Harcourts sold more homes in August but average prices were down in Auckland, Wellington and Christchurch. CEO picks 'an upturn shortly'

Sales volumes were up strongly at the country's largest real estate agency in August but the average price was significantly weaker.

Harcourts sold 1913 homes throughout the country last month, up 9.6% compared to July and up 5.5% compared to August last year.

However Harcourt's national average selling price of $570,921 in August was down $27,488 (-4.5%) compared to July, but up 2.4% compared to August last year.

The fall in the average selling price was particularly severe in Auckland, where it slumped to $857,184 in August from $923,348 in July (-7.2%) and $940,569 in August last year (-8.9%).

Harcourt's August average selling price in Auckland was the lowest it has been in the last two years.

The average selling price also dropped in Wellington, where it fell to $485,016 in August, down 5.5% compared to July but up 14.9% compared to August last year.

It was also down in Christchurch where it dropped to $527,483 in August, down -5.4% compared to July, but up by 0.63% compared to August last year.

Harcourt's average selling prices can be volatile from month to month, so caution needs to be exercised when interpreting longer term trends from them.

While prices were weaker overall, Harcourts new listings and overall stock levels held up reasonably well, with 2085 new residential listings throughout the country in August, only just above the 2074 new listings in August last year, while the agency had a total of 6004 residential properties available for sale in August, also almost unchanged from the 6030 it had in August last year.

While acknowledging the market had been slow, Harcourts Chief Executive Chris Kennedy was also optimistic about the prospects for spring trading.

"It is undeniable that there has been a general slowing in the housing market across New Zealand, and particularly in Auckland," he said.

"I think we are going to see an upturn shortly as buyers return to the market, due to the lower points that the market has reached in the past few months and with spring heralding a trend of people listing after a wait for the weather to improve."

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83 Comments

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I think the headline needs editting s/"picks"/"prays for"

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"It is undeniable that there has been a general slowing in the housing market across New Zealand, and particularly in Auckland,"

Kudos to Mr Chris Kennedy for making a reasonable and realistic statement about the current market.

I'm not sure about the coming upturn though.

Don't worry Bindi Norwell will provide the counterpoint to that reason.
Speaking of Points - where is my Dad? Only one or two comments today.

Someone will shortly come along with a cherry picker!

Ha-ha! yeah like, "Auckland villas 5 mins from the CBD are showing resilience as anticipated" or "considering the huge run up to April 2016, these are such tiny adjustments by comparison"

Fabulous. I've been looking forward to listing with title: "Sussex Street Ponsonby villa 5 mins walk from the CBD now selling at $300k". Haha! Yvil won't be too happy about it :-P

They better be in a reasonable condition for 300K, not a dilapidated mess with broken windows - that or have a reasonable amount of land/zoning options.

Completed with used needles disposal box on the fence so you won't step on them!

Will need this to be a long term trend (over years and years) to make any real difference.

No it won't, a -4.5% in a month what happens if that continues for just three months or a year?

Then RP's prediction of -5% by Christmas looks severely understated! it looks like there are a few fools still buying but not enough to keep prices up and if credit availability for mortgages has dropped by around 20% then it's a slippery slope down from here. be interesting to see how people get on re-financing over the next 24 months. Will they be asked to inject more cash to maintain equity levels? Will they be shipped on to banks variable rates when no-one else wants to hold the grenade of loans with limited equity?

Don't be as silly as to annualise monthly figures, Nic.
Stick to the annual only. Don't misinterpret volatility.

Hi Nymad

Annual stuff from the report. 'The average house price in Auckland was $857,184 in August 2018,
a decrease of 8.87% when compared to the same period last year'

I'm merely pointing out that it would be silly not to recognise that there is a massive change in sentiment occurring. I'm not expecting the magnitude of that drop to be annualised, but I do think that this is the beginning of something that will be a lot bigger than people believe and also that when it takes hold the pace of change downwards, may surprise a number of commentators here. The information age is now upon us and buyers can see very easily with their own eyes.... I-phones only came out in 2008 and many didn't have access to information during the last correction.

Just think, it was only 11 months ago that Trademe started to post previous sales history alongside listings. The information gap from those in the know (manipulators) to the market participants is far smaller today and will magnify the pace of correction.

Also Harcourts numbers are far more relevant than a couple of Bayleys Auctions as they essentially represent 30% of the market sales across the Country.

The REINZ report for August may be a difficult one to 'fluff up' as I presume that this data will be replicated by other firms. What happens when more people know that prices are falling? I would argue that it may temper the appetite to jump in.

Even then, hanging on this is pretty silly - Harcourts is hardly a reliable sample and the REINZ indicies are relatively flat for the previous 12 months.
It's just confirmation bias.

It's pointless talking in hypotheticals like this..
No it won't, a -4.5% in a month what happens if that continues for just three months or a year?

Report on the data, but be wise to it's limitations.

I think you are both right. A major change of trend starts off slowly at first and gradually accelerates, a bit like the tiller on a dinghy. For quite a while it is hard to know if there is a change of trend at all.

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Yes I would agree, Auckland is in fact down 10% from the high of October 2016, but many property owners don't care because it went up 46% in 3 years prior.

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That only works for those not riding the wave of volatility.
Or those people who haven't leveraged that asset to the hilt supplementing consumption or further investment.

I would think it has a pretty big impact on any speculator who is grossing 3-4% p.a. on an investment property.
Likewise I would think it probably impacts those who have a new Audi or Range Rover sitting in the driveway depreciating at a horrendous rate.

I may be incorrect though.

You may be right about some people (for now), but the negatively geared speculators and FOB who entered the market from the last year should be starting to sweat. God forbid interest rates rise this next year like OZ or many people will be in the proverbial dodo. The alluring sound of the property tango is starting to become ever more audible and sellers should begin to ask themselves "how low can you go?".

True, but for some their equity will start to go into negative territory!

Except those who entered in 2016 as have bought at Peak.

Prices are holding in the northern provincial ares which is both heartening & heart braking.
Heartening that those who are up to their eyeballs in debt are holding their debt/equity ratios and heart braking for those still unable to get a foot on the property ladder. We usually follow the big cities so wouldn't surprise me that it levels off or declines slightly.
Lots of talk about the UK market pre & post Brexit being 30% down in two years. Can't see that happening too much other than in London. Floating currencies are a great leveler. In fact, if you add our 10% drop v USD to the 10% drop in Auckland property prices, you could argue that you're 20% south internationally.

88c to 65c is a bit more than 10%...

Hi nymad,

Everyone should be driving Hillman Hunters.

Good ones are actually appreciating in value right now....... plus they are far more reliable (and a lot less costly to run) than the likes of Audi's and Range Rover's.

Let's hear it for the venerable Hillman Hunter - the thinking person's choice!

Park one up your Herne Bay driveway - and be the envy of your neighbours.

TTP

Close.
Actually my father and I had the foresight to pick up a HQ Monaro and a VH Charger about 7 years ago in an estate sale.
Done pretty well out of those two.

Actually more than covers the depreciation on the RS4 ;)

A Hillman Hunter was my first car. There is a reason there are no more British car markers.

Hillman Hunter, aren't they the British's version of the Lada Riva?

juts confirming what we knew all along and national denied for all those years, foreign buyer in our small market does make a difference, especially if it becomes to excessive in a couple of hot spots
https://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=121...

Auckland and Queenstown house prices will "clearly" be hurt by the upcoming foreign buyer ban, Westpac says.

But just how great an impact the ban will have when it comes into effect in the next few weeks was hard to tell, bank chief economist Dominick Stephens said.

yes. Good.
I think they are exaggerating how many foreigners will buy apartments though. A lot of foreign buyers of NZ property want land.
I think there's a good chance now that Auckland prices will drop by at least 15% from their peak. I was picking 10%.

Yea, I'd tend to agree.
Foreign investment is unlikely going to be hugely interested in top heavy real estate like apartments.
The hassle just isn't worth grossing 5% p.a. on an apartment.

I too was conservative when it was first announced, but I think this will have a substantial impact on prices. I'd say 15% isn't at all unreasonable.
If we hit an economic downturn in the next year (which is highly likely), I'd say it will be substantially more than that. The money just won't be there to support the prices.

There seems to be a lot of chatter around another looming GFC. Hopefully that doesn't happen for a host of reasons. If it does all bets on NZ property are off (30-40% falls likely)

Hopefully it does happen. How else might we be encouraged to think outside the status quo/BAU box?

funny you just added that caveat around prices falling much more if the economy slumps as I was typing up a similar thing

I think KB will have some effect too. Some FHBs will hold back for that rather than buy now.

Yea.
You'd have to be crazy to be a FHB and not be holding out as long as possible for a KB windfall.

They aren't a windfall. Looked at the Papakura ones, and looked at the plans for the Onehunga apartments, in both cases other options in the development were better value for money.

The Onehunga apartments for example, a mirror image of the kiwibuild 2 bedroom apartment (KB:104, retail: 101) at Onehunga is $40k more, but instead of the southwest corner you get the northwest corner.. which will actually get sun in the winter afternoons, instead of being in the shade of the other building basically all day.

why buy an average, 50 years old 2 bed flat for 750K when you can get a new 2 beddie through KW for 600K?

Yep, exactly.

One of us is misreading this I think

https://cdn2.hubspot.net/hubfs/511279/201809%20National%20Marketwatch-1....

"The average national house price in August improved on last year’s
August 2017 figure of $557,547 by 2.4% to now sit at $570,921."

Prices are down from last month, but up from last year despite the car crash in the Auckland data, you've stated down 2.4% from last August.

'The average house price in Auckland was $857,184 in August 2018,
a decrease of 8.87% when compared to the same period last year.'

There's still some interesting reading in the report.

Yep, no arguments on those. My non-Scientific feeling is the regional spurt that's kept things going over the last couple of years is petering out and now we'll see the whole country bouncing around zero like Auckland has been. Definitely potential for some decent falls too. From my point of view, good to see Christchurch still steady, up 0.6% over the year so down a little in real terms.

15% drop in sales volume in Auckland YoY.. not a surprise to anybody that;s had their eyes open.

Good pickup! Yet some things don't change!

(from the Harcourst August 2017 report)

"Harcourts CEO Chris Kennedy says he expects to see a recovery after the election....However it is also undeniable that there has been a general slowing in the housing market across New Zealand...."

https://content.harcourts.co.nz/news/auckland-market-watch-august-2017

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CEO picks 'an upturn shortly'

I guess that's why they just closed their massive office in Albany, because they uh... are uh... doing so well... Or something...

BHSL will put his spin hoping people will fall for it

Volume should be high as non residents rushing to buy before the doors are closed in a months time and also vendors selling at best available price instead of waiting as the outlook is negative atleast for next few years.

Will know in 2 months time if ban does have an impact or not as the opinion is dived.

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There are no foreign buyers and banning them will make no difference. Also, banning them will be a terrible thing.

The debate will be setlled once and for all as ban is a reality now thought with some exceptions.

Unless one is still hoping that the ban will not be implimented.

No one can deny foreign buyer but what can be argued is the percentage of influence that they had in NZ housing market.

Many ignore what they don't want to deal with. Ignoring doesn't change things. It doesn't make them go away.

Agree and will be interesting to see how the markets behave once the ban is implimented.

We have a housing shortage. We have induced falling house prices by limiting foreign investment making it even less profitable to build private housing. We are now having the state housing agency borrowing $billions (government debt - off books) to prop up property speculators weaned off foreign money. All to build "affordable" $650,000 houses.

It is pretty terrible.

Should have dealt with the issue 9 years ago when the political party that Ill admit I voted for campaigned on sorting out.

Pricing is still doing ok in Greenhithe where I live, but I agree pricing is lower overall. TBH I am sick of the area being populated with elderly Chinese folk with their pet dogs crapping on my lawn. I have a few neighbors with mortgages towards $1M and with bridging finance as they are selling elsewhere, that would keep me up at night! But best of all, I have no mortgage now so not as nervous as I may have been in the past, spending too much now due to extra disposable income.

stick this sign on your fence, it might work

美味的狗肉可用

Thanks, will try this.

That's an interesting point The best status.

Why are there so many elderly Chinese in Auckland? Whenever I went to observe the Auctions a couple of years ago, when I think back there was often elderly Chinese men orchestrating proceedings and giving directions to those bidding in English on their behalf. Were they all essential migrants with skills that no younger New Zealander possessed, despite an inability to speak in English? Or was it part of a plan to drown NZ in 'competing' debt? Or was it part of a plan for those in the 'Party' to extricate themselves from a situation in China where the youth are now questioning the system and could revolt? There are some interesting comments on the Mauldin article today that are worth reading.

There are so many elderly Chinese in NZ because we have the stupidest immigration rules possible. Once a young Chinese person gets permanent residency (trading up from a student or work visa) they are able to bring their parents over as well. These elderly people are parked in a house and expenses are paid for by the kids (who may or may not still be living in NZ) for 10 years, at which point they are then eligible for the NZ Pension. The kids are relieved of their parental support obligation which would have continued until death if they were still in China, while the NZ taxpayers pick up the pension and healthcare bill for people who have contributed absolutely nothing to NZ society.
https://www.stuff.co.nz/auckland/local-news/eastern-courier/103939623/El...

Poor thing. It's not the elderlies' fault if they can't speak a word of English。
他们以为这里是紫禁城吗?

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But Auckland is not the forbidden city is it Double GZ? It's just been pumped and dumped with debt, on the expectation that we'll sell even more of the Country in a debt crisis.

On forbidden if your a local tax payer trying to compete for a house.

There’s something really sad and pathetic about a white-guy real estate agent copying and pasting Chinese quotes to a NZ economics forum.

Quote of the day - white-guy real estate agent

East Coast Bays is like a suburb of China these days. I have a place outside Auckland and the locals dont have a clue what I am talking about regarding the Chinese buy up of Auckland. It hasn't happened past the Bombays......a lot of these locals though still think John Key is still the best thing since sliced bread....fools..... sold us down the river aye JK!!!

Is anyone else completely bored of this housing crisis?

I know I am getting pretty bored WITH the use of bored OF.

Could not care less.

Nah. Gravity is simply kicking in as years of artificial rocket booster stimulus most of NZ is simply waiting for reality to kick in.

Non develop-able property in the middle is gonna get a hiding. Look at 4 Tohunga Cres. Lots to like, but single dwelling zoned and development limited by heritage status. Also has the benefit of a lucky Chinese favorite number (sarc). Been for sale for ages and with signals of $6m+. Now its present all offers. How much will it get...?

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'Bricks and Slaughter' - It looks like the Aussies are starting to wake up to the fact that years of 40% of lending being interest only was eventually going to lead to trouble. Good job our banks have massively restricted interest only debt to a around third of all market lending.....$350K interest only is cheaper to service than $250K repayment over 30 years. What a fools paradise that is when the piper starts playing his tune.

You can’t spell Slaughter without laughter.

Follow Martin North from DFA Nick

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Here in Australia, Martin North was on 60 minutes last night talking about a 40% drop in house prices. Just FYI. Episode title was "Bricks and Slaughter".

Not up on youtube yet, should be up sometime tonight hopefully.

Up now:
Part 1: https://www.youtube.com/watch?v=smPR0s2W-Ck
Part 2 : https://www.youtube.com/watch?v=BbFvwYVfwq0

In part 2 are we supposed to feel sorry for 72 year old John, the interest only debt stacker whose investment properties have had a 57% increase in servicing costs now the banks have switched him to repayment from interest only?

I may be a heartless bugger but I just couldn't help but think of some of our interest only debt stackers getting a similar letter through the post from their banks. Still it was fun while it lasted!

Aus vs NZ - Wages are higher, new houses and living costs are considerably cheaper (so i'm lead to believe by some commentators on here) yet homeowners are facing mortgage stress?

Sounds like a whole lot of over-leveraged investors are starting to find out that they're not as astute as they tell their mates over the BBQ on the weekends.

Yep. Love the title "Bricks and Slaughter". Math's has been broken from a ROI perspective and its all been focused on artificially driven speculative appreciation. I am surprised how things continue to defy gravity in NZ and that this sort of coverage hasent really started here yet.

That two part 60 minutes program was well worth a watch. Not sure why people blame the banks though, what they are supposed to protect you cos your so stupid ? Also not sure how you can get to age 70 and still be on interest only, how stupid is that ? of course your going to have to sell the properties to retire you don't own them and have banked on huge capital gains ! I totally agree with the part that everyone wants it all and they want it now. The credit card and faster and faster internet showing people living a lifestyle they cannot actually afford will do that. You have to make the right decisions and its slow gains but you get there in the end. Boring I know but ultimately rewarding from hard work. The program scared the shit out of me, better hope it never comes to pass.

See link above.

"Bricks and Slaughter' was made to scare the bejesus out of the Australian Government and their RBA.
It's the old reverse psychology. "House values will plunge 40% - if you'se guys don't do something to help us out!"...and they will. Lower % rates are coming there ( and here?), to will stave off the inevitable, but inevitable it will remain....

I'm not so sure if they will see lower rates. Their savings ratio is abysmal and so they rely on foreign capital far too much.... Our problem is that we rely on the banks that are relying on foreign capital over the ditch..

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“These impacts would be felt the most in the North Shore, Central City, Howick and Henderson-Massey districts in Auckland and the Queenstown Lakes District, Stephens said. These are the places in which foreign buyers account for more than 5 per cent of sales at present."

So says Mr Westpac – and more than 5% still doesn’t seem like a big number.

However, if that more than 5% was primarily involved in say the top 20% of sales by value – then that 5% has had quite an impact at the top – and this then filters down to or drags up all other properties in the area.

Remove that 5% (or more) and I think it will have a far greater effect on market pricing than what a simple removal of 5% of buyers would suggest.

They set prices that had scant regard for NZ wages / salaries or expectations – shortly, and in a general sense, those marginal price setters will be gone.

I agree custard. I think the concentration of foreign buyers is a concern. The concentration would suggest that these high prices were not set by a foreign buyers paying marginally above what a local would pay but foreign buyers competing against each other bidding up the price without consideration of the local economic environment, causing great market dislocation. Well then as you say it filters down, suburbs are connected to each other, cities are close to each other.

"Homes" sold - no distinction for no houses sections then?
"Listings" - 25% of "houses and townhouses" have no dwelling on them.
Orewa and Millwater dominate Rodney sales and 3 and 4 bed sales in rest of Auckland are DOWN on last year.
Harcourts has more "fluff" listings than anyone else.
Prices down 9% on last August.
Vancouver sales down 37% on last August - overseas buyer limits law has no effect eh??
Hibiscus Coast market driven by land speculation.
Sales over $1.2 million are falling faster than rest because Chinese buying land and apartments _ pre loading up prior to OBB which just came in. Immigration from China slowing and more leaving.
China economy in more trouble than outsiders (outside of Communist Party i.e.) have any idea on.
Spring in NZ will see FALL in sales compared to last year because there is a hole in demand due to front loading in first 8 months of year.
Look at stratified analysis of sales - apartments and section sales show that houses with 3-5 beds are falling in sales terms.
Boasting of more FHB is simply welcoming them to negative equity.
Prices cannot fall in Auckland eh?
Watch