Sales were more subdued at the country's largest real estate agency in June and prices were particularly weak in Auckland.
Harcourts sold 1684 residential properties in June, down 3.8% compared to June last year and down 15.2% compared to May.
However most of the decline occurred in the Auckland and Wellington markets, with Harcourts selling 398 Auckland properties in June which was down 8.3% compared to June last year.
In Wellington the agency sold 272 properties in June which was down 9.6% compared to June last year.
But sales held up reasonably well in the rest of the country, with June sales in the Central North Island up 3.2% compared to June last year, while in Christchurch June's sales were down just 0.8% and in the rest of the South Island they were up 0.5%.
Harcourts' national average selling price declined for the second month in a row to $617,042 in June but remained up 4.8% on June last year.
However the average price was particularly weak in Auckland where it declined for the second month in a row, from $1,065,739 in April to $923,348 in June, which was down 5.1% compared to June last year.
In Wellington the average price declined from $505,074 in May to $491,407 in June, but remained up 11% compared to June last year. In the rest of the country average prices were up both compared to May and compared to June last year.
The decline in sales volumes that occurred last month was accompanied by a an even bigger decline in new listings, with Harcourts signing up 1634 new properties for sale in June, down 18.6% compared to June last year.
The group's inventory - the total number of properties it has for sale on its books - was down 5.9% compared to a year ago.
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76 Comments
The regions will follow very soon, as people are better able to afford Auckland and Wellington. Still might take a wee while, but I would warn anyone thinking of going regional, that when the drop hits the regions it will be far more dramatic than in the main centres. You could be stranded with a very much reduced property values and job prospects.
The regions were usually the last to feel the effects of rising prices - tick, but the first to feel the effect of a downturn - cross, this is shaping up a bit different, but then the values in the regions rose for other reasons than they have in the past.
The data suggests differently in regards to when some of the regions decline as well as the amount of decline. I've only seriously researched hawkes bay so other regions may follow your claim. HB appears to thrive as the mains decline, and stay static as the population centers thrive. The economy at present in HB is currently quite strong, and the housing market is annoyingly robust. I'd rather it was weaker myself, hard to get tradies, and it is getting congested in town...
What has pushed up regional prices is Aucklanders, primarily, cashing in on the ludicrous market that was and heading off to the regions, gobsmacked at what their money could buy there. If we find our immigration dropping further, it will affect. People may still want to go to regions but they will not have the same sort of money to spend as they have. Sadly, the other side of that coin is people being pushed out of those areas further out such as Aucklanders to Tauranga, Tauranga people to Te Puke, Te Puke people to the streets, as a crude illustration.
Jobs have a habit of disappearing into thin air in regions as well.
I have been a regions dweller since the early 90s and I have seen how it goes - a few times, actually.
I agree with most of your comment, however I have been back in regional NZ for a while now and I am now earning more than what I was earning in Auckland. My lifestyle is also alot cheaper, so more money in my pocket to spend. I put it down to, Aucklanders having to compete with so many immigrants who have comparable skills but will accept a lower salary compared to the regions where yes there is a skill shortage and they pay higher salaries for ex-aucklanders with a higher skill set. The regions don't need to compete with so many new immigrants.
I possibly didn't make it all that clear, but I thought I had acknowledged that the drivers are a bit different. Yet, in a way they are the same. I watched as Queenstown first really hit its straps back in the mid 90s or so, and the money going in there was being taken to where I lived at the time, and drive prices there to crazy levels. I see they have well and truly stagnated there. The difference is/was work. I still think however, that prices will settle to a level reflecting incomes, Auckland is starting things this time, the rest will follow, in the past the downturn has had different causes and it hit the regions first.
Also as an example to migration movements, when I left Auckland unfortunately I gave 6 weeks notice to my tenants to move out, because I needed my house back. I felt sorry for them, but I needed a roof over my head. The last I heard, one of the tenants who wanted to buy my house, is now a real estate agent, so he is doing well and my move prompted him to change careers from a soldier to selling houses.
Yes do as pocketaces says and don't buy in Auckland or Wellington or anywhere in between. If you buy, then you will hate getting on the property ladder, your kids and future children will not thank you for buying a home for them to grow up in. Follow in the footsteps of pocketaces as one who knows since he is an over 50 baby boomer and still renting. He can tell you how hard it was in his day and how houses were expensive even then
Are you fricken crazy, children will curse their parents in a couple of years if they bought in Auckland. You please go ahead and keep buying. Your children will build a statue of yourself on One Tree Hill, as a reminder to future generations not to do what their dad did
If you know that from experience of moving from place to place as a kid then why do you make dire warnings and tell people not to aspire to own a home?? A famous guy once said "be fearful when others are greedy and greedy when others are fearful". The commentators here who are share investors would understand that approach. In other words, buy on a dip.
Buy the dip is something I can agree with but this correction has only just started and every indicator points to it being likely to be a 'big dipper.' It's still very early Houseworks and first time buyers loading themselves up on interest only money could very quickly see their 20% deposits disappear into thin air. The banks won't care they'll just re-price the risk and make it more expensive to re-finance in a couple of years and as long as you can keep paying each month they've still got you for 30 years. The famous guy you can't remember is Warren Buffet and he is very patient when buying anything.... And often does very well buying the bottom and do you know what that 'famous guy' doesn't buy stuff by mortgaging himself up to the hilt. The 'Big Dipper' is on the horizon and good things will come to those that wait.
The belief that Kiwibuild could make a difference is really silly guys. The Mangere, Northcote, Unitec developments are NOT Kiwibuild, these are projects planned well before the COL. Let's be realistic if PT gets true addition capacity into the housing market then we can call that Kiwibuild but only then. There seems to be an assumption that KB when it arrives will be a winning competition in choice over established suburbs which really makes no sense. KB is state houses with all the stigma of low/socio/economic flavour with it.
We know Kiwibuild will have a "significant effect on the 'Mangere' market". In particular the apartment market for owner occupiers in Mangere, where altogether 10,000 apartments are planned, Ten Thousand!. There is currently no market for that kind of property at the moment and nothing like that exists in Mangere. The Mangere market could be flooded leaving many units empty if kiwibuild fhb say no they won't live there. After 3 years the first units will be able to be on sold to investors and then the properties will be filled with Mangere style tenancies. That is not a great prospect for those kb buyers after 3 years as values will fall. Whether there is any effect on the housing market beyond Mangere is debatable.
You are so right EB it is a waste of time responding to these comments from the naysayers intent on distorting facts and making predictions that would make Donald Trump blush. They actually are just making themselves look like fools and I know that will get a reaction but what the hell, it needs to be said.
Will PT and his band of merry men even be in power past 2020? And there's no need to worry about them being in power in 10 years but I digress. As you say the build time is over 10 plus years. Pity the second wave of kb first home buyer which buys when the first wave is selling. The second wave will see the units being resold for less than what the kb price will be that they signed up for. And by the third wave that price will be lower still as more and more kb buyers will sell to get out of the pits where there are huge numbers of state houses. Most people already know that where there are state houses the home values are much lower. I hope that these wide eyed kb buyers do not learn that lesson the hard way ... by painful experience.
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I feel a Dubai slump coming. Now did we get all our money-laundering regulations into force so that we can go after people that run off and leave their bad debts behind? Photo ID so we have a chance of identifying them? Agreements in place with other nations to pursue bankrupts? Can I have the gig of collecting the sports cars that get ditched at the airports before departure?
Seriously the property bears have been around on Interest.co for many years and been predicting huge price drops.
Finally after 10 years or so there is a bit of a dip in prices and so many are very happy for some silly reason.
If you did not buy property during this time then it has cost you big time.
Remember though that the housing market isn’t just Auckland and that the opportunities are always around in any market.
ChCh would be my choice for buying if the numbers stack up and you are buying under true market value!
I am for one very happy to see house prices starting to deflate, because it means I won't feel like I am forced to help my offspring into buying a house using my own savings! Neither do I want my daughter and partner having to move in with me, just to save a deposit for a house that is over-inflated thanks to all the QE money that the US printed, just to try and stimulate their own fake economy. My house value has increased significantly and it shouldn't be worth this much. In the end, the banks are the winners, not the debt slaves who have taken out interest only loans to pay for a shack that they will be handing over all of their potential future income AND all of their lifestyle choices to their bank for 30+ years. If this isn't a massive transfer of wealth from the middle wealth new zealanders to the Australian Banks, then I don't know what you would call it, other than debt servitude for the best years of their lives.
Well said The Man. There has been several notable buying opportunities other than during the gfc. In Auckland in the lead up to the 2014 election. The regions languished before 2015 and then got their demand spurt on. First Home Buyers could have got into a home, got settled and start paying down the mortgage. I have some friends who did this and when Hamilton house prices increased you should have seen the smile on that couples faces.
well said both of you ...
idiots here cheer at the fraction of percentage drops MoM and hide when it reverses the month after -
they are stupid enough to forget ( or overlook) the fact that property prices at large have increase by 50-70% in the last 4 years.. in some cases more than 90% - and Hamilton is a live example of that ...
but these losers who don't and Won't have any stake in this game are just like the ugly ravens hanging on the old electrical wire looking at the house underneath and wish it will become theirs one day .. they still think that more raving will bring the price down.
Arguing with fools make us look like them.
You have to be fool to show up each time and make a mockery of yourself. . First it was only one way for prices, that was up. Now that the stats have proven you wrong, you come out with some outrageous statements. .
Get back to catching your worms, don't think you can afford the single malts anymore. .
Yeah , whatever Jimbo , hope you feel better now that you got it out of your system !!
" Quick tax free buck " ? ... what an idiot !!! lol ... and you are free to think whatever you like ... if you can, think that is !
Where is that Single Malt ?? ..Ah there it is , it's Saturday night !! ... lol
P.S. : Quick tax and full excise duties on this Single Malt were all paid ....:) from the quick buck above .... lolololol
Eco Bird, yes Hamilton has done well. A well known PI and mentor once asked me why would I invest in Hamilton when he could see big gains in central Auckland. At that time I was finding great investment properties and less competition than was the case in Auckland and easier to finance. We have been totally lucky because those properties have great cashflow and exceeded the published average percentages for capital gain by quite a bit. Hamilton is still a great place to invest in and be a landlord, in my opinion. Are you happy with the Hamilton properties you hold?
Oh, perfectly ... I am just kicking myself that I didn't buy more late 2013 .. my properties there have gone up by more than 74% conservatively.
Yield is now over 8% of purchase price paid .. today's investments should still yield about 4 % in new units and homes, a bit more in the older 10 year + builds ( except the units leased long term to HNZ - most of these are crap )
so happy is an understatement ...it was the best decision I made.
I still see growth and appreciation in Hamilton - there is so much going for it, express way is nearly done this year and the dry dock is not too far away. I have two tenants moved from AKL to live there and saw a lot of the same recently - Good rentals are scarce and not cheap.
Funny that I heard the same advice in 2013, some said that as the city is expanding then there will be no CG as the new will be built for the same price and supply will dominate Demand .... No at all, new build is now market value, land prices shot of the scale, and supply is sudude and demand from people moving around for work is higher than ever.
Good luck with yours - I am looking for another opportunity there.
Good on ya for buying when you did in Hamilton it took guts and confidence that you wouldn't lose money and value. RHF was pushing central Auckland as the only place to invest and in a way he was right because he prioritised capital gain. I talked to him several times from 2013 onwards and he would always question the logic of Hamilton and then I recall him giving a talk at APIA probably in late 2015 ridiculing investors for buying in Hamilton and saying that the bottom would fall out and the values would dial back. He was also protecting his own patch to keep his student numbers up, I realise that now. In a way it's not too different to interest.co although the naysayers here have their own set of motives (like the one who just posted hahah)
Houseworks, sorry if what I say makes you sad. Oh ok, it's how I'm wording it now - lol! That's a new angle! All parties finish eventually. Only the junkies can't tell till its too late. Let's be honest, capital gains are of little use when everyone gets a cut today, unseen events can rob it from you tomorrow. Capital gains aren't banked so stop kidding yourself. What's so depressing about reality? It is what it is ;-)
Jimbo, that is an absolutely silly thing to be saying that a property investor is lowlife because he outbids a first homebuyer.
Personally have helped out a large number of vendors by purchasing their houses for obviously the highest price on the day at auction.
Without me they would not have been able to get on with their lives and I am then able to provide an excellent standard of accommodation for people who want or need to rent.
So what do you call a first home buyer who outbids the other first home buyers?
Are they total lowlife as well?
Thanks for the info Greg. It would be good to be clear that these sales are (mostly) already incorporated in the REINZ numbers for the same month (June in this case), which come out earlier. Commenters appear to treat it as 'new' information and often proceed to add to the noise. Really this is looking at a subsample when we've already got the results for the whole sample. Of course, some of the information doesn't come through REINZ, like the inventory numbers.
Nevertheless, grateful for the commentary.
The regions appear to be holding up reasonably well. I've noted the silliness of looking at median house price changes, particularly in the short term or for small sample sizes. The data for Hastings in Hawkes Bay is indicative of this silliness.
From: https://www.nzherald.co.nz/hawkes-bay-today/news/article.cfm?c_id=15034…
Sales data, released this week from the Real Estate Institute, showed the Hawke's Bay's median house price last month was $430,000 - unchanged on the previous month, but prices in Hastings were up as much as $48,000 for the month and $76,000 up on the same month last year.
A REINZ spokeswoman confirmed that last month's median of $456,000 was a record for June in Hastings.
A gain of over 10% in median price for a single month is not reflective of actual home price gains but instead of the composition of sales. This is true regardless of whether the change is up or down...
You're right on the problems with looking at the median Yankiwi. I stick to the REINZ HPI as the most timely measure of house price changes (which corrects for the composition of sales). QV is fine too, but is not very timely. To me the median is just something that is convenient for commentators. Its so volatile that commentators can point to (sensationally) large increases or decreases in prices to support their preferred story. I guess a positive is that it is more tangible and easier to understand than the indices.
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