Asking prices on Trade Me Property took a dive in June

Property

Average asking prices on Trade Me Property dropped for the second month in a row in June

13th Jul 17, 3:17pm by Greg Ninness

Further evidence of a housing downturn is emerging with the average asking price of residential properties advertised for sale on Trade Me Property taking a dive in June.

The average asking price of properties advertised on the website dropped 1.2% in June to $632,850.

It was the second month in a row that the average asking price has fallen.

"It means the significant capital gains of recent years are slowing down but if you are looking to buy it will be welcome news that the deposit you require isn't surging at the insane rates we've been seeing," Trade Me's head of Property Nigel Jeffries said.

In Auckland the average asking price also dropped for the second month in a row, to $911,000 in June, down 0.9% compared to May.

"Auckland's property market has softened considerably in the last six months," Jeffries said.

"Year-on-year growth is falling across the super city, landing at 7.4% in June after being up at 9.6% in May and 13.4% in November."

However, the price falls weren't confined to Auckland or other major centres.

June's average asking price for all parts of the country excluding the biggest cities of Auckland, Wellington and Christchurch was down 0.6% compared to May.

The fall in asking prices suggests vendors and probably the real estate agents advising them, have accepted that the market has softened and are adjusting their asking prices accordingly so that their properties do not appear over-priced.

However asking prices were still rising in some regions, notably in Otago and the Waikato which hit record highs on Trade Me Property in June, with respectable rises also occurring in Northland, Nelson and Wellington.

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43 Comments

by dictator | 13th Jul 17, 3:23pm 1499916198

Whatever you do don't panic about the property crash.

by Retired-Poppy | 13th Jul 17, 4:28pm 1499920096

-10% take notice, -20% get interested, -30% start buying, -40% panic!

by tothepoint - d… | 13th Jul 17, 3:36pm 1499916997

Yep, don't panic - even though 1.2% is an enormous percentage drop.

Absolutely massive crash. Nobody could possibly deny it.

Keep calm and carry on.

by Double-GZ | 13th Jul 17, 3:37pm 1499917069

Yeah and it's a massive 0.9% in Auckland and that's HUGE.

by NZXY | 14th Jul 17, 8:10am 1499976619

That's $30,000 in your $3 Mil neck of the woods - most people I know don't earn that in a year

by Eco Bird | 14th Jul 17, 9:42am 1499982142

Its actually amusing when people pick up what they like from a yearly graph like the one above - I can say that prices have "DIVED" by 4.2% since Mar or 3.3% since April ...and a clever dude will rush and annualise that to come up with a nice rounded 25% pa ...
I love it ...!!
Funny that I missed anyone mentioning that it went up by 3% in march !!

by Grendel | 16th Jul 17, 8:02am 1500148954

It amuses me when I see young investors go through the denial phase in their first downturn. Don't worry Eco Bird we'll get through this together =)

by Grendel | 13th Jul 17, 5:12pm 1499922766

Exactly panic in Nov when its -15% and everyone else starts climbing over people to get to the door =)

by scarfie | 13th Jul 17, 6:20pm 1499926836

Keep deluding yourself that a change in trend is insignificant.

by kane02 | 13th Jul 17, 6:29pm 1499927364

14.4% annualised. On $950k that represents a drop of $136k in a year. Not exactly what the average property investor envisaged a year ago tothepoint.

by RickStrauss | 14th Jul 17, 10:46am 1499986012

Those ones with the interest-only loans will be a little nervous, likely.

by Nzxonz | 13th Jul 17, 7:05pm 1499929542

Yeah panic when it is minus 15% as than will be chain reaction but the bigger question is, at that time will panicking help.

So is it not better to be aware now and act to book and minimise loses UNLESS you are init for a long period than hold.

by CJ099 | 13th Jul 17, 7:40pm 1499931617

Ha ha, I don't see those teen tiny auction results keeping the Auckland paper millionaires prices afloat. It's all aculamative you know the rest of those poor sales results will pull down the property market over time.

by john wheeler | 13th Jul 17, 9:19pm 1499937544

Toronto Home Prices Crash 192k since April.
https://www.youtube.com/watch?v=hGL0ysImPCo&t=4s

Auckland Albany House Prices Dive 13.5%
https://www.stuff.co.nz/business/property/94154549/house-prices-dive-in…

But Dont Panic !

by theglc | 14th Jul 17, 8:12am 1499976775

Interesting comments about the inventory in Toronto going from 3 weeks worth to 3 and a half months worth

by Eco Bird | 14th Jul 17, 9:24am 1499981050

Please don't believe everything your read, I live near Albany and have my fingers on the pulse .. I can second the lady from Bayleys Albany, that news is pure BS unless B&T has been selling crap houses around Albany village etc.... rosedale gardens pictured increase their prices to already signed up buyer by 15% few months ago ... most "average" 3 bedrooms have never reached the $1M mark there yet unless they are new and with 2 bathrooms etc which have never come down in price ....
Go figure

by Davo36 | 14th Jul 17, 9:55am 1499982929

Baylesy say this:

"Instead of three to four weeks, it's now four to six weeks on average. Sales [prices] are still stable for us."

So hardly a downturn.

by sferris | 13th Jul 17, 4:00pm 1499918417

0.9% is the monthly drop, about $8k less in just a month - 10.8% annualised.

by Carlos67 | 13th Jul 17, 5:40pm 1499924425

Not according to the graph above, you mean now its only +10.8% instead of the +25% everyone has got used to, help its time to panic and SELL, SELL, SELL and live in cave until the market crashes.

by moneyphobe | 13th Jul 17, 4:11pm 1499919074

ouch 10% a year. What will happen to the 40% of investors that bought with interest only loans that are now underwater? I just hope they have a lot of equity in their main home to soak this up once the bank calls the loan in...

by Yvil | 13th Jul 17, 6:15pm 1499926534

Why are you concerned for other investors ?

by TainuiBabe | 13th Jul 17, 10:22pm 1499941345

He may be concerned if one of these investors was in his neighbourhood, because a mortgagee sale typically results in a fire sale and drags down all the neighbouring properties value with it.

by Eco Bird | 14th Jul 17, 9:26am 1499981209

lol, that doesn't happen in Auckland !! coz the neighbours will buy it smart fast :)

by RichMuhlach | 13th Jul 17, 4:19pm 1499919594

https://people.hofstra.edu/geotrans/eng/ch7en/conc7en/stages_in_a_bubbl…

"1% drop! that's NOTHING!!" -- denial

Spring will be the "Bull Trap"

elevated sales after Election will be the "Return To Normal"

then watch all the investors get rid of their property at reduced prices in the Summer

by theglc | 14th Jul 17, 8:20am 1499977233

love the part about denial and temporary setback, are we there yet?

Blow-off. A moment of epiphany (a trigger) arrives and everyone roughly at the same time realize that the situation has changed. Confidence and expectations encounter a paradigm shift, not without a phase of denial where many try to reassure the public that this is just a temporary setback. Some are fooled, but not for long. Many try to unload their assets, but takers are few; everyone is expecting further price declines. The house of cards collapses under its own weight and late comers (commonly the general public) are left holding depreciating assets while the smart money has pulled out a long time ago. Prices plummet at a rate much faster than the one that inflated the bubble. Many over-leveraged asset owners go bankrupt, triggering additional waves of sales. There is even the possibility that the valuation undershoots the long term mean, implying a significant buying opportunity. However, the general public at this point considers this sector as "the worst possible investment one can make". This is the time when the smart money starts acquiring assets at low prices.

by linklater01 | 14th Jul 17, 1:30pm 1499995846

thegic,

Absolutely right. "but this time,it's different" Yea right! I don't live in Auckland,but in a way,I have skin in the game. My younger son-with wife and 2 young children,recently sold their house in Meadowbank pretty much for the asking price and are renting,while they look for another house to buy. I am watching with interest.

by moneyphobe | 13th Jul 17, 4:32pm 1499920366

Return to the mean = 3-4 times earnings ouch

by K.W. | 13th Jul 17, 5:12pm 1499922735

As investors are finding out in Australia, when you go to refinance your loan (eg. to switch from interest only to principal/interest, from variable to fixed, or switching banks) the banks will implement a LVR based on their valuation. So if prices are 10% down on purchase price, the banks might come back with a valuation thats 15% lower, of which they will only lend 60-80% of that valuation - and in order to get finance, you have to stump up the cash to make up the difference. Don't have the cash? Well, you are in the poo aren't you. Hope you didnt use equity in your primary place of residence as security for that investment property mortgage because the bank might just call both mortgages in and force the sale of both to get their money back!

by Averageman | 13th Jul 17, 10:39pm 1499942389

Agree banks will look after themselves first if they have to. A clouple of months is not the end of the world but if it keeps up into the new year then anything is possible. Last time Winston got near the wheel the whole economy stalled till March the following year.

Could get really bloody is the Chinese decide to dump stock. Imagine not being able to return all the money to the motherland, as values drop, rates go up, and the NZ doller weakens.

by ngakonui gold | 13th Jul 17, 5:36pm 1499924205

Much ado about nothing.

by O4 normal | 13th Jul 17, 6:16pm 1499926618

If some go under water with there loans and there'll be a lot , I can't see banks touching them if they keep paying there payments, if housing gets that bad banks will have other problems, but yeah those home owners won't have many options other to stay put and keep a clean nose and for many years, but ya tell your mates (I don't have to sell)

by Solidname | 13th Jul 17, 10:16pm 1499940983

Now I'm not saying there's anything in this, but I have noticed a distinct change in positioning of housing stories on Stuff, a couple of months ago they were "Young couple buys house without issue (caveat they sold their first born and borrowed a million bucks from their parents)" "Property makes a gazillion dollars a minute" and they sat on the front page all day. Now there's a chink in the market and the "Reinz says don't panic", "Barfoot and Thompson struggle to sell any properties" headlines are gone and hidden within an hour. I'm not saying that RE make up a lot of their advertising budget, but RE makes up a lot of their advertising budget. Has anyone else noticed that or am I just hugely cynical?

by TainuiBabe | 13th Jul 17, 10:27pm 1499941667

When you get a mainstream news article with an interview from Auckland's Barfoot and Thompson admitting that Auckland house prices are in decline and that sellers need to be realistic with their prices in order to sell, then I don't know what else would smack you in the face of reality, considering that Barfoots have been the dream team of Real Estate Agents across Auckland for years!

by Rob | 14th Jul 17, 1:05am 1499951114

It is interesting watching how real estate agents spin these things with the market changes. All an agent really wants to do is keep turnover high, so it all comes down to persuasion. Whether that is with the buyer (saying they will miss out on a house etc), in a sellers market. Or a Seller (saying that they have to meet the declining market, and this is a good buyer etc), in a buyers market.

by NZXY | 14th Jul 17, 8:20am 1499977209

Precisely - RE salespeople don't care what price your house sells for - just that it sells...

by Davo36 | 14th Jul 17, 9:58am 1499983098

Yep, agree, this is all about getting vendors to lower their expectations. So that more transactions can be done.

by Davo36 | 14th Jul 17, 9:58am 1499983127

Don't bite the hands that feed you...

by john wheeler | 18th Jul 17, 3:41pm 1500349284

Soildname - RNZ radio station was always comparing Auckland to Toronto on there radio show. BUT now that prices have CRASHED 192k since April we here NOTHING.
https://www.youtube.com/watch?v=hGL0ysImPCo&t=1s

by Philly | 14th Jul 17, 1:07pm 1499994423

This property downturn, whether turning out to be minor or major, is potentially very damaging for NZ's future.

It is likely to take the pressure off politicians, regarding creating a more rational (& sane) taxation system, which would encourage investment productive enterprises over passive capital gains in property.

With the productive sector so tiny in NZ (eg NZ's share market being about 5% the size of Oz's), and our love of debt so strong, we really need to change our tax settings to create a better future. I see this as far less likely now, at least over the next few years.

by Eco Bird | 14th Jul 17, 3:09pm 1500001747

"which would encourage investment productive enterprises over passive capital gains in property."

Oh please, Where are these enterprises ?? There is still tons of $$$ in the market waiting for a home and proper investment ... look at the over subscription in corporate bonds !! any company which has a proper prospect and plan can attract a lot of money in an IPO or bond release.

The only thing that there is shortage of is IDEAS and innovation ( some limited amount is out there but still very small and tiny in the scale of things )

So there is no shortage of Money and most is parked in property because interest rates are low and hardly covering inflation if put in any other investment vehicle other than the share market - but Shares are too risky for some / most and comes second to Property ....
that is why this phenomenon is International ... properties everywhere are expensive and snapped by the wealthy people in growing economies.

If the government created a PPP fund for building infrastructure with a capital of $5B and only puts in its $1B, I am sure that the other $4B will be oversubscribed in two weeks provided there will be a healthy long term return on investment and proper oversight and governance ( instead of wasting it) ... and you might see lots of houses for sale coming to the market as a result.

But that is just my opinion

by blue meanie | 14th Jul 17, 5:15pm 1500009348

I totally agree with you in this instance Eco Bird... the issue comes with 'proper oversight,' or for that matter a long term vision by the government, something none of the political parties have. Compound the 'work for mates' policy being the norm, (see Fletchers strangle hold on NZ construction) and absolutely nothing will get done, ever.

by Eco Bird | 14th Jul 17, 6:07pm 1500012430

Agreed.... and that is the Deep State which some of us here ignore or deny its existence and powerful influence ... You think we should have at least a dozen of big contractors and construction material suppliers in such a booming time but most projects and policies are literally governed and bottlenecked by what the two main players want and can do!!

My point above would be complemented by saying that taxing people to get their money in order to "please the Mates" is old outdated technique that almost everyone hates ( big and small) while working alongside people with money and encouraging them to invest in "Your" projects is far much smarted, civilized, and more effective ... it could make them vote you back in office again -
until polys figure that simple rule out , we need to wait and see what happens in September.

by blue meanie | 15th Jul 17, 8:32am 1500064379

Again all good points. As the saying goes, "where there is no vision, the people perish." Sadly I cannot see a 'vision' in any of the main parties. TOP at least is proposing something different from the status quo. Unfortunately poor ol' Gareth lacks the 'x-factor'... seriously how can we as voters take ourselves seriously, when decisions aren't made on policy, but 'x-factor' and wouldn't he be fun at my BBQ with my mates.
Come September, the Nats will win with the support of the usual suspects and again zilch will be accomplished.
Unfettered immigration and the selling of high priced property are the only games in town.
Stuff are running an article on the new NZ citizens. The comments section is something to behold, the animosity to migrants is flabbergasting and they are the comments getting through the moderator... we know the feeling about house prices and the comments on this site... The Nats two main policies for growth, immigration and houses, are turning into a nightmare of social animosity. So I guess in short, while you speak the truth, sadly our political overlords will continue to stumble on the same path avoiding 'vision' at all costs.