Average residential property values in Auckland dropped for the second month in row in February but increased in most other parts of the country, according to Quotable Value.
QV said the average value of Auckland homes was $925,656 in February, down from $928,921 in January and $933,264 in December. The Auckland market has increased 17.8% year-on-year, but dropped 0.7% over the last three months.
The slide in Auckland values was widespread, with average dwelling values declining in the North Shore, Waitakere, the Central Isthmus, Manukau and Papakura.
The only places to go against the trend were the two districts at Auckland's northern and southern boundaries, with Rodney and Franklin both posting increases in their average valuations.
Valuations also continued to rise in other main centres, with the average dwelling value in Wellington increasing from $482,716 in January to $485,424 in February (up 6.1% for the year) while average values in Christchurch increased from $484,118 in in January to $485,014 (up 2.5% for the year) over the same period.
Property values have also been rising strongly in Hamilton, where they increased from $447,921 in January to $455,966 in February (up 22% for the year) and in Tauranga, where they increased from $557,313 in January to $564,547 in February (up 22.3% for the year).
Double digit growth in average dwelling values in the year to February also occurred in Whangarei (14.6%), Hauraki (12%), Matamata/Piako (10.7%), Waipa (14.2%), Western BoP (13.4%), Rotorua (10.2%), Opotiki (11.7%), Central Hawkes Bay (10.5%), Stratford (10.5%), Central Otago (11%) and Queenstown-Lakes (13.7%).
The average value of all homes throughout the country was $556,306 in February, up 11.6% compared to a year earlier.
The only places to post annual declines in average values were the Buller (-6.2%) and Grey (-10.2%) districts on the West Coast.
To see the average dwelling values for all parts of the country and how much they have changed in the 12 months to February, click on the link below:.
No chart with that title exists.
115 Comments
Are REINZ figures more up to date?
They would suggest much larger drops are coming in the QV figures over the next couple of months.
http://www.interest.co.nz/property/79956/downturn-hits-auckland-housing…
Mandalay conveniently overlooks the January strata index data from the REINZ which showed a 8.2 percent fall in Auckland prices since October 2015. People in the industry I am talking to say the market slipped more in February and the momentum down is increasing in pace. Ten percent on a million is significant.
Ex Agent, you have conveniently forgotten that since you and most other property bears first started predicting the collapse of the Auckland property market, prices in some areas have almost doubled. Our biggest buyers from up north are going to be back soon. The Chinese shadow banking system is bigger than ever and properly prices have surged in China, up as high as 50%.
They will be back soon and the coolest thing for them is our government will give them residencey when they do and shelter from any fallout over there.
China's Shadow Banking Evolves to Dodge Crackdown
http://bloom.bg/1R1rFYH
And China's realestate frenzy is back http://www.bloomberg.com/news/articles/2016-03-02/china-s-real-estate-f…
Enjoy the read and the linked articles and I bid you good day Sir.
See I told you it would happen!! You can't have 40% of the investor market disappear over night (Well over October) and not expect it to have any impact on the AKL market. Which of course will gradually affect the rest of NZ over time. I still think that you're going to see a very significant drop over the next few months.
I'm thinking that volume will drop, and property will be withdrawn as people chose to 'wait it out'. The main sellers will be those looking to cash out of Auckland. Mainly retiring Boomers who want to spend that money tied up in their house. Speculators cannot afford to sell at a loss, and I figure it costs about 5% to own an Auckland investment property (if bought at todays prices) so already the timeframe for selling at a profit is shrinking. Anyone who bought in the last 6 months is going to be very reluctant to sell, if they believe things will recover eventually. I think most investors will keep doing their best to keep those properties. It's a sunk cost, and they can't walk away from it. They'll keep pumping money into a dumbass investment, because they really want things to always go up in value.
Thinking of buying a place in either Hamilton or Tauranga but was hoping to buy in a correction of price.I've been waiting for over a year now.With the impeding correction of Auckland prices does anyone think it will stop Hamilton and Tauranga prices from their march upwards?Many thanks!!!
While prices have increased in many areas - and people fear the contagion of the Auckland property boom to other areas - the question is I wonder how long the boom will last in the provinces - I doubt it will be as long or as far as the Auckland property boom as the fundamentals still come down to people renting a house - is there the demand.......
fundamentals? How about almost every renter in most provinces can own the house they are renting for less than their rental payments (at current interest rates of mid 4%).
And almost eveyone of these renters will have kiwisaver with 20-30k in, enough for 10% dep to buy up to 300k (up to 350k price cap) in most of these regions?
You have many times more potential house buyers in the regions than there ever will be again in Auckland (unless prices in auckland fall 50%). No one renting in auckland can own the home they are renting for less than their rent, or pull out their 30k kiwisaver and buy a 3 bedder on full section.
On all these measures the regions could potentially see gains of the same or even greater size to auckland as the catch up enters full swing. I've warned of this for months. Hope people have positioned their money well.
I see on the report that home prices in the Far North are still over 16% below their 2007 peak so little wonder that folk are taking advantage of the price differential to get a lifestyle in paradise.
Speaking to an old friend on the weekend, her two daughters (with partners and children) have both given up on Auckland and are moving to Whangarei and Masterton. Good jobs and the chance to own their own homes without impoverishing themselves for decades. Good for them.
Only anecdotal but there seems to be some resentment/fear/dissatisfaction from some recent Auckland refugees at the racial changes occurring in that once fair city. Of course few will admit to that publicly.
A bit off topic but we were in the Hauraki gulf recently on our boat and have to give credit for the state of that wonderful harbour. No rubbish to speak of, good water quality and healthy marine life with snapper and kingfish swimming around the boat in the anchorages. Hard to believe there's all those people living around there. Special! I do hope they can keep it that way. At the 2% growth there would be 3 million in 35 years. Do they really need or want that?
Palmy exactly the same last couple of months, perhaps lagging rotorua Hamilton etc but next in line if trend is north to south, t relative value has seen investors into the pn market and first home buyers who have been sitting on hands and building up kiwisaver for last decade getting a rude awakening. Tony Alexander of bnz has mentioned 20% yoy growth for cities like pn and after a weekend at open homes their I definately agree.
If prices go up 50-80% in these secondary cities it will be due to kiwisaver and low interest rate fuelled first home buyers fighting over the extremely limited stock (in pn anyway)
But it still comes down to demand - is there the demand for rentals - from your statement there can only be demand from the less well off - read poor , those who can't scrape together the deposit for a house. Are there the jobs for these Auckland housing "refugees" in the regions - in some occupations - yes, but others there just aren't the jobs and salary's.
I have seen and heard of quite demand for a range of properties to rent. There are jobs that are higher paid but in specialist fields, which people come too take up and need a home. There is also a growth in building such as new business centre, probation offices (I don't know what else is housed there, but its a big premises), Redevelopment of care facilities, a number of large hotels under construction or refurbishment. So yes the regions do offer opportunities.
Narrabeen Boy. I think Hamilton and Tauranga have a couple of years to run. Look at previous cycles and you'll get a good idea of how it will probably play out. Not sure we'll see 20% gains yoy but I don't think prices will be any lower than they are today. These places are bargains when you're used to the Auckland market.
But house prices jump up and down around the long term mean don't they? Overseas money pushing them up steeply last year and now easing back to the purchasing capabilities of residents. China has slowed resulting in slipping property prices around the world in cities with huge demand vs supply. Why should Auckland prices rise steeply again? Explain. Money launderers getting round the system doesn't sound like a solid factor to base your hopes on.
China is getting into more and more trouble financially, what happens if they don't start buying again at all?
What if they need to sell their Auckland houses quickly to prop up investments at home?
If China really falls over it could seriously hammer the Auckland market, and also depress dairy prices even further - a perfect storm for NZ.
I don't think the Chinese will sell - they see the property as a store of wealth - not necessarily an investment - there is a difference. I also wonder if the buyers in different markets - London, Vancouver, Sydney and Auckland - reflect different buyer's wealth in their homeland i.e. the really wealthy buy in London , the not so wealthy Sydney and the budget wealthy in Auckland.
North Shore City from the qv site going back 5 years - looks like 12.68% per year
$1,079,445
$910,335
$820,155
$713,400
$646,760
another 5 years would see your house roughly 2.1 million at current rate of growth. Im not sure where people are getting their 20% from.
measure that against wage growth and income to debt and NZ has a problem
http://www.interest.co.nz/property/home-loan-affordability
The door is now firmly shut for any more price increases for Awklund in 2016...... the best case scenario is that prices sit where they are now .....but as I have always said, with the great NZ property investment "model"....... "It's a losers game, if there ain't no capital gain"
Went to Barfoots auction today.
Lots of people but bidding somewhat lackluster and prices so-so
Many Asians but few of them were bidders.
Overall auctioneers had to drag bids out of the crowd.
Last year bidding was more energetic.
This time more serious but sales were made, nevertheless.
Thanks BD - did you think any of the non bidders were perhaps fox hunters? Look for the obvious shades, standing in the corner or back of the room with ear devices and comms to fellow spooks in the room.
http://m.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=11588…
Which session were you at BigDaddy - appeared to me that Chinese buyers were in the majority at the morning session and perhaps sellers set their reserves a bit above market but conceded mid auction and lowered their sights slightly to get a sale through. Despite that the average price in the morning session was $1,416,381 and median $1,300,000 - pretty strong figures!
Another head wind for chinese investors, is that their currency has been weakening in the last few months so our houses have got about 10% more expensive in their terms since September.
The Pound, Euro, Canadian dollar and Australian dollar have all done the same thing, and they are the countries most represented in foreign ownership in NZ.
things are not as rosy in china as they make out
http://www.cnbc.com/2016/03/01/moodys-lowers-outlook-on-chinas-credit-r…
If it ain't happening in Vancouver, it ain't going to happen here!
Canada properties 'dangerously' unaffordable: RBC
Booming real estate markets in Vancouver and Toronto have pushed housing prices to "dangerously" unaffordable levels, according to RBC.
Read more: http://www.cnbc.com/id/103432018
Sounds like all good stuff to me. Auckland prices stabilising (yes some who bought very recently will be nervous). We can't have double digit growth endlessly without disaster. Prices around the country catching up as per previous cycles. The Governor must be happy about these figures!
Now we just need wages to rise and FHB'ers may have a chance at a home in Auckland!
I was also at the Barfoots auction in Shortland St. It looked like a good turn out in the afternoon. I was only able to stay for a few but all seats were taken and it was quite a battle to get out of the room through those standing at the back. Quite a few houses had sold prior and it was trending about 75% selling when I did leave although I suspect they put the easy sales on first. Certainly looks like quite a healthy market still.
Carlos - how do you know this?
If we were to take a long term outlook, it would say that all markets eventually return to the mean or back to fundamentals. So the graph can't just 'go in one direction and that is not down'. It is more likely that it is due for a significant correction in the opposite direction. The question is when?
Its only gone in one direction since we got to New Zealand in 1974. Sure its had a few dips but like I said if you take the long term approach the line is only going in one direction. In recent times you didn't have to even take the long term approach, 5 years has been a "Long Time" in the property market. In case anyone has not noticed, they are not making any more land. The spread is outwards and as long as NZ is a safe haven and with the worlds population increasing exponentially now its only going to get harder to buy property. Its going to take a major event to change things and not a nice one at that. My advice is not to wish for a sharp correction, thats just going to screw everyone.
What do you think greed and mismanagement should be rewarded with?
You are not accounting for all the non-property owners, current and future generations, who are on the wrong side of your trade and are getting properly screwed by those lucky enough to have landed on the other side. Inflating property value is a social evil, not some god-given right and benefit of Kiwi lore.
try propertytalk.com you will see the same vibes from wise old investors who talk about peaks and troughs, cashflow and making sure you can handle and take advantage of a downturn, and the young bulls who have been in since after 2009 who only talk the market up and up and only know how to leverage and borrow
it is interesting when a wise old knarley investor calls out the BS being spouted by a young bull,
they are not making any more land
Well actually there's plenty of land in NZ. The landmass is larger than Britain and with 1/20th the population. There are only city limits and the crappy undesirable nature of the regions, which are just transient details in the long term.
Property values over the long term in colonial countries where expansion is possible tends to trend flat. Ref USA Case-Shiller long term data.
My advice is not to wish for a sharp correction, thats just going to screw everyone.
Actually everyone who's not recently become a property speculator will benefit radically, as will their children. The opposite is true. We had all better hope for a sharp correction.
No just people in the real world who acknowledge that markets are unpredictable. That all markets have peaks and troughs. That all markets work on greed and fear. That fear is creeping into the Auckland housing market hence more listings and more people willing to negotiate to get a sale.
The people I talk to have sold and know they will buy back cheaper. Those who have never owned a house are holding off as they know they will be borrowing less when they buy. Their fear is borrowing more than they need to if they go in too early. The people you are talking to are not facing reality like you. That the market is already down 8.2 per cent since last October and dropping and the momentum down will accelerate. As more and more people see the valuations in Auckland drop more houses will hit the market and valuations will drop more. That is how markets work. Greed prevailed but now fear is taking over.
You talk as if Central Auckland is so sacrosanct it will never fall in value. The reality is it already has and will continue to. I appreciate some big prices will always be paid for trophy homes but that does not mean they are worth those prices. Some people just have to have a certain home and money is not a problem. In tough markets the higher priced houses drop more. And that is what is currently happening. It is tough to sell a house in Auckland and it will get tougher. Get used to it. As the REINZ said last month people want to sell and buy but they cannot sell.
My base is Central Auckland so it is what I know best. Very few houses for sale around me. What was for sale recently went to early auction. No problem finding tenants. I went to Barfoot's auction on Wednesday and things looked hot and lively, probably 75% sale rate if you count the sold priors. Houses are easy to sell here.
People buying on condition will be a sign but I'm not seeing it.
Which is why the minimum wage had to increase, just to pay the rent to keep the ponzi going. -Andrewj
I don't understand why I keep seeing the term ponzi thrown around here when it comes to the property market. When I rented a unit 15 years ago I paid $250 a week and now the same place is $500 a week. The unit is worth three times as much now but mortgage interest is much less so it doesn't seem crazy. My salary has more than doubled in that time. My household income tripled.
You can buy a place in Papakura for 450k and rent it out for $400 a week or more making it cash flow neutral. A nice place in a nice area is always going to be worth substantially more than what an investor would pay just for rent yields. For as long as I can remember you couldn't buy cash-flow positive places easily, you always needed to top it up by 50-100K . The figures still look the same. The fundamentals are the same. Wages increasing woulld really drive this along. Many businesses operate at a loss and only make money when they sell. Some intend to lose for the first few years and then make money later after getting established.
The other factor is rent yield is low but so is bank deposit yield. Wouldn't it be nice to have four rentals bringing in a passive income? You wouldn't need to work again. Doesn't this regulate the market, making it definitely not a ponzi? Someone can come in from China and buy five houses, rent out four and not need a job. Why does the government stop this and not make it a valid business proposition? Because it is too easy and doesn't employ people. It could mean the Chinese buying every rental, but don't you see it is kinda of an attractive proposition? So safe and so easy to make passive income for someone with 2-3 million and modest taste. There is a reason we need to guard against this happening.
Anyway in summary how is it a ponzi if rent can cover mortgage for Landlords in some areas and people will pay more in good areas than an investor would to secure a family home and get house security?
Rent yields place a backstop on a price plummet. A ponzi scheme has no such backstop.
But auck rental yields are gross 3-4%, net 2%, less than money in bank. Add flat or falling prices and the back stop wouldnt kick in until net yields bounce back to 4-5%.
400 wk for 450k house, after rates and insurance is still solidly negative even at 4.5% interest.
Try 380-420 a week for a 4 bedder in pn (and thats renting to a family not students, 500+ a week rent for 4 rooms to students) if you want someting putting money in your pocket (can be found for 250-300k depending on area).
Search for yield likely to see this anomoly short lived however (i.e prices will rise until yields fall to 4.5% matching cost of money) as the world accepts a lower for longer interest rate environment.
Bank yields look to be getting lower in the long term though. You should get better than 4.5% interest and there are tax breaks. It's not great I know but its not spectacularly bad. The idea is to hold in there until things start to improve with rent going up, interest going down, wages going up. However you need to choose wisely as well with view to improving capital gain. Can a two bedroom be a three bedroom? Can you install a sleepout? Is it an up and coming area? It's not supposed to be too easy.
Bank yield on 450k at 4% for 5 years would be about 2.8% after tax? No chance of CG either.
Also bank deposits, how boring is that? Also that much money in the bank is hypothetical for most. Many are in the rental game for a long time and have built equity there to continue playing.
I respect what you are saying ZS but it's the whole economy that is being susidised by globalist, banker friendly policies that's keeping it all going. If labour and the greens are voted in at the next election what can they do? Keep policies going that favour foreigners over New Zealanders? They will have to, or the whole thing could collapse. This why Donald Trump is scaring the establishment in the US. He's the only one saying anything different. The rest are terrified of bursting the bubble. We have let the bankers take over the world.
Indeed
They are terrified of losing their hold on power that delivers the privilege they have long enjoyed.
Watch the republican financial elites bankroll the political elites to pay a huge sling under the table to make it worthwhile for the number 3 and number 4 republican candidates to eat their egos and pull out and leave only one of their chosen candidates up against Trump
The 3 candidates are splitting the republican vote giving Trump the lead
the people that can not see bubbles are the worry, and the chinese are at the forefront of creating many of them whether it be stockpiling of commodities, piling into their sharemarket or overseas property markets. once they get a scare they will run for the hills on mass.
but that's fine because JK said they are not a problem in the Auckland housing market "yeah right"
http://www.cnbc.com/2016/03/03/i-see-bubbles-bursting-everywhere-top-ac…
watched all those this morning too.. thats why im fixing short at 4% (knowing in 1 years time rates likely same or lower) and buying high yielding properties in cities with a good uni and hospital as the search for yield makes 7% yielding property thats still at 2006-2007 price levels look like a screaming buy
Property is not a Ponzi scheme sorry. What you have however is people kicking themselves in the ass for not buying a house 5 to 10 years ago when they could have and still telling everyone its a Ponzi. Really its a simple decision, buy a house or go on renting and thus face the possibility of not having the option to retire and keep working til the day you die. Don't get all green with Envy over the people that took the punt and purchased multiple houses and are now worth millions, thats life.
Carlos do you feel sorry for those just entering the work force in Auckland who will be saving to create a deposit on their first home. What about those still at school or at university. Not that many are worth millions. They owe millions of course and 10 per cent has just come off the top in Auckland and the pace down is increasing. Talking to those in the industry listings are growing as investors and speculators see their equity diminishing more each month since October 2015. Markets are ruled by fear and greed. Fear is now the main factor especially the idiots who bought last year prior to October.
Your choice if you want to go to University and come out with a bill of $100K. You know what your going to owe when you come out. I would suggest that 80% of University degrees are a waste of time so choose wisely and get qualified in something that leads to direct employment paying good money. Perhaps the parents of those kids will have to downsize early and help them into a home. By the way I have yet to meet an "Idiot" who owns their own home.
Their equity is down 10% already and diminishing by the month Carlos. If they had had the patience they could be buying now and borrowing 10% less. I would not advise them to even buy now as the market in Auckland has some distance to go downwards. My broker always says you only know it has turned around when you see it go up for a couple of months or so or in the world of shares a couple of sessions. Last year it was obvious the market in Auckland was peaking as it was irrational. The idiots who bought then only have themselves to blame. Some of them will have their loans called up in due course when the banks get worried about their lack of equity or rather their negative equity.
We welcome your comments below. If you are not already registered, please register to comment.
Remember we welcome robust, respectful and insightful debate. We don't welcome abusive or defamatory comments and will de-register those repeatedly making such comments. Our current comment policy is here.