Auckland's largest real estate agency group, Barfoot and Thompson, has reported a fall in house sales in July from June to a level 17.3% below sales a year ago.
But it reported a 2.2% increase in the average house sale price to NZ$534,389 in July from June, due to a larger number of houses selling in the bracket over NZ$750,000.
These are first figures to be reported for July and suggests another weak month for sales in the wake of property tax changes in the May Budget and the two Official Cash Rate Increases over June and July.
Quoteable Value and REINZ are expected to release national value, sales and volume figures for July over the next 10 days.
Barfoot and Thompson Managing Director Peter Thompson said the Auckland market had found its winter 'ticking over' point.
“For the past few months turnover and average prices have moved in a tight band,” said Thompson.
“Properties are continuing to sell, particularly if they are priced to meet the market, while there is a steady stream of new listings giving buyers a good level of choice," he said.
“It’s a typical situation that can develop in mid winter, especially during periods when economic activity is quiet."
There were 644 properties sold by Barfoot and Thompson in July, down 21 from June and down 17.3% from July a year earlier.
July’s average price of NZ$534,389 was also 5.3% above the average in July last year.
“We are attributing the increase in average sales price to a higher than usual number of homes selling at more than NZ$750,000 in July. The percentage increase was modest, but enough to push the average price higher." Thompson said.
There were 1,267 new listings at Barfoots in July, up 6.1% on June. This was almost twice as many new listings as sales for the month.
Barfoots said it had 5,759 properties listed in August, in line with those at the start of July. This suggests many listings were withdrawn after not being sold.
“Until winter is behind us, we anticipate market conditions will remain the same as at present.”
Barfoots reported its average weekly rental during July rose NZ$5 to a record high of NZ$408, up NZ$20 from July last year and above the NZ$388 through 2008 and 2009.
“Average rents have definitely increased since the start of the year,” said Thompson.
“Landlords are facing higher operating costs and this is leading to rents going up.”
Barfoot said it rented out 775 properties in July up 12.3% on June and in line with rentals in July last year.
See our interactive chart series for Barfoot and Thompson's figures here and below.
Barfoot Auckland
Select chart tabs
9 Comments
many have said property is not a liquid asset. they are correct - it is a solid investment all day long, provided you can afford it, or those that live there can. Rents aren't exactly going to drop, property prices will do what they do - just remember in the 80/20. 90/10. 95/5. 99/1. rule that the majority doesn't always win, and just because some people can not afford something there will always be those who can afford that and some more...
The problem with the leaky homes solution is that it depends on banks lending most of the money required. The government guarantee isn't much use if the borrower don't meet the banks' usual criteria and most don't.
The banks and government are still in talks. Until that impasse is breached, leaky homes will remain a problem. The solution appears to be either a government grant or the banks taking equity in these houses, or a combination of the two.
Here's more here from Gareth on this.
cheers
Bernard
Peter
Can you confirm that you managed to roll over a 5 year term deposit with National Bank at 7.9% in the last couple of weeks?
Their advertised rate is 6.75% here http://www.interest.co.nz/saving
Are others seeing this?
I frankly don't believe the banks are paying 120 basis points over their advertised rates for term deposits. If that's true, that's an explosive story.
cheers
Bernard
Anonymous/OllyN
You'll see I include the rents information in the article above.
Have a look here at the most comprehensive data series on rents in New Zealand from the Department of Building and Housing.
http://www.interest.co.nz/charts/real-estate/rents-median
Check out what's happening with Auckland median rents for both 3 bedroom houses and 2 bedroom apartments.
Auckland 3 bedroom apartment rents across the entire market (not just Barfoots) have risen from around NZ$400 in mid 2007 to around NZ$460 in mid 2010, which is around 15%. Disposable household incomes rose around 10% in Auckland over that period.
Auckland 2 bedroom apartment rents have risen 10% from NZ$300 to around NZ$330 over the same period, in line with income growth.
Nationally, rents have risen around 7% from NZ$280 to around NZ$300 over the last 3 years, which is actually less than disposable income growth of 10.7% over the same period.
Very happy to report all these facts. We'd invite readers to have a good look at that interactive chart above.
My point is that rents tend to rise in line with disposable incomes, unlike house prices, which were able to rise faster than disposable incomes in the last decade because of easy, cheap credit.
That easy, cheap credit has now gone.
I doubt landlords will be able to lift rents much faster than disposable incomes over the long term.
cheers
Bernard
Sam,
Many thanks. I remember telling Mark Hotchin in July 2008 that I thought property prices would fall 30%. He said I was crazy and it would never happen.
He was essentially telling me to stop saying such radical, dangerous things. He wrote me off as a joke.
His development properties are now worth significantly less than he valued them then. Perhaps 60-70% less.
You make a good argument about GST and population growth. The problem though is the banks have stopped lending at the same rate they were and house prices don't rise without the extra credit growth.
The other option is for people to live with friends and family if they can't afford to buy or rent. That's what we're seeing in Auckland.
cheers
Bernard
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