to have one !

Be quick. Olly or SK will be on to it!

....did  you notice that it's tilting towards the right and towards the rear ?
Big Daddy is checking out the European designed kitchen with Italian marble tops !

........yes it's only a small tilt....not enough to qualify for a rebuild........
Initially I thought Gerry got confused and assumed it was the local ferry !
But maybe Bid Daddy sorry I meant Big.....has got the marble tops in already.

What is (to me) extremely interesting is that the market volumes are clearly going backwards at an accelearting pace in spite of the highest net immigration in 10 years.  Immigration is right now the main thing proping the market up and is doing so in a big way - imagine what the impact of the market will be when net migration slows (historically major net migration inflows and outlows dont last more than 18 months).

Auckland #2 on the list of biggest price gains for luxury real-estate
"Biggest price gains. The city that had the biggest price increases for luxury real-estate was Jakarta, Indonesia, with prices up 38 percent for prime, luxury real estate. Auckland, New Zealand, ranked second, at 29 percent, while Bali, Indonesia, ranked third, with prices up 22 percent."

Hi Simon, do you know what they define as "luxury real-estate"...  properties over 1m?

Not clear from the cnbc article, would have to dig out the original report. 

So Graham Wheeler has turned out to be a bit like the Noise Control Officer who quietens  down the party.
His threat of increased interest rates and the LTVR rules  have been  enough to inject some sense into this out-of control Auckland Housing Market .   
The fall in sales volumes both compared to January and YoY , is not easily dismissed as simply saying the market is taking a breather.
Agents will tell you there is no stock , but that does not hold true as the Property Guide  is fatter than ever , and Trade me listings are static .
That said , there are no doubt some logical explanations for this , and I can think of at least one or two
1) The market has run ahead of itself
2) Buyers are not stupid , they know Auckland prices have gone too high ( as in afforadable)
3) Sellers have developed unrealistic expectations
4) The expectation of an increase in interest rates will dampen enthusiasm
5) Our inherent low wage economy is a hurdle to prices going up forever .

How long is it now Boatman, that you've been predicting price falls, 1, 2, 3 year + ? ?  Is there a point where you should ask yourself "why do I keep getting it horribly wrong"

I have not actaully predicted a fall in Auckland residential property prices , I just think the status quo is unsutainable , does not make sense and until the multiple causes are dealt, property prices will remain too high and  skewed .
I dont think I am wrong in these observations .

"... I just think the status quo is unsutainable" 
I assumed from that you meant price drops, you may not be saying "price drops" specifically but it is implied from your comments.  I've mentioned before that for someone who was rallying for lower prices it would be counter-intuitive to argue that price drops are inevitably going to happen as that would in turn suggest that the problem would resolve itself and require no intervention.  I.e. the status quo can and should continue.

@happy 123 , I just dont see value at these very high levels , and if you are borrowing a mortgage , I think prices have moved into dangerous territory .
These prices cannot go on up forever , there will always be someting that gives eventually
For investors the investment returns are negative by a huge margin , and for occupant  young families a pregnancy could see 1 income drying up and foreclosure following.
Its all too risky

I love your work and contribution to financial discourse - but why the random as posts all the time on completely unrelated topics?



The left is decline because of internal politics in the Labour party and because Cunliffe hasn't 'clicked' with voters. Whether he does or not, time will tell and whether he gains the upper-hand over the Labour caucus is unknown. Even if does will he just be the next JonKey, Helen Clark, Rob Muldoon?
Bill English never 'clicked' and National had a bad period of swapping leaders and doing badly in polls and elections not so long ago.
John Key does 'click' with voters and that is why he runs the country.
In our highly centralised country this is a problem because basically what JonKey thinks is law. If you don't like the institutions of state in NZ it is the PM's fault because without there support, nothing will change. Their is no chance for local initiatives or change coming from another avenue, Congress, Senate, State government, the Courts, Civil Society (knighthoods -Sir Bob Parker -what a joke). JonKey controls all the equivalent structures in NZ directly or indirectly.
NZ cannot reform itself because we have turned ourselves into a bunch of 'yes men'. That is why we get the Novapays, the Christchurch insurance crisis, the housing affordability crisis, leaky buildings...
Last night on Campbell there was two interviews of locals re the Christchurch flood. The kiwi complained of the difficulties of being flooded out of her home every time there is a decent drop of rain. The foreigner -Brit, hit the nail on the head and said the government (meaning EQC, CERA, Brownlee etc.) know the problem is the land has sunk, but they don't want to officially hear about it because then they would have to do something. Why is it foreigners are used to the 'bottom' being heard but kiwis are not?
So Demographia having the support of Bill English the finance minister is not enough, you need JonKey support and I don't think we have it. I think he is more concerned about his rich mates....
Democracy the least worst system of government.....

As a little thought experiment. Has anyone here at ever had a conversation with a politician in NZ where the politician seemed genuinely interested in your opinion?

People have to be clear about their expectations and ensure that is beneficial to the wider community and cost effective if your going to approach a Politician. Clear reporting on your findings, i.e. not your personal circumstances but the issue as a whole. If people are having a problem and they have been affected personally you can bet your last dollar others will be having those exact same problems with whatever the Government entity is.
You can also just about guarantee that there is an 80/20 or 70/30 situation. The system works for the 80% but fails the 20% etc.
You need a clear direction on a path forward to resolving the problems, this is mandatory.
Most of the issues that arise are due to the administration of that system by bureaucrats so clear patterns of behaviours/culture within an organisation have to be identified, in particular where  internal Policy conflicts with what is in the legislation that governs the body from where the problem stems. And you would be surprised how many policies have a double interpretation.
If legislation is viewed in general as provisioning the community with a benefit, is that benefit being obtained? What is the percentage of people who receive no benefit? (numbers who have fallen through the cracks)
Are those who are administering the legislation showing transparency, integrity etc when they do that administering?
Have people been bullied or threatened in some capcacity by the organisation whose responsibiility it is to do the administration? Are the administrators in breach of Bill of Rights etc?
My personal experience and the experience of many of my family and friends is that most people who are working in goverment organisations across the spectrum exude arrogance, dominance, demanding, have no problems using trickery, lies and deceit  whilst undertaking their duties. in fact today I had to deal with a very arrogant man from a Govt organisation whilst undertaking a compliance issue. You have to have legs on your belly and make out your stupid with some of these people so they don't feel any threat to their egos. If you go at logger heads with them they'll make your life miserable and you'll get threatening letters quoting legislation and fines etc that can be imposed if they take action through the Courts with you. So you have to pick your arguments and factor in the costs involved.
We all tend to look at MP's to solve these issues, but they're getting reports from the areas they are responsible for which makes the organisation look like a glowing well- functioning body.
There is nothing worse than conflict of information when in a position of decision maker. One oganisation is provisioning the MP's with reports that appear supported by information while the ordinary Joe Blogss on the street is not providing the same type of reporting only his/her personal circumstances/experience of the organisation. Then add in opposition parties who have a completely different agenda. Politics is a messy affair and made worse by all these list MP's who get in.
The last time I did a report up to present to a Politican it took me nearly a year to make contact with a large number of users from across the country. It did become a word of mouth thing and people started to contact me in the end.
I had to collate the data, identifying all the patterns of behaviour/culture etc. It was an enormous task which takes a huge toll on your personal life and finances.  The thing is that you can effect change but then you notice that a new machine is born which is usually worse than the original, better at covering their butt and more expensive to comply with etc, so you then have to identify all the new patterns that organisation comes up with so you feel like your back at square one 5 to 10 years down the track.

Yes Brendon , I had a wide ranging conversation with Ron Mark ( when he was an MP ) at the Oxford A&P Show ....
.... he was extremely knowledgeable , and courteous ...
Our only disagreement was my contention that NZ First was all about Winston Peters , and Winnie's gargantuan ego .... and that no one else would be promoted within the party ....
.... sadly for us all , I was right on that point , and Ron Mark is now a glaring absence from our parliament ... a really switched on , decent guy ...

So if I want to meet politicians and have a genuine conversation I should spend less time here and more time down at the local A&P show?

.. . it  seems a relaxed and convivial place to start , yes ...

Some of the green's sort of, otherwise, no.

I have had conversations with politicians that were not just interested, but wanted more depth in my conversation than I could easily give. Admittedly this was on topics that they were personally interested in rather than particular topics I wanted to buttonhole them about. 
I'd also say I've met MPs with enough grasp of how government operates, and enough interest in their constituents, to have been genuinely helpful to people I know at navigating the beurocracy. But then I can also think of some I would personally consider a waste of space. 
To stereotype at a party level, I would say it is easier to have discussion about complex interacting systems with a Green MP, while National and Labour ones tend to be much more linear thinkers. I have actually enjoyed arguing out the net energy efficiency of the New Zealand transport network and what the Government could/ should do about it, whereas Nat/ Lab tend to just look lost. OTOH discussing natural remedies with a Green Party candidate can be bad for my blood pressure, so it does depend on the particular topic.

DH I would imagine being clever with statistics (I mean this in a good way, just a bit late to work out how to say this in a simple but effective way) makes you quite attractive to politicians.

Question, Hugh. If we taking your opinion as the government "getting it" on housing as having a starting point in Spetember 2012 (Bill English's comments). How long does inflation adjusted costs per square metre for housing planning consents need to keep increasing before you would reconsider your opinion, either about the government or about the underlying causes. Since if the government do get it, and are able to do something about it, at some point the cost per square metre should be coming down rather than going up.

Hugh in my experience actions are worth more than words.
Last October year JonKey commited himself to what? Increasing the consent rate in Auckland through one housing accord, how is that going? Are houses cheaper to build in Auckland yet? As DH says where is the evidence? 
What about the other nine accords. What progress has been made?
What about Christchurch? No housing accord and after the floods locals are saying that more redzones are needed! So we are going backwards not forwards there.
Hugh where is the progress that goes with Jonkey words?
Just because the Emporer says he has fine clothes doesn't mean he does.

Now, I'm saying this as someone who sees a freedom to build as a good thing, but I see the New Zealand housing bubble as having more to do with fiscal reasons (in particular the amount of capital directed at the housing market). I think we are entering an interesting time where a number of things could happen though. The cost per square metre of building could keep rising in the same way it has been the past couple of years or it could fall. House prices could rise or fall. The combinations that we see are going to tell us a lot about the drivers of the bubble. For instance if we see the cost of building fall, then house prices track down with it we will all pretty much have to agree it was supply issues. If we see the cost of building not fall, but house prices fall that will suggest it is financial. I would also suggest that if we see the cost of building increase, the amount of building increase, and house prices increase, then we are in the unhelpful situation of supplying more tulips to meet the current market demand.

This 'crash change' is all I know from NZ governments and I am in my 40's. My childhood I remember my father talking about Muldoon to his mates. Not exactly an exemplar to consensus politics. Yet people protested and challenged the status quo. It was only in my teenage years when Lange and Douglas come to power that I was old enough to really pay attention to politics.
Since my childhood I have noticed that kiwis are less and less challenging authority. That the 'system' is wearing people down.
When you have an Earthquake Minister not evening acknowledging 3 years after the event basic changes of the landscape. Taking the hands in ear LaLaLa I cannot hear you approach, then you cans see there is something fundamentally wrong with our political system.
Carrick St resident Jo Byrne , who has evacuated her home four times since the 2011 earthquake, said it was ''absolute crap'' that authorities were still unable to confirm the effect of the earthquakes on their land. 
''We weren't even in a flood management area before the earthquakes... it really annoys me when we're told flooding in this area is historical.''
Bryne said she was ''sick of the non-committal response'' from the Government, the council and EQC. 
A Tonkin & Taylor report commissioned by the council last year showed vast parts of the city had sunk because of earthquake-related elevation change.


6) investors can not get a decent yield in auckland as prices have risen much faster then rents.  Investors however have had a massive increase in equity from the big price move, so will now look to invest outside of auckland in areas where yields and prices make sense. 

I hear Palmerston North is a good place to invest ;o)

Yeah, but it's also Palmerston North...

Transmission valley cutting travel time, freight time between p.n and welly.

Last comments I saw was, rents have not increased increased.  So its like being a gold bug, the only way to make money is if the value rises...and look waht happened to gold.
As for other areas, I suspect there is a ceiling on rents (just like Auckland) there as well ie the ability of ppl to pay (more) limited.
Have there been bigger rent allowaces off winz?  (or whomever) if not (and that's a no isnt it?) and therefore rents have topped then unless that allowance increases rents wont.
So really the rent suppliment is a rort to support landlords and nothing more, maybe it should be cut.  That would be an interesting experiment to watch.

Last figures I saw were that rents in Auckland are going up at over 10% yoy...

What figures are you stating experience they are steady and plenty of choice. A friends landlord tried to increase their rent by $50 a month - he simply moved closer to town at the same old rate (more modern apartment as well).

I have been watching the rates in my area (betweeen Takapuna and Devonport) for a while now and there is no indication of a rise. I can rent a similar property now for the price I negotiated down to 3 years ago. Recent listings in the area:
- listed at $1250, reduced now to $970, still available
- listed at $900, reduced to $780 then rented
- listed at $900, then $800, then $750 then sold (not to an investor)
Anyone trying to push up rents is failing as almost nothing over $750 is getting tenants and I don't see this changing unless wages increase.

Help !!! where is SK, Big Daddy et al.......this can't be happening to the Auckland property market, as I thought there was a steady, never ending stream of cashed up immigrants and busloads of foreign visitors with brief cases full of "neatly ironed" cash !!  ......all waiting to pounce on that $1.7mil Westmere or Grey Lynn dump with no land !!
Thank you John Key and the National Party for putting your interests and those of your cronies,  ahead of the general public, you are doing a fine job !

...I know this, you know this...the Nats know this.  The problem we have is a disfunctional opposition who seem completly incapable of picking the right issues with the Nats.  A weak opposition is bad news for us all.
Human nature as it is, a good looking, smiley leader is a sure fire way of getting the votes - . of the worst US presidents of all time..
Harding was worth looking at. At about 35 years old, his features, size and proportion attracted attention. The term ‘Roman’ was occasionally used in descriptions of him.
He was classically tall, dark and handsome and appeared courteous, virile, generous, genuine and good-natured. However, Harding wasn’t a particularly intelligent man. matter..


No use accusing the PIs of picking and choosing stats if you do just the same.  Where were you when was releasing record prices and low listings for Feb?  Or when the seasonally adjusted figures show continuing strong yoy growth for Feb.  Crazy horse indeed. 

Good Morning to you Zanyzane or is it Happy123 ..... :)  regarding the stats don't you think it would be good for the market to know who is buying properties in Auckland .... 'who' meaning is it a foriegn company, family trust, local company, private buyer, overseas domiciled entity etc.
This has nothing to do with the race or ethnicity of the buyers at all, it would just give a clearer picture, as to whether these buyers are residing in NZ or not ?  
If these stats were available, perhaps it would give some ammunition for a lobby group to push to restrict sales of existing property to foreign buyers ....... as in every other country in the world (including Australia) ...but not in NZ because of and I get sick of repeating myself ......VESTED INTERESTS.

One simple way to benefit us all (taxpayers - not cap gainers) would be to extend the home wof scheme to all rental properties.  Several impacts - some landlords will cash up, not wanting to upgrade, a home owner can buy in, not having the same conditions imposed.  Secondly, the upgrade will in effect transfer health costs (go visit the kids words in Middlemore during winter) from a tax payer burden to a landlord burden.   Would do more overnight to prop prices than LVR will ever do.

Not sure about the Auckland or Christchurch market but things definately seem to be slowing in much of the country. Decided to do up and market a property in Tauranga, listed at just under $500k.  It was sold within 3 weeks of tenant moving out but only had minimal interest at open-homes and agents were saying how quiet things had become.  But it  sold because you  only need 1 person as a buyer and she was keeen to purchase the property

I passed through this property in 2012 when it was on the market, i's now back for sale with minor reno. would be interesting to see how much it will fetch.. my guess is it has gone up roughly 15%/yr since 2012.

We just did a mini make over in my mums house in PNorth.  800 square metres, corner section, solid 1940's house with new top and bottom insulation, listed early 200K.  Agent said he could easily sell it but didn't.  Said LVR has had a huge impact in PN with way lower sales than last year.
Any takers?

Big section, small house might not be that appealing to an investor?  What suburb?  It is a shame the lvr restrictions seem to be giving investors first pick while first home buyers sit on sidelines.
Although at that price range I can not figure out why the buyers do not use the welcome home loan, only needing 20k dep, if they are a couple 5k each grant, plus kiwisaver...
I had a relative buy in palmy this year at high 200k range, about 10% over GV,  having never been able to save a cent in his life, but had kiwisaver since inception, so had all deposit needed in that plus the 5k govt. grant.  Thing is he originally went to bnz and was convinced he could only buy up 200k.  And of all the open homes he attended NO-ONE mentioned the welcome home loan scheme.  I had to be the one to inform him, and within a month he had used it to buy a very nice house. 
People selling their house need to make sure buyers are aware of whats out there, as the main banks who dont offer the welcome home loans will not tell them! 
Things will change a lot if all the banks get access to the welcome home loans, you'l see many regions lower priced property immidiately jump to the price cap level.

One word....Trade-Me.
Why would anyone in the current market need a Reaiestate agent to sell their property ?
List it and its sold in under 30 days.