Barfoot & Thompson's June sales slumped to a 14 year low, while the amount of stock for sale on the real estate agency's books hit a 14-year high.
The agency, which is the largest in the Auckland market, sold 681 residential properties in June. That's down 26% from the 916 it sold in May, and is the lowest number of sales Barfoot & Thompson has achieved in the month of June since 2010.
New listings coming on to the agency's books dipped slightly to 1506 in June, down from 1695 in May (-11%). But that was still the highest number of new listings Barfoot's has received in the month of June since 2020.
The high number of new listings combined with the low level of sales pushed the total stock of properties Barfoot's had available for sale at the end of June to 5736, up 34% compared to June last year.
That means the agency's total stock for sale at the end of June was at also it's highest level for the month of June since 2010.
The combination of declining sales running at a 14 year low, while new listings and total stock levels remain elevated, suggests the Auckland market is likely to remain extremely subdued over winter.
The only good news (for vendors) in the latest figures was that selling prices haven't collapsed.
Barfoot's median selling price in June was $1,020,000. That's up from $1,011,900 in May and $1,007,500 in April, but down from $1,050,000 in March.
June's median price was $220,000 below the record high of $1,240,000 achieved in November 2021.
Barfoot's average selling price in June was $1,236,336, the highest it has been since December 2021.
The high average price was most likely the result of the high proportion of sales at the top end of the market in June.
"A feature of June's trading was the strength of sales in the top price segments, with 61 or 9% of sales being above $2 million, with 19 of of those sales being above $3 million, Barfoot & Thompson director Stephen Barfoot said.
Barfoot Auckland
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132 Comments
https://newsroom.co.nz/2024/07/01/auckland-leasehold-residents-fear-the…
Coming from Europe, I wasn't sure what the issue was with leasehold. This article is a pretty sobering read for those considering leasehold.
I looked at buying leasehold in St John's Auckland - interestingly the outgoings listed as payable included any land tax due. I thought that was a bit on the nose. Although, an LVT would knock the land value down which would eventually flow onto lower ground rent if they stuck to their current method of pricing it.
But then they also wanted you to insure and maintain the house, including reinstatement if it burnt down. Not sure why as they wouldn't own the house! Maybe they were hoping to set the ground rent for bit above the going rate for vacant section grazing...
The current housing crash still has a long way to play out(drop). The current buzzword saying is "survive til '25" this is the only hope that all the over leveraged have to hold onto.
They expect/pray/hope/copium that interest rates will be slashed in 2025..... Those of us operating in the real world expect current rates to be at or near the new normal going forward.
Real world…the one where businesses are tanking, families struggling, folks losing their jobs…but yeah let’s keep rates high to CrAsH property…and the rates not historically high reply is hard to push seeing as the OCR is higher than anytime in the last decade and a half 🤦🏻♂️😂
Surely we can try to have decent DTI/LVR rules in place to hamstring a boom on house prices then start to make decent cuts to OCR/lending rates so businesses can borrow to grow and households can have a wee bit more in their pockets to help these business thrive
I agree 100% it's terrible, and only getting worse. But like any greedy investment 'cant lose/only goes up" bubble, our nation must pay the penalty for the out of control house lust.
I'm on board with cutting the OCR, once inflation is below 2%, and DTIs need to be 5x max for owner occupied and 4x max for investment (or apply capital gains to all investment properties).
No one in NZ politics has the cajones to do what must be done to help NZ thrive. The first step, and tough medicine to take, is median homes between 4x and 5x median household income.
Bang on. It’s excessive house prices that have caused the problem. Those DTIs you mention are in the right ballpark. Falling house prices are as much good news for buyers as they are bad news for sellers - people need to see a balanced picture. Buyers have been in an unreasonably tough position for far too long whereas most owners, including many current sellers, have done very well.
Exactly, with surplus townhouse stock on the market, why buy off the plans and take the non completion, quality and inflation risks when you can buy a completed one, do the inspection, and negotiate the price better?
And most townhouse schemes rely on some forward purchases for financing.
Perhaps even more special - at least Ireland, after property crash and subsequent IMF bailout and mandated economic reorganisation, put sensible policies together and are doing well now. DTIs of 3.5 (4 for FHB) have done a good job of keeping house prices in check even with per capita GDP growth exceeding 5% for most of the past 10 years. Their USD GBP per capita first caught NZ’s in 1995, now they are more than double us. https://data.worldbank.org/indicator/NY.GDP.PCAP.KD?locations=IE-NZ
14 year record low number of sales does not scream "desperate sellers willing to sell at any price".
Perhaps sellers are indeed waiting for the brightline test to reduce to 2 years from yesterday, before listing?
Then again, if you don't make a profit on the sale of your house, you don't pay tax, so, no point waiting.
It will be interesting to see if there is a flood of new listings in July leading to a surge of sales in August. We'll have to wait till September to get the full data.
Funny reply I suppose (which is guaranteed to yield you lots of thumbs up). If you're serious, if sellers were desperate to sell, like many believe, they would drop asking prices to a level that suits buyers and prices would therefore drop, significantly. This is not happening.
(edited)
Exactly. It'll be an interesting few months while we wait and see if there's a rush of listings that were purchased in that 2019-2022 that would've been done at high purchase price on low interest loans. Even now on Trade Me, my highly scientific method of testing market conditions (typing mortgagee into TM search bar) has seen an increase from 37 to 65 in the last few months, up from mid-20s last year. Interesting times ahead.
Business and job losses left and right, young future tax payers bailing stage west and being replaced by 501s, congestion tax circling, NZ dollar still on life support making import costly, more retired sucking on tax, and on and on. But hay, real estate ponzi to the moon its all good double down to a lifetime of financial enslavement.
Looking forward to the flash car repo auctions, just like GFC.
I wonder how soon? Twenty years for NZ to catch up with the rest of the world? I was watching a video of "a day in the life" of a woman living in a build to rent complex, designed to be a "walkable city" and combining retail space with living space for small business owners. She nonchalantly called a Waymo (driverless taxi service), and got in without batting an eyelid. The robo taxis are fully up and running in several cities in the US now.
Barfoot's median selling price in June was $1,020,000. That's up from $1,011,900 in May and $1,007,500 in April, but down from $1,050,000 in March.
Would be nice to have a comparison with the same month a year ago.
Also it's very surprising to see prices hold up with "stock up 34% compared to June last year", and interest rates nowhere near dropping, I can't explain this.
“June’s average sales price at $1,097,896 was up 2.5% on the previous month’s average and sat 1% higher when compared to the average price of the three months preceding. While the medium price at $995,000 increased by 4.2% when compared to May.
https://www.barfoot.co.nz/market-reports/2023/june/market-update
2024: June’s average sales price at $1,097,896
2023: Barfoot's median selling price in June was $1,020,000
Assuming that June 2024 median is comparable to June 2024 average (as the mathematically inclined know, it may not be), then that is a FALL of 7%.
We'll get a better indication when REINZ HPI comes out.
"That means the agency's total stock for sale at the end of June was at also it's highest level for the month of June since 2010"
Vendor: I must get $XX amount, as I need to get rid of this crippling mortgage.... plus I have to make a profit, as I have only known property to go "one way" and that's UP !
Prospective Buyer: The bank will only lend up to $XX so this is my first and final offer $XX ?
Vendor: Wouldn't touch your offer with a barge pole ! - you're way under ...mumble mumble
Prospective Buyer: Thank you for your time and have a nice day :)
And that would be the scenario that will be playing out all over NZ.... no wonder the stock levels are so high, the market is at a stalemate
With a likely outcome being the vendor carries on "stressing out" about these mortgage payments ....even while the price to "meet the market" is dropping all the time
While our prospective buyer - a young professional couple wanting to have children, are seriously considering those 2 great job offers in Aussie
What a greedy, short sighted little country NZ is.
I'm not disagreeing with your points, but why oh why are prices still not falling significantly, since there is 34% more stock, and interest rates are nowhere near coming down meaningfully ??? I can see you say "big price drops are coming", but let's be honest, we've been saying this for a year now and prices have still not "crashed".
Why are prices still holding up? Anyone?
I"m not sure what you mean by holding up? The market is currently crashing, it doesn't go down as quick as it rises. Why? Because people are quick to jump on a Ponzi for FOMO but it takes a while for people to understand that the narrative that convinced them to buy was a lie, people resist accepting reality if reality means they were wrong, especially if they were vociferously exclaiming how right they were.
"I"m not sure what you mean by holding up? The market is currently crashing"
I was very clear, I asked why "prices have still not "crashed". No, the prices have not crashed over the last 12 months, which is the period I referred to. Prices are actually slighlty up on B&T measures and on HPI, but let's just call them even for argument's sake.
So, if we want to be open, neutral and real, I ask again:
Why are prices still not falling significantly, since there is 34% more stock, and interest rates are nowhere near coming down meaningfully ??? I can see you say "big price drops are coming", but let's be honest, we've been saying this for a year now and prices have still not "crashed".
It's been a continuous crash since the peak, with a bull trap (which is coomin in housing crashes historically).
Are you asking why prices are not crashing more than the 30%+ they already have? How much do you think the total crash is going to be too to bottom?
Or does a 30% crash have to occur in a calendar year to be called a crash. The trend is pretty clear we're still on the downslope.
Its not the sharemarket where its "escalator up, elevator down". Its actually the opposite, elevator up, escalator down. It plays out over years, and its a long, grinding process. Currently people are thinking "if it doesnt sell, I'll rent it out or put it on AirBnB". But now rents are falling, and AirBnB is dying. So it will be that stock that needs to come back to the market with desperate sellers, not the ones that are just at the beginning of "testing the market".
So patience, grasshopper.
As I discussed with a mate of mine 30 years ago .....the price, value, worth etc etc of a property in $ terms is ONLY worth what the property will actually SELL for ....anyone can yell from the rooftops, at bbq's, at work, across the city, hills and valleys, my property is worth $XXX ....BUT ONLY TILL that exact $XXX is on a fully signed and unconditional sales and purchase agreement, any fool can just pull a price out of their hat, at any time .....and no one can dispute it, because it has YET to be proven.
Because vendors are not meeting the market... Hence the record levels of unsold stock and record levels of homes being withdrawn from the market. I think lots of properties listed in 2022/23 were folks trying to cash in on the 2021 hightide mark.
Now we are likely to see the must sell/quick sale/urgent sales/desperation and my favourite "can't afford the interest" listings flooding the market through winter and spring. These will be the first wave of real price discoveries.
I agree that vendors are not lowering their prices.
"Now we are likely to see the must sell/quick sale/urgent sales/desperation and my favourite "can't afford the interest" listings flooding the market through winter"
But we are in winter, and many have been saying for the last 12 months that vendors are desperate. When, oh when, is that big price drop coming ???
yeah, i know a few prospective buyers, selling their own house to move up, so they know the market conditions, but everything they want to buy the sellors still think it's 2022. Very unmotivating to view properties and not know if the vendor is genuine about wanting to sell. Neighbours here tried to sell their property, went to auction after a 4 week listing period. Didn't sell, immediately taken off the market, the listing page returned a 404 the morning after the auction.
Only thing that will break this log-jam is distressed sellors having to meet the market. If unemployment heads up we might then see vendors get serious about selling before the price drops futher. Otherwise we'll just muddle on sideways with a disfunctional market until the next economic upturn.
Busy little bodies holding open homes though, so no shortage of listings....... putting those little signs out and in, often in the rain.
Many things feel very GFC, In fact some things look to end up way worse as during the GFC OCR was slashed to stimulate the economy, US FED started QE, as did China, this time......
If I was feeling particularly facetious I'd point out that the median price has risen more than 7% in the last 12 months. That's double in ten years territory.
I expect prices will drop a tad to clear the glut. But you must be feeling pretty smug calling the floor in July 2023 right now!
In my area, the prices of standalone dwellings in the premium end of the market are still going up and selling well over 2022 CVs. However the prices of newly built townhouses are going down (and still not selling). A shortage of premium family homes, and an oversupply of cheap dogboxes. Whodathunkit?
Not smug, People come here for financial advice right ? I just looked at all the factors at play and made the call, you could chose to go with it or ignore it but some people couldn't resist taking the piss. Anyway that's in the past now and looking forward its interesting. New builds are falling off a cliff and the massive lag in that sector will just lead to increased house prices, The brightline removal may fill the gap. The Auckland fuel tax should help inflation but I'm still undecided as to where interest rates are going. I think the RBNZ should drop rates 25bps in August to try and retain some momentum in the economy. The whole thing is hard to control, because its so laggy and then you implement a change and you finally get overshoot.
Lol that DGM again.. being the investors who cheer as the economy get distorted by house prices causing suffering for everyone.
Happiness is found in a buzzing productive economy with an excited next generation starting innovative biz.
Not a bunch of middle age speculators gambling on property... it's sad.
What's cool is our government has noticed that the majority of their voters want the economy and house prices sorted out..indeed their chance of election will hinge on it. I suspect they will make housing affordability a goal.. then they can look good at the end of the bust. When they fix it.
I reckon there is a good chance they will throw dgms (speculative investors) under the proverbial bus.
Frankly, I trust Barfoot and Thompson way ahead of the typical DGM squatter........
Barfoot and Thompson provide relevant date in a timely manner - no matter where the housing market happens to be sitting on the property cycle. Thus, I'm happy to give B & T credit. Notably, criticisms of B & T data are few and far between - not bad at all for a real estate agency.
TTP
Correct, neither is an apartment. With the land value being half the value of "House" you need to compare apples with apples. You cannot just throw them all in one basket when back in the day all that was built was houses and as above, what is being built now is mainly townhouses which are at a different price point for obvious reasons.
Its unfortunate its come to us having to look at buying a townhouse as the only affordable option. Seriously practically nobody would live in one given a choice. My definition of a house doesn't need changing its in reference to prices. If all that is getting built these days is townhouses then the "House" prices will appear to be going down, this is not the case
Yeah.. not a time to be an investor or REA.. be interesting to see if they try to drop the Accom Supplement too... it's a total waste of taxpayer money. Imagine how fast the DGMs (property investors) would be getting out.. crash the ponzi and get back to business faster... it would fix the house affordability issue in no time.. and there would be plenty of cheap houses for govt and renters to buy.
Excuse the analogy, but this feels to me like for the NZ Warriors to have any chance in 2024, they have to make the top 8. Then anything could happen.
On that note, B&T sponsors the Blues, not the Warriors. The Blues will have a higher incidence of aspirational property heads in the fan base. Warriors fans are more likely renters.
This might help the property market, oh wait ...
https://www.nzherald.co.nz/nz/thousands-of-wellington-buildings-at-risk…
Your are joking right? The quantum of Debt numbers would require new mortgages rates well below 4.5%, to create any massive revival anywhere near 10%.
Rent is just 1/2 the price of a mortgage. Rents will be wholesale dropping soon. Thousands of unsold newbuilds, will see to it.
Low sustained mortgage rates below 4.5%, are finished. You are aware that there is Deglobalization now occurring?
Hard to understand the market currently. It would be good if someone had stats on how many houses were withdrawn from the market after not selling.
I'm wondering if this average selling price is overstated as quite a few trophy houses were sold off in the first half of this year in Auckland
Market now reflecting real economy more which itself is in slump
And one reason that slump is deepening fast is the RBNZ holding interest rates so high, effectively pulling dollars out of peoples' pockets and general economic circulation and feeding it into interest costs.
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