Buyers market in Auckland, shortage of homes for sale down the line

Property

The number of homes available for sale in Auckland hits a five year high, while many regions struggle with record lows: Realestate.co.nz

2nd May 17, 5:02am by Greg Ninness

The number of homes available for sale continues to increase in Auckland while there is a shortage of listings in many other parts of the country, according to the latest figures from property website realestate.co.nz.

At the end of April a total of 8927 Auckland homes were listed as available for sale on the website, up 49.5% compared to a year earlier and the highest number of Auckland homes available for sale on the website in the month of April for the last five years.

The rising number of homes for sale in Auckland comes as the REINZ data shows sales declining in the region on an annual basis, although the sales figures for April are not available yet.

Realesate.co.nz spokesperson Vanessa Taylor said the jump in stock available for sale in Auckland was good news for buyers.

Auckland appears to be in a wait and see mode right now," she said.

"A cooling in demand and an increase in the number of properties sitting on the market indicates that potential buyers are taking their time and exploring all of their options," she said.

That's the reverse of the situation in many other parts of the country, with the stock available for sale on the website down more than 25% compared to a year ago in 12 regions, and total listings at an all time low in Hawke's Bay, Gisborne, Manawatu/Whanganui, Northland and Taranaki.

In main centres aide from Auckland the total number of homes available for sale appears comparatively stable, with 1197 Wellington compared to 1157 in April last year, and 3716 available for sale in Canterbury in April compared to 3598 in April 2016.

In most regions the difference in asking prices of properties newly advertised on the website in April was negligible compared to March, while demand for properties had declined 13.8% over the last three months, with demand in Auckland down 31.1% (see chart below).

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Source: realestate.co.nz

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51 Comments

by tothepoint - d… | 2nd May 17, 6:28am 1493663314

A slow-down in Auckland property in the short-term seems plausible - especially with the onset of the winter months.

For sure - it's a good opportunity for buyers. But long-term prospects for capital growth in Auckland (and Wellington) remain excellent.

Remember also that the short-term won't last forever........

by Peri | 2nd May 17, 7:33am 1493667185

Between the short-term and the long-term is going to be really interesting

by unaha-closp | 3rd May 17, 10:42am 1493764953

It depends on what the young people do and it depends on what the corporates do. I suspect Auckland is medium to long-term screwed.

Over the last 8 years the entirety of Australasia (and most of the world) has been hitting dizzying heights of building construction. These new buildings offer great places for young people to live and corporates to work.

In Auckland our Council has made the price of land go up for 8 years and created excellent short-term gains, but not let anything much be built. The only thing that has boomed is a whole massive amount of costly exurban sprawl. Auckland has accumulated a lot of debt, but very little to show for it in the way of new buildings.

If you were a young person or a corporate in Auckland, would you stay?

by swapacrate | 2nd May 17, 7:34am 1493667277

10 to 13 times income. Short term might be 20 years in Auckland till salaries can catchup. Who can afford the price of the house now in Auckland. Not sure how our low wage economy can create enough millionaires to buy the houses.

by RickStrauss | 2nd May 17, 9:59am 1493675976

People might be banking on a continuing influx of foreign ownership instead, to keep things disconnected from local incomes.

by unaha-closp | 3rd May 17, 10:25am 1493763940

International investment is not going to stay in a market where best case scenario they will not make any money. International investors will cut their losses here and sell.

Basically the same high income of international investors that allows them to distort our local market, is entirely based on them making a high return on international investment.

by skudiv | 2nd May 17, 7:49am 1493668158

Anything that provides a return will see its yield continue to drop.

by scarfie | 2nd May 17, 12:14pm 1493684047

Yep, a most important point you make.

by ex socialist | 2nd May 17, 7:52am 1493668343

Capital gains in Auckland are dead for ten years.

by Rob | 2nd May 17, 5:50pm 1493704235

I don't think so, mainly because the value of many peoples homes in Auckland is the future potential of the land itself. This is because the future is high intensive housing, so the house will be bulldozed and high intensive housing will be built on the land. They have already zoned areas in Auckland for this under the plan. But it all depends on NZ growing at its current rate by importing our population growth, and NZ wanting a population closer to 10 million +. Makes the books look good, but huge costs for society and infrastructure further down the track. I can see a shift in the way we treat people in our society in the future. You are already getting generational conflicts occurring.

by unaha-closp | 3rd May 17, 10:13am 1493763238

The building of intensity costs a lot of money. What you are saying is that during 8 years of low cost credit Auckland did not intensify, but now that the cost of credit is increasing it will?

It won't.

The present and immediate past has been high intensity housing. Record low global interest rates, coupled to any sort of semi-competent planning instruments, and the last 8 years has seen a global oversupply of apartments. This includes Australasia, which has seen a veritable flood of new apartment stock arrive.

The current overvalued cost of peoples homes in Auckland is not due to future potential, rather it is due to an artificial shortage of land (thanks Len Brown) and the now receding low cost of credit resulting in short-term capital gain. This land cost speculation prevented Auckland from building apartments for 8 years. We missed the low interest cost intensification boat and now Auckland is screwed.

Auckland prices are going to adjust downwards. The future is emigration as every young person in Auckland is soon going to leave for Sydney/Melbourne/Brisbane/Perth where they actually have built lots of homes. I think Auckland future pricing is going to resemble that of Adelaide, which has had an emigration problem for years.

by CJ099 | 2nd May 17, 8:06am 1493669207

@tothepoint: l think you're completely missing the point. Auckland's sales are massive down due to the absens of foreign investors from Asia (Mostly China). This has been since January this year when the capital flight restrictions really kicked in. Now Auckland is in this situation where property is vastly over inflated and isn't selling due to the lack of free credit from China that fuled the Foreign Buyers. So property will sell when Aucklanders get realistic about their property prices and allow them to drop to an affordable level more in line with salaries.

This just goes to show what a huge influence Foreign Buyers have on the Auckland property market.

by RickStrauss | 2nd May 17, 10:05am 1493676309

Look, National repeatedly assured us foreign buyers were not an issue in the Auckland market.

I hope you're not questioning their integrity.

This just goes to show that we need a government who will change the law re foreign buyers (e.g. new builds only, stamp duty) in case this is a temporary lull in the selling of NZ out from under young New Zealanders.

by Simon | 2nd May 17, 9:21am 1493673697

record low level of listings (supply) at same time as demand up 14.5% in the mighty manawatu - PN the only long term hold option in the region. Sales also at record highs not seen since mid 2000s. History doesn't repeat but it sure does rhyme

by Better things to do | 2nd May 17, 4:26pm 1493699169

Maybe, if the downturn happened in winter.. but this "downturn" has been in the making since mid last year and slowly growing to have a life beyond "seasonal" excuses..

by saamee | 2nd May 17, 6:46am 1493664375

"Realesate.co.nz spokesperson Vanessa Taylor said the jump in stock available for sale in Auckland was good news for buyers"..... Which is bad news for Sellers! "Short Term can always become More Long Term"

by Hardly | 2nd May 17, 6:56am 1493664960

What is with the timing of this release? Correct me if I'm wrong, but they aren't releasing April data yet are they? So why release these comments and push to media outlets?

by Leverageup | 2nd May 17, 7:44am 1493667852

Pretty sure that graphic says April 2017

by Hardly | 2nd May 17, 8:16am 1493669812

What is confusing me is the intent. They normally release some robust market related data mid month. This seems to be primarily website driven data based on the adverts and the interactions with those. Maybe the release timing is designed to drive web traffic.

by ex socialist | 2nd May 17, 8:37am 1493671078

there are two sets of figures - this is from the realenz website; the aspect of average sale prices etc will come later in the month

by Greg Ninness | 2nd May 17, 9:01am 1493672501

I think you may confused between the data released by Realestate.co.nz (which lists properties for sale on its website) and the REINZ which is the industry body and releases sales data collated from its members. Realestate.co.nz always releases its data at the beginning of each month. REINZ figures should be out in a week or so.

by Hardly | 2nd May 17, 10:44am 1493678658

Thanks Greg, I managed to get myself confused between the two entities. I haven't been in the house buying market in a while and for come reason I conflated this entity with REINZ.

by Roelof | 2nd May 17, 7:40am 1493667656

Keep in mind that even thou no. of listings is at the highest level in 5 yrs at almost 9000, Aucklands population has grown by almost 100, 000 in those 5 yrs.
I think inventory levels was about 12000 in 2011

Listings as a % of total housing stock might be another good metric...??

Mkt might not be as vulnerable as one might wish for... ???

Who knows... demand might step in as prices soften a little..?? ( once any vulnerable investors have been forced to sell )

by Stev-O | 2nd May 17, 8:08am 1493669322

But it's not solely about demand though. There are lots of demand but it all comes down to the banks and their willingness to loan. They control the market. 40% LVR forcefully took ~50% of the buyers out. No equity increase/capital gains due to half the buyers falling out? No way to buy the next property for a long time. This is what happens when the governing body panics and pulls numbers out of thin air. Population increase due to importing of chefs, retail person, baby sitters, family members ain't going to help. Quality matters, and the rents not rising as quickly in Auckland due to overcrowding. Without those magic formula the prices won't increase.

by M.Aurelius | 2nd May 17, 8:55am 1493672139

Just wanting some clarity on your comment. Are you saying the slowing of the Auckland market is good or bad? Becuase it reads as though you think it's bad the government stepped in to slow things down?

by Yvil | 2nd May 17, 10:09am 1493676597

Good or Bad is in the eye of the beholder

by Hardly | 2nd May 17, 10:45am 1493678742

Demand is willingness and ability to pay. As you say, just because I want a house doesn't mean I feature in the demand equation unless I can get the financial resources to buy one.

by Averageman | 2nd May 17, 8:00am 1493668811

Specuvestors appear to have stalled for sure. If price come back and banks lift any more it will be time to feel that negative leverage. Cap gains have gone over the top of the hype curve.

by MikeM | 2nd May 17, 8:25am 1493670305

How is it possible to have both a buyers market and a housing shortage at the same time?

by M.Aurelius | 2nd May 17, 9:00am 1493672457

Exactly! The market is property broken at this point and we don't have the data to understand what is having the most influence on it.

by AK79 | 2nd May 17, 8:33am 1493670785

Average house price to average income is still at 10:1 - it's not a "buyers' market" in any normal sense of that phrase. Until that gets down to normal levels then it's still financial suicide. If the US Fed keeps to its promise of interest rate rise then we will get some normality in asset prices and investment yields.

by swingtrader | 2nd May 17, 8:35am 1493670907

I find it quite interesting how NZ Herald has reported these figures compared with Interest.co.nz -
NZ Herald: "There were 31.7 per cent more properties available to purchase in April 2017 compared to the same time last year".
Interest: "At the end of April a total of 8927 Auckland homes were listed as available for sale on the website, up 49.5% compared to a year earlier"
There's an almost 20% discrepancy there so which one is it?
There is no doubt in my mind that the herald is conveniently massaging the figures to support their agenda of having everyone believe all in well in the Auckland property market.

by Smalltown | 2nd May 17, 8:52am 1493671948

Swinger - most people realise that the Herald has lost its reason to be. I suspect somewhere in the next 2-5 years the Herald will disappear completely.
That will be a disappointment for me as I find the Herald is very useful as a weedmat when I collect them from the shops the day after and is also good for starting the morning fire. For anything else though - not much.

by zorba - old | 2nd May 17, 9:24am 1493673866

Excellent for wiping windows after spraying with window cleaner - something to do with the ink on the paper apparently.
Aside from that I agree; the Herald has lost it's reason to be. There is too much instant news throughout the day to have to wait until the next morning to learn of it.

by Uninterested | 2nd May 17, 8:54am 1493672084

I've long thought that if you follow AND BELIEVE what the NZ Herald says then you will not get ahead. You have to have your own unique individual view and go with that.

by two otherguys | 2nd May 17, 10:00am 1493676016

The 31.7% is a direct quote from realestate.co.nz

http://www.realestate.co.nz/blog/news/new-zealand-property-report-april…

Gee people are quick to attack the NZ Herald - aren't they

by Boatman | 2nd May 17, 10:00am 1493676028

The headline is deceptive , this is NOT yet a buyers market , it has a long way south to go before we see real value for buyers .

A Labour coalition Government is almost sure to bring immigration to an abrupt end , and this will help the market get back to its senses

If I were an FHB, I would sit on my hands for at least a year as there are a number of factors that will take the steam out of the market , such as increases in interest rates , more vacant land becoming available , and slower immigration as a new coalition Government puts a halt to this game of bullrush we euphemistically call an Immigration Policy

by Cowpat | 2nd May 17, 10:09am 1493676553

The game of real estate is over. After two decades we find ourselves between euphoria and denial.

by Upside | 2nd May 17, 10:11am 1493676687

With rents increasing due to demand of Rentals (with the buyers holding back from home ownership),
the "stagnant" AKL market or slight decline will slowly create higher yields with time in Auckland, not great yields but higher than recently, ultimately the Supply/Demand is still out of whack and this will sway pressure between buying and renting in an upward direction for some time to come. Even increased listings to the current point will be no match for net migration figures and local population growth, if you ain't buying you're renting and again the rent will go to the highest bidder! Will that make property attractive again for the investor?? Possibly...but it will continue to sway back and forth until the Supply overtakes demand or at least makes any real dent!

by Cowpat | 2nd May 17, 10:19am 1493677160

Do you own a rental property by any chance?

by RickStrauss | 2nd May 17, 10:20am 1493677249

The problem is too that we may well see Kiwi migration swinging again because things are so out of whack.

With renting an already more attractive equation in Melbourne, the GC or even much of Sydney - and more apartment supply to come online - those who must rent may well decide it's better to do so in a place with better prices and higher salaries. And the first to go may well be the highly-skilled who naturally have pretty good job portability internationally.

National's response is of course to flow the international flood gates open even wider to replace them, but we've seen we're not getting the highly-skilled replacements - these are going to Australia, USA, Canada, UK - while we are getting large numbers of low-skilled migrants, albeit coming in as 'skilled' or via the unsavoury PTE sector visa mills.

by TainuiBabe | 2nd May 17, 6:52pm 1493707925

I wouldn't be surprised if rental caps are introduced via government policy, because high rents are dragging down the entire economy and National have been down this road before, when Muldoon was in power.

by Yvil | 2nd May 17, 10:16am 1493676993

I think this is actually quite good news, Auckland is definitely slowing down (and it needs to) but many regions have had very little growth in the last 10 years and actually need a bit of life injected into their stagnant real estate. Will more Aucklanders move to the regions (both North & south island) in search for better value ?

by RickStrauss | 2nd May 17, 10:24am 1493677456

Sounds like you're saying houses should be about investment, not homes.

Quite how we went from a country where policies including government builds, tax and the like being about encouraging a high rate of home ownership - and succeeding - to one where a generation thinks it's all about their investment portfolio rather than passing the ball on...well, I really don't know.

You'd think the benefits received from previous generations would be passed on in kind via carrying on policies that had proven effective.

by iconoclast | 2nd May 17, 10:31am 1493677894

Not surprised Auckland real estate has slowed down

From both a buyer's and a speculator's perspective, winter is the best time to search for quality properties as you can soon find out if there are water problems with the section, the garden, the lawns, paths and the house

The cyclonic storms of March and April and the failure of drainage and storm-water systems (being the worst in recent memory) will have exposed any defects in properties (and areas) subject to such problems

by unaha-closp | 2nd May 17, 11:06am 1493680007

Auckland has exhausted the short term gains of land price inflation and is moving into medium term stagnation and collapse.

The underlying reason is demand is down in Auckland because economic growth and productivity growth is slow in Auckland. People who just a decade ago would have moved to Auckland for work are staying in their home regions or moving to other regions, because many of the other regions are out performing Auckland growth.

This is direct by-product of Auckland Council planning strategy of maximising exurban sprawl. Auckland Council specialises in spending money building lots of sprawl in the middle of nowhere, (creating epic traffic jams and shoving up land prices) destroying economies of scale and building very few homes. It has been going on for 7 years and will continue until 2040, so in the medium-term until 2040 Auckland is screwed.

There was a short term halo-period of land price inflation, but now that has ended and there is no attractive reason to invest in Auckland.

by abnz1 | 2nd May 17, 12:33pm 1493685216

Government is now only playing with fear physiology that if they are voted out - NZ will be doomed.

9 years is too long a time for national and it is time for change.

Enough of politics of Denial, Lie and Manipulation and if nothing works pass the blame to everyone else but themselves.

Another example is Pike River tragedy - tried to hide, manipulate and lied and when nothing works pass the blame to police.

In any National government Fiasco - one will be able to relate to their policy : Denial, Lie, Manipulation and if nothing works pass the blame.

by RickStrauss | 2nd May 17, 1:05pm 1493687102

>"Government is now only playing with fear physiology that if they are voted out - NZ will be doomed."

One thing's for sure - if National get in the home ownership of generations of young Aucklanders growing up now are likely doomed.

Vote National: #RentTillYouDie

by abnz1 | 2nd May 17, 2:08pm 1493690911

Agree.

Vote for change

by Independent_Observer | 2nd May 17, 12:57pm 1493686623

Auckland, once the city of sails, now the city of sales.

by Averageman | 2nd May 17, 2:04pm 1493690655

Classic, city of "lack of sales" (buyers sitting on hands), city of "sales" (agent ex lease flash cars to appear at Turners shortly), city of snails (motorway traffic).