Barfoot and Thompson, the biggest real estate agency group in New Zealand's biggest housing market, has reported sales volumes of 563 in January, which was down 3.4% from 583 in January last year, but up from 524 in December.
Barfoots said the average price of NZ$515,693 was up 2.1% from January a year ago, but down 2.6% on the average price for 2010.\
Barfoots said the lack of new listings was a major factor keeping sales volumes modest.
The Barfoots results are closely watched because they are the first sales figures released for January.
Quoteable Value figures are due next week and REINZ figures are due on February 14.
See more in Barfoots statement below. We will update with more shortly.
House Prices In January Firm, Turnover Modest
Auckland house prices firmed in January, increasing to an average of $515,693, up 2.1 percent on the average price at the same time last year, but down 2.6 percent on the average price for 2010 of $529,648.
“January’s sales were consistent with the pattern for the last quarter of last year,” said Peter Thompson, Managing Director of Barfoot & Thompson.
“While turnover was modest, price movement was in a narrow band.
In January we sold 563 properties, fairly consistent with the 583 we sold in January last year, and up 39 on December’s sales.
“It’s very much a case of the new year starting the same as the old one ended.
“Compared to January last year our average January price this year was up $10,000, while the average price is down only $14,000 on that in December, a much lower gap than is often experienced between December’s and January’s values.”
Mr Thompson said that lack of new listings was a major factor in sales volumes remaining modest.
“In January new listings were down to 896, a quarter lower than in January last year, although much better than December’s 737, which was the lowest in a month for more than a decade.
“It is a lack of sellers that is holding back market activity. What buyers are lacking is choice.”
At the end of January Barfoot & Thompson’s total listings were 5854, 9 fewer than at the end of December.
Rentals
While house sales turnover was low key, the rental market was active.
The average weekly rental achieved in January was $416, up $5 on that for December and $15 higher than 12 months’ previously.
“The lift in rents started in July last year, and January’s average has set a new benchmark,” said Mr Thompson.
“Although we let 810 properties in the month, up 3.3 percent on the number in January last year, we were still short of supply.
“A shortage of properties to let combined with landlords looking to improve their operational returns on their investments is behind the rent increases.”
Barfoot Auckland
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43 Comments
...... it's a line-ball decision whether I prefer listening to the cricket team lose or to real estate agents coming out with their dopey reports , for putting me to sleep ........ soporific , it tuely iszzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzz .....................................................
As I relayed from Leith post, earlier ...
"NZ Deleverages: Taste of Things to Come"
and a nice one from Oliver Hartwich, re supply and demand....
"Lack of sellers the problem." What a load of rubbish. Has anyone driven around Auckland recently and seen the number of houses on the market. It is mind boggling. He does not want to use the words describing the real situation out there. "Lack of buyers is the problem." Why would he. The buyers would back off even more if he dared tell the truth.
I see one of their kind just got 4 and half years in the slammer..bloody good show..hope the inmates make him welcome!
The cliff face is where the property market is headed....sit back and watch as the players scream and yell and spew out the BS that it's the right time to buy...hahahaha
Barfoot: “It is a lack of sellers that is holding back market activity. What buyers are lacking is choice.”
There is a price that everything will transact at in any market conditions, whether it be property or hats. It is not 'choice' that stops that happening but (1) the price at which buyer and seller agree to exchange or (2) the ability of the buyer to pay for what he has chosen. If currently listed properties are not selling it therefore follows that they are either (1) overpriced, as ultimately only a buyer can facilitate a transaction, or (2) not able to be paid for by whomever may want them.
But it will be interesting to see what happens to prices when Peter get's his 'increase in sellers' that he hopes for!
My daughter and son in law are willing buyers but
1. They can afford to rent (cheaply in terms of what they get for it) and wait.
2. They are not going to buy while this stand-off is in progress.
3. They will happily pay a little more once they see the market has turned up. The risk of more falls is greater than any cost of resurgence in price.
On the negative side, they would love to own their own 'piece of dirt' and get on with it but in the meantime the available deposit just keeps rising unlike if they had bought and were paying lots of interest, rates, insrance and maintenance.
Ultimately the 3 Ds will change this market
Ha ha ha…’lack of sellers’, wot rubbish when there are near record listings, 47+ weeks supply at current turnover, anecdotal evidence of 4 Sale signs everywhere, 2 in my short cul-d-sac of 26 houses alone.
It’s actually ‘lack of sellers at tradeable prices’. Vendors have yet to get realistic. How are the 5 D’s (Death, Divorce, De bank, reDundancy, Departure) going?
Is that the sound of an impending waterfall I hear emerging?
Average Auckland rent ( 'dead money!) on average house in January 2011 ? - $416 per week. Cost of floating interest ( same 'dead money') @ 6.25% on average house? - $635 per week. So for the privilege of owning the average house, and loosing $219 per week holding costs over the December month, you got to see the value fall $14,000 ! But too be fair, I guess the renter is $5 per week out of pocket as well.....
St. Nick : I did similar sums in my simple Gummy head ....... and concluded that I'd lose less munny by renting , than by holding onto a house with a falling value ............ And the munny from the house is now invested elsewhere , and paying me dividends ....... renting is cool , if you getcha head around the facts , instead of the negative hype .
Let see, sharemarket volume is down because there are not enough sellers, new car sales are down because there are not enough models to choose from, ditto second hand cards.
Don't encourage him, just publish the facts and comment accordingly.
He is a salesman selling second hand goods, that comments on the market in relation to his business as opposed independant market commentator
Discussion with a friend today; an opportunity to purchase a property in the Wairarapa where the vendor is seeking $165k. Registered valuation of the property, that is dated Nov 2010, shows $280-285k. Vendor in financial distress. Property not publicly listed for sale. Vendor approaching prospective purchasers directly.
This prospective purchaser can purchase with 50% equity and would seek 50% debt. Prospective purchaser hesitant. Unsure of actual rental income from the property. Unsure of mid and long term property value. I'd be surprised if the prospective purchaser steps into this.
Cheerio,
Miss Astrid
Without wishing to upset anyone’s semi-religious feelings, I think it is time to deflate one of the great myths of the housing market. It is the myth that restricted supply is a guarantee for ever-rising house prices.
As undergraduate students of economics learn, lowering supply results in higher prices. But their teachers also issue a disclaimer with this rule. It hides behind the Latin phraseceteris paribus – ‘all other things being equal’. In their postgraduate studies – and even more so in the real world – the students will then spend most of their time finding out what happens when other things are not held constant.
Applied to the conundrum of the housing market, the ceteris paribus assumption is usually ignored –at least by those who claim that a combination of restricted supply and rising demand for housing will inevitably lead to a rise in house prices.
In the very long run, this is correct. In the short run, however, there is no such inevitability. Why? Because other things are never held equal. Demand fluctuates, expectations change – and then it is the very rigidity of housing supply that amplifies price swings.
The only areas where price increase is likely right now is where there are still immigrants or overseas (read asian) investors who have not yet been told that real estate can fall as well as rise. Those peeps are also taking on the risk of a potential fall in the NZ$ if they want to repatriate their dosh in the future.
We can only hope they are rewarded with the benefits of their ignorance and sell out later to the buyers who are now holding off.
Housing will rebound again once our banks cotton on to this from the UK:
If the current generation of frustrated first-time buyers harbours any envy for their predecessors, who just managed to scramble onto the ladder before the lenders stopped offering a leg up, they should consider the following. Four to five years is the average amount of time a homeowner stays in their first property. First-time buyers who bought-for-the-first-time four or five years ago did so at the very peak of the market, and they’re most likely to have bought the kinds of properties (smaller flats, new-builds) that have fared worse than average in the years since. If they’re not in a significant negative equity position now, there’s every chance they will be soon.
So, although negative equity, as a percentage of overall loans, might be low compared to, say, the US, or when the UK property market reached the bottom of its first dip and a Citywire headline announced one in three borrowers could be affected, it’s still, among the first-time buyers of 2007, a potential problem.
First-timers' problems affect everyone elseData from Lloyds Group suggests that as many as 9% of so-called 'second-steppers' are currently in negative equity; double that number don’t have enough equity in their properties to move into a larger property better suited to starting a family.
Most interesting, Lloyds have produced data suggesting that second-stepper difficulties are feeding into the market. So, as well as the kind of huge regional variation we already know about, the market’s also hugely lopsided in terms of volume. Properties worth less than £200,000 saw far fewer transactions in 2010; above £200,000 they increased on the previous year; above £500,000 they increased by almost a third.
So why Lloyds’ sudden interest in the second-stepper? They’ve a new mortgage for them.
The 'Equity Support Scheme', a mortgage disguised as a self-help group, is a product aimed at existing (Lloyds Group) borrowers in negative equity who need to move. It makes their mortgage portable, by allowing them to use any savings they might have (and so immediately disqualifying 43% of them according to Lloyds’ own data) to meet a 5% deposit requirement on the new property, and to move their negative equity (up to 25% of the value of the new property) over. In other words… it’s potentially a 120% mortgage.
Nationwide's experienceBrokers will tell you that similar arrangements have been made by other lenders, but on a case-by-case basis. Lloyds have taken the step of publicising the product. But they’ve chosen their language very carefully, perhaps because they saw how Nationwide’s similar product, launched in 2009, was widely received.
Nationwide’s negative equity mortgage allowed a higher rate of negative equity to be carried over (30%) and charged interest in two tiers: as much as 7.48% for five years for the new loan, and 7.98% for the 30% extra.
Commentators – still hyperventilating from the banking system’s recent near miss – rounded on the product as a return to irresponsible lending. The Liberal Democrats’ Lord Oakeshott described loans higher than the value of the properties in which they were secured as 'the problem, not the solution'.
http://www.citywire.co.uk/money/is-lloyds-second-step-mortgage-a-good-s…
If you feel you absolutely must buy now, rather than waiting a while and paying less later, you can safely offer a lot less than any current asking price.
Don't feel obliged to avoid "offending" the vendor: it's a buyer's market, and the sooner everyone understands that, the better.
Depends on what year the RV was done in (and remember RVs are not reliable market valuations). RVs are only reviewed/reset every three years. So, if you're looking at one where the RV was revalued in say 2008 - it will not reflect the impact of the declines in house prices which occurred in 2008/09. If the latest RV was done in 2010, that should better reflect the decline experienced in the particular area.
But better yet, ask the agent to provide statistics for actual RECENT sales (say within the past 6 months) in the area you are looking to purchase in. Get them to give you the Asking Price, Sale Price and RV. Then work out your own idea of what the property would fetch were it to go to auction on a must sell basis in today's market conditions. For example, take the average of actual sales prices as a percentage of RV. If there are very few actual sales for you to compare.... that speaks volumes.
Thanks Kate for the insight, especially about asking the agent for the sales figures for the area for the last 6 months. I was gonna look up on QV for the latest sales report for that area, but let's see if the agent is keen to give. This one particular property that we are keen on, will be sold on Auction, (to be sold on 24th Feb).
I would prefer to goto the Auction, as I feel that I would get the actual market price. However there is a chance that it might sell before, since it is one of the better looking and well maintained 3 bedroom house in the Glenfield area.
The only negative point is that the backyard is slightly small, and not completely level, so may not suit families with young kids.
Plus with the auction, it has to be unconditional, so not really sure how many people have their finances sorted. I also have heard so many stories about house deals fall through due to financing.
Taking to a neighbour where I was on holiday, they paid a lot for the section and then a lot for the house....he wanted to sell as he had a job in Auckland but couldnt because no one would come near what it cost him....so he was renting it out.....
So sellers are not selling because they knoe buyers wont pay.........its a standoff....the stuff being sold is fools buying so the prce is up a bit.....and good luck to them.......
regards
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