Big decline in sales at Barfoot & Thompson while prices dropped slightly in April

They were some very lucky sellers

The cliff top has been reached

You know that feeling you get when you get on a rollercoaster and it slowly ratchets up and up. Then you pause at the top of the incline........ and then..... weeeeeeeeeeeeeee!

And here's me driving around central otago seeing new for sale signs daily.
One builder had the call from 6 different clients, that was every job he had for the next 18 months. All cancelled.

This does't really tell us much does it?
The stats will get interesting come July/August.

That's an unprecedented sales drop-off, but under unprecedented conditions. I can't say I'm surprised that the figures are that dramatic.

Same goes for new listings - who is going to be listing when they don't even know when anyone will be able to view their property?

The real question is, what happens now? Do the meagre pickings in supply mean that prices hold up? Or is everyone waiting, buyers and sellers both? Are banks going to be keen on lending in this low-interest environment - particularly given that they themselves are all predicting drops in prices? How many buyers that signed on the dotted line back in March will find themselves unable to settle?

Seems like a bit of a mess, that may take a few months to shake out.

Pretty hard to list and sell a property when youre locked up. What are you telling us here, that everyone was on holiday. Next three months will be the real indicator.

Pretty hard to list and sell a property when youre locked up. What are you telling us here, that everyone was on holiday. Next three months will be the real indicator.

So far I've seen no evidence of any life returning to real estate in L3, even though it's technically allowed (if not open homes).

But I guess if you were already partway down the selling track when lockdown hit, you can probably hold out for L2 and something closer to normalcy, if that's only next week. And if you're suddenly highly motivated to sell because of recent events (e.g. job losses), those listings will be a little ways away. Will be interesting to see how many there are.

Well to be fair the agents have had a spectacular run over the past decade , so they should all have very little debt , large asset base , and be all good

Not much surprise here. As BT said, many of sales in April were in transit from March.
Sales impact will be most dramatic from mid May - mid October.
Expect a 35% drop in sales in Auckland and about 25% elsewhere, in that period compared to 2019 figures.
Prices to drop 15% minimum by year end.

Curious to hear if readers here are hearing any stories of highly leveraged property owners in cashflow stress?

Some potential areas of highly leveraged borrowers with cashflow stress:
1) Residential property rented out on Airbnb
2) Residential property rented out to students
3) Commercial property owners - particularly hotels, retail businesses
4) Negatively geared property owners who have lost their jobs / fewer number of hours worked

The mortgage payment deferral might help for a little while, but after the expiry of the the mortgage payment deferral period, there might be additional leveraged borrowers under cashflow stress.

Recall someone knew a person with 2-3 properties rented on Airbnb in Wanaka.

Not concerned about sales numbers dropping to half. Price is just as if not more important.

The government ordered a suspension of mortgage reality for 6 months. That gets us past September. What's happening in September that is so important??
If you think you will have to sell then. Then you may as well try and find a sucker now. Don't wait for September to end before you wake up.

Well, Well .. the data is starting to come out - May The 4th Be With You.

Personally I think this week people are looking at their positions, both in property and equities. Risk profiles and investment cases are being considered.

I slit two turkey necks myself this morning. Sold my full positions in both NZ Refining up there in Marsden Point and Enprise Group.

Business cases changed .. NZ Refining doesn't seem to want to be a refinery company anymore lol but a fuel importer .. yet Z Energy is turning tankers around. It can't even maintain its share price - TURKEY~!!

Enprise Group .. well, wants to pay a lovely, lovely dividend but is issuing new shares - questionable! Lots of product talk, not much action .. lacking potential and stock liquidity -TURKEY~!!

NZ Property Investors obviously can't liquidate as quickly as Equity Investors .. but the cogs in their heads are turning. Remember, someone that liquidates a property may almost redeploy that capital back into property. I've already redeployed my capital from Turkey Sales today .. right back into the NZX.

Hi Greg, I presume these stats are for sales completed in April rather than signed in April ? Thanks for the advice.

It's going to be interesting to see what impact the flood of Airbnb's will have on both the sale and rental property markets. Spoke to some friends of mine that have investment properties that they used as short term holiday lets (via Airbnb). They're now scrambling around desperately looking for long term tenants but that's considerably difficult since mostly they're in tourist spots that really have no other income other than tourism.

Bit stuffed really, many will be forced to sell to just to off load their properties.

Surprised its not worse. Speaks to the underlying lag in real estate activity. Those that exited and banked the cash well done. Those that didnt, good luck, your gonna need it.

March figures were storming in so to me this is an incredibly good result for April. Being under LD for all but two days of the month how did buyers/sellers transact if not remotely. Confidence must be high ...but feel free to tell me otherwise from a doomsters perspective.

April 2020 sales down compare to April 2019 is not bad at all. Under lockdown if was down compare to last year by just 17% is excellent but it also reflects that last year in April market was down and real bad.

Currently, most houses in market are expecing/asking Pre Corona price (Which is high) so it will be not before july/ August that will have some data as to future of housing market- is it just soft or a fal or if taking a hit.

Also many houses sold before locjdown at high price will reflect in May when offer goes unconditional and will always have few FHB who would/will, have rushed for FOMO and paid a decent /high price. Besides true impact of Corona Virus in economy will be felt only few months, once the lockdown is lifited and governments wage subsidy and other lollies comes to an end.

For now it has to be Wait and Watch.

Would investors pick up the slack in demand ? The changes in legislation like Foreign Buyer ban, ring-fencing of losses, Bright Line Test, increased obligations under Healthy Homes on rental property owners, abolition of no-cause termination tenancy & letting fee, etc had already somewhat dampened the appetite for property as an investment.Some had already exited.I wonder how many investors who exited would like to re-visit their decision.

The devil is in the detail ... a great deal of these 'April' sales are just completions on apartments sold much much earlier.

From the report... and this isnt the only block by a long stretch. This block alone counts for 60 of the months sales.

10B/ 57-59 Wakefield Street, 10C/ 57-59 Wakefield Street, 10G/ 57-59 Wakefield Street, 10H/ 57-59 Wakefield Street, 11C/ 57-59 Wakefield Street, 11F/ 57-59 Wakefield Street, 11G/ 57-59 Wakefield Street, 12A/ 57-59 Wakefield Street, 12B/ 57-59 Wakefield Street, 12C/ 57-59 Wakefield Street, 12G/ 57-59 Wakefield Street, 13A/ 57-59 Wakefield Street, 13B/ 57-59 Wakefield Street, 13C/ 57-59 Wakefield Street, 13F/ 57-59 Wakefield Street, 13G/ 57-59 Wakefield Street, 13H/ 57-59 Wakefield Street, 14B/ 57-59 Wakefield Street, 14C/ 57-59 Wakefield Street, 14F/ 57-59 Wakefield Street, 14H/ 57-59 Wakefield Street, 1D/ 57-59 Wakefield Street, 2A/ 57-59 Wakefield Street, 2C/ 57-59 Wakefield Street, 2F/ 57-59 Wakefield Street, 2G/ 57-59 Wakefield Street, 3A/ 57 Wakefield Street, 3B/ 57-59 Wakefield Street, 3C/ 57-59 Wakefield Street, 3G/ 57-59 Wakefield Street, 4F/ 57-59 Wakefield Street, 57Gf-59 Wakefield Street, 57Gg-59 Wakefield Street, 5A/ 57-59 Wakefield Street, 5B/ 57-59 Wakefield Street, 5C/ 57-59 Wakefield Street, 5E/ 57-59 Wakefield Street, 5F/ 57-59 Wakefield Street, 5G/ 57-59 Wakefield Street, 6C/ 57-59 Wakefield Street, 6F/ 57-59 Wakefield Street, 6G/ 57-59 Wakefield Street, 7A/ 57-59 Wakefield Street, 7B/ 57-59 Wakefield Street, 7C/ 57-59 Wakefield Street, 7F/ 57-59 Wakefield Street, 8A/ 57-59 Wakefield Street, 8B/ 57-59 Wakefield Street, 8C/ 57-58 Wakefield Street, 8F/ 57-59 Wakefield Street, 8G/ 57-59 Wakefield Street, 9A/ 57-59 Wakefield Street, 9B/ 57-59 Wakefield Street, 9C/ 57-59 Wakefield Street, 9D/ 57-59 Wakefield Street, 9E/ 57-59 Wakefield Street, 9F/ 57-59 Wakefield Street, 9G/ 57-59 Wakefield Street

See my LinkedIn page for more detail.
In brief, when wage subsidies withdrawn, sales collapse will accelerate.
Look to first 6m of 2017 for last really poor sales in Auckland, and deduct 25 -40% from that for April - Sept 2020.
There were 11,008 sales in Auckland in those 6m in 2017 and only a few more in 6m of 2019 (11,287)
take 25% off sales for April - June and then more in July, August, Sept (35%, 40% and 30% roughly)
Max sales in Auckland in 2020: 16,000. In 2019 it was about 23,000
At the moment we are in economic phases where tide has gone out and tsunami awaited.
That will be in July, as credit cycle crashes properly and USA attempt to "re-open" is shown to be a bad idea as second wave hits.
Like the way Aussie banks are showing 6m results to March and claiming they are so poor because of CV19.
CV 19 did not start affecting Aus til March
Reality is that Aussie banks are getting crushed by provisions for wash out from their Royal Commission pasting.
Their share prices and equity and safe levels of capital looking pretty shaky now

I’m surprised so many transactions were possible.

I know many on here like predictions. My prediction: as we ease out of lockdown the housing market, in terms of prices, will be surprisingly resilient- at first. There’s still a pool of fairly desperate FHBs, and those who still have jobs will be feeling good. The optimism towards property is profound in this country, and there’s not much else to invest in ATM.

But - with migration halted and high unemployment, tourism shot - rents will have to fall. That means negative returns for a large number of investors. Most won’t be desperate (except for maybe holders of crappy apartments) but they’ll be unhappier with every week that passes. So we’ll see a slow but steady slide as investors tap out, one by one.

June 2020: down 25%.

Im constantly amazed by some of the people here that when standing in the middle of the road and watching a bus coming straight at them cannot see a problem until it actually hits them.

What'll come first, the rent reductions or the house price reductions?
Every year I get the email from my LL explaining 'I monitor market movements and due to the increasing demand your rent will be going up by X%' (7% increase this past year, higher than the national average...).

I just can't foresee an email from my LL explaining 'due to the nature of the market, and because you're such good tenants, I've decided to reduce your weekly rent'. It'll take me moving out and my LL realising they can't get what I was paying, to reduce it.
Alas, it is almost cheaper for me to buy in the current market conditions than it is to rent. As soon as those prices come down I won't be sticking around long if there's no let up in rent.

The reported 552 sales are not a true picture as many of these were signed up in March and went unconditional in April

Peter Thompson interviewed here https://www.newstalkzb.co.nz/on-air/heather-du-plessis-allan-drive/audi…

Says peak sales week in March was 330 sales

First week of lockdown was 77 sales
Second week of lockdown was 66 sales
He predicted for third week of lockdown 40 sales

So probably less than 200 sales actually signed up and unconditional in April.

May will be very interesting indeed.

Much 'more' worse to come

Sydney and Melbourne have both been a giant canary in the mine for Auckland RE Market. Here they are tripping over in April but some say we are diffurunt!

https://www.abc.net.au/news/2020-05-04/coronavirus-has-turned-the-real-…

I'm one of the wealthy NZers returning to live in NZ that everyone seems to be pinning their hopes on. I think very few are making that choice and the wealthy foreign Kiwi is mostly mythical. I've never met one in real life. I know people that go to Vail for winter and own houses with helicopter pads but they are one bad event away from destruction at all times. The bad event just happened.

Based on early interactions here NZ is in for a savage readjustment.

Just went through RE NZ for sale stock online.
I looked at the first (latest ) 546 listings and then the oldest 546 listings.
In each case that is 10% of total listings .
17% of the newest listings are not built or not finished, and are represented by artists impressions.
43% of the oldest are not built or not finished.
In layman's terms, a house or townhouse should BE THERE, not be in prospect at some stage.

So, of the 5462, a v hefty proportion are, in these terms, FAKE