A sluggishness in new property listings in Auckland is turning the market in favour of sellers, as the national housing market continues its 'two-speed' trait of Auckland outstripping the rest of the country in terms of activity, realestate.co.nz says.
In its latest NZ Property report covering May, realestate.co.nz also said the average nationwide house sale asking price for new listings fell 4% in May from April's record high of NZ$429,249 to NZ$414,308. Nationwide inventory levels - a measure of the stock of unsold houses on the market - fell 12% in May from April to 47 weeks worth of unsold property.
"The prolonged sluggishness of new property listings, which has been evident for nearly 2 years, has at last seen a tip in the balance of the property market from favouring buyers to favouring sellers. At least that is now being seen in two of the major markets around the country – Auckland and Queenstown lakes," realestate.co.nz chief executive Alistair Helm said.
"The Auckland market, which saw strong late summer property sales, has now as a consequence of these sales, matched to the slow flow of new listings, seen inventory levels below long term average. At the end of May the inventory of unsold houses on the market fell to 30 weeks as compared to the long term average of 34 weeks. The last time this level was seen was at the end of 2009," Helm said.
The asking price expectation of the new listings coming onto the market in May fell back from the peak seen in April.
"Historically there is always an adjustment seen at this time of year. The seasonally adjusted asking price fell 2% [unadjusted: 4% fall] nationally and that was reflected right across the regions indicating that the market still senses no significant property price inflation as yet with new-to-the-market vendors pricing to attract buyers who are still small in number across the regions," Helm said.
New listings in May down 16% yr/yr
The level of new nationawide sale listings coming onto the market in May fell by an unadjusted 3% to 9,898 from 10,181 in April. This represented a 16% year on year decline but a 1% seasonally adjusted rise from April, Helm said.
"On a 12 month moving basis the number of new listings in the past year totals 127,843 as compared to 144,375 for the same period a year ago – a fall of 12%," Helm said.
The level of unsold houses on the market at the end of May continued to fall from prior months. May reported 48,352 unsold houses down from 50,398 in April and 51,980 in March.
"The recent relative strength of sales as seen in March and April has now stared to see a clearing of what has been a high level of unsold houses on the market over the past 18 months. Heading into Winter, a time of traditionally weaker listing will likely see this inventory level fall further in coming months," Helm said.
Auckland & Queenstown vs the rest
There was a level of confidence in Auckland from sellers that had not been seen in a long while, Helm said.
"The cyclical trend we saw following the impact of the global financial crisis in winter 2009 is balancing out and normalising the property market again to some degree,” he said.
If current trends continued in Auckland, the region could see a shortfall in new listings emerging over the winter period.
“It is common misconception that property sales go quiet as winter approaches. While new listings do tend to drop away, people are still enthusiastically looking for and buying properties," Helm said.
"While the steady shift out of excessive levels of national inventory is giving vendors the upper hand in Auckland and also Queenstown, 10 of the 19 regions are still predominantly favouring buyers for the time being," he said.
“We are clearly seeing a ‘two-speed’ property market in New Zealand at this time, with Auckland leading the rest of the country in levels of property activity."
'Prices troughing out'
Commenting on the figures, ASB economist Christina Leung said while new house listings looked to be slowly coming onto the market, the improvement in housing turnover meant the total level of housing inventory remained contained.
"As a result, house prices continue to hold up reasonably well," Leung said.
"A contained level of inventory, positive migration and population growth, as well as the recent drop in interest rates are all positive for the property market over the year ahead," she said.
"We expect nationwide prices are troughing out now, and should increase by around 3% over the year ahead. Behind this lift will be a range of experiences, from stronger price appreciation in areas such as Auckland, and ongoing weakness in areas where population and income growth are less supportive."
(Updates with ASB comment, more from NZ Property report)
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49 Comments
Yep ! ... the sky is falling . You must be beaming with joy , Bernard , gotcha " cheshire-cat " grin on this morning ?
...... yippee , house prices are falling , going down ....... crushing $NZ billions of owners' & investors' value .....
And this is a good thing , right ? ....... Bernard !
asking prices down 4% in a single month! that's terrible
That is the ASKING price...NOT the sale price...just means sellers are being a little more realistic ...Or could be a change in the type or value of houses being put on the market.
How people simply take as stastic at face face and draw conclusions...
But matie let's not forget that sellers were absolutely convinced that the clock stopped sometime in 2007. Until now.
So it's significant to see a decrease in asking prices because it means that sellers feel forced to do it. The denial blinkers have been removed and they are beginning to understand the position they are in.
Asking prices drop, therefore selling prices drop -- assuming they manage to sell.
Back in the days of the bubble, everytime some clown selling a house got what he asked for, the next clown selling a house asked for a little more, and got it. But that was back when banks would loan to suckers whatever they wanted.
Now as selling prices fall, asking prices will have to fall even faster, or the vendor will fear losing out to the guy who asked just that little bit less.
This is how snowballs form, because they always roll downhill, whereas upward trending bubbles constantly fight the gravity of fundamentals.
A 'sellers' market is when prices are up, and volumes are up! ie: they get better prices with more competition pushing up transactional volumes.
The market that comes just before a fall is....volumes down and prices down, as reluctant vendors pull back their wares, hoping for better prices in the future. The prices don't come and vendors panic at some stage. Then we get prices down and volumes rising. For those wishing to buy, that is the time to focus on, but it still may be a wee way off as the economy may force lower innterest rates yet, stalling the inevitable.
"The market that comes just before a fall is....volumes down and prices down"
Sage advice to go with your advice that:
- increased prices and reduced volume is a sign of impending doom as this means only hgher priced houses are selling as "the rats leave the ship".
- increased prices and increased volumes is a sign of impending doom as this indicates everyone is trying to sell at the same time to escape the coming crash.
- decresed prices and increased volume is a sign of impending doom as the market is flooded with unwanted properties no one can buy.
... musn't forget your recent gem of advice - in an inflationary environment one wants to hold cash not assets as assets will reduce in value so if you have cash you can get a bargin.
thankyou - most amusing.
Surely wise buyers who are aware of the very probable enormous increases in petrol costs will be trying to position themselves to areas that allow better access to work and other inportant (to them) facilities. This trend would one presumes impact certain Auckland suburbs far more than those most other far smaller NZ towns/cities. When one of my grand daughters and her husband relocated they certainly had such concerns. Indeed she can now bicycle to work while husband has a company car because he works wherever.
Apparantly the rise on the North Shore was due to one 5m+ property selling in Takapuna, and if you take that out then the market was pretty flat there:
"Looking closer at our area (north of the Harbour Bridge to the Brynderwyns) there was a mixed bag of results for the various suburbs, with the greatest drop off in average sales price recorded in East Coast Bays, Milford, Takapuna, and Devonport."
The figures here may attenuate your optimism:
http://www.valuationrodney.co.nz/news.htm
Better headline would've been: Best time ever to buy a batch!
Our holiday hotspots are overstocked like never before (# of weeks inventory to hand):
Northland 200 weeks
Coromandel 223 weeks
Taupo 93 weeks
Wairarapa 139 weeks
Marlborough 70 weeks
Central Otago 107 weeks
And the one to watch over the next 6 months is lifestyle blocks. Inventory trending downwards over the last three months and asking prices up 12% over the last year.
Given the wide variety of types of property classed as lifestyle - it would be a really interesting category to do some further drill down in stats to get a better picture. In particular there are two indicies of interest: the volume of sales and the sales price above RV - by the distance from a city centre.
In answer to the question: is there a general trend toward greater self-sufficiency.
Yet some are saying:
"Higher priced properties, lifestyle blocks, and rural property is still under a cloud from people endeavouring to reduce debt. This market sector is still experiencing downward pressure on prices coupled with a long time to sell, which would indicate no growth in this sector for some time still."
Great link - and this is the stat that really matters:
"Some lifestyle properties selling more than 20% below RV..."
One assumes then that next rateable valuation period we should see a corresponding drop in RVs - and that's got to be good (for buyers and the market more generally).
What I think the NZ property market really needs is an end to the Mexican standoff. Property improvement provided good impetus to the local economy during the boom years - but people simply can't afford renovations/improvement on top of inflated asking/selling prices.
I note that the Mitre10 Mega here is relocating - and I'm guessing it won't be a Mega anymore when it reopens. I think this could become a general trend - unless of course, the bubble bursts. Then consumers will move back into home improvements.
I hope you're right!
My wife and I would have liked to buy a place this year but next year is looking more likely. We just can't get over the prices of houses here in Auckland, it seems that the only thing keeping the game going is those buying and selling in the same market. But if you're not in the market then, even on good wages, it's nigh impossible to get into the market. :-(
"The prolonged sluggishness of new property listings, which has been evident for nearly 2 years, has at last seen a tip in the balance of the property market from favouring buyers to favouring sellers"
But what about the demand side of the equation? If no one can afford to buy houses due to being so high relative to incomes (which they bloody are in Auckland) then a small drop in supply means what? They need to equate the drop in supply with an increase in demand (measured by houses selling) to conclude this.
So how many houses sold in Auckland relative to this time last year?
however the regions paint a completely different picture
http://housesforsalegisborne.co.nz/wp-content/uploads/2009/11/Sales-Gis-2011-JF-LJH.pdf
a lot of red here
Just had a quick look at listings for Auckland. As of today it totals 16,644. Over the past few months total Auckland listings have been around 12,500 at any given time. How does this relate to falling inventory/new listings?
Or is it irrelevant given that we're into a new month and the report is only in relation to May?
We have been recording "for sale" listing volumes weekly for most regions since 2008, for both Trade Me Properties, and realestate.co.nz and you can see the trends here >> http://www.interest.co.nz/charts/real-estate/houses-sale I think you may well be mixing the volumes on Trade Me with those on realestate.co.nz. They are not the same.
Thanks for that David but I think I know the difference between www.trademe.co.nz and www.realestate.co.nz.
It was the realestate website that I visited. Funnily enough trade me actually shows the same total for real estate listings which I have never seen before. I'd expect a higher volume on trademe given the addition of private sales. In saying that there seems to be regular discrepancies in properties listed on trademe but not on realestate (by RE agents) and vice versa.
Who cares!
I moved to the lucky country few months back, got a great job - Rented our house in Auckland for a year - Rent we received is way way above our mortgage payment . Will sell it next year.. This is music to my ears... keep report the good news. I am happy!
Are we talking buying a home or buying an investment property?
If buying a home, do it when you find a house that you (and your family) like and can afford. It looks like house prices will not move much either side for a year or two, so get into owning and enjoying your own home as soon as you found what you like and can afford.
A different set of criteria applies to buying an investment property, as one has to consider it as part of their overall investment portfolio and strategy. Property is a good option for long-term investment as part (but not the only part) of a balanced portfolio.
As to prices, they will fluctuate around a relatively steady average for a while before starting to go up and into the next cycle. (This statement is probably not delivering much adrenalin to those who like dramatic stories and get excited about every blip – up or down – in the fluctuating line, but such is the reality…)
In Auckland "enjoying" your own home means paying significantly more in interest than in rent, on top of other expenses such as rates and maintenance.
All so you can call the home yours, and put your stamp on it? But wait, better not change anything too far from what is considered "normal" otherwise you'll destroy it's value.
Who really "owns" the house anyway? The homeowner? I don't think so. Read the mortgage documentation.
So what are the advantages of owning a house again?
Capital gains? (yeah like that's gonna happen anytime soon).
Stability? With aucklands prices, two incomes are needed to service the mortgage, so you are one job loss away from a mortgagee sale. In todays market there is also significant risk of negative equity.
Inflation? Probably the best advantage.
Any others? Someone please tell me there are others...
"In Auckland "enjoying" your own home means paying significantly more in interest than in rent, on top of other expenses such as rates and maintenance" .
No, enjoying your own home means something else: it means arranging it the way you like to make it more comfortable and enjoyable; it means for your kids to like it too and have a sense of their family home; it means being able to do all of that without asking anyone for a permission; it means an assurance that all of that can be had for as long as you - not somebody else - want.
Does the above involve paying "more in interest than in rent"? - Maybe! So what? (Unless one can't afford it - then it's a different story...)
"So what are the advantages of owning a house again? "
Read above...
"Capital gains? (yeah like that's gonna happen anytime soon)."
Capital gain is a bonus only - we are talking about your home, not investment...
"Stability? With aucklands prices, two incomes are needed to service the mortgage, so you are one job loss away from a mortgagee sale. In todays market there is also significant risk of negative equity".
I'd call it "security" - the security to know that you and your family will not get asked to leave any time. Again, the ability to service the mortgage has to be there of course, otherwise the condition of being able to afford the home is not satisfied.
"
"Inflation? Probably the best advantage".
The best advantage is in enjoying your home and doing it however you want and for as long as you want. Protecting yourself from rent inflation is one of the advantages too.
I purchased my first home in May for 7% less than what the previous owners paid for it in late 2009, but that wasn't in Auckland or Wellington.
I think now is an okay time to buy if you are cashed up and can bargain hard.
I think house prices will be quite flat for some time, but bargains do come up that it's not worth waiting to miss. Plus interest rates give a bit of a bonus to buying now as opposed to a bit later.
"A contained level of inventory, positive migration and population growth, as well as the recent drop in interest rates are all positive for the property market over the year ahead," she said.
Abysmal comment!
Migration has already turned negative and interest rates will rise from here
The Auckland market has been slowing rising for the last six months. Momentum has seriously picked up since January. It is very difficult to find a good house that is underpriced today, this is not going to change anytime soon.
We are now in the market of increasing prices if you are buying in Auckland and despite what others may "wish" this is unlikely to alter significantly.
The regions will follow Auckland in about two years time.
LOL: Actually I've been laughing at negativity in regards to property for about 40 years, keep it up, as it makes it easier for us to buy! Like the one I brought for 42k 30 years ago and turned down an offer to buy at 2.5M a couple of years ago.
There are really only three ways to make money, Business, Shares or Real Estate. Most just hold down a job (which leaves you just over broke) Having been involved in all three, I'll stay with Property. Nice to have money working for you, instead as a lot on this site who have to continue to work for money. Good Luck!
I wonder why the banks are far more likely to lend on a property than shares or a business? Perhaps they have also learnt where the greater risks are.
You are clutching at imaginary straw.
LOL was talking about those who believe it's still 2007, and that a quick CG buck is still to be made.
Anyone who bought a house 30 years ago is likely to realise a significant return on it if selling now.
Even the most clueless of PI monkeys couldn't stuff up that one.
But here's hoping you can still get at least $2.5m from it before you die.
We'd hate to see you stuff up that deal.
I have recently sold a property in central Auckland (at the higher end of the market). I ended up getting about 3% below the minimum price I was hoping for, but since it was a cash buyer I was happy with that. In better times I would have expected at least 15% more than what I achieved. Bidding at auction was tepid and the property was passed in and sold later to the highest bidder.
Anecdotally, from the buyers who were interested in the property that I spoke to, many were having trouble selling their houses at their asking price (again these are properties at the high end of the market in Parnell, Remuera, Herne Bay). Sales would only take place when the seller was prepared to meet the market. In one case I was told that a seller had dropped their asking price by $500,000 in an attempt to flush out buyers.
I am also aware that there are a number of high end apartments (2.5M+) that have being on the market for months. They are just not selling as the asking price is totally unrealistic in this current market. I’m sure each owner could argue at length why their apartment should be worth 3M, but the problem is no one is prepared to pay it.
All in all my recent experience indicates that this remains a very cautious market, even at the high end. There is little upwards pressure on prices, demand is muted, but properties will sell if priced realistically and a particular buyer has fallen in love with it. And let’s face it, some of these properties, their locations and outlooks are just gorgeous.
I think prices are holding their own at this stage as there is a lack of supply wrt demand, with many home owners in central Auckland under no particular financial pressure to sell. They are happy to stay put in the meantime.
The high end apartment market in central Auckland however is very weak, and for some may be turning into a train wreck.
Central Auckland won't remain immune to price pressure once interest rates go the only way they can (up). Affordability will start eating into selling prices.
Unless.... We end up with low interest rates for the long term...
How likely is that with the FED printing press going gangbusters tho? I guess Bollard just has to come up with a new technique to say inflation is lower than it actually is... again....
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