Auckland's largest real estate agency experienced a strong lift in new listings last month with almost twice as many homes being newly listed for sale with Barfoot & Thompson compared to a year ago.
There were 2123 homes newly listed for sale with Barfoots in August, up 19.5% compared to July and up a whopping 88% compared with August last year.
It was the highest number of new listings recorded by Barfoots in an August month in at least 10 years and Barfoot & Thompson managing director Peter Thompson described the surge in listings as "exceptional."
However while the number of new properties coming to market was up sharply, the number of sales and prices both declined slightly.
The company sold 1314 homes in August, down 5% from the 1388 it sold in July but still well up 45% on the 909 homes it sold in August last year.
The median price of homes sold in August was $755,000, which means the median has declined for two months in a row since it hit an all time high of $786,000 in June.
However it was still up $125,000, or 20%, on the August 2014 median of $630,000.
"We are now at a crossroads in terms of where prices go," Thompson said.
"With the coming of spring we can expect pressure to go back on prices as factors which have led to record prices in the first place, such as low mortgage rates, shortages of supply and demand from a growing population still remain.
"However, countering this is the pressure the Reserve Bank and the Government is applying by way of new rules and regulations to keep a lid on Auckland price increases, and concerns around world-wide economic stability."
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65 Comments
It's not surprising that prices have dropped again.
I and a few other posters got hammered for suggesting the cycle had peaked. Hmmm...
And now listing numbers are surging for September which typically doesn't start until October. If demand doesn't increase to match the surging supply then there will be further downward pressure on Auckland house prices. Plus there's the new property investor rules starting soon....
And to be honest, all this is nothing compared to what is unfolding in world markets at the moment. It's time for Kiwis to get their heads out of the sand and wake up.
Why would they do that when they see the current Auckland house prices as one of the largest current threats to the stability of the NZ economy. The RB in fact want it to fall and will be glad to see it go down as hard as it possibly can. They are not going to protect investors and speculators who fell into the greed trap. Currently all you have is paper profits. To get real cash in the bank you need to realise your profits.
What do you think consumers will do if house prices crash? Spend their salaries from their now defunct jobs? Sad day for everyone who wants a major property correction or a crash - if it happens, everyone will pay the price. Everyone. The RBNZ won't allow it, neither will the government. I win.
Actually those with cash will do quite well.
Do you think that the RBNZ sets interest rates for the world? Perhaps the RBNZ can sort out the Chinese economy, the Canadian economy, the Australian economy, etc, etc .
Yup, the RBNZ has got it all covered. Awesome plan OU - you are definitely a winner!
So where do you put your money to be "Safe" ? I sold a property and cashed up back in May and its in an ASB term investment but is it ever really "Safe" ? short of putting a huge wad of cash in your own custom made safety deposit box buried underground that nobody knows about is it ever safe ? I can only figure that if everything gets so bad even the leading banks start to collapse then where your money went could be the least of your problems.
thats not as safe as you think check out the OBR
http://www.rbnz.govt.nz/regulation_and_supervision/banks/policy/obr/ind…
They are not likely to crash OU. That is too strong a word. Even shares have not crashed in recent times except in China where the PE ratios were ridiculous before the rot set in recently. House prices in Auckland for the first time in years look like they are going to settle back to some historic level. I am not willing to put a figure on where they will end down at. There are so many factors. The Chinese investors needing to get money home to China to shore up investments there that are not doing so well. Investors from here looking at substantial profits and thinking do I take a bit off the table and get rid of some debt at the same time as the rent does not cover the costs of holding the property. People who are highly leveraged getting worried about the market being stable at best and thinking they do not want to contemplate being in negative equity country. So many factors but overall fear and greed will come into it and it all depends on which one has the upper hand.
Everyone will pay a price, but leveraged investors will pay a far higher price than bystanders if there's a decent drop. I hope you've not got too much cash on the line here, you seem dangerously sure of yourself and no-one can predict the future with any consistency.
Actually it will be the FHB and renters who will really pay IMHO. The former will have a very high LVR so go under water for a decade or more and the latter could find they have no where to live or the bank is then the landlord. In terms of predictions I go with the long term fundamentals which appear to be catching up with us fast and not pretty.
Those that have cash, and have deleverage will buy at the bottom of the cycle. The banks will be only to happy to write loans, as they take impaired loans off the books.
...buy in doom, sell in gloom.
You would have to be an idiot to buy right now at the top of the cycle
You can't be serious? The RBNZ doesn't care about investors. Those buying at the top of the cycle, and over leveraged will collapse like a house of cards - and lapped up by the first home buyer at sustainable prices. All the RBNZ cares about is that the financial system doesn't implode.
At any rate the ones who win the the long run are the ones who set themselves up to win regardless if house prices fall. In the event of a major house price fall without rental price drops (ie. speculative house price fall as opposed to supply catching up to demand) simply liquidate other assets to buy properties with decent yields at their new more attractive price and hold them. :)
If you have property to sell at 30 - 35% below current market rates, I'm all ears. I personally believe that supply has a long way to go to catch up with demand and that even if every house built this year and every house empty during the last census went to an owner occupier, there would still be rental demand because of existing pent up demand.
Some dude whom I've heard of got lucky a few times and then said something like:
“Be Fearful When Others Are Greedy and Greedy When Others Are Fearful”
:P
That's fine if you can purchase property with cash but typically during a serious recession the banks tighten up so it's difficult to get funding approved.
BTW - I think you may be correct about rents holding firm, regardless of property values. I researched this many years ago and surprisingly (or at least it surprised me at the time) when I checked the rental numbers in the US following the GFC, rents did not appear to drop, even though many properties had halved in value.
Looks like more and more people are selling to lock in profits and presumably get rid of some debt that limits their lifestyle. Just like the share market it all works on fear or greed. Maybe fear is creeping into the property market in Auckland. Fear that you might see the paper profits drift backwards but the massive bank loan stays at the same level. And if Auckland goes backwards will that also hit the big pricing gains being achieved in the Waikato and Bay of Plenty?
...and BTW, I wouldn't be relying on the NZ media hype being true about Chinese capital flooding NZ's property market anytime soon due to the Chinese govt loosening foreign investment rules.
The truth is quite the opposite:
http://www.zerohedge.com/news/2015-09-02/china-scrambles-enforce-capita…
I'd be pretty concerned if a country that has used in 3 years more cement than USA in 100 years suddenly starts slowing down and its government seems desperate to stop the bleeding..
http://www.washingtonpost.com/news/wonkblog/wp/2015/03/24/how-china-use…
To me the Chinese crisis means exporting deflation globalwide and destroying commodity-export based economies.
China are trying to change from an exporting country to a consumer one very much like the USA but they dont have the policies or people in place to do it.
The USA will not be affected too much as they export less than 1% to china and they are a more internal market than people give them credit for
Yes. That's why I don't think the global financial meltdown will start until we see a 15% or similar decline in US stock markets.
Until then only countries that put too many eggs on China's basket will be directly affected.
But the deflation will be everywhere.
But China is liquidating treasures because they're really struggling..
http://www.zerohedge.com/news/2015-08-27/its-official-china-confirms-it…
So eventually we all should be concerned
The problem with a 15% decline is it could happen in days, maybe even hours with micro-second trading? unlike 1929. Interesting thing is chicken and egg, I also suspect the stock market could react after the financial system locks up, or before....just what will tip us over first?
A 15% decline is technically not even considered a bear market. The S&P 500 needs to drop to 1708 from the peak of 2135 to be in bear country. This would still just take it to where it was 14 months ago. That would be a great opportunity to shop around for oversold components whose prospects you consider to not be adversely affected by prevailing conditions.
Buy the fear, sell the greed.
I'm still not sure where the 50,000 net immigrant inflow are being housed? That would assume MANY MANY jaffas leaving Auckland and getting crappier jobs elsewhere in NZ (if they can get a job, that is). 1 month is an anomaly, 2 is a fluke, 3 is a trend. Lets see what happens in September.
The price dip is due to the surge of investor activity at the low end of the market. Once the 30% Auckland investor LVR rule kicks in the composition of sales will be made up of more family homes at a higher price level after which we will see a solid upward kick in prices. Expect this will show up from October onwards.
I am also expecting a moderate reduction in housing stock on offer after October/November. This will be due to purchasers holding for at least 2 years and as such removing housing stock that would have traded hands from the markets creating a short drought which will push prices up slightly ( In much the same way that Fonterra have raised prices by reducing volumes offered on the Global Dairy Trade).
You got that totally right Simon.
REINZ stats the best - based on unconditional sales (not completed sales - so usually a month or two more relevant and fresh), captures the entire market, and a median (which will always beat a mean) and a stratified median mean it is quality and mix controlled.
None the less - Barfoot a good first look at auckland.
Things could get really interesting if this eventuates
http://www.zerohedge.com/news/2015-09-02/what-if-china-devalues-8-bofa-…
keeps people on there toes... means theres plenty of money on sidelines paranoid/worried about confusing everything... which is good..its when everyone agrees and is complacent and fully invested is when big crashes happen.. We are miles from this situation luckily.. Id say 1997, or 2003..
We actually want Auckland to have very high average prices. This will result in the city becoming more exclusive. We want to be exclusive because it is safe and healthy and very comfortable. This is why the Afghan interpreters want to leave Hamilton and live here. Cheap housing and a good economy with plenty of jobs would just be a magnet for all those in the world seeking a better life and Auckland would start to resemble Mumbai or something like that. Instead of exclusive suburbs we will have an exclusive city. The high prices across the entire city will ensure that people will take an interest in their investments and seek to further increase value and make their suburbs more beautiful. Only well heeled migrants can afford to purchase here. Even if just a tiny proportion of wealthy foreigners realize the value of our exclusive city it will further increase its value. All home owners will have a feeling of success thus generating even more success. Think of it as the whole city of Auckland becoming Grammar Zone.
Those that worry about their children not being able to afford homes need to help them. The Indian and Chinese people I know are dedicated to helping their own children become successful even to the point of buying them houses. Traditional Kiwis need to think about this too and forget the old way where your children have to fend for themselves. Remember when Kiwis charged their own children board? Those days are long gone. Buy a rental or two in the provinces with a view to helping your children in the future. Auckland has a great future as an exclusive zone but you are going to have to change traditional attitudes.
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