Auckland's median house price was down 2% in November but across the rest of the country prices continued hitting new highs

Auckland's median house price was down 2% in November but across the rest of the country prices continued hitting new highs

There is growing evidence that Auckland's booming housing market has plateaued, with the latest REINZ figures showing the median house price in the region dropped by -1.8% in November compared to October.

Median prices were down in most parts of the region, with the biggest fall occurring in the central suburbs of the Auckland isthmus (within the boundaries of the former Auckland City Council) where the median selling price was down -4.4% compared to October, followed by Waitakere -2.1%, Manukau -0.7% and Rodney -0.3%.

But the North Shore bucked the trend, with the median price there up a whopping +10.5% to hit a record high of $1.105 million.

However Auckland's median price of $851,944 was still up +11.4% compared to November last year.

The median price also dropped in the second most expensive region in the country, - Central Otago Lakes - where it was down -3.6% compared to October.

Nationally, the New Zealand median price hit a new record high of $520,000 in November, up +2% compared to October and up +13.2% compared to November last year.

Around the rest of the country median prices rose in most parts of Waikato/Bay of Plenty except Rotorua where it was down 11.9% compared to October and Gisborne where it was down 1.1%.

In the Wellington Region the median rose 4.8% to hit a record high of $500,000 in November and in Christchurch the median was up 3.7% to $465,000.

The REINZ's full report with median prices and sales volumes for all regions is available on this link: PDF iconREINZ Residential Regional Commentary - November 2016.pdf

Nationally 7576 residential properties were sold in November, up 13% compared to October but down 6% compared to November last year (see the interactive chart below to follow the trend).

In Auckland 2400 residential properties were sold, up 12.4% compared to October but down 4.5% compared to November last year.

In Waikato/Bay of Plenty, sales were up 18.5% compared to October but down 13.3% compared to November last year.

In Wellington sales were down 0.3% compared to October and down a whopping 19.5% compared to November last year and in Christchurch sales were up 22.3% compared to October but down 6.9% compared to November last year.

In a First Impressions note on the figures, Westpac acting chief economist Michael Gordon said they suggested the market was steadying after the impact of the latest loan-to-valuation ratio (LVR) mortgage lending restrictions.

Gordon also noted that mortgage interest rates had been creeping higher.

"This turnaround in borrowing costs could have a more meaningful impact on house prices than the LVR restrictions," he said.

Volumes sold - REINZ

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NZ total
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We welcome your help to improve our coverage of this issue. Any examples or experiences to relate? Any links to other news, data or research to shed more light on this? Any insight or views on what might happen next or what should happen next? Any errors to correct?

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81 Comments

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"But the North Shore bucked the trend, with the median price there up a whopping +10.5% to hit a record high of $1.105 million."

Yeah because the bottom end of the market has completely stalled.

So if that's the case i.e; North Shore still increasing, then why have the recent Auction results been so bad with many properties passing in?

What I am saying is that the only properties selling are the top end, which are usually cash buyers and probably most likely, foreign buyers. The fact that properties are being passed in, supports what I stated

Well there you go that proves that foreign buyers are way over the 4% mark. Not sure how long it will last though considering that China is pushing to crack down on capital flight since it's seriously affecting and having a negative impact on their economy.

Yeah, it seems like that "cashed up" foreign buyers, are actually using borrowed money from banks in China.

This week end I had an interesting phone call from an Auckland land agent with whom we made an enquiry 7 years ago (two houses ago). She was trying to sell us something. Do I detect a touch of panic in the market.

can you elaborate more? You inquired about a property with them 7 years ago??

Yes it was a general enquiry 7 years ago and beyond the sort of follow that you would expect at the time, we hadn't heard from then since.

D.P.

Some people on Interest.co keep on telling us that people were abandoning Christchurch and prices were dropping!
The reality is that Christchurch is developing nicely, and the median price will continue to increase gradually which is far better than in large amounts as it prices so many out of the market.
The median price is also skewed due to the "as is where is" property still being bought which drags the prices down quite alot and the many 2 bedroom units being bought up.

The statistics are so jumbled up and blurred. In reality there are two halves of Christchurch and people don't want to touch the sandy eastern areas. Interest.co.nz doesn't even show Christchurch as a city, Canterbury/Westland is all we get.

You are wrong about people not buying in the eastern suburbs.
I think you will find that many of these areas have had the biggest increase in prices over the past couple of years.
Christchurch doesn't want to be lumped in with Westland either as Westland clearly drags figures down.
Why isn't Auckland lumped in with a north Auckland on the same basis?

11
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If Auckland keeps falling, the regions will follow, nothing surer.

I don't think that price drops in the regions is going to be immediate. Although measures have been put in place to cool the market, fundamentally the issue is that Auckland prices are overheated, and in comparison provincial prices are under priced, so there is a little bit of catch up.
Lots of anecdotal accounts of Aucklanders arriving here in the Hawkes Bay; it would appear that a number of Aucklanders are selling out and moving to the provinces - as the Herald reports - for lifestyle and cheaper housing. An acquaintance sold up in Auckland to buy an orchard for lifestyle and semi retirement at 50 and still had money left over.
Still a little while for price differentials to balance out.
I am not suggesting that the last out of Auckland needs to turn the lights out, however if future you may notice slightly less gridlock around the airport!
P.S. We don't know what gridlock means here in the Hawkes Bay :)

Nothing is really underpriced when compared to average earnings, its just now the rot is spreading everywhere. Sooner it is over and some normality returns, the better.
All well and good for the wealthy Aucklander to go buy up somewhere else and keep some change, but what happens to the locals - just what happened to Aucklanders, where are they supposed to go once they too, are booted out of their own home towns. This is not that much of a good story in reality

Sales up 30% in Palmy a few days ago the local paper called the market "berserk" so I think it's got too much momentum to slow anytime in the next couple of years... Long term renters have given up waiting and are coming out of the woodwork to get on the ladder before prices get out of reach

Unless there is a huge increase in job opportunities, I cant see it being sustainable long term though.

hi simon
I knew exactly what your view about PN market
I was watching your commends on stuff as well
I guess you are Wellington based
Can you add me to your contact for information sharing
Liuyingheng@gmail.com
I am not a land agent

Simon really knows what he is talking about
Strongly agree
Pn agasit the trend
Lots out of town buyers around

Probably not. The regions are being supported by cashed up baby boomers. The Chinese foreign buyers are out in force and hoovering up Auckland homes on their own terms.

There are other factors fat pat. not every story is about Auckland.

so maybe history does repeat and we have reached the peak of the property cycle and the bottom of the interest rate cycle.everything has an ending,the good and the bad.john key saw it coming and he has cleared out.

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I love the creativity in property press releases. And the obsession with every graph rounding out in a nice plateau. I've been up and down many hills and mountains and plateaus are not the norm. It's like predicting a draw in a rugby game, you know the odds are stacked against it. In any market a plateau is statistically the most unlikely scenario of all.

First time buyer strike is in effect from what I can see. Everyone is just bored of property obsession and happy to let the investors, foreigners and agents play out the end game whatever it is. Any investors buying into Auckland right now should be sectioned and moved to their own safe space, well away from their bank manager and Barfoot's sales people.

The pervasive conditions are low interest rate and moderate growth. Good conditions for price increases. The regions will continue to rise as long as those conditions maintain.

Auckland prices could jump off a cliff or go higher, it doesn't matter.

Cashing up and buying in The Regions is just fine - as long as you don't intend to look for work. You'll perhaps find it, but not at wages that reflect your capacity to be able to buy a home there if you become income reliant.
The misguided attempt to cool the property market in Auckland 2 years ago with discriminatory LVR's fuelled an unnecessary price escalation in The Regions that has distorted the wages/price ratio to dangerous levels; dangerous for current property owners. Now that the LVR's etc are equalised across the country, I wouldn't be surprised to see a rush of selling in The Regions as those who bought in from outside 2 years ago, hit the exit. Time will tell, as it does for everything.

There will be some occupations in which one can readily shift to the regions to find work and in some instances no difference in wages or salaries.
An example is teaching. In the Hawkes Bay we have a number of teachers moving here from Auckland to be able to afford to get onto the property ladder leading to a competitive oversupply of teachers in all subject areas while I read in the Herald there is a shortage of teaches especially in maths, sciences and English (but I note not economics).
The same rationale will apply to other professions such as accountants, junior doctors etc., and many trade people.
A don't knock the social life in the regions; there is plenty of social life, and with competition between the airlines and roads not congested, getting to the big cities for a weekend away, shopping, or a concert is relatively easy.

Teachers, uni staff, hospital workers, government workers, defence force workers, all tradies - all very liquid the same across the country... all the stuff Palmy has in loads - 147 sales in pn last month is similar to last boom so definately a strong market for a long time to come there

They build new stuff in the Waikato and BoP regions much faster and more efficiently than in Auckland. When the capital investment moves to these provinces it generates more jobs, much more than when the capital flows the other way. Apart from the upper/middle realms of employment type, it is more beneficial to move towards Waikato/BoP than Auckland. And even for the upper/middle and above it becomes a case of how much more income is available over relative asset value.

Building houses and associated infrastructure isn't real job creation. It is boom bust cycle.
There is plenty of work in the provinces at the moment building houses and associated infrastructure for displaced Aucklanders, but long term job prospects depend on the productive sector.
We aren't creating more farmland, the fisheries are depleted and the boom in tourism is cheap airfares dependent, not to mention tourists prefer areas of low population.
So our booming rock star economy is just us selling our low population statistic with the financial hang over yet to come.

The regions are creating more office space, more commercial space, more homes per capita than Auckland. The regions are attracting people and capital. Their future economy will compete with Auckland for jobs, so farmland and fisheries and tourism will not be the growth sectors - service and industry will.

We live in a time when Auckland has taken stock of its position as the largest, most attractive urban centre and made a plan for the future. That plan is to slice its own feet off, by applying the methodology of a cargo-cult Auckland has made land really expensive, because expensive land happens in the most successful cities. It is a horrible, stupid, harmful plan for NZ - but as long Auckland has the plan the best outcome is diversification to the regions.

"This turnaround in borrowing costs could have a more meaningful impact on house prices than the LVR restrictions," he said.

Exactly.

What counts as money is not what almost everyone still thinks it is, though those view should have been shifted almost a decade ago in August 2007. Money is instead “money”, where all the various forms of those bank balance sheets become the conditions that drive either monetary growth or contraction. Indeed, it is in many ways impossible now to separate money from credit, a further complication that has only rarely been considered.

The problem from a monetary policy standpoint that might ever acknowledge this arrangement is that it diminishes greatly the standing of monetary policy and the central bank. To realize that banks are at the center rather than central banks would be for monetary policy to be reduced to one input among many; and, more often than not, especially the past few decades, an unimportant one. Read more

Stephen, it's a shame your comments are very often so looong and complicated, I would love to read them if you could keep them concise and to the point

touché Stephen.... I think the guy was asking u to speak in simple English.... : )

I am always confused as to whether Stephen is quoting from other sources as his comments are always In italics or whether they are his own opinions. I give up on reading once I see the italics.

"his own opinions"

I think you'll find Stephen is not actually human but rather a comment bot designed to drive clicks to alhambrapartners. The algorithm is quite easy to reverse engineer. Quote random passage from article. Add small connecting phrase or word such as "hmm...." or "exactly", then quote and link to target alhambra article.

The REINZ graph on their website shows a drop in Auckland every December for the last five years. This years is similar to 2014, 2012 and 2011. December drops in 2015 and 2013 were much larger. I assume this years different but not sure why?

This data is for November.

Do I detect a hint of worry and rationalisation here in trying to explain away Auckland's house price and sales drop?
It is correct that there are fewer sales In December simply due to the holiday period - and in particular lawyers being closed - which makes for a far shorter trading month. And yes, the drop in sales is November, not December.

TradeMe Auckland listings are continuing to decline. Now down to 9003. It could go into the 8000's this week. This is almost a thousand properties less than a few weeks ago which is quite a number. I suspect it is due to the upcoming holidays although it's also not signifying a rush to the exit just yet.

Whoohoo just went below 9000 and is currently 8994!

No one is going to be listing property over the next 4 weeks.

Nobody wants an open home whilst the kids are feral on fizzy drink, nana's passed out on the sofa, and the house is eyeball deep in wrapping paper and Lego.

Just include them in the chattels. One persons junk is another persons treasure. :)

Irrelevant at this time of year and the decrease in supply won't galvanise sales unless no one puts their house on the market in Feb/March.

Sales for past two months down 10 percent year on year , in Auckland that equates to about 85 million in commissions and sundries half a billion over the year. Add in related support services, and the implications stack up.

I have just settled on my house in Auckland central suburbs and moved to the Bay of Islands, swapping an old tired home on a crosslease section for a newish house and 15 acres of prime land. I haven't felt less stressed in at least 10 years, even when I've been on holiday. I am mortgage free and now have a six figure term deposit and money left over to start a small business. I don't know why I didn't leave Auckland earlier, but somewhat glad that I didn't because my capital gain ended up larger because of it.

The first year on a lifestyle block is the best year. After that you really miss the opportunity to just chill on the couch and read a good book. Been there and done that. My advice is don't skimp on machinery. Buy a tractor with a mower to keep things looking nice.

Luckily a tractor and Walker mower came with the property, but I do need to buy a ute!

"six figure term deposit". Cool! Now at some stage you'll start to fret about the OBR taking your deposits if the bank(s) you have it with fail. They won't of course, but you'll have that nagging feeling of "But what if...." Join the club!

Haha yeah true, but at least it's better than fretting about getting to work on time in Auckland traffic!

Hey Zac were you suprised at the drop in prices in Auckland Central?I think you mentioned that that areas prices would hold up the best.Also do you see the regions following Auckland?

Most regions are under pinned by fhbs and kiwisaver which basically gives anyone with a job who's been in kiwisaver for 3 years a free deposit if buying a house up to 400k.

In auckland fhb's can't use this as prices are 700k for a fhb house and they earn similar wage to the regions and even if they can get 70k plus deposit they'll fail the serviceability test eg banks won't lend them 500k plus.

Why does REINZ publish "median" prices and not "average". Personally I would prefer to know what the average price is

For example if 1 house sells for $1 Million and 2 houses sell for $500 k the "median" price is $500k, the "average" is $667k

Narrabeen Boy, I did notice that and was a little surprised. I think Auckland Central statistics suffer from too few sales and high ticket sales or lack of them one particular month can dramatically skew the figures. A single month's figures are not enough to draw an accurate conclusion. It would take a year to determine whether I am right or not I suspect. Like another commenter said the graphs never show plateaus but are always jagged up and down lines.
I'm not sure about the regions. I think prices will be stable as long as interest rates stay below 6.5%. The lower quartile house will always be popular because there is a huge market for those.

Maybe Auckland Central had more apartment sales this year (as far as I know, REINZ don't filter out property type e.g house, townhouse, section, apartment etc).

It's going to be an interesting summer - I'm expecting a bit more demand than what is showing now - but no property appreciation.

by the way, @zach - # of properties on TM are now down to 8983!

1.6 mill competing over 8983 houses = 178 ppl competing for each listing

PN has 85k people competing over 160 houses = 531 ppl competing for each listing.

Do you write the survey questionnaires for LINZ.?

8949 houses now!

Only 160 houses for sale in PN is very low. That is quite an interesting comparison. How many houses are there in PN? My guess is around 28,000. If they sold every seven years and were on the market for one month you would expect to see 333 for sale at any one time. Hamilton is twice the population at 161K yet has 622 houses for sale which matches my guesstimate. What's going on in PN?

Simon owns half the properties in PN and is keeping the supply tight to force the market up.

Haha, 8932 this morning.

What's going on in PN?

Nothing.

What is PN, do you mean PNG ?

Yes, Papua New Guinea. It's a moderate sized city in the lower middle of the north island. A jungle village where the locals still practice head hunting.

Palmerston North mate, biggest city in the Manawatu-wanganui region of North Island.

In fact biggest city between Wellington and Hamilton.

Can you explain a bit further the rationale for assuming that 1.6 million people want to buy a house in Auckland now?

So why can't people round here sell their houses then if supply is so low? From what I can gather they are all relisting after the holidays.

So why can't people round here sell their houses then if supply is so low? From what I can gather they are all relisting after the holidays.

so prices fell 4% since October - annualise this and we have a 48% reduction. anyone reporting this?

If you do a search on TradeMe for houses in Papakura under 600K you get quite a few results with asking prices. Also houses claiming "price reduced". Here is a standalone house for under 400K:

http://www.trademe.co.nz/property/residential-property-for-sale/auction-...

That should be cheaper than rent. Houses around it look okay as well. A little box but easy to look after and quite sunny. I was talking to a contractor the other day who said that he wanted to get a full time job in order to get a mortgage because house prices were getting affordable in South Auckland.

BTW Auckland listings down to 8888 now.

Fake

That is not a stand-alone house - it's a portable cabin

Otherwise known as a mobile home
https://www.google.co.nz/search?q=mobile+home&sourceid=ie7&rls=com.micro...

Strewth $400,000

Yes, you could just stack these things on top of one another and solve homelessness practically overnight.

https://www.alibaba.com/product-detail/1-bedroom-mobile-homes_768389221....

Yes, except for local and central government.

landlord speak it is a cosy 2 bedroom stand alone house for the rest of us it is a portacom,they had better ones for construction workers at Marsden B,they are now units at marian heights retirement village in maunu whangarei.

Of course it is a dressed up Portacom.
However would be better to own it than continue on renting for first home buyers.
most of the value would be the land value rather than the accommodation, and if you want to live in Auckland then that is what many will need to get their head around this.
$400k will buy you a 3 bedroom permanent material 100m2 home on a cross lease section in an average area of Christchurch at the moment, so similar size section but definitely better home, and better lifestyle!
New homes not a lot bigger with attached single garage around $500k. on very small sections.

"However would be better to own it than continue on renting for first home buyers."
Rubbish.
Based on what?
Definitely not financially.. Unless of course you consider ~$100k over 25 years an adequate premium for ownership of a Portacom.

Nymad, why do you say you would not be better off in 25 years time if you purchased it.
I believe that property will be worth far more than the current 400k in 25 years time and you are paying off the mortgage rather than renting and having not a lot to show for all your payments plus you have something to pass on to your kids.
Interest only wouldn't be much more if any than renting it I would guess, not knowing what it would rent for in Auckland at the moment.
The fact that it might not look like your dream home doesn't mean that it is not fair value if you want to live in Auckland.

yes and the shared driveway that is another plus for this property.prefab unit,carport,the whole thing is so desirable,just lacks a coat of nipple pink paint to attract the suckers!

If I have understood properly, I think Nymad is saying that after 25 years the property owner will have paid very much more, in mortgage repayment + interest, than he would have paid to rent the place; and that the increase in value of the property will not be enough to justify the differential.

Thus, in 2041: (value of house minus amount paid to own the house) is less than (amount paid to own the house minus amount that would have been paid to rent the house)

It would be interesting to see the workings and in particular the assumptions that have gone into that conclusion.