Trade Me Property says the Auckland housing market has shown its first sign of easing in 18 months.
The average asking price of Auckland residential properties listed on the website in the three months to July was $756,700, down $16,650 (2.2%) compared to the average asking price of $773,350 in the three months to June.
"While a single month doesn't confirm a trend, the asking price is a lead indicator of the market based on thousands of listings added to Trade Me Property by real estate agents and private sellers each month," the head of Trade Me Property, Nigel Jeffries said.
"This blip could mean a change in direction for the market or may just be a temporary stall," he said.
"Historically we see a dampening in expected sales in winter, as sellers wait for warmer months to list their properties on the market.
"We'll be watching the coming months with interest."
However although the overall fall in average asking prices affected most types of properties, it did not affect asking prices for 3-4 bedroom houses, which is the largest single category of homes advertised on Trade Me Property, accounting for more than 40% of all listings.
The average asking price of 3-4 bedroom houses was up 1.1% in July compared to June.
The biggest fall in asking prices was for smaller 1-2 bedroom houses, which were down 4.5% in July compared with June.
Auckland apartment asking prices also took a dip, dropping 3.2% in July compared to June.
However the average asking price of Auckland properties was still up 18% compared with July last year.
Outside of Auckland asking prices are continuing to rise, with average price for all parts of the country excluding Auckland hitting $414,800 in the three months to July, up 2.5% compared to the three months to June and up 5.5% for the year.
After Auckland, the biggest annual increase in asking prices was in the Bay of Plenty where they were up 12% for the year, followed by Southland $11.6%, Canterbury 10.7%, Manawatu/Wanganui 9.8%, Taranaki 9.7%, Hawkes Bay 8.6%, West Coast 8.1%, Northland 6.8% and Otago 2%.
Four regions recorded declines in average asking prices in the three months to July compared to a year earlier; Nelson/Tasman -4%, Gisborne -3.2%, Marlborough -0.4% and Wellington -0.2%.
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76 Comments
From what I have researched about property cycles this cycle was due to start dropping around mid year this year. So far this looks as though it may be accurate.
Happy123 said this week he thinks the Auckland market has peaked. For once I agree with him. In fact I think it may have peaked a month or 2 ago. Time will tell.
If we look at the last 3 or 4 years median prices comparing May through to July prices
2011 up 6k
2012 up 14.5k
2013 up 15k
2014 0 rise
2015 up 7k
If anything its just following standard trend of prices traditionally dropping around the winter periods and picking up towards the Christmas time again, more key information that will help determine who is right and who is wrong will come out in a few months. So I totally agree Triple Time will tell.
What is the other evidence Triple, keen to hear your thoughts??
I agree and have said winter always slows, but on another note I was at an auction yesterday for a 3 bed in Avondale for my brother-in-law who is moving back from Sydney. Weatherboard house, ok, not amazing, no land just your bog standard house. I don't know Avondale but got my Barfoot agent I normally use to send me all the recent Avondale sales and it should be selling for $660-ish. Anyway this one had a pre-auction offer accepted so the auction was moved up, I arrived at Barfoots New Lynn and there were 9 different potential bidders there, with the preauction offer being at 690k, I then bid 710k and was immediately counted at 715k (I told my brother in law not to bother going higher) and that was it's sale price, none of the other 7 groups of bidders bid.
Demand is definitely still there in my opinion and there are still a select group of people willing to pay ridiculous prices, but there is obviously a growing number of those not willing to pay the excess.
True, demand is still there. Less buyers at auctions but deals are still being done as you correctly stated. The key thing to observe in my opinion (and I have been in property for over 25 years) are cycle changes. They seem to play out fairly consistently.
If buyers want to go against history and cycles then by all means - go for it!
Speaking of experience Dave - you appear to have strong opinions. When did you make your first residential property purchase? When did you make your first commercial property purchase? What is the largest subdivision you've ever completed?
I'm from the UK and moved here 4 years ago and in London you definitely can't subdivide a postage stamp.
First property was early 2000s, got stung a bit when I sold up to come here, but that was a "need" to sell, although looking back I didn't really "need" to sell and shouldn't have.
My only opinion is as you know in the long term property prices will at some point be higher than they are today and if you don't "need" to sell then there is not a problem, yes that is probably a strong opinion of mine, more a belief really but ultimately it depends on what your goals and beliefs are.
I'd say I'm not the only person in the world to believe this though I work at major investment house and we classify the Property asset as 60% Growth 40% Fixed Income, and that's determined by someone a lot smarter than me.
Ah! So you missed the negative equity disaster of the late 80's then? But you'd have been old enough to remember that people couldn't sell to move for work purposes, as the bank wouldn't let them sell at less than they owed. That rents far exceeded the cost of buying, for the same reason. And that those that couldn't hang on, didn't. It caused a huge amount of personal and financial pain. It was still going on when I turned up into the 90's and did the sums. It was far cheaper to buy than rent on a saving sacrifice basis, so I did! A brand new 3 story, 4 bedroom SW4 residence by Berkeley Homes for £ 200k.(Google them you'll get the idea!) Are price higher now? Sure! But, that's the point. Time is money, and no matter what you believe, if you can't hang on, you won't.
The late 80s all I remember was the Beano cost 10p and you'd get 50 sweets for a 20p mix up at the shop, oh and Back to the Future was all the rage.
That aside if my belief is that providing you don't need to sell at some point in the future your property will be worth more than it is today, I think you are saying exactly the same thing bw. The key as you point out is positioning yourself to never have to sell
No one knows what's going to happen, Dave, but we all have a view. The 'buy and never sell' thing has been around since Moses ( it's an old Jewish philosophy, as I'm sure you may know!). But just consider why we are all here in whatever state we are today. Why did the GFC happen, if it was all so clear that the future was going to follow the past? Worse! We'd had 3 very recent warnings (87, DotCom and Property '08) as dry runs at what's happening now ...and we still ignored the problems that we now face. This time we have used the last stabilizer - 0% money. Now what? There is no 'safety valve' left, except for asset prices. Call if Deflation, if you like. But once money no longer has a risk buffer built into it, the asset itself assume the risk. Just food for thought on a quite Friday arvo....
Totally agree no one will ever know whats going to happen.... But that said if the worst happened and we all knew the world was going to end tomorrow, I'm sure all of those people who had a belief system in god or allah or the after life would feel a lot better about it than those who didn't, wouldn't they?
But good points bw for me to think about on, I'll enjoy a beer and look forward to another healthy I believe this, you are wrong to believe debate come Monday :-)
A parting thought for you. Risk, like debt, doesn't go away. It just gets transformed. Usually, from one party to another. That's one of the reasons why people sell property they own! And here's a final one from anyone whose speculated in anything "Always leave the last 10% for the next buyer" Otherwise they won't take the risk of your hands.....
Of course long term property will go up, if nothing else because of inflation.
But smart guys make money when they buy property. Timing is everything. And I may be incorrect, but in my opinion this cycle looks like it has peaked.
Don't believe the old wives tale Dave that it doesn't matter when you buy as long as you hold long enough. That's for bank slaves, and agents have been spinning that line forever. Buy well and you can retire young. Or if you want, keep working, but at least it will be your choice, not the banks.
Totally agree Triple timing is key no one wants to buy at a peak, and everyone wants to buy at the bottom, but if you end up paying 20k or 30k extra for a property than you planned, you're locking in a long term mortgage and can service any shortfall whilst planning to hold for a long time, in the life of the investment that extra money you paid comes out in the wash.
I do also think there are bargains out there in this market for those who work hard, do their homework, can make a fast decision and most importantly find a below adequate real estate agent of which their are plenty.
Hey if you can find a good deal and you think the numbers stack up, then go for it.
But I still remember when I once bought a property and completely timed it wrong and paid too much. It f#%ked me off for years and to no end. And when I did finally see a profit it was so much less than what it should've been. All I'm trying to say is if you buy well, then you're laughing from day one.
Maybe, but my opinion is it has peaked as a typical cycle would suggest it should have around now.
B&T medians were down 3.6% last month. Now trade me asking prices are down 2.2% the same month. Even Peter Thompson concedes the Auckland market is fully priced. And on top of that we have seen interest rates drop further but with apparently little effect.
it costs a lot to liquidate property, and if they haven't borrowed too heavily on their "new wealth" then they haven't really lost much. Problem is a house is seldom a pure fungible investment. Sell that house in Auckland with great aspect for $2m ... where can the seller get replacement inventory? If they live in the house, then there is the access to career and the missus' opinion to take into account too. Many won't accept a down grade in location, access, or view.
I guess some people never think in terms of Kenny Rogers.....
Who would want to sell their house in cold, damp July? Certainly not me.
I see prices cruising up steadily but not astronomically for another 12 months. As interest rates drop, (the NZ dollar becoming weaker which means it becoming even more affordable for Chinese buyers to purchase) and other immigrants coming into Auckland at record numbers.. hard to see any prices bottoming out soon.
Might as well plonk Auckland with Sydney and Melbourne for the next 10 years
If Auck does stall or go into reverse I wonder what affect this might have on the regions? For example the likes of Tauranga and Hamilton have lifted quite significantly lately - will this continue or will an Auck decline knock markets across the board? As for the Wanganui types who havent lifted at all..where too for them I wonder?
There are far more ordinary people talking about a peak and the risks, even the NZ Herald! We have investor lending restrictions (affects 50% of investors), Chinese stock crash, general affordability limits... there is definitely a shift in sentiment. Probably more of a sense that the madness has gone on long enough and even the nutters want it to slow. Of course that is followed up with "but I can't see prices falling".
The contrast with 6 months ago is definitely noticeable. I think the three months Oct-Dec will be all softening prices. Unless of course the Govt push down even harder on the immigration lever to counter-balance. They've been doing their best.
There is still a lot of pent-up demand in the FHBs out there who are still renting and the new migrants. I agree prices won't keep going up at the same rate but I can't see them sliding into a downward spiral any time soon. Maybe a small price contraction in the over-inflated prices people are paying for apartments. I think dropping interest rates will start to have an effect. If our enconomy if as bad as we think it might be then people will want to put their money in houses more than ever.
" If our enconomy if as bad as we think it might be then people will want to put their money in houses more than ever". Sorry I dont get your logic here. FHB are still locked out of Auckland market, if I was them I would watch the rush for the exits, stay out of the way and stay renting.
I mean investors (despite the new regulations). Houses may still produce better yields than bank deposits in the coming years.
Having said that, I sold my rental last month and I'm considering selling my home too so I can cash up and head for the regions ;-) The timing probably won't get better in terms of price difference between Auckland and the regions.
Agree. But it's always a gamble, you've no idea what might come round the corner in this mad world economy (shocks, more money printing etc) but every signal out there is suggesting your strategy is the right one. If things do slow and there is a bit of a buyers strike people forget that it gets quite hard to sell a property. They suddenly become illiquid unless you are prepared to discount.
And the majority of stable employment is within Nanny State somewhere !!!
There is hardly any mention of the likes of Spark who have been making quite a few redundancies over the last few months.
The IRD never seems to audit those working in the public services either...ah....under their noses !!! Maybe the staff in the IRD are into the property speculation and investor business too!!!
The difference is an illiquid asset like property takes a while to turn. The funniest game I've seen playing out in Auckland recently is the "it's all over in 2017" mantra. So many people publically saying that's when the market will peak but of course behind closed doors they're saying "if it peaks in 2017 well I'm gunna get out in 2016". Then there's the real plucky one's who think "obviously everyone else is getting out in 2016 so I'll exit in 2015 before they drag prices down". It's like a game of bluff.
Anyway.. in my opinion you'd be mad to make a speculative play at this stage in the cycle and at these prices. Throw on top the regulatory change and a ban on foreign buyers and it's safe to say the party will be over.
I agree about the 2017 thing.
Tony Alexander started that 2017 prediction. Why would anyone take the advice of an economist who is paid by a bank which profits directly from making loans to house buyers.... a slight conflict of interest maybe?
I'm still waiting on the wage inflation Tony promised everyone would get.
Surely at some point Joe Average property buyer must wonder if the market is over priced when they ask for a rental appraisal and the agents reply is, "there's no point me getting appraisals as the numbers just don't stack up."
I mean HARROW, anybody home???!!
If rental numbers just don't stack up and the agents don't even bother getting an appraisal then the market is probably over-priced.
yes, very hard to start a business with strict regulations and such high wage bills.
Getting worried about the sheer number of Eateries in Palmerston North (eateries per business is a low qual marker. interesting how few second hand/antique places in modern stores). Very few "other businesses" in the brick and mortar world. There were only about 2 store front eateries in Palmy "CBD" now there are about 20.
Used to have to avoid CBD during lunch hour when I worked near town, even doing computer service calls to the CBD 15 years ago it was better to wait until 2:30 and the grid lock to clear (used to take 30-40 minutes to travel 3 blocks). Now it's no wait and parking within 10 meters of shop even at peak. Lots of large empty stores. Although I notice the banks can still afford to keep doing renovations and redecorating and shifting buildings.....
This will soon hit home - already showing sign is Sydney and medlbourne
http://www.smh.com.au/business/banking-and-finance/amp-bank-stops-lendi…
I'll prefix this comment by saying I'm not one of those bears that constantly predicts the housing market to collapse - I think if prices stopped rising a year or two ago the market would have been fine. But I think it has gone too far, and it will eventually have to come down. And when it starts falling it can fall quite quick!
I'm predicting a crash in the next year or so. If I had investment property in Auckland (or anywhere in NZ) I would get out now.
Look what has happened to dairy in the last 2 years - the experts had all sorts of reasons why dairy prices would stay high forever (such as Chinese demand!), but eventually they were proved wrong.
It almost seems like confusion on purpose. UP ...DOWN...UP....DOWN....marked going MAD ....MARKET SOFTENING...... LACK OF LISTINGS......INCREASE IN LISTINGS..... PRICES DROP....
More confusion in the market - more likely a lot of people will make WRONG decisions in panic and misinformation. That will drive prices up, mortgages, insurance and rates....
I haven't bought anything in Auckland for the best part of a year and wasn't planning to for the foreseeable future. But if prices start to drop and there are some bargains around... wait a minute... there's a dire shortage of houses in Auckland... until that's fixed prices are not suddenly going to crash. Plateau possibly but there are too many factors preventing big declines. Not for a few years at least when we may even end up in over-supply territory but it's hard to imagine. My 2 cents.
Very interested to see the next few months results!
NZ is just a pimple on the worlds arse.
Most commentators here seem to think we call our own shots.
If the world shakes, then so will we.The US share market for the last 100 or so years has had share market corrections every 4 to 7 years. We are now at year 6, so there is little chance a correction is not coming in the next year or so. To put this in perspective – the S&P is now on its 3rd longest bull run in its entire history. How much longer do you think it’s got left?? Hmmm... I wonder if NZ will get affected? Its not just about our perceived "shortage of houses".
(AFR) Flood of houses and apartments for sale worries experts ..off-the-plan buyers are facing a "double whammy" of apartment prices having fallen by an average of 20 per cent and banks demanding higher deposits.....More than 40 per cent of off-the-plan apartments are worth less when they are paid off than when the buyer agreed the borrowing conditions and finalised the price with a developer...
http://www.afr.com/business/flood-of-houses-and-apartments-for-sale-wor…
Perhaps. But as is noted elsewhere:
The exit is always smaller than perceived in aggregate before the theatre fills with smoke. Feedback loops cause dramatic overshoot. Out of the wreckage arises amazing opportunity. Dry powder is essential, for credit is often impossible to obtain when the opportunities are the juiciest
Friends asked me at dinner last night "Why are you all in cash now, and why are you taking on debt at what will be shown to be high rates of interest, as the OCR falls?' My answer is in the last line of that last piece. Those who think the Banks are tightening up now,haven't seen anything yet! Debt will be hard to come by, at any price, and if the banks can't lend volume at lower rates they will have to 'sell' less of their wares at higher rates to make their profit targets work.
If you have no debt at all, you pledge whatever assets you can get a lender to accept as collateral for a loan, and keep that amount as cash (or a cash equivalent), and don't spend it. In my case I had no net debt outstanding at all, so I used an existing offset loan facility to fix the rate for a couple of years. ( ie: when we moved I arranged for a Floating Rate facility that was 100% Off-set by keeping that amount in a mirror account - no interest paid or received, or tax paid etc and no "End Purpose" for the credit funds). Now I will say that I got this structure in place 4 years ago and the bank officer I dealt with two weeks ago mentioned that "No way would you get this through, today!". As I say, the interst rate is going to be the problem from now on, getting credit lines will become increasingly so
net debt.
Like having that last 25% of your mortgage to pay off.
The amount of interest you're paying is usually the lowest you get anywhere else so given inflation and opportunity cost you're almost guaranteed (if you have income) to actually not pay it back !! ever! slap it on 4.75% interest only and use your money for other more useful things.
Point the poster was making is, that if credit gets hard to get, you still have your loan active. Can possibly even re-draw it, depending on documentation. but you've already got a bunch of their money.
Long-term risk must be considered, as well as "insurance" cost. How secure is that loan at low rate, how secure is your hedge against it. How will it affect your lifestyle/sleep-factor if things go wrong. Generally things like a 15-25% LVR mortgage isn't big bikkies if you can spread it over 29 years... if everything goes to hell.
OK YL - so you predict the US stock market will perform differently than the last 100 years and this time the bull run will continue indefinitely.
Otherwise, you must be implying that even if there is a US stock market crash, NZ property and finance somehow will not be affected in any adverse way.
If you seriously think either of the above scenarios is likely then I think you're delusional.
will the market retrace though?
nice having the extra paper equity, but it means borrowing ... but if I can't lift my income yield (as tenants wages aren't rising with prices) my borrowing won't increase as it's limited by servicing.
And I don't really want to be selling into a rising market if I have to re-buy in that same market!
And if the prices are increasing, and rents aren't it just makes expansion of passive income much much harder (ie lower yield).
Still nice, but don't see the advantage to it myself..
OCR hikes still coming (remember). OCR 4.5 by year end according to reasonably recent predictions.
http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=112…
OCR heading for 4.5 and beyond according to the Reserve Bank and Economists not so long ago.
Inflation is such a significant problem, and consumers and SMEs are so exuberant, spending up, so interest rates must surely rise.
How many borrowers are locked in on a 6.8% fixed mortgage now on the basis of those previous predictions?
I moved here from the UK a few years ago. Of course I could be completely wrong but the current market just feels so similar to the run up to the property crash there in 2007. I know the circumstances are different and am not expecting another GFC but there is just something similar about the way people are talking, the increasingly ominous economic rumbles, the obsession with house prices, the nervousness of investors ready to jump at the first sign of peaking. Hopefully I am wrong!
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