Harcourts' average selling price in Auckland dropped $60,000 in August

Property

Average prices and the number of sales take a tumble at New Zealand's largest real estate agency

14th Sep 17, 8:39pm by Greg Ninness

The average price of homes sold by the country's largest real estate agency dropped by just over $20,000 last month, with the average price dropping almost $60,000 in Auckland.

The average price of all the home sold by Harcourts in August was $557,462, down from $577,595 in July and barely above the average price of $550,573 in August last year.

The decline appears to be mainly driven by falling prices in Auckland and Wellington.

In Auckland, Harcourts' average price dropped well below the million dollar mark to be below where it was a year ago, falling from $1,009,090 in July to $940,569 in August, which was also down from the August 2016 average price of $965,836.

In the Wellington region the average price dropped from $457,354 in July to $420,915 in August, although that was still up 5% compared to August last year.

In Harcourts Central North Island District, which includes the Waikato and Bay of Plenty, Harcourts' average price fell slightly, dropping from $476,187 in July to $471,616 in August.

Prices in the South Island went against the trend, with the average price in Christchurch rising from $488,079 in July to $524,159 in August and in the rest of the South Island it rose from $381,327 in July to $398, 256 in August.

However while average prices were falling in most parts of the country, the number of homes Harcourts sold was up.

The agency sold 1812 homes throughout the country in August compared to 1627 in July but still down 11.4% on the 2046 it sold in August last year.

That trend was reflected in the number of sales in all regions except Wellington, where sales were flat in August compared to July but still down almost 6% compared to August last year.

Harcourts chief executive Chris Kennedy said new listings in August were down 21% compared to a year ago.

"This is to be expected in the month leading up to an election, with listings generally down by around 20% before an election," he said.

"However it is also undeniable that there has been a general slowing in the housing market across New Zealand,and particularly in Auckland, due to Reserve Bank restrictions and a sharp decline in the number of foreign buyers."

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42 Comments

by Solidname | 14th Sep 17, 8:45pm 1505378755

Utter rubbish, property never goes down and foreign buyers only made up 3% of sales or something.

I guess I'll be getting a rent increase on the back of this news.

by J.C. | 14th Sep 17, 8:51pm 1505379104

Kind of meaningless media release when it doesn't give any indication of sample size at the local level. Mind you, it's quite interesting that the sales volume is only down 11% yoy at the national level.

by Wildcard | 14th Sep 17, 9:25pm 1505381107

So foreign buyers are having a noticeable impact on the housing market! I thought they only made up 3%? I guess National lied... Again.

by J.C. | 14th Sep 17, 9:58pm 1505383108

I think you would have to question the author of this media releases. How do they know the drivers (restrictions and foreign buyers) of the slowing? Where's the evidence?

by Wildcard | 14th Sep 17, 10:39pm 1505385574

Yes, I agree. Just having a bit of fun :)

Data on numbers of sales, property values at the time of sale etc is collected by Harcourts, so they would see the trends and market movements from the effects of LVRs, the election cycle and credit tightening. As far as I know Harcourts doesn't record any data on foreign/domestic buyers, so there would only be anecdotal evidence then from Kennedy et al. Therefore, either he has seen the amount of foreign buyers in the past and their lessening impact now, or he is lying about foreign buyers having an impact when in reality their effect is negligible.

by J.C. | 15th Sep 17, 12:24am 1505391898

Yes, but you're sort of reaffirming what I am suggesting: these media releases are rather ambitious with their claims. They believe the sheeple won't bother to ask the question "why" and will accept what they say because they are the "authority." If they can't back up their claims, they should report the data and trends. Nothing more, nothing less.

by theglc | 15th Sep 17, 8:08am 1505419727

I agree with you, as soon as the prices go up they will turn around and say that its due to high demand because we arnt building enough houses, they just pull these reasons out of thin air sometimes

by NorthernLights | 17th Sep 17, 2:28pm 1505615339

JC are you saying that sentiment has not changed in Auckland RE ?
I have a nice bungalow in Greenlane for you only $2.3million with a block of flats behind on a shared driveway
Strange but this property was sold multiple times over the past 2 and a half years yet now is wanted by no one!
They call that a change in market sentiment JC

by Brock Landers | 14th Sep 17, 9:40pm 1505382036

Nothing compared to the drops to come after National and their infiltrators are booted.

by areyouserious | 15th Sep 17, 6:43am 1505414627

Infiltrators? Or masters?

by theglc | 15th Sep 17, 8:09am 1505419784

You mean Chinese Overlords....

by surfisup | 14th Sep 17, 10:30pm 1505385029

In my view this is just a blip. Prices are still up massively . A while back they said chinese buyers had stopped buying, now this. . . it is a remarkable that the chinese apparently have all power and no power depending on who you talk to.

However, if the blip is sustained it will be interesting what occurs to those now stuck with houses they had never intended to be owning for much longer than a few days.

by O4 normal | 14th Sep 17, 11:41pm 1505389285

More scary is if prices go down to much at what point do the overseas (3% haha) investors sell in mass or the banks or government in China force the sale. Keep a eye on any big lifts in listings on trademe. When the GFC hit in 2008 trademe listing jumped to 18000

by Nzdan | 15th Sep 17, 7:03am 1505415824

That's right. Might be a blip but how many overseas investors will get up in the morning, read the news and decide nows the time to sell before it drops any further.

by skudiv | 15th Sep 17, 7:40am 1505418030

None, but keep daydreaming lol.

by mja | 15th Sep 17, 12:55pm 1505436908

Overseas owners with a secure offshore asset will really be in a rush to sell, given the prospect of legislation change meaning they will not be able to rebuy an existing well located asset in this jurisdiction. You can sell, but had better be sure, as an offshore buyer ban means you will be excluded from buying back in.

by NorthernLights | 17th Sep 17, 2:33pm 1505615639

History teaches some anyway
Plenty of Howick homes were put on the market by their Hong Kong owners after the successful changeover from UK rule to China rule. I know I bought one at a heavily discounted price
Doesn't anyone in NZ track foreign cities which are seeing correction in prices ?

by tothepoint - d… | 14th Sep 17, 11:27pm 1505388463

Hi Surfisup.

"In my view this is just a blip. Prices are still up massively."

As much as I hate to admit, you're correct.

by swapacrate | 14th Sep 17, 11:51pm 1505389890

Take from this what you will but Tony Alexander is telling real estate agents to get another job.

https://www.stuff.co.nz/business/96864107/tony-alexander-warns-real-est…

"According to his figures in the year to June 30, 2016, 95,000 houses were sold by registered agents, while in the 12 months to July 2017, that number had eased to 80,000."

"BNZ warned that the number of sales would continue to fall.

"The chances are that within a year or so the annual number will be near 65,000 with downside risk," Alexander said.

While previous housing downturns had seen annual sales in New Zealand drop to 55,000, Alexander said the fall this time was unlikely to be that hard."

by O4 normal | 15th Sep 17, 12:12am 1505391132

Be nice to see Aucklands figures alone on houses sold. Auckland seems to be dropping before the rest of the country . I would think last July to this July to look not that bad over the hole country because the rest of nz didn't drop in sales be Auckland should be worse

by J.C. | 15th Sep 17, 12:28am 1505392082

Take from this what you will but Tony Alexander is telling real estate agents to get another job.

The smarmster is back in action. I don't like the expression "punchable face", but I heard it used about this guy. I think that was way out of order. The smarmster is far better.

by tothepoint - d… | 15th Sep 17, 6:31am 1505413860

Hi swapacrate,

Nice to see Tony Alexander being quoted in a respectful way.

Usually, people here try to run him down.

Like other economists, he doesn't have a crystal ball and he can't see into the future, but I'm sure he does his best in making forecasts/predictions.

It's nice to see him given the time of day - for once.

by RickStrauss | 15th Sep 17, 1:25pm 1505438747

In fairness, I don't recall anyone mentioning him much prior to his ridiculous "buy a meth house" column. He got a bit of derision for the sheer volume of inanity squeezed into a single column.

However, I think most people regard him as an economist with a record largely like any other.

by theglc | 15th Sep 17, 8:12am 1505419962

Been quite a few blips since February

by NorthernLights | 17th Sep 17, 2:35pm 1505615753

So if you want a spruikers view everything's OK right tothepoint ? Laughable!

by E.I.Addio | 14th Sep 17, 11:45pm 1505389535

The sale of John Key's house should lift the Auckland average for September.

by thenewguy | 15th Sep 17, 9:38am 1505425102

One smart cookie, sold before the labour government from sept 24.

by O4 normal | 14th Sep 17, 11:56pm 1505390195

In another 3 months yoy statistics on house prices won't have last years high October November and December figures to help. Sales after the election should pickup, I'm guess people will be more realistic in there prices. I can't see a happy outcome to be a bull in house prices after the election. The chances of national getting in without peters is pretty slim

by Double-GZ | 15th Sep 17, 7:04am 1505415871

Yes!

by gingerninja | 15th Sep 17, 7:12am 1505416372

There is a lot in the media and from financial institutions recently about liar loans and a crash pending in the Australian property markets (Sydney and Melbourne specifically). What I don't see, is much discussion on how that will impact in NZ. Many of these articles highlight how exposed the Australians banks are to a big crash in property. And these are the same, main banks in NZ also. If Oz market crashes, placing strain on the banks, stock markets (heavily exposed to property markets) and pension funds (also heavily exposed) surely that would have a huge effect here? Would an Australian housing crash not provoke a credit crunch in both countries? Especially considering the amount of overseas lending these banks rely on?
Why do property bulls in NZ never discuss this risk?

by Zombie ponzi | 15th Sep 17, 7:25am 1505417110

It's a good point. If Australian cities are a cornerstone of the "Auckland is not overvalued" argument, then I suppose it doesn't compute that those cities are also overvalued. Most property bulls on this website don't discuss any of the risks. We're talking about something close to a religion. Australia is caught in the same trap as New Zealand except with even higher private debt.

Digital finance analytics provides some good 'under the hood' data for Australia.
http://www.digitalfinanceanalytics.com/blog/category/household-finance-…
The six charts about half way down the page show a steady deterioration in household finances.

by skudiv | 15th Sep 17, 7:32am 1505417528

Forget Sydney, a 1/4 acre in New York will cost you $600 million, talk about the mother of all bubbles!!!À¿

by Zachary Smith | 15th Sep 17, 7:32am 1505417572

Where Sydney goes Auckland will follow.

The interesting thing about the liar loans is that few of them are in arrears. I think I read that on average they were more reliable than the entirely honest ones. Also that are not totally lying about the income, just embellishing it somewhat.

by Zombie ponzi | 15th Sep 17, 7:47am 1505418431

Australia and New Zealand have followed a remarkably similar policy path. Both have had very high immigration and private debt expansion for some years now.

Why would a liar loan be more reliable? Australian interest rates have trended down which masks bad lending. Note how quickly mortgage stress in Australia has risen in the past few months with very minor increases in retail interest rates;
http://www.digitalfinanceanalytics.com/blog/mortgage-stress-still-on-th…

I suspect Auckland is more vulnerable than Sydney though. More political will for change. Less underlying strength in the economy. Both economies will struggle to improve even with a lower currency, because both have so little exporting power now there isn't much left to benefit from it.

by theglc | 15th Sep 17, 8:21am 1505420503

Doesnt that raise a red flag for money laundering ???

If you have to lie about your imncome to get the loan but then are more reliable payers that the rest of the market.... just doesnt add up!

by rmnz | 15th Sep 17, 8:38am 1505421535

More data on liar loans is needed. Anecdotally (yes I know!) I've talked to a few people who have included their bonus in their income. That's ok in the good times but bonus' are usually one of the first things to go in a downturn. One example is an acquaintance who has a fairly low salary but gets around a $40k bonus annually and has that and her salary as her total income.

by NorthernLights | 17th Sep 17, 2:37pm 1505615838

Listen to Zachary he learnt much up a post working for the post & telegraph Ha!

by Zachary Smith | 15th Sep 17, 8:10am 1505419804

Why would a liar loan be more reliable?

No particular reason other than that the banks stated, up until now, they defaulted a little less than the others. At least that's what I read in an article about it.

by gingerninja | 15th Sep 17, 8:48am 1505422093

I would assume liar loans would be more likely to buckle under pressure of higher interest rates than honest loans. Hence why this kind of property market is often referred to as a house of cards. There are numerous factors on the horizon that could destabilise any segment at the bottom of the market currently.

Could be foreign lenders raising interest rates (either because they are tightening themselves or because OZ banks are perceived as higher risk), could be reduced trade from China, could be decreasing housing market activity or values, could be decreasing net migration, change in political sentiment, change in market sentiment owing to negative media reporting or some/all of the above.

Possibly these storm clouds will just blow away and amount to nothing but at the point, I personally doubt that.

As ever, sensible, long term investors will have healthy enough yields to stay the course. But the vast number of negatively geared investors might be in trouble when the banks watch the LVR's deteriorating and without cash flow to see them through a down turn.

by atadesk | 15th Sep 17, 8:34am 1505421282

The Aus. liar loans are partly about people embellishing a bit on their application, mostly understating expenses apparently. So a significant proportion of them aren't really that big of a problem and the banks compensate by testing the ability to repay at a much higher rate than current rates. Little bit of a beat up, makes a nice headline though.

by THE MAN 2 | 15th Sep 17, 9:01am 1505422869

Christchurch prices up by approx. 36k.
The reality is that Christchurch market is undervalued compared to the quality of life you can have.
The average prices that have been quoted over the past few years have been seriously inderquoted as they always included all the "As Is" property and investor are doing very well with their rental returns.
I can also confirm that there are a hell of a lot of buyers from Auckland buying as they can see better value than In Auckland.

by Wildcard | 15th Sep 17, 11:04am 1505430295

I can't see the Christchurch property market taking off like Auckland/Tauranga/Wellington for a while, as the post-earthquake Fletchers/"cowboy" builder repairs will still be a dead weight. Buyers are still being thorough in their due diligence and sensitive to having to fork out for any needed additional repairs (exterior cladding, ring foundations, piles, leveling, sub-floor etc) on top of what they pay for the house itself. Not to mention the potential that the seller/REA is trying to hide something. The new builds that sell slowly are dampening the market as well, with construction starting to wind down. It's a pity so many are God awful cookie-cutter subdivisions like the ones by the Racecourse or Pegasus though.

As for the market being undervalued, I would have to disagree. The market down here is a lot more in line with what is considered affordable in NZ, and with what you get for your money. Besides, the last thing NZ needs is another city with over-inflated house prices.