The REINZ's median price in central Auckland dropped by $84,500 in July

Auckland house prices took a breather in July with the median house price for the region declining by $20,000 to $735,000 in July, a 2.6% decline compared to June, according to the Real Estate Institute of NZ.

However prices continued to climb in some parts of the city and decline in others.

The biggest drop in prices occurred in Central Auckland, which is defined by the old boundaries of the former Auckland City Council, where the median price declined by $84,500 to $775,000, a massive 9.8% drop compared to June's median price of $859,250.

The median price on the North Shore also declined, dropping by a more modest 0.2% for the month to $939,000.

However median prices were up in other more affordable parts of the city, rising by 1.6% in Waitakere, 1.5% in Manukau and 5% in Rodney compared to last month.

There was also a big jump in the number of home sold last month, both in Auckland and throughout the rest of the country.

Highest national sales volumes in 10 years, highest in Auckland in 12 years

In Auckland, 3,160 homes were sold in July which was up 12.5% compared to June and a massive 41.1% compared to July last year. Overall there were 8,121 dwellings sold in New Zealand in July, up 37.8% on July 2014 and 9.4% from June, REINZ said.

It was the highest sales volume in a July month nationwide since 2005 when 8,213 houses were sold. And it was the highest July sales volumes in Auckland since 2003 when 3,583 houses were sold.

The national median price was $465,000, which was up $49,000, or 11.8%, on July 2014 and $15,000, or 3.3%, from June. The national median price excluding Auckland rose $19,950, or 6%, to $352,000 versus July 2014, and $12,000 from June.

Year-on-year Auckland's median price was up $125,000, or 21%, to $735,000 in July.

"The volume of sales has been exceptionally strong for the middle of winter," REINZ chief executive Colleen Milne said.

To read the REINZ's full regional reports for July, click on the following link:

PDF iconREINZ Residential Regional Commentary - July 2015.pdf

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103 Comments

China , China, China .......... is the party over if the Chinese community stops buying ?

And Bill got the inside running :-);

http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=1149...

You gotta smile at this quote:

"If speculators and money launderers are having a big effect, it will affect them."

the last comment made that "overall NZ is doing well" is far fetched

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Surely this cannot be true and must be a typo. Property only goes up in a straight line.

Yes and the straight line is all about Auckland becoming realigned with other international cities. Absolutely...and as history shows their markets peak as well. People can be so disillusioned.

Yeah mate - its different this time. We are much cleverer than the hicks of the past. New paradigm and all that. US sub prime effect was just crazy yanks........................
We all can sleep well at night knowing BE and JK are watching over us and we will come to no harm.

The Auckland market has already peaked.

In my opinion you'd be bat-sh!t crazy to invest at these prices and at this stage in the market.

Even the rampant FDI which was in our faces only 12 months ago has evaporated.

When did you jump the fence? Even until very recently you were one of the biggest bulls going.

I wouldn't describe myself as a bull or a bear, as soon as you do either you've lost perspective. I simply observe and analyse the market and guess which way it's going without bias. Since 2011 I've been predicting the market in Auckland would go up, I've said it on here for years and I'm pleased (for my sake) that I got it right. Now I believe the markets peaked and is sliding into flat or declining trend as I describe below.

The perma-bears and going to get it wrong just as often as the perma-bulls.

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It appears the cycle has started the downward phase.

...and it's time to panic if you're one of those overleveraged fools who believed the media hype that Auckland prices couldn't fall.

Why should they panic? Why so bitter? Did you miss the boat with property?

They should panic if they are overleveraged.

I am not bitter, quite the opposite. I am looking forward to some future bargains. Perhaps I'll buy your home when you go broke.

No I did not miss the boat. I have been in property for over 25 years. I predominantly own commercial property.

Well if we must panic then we might as well go the whole hog. Better stock up on silver barter bags, gold, guns and a getaway plan, filtered water, hydration rations....anything I've forgotten? O yes sunscreen.

Probably best to get into metals - tinned food and guns.

I think we'll need some more consistent data over the course of a few months before it can be claimed we are in the start of the downward phase. I don't doubt that it is close and there will be a lot of people panic selling when it comes but there are also people out there still paying crazy money for places.

In the past week:-

3 bed Panmure 741m2 Land (Barfoots) Sold $1.2m - I mean this is crazy the place needs bowled and subdivided so you'd need to sell the new houses at over a mill a pop just to break even.
2 bed House Panmure 400m2 1950s brick nice deck area outside Sold $803k - Dated inside
2 bed Unit Epsom 90m2, DGZ, could be turned into a 3 bed Sold $1m on the nose...

If it continues like that for the rest of August I'd not be surprised if that number is totally reversed.

Disclaimer Triple I'm not saying it will increase or decrease....

You may be right, but yesterday at the morning B&T auctions, only 39% sold under the hammer - and that included sales sold prior to auction. That is a terrible result. If that auction represents typical August auctions then the downward pressure may continue.

A comparative downward trend only emerges way after the real change has happened. The 'compared to last year' one being the worst analysis. It's like a car going uphill, and down the other side. For quite a way after it starts going down it is 'comparatively' still higher than where it was. By the time it shows 'you are going downhill' the top is a long way back!

Correct. It's a 10% shift in the _median_ price. therefore more (by number) lower value properties sold^H^H^H^H _Purchased_ , than high paid ones.

The higher price bracket might be astronomical.
Or it might be we had an even number of sales that month (thus requiring the averaging of the two middle prices).

Most likely, given the market. a lot of middle range product has moved quickly though the books. giving a higher probability to hit a lower median price.

Alls good in landlord land..is that lifeboat full, please shift over young children

frazz, co'mon co'mon now... that's my line and you know it.

Apologies...will retract and try to be more original in future ML

we need to see three months to really see the trend, but by then will be too late for some people to get out

check the location, demographics, moving means, seasonal/annual effects.

Probably just more mid range product, and less supertop foreign buys.

I have a feeling there may be a few more properties coming on to the market as of today

But but but ..... surely not. Is this possible?

Interesting the auction results and prices achieved via the main agents still look eye wateringly high. Maybe its compositional, ie if a block of 90 apartments sells out in a few hours.... at say 500k and avg price in the akl central is 880k that big hit will change the data.

I like to compare sales relative to CV across a suburb to get a feeling if things are really falling

CV? What that go to do with anything? RV? Ratings Valuation = the amount the council can use to extract rates doesn't reflect (CV?) current valuation; it's a computer generated figure based on the amount of rates required, and GV has gone the way of the dodo I suspect.....
https://www.qv.co.nz/n/valuations/phoenix-14

The CV is part of the rating take in many places in NZ.

LV = Land value
I = the value of improvements to the land

LV + I = CV (Capital value) also referred to as RV (Rateable value) which used to be referred to as GV (Government value) before such time as the government valuation office was privatised and renamed QV (Quotable value).

At least that is how I understand it :-).

PS. QV also provides private valuations, also referred to as "Market valuations".

A bunch of units/apartments were probably made available for purchase and were being pre-sold (hence the phenomenal jump in volumes for winter), I just checked the individual suburbs in central Auckland where I own property ( on QV.co.nz ) and it appears that they all have rising average values.

it only takes a few drops to create the feeling that there will be a third, hence to stop "investors" from buying.

too early to know, but we might have finally reached the peak.

So supply has increased by 41% but prices have only reduced by 2.6%. Sorry losers, nothing to see here. Keep holding your thumbs for a pop while you get poorer.

Quite right. Supply and demand have little to do with price. It's the capacity to transact; pay, that does. The Banks need to be watched very carefully from heron in, because if they aren't doling out loans, that 41% will be going nowhere, fast.....until they reprice to a level that the banks are happy with.

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OnwardsUpwards - you're the loser and everyone who reads your posts knows it.

That's because Auckland market's high prices are not led by a supply shortage like many keep repeating.
It's a speculative market, supply has nothing to do with it.

Houses in this market just happen to be something that people could use to live in, but it's not its utility or its supply what dictates the price. Same with Holland's tulips. Demand does not come from people who want to live in them (most of them cannot even afford a loan!).

The day "investors" start feeling that prices won't go up is the day they'll get out of the market and the beginning of the big correction.

Is it today? Who knows?

..do you feel like cashing up and leaving the market?

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Did I hear a pop or or was that your thumb coming out of your mouth Onwards

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For someone who is seemingly making money out of this whole property thing you seem to be pretty angry.

Can you not enjoy the fruits of your investment foresight and courage without having a go at others?

JK has dawdled so long that by the time his 2 year cap gain comes into effect there will be a nice cap loss to claim on the tax return of a lot of our speculators and traders who will suddenly find a real desire to go legit.

Capital GAINS is not Capital Tax. A gain is taxed, a loss is for the asset owner to bear. There's nothing to say that property losses on realization can be claimed against anything but within the same asset class. ie; you can offset a property loss against a future property gain. The days of a Negative Gearing type of policy to allow non property losses to be claimed outside that asset class may be numbered.

A snapshot of the month doesn't define the trend. We have one contributor here consistently warning of more Chinese money flooding in later this year as the Aussies tighten up their rules on foreign buyers.

Newsflash, the Chinese are broke, tried selling anything in the general direction of China recently? Or spoken to someone who does?

Olly Newland predicted all this not so long ago
"There will be tears"

He went on to say:

"They are making the mistake that prices will go up forever.

"One day there will be a day of reckoning, it will flatten out and then it won't be so much fun anymore."

link:

http://www.interest.co.nz/property/74363/olly-newland-says-property-inve...

That's a pretty spectacular drop for Auckland central. I bet a few home buyers who bought in June will be a bit disappointed/nervous. The main areas for investors, west and south, continued to rise.

Certainly we are all expecting a plateau / mild decline at some point. This could be it. It is the middle of winter though so we need to wait and see. If things don't pick up in Spring we can call it a sustained downturn. It is self perpetuating of course and I expect this type of headline alone will reduce demand somewhat. We still have the whole housing shortage thing though so I'm picking in a year prices will still be the same or higher than today.

Thankfully the 18% yoy increases have surely ended for the foreseeable future.

I think you're right when you say mild decline, all my models point to an up to 20% decline but that's at the extreme end. Most likely is in 2016 the Auckland median settling down at 12% below the 2015 peak then staying mostly flat for 2017 and 2018. Then further increases in 2019 and beyond as the cycle swings again.

I actually think that would be a good outcome for all everyone - investors included. If we are wrong and the market does keep rising for longer then the fall out would be more catastrophic.

I'm picking an overall 5-10% decline when it happens. This will play out over a bumpy 6-12 months with wild speculation from all sides about what is really going on. I don't think this will be in the next 6-12 months though. Maybe 2016-2017. Pure crystal ball gazing though!

Yip, we all know it's coming it's just a question of when, in my opinion sitting on the sidelines and observing will be the best play.

Happy - you may be correct, but if there is a significant world shock over the next year or so (and quite frankly, we all know this is very possible) then any correction will be compounded by the external event.

The US currently has $18 trillion of debt and I have never heard a US politician talk of how they will repay this debt. The US is the biggest debtor nation in the world and in history. Something is going to give. And printing money has never worked long term to solve financial problems. On top of that the US stock market is getting ripe for a correction.

All I am trying to say is the NZ property market will be affected by adverse overseas events. I doubt our housing market will play out on it's own without external influence.

The Auckland property market is proving to be very, very resilient. We've seen major global events since, and including, the GFC and Auckland prices have remained firm. I'm not saying prices can't go down, in fact I'm forecasting price falls, they just won't be large (max 20% IMHO).

Government debt is interesting but only a major problem for countries like Greece who have no control over their currency and money supply. USA for example has in place a debt feedback loop between the Fed and the government that effectively nullifies the debt; i.e. all government debt/bonds are bought by the Fed which ensures funding for the govn but the Fed is not-for-profit and so any interest paid on the debt/bonds must be returned to the government. Sure the debt sits on the govn's balance sheet but doesn't actually burden them. I read the theory here on interest.co so apologies if I've not recounted it correctly, I'm sure there are others here that can explain it better than I can.

It's easy to get caught up in the doom-porn peddled here but the fact is there is a whole world of people out there working day in and day out to keep economies on the right track and mitigate risk.

Are you trying to convince yourself everything is okay Happy 123? I have relatives who bought a property for closer to $2million than $1million only four months ago or so after doing up and selling a few homes they lived in. He is a bank manager and he thinks things have peaked and is about to sell and rent and wait to see what happens. I am not sure they will get their purchase price though and they do have a big loan.

Pass on my condolences to your mate.

Yes I think they got a bit ahead of themselves as have a lot of people in Auckland. Like the share market when fear and panic hits the housing market it will be ugly. No asset has a definitive value until it is sold and the money is in the bank. Compared with shares houses are not so easy to sell and there is a lot more expense involved. This is starting to look very interesting 123. You will be able to add to your portfolio at a reduced price by the looks of it. As always it pays to be patient as it will be hard to pick the bottom. I presume there will be a few farmers selling properties they bought for their children going to university in Auckland for a start. They would have been bought with debt and debt is their big enemy currently.

Low debt, timing and quality areas are the key.

Would you buy property in Auckland now or wait?

My comment above went something along the lines of "in my opinion, you'd be bat-sh!t crazy to buy in Auckland at these prices and at this stage of the cycle"

Location? - Auckland or elsewhere?

keep us posted on how that works out, please

Auckland and they might have a tax problem as they have shifted a bit. They need to keep really quiet as there are always people out there ready to talk to IRD>

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I have invested in overseas markets and experienced major property collapse. Sadly everything about the Auckland market feels like we are brink of such a collapse - the way the government and economists are talking, the poor economic outlook and the fact the market is clearly driven by speculation. I am glad I now only have one property in this market.

Tolstoy reckoned six feet was all the land a man needed(to bury the greedy sod)

Vancouver said the same when their prices hit 1 million, now at 1.4million and still climbing.

They are worried there too. And they have been very badly burned before. It is not a case of 'if' it is a case of 'when' as all economists will tell you.

Wish this was the case (price drops), home auctions on the Shore are going nuts. I for one are willing to take the punt, 5 years @ 5%, you beauty! All you nay Sayers, tut tut, dedicated audience to this forum are not going to make your wishes come true, no matter how many times you say it. Even if I was burnt by a correction, it certainly isn't going to be bigger than the gains most have made over recent years. Good day

Good luck

I agree for the long long term, Brendan. It is painful, though, when you look back and think 'if only I had sold then during that overpriced madness when the clever ones got out'. And there is absolutely nothing you can do about it. Now is the time that we still have the luxury of choice. Lucrative choice anyway.

Somebody told me once that when considering the sale of investments, it is always better to sell out when there is still some money to be made by the buyer. Consider the alternative. How much money can the present day buyers expect to make if they invest in property in Auckland today?

I think that is What Bernard Hickey did half a decade ago.

My share broker has always told me to keep in something for the next guy. in other words don't be too greedy otherwise you could miss out on a sale altogether. I suspect a lot more property is going to go on the market after yesterdays REINZ news. The numbers are just too big for some people especially over the size of their mortgages. Negative equity is a possibility for some people and just like sharemilkers the Banks will give no mercy and houses will be sold just like herds are currently being sold.

Jeez, prices still increase 25% over a year and people say this is a big fall. Ha ha.

Don't worry about that , the chinese money is out there.

Chinese money is added fuel but alone not enough to sustain a whole market. The Kiwi borrowed dollar is the real driver behind this whole rising market.

nope

Most recent auction I went to was only Europeans. Offshore buyers tend to prefer modern houses in particular areas. Take out most of the resident investment dollar and offshore buyers alone can't keep the market rising to the same degree - sorry.

starting to hear stories of auctions not meeting reserves and having to be negotiated to make the sale.
like all cycles once it turns auctions are the worst way to sell as they go from people trying to outbid to people trying to get for bottom dollar.
I will know its turned once you start to see prices advertised and less auctions and negotiate signs

Do some research on Chinese investment, there's plenty of studies that show where the Chinese set their sights there are initially massive increases (as Auckland's experienced), followed very shortly be equally big falls.

I'm amazed by the comments such as price drop, waiting for bargain, peaked out, property collapse etc with just one month of winter period data! Those who made such comments are not true investors and don't have any grip on market fundamentals! Interest rate is going to be lower for considerable period of time and there are no real alternative investments to property for conservative investors in NZ until Government intervenes and takes substantial curbing measures similar to Singapore.

Would you further invest now, Shogun?

Yes, just did in July 2015. There are some good opportunities around West Harbour, Papatoetoe, Pakuranga which can provide decent capital gain over 5 year span with limited negative gearing (1% or less)!

Shogun - true investors understand cycles.

All assets follow cycles through ups and downs. So do not be sucked into the media hype that property can only go up. There will be a downturn at some point (and maybe that is now) and later there will be another upturn when prices recover.

That's just the way it works.

How much market correction did we observed/experience during 2008/09 GFC? Not much at all barring price plateauing for two to three years. Number of people calling Auckland their home is greater than ever before and we can expect that continuing to happen for considerable future. Most of them prefer to have own roof over their head (especially Asians/Indians) sooner than later so it's highly unlikely of any dampening enthusiasm of getting on property ladder.

you might want to check on those figures there were big corrections in parts of Auckland (south and west)and queenstown as well as a lot of mortgage sales

New Zealand´s property cycle

House prices started to fall in early 2008, but the decline In 2008, house prices fell 8.94% (-11.91% in real terms).
In 2009, house prices rebounded by 5.23% (+3.21% real).
In 2010, house prices fell again by 1.63% (-5.44% real).
In 2011, house prices rose by 2.91% (+1.04% real).
In 2012, house prices rose by 6.52% (+5.54% real).
In 2013, house prices rose by 9.8% (+7.17% real).

for those not around in 2008 2009 that think house prices only go up year after year
Auckland

Property values in the Auckland region declined by 10.1% over the past year (calculated over the three months ending March 2009 in comparison to the same period last year), deteriorating further from the 9.4% annual decline reported in February. The average sale price for the region decreased from $502,193 to 495,892.

Glenda Whitehead of QV Valuations said; “Anecdotally we feel that values are beginning to stabilise or level off. Enquiry levels are up in most areas, with people now wanting to make decisions, which certainly didn’t seem like the case late last year. What are seen as low interest rates are definitely one of the drivers behind this, however caution remains due to wider economic factors such as job security”.
http://www.nzpif.org.nz/news/view/53785

will we see history repeat if we go into recession
Terralink managing director Mike Donald says while October's figures were down from September's historical high of 343 he expects the numbers to remain high for awhile yet.
Terralink International's data shows there were 298 registered mortgagee sales in October compared to 174 the same time last year.
Donald says pre-recession there were about 190 mortgagee sales for the whole year and now we're seeing those levels every month.

...got a link for that data st? I cant find it.

its all here if you want to check it out

http://www.nzpif.org.nz/news/

Today's news "In Auckland the average selling price of homes sold by Harcourts last month was $828,000, up just $330 compared with June but still up a whopping 24% compared with July last year (refer table)." Average 24% increase in 12 months is more than sufficient to sustain any corrections if there are any! If you are not in Auckland then tough luck but it's never too late to be part of Auckland market if one can afford.

True "investors" would invest in proper businesses not housing, housing market (barring apartments and blocks of flats) should, by and large be the preserve of the home owner occupier. It is time that investors were discouraged from stand alone housing market. Gotta stop

This is classic property cycle playing out. Just as the market turns the Government finally brings in regulations (far too late), the economy turns which means immigration slumps. All we need now is some semblance of increasing supply = perfect storm.....

Yes, just did in July 2015. There are some good opportunities around West Harbour, Papatoetoe, Pakuranga which can provide decent capital gain over 5 year span with limited negative gearing (1% or less)!

Not much analysis in these comments .... just shouting from the rooftops..
inventory is the mortal enemy of price....
Aucklands inventory levels are at about 10 wks... which is very low...

If there was a lot of new housing being built ..AND... there was alot of speculative buying.... then inventory levels can turn on a dime... ie. speculative buyers become sellers, along with spec builders..

is there alot of speculative buying..??? I don't think there is so much... and housing credit growth is kinda muted at 5%. ( i think most of the buying is in "strong hands" )

Last I heard... immigrants are still pouring in...
Last I heard... Mortgage rates are dropping...
Last I heard unemployment was less than 6%
Last I heard ... the unitary plan has yet to happen..???
As the dollar drops housing becomes cheaper for foreign buyers..

Do u really think this is the "big" top...... and its all down from here..????? I don't think so.
Just my view...

unemployment is rising
the yuan has devalued against NZD
two of you points have turned immigration will too once the jobs dry up

I don't know why EVERYONE doesn't do this!! - You see what happens is that prices of houses continue to rise - just as per the last 4 years - do the maths, it's actually really easy - think about it...by 2019 your average 800k home will be worth 1.6mil then in 2023 it will be worth 3.2 mil then by 2027 it will be worth 6.4 mil. My advice would be to get at least 5 of these houses now and then in less than a decade you will have around 30 MILLION DOLLARS !!!
YEAH BABY! - oh and by the way...
what is this thing called "market correction" you speak of?

Sounds like a bit of a Ponzi scheme to me!

It's actually pronounced "the market's correct-son"

Congratulations on your future millions.

I think your head is stuck up Uranus.
It cannot keep rising, it has to take a fall or at the very least plateau for years, probably a decade or more for everything else to catch up. Of course if it keeps going we are going to be the next Shanghai of the South Pacific. Of course if greedy Kiwi's just stopped selling to foreign investors the problem would be solved overnight. Who said history never repeats, you know blankets, beads and muskets ring any bells ?

I think Uranus is taking the p##s!

I think it was Buffet who said "when your hairdresser says buy stocks... you should sell"

My version is "when a person with an alias Uranus starts posting YEAH BABY in caps and predicts a doubling in price on top of a doubling, on top of another doubling, you should worry".

The shoe shine boy has become your landlord!

No Guido, I am not the shoe shine boy.

"You know it's time to sell when shoeshine boys give you stock tips. This bull market is over" - Joe Kennedy

Maybe so, but there are a lot of shoeshine boys becoming landlords.

I think he was just kidding .....probably shares your sentiments

On trademe the last 4 weeks has seen a 5% increase in listings in Auckland. Watch from early Sept when too tight to settle before Oct 1, re: 30% investor LVR and brightline test. The available supply in Auckland should have been falling not increasing as people got in before Oct 1. Also of note relative to population Wellington rental market is tighter than Auckland. Wellington listings have fallen 8% the last 4 weeks. Canterbury flat, Waikato supply has tightened about 3%. Data indicates Auckland is done, anyone who talks of only a 10% decline is fooling themselves, it will get ugly. Buyers will dry up. Banks will get antsy, and investors looking to refinance will suddenly need 30% equity and this will be exacerbated by falling property prices. Bull markets overshoot on the upside and over correct on the downside, because at the extremes we have greed and fear.

Today's news "In Auckland the average selling price of homes sold by Harcourts last month was $828,000, up just $330 compared with June but still up a whopping 24% compared with July last year (refer table)." Average 24% increase in 12 months! If you are not in Auckland then tough luck but it's never too late to be part of Auckland market if one can afford.

There are a lot of us on here obviously debating whether or not now is a good time to sell. What about buying? Anyone here planning on investing more in the next few months?

Don't tell me! Buy when everyone else is selling, and sell when everyone else is buying! Right? That saying drips of the tongue easily, but how many have been selling over the last month/year when everyone else was furiously buying? Not many! Very, very few people have the wisdom or strength of character to sell when a market is rising. And so to answer your question: Very few people have the same fortitude when prices are falling....Usually, they end up panicking...both ways. So if we haven't got a panic yet...wait...we just may have the makings of it!
(NB: Yes, for every seller there is a buyer. But most stock doesn't transact each year, but its 'value' rises/fall along with those that do cross the market, and new stock has been added...especially in Christchurch)