September saw Auckland record the second lowest volume of house sales in a September month - after 2008 - during the past 25 years

Auckland house sales volumes plunged 31.5% in September, year-on-year, meaning sales in the city were the second lowest for a September month since interest.co.nz's records began in the early 1990s.

The latest Real Estate Institute of New Zealand (REINZ) national monthly sales data, out Thursday, showed big falls in sales volumes but prices holding up.

As the chart below shows, the 1,591 monthly sales in Auckland was the second weakest September month in terms of number of sales in the country's biggest property market, after 2008, going back at least 25 years. Unlike this year the 2008 election was held in November. However, Lehman Brothers collapsed in September 2008.

Meanwhile, the median number of days to sell in Auckland rose by three, year-on-year, to 37. And, REINZ notes, only 422, or 26.5%, of the Auckland sales were made via auction. That's a 57% drop versus September 2016.

Inventory, or the number of properties for sale in the Auckland region, increased 916, or 14%, year-on-year to 7,429 from 6,513.

In terms of prices, national median residential property prices increased 1.2% year-on-year in September to $525,000, the REINZ says. Nationally, excluding Auckland, median prices increased 5.7% year-on-year. The September Auckland median price came in at $845,000, down $5,000 year-on-year.

The national REINZ House Price Index, developed in conjunction with the Reserve Bank, increased 0.7% during September month-on-month, reaching an all-time high of 2,699. REINZ says this indicates the ratio of sales prices when compared to CVs is at its highest point since the Index began. The Index also shows all NZ regions except Auckland, Taranaki & Canterbury, reached a new high during September.

ASB senior economist Jane Turner suggests Auckland house prices are likely to remain supported - at very high levels -  given the ongoing imbalance between housing supply and demand.

"In saying that, indicators in September are conflicting, with the median number of days to sell remaining elevated in Auckland. This suggests the balance between buyers and sellers remains tilted toward buyers, and hence the outlook for Auckland house prices does remain highly uncertain," Turner says.

Running in favour of the Auckland housing market is ongoing record inward migration and historically low interest rates. Running against it is the Reserve Bank restrictions on high loan-to-value ratio mortgage leading, and less money coming into the market from overseas. There's also political uncertainty until a government is formed following the September 23 election.

"Signs of Auckland house prices stabilising despite soft demand and Wellington prices still growing strongly, reinforces the need for the Reserve Bank to remain vigilant for signs the housing market may reaccelerate. The election has added another layer of uncertainty to housing market trends, and the Reserve Bank will want to see how the housing market trends develop over the coming months once a government is formed," adds Turner.

*The charts below both come from ASB.

*This article was first published in our email for paying subscribers early on Friday morning. See here for more details and how to subscribe.

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102 Comments

Um ok so cause and effect. The cause is artificial market intervention (40% LVR), effect is the lowest volume of house sales. It's like building a dam then saying we are surprised by the water volume down below have decreased immensely. Haha funny how we are all for introducing more restrictions to purchasing a house (DTI, higher LVR etc) but also complain about low home ownership rates? Aren't they essentially cause and effect as well? :) They make it worse for the poor/less well-offs to get into housing.

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Yeah, cause and effect like lax foreign investment regulations and tanker loads of immigrants every year leads to unsustainable prices... Policies giveth, policies taketh away.

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Cause, unprecedented buying of houses, land by foreigners, particularly foreigners who could not freehold real estate in their home country, foreigners with pots of money acquired by fair means or foul, happy to pay OTT money for property, so long as they owned it. Effect, house and land prices going through the roof. Cause, government of country whose money is being splashed around all over world clamps down on it leaving their shores. Effect, house and land prices begin to fall. No more, no less, whatever minor interventions have been applied here. Once people truly understand what happened they will be less enthusiastic about paying stupid prices for houses. It has started.

The dark art of deception

The 40% LVRs do not apply to owner-occupiers of houses but do apply specifically to investors

Yet you talk of purchasing a house and low ownership rates and poor less well-offs
Poor less-well-offs aren't investors

How quickly we forget

This week the RBNZ released the sort of data on mortgage lending that we have not previously seen. It revealed banks have made three times as many loans to investors as they did to first-home buyers in the past year, and the average amount lent to investors was larger. That's 3 to 1 or 75% v 25% in investors favour

http://www.nzherald.co.nz/politics/news/article.cfm?c_id=280&objectid=11...

Stev-O First home buyers and owner occupier percentage numbers have actually increased since the LTV came in. So they have **improved** home ownership rates. Nothing like where they should be, because of the inflated prices to incomes but any improvement is welcome.

I think there’s a severe lack of knowledge Stev0000MG!!

Plans for new Key family home on tennis court revealed...and it's still in DGZ!
http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=1193...
'Outlook for Auckland house prices remains highly uncertain' ...
It just goes to show that certain or uncertain, if you're building a family home for your family to live in for the long run like Sir JK does, who gives a toss about what you say about the current market?!?

Difference between the Prince PonyTail Puller & you DubleDunce is he doesn’t have most of his wealth trapped in housing !
You’ll never learn

"It just goes to show that certain or uncertain, if you're building a family home for your family to live in a long term basis, who gives a toss about what you say about the current market?!?" Most if not all of the property vultures in these pages?

I was just referring to people who are in the same boat as Sir JK...they don't give a toss especially after cashing up with $20M in the pocket LOL. By the way, just heard that 170 Orakei Rd sold for $5.25M just a week ago yay!

Dammit man, this thread is worthless without postcodes.

"Dammit man, this thread is worthless without postcodes."

Exactly - it's all about location. It always has been and it always will be.

TTP

How many people are in the same boat as John Key with the wealth to own property in the DGZ and build on it? 0.5%?

A bit of spruiking practice I suspect, before heading out the door to set up the first "Open Home" of the day.

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Reduced sales volumes eventually leads to price declines. Price declines will herald a property bust, then regretfully job losses. Migrants will not come, they will leave despondent. It's been a good lucky run, a hard and noisy party helped along by printed money and good old fashioned herd mentality. A correction is healthy, it is the new normal and it is coming. The more those involved remain in a greed and debt driven denial, the bigger the correction will be. Its going to be a big one.

I have to quote TTP here, 'No such luck for you' LOL

It just lovely that comment :-)

Well considering you are both the same person it would be pretty easy for you to quote him.

Migrants with money have a different effect on the housing market than migrants without money. Rather obvious. 15 years ago as a middle aged migrant I sold up in London and used the money to buy in Auckland and it has been a good investment (it would have been a reasonable but not quite so good if it had been left in London). How many of the current applicants for 'skilled' residency are bringing wealth with them and how many are in the students from poor countries category? Obviously there is a mix but it does seem to be heading towards the younger and low-wage immigrants. If so (I've seen no stats) then the pressure will be on overcrowded rental accommodation.
If that analysis is right then the demand for owner occupied property will be less than anticipated by population growth.

The whole rotting debt-soaked mess is about to sink our; Australia's and the World's economy.

Well done Central bankers! Your rewards are on the way....

The Reserve Bank of Australia is opening the door to even tougher regulatory restraints on risky bank lending after announcing it would do its own "bank stress tests," a task usually performed by the prudential regulator...amid a fresh barrage of warnings that limits on investor lending would not reduce high household debt levels....The report comes as the property market shows ongoing signs of cooling even as the cash rate remains at a record low.. attempts to curb ..... mortgages had come too late...Macro-prudential policies can at best moderate the growth of credit and prices for a while but they cannot address the high levels of debt and prices"..

http://www.afr.com/business/banking-and-finance/reserve-bank-to-stress-t...

"Macro-prudential ....cannot address the high levels of debt and prices". Quite right! The Market is going to do that all by itself, and markets being markets....there will be losers.....

Oh the drama and those with money will take the opportunities..funny enough they are us who made our money ..often out of property

You are quite right. I sold my first $1m + home in 1992, but that's not where I made my money. And I'm still a homeowner today! The property I sold in Queenstown has been remodelled by the current owner; he's done a nice job! and is worth far more than Jonh Key sold his Auckland plots for. But my comments above stand. "The whole rotting debt-soaked mess is about to sink"

I can see this hole property cycle ending in tears what the deleveraging take hold soon.

For once you are correct, this property cycle is in a HOLE.

You forgot the denominator - number of owned stock sold. Number of houses has increased quite a bit since 1992? Also, please stop referring to prices being supported by interest rates and immigration. This is tired assumption based thinking. Affordability - not mentioned. % of people who can afford or get a mortgage? Not mentioned. Medians are held up (average more so) due to those over $1m price who do not need to borrow. Sales below $850k have fallen most. A little depth of analysis would be expected of you on this site

So the expensive houses get more expensive and the cheaper properties get cheaper. Soon it will be worth buying the latter and replacing it with a new house.

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Let's hope Winston administers the delouse treatment.

Winston is more likely to be Minister of Foreign Affairs - indulging himself in the baubles of office in hotels/restaurants/limousines abroad.

I can't see Winston targeting property prices - especially since he and his partner have a $3million house in the ultra-exclusive St Mary's/Freemans Bay area of Auckland.

Highly likely that Winston will hold hands with Bill English. We'll find out within the next few weeks (or months) anyway.........

WP will be Minister of State. He’s too old for all the overseas travel needed for Foreign Affiars.

And there is no Condoleezza Rice to "charm"

I made a comment the other day where I questioned whether we can even claim that we have a civilization. I thought it was rather profound. Similar to Fukuyama's claim that we are witnessing The End of History and the Last Man.
He argued that the worldwide spread of liberal democracies and free market capitalism of the West and its lifestyle may signal the end point of humanity's sociocultural evolution and become the final form of human government.

We have become atomized, highly individualistic and secular in a very profound sense. Stuff, especially property, is now our God. Which makes sense when we are no longer striving for a civilizational destiny but only a personal, materialistic, destiny. We will not see property prices implode. Much more likely the opposite as the wealthy are drawn to the magnetic World Cities, the jet transport hubs and ultra safe spaces of the planet. This is it, this is the end.

I think you've forgotten what actually drove the NZ and mostly the Auckland property market to such over inflated extremes. And those top end buyers are GONE, never to return in the numbers that they had before, all you're left with now is worst of the money launders (For top end buyers).

Here's a little article to remind you, so you can hope all you like that's not going to help the sales figures. We need to let property prices fall to affordable levels it's as simple as that. :)

Better Dwelling article: China’s Massive International Real Estate Buying Spree Is Officially Dead
https://betterdwelling.com/chinas-massive-international-real-estate-buyi...

Quote: Impact On Global Real Estate Markets; New Zealanders that were complaining about a “flood” of Mainland Chinese buyers, are now complaining about the market cooling faster than expected.

Signs of Auckland house prices stabilising despite soft demand and Wellington prices still growing strongly, reinforces the need for the Reserve Bank to remain vigilant for signs the housing market may reaccelerate.

What you fail to grasp CJ099 is that the money is already here. Desirable property in the Global Cities doesn't consume money, it generates money, so it doesn't need to be constantly fed.

No Zachary what you don't seem understand that in order to keep prices 'UP' you need to keep the money stream going which was all know has been well and truly shut off, hence why prices are crumbling especially for the million dollar homes since there are very few sales.

And yes a property market does need to be constantly feed, that's how you keep prices up otherwise it just stagnates and prices gradually fall. You'll understand this as we go in to the second phase of a property correction next year since they'll be no hiding behind year on year data. :)

We shall see.

Remember golden rule: "Property is only worth what someone is willing and able to pay for it". :)

We shall see :)

"Property is only worth what someone is willing and able to pay for it"

That's misleading and deceptive nonsense, CJ099. You ought to know better. (You've been coming here long enough.)

Clearly, you only need to be willing to pay. If you're not able to pay, you can borrow the money - which is what most people do anyway.

TTP

For most people, what you are willing to pay already included what you can borrow!

Someone might be willing to pay $500k for a property, but if they have $1 and Credit of $2, then willingness aint gonna help....

Common expression: " I'd be willing to pay a million bucks for that place if I won Lotto!"

"For most people, what you are willing to pay already included what you can borrow!"

Really??!

Typically, people find a house they like at a price that they're willing to pay. BUT, they have to borrow money to be able to pay for it.

They're "willing" - but they're not "able" until they've borrowed the money. Importantly, at the point of "willingness" many of them don't actually know whether they'll be "able" - because they don't know how much they'll need to borrow. (For instance, they might not know how much their existing house would sell for.)

TTP

Of course, not everyone is typical!
I recall envying a particular property that I would have been willing to buy, if I had the resources available at the time, and determining that "One day, I'll buy that!' and, 'one day', I did!
So again, willingness and ability to pay can have barriers in between them....time, personal circumstances, all sort of things, but capacity to pay....trump them all....

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@ TTP You're an RE everyone knows that you're an RE! And you are unbelievably pathetic if you think the average Kiwi can afford a million dollar home when the average joint income is 80K. The maximum they can borrow is $500k and even with a $100k deposit the MAX they can afford is $600K

And by the way every time you use that "You should know better" line. Hey guess What! I and most of the commenters on this site know you're an utter moron because you can't even calculate basic math!

Here's a link to mortgage calculator help you: https://tools.anz.co.nz/home-loans/borrowing-calculator/true?cid=sem--ho...

Clearly, CJ099 is on the turps again tonight.

You're incredibly sad TTP is that the best you can do in a retort? :)

And by the way, I don't need to drink but you clearly do, according to the latest declining sales figure you and the other RE's should be looking for another job.

Lets face it you don't have a shred of evidence to support your claims that Auckland's property prices will rise again, not now or even in a few years.

And haven't you shuffled off to Palmerston yet since you complain that you can't afford a home in AKL?

The likes of TTP, Z and DGZ are trying so hard to keep the property market propped up... their efforts should be acknowledged.. what they can't go against is the law of gravity

I'll be putting my money on Zachary.

TTP

Me too

Me too

Me too of course ;-)

Losers in the making!

You don't know that Didge. The article appears to suggest that the Reserve Bank is more worried about a re-acceleration of house prices rather than a crash.

Immaterial. If house prices take off again then the enevitable crash will be larger and the social unrest more severe.

Chatting to a friend while I was back in NZ. They've got one foot out the door. Both highly educated and both highly paid, albeit with kids They've calculated that they can only borrow 800k so probably limited to 1.1m. Still nothing reasonable in nice areas for that price so they'll probably leave Auckland. Can't you all see what's happening. All the innovators are leaving.

They'll get a 2-bedroom duplex with a carport.

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I think that's fat pats point. Great people with good incomes are leaving because all they can get is a 2 bed duplex.

Great people with good incomes are leaving ...
It is not a given that Auckland will forever have the capacity to be home for everyone. If you have some common sense you'll know that some stay and some leave. Great people with good incomes like Zachary, Ex Expat, Eco Bird and myself are STAYING!! LOL

I don't see why great people can't just rent and invest in other things. Perhaps buy a house in an up and coming area of NZ and rent it out. Why do they want to buy a house in Auckland if there is not going to be much capital gain?

People want to buy a house where they live so they have a HOME, that's H.O.M.E. somewhere they can make their life with no fear of being turfed out by a landlord deciding to cash uo, without having to go cap in hand to said landlord if they want to have a pet in their life, maybe they want to completely redecorate. And maybe they don't want to recreate the same crappy circumstance for some potential home owner somewhere else by pricing them out.
Time for this sh$#y culture around housing to end!!!

Lots of landlords want forever tenants. Why be so pessimistic.

Still not your own home, not under our tenancy laws, and while I can see that renting forever will become more of a "thing" I reckon the way it is structured here, needs completely revising. However, the ideal is still owning your own, really. Sorry, but the majority of the people cannot become the means by which a minority become rich especially where housing goes.
Pessimism would be accepting the status quo without a squeak.

Do you own your own house Pocketaces? Do you know people who are suffering because they have to rent? Or is this just happening in your imagination? We have to change the structure of our society so people can rent cheaply in desirable locations and keep a pet forever?

I had a tenant for about ten years who would still be there now if I didn't sell the property. I offered to sell him the place at what was probably 50K less than I sold it for at auction. House would be worth 300K more now five years later. People do get stuck in a rut and need a bit of a push sometimes.
I would say that tenants leave of their own accord much more often than getting evicted.
It's not reasonable to expect to rent the same place for life.
Pocketaces is over empathizing the plight of tenants for political reasons. It's great to have an excuse not to have a pet. It's great to not have to worry too much about the house and so on. It can be great to move around often.
If you really, really want your own house you make it happen. House in Bluff, under 100K.

I understand there's never been a better time to buy in Gore.

Because if they're talented and hard-working they can get a better deal elsewhere, including the ability to own their own home and - often - a higher salary?

Double-GZ
Great people with good incomes like Zachary, Ex Expat, Eco Bird and myself are STAYING!! LOL

Are any of you under 40?

All personalities staying within the one person???

Lol I thought I would Chuck lol in so I can be a groupie.

Well just because your staying means nothing. What it means is that if people with great incomes cant afford houses in Auckland where is all the money going to come from. Not from the Yves St Laurent property speculators. You need more people with cash.

Actually they might be able to get this shack for less than $1M in Ponsonby, but you never know it might just go above $1.1M LOL! http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=1193...

Nice place!
However the article has this to say:

On the same street as Harper's property, a 3-bedroom pre-1914 villa with a rating value of $1.09m was sold for $1,495,000 - $405,000 (27 per cent) above its valuation.

Just around the corner on John Street a two-bedroom villa, dated pre-1914, with a rating value of $980,000 sold for $1,372,000 - $392,000 (26 per cent) above valuation.

Can anyone see a problem with these two sentences?

There are 400 Investor Visa's being issued each year. Those Visa holders typically want $3m++ properties in Central Auckland. That's why I believe the top end is holding up and will continue to as also those people are cash buyers. Lower end is a different market and will make it more attractive to FHB's which is great.

Dear “Penguin”
The 3m+ homes purchased by investors are only part of their portfolios in Auckland property
My wealthy Chinese neighbour purchased many properties both for himself and for his friends back in China
all in his companies name
You do not know the half of what’s going on

I'd guess our politicians known, but they've been happy enough to lie to the public about it.

Zachary on crack now
People living in the worlds premier cities are not clambering for Epsom or Remmers or even know they exist
Even the Asian tourists are asking where the kiwis are when they walk around downtown Auckland
Keep up the laughs Zach & DD

It only needs a relatively tiny number of buyers. Within spitting distance of my house I have people who have bought and renting that have recently arrived from Beijing and London, premier cities.

That’s wonderful for you then
Saves you flying up here

Why would I want to fly up there?

I ain't gonna fly up anywhere especially near NL LOL!!

So, September 2008 was a month of low volume house sales in Auckland. That's 9 years ago.

In fact, I remember the time well....... The doom and gloom merchants came out in force saying it was the "beginning of the end" for the Auckland housing market - and that house prices were about to tumble big-time. "Fundamentals" would not support house prices at their September 2008 level, we were being told. Prices were "unsustainable".

But they got it WRONG. Believe it or not, since September 2008, Auckland house prices have actually increased.

Anyone who bought in Auckland in September 2008 would have done very nicely indeed. (Unfortunately, I'm not one of them.)

Thanks, in the main, to foreign buyers, desperate to get their money into real estate, they are now gone

I am putting my money on Zachary. Seems like a lot of doom and gloom merchants on this site.

The doom and gloom is in ridiculously high house prices.

Don't let the facts get in the way of a good story. Unfortunately what your are refering to being the "Doom and Gloom Merchants" on this site are actually reading all of the "Leading Indicators" as to what is happening in real time on the ground. Have you noticed the conversations around the water cooler have changed dramatically over the past few months? The herd mentality is alive and well. Just as many people piled into the Auckland housing market all at once, many more people are now trying to get out. Unfortunately the doom and gloom is all yours to own.

Should be some real bargains out there, what with "more people trying to get out", looking around can't see them yet, any day now, maybe...

Indeed Zachary,

The "any day now" mantra is beginning to wear a bit thin.

Also, I note that some people are pushing the "slow crash" mantra. Now, of course, this is as silly as it sounds. By the time the so-called "slow crash" is complete, prices will, in fact, have risen considerably on what they are now.

There's an insatiable demand for property, particularly well-located Auckland property - and it's growing by the day.

Yes tothepoint a lot of commenters also write something like "as soon as the crash happens I'm going to buy or my daughter's going to buy" not realizing that such an attitude reveals quite a demand for property.

Dear spruikers
If you believe Auckland property is going to increase in value over the next 12 months why are you waiting ?
Buy now
No you are not buying now because you know the overall market is in decline and you will wait
So dear spruikers your lack of action preferring to wait exposes your hypocrisy

DGZ has just bought a place in Puhoi. I'm a bit maxed out and need to do some renovations. Any more questions?
We're not multi-millionaires just ex P&T workers. You're the hypocrite, you made money in property, now you're nice and comfortable, swanning about the world, you're a social justice warrior.

I bought a few months ago, and I have settled now! It's going to be a long term hold on this one and it's already tenanted ;-) #GoodBuy

I’m in a different space to you two. I have a single unencumbered home, cash in the bank and follow the market because I need to be aware of trends for my looming retirement, in a decade or so.

My wife and I are extremely financially conservative so any decision to mortgage the home would have to be very well researched. I’d borrow to secure houses for my children. I’m a buyer if I can see an opportunity in my area (1071) to downsize, but I’m very fussy. It must have the attributes of my existing home I.e. North facing, elevated and close to the beach. I will trade down living space to get money out. Right now those opportunities are not there. A single site house is still better value than any options. I’m not seeing the doom and gloom right now. Listings are next to nil and buyer demand is strong for what listings there are as seen at the auction I attended a few weeks back. I suspect I’ll be watching for a long time.

Aucklanders still fleeing Auckland’s traffic, hyperinflated house prices, and moving/buying in Hamilton, Tauranga, Hawkes Bay etc.

Yep, and that is a trend that seems likely to continue. Count me amongst those displaced Aucklanders who simply wasn't prepared to pay a million dollars for what is in effect an investment grade quality. Aucklanders and Wellingtonians are flooding here to Napier where a search this morning on TradeMe reveals a grand total of just 91 properties available for sale.

I had a quick look, and probably 76 of those listings are fresh. Based on 24,500 dwellings there’s not much choice for buyers in Napier. My hood, Kohimarama, is the same with 10 fresh (less than 75 days old) listings for 2,970 dwellings.

Things are percolating in Palmerston North.

See you there!

Palmy was pushed up by speculators. It is now coming back down to reality and that is excellent news for my daughter. I just need to convince her now to leave Auckland like I did. Good things take time.

A lot must have changed in Palmy since August:

Buyers struggle to find a house in Palmerston North

It sure has. Palmerston North's average house price fell $49k from August's record-breaking high.
http://www.stuff.co.nz/manawatu-standard/97802809/Nearly-50k-price-drop-...

Interesting. I have been watching for these sorts of contracts to start showing up:

For the first time in 18 months, there were plenty of offers coming in that were conditional on the sale of the buyer's previous home, Klue said.

Offers coming in but were they accepted? A big problem with the hot market is that it is quite difficult to upgrade your current house and has led to people acquiring rentals (their original home) when they really didn't particularly want one. Being confident with a contract that has this condition is a good thing and was very common in the past. I found that article to still reflect a hugely healthy interest in buying property.
Buy in Palmy now if that's where you want to live, it's just possible the market has bottomed out already.

I agree it looks like Palmy has bottomed out and it might be a good time to start looking at houses for my family. I'm thankful that Palmy can still offer FHB's a home to call their own.

Palmy doesn't suffer from a shortage of land which has driven up Aucklands prices. There are so many new building projects going on that there is a wait list of 12 months just to get to talk to a builder and then a further 12-18 months to get an architect. Commercial builds are also popping up everywhere, so we won't experience the price inflation like so many other areas.

Paul Whittaker the manager of property brokers real estate says he does not see any signs of first home buyers being pushed out of the market. Lol.