Sales results from the country's largest real estate company suggest the overheated Auckland residential property market has peaked.
Harcourts had a surge in the number of Auckland properties being listed for sale in August, while the number of sales and the average selling price were flat.
Harcourts had 829 new listings in its Auckland/Northland district in August, up 28% compared to July, and sold 646 properties in the district during the month, down 3% compared to July.
The average Auckland selling price was $817,580 in August, down just 1.3% compared to July and down 1.5% compared to its all time high of $830,186 achieved in March.
However the average Auckland selling price in August was still 25% above the average price in August last year, while the number of Auckland homes sold in August was up 37% compared to a year earlier.
The combination of the lift in new listings and the slight dip in sales in August, meant the company finished the month with an inventory of 12.5% more homes listed for sale than it did at the end of July.
The figures suggest that the Auckland market has probably peaked but is largely maintaining the significant price gains achieved in the last 12 months.
Around the rest of the country, activity in the Central North Island district, which includes Waikato and Bay of Plenty, was up in August compared to July, with the number of sales in the region up a massive 68% in August compared to a year earlier (see table below), although price growth was more modest with the average selling price up just 6% in 12 months.
Harcourts chief executive Hayden Duncan said the number of auctions Harcourts conducted in the Central North Island in August was up 172% compared to August last year, as vendors in cities such as Tauranga and Hamilton tried to meet the demand for properties form Auckland investors.
In the Wellington district activity was more subdued, with the number of sales and average selling price both down slightly compared to July and the average price down 8% compared to August last year.
In Christchurch the number of sales was down compared to July, but the average selling price was up by more than $23,000 for the month.
In the South Island excluding Christchurch there was a big jump in new listings, which rose from 229 in July to 299 in August, while the number of sales dropped from 237 in July to 202 in August, with the average price remaining almost flat.
| August 2015 | July 2015 | August 2014 | |
| Auckland/Northland: | |||
| New listings | 829 | 647 | 651 |
| Number of sales | 646 | 668 | 471 |
| Average selling price | $817,580 | $828,009 | $654,429 |
| Central North Island: | |||
| New listings | 464 | 438 | 423 |
| Number of sales | 543 | 527 | 324 |
| Average selling price | $349,147 | $347,444 | $327,904 |
| Wellington Region: | |||
| New listings | 275 | 322 | 336 |
| Number of sales | 274 | 291 | 243 |
| Average selling price | $351,054 | $354,079 | $380,611 |
| Christchurch: | |||
| New listings | 457 | 467 | 493 |
| Number of sales | 384 | 426 | 332 |
| Average selling price | $496,023 | $472,710 | $488,772 |
| South Island excluding Christchurch: | |||
| New listings | 299 | 229 | 231 |
| Number of sales | 202 | 237 | 168 |
| Average selling price | $336,112 | $337,811 | $298,746 |
25 Comments
AUGUST DATA
Barfoots - fall
Harcourts - fall
Reinz - 0.7% gain
Lets see the scores on the doors next month. A swallow doesn't make a spring. Two or three might though. Scariest number that I've only see in one of David Chaston's posts was that Barfoots dropout rate (no sale, seller gone to other agent etc) being highest since 2003 at 23% (average 14%)
http://unconditional.co.nz/colinkelly/2015/08/28/economist-renowned-for…
Economist Renowned for Wise Predictions Ticks Wellington. Buy in gloom, sell in boom
Long may it remain that way.
Alternate outlooks are not that great given the direction domestic interest rates are heading.
The worsening housing shortage -- exacerbated by record immigration -- and surging house prices reveal that deeper financial instability risks lie ahead. The combination of already too-high household debt and negative rates "may ultimately be very costly for the economy,'" the central bank said last week in its monetary policy report.
"Low interest rates contribute to the trends of rising house prices and increasing indebtedness in the Swedish household sector continuing. Current debt levels already pose a substantial risk to the Swedish economy. It is thus essential that the Riksdag (the Swedish parliament), the Government and other authorities implement measures to reduce this risk. If no measures are taken, this, in combination with the low level of interest rates, will further increase the risks, which may ultimately be very costly for the economy." Read more
I don't see a long slow decline...
Imagine if you were an investor getting 2% yield after expenses and house prices start stagnating or declining, wouldn't you decide to sell and invest in other locations where there is better yield? Wouldn't you get your big capital gain out while you can?
Imagine if 20% of investors put their house on the market in the next 12 months?
Majority of current purchasers are investors:
i) The first to exit will be those that feel their equity isn't performing (i.e. Auckland plateaus & low yields);
ii) If due to (i) a slow decline starts then a second tier of less sophisticated "investors" may look to exit as they feel their equity is under threat and that they have "missed the peak";
iii) First home buyers and other highly leveraged investors may be forced to sell.
Owner-occupiers with sufficient equity should be ambivalent about selling & buying in the same market.
http://www.javipas.com/wp-content/uploads/2011/06/bubble-phases.jpg
I think we are already between 'delusion' and 'new paradigm'.
If I was an Auckland housing investor I would sell right now - not much chance of more capital gains at the current prices and a much lower yield than other parts of the country. It wont take that many investors to sell to create an excess of supply at current prices. Then if prices begin to drop, more investors will get out while they still have their big capital gain. This could cause a massive collapse. Or it might not.
http://www.afr.com/real-estate/chinese-retreat-from-australian-property… might be a good time to sell?
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