By David Hargreaves
Auckland's biggest real estate firm is reporting that both its median and average prices slipped in November, while the number of listings it has on its books is now the highest in nearly four years.
Barfoot & Thompson's managing director Peter Thompson said that after seven years of constantly rising prices, November’s sales data pointed to the Auckland housing market "turning" but he felt it remained "well positioned to achieve a soft landing".
This is happening amid a backdrop of the new 40% deposit rules for investors introduced in October by the Reserve Bank and also amid increasing evidence that the banks, faced by flagging levels of inbound deposits from savers, are starting to 'ration' their lending.
Thompson said that signs the rate of price increase in Auckland had been slowing have been there for some months "but November’s sales data confirms that for the time being at least, Auckland prices have stopped rising".
Barfoots typically accounts for about 40% of Auckland's house sales.
The average sales price in November at $933,130 was down 1.1% on October’s and "only" 1.1% higher than the average price for the previous three months, Thompson said.
The median price at $850,000 was down 1.7% on October’s and down 0.6% on the median price for the previous three months.
“What puts November’s lower prices into context is that November and December are traditionally when prices peak for the year, and this is the first time in eight years that November’s average and median sales prices have been below those for the previous October," Thompson said.
“Encouragingly new listings at 1879 have been strong and sales numbers at 947, while down marginally on the same month last year, were sound and up 21.7% on those in October.
“The market is not over reacting to the changes occurring."
Thompson said clearance rates under the hammer at auctions were 30% in November with another 20% being sold in the 24 hours following auction.
Barfoots doesn't always specify what the auction clearance rates are in its monthly reports. But in July it did report that 70% of its sales then were under the hammer - so the drop since has been considerable.
Commenting on the November auction figures, Thompson said those sellers "who were realistic and prepared to trim their reserve price achieved sales and buyers were confident in meeting near record prices".
“With 3881 properties on our books at the end of November, properties for sale are at their highest since February 2013."
Barfoots' available month-end listings figure is the highest for a November since 2011 - at which point there were over 5000 available.
Thompson said in the latest month sales of properties in excess of $1 million remained "strong", with 377 or 39.8% of all sales exceeding the $1 million mark, marginally higher than the 39.2% $1 million sales represented in October.
Properties sold for under $500,000, at 73, made up 7.7% of sales.
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69 Comments
With Xmas approaching houses not sold will fall into the dead month of Jan, then be likely joined by a new surge in Feb listings. The figures by April may give a better indication of a real turn (in Auckland). Question for other FHB, wait for election next year as a new government may have an effect on market in terms of removing the foreign buyer from existing housing stock?
"The average sales price in November at $933,130 was down 1.1% on October’s and "only" 1.1% higher than the average price for the previous three months, Thompson said.
The median price at $850,000 was down 1.7% on October’s and down 0.6% on the median price for the previous three months"
So what data is the claim that Auckland is a Million $ house value city, based upon ?
Not necessarily so
If the number of high value sales remained high, but the number of low value sales increased disproportionately it would push the median line down towards the lower end
The median is made up of both volume and prices
Either one can shift it, just as both combined can either shift it or hold it
Of course they are saying it is turning ... they have everything to lose if the Reserve Banks brings in further measures to cool prices.
they are against both a foreign stamp duty or the Loan to income limits as they would be bad for business.
John Key has done nothing to solve the housing crisis.
Yesterday they reported 99 suburbs in Auckland have a median price of 1million or more...
http://m.nzherald.co.nz/nz/news/article.cfm?c_id=1&objectid=11759452
Figures from qv.co.nz E-valuer show Auckland has 99 million-dollar-plus suburbs and just three suburbs under $500,000.
Despite a reported cooling in the market 10 more suburbs have joined the million-dollar club in the past two months.
What about those developers that went ahead and built homes to sell later? I believe most of that was done with bank money, meaning they will be desperate for cash flow right about now. I have noticed an increase of new builds on the market. I think the distressed sales will come from here 1st.
One aspect is the extent to which supply continues with declining prices. In reality developers margins don't change it is the price they pay for land, and although some may have a lumpy period the more common pattern is a decline in undeveloped land prices. This easing, combined with the changes to the Auckland Plan, should result in a declining values for land bankers (couldn't happen to a nicer bunch.) The pattern could be land coming onto the market at discounted prices to ease development.
One aspect about whether we see an on-going decline in values is the extent to which the Government/Council move to restrict supply in response to 'declining values'. The pattern we have seen overseas is that the public sector opts to limit availability land etc, because of choruses from existing property owners (eg "why is the government continuing to build when there is clearly oversupply in my part of the market")
Last year, after the LVR's went up to 30% - there was 3 months of consecutive declines in the median sales price (according to REINZ). It had me panicking a bit .. but alas I decided to ride it out and what do you know, I got about a 10% paper-gain return on my million dollar property for doing so.
I still own the property. I wonder if this is history repeating itself (as I indicated above, we had a few cold months at the end of 2015, start of 2016 in Auckland) or whether it's for real this time. I'm now wary - but not concerned.
If you look at the number of listing on trademe for Auckland about 10 days ago was at 9750, now at 9330 (Auckland City 2330 to 2122). So after initial rise from 8000 to 9750, appears as if number of listing is falling same thing has happened in Wellington. Bay of Plenty listings still rising. Waikato and Canterbury static after initial rise.
So the stock of properties for sale declining in Auckland and Wellington after initial increase.
Listings may be declining but for what reason - are houses being sold , are people taking them off the market because they can't get the price THEY think their house is worth - who really knows. Christchurch has had an increase in the number of houses for sale recently ( at one point there were more for rent than for sale). Currently there are 1970 houses for rent and 2357 for sale in Christchurch, Selwyn has 798 for sale and Waimakariri has 791 for sale ( not all of these would be in commuting distance to Christchurch). Interesting times.
Comments about lower clearance rates is superficial.
Add to that the properties that are now listed for sale by other means and a new factor enters the market - the ability to negotiate in a more leisurely manner and on better terms for the buyer rather than the seller. Also the overseas telephone buyers will no longer be as big a factor.
SInce John key has been in power auckland prices up 500k to 1million. Barfoots commissions have also probably doubled.
Better to sell million dollar homes than 500k homes ...
Agree this is to get people to list... also to convince everyone that new measures are not needed
Problem is unless prices drop significantly or household income double overnight auckland property prices are above the crisis levels John key mentioned in 2007 of 500k.
It's almost as if the intelligent and rational side of JK's brain in 2007 was saying the housing mess wasn't really a good thing for the country, but the popularist side of his brain increasingly told him as his tenure lengthened that house price booms were amazingly good, overall, politically
With the Rt. Hon. John Key resigning as Primeminister of New Zealand........what does he know of, that the rest of us don't ? .......that was the first thing I thought of.
So quick quick quick ....sell now ...sell now ...sell now !! ....Lock in those "capital gains" all you "astute" awklund property investoors !!! .....the "partay' is officially over.
Try and put a "spin" on this one, all you John Key supporters .....
Yes ...and who has he "won" for ... a few "astute" awklund property investoors, the banks, RE agents and all the property spruiking "hangers on" ... if I was up to my eyeballs in debt right now, I would be a wee bit concerned there OU .... once young Janet raises those interest rates, the aussie banks will take no prisoners and will double, at least what they increase by in the USA.
Todays news out from B&T confirms just what I was being told by family when I was in Auckland for a week recently. We hired a house in Milford and were getting told that there was a lot on the market and it was not shifting as quick as it used to. One of my wife's cousins and her husband turned down $1.6M for a house in Mairangi Bay as they were being told that things would pick up in a months time or so. We all thought they were being foolish especially as the 1960's house is pretty average. For while I have been advising Auckland investors and speculators to take some money off the table or should I say debt. No market goes up in a straight line and of course I was told by several of them that it was not possible for the Auckland housing market to move backwards. Time will tell who was right.
Surely that has more to do with the time of year though? No one really wants to try hold Open Homes or move house during the Christmas period. I'd imagine listing naturally decline at this point during the year every year, and pick up towards the end of January when people start to get out of holiday mode.
Trade Me is expensive. When times are tough people cut costs. You sound so desparate. Get used to it. The Auckland market is declining. The decline will accelerate as more people sell to drop debt, attempt to lock in some profits or simply sell to get away from tenants who do not respect their landlords property. And now with JK gone you are staring down the barrel at declining immigration figures and measures stronger than LTI's.
Depending on what you own Zach(if anything at all) you had better get used to the idea that your wealth is diminishing daily and it will accelerate. I assume you total up the value of your properties daily as you are such an obsessive person. As they say your assets are not worth anything until they are sold and the money arrives in the bank and that includes my shares and commercial properties.
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