Barfoot & Thompson has started 2018 with lower sales, prices taking a dip and inventory levels rising

Increased stock and at best flat prices definitely makes for a buyers market, and that is going to put downward pressure on prices.
If a first home buyer, no urgency to rush.
If a seller not rebuying, then a little urgency.

There are three directions a market can trend. Up, down or sideways. Sideways trend is a period of consolidation after a major move, and is to be expected.

Last month "prices still rising"
This month "stable, steady, etc"

As in;
"stable the drawbridge!!!!"
"the stable 48 states of the USA"
"stable your weapon!"
"how could he do something so stable"

Vendors, you are going to need to have steadier expectations to sell in this market.

Wow. A 4.7% drop in median prices from December.

That's a 56% loss annualised.

No need to rush and buy at the moment as the heat has come out of the market if a cash buyer...patience is the key for lower prices and the likely higher rates in the future. Like Bitcoin gone up way too high and now the reality sets in when prices fall. Lower immigration numbers going forward...crack down on foreign investments and higher mortgage rates with an overpriced market there will be cracks in the property market going forward.

Back in Jan, I came back from 3 weeks holiday in Japan. Our AirBnB host was telling me that properties in Japan's major cities are selling like hot cakes to wealthy Chinese buyers and our AirBnB is in fact owned by a Chinese couple living in Shanghai. So may be buying houses in NZ is weaning off as there is better deal elsewhere.

So the $1m + market is still moving while the under $1m market is slowing to a crawl.

With the inventory rising, pressure in the lower end is rising. It all adds up to lower prices in that sector. Its going to be an interesting next 6 months or so

On a 3 month rolling sales basis Barfoots have 6.5 months of listings on its books. M13 data nationwide sees prices stagnating for the next year. Banks will be pushing out the Ipads and grocery vouchers shortly.

" The decline in sales was mostly at the bottom of the market, with sales of properties priced above $1 million being similar to a year earlier, while sales of properties priced under $500,000 dropped from 13% of all sales in January 2017 to 8% of all sales last month."

So, people do not want Junk even at a discount and there will be less sold as we go forward...
Quality houses and modern $1M+ being "similar to last year" i.e. are holding and rising

Hmmm.... we knew all that and said it before , now B&T is confirming and Greg is still jumping to conclusions and assumes its a buyer's market because of choice!
No one sells at a discount unless they need to, and few of these do not disturb the markets

The Market was Off in the first 2 weeks of January, most people with kids are only getting back to real life this week ....

Patience is a virtue

Two aspects:
Firstly, if sales have fallen in the lower price brackets then this would keep up the average and median prices. Therefore the decline in prices is likely to be greater than these figures suggest at face value.

Secondly, it is interesting to note the change in commentary that is prevalent -banks, agents, economists are increasingly talking static - or declining market as distinct from the 'small increases' that was the language even three months ago. That has a big impact on those who are looking who see a chance of a lower price in six months, but very limited chance of a price increase.

If you look back 12 months - what was so bad with those prices that people felt obliged to pay more for a property and what is the chance of returning to that level.

The demand for greater fools has exceeded supply!

My heart bleeds for Barfoots

I've been to a few open homes in last one month and all the agents acknowledge that houses aren't selling at the current CV, in fact, about 10-15% below CV. Just one year ago, houses were selling at about 20-30% above CV. I don't know where it'd go from here. Unfortunately, prices are so high, we can't afford even at these discounted prices.

Gravity kicks in after rocket booster shut down by change in govt and incoming legislation. 2018 could be a really interesting year as ponzi headwinds are far from over.

All we need now is a visit from Mr Wage Inflation to light the fuse. I notice the German unions are now saying 6% and the Japanese unions 4%. That was unthinkable a couple of years ago.

Just remember the Powers That Be simply adore a visit from Mr and Mrs Asset Price Inflation but hate Mr and Mrs Wage Inflation with a Vengeance. Yes, I know it's unfair and all that. Remember, the Powers That Be are not kiwis, they are the top 0.1% in the US, China, Japan and Germany and they will keep the workers in their place. No ifs, ands or buts.

Truth is that Auckland prices have a mighty long way to go before they could be regarded as realistic .

That said , its actually good to see the loss of steam in the market , its been easy -street for too long .

Now those developers without pre-sales or defaulting off-plan buyers will be the next space to watch , as the noose tightens ...........

Let's also not forget a falling market becomes reinforcing , in anticipation of further price falls, buyers sit on their hands , and they have waited so long , that a few more months will not make much difference to them , but a big difference to sellers and developers .

how much is due to the fall in overseas buyer, B&T targeted a specific country for purchasers,
pity we dont have a register so we know.
will be an interesting census this years to see OO rates, and population make up in certain places + and -

That the property spruikers herein spend so much of their time protesting against the possibilities of a decline in residential home prices, surely tells us a lot about the future and also about their too high investment in property.

I’ve spent a reasonable time on this planet – and yet I don’t think I’ve ever seen residential property “crash”.
I’ve seen long, drawn out declines and relatively sharp declines – but in each case years were involved in the process.
There are very few that willingly throw what may be their largest, or at least one of their largest financial assets on the bonfire – and if there are large enough numbers who see no other option but to do that then don’t panic, normally financial regulators will do what they can to ensure that it does become an epidemic.
I’ve seen shares crash, maybe will see crypto currencies crash, possibly saw personalised plates crash (though I wasn’t really looking) and what on earth happened to Telecom phone cards – did they crash or simply vanish, and did anyone care, someone must have I assume.
As an aside, I think we’ve reached some sort of “funny” exhaustion point in the real market – puzzled, confused buyers and sellers – too many conflicting and flashing signals, real or otherwise.
However, in mcmansion land the motives may be different – simply do whatever to get your hands on one, and quick – time is of the essence!

Talking of share crashes versus property – it’s often said that residential property in a general sense is going up and down every day – but as it’s not traded as an index unit or share you just can’t see it. If it was it would move up or down every day depending on news releases such as wage growth, employment numbers, immigration, construction costs, sales figures, unsold inventory etc etc….
I recall the US created various city indices you could trade – long, short etc – I don’t know if they still exist.
To have such an index in Auckland would be interesting – but probably nigh on impossible – getting agreement on its construct, good grief!!
Still, it would be an opportunity for property owners and non-owners alike to take a position in the game. Don’t own property, but wish you did, here’s your opportunity to make out like a bandit – take the index and back up the truck.
Think it’s going to crash – go short and brave, but it’s Auckland, so maybe don’t go too far away from the buy button.
And then you can throw in some option plays for a little protection – or leverage up if you’re game.
C’mon – someone give it a go – and clip the ticket for your trouble – real estate commissions are in a bit of a slump I understand – this is perfect, once again, it matters not if the market is rising or falling – just simply participate in the trade!

Been a flood of new listings in 1071 the past few days. They are moatly auctions where as trend of late was negotiation or price. I hate auctions and see it as a win for the agents. Can anyone shed some light on a vendors motivation in this market to opt for auction? Surely it works to their disadvantage in a sideways or down market.

...

Eco Bird – you state the following:
“The fundamental is that we are 40,000 units behind and that is increasing by 5000 every year, the other fundamental is that borrowing is being made harder for developers to build so shortage will be higher”.
In all seriousness I do ponder the following – let’s assume we now have more tradies that can swing a hammer – that’s what their good at but that’s pretty much all their good at.
At the moment let’s assume their all busy – however, in a general sense they always will need to stay busy – and also, developers will again, need to stay busy – mouths to feed and food on the table etc.
To do the above they will need to stay busy, to stay busy they will need to be competitive, to be competitive their pricing and performance will need to meet market, in whatever form.
To fix the problem we have created a machine – I don’t know how easy it will be to pack this machine away and only bring it out when conditions fit.
Unintended consequences – they simply have to keep building.

Custard, that is fair comment. However the smaller concerns, and lets face it these are the tradies that NZ relies on to get stuff done, will always go for the optimal margin as they dont have the competitive edge that their larger counterparts do. They simply dont have the resources to be able to weather the usual situations which occur within NZ’s typical feast/famine building cycles. Larger corporates can, and do, take opportunity over profitability by keeping assets productive at cost and then being able to make their margins in other areas often at the expense of smaller ones. That said the Labour vision of 100,000 houses in 10 years is currently a pipedream even if we qualify what is meant by affordable homes. The only way this will be achieved, in fact even 50% of the promised target, despite potential macroeconomic shocks etc, is through influx of foreign labour prepared to work at even tighter margins. Where these people will be accomodated is anybody’s guess. But hey, Labour received the mandate (apparently) and we are all going to prosper together under their wise and visionary stewardship.

Auckland shmauckland.. don't you know Wellington is where the property market is going nuts these days?

Wellington is certainly active at the moment - but Auckland is more than holding its own........

Try finding good houses (fee simple) in the inner city suburbs: it's almost impossible. And that situation is destined to continue.

TTP

speaking of crashing markets Bitcoin has crashed to $6400 from $20,000 a month or so ago, that is a loss of 2/3 of its value. Some of the fools will be hurting, thats for sure!!!

Auckland wont match that, I can guarantee!

Without wishing to appear too churlish, based on the comment gushing forth from Waitangi it wont matter too much what’s happening on the economic front as next election it appears we may be voting along the lines of (to pinch a few lines from Blackadder) Arden the even younger, Arden the toddler, Arden the embryo or Arden the glint in the milkman’s eye.

Woe betide anyone who now openly castigates Jacinda. You’ll become public enemy number one and likewise, if you say something about Winnie you’ll be accused of pensioner bashing.

But thankfully we will have John Key, not present, but a perinnial whipping boy, nice, white and rich, that we can pull out on the fly and thrash for all the ills we are presently beset with and of course all future malaise that will certainly befall us.

I look forward with bated breath...

Was trying for humour, Christ knows I needed some levity. True, Im a little more blue than red I suppose but I also had more than enough reservation about Key’s government and in fact any government. Doesnt make me some kind of libertarian though. By the way don’t confuse my ramblings as a judgement, more a conceit on an entire system and the sycophantasy of much of the headline commentary both from the newsroom desk chair and the armchair critic alike. Well done Pocket, you have led me to make up a new word. I will use it sparingly, I doubt accusations of sycophantasy will be too well tolerated round the traps.

haha

For 12 months ending Jan 18, opening inventory = 3620, closing inventory = 4320, new listings exceeded sales by 9782. Suggests that a whopping 9082, almost half new listings, disappeared off B&Ts books without actually being sold. Recent B&T releases note that their delisting rate is relatively low at about "10%", but apparently not so now???