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
9am the REINZ release is expected, although it tends to land when they are ready to release the data.
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!
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.
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.
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.
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.
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.
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%.
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.
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.
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.
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.
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.
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…
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.
@ 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?
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.
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.
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.
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.
What do you guys think of this:
Auckland's housing shortage: Government to consider temporary homes
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
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"
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
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.
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.
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