Harcourts' average selling price sets new record in May

Property

Harcourts' sales were flat last month but prices set new records in spite of an increase in new listings

14th Jun 16, 9:02am by Greg Ninness

The average selling price of homes sold by the country's largest real estate agency set a new record last month.

Harcourts' average selling price was $591,812 in May, an all time high and up from $548,208 in April and $56,056, or 10%, higher than $535,756 in May last year.

Record average prices were also set in Harcourts Central North Island sales region, which includes the Waikato and Bay of Plenty, and in Christchurch.

In the Central sales region the average price of homes sold by Harcourts in May was $451,800, up 31% compared to May last year and in Christchurch the average price was $553,156 up 5% compared to May last year.

In the Auckland/Northland sales region the average price jumped back up to $916,634 from $862,327 in April.

That was still below the record high of $940,246 set in March but up 15% compared to May last year.

In Wellington the average price was $437,874 in May, up 17% on May last year.

Harcourts also had an 11.2% jump in new listings last month, signing up 2330 homes for sale in May compared to 2096 in April.

However the number of homes the company sold was flat, with 2344 sales in May which was just one sale less than the 2345 it sold in April.

Harcourts chief executive Chris Kennedy said prices had risen across the board in all regions, and strong inward migration meant they would continue to increase.

"With new builds not even close to keeping up with demand, there will be an inevitable squeeze on the number of properties available to buy and prices will rise," he said.

Here's a link to Harcourts' sales report for May.

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54 Comments

by mvgsmf | 14th Jun 16, 9:26am 1465853213

Again - would be great to see the stratified index to see the real movement in the respective locations around the country if anyone has it?

by Simon | 14th Jun 16, 2:59pm 1465873159

Reinz come out tomorrow apparently.

Central region inventory almost halved compare to last year and prices up 30%! No supply. Too much demand for yield. Was always going to happen

by Craig Simpson | 14th Jun 16, 3:51pm 1465876301

9am the REINZ release is expected, although it tends to land when they are ready to release the data.

http://www.interest.co.nz/economic-calendar

by Machiavelli | 14th Jun 16, 9:38am 1465853880

Look at those double digit increases. It's money for jam. Why would you not be buying property? Even if we have a pull back of 5-10% in years to come, it's nothing against these increases. Besides, all commentary from the talking heads suggest the powers that be want to keep the plates spinning. We're good until at least the election!

by mfd | 14th Jun 16, 11:33am 1465860835

Perhaps some people realise that recent rapid increases make future rapid increases less likely. Linear extrapolation is very dangerous.

by Sluggy | 15th Jun 16, 9:50am 1465941043

Personally I wouldn't do it because everyone is doing it, and its an asset that doesn't produce a real income (paper income is hard to eat Ive found).
Traditionally collectors markets are unreliable - that's what this is. The classic car market is way up here, as it was in the states before it went pear shaped.

by Ezy | 14th Jun 16, 12:26pm 1465863975

Not surprising. Baby boomers are increasingly selling up for retirement and anyone who's been trading up on the gravy train for the last 10 years is funding them driving up the average sale price. Still a bit of steam left in HMS Auckland to push forward yet, but the hull is breached and water is flooding in while folks are partying still up on deck. Captain Key is in denial.

by head_down_bum_up | 14th Jun 16, 12:47pm 1465865255

This summer will be telling. More for the regions than Auckland but it will give us an indication if things are going to slow down prior to election or not.

National don't and can't admit a crisis, if they do, this close to an election will mean they'll be out of power next year.

by Zachary Smith | 14th Jun 16, 2:00pm 1465869614

Certainly all those folk who advised not buying and waiting it out have been wrong as they always seem to be. I can't believe people would offer this advice so adamantly, better to say nothing.

by steven | 14th Jun 16, 2:45pm 1465872332

No, you let ppl see the facts behind your opinion and then let them make their own mind up.

by Machiavelli | 14th Jun 16, 2:46pm 1465872411

Precisely. Imagine if you'd held off on buying waiting for the "big crash". Of course the doomsters will keep saying it's coming until they are one day proved correct. My view is that if you are going to predict a crash you must also predict the date it will occur or your prediction is meaningless.

by J.C. | 14th Jun 16, 3:23pm 1465874606

I think you're trolling.

by mfd | 14th Jun 16, 3:33pm 1465875228

I can't tell the future any better than you can, I just think it's important that people understand the risks involved. If they don't buy and prices go up, no biggie. There's profits to be made all over the place and you're constantly missing out on an opportunity somewhere. If they leverage in and prices fall, there's the potential to be wiped out. The burden is on you to convince people that buying is the smartest option, renting is currently cheaper and less risky.

by Zombie ponzi | 14th Jun 16, 3:38pm 1465875508

That doesn't make any sense.

It's perfectly reasonable to view the future as a range of possible outcomes and hold the view that risks are skewed to the downside. That doesn't mean that prices won't keep rising or stay flat.

A counter question to a property spruiker is at what price does it make sense to cash up and exit the property market - the posts you've made in the past suggest you wouldn't sell because you are looking for long term cash flows (usually referencing yield based on purchase price which makes zero sense). Whatever your answer is aside - most 'investors' can't answer this question because capital gains are the only game. Why else would 46% of Auckland properties be purchased by investors at a yield of ~2%.

by Zachary Smith | 14th Jun 16, 4:18pm 1465877920

The problem is some of us property spruikers have cashed up and exited on individual properties only to find we have always lost out on many hundreds of thousands of dollars. I doubt anyone in Auckland has sold up just in time yet. I sold a house in One Tree Hill three years ago that is now 300k more expensive and I could have held on...sob.

by Zombie ponzi | 14th Jun 16, 4:32pm 1465878747

A masterful pretence of a reply whilst actually spruiking, LOL.

by jamesy | 14th Jun 16, 3:03pm 1465873397

However, people who have bought need to be willing to accept that a 30% decrease in value can happen, and arrange their finances accordingly so as not to be caught with their pants down.

Over a long enough time frame, it's irrelevant. No matter how much the market pulls back in the next few years, over the timeframe I care about (30+ years), the ups & downs are smoothed out.

We bought last year despite the advice not to, and our house is now "worth" $200k more than what we paid.

But those are paper gains until realized, and in no way inform our day to day spending.

by Penguin | 14th Jun 16, 3:48pm 1465876103

I agree that people buying now need to be prepared for a 30% correction at some stage. That is why it is good that the LTV's have been introduced. I can't see a big correction in AKL for a while yet purely down to the supply issue.
With Govt Bonds offering 2.25% for a ten year period you could argue that a yield above 4% is not too bad.

by Ezy | 14th Jun 16, 4:45pm 1465879526

Absolutely agree. Property is a great investment if you enjoy managing tenants or can afford a property manager. But CASHFLOW IS KING and people need to be able to service their investment.

Speculators are the ones who are going to lose their shirts, and that includes the ones that have over-leveraged their existing portfolio. If we'd bought 2 years ago we'd have shovelled a hefty cash deposit into the market. And I still believe the market will go lower than it was at the start of 2014. So ultimately we'd lose the buying power of that cash in the short term.

by Rob | 14th Jun 16, 6:18pm 1465885095

Absolutely. In fact you have to look at housing like the sharemarket, and it is all linked. You get bull runs that pump up prices, and then you get corrections. Housing is no different, except a house is also somewhere you live in. you can't live in shares. the problem is that people think housing is a 100% safe investment, and prices can never go down. Unless we have huge inflation, and wages double to catch up with the house prices rises, it is all going to end up in tears for some people. It does remind me of playing 'hot potato', the person buying at the top of the market and then a correction occurs, they may get burnt.

by kiwimm | 15th Jun 16, 9:15am 1465938958

My share dividends (note: good cashflow) can pay my rent and increase faster than rent rises

by Craig Simpson | 14th Jun 16, 3:55pm 1465876511

I'm not buying and waiting it out - only time will tell me if I'm wrong. Have a similar approach to the NZ share market - valuations don't make sense, fundamentals stretched, market fuelled by foreign cash which can leave as quick as it comes.

by Zachary Smith | 14th Jun 16, 4:13pm 1465877609

I think that is perfectly fine if it is something you are doing yourself. However if you are some old fogey who has a mortgage free house advising someone else then that is entirely different. I perhaps should have defined it like that.

by CJ099 | 14th Jun 16, 4:11pm 1465877501

The anatomy of a housing bubble; Why do we repeatedly fall into the trap of inflating bubbles even though history shows they always end badly? Blame your brain.
http://www.macleans.ca/economy/economicanalysis/the-anatomy-of-a-housin…

by evita | 14th Jun 16, 6:46pm 1465886778

Interesting and informative article. Each and every word seems like talking about NZ and not Vancouver. It even mentions that govt stand by side and take no action - how true and than when the bubble bursts blame each other and national party has already started to blame everyone else but thenselves and their chinesse friends.

by CJ099 | 14th Jun 16, 7:21pm 1465888899

@ evita: Yes it's quite staggering how similar the Vancouver housing bubble is to Auckland, especially when you look as to the reasons behind it. The Canadians seem to be a lot more vocal about their situations with their out of control property market then we are.

I think this is one of the most revealing articles that I've seen so far: http://www.macleans.ca/economy/economicanalysis/chinese-real-estate-inv…

I'm trying to weigh up which housing market will go pop first? Auckland or Vancouver?

by Penguin | 14th Jun 16, 8:23pm 1465892637

CJ,

Vancouver is worse than here in my opinion. I understand why the Chinese want to buy property overseas due to their own property laws being very different to theirs since they are only 70 year leaseholds.

http://www.chinaeconomicreview.com/china-land-lease-property-law-owners…

With property in the West generally being freehold it makes it a no brainer in relative terms of security etc and they mainly are cash buyers.

The elephant in the room remains how the legally got the cash out of China taking into account $50k per annum limit? Now what has happened to that extradition treaty with Beijing?! Is JK saving it for a bit of electioneering?
To talk about China all the time as we all tend to do is a bit unfair since we do attract a lot of money investment from other parts of Asia. We do have a degree of safe haven status in the mad world that we live.

by CJ099 | 14th Jun 16, 10:00pm 1465898400

Penguin, Like everyone else, we're all trying to figure out when our housing bubble will burst. It helps to look at the global picture, and especially to look at how other housing markets that are at risk and what factors are driving them.

by evita | 14th Jun 16, 6:46pm 1465886781

by CJ099 | 14th Jun 16, 4:37pm 1465879053

@ Zachary: You're applying the Greater Fool Theory: Speculators regularly convince themselves that there is always a greater fool who will come along to pay a higher price for their asset than they paid.

by Sluggy | 15th Jun 16, 9:56am 1465941398

I keep harping on, but I put money into a business instead of a house 5 years ago. We have seen 50% growth year on year over the last 2 years. Sure we have done a good job, but people are spending like crazy.
My Point is - housing is not the only thing that has gone nuts. And housing is not the only thing you can make returns on. The difference being my investment makes me a real return every year - i.e. Cash.

by evita | 14th Jun 16, 2:04pm 1465869889

Still our Hon PM will deny. He is in permanent denial.

by Munes | 14th Jun 16, 2:44pm 1465872247

As others have said on this website, it is probably too late to act now, the PM probably knows that if he takes some major steps now he could blow the market, and damage his chances of re-election next year.

by steven | 14th Jun 16, 2:46pm 1465872408

I think his chances of re-election rest on WP and how big a bag of silver he has to hand over.

by Rob | 14th Jun 16, 11:33pm 1465904002

It is really now too late to work out what can be done. At some stage people are going to get burnt by this, I can't see it ending any other way.
Labour are too weak to take on National alone. I shudder to think what a Labour / Green and NZ first coalition government would be like. Labour didn't do much to solve the problem in the early 2000's either. If they had nipped it in the bud back then, we wouldn't have the problem now.

by Zachary Smith | 14th Jun 16, 4:24pm 1465878276

What do you guys think of this:

Auckland's housing shortage: Government to consider temporary homes

by Independent_Observer | 14th Jun 16, 4:35pm 1465878918

But Auckland's already got the temporary homes in the form of the additional 40,000 cars in the region in the last year...

by head_down_bum_up | 14th Jun 16, 4:46pm 1465879604

Too little too late.

Is she saying 130-150 homes by April next year "if all goes according to plan"?

by Justice | 14th Jun 16, 5:08pm 1465880917

Temporary homes are called 'rentals'

by Zachary Smith | 14th Jun 16, 5:35pm 1465882517

Large groups of temporary homes would be homeless camps. I wonder if there will be a perimeter fence?

by CJ099 | 14th Jun 16, 5:41pm 1465882895

Yep we're starting to turn in to a fortress society like South Africa. Go look at Pakuranga if you don't believe me.

by sharetrader | 14th Jun 16, 5:51pm 1465883471

round my way now all 1.8 mtr fences and big gates, gone are the days of the little fences you could step over, or the open driveways you could walk up

by evita | 14th Jun 16, 6:48pm 1465886906

Now we will have Refugee camp in NZ. Thanks to national govt

by sharetrader | 14th Jun 16, 5:48pm 1465883283

that is what HC was setup for to provide social housing for the lower paid. this government has made them take a corporate focus, i.e make a profit, rather than their social responsibility by , that is left now to social welfare.
if they used there dividend (about 200 mil) for the next ten years to build we would not be here

by OpenPensionResolutn | 14th Jun 16, 5:47pm 1465883262

I'm really comfortable that, I think you'll find, that at the end of the day, most New Zillinders ackshully really want to live in trailer parks.

by Justice | 14th Jun 16, 6:01pm 1465884077

Yes, they do have a very...schrong desire to do so.

by evita | 14th Jun 16, 6:51pm 1465887083

Would not be surprised if our Hon PM or his miniters comes out and say that Kiwi prefer to stay in refugee camp ( another word for temp hoyses) and is by choice.

by Smalltown | 14th Jun 16, 9:15pm 1465895704

FT article today states that some of Australia’s states are "introducing new taxes on foreign property buyers amid growing public concern over the volume of Chinese money flowing into local real-estate markets ....
New South Wales and Queensland said on Tuesday they were introducing stamp duty charges for foreign buyers of 4 per cent and 3 per cent respectively. NSW will also levy a 0.75 per cent land tax surcharge on real-estate investors from next year. In April the state of Victoria increased an existing stamp duty charges for foreign buyers of property to 7 per cent.
http://www.ft.com/cms/s/0/16859cde-31f7-11e6-8825-ef265530038e.html#axz…

And NZ's position on this" At the end of the day etc etc"

by Independent_Observer | 14th Jun 16, 9:18pm 1465895921

Anyone want to start a camper-van business with me? Reckon the market could really start heating up...

by Yvil | 14th Jun 16, 10:56pm 1465901804

GREAT NEWS

by evita | 14th Jun 16, 11:09pm 1465902564

Mr PM, what do you have to say. Now Australia is showing you the way. You only have to show the will.

by sharetrader | 15th Jun 16, 12:48am 1465908526

he is so busy grasping at straws to justify his government failed policy, he has pulled his statement of kiwis wanting to rent from the briefing they got when they came into power. all it highlights for me is theyknew there was a problem eight years ago about falling home ownership and have done Nada

Rt Hon JOHN KEY: Yes. Unlike the member, I do not just make things up. In the interests of an informed debate, let us not worry about the advice I get. Let us go to the 2008 advice from Statistics New Zealand presented to the previous Labour Government, when it goes on to talk about: “Possible causes [of reducing homeownership] include increasing participation in alternative forms of long-term investment, a high level of student debt, higher house prices relative to incomes and people forming families later in life.” [Interruption

by middleman1 | 15th Jun 16, 10:55am 1465944921

I’m disappointed the Govt didn’t move sooner and more emphatically on AKL housing but your statement they have done nothing undermines your credibility. You are obviously an informed individual so must be aware of the various polices they have implemented. Whether they have done enough is another question. I don’t think so. The AKL median has fallen for the second month in a row. Could be due to a range of reasons but would be good to think this bubble might deflate slowly rather than a catastrophic bust.

by tomalteruk | 15th Jun 16, 7:33am 1465932818

Currently intoxicated with power have become blind and deaf so the only choice people have is to wait till next year election. Wish some lawyer or someone càn file a public Interest Litigation in court as the damage that this people are doing to NZ is beyond repair and need some intervention specially in absence of strong opposistion and media also so much hue and cry about housing crisis still se no protest in NZ.