Barfoot & Thompson, Auckland's biggest real estate company, says it sold 778 houses in July which was down 11% from June but 21% higher than the sales achieved in July last year. The company also said its new listings in July were the lowest for a decade.
Barfoot & Thompson managing director Peter Thompson said the average price in July was NZ$530,191, about 1% lower than in July 2010 but nearly 2% higher than in June.
“For the past four years we have been selling between 650 and 780 homes in July, and this July’s sales numbers are sitting at the top end of the range," Thompson said.
It sold 644 houses in July last year and 873 in June this year.
He said the low number of new property listings and the total number of properties for sale in July produced the tightest property market for choice in Auckland for four years.
“While choice is limited it is not holding back sales numbers, or contributing to higher prices,” Thompson said.
“Our reading is that with buyers in the market, now represents an excellent moment in time in which to sell a property.”
“Overall, we have a stable market which is waiting for greater certainty in terms of when the economy will start to pick up. In July we listed only 1050 new properties (significantly more new listings than the 778 sales), our lowest number in the last decade, and 8.9% lower than in June."
He said Barfoot & Thompson had 4830 properties on its books at the end of July, meaning you had to look back nearly four years to find a month where choice was so limited.
“While July’s average price edged up 1.8% on that for June it is right in line with May’s average price, and the average price spread across the past three months is less than NZ$1000," said Thompson.
“Normally, the combination of buyers in the market and lack of choice would lead to prices increasing as buyers compete for available properties. Even though there are buyers out there, prices are increasing at only a nominal rate. Buyers are prepared to pay a fair market price, but not over the top."
Barfoot & Thompson sold 8,594 Auckland homes in the year to July, down from 9,036 in the year to July last year.
'Sellers market in Auckland'
ASB Economist Chris Tennent-Brown said he expected continued tightness in supply in the Auckland market to support prices.
He said the ratio of house sales to total listings indicated there are 6 months of inventory on the market, which is below the long-run average of 8.2 months of inventory, and the 10.4 months of inventory at the start of the year.
Seasonally-adjusted turnover fell 3.3% over the month, but was up 22% compared to a year ago, although Tennent-Brown noted seasonally-adjusted monthly turnover was regularly over 1000 properties at the peak of the boom.
"Over recent months, seasonally-adjusted turnover has been around 800 properties, so the market is not booming. However, when the current level of turnover is coupled with the low amount of inventory, the choices for buyers are somewhat limited. The Auckland market seems tipped in the favour of sellers," Tennent-Brown said.
"Given this tightness, it is a little surprising that average house prices from Barfoot and Thompson have been relatively steady over recent months, and are flat when compared to a year ago. A more reliable measure of house prices is the REINZ stratified house price index: in June, this index showed Auckland prices have risen around 4% when compared to a year ago, whereas prices were down on an annual basis in other areas," he said.
"We expect ongoing tightness in the Auckland property market to be supportive of prices in the future, and price gains in Auckland are likely to be stronger than in most other regions over the year ahead. The recovery in housing demand has been more subdued in the rest of the country, and we expect this trend will be confirmed when the July REINZ nationwide house sales data are released (next week)."
(Updated with comment from ASB, chart below)
Barfoot Auckland
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41 Comments
Peter Thompson said ,"...now represents an excellent moment in time in which to sell a property...( What?! Not an excellent moment to buy, Peter?).... it sold 778 houses in July ....In July we listed only 1050 new properties,". So: Selling less than they're listing...still..and as for choice ? "Barfoot & Thompson had 4830 properties on its books at the end of July.' .thats's still over 6 months 'choice', if the inventory doesn't keep growing!
Nic.... I also dont understand these press releases from B&T. They have put their own slant on the sales numbers, but I suspect they are simply fudging the numbers to try and stimulate sales .
Its clear they have little actual saleable stock We can see this from the unsold inventory of nearly 5000 units. Much of this is simply rubbish or unsaleable , overpriced , or under- water (LTV Ratio) too high , etc
We know that almost all investors have left the market because of tax changes , CGT Threats , etc . So its not speculation thats driving the market .
Figures show New building approvals are low .
Figures show migrants are still entering NZ .
Is inventory really so "low" that is causing low sales volumes ,or is residential real estate as an asset class simply adjustung to the new normal ?
Either way B&T should get used to it becasue I dont think its going to change anytime soon.
Dr Bollard is probably quite happy with all this as he always wanted a "soft Landing" for homeowners
" ...( What?! Not an excellent moment to buy, Peter?).... " I love the irony of you trying to be ironical Nicholas. That is exactly what he is saying. It is really a difficult time for buyers at the moment. Can't wait for your next gem. Lets see........ the price of property is really crashing because it only takes a third of the capsicums to buy a place as it did 3 months ago. (Been working on my Nick impersonation ;-)
Just noting Peter Barfoot's word, verbatim, Vera. Oh, and re capsicums...have you seen the price.... $16 per kilo....."Inflation in all you need; deflation in all you own", Vera. That phrase looks more appropriate by the day - in every supermarket, pertol station,and bank account. I wonder how much longer the savings not imprisoned in property can last, before the inevitable relase from the hostage asset?
It sure is - the amount 'For Sale' is down-, Murray. But that's probably only the visible inventory. From years gone past, even I knew, that if your property wasn't selling do one of two things : (1) put the price up ( if it isn't going to sell, it may as well 'not sell' for more, rather than less) or (2) pull the sucker off the market and hope for better times to come. And it has worked, up until now. Today we are at the stage of "if all there is is hope, there is no hope", and I say that in the light of the economic circumatances we all find ourselves in. Hope, eventually gets replaced by reality.
I've also said that I never expect to buy a house again in my lifetime. I'm just hoping in that sense that it is the horizon that I can see! But I accept that the endeavours of all Governments is to stop a calamity happening. In New Zealand's /Australia's case, that would be by their housing stock collapsing ( something I'm sure other juristictions also tried to avoid). So I have never put a time frame on 'when', just that it's imminent, depending on what 'magic' the powers that be come up with on any given day. Too many more days in the equities market like the last week or so, and Voila!- we may see some movement. But I do not underestimate the stickiness of assets to fall in price; whether they are stocks or houses. The hardest thing for most people to do, is take a loss. That's what makes the difference between a good dealer and an exceptional one.
According to a Herald article yesterday total inventory was down to 10,685 (excl sections) last month according to realestate.co.nz. The realestate website now shows 12,345 listings.
http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=10742368
How could this even be categorized as "news" ????
Small number of new listings? That can quickly change. It doesn't take a whole lot of new listings to tip things the other direction. Then what will we see here? "Never been a better time to buy... lots of selection...buyers market!" Same old BS. Some things never change.
Meanwhile, in the broader market, sales are down in Australia, and that should worry everybody owning property in NZ, because we depend on Aussie banks for cheap and easy credit. Where will it go when that disappears?
Barfoot and Thompson are the tail waggin the dog.
On Australia, this might be of interest - http://www.interest.co.nz/news/54660/australian-bank-regulator-warns-au…
Updated now with comments from ASB and our interactive chart
http://www.interest.co.nz/charts/real-estate/barfoot-auckland
cheers
Bernard
Very difficulttt to get people to do ,CM. Anyone who paid, say, $500k for their house is reluctant to sell it for $400k,( there's always something 'special' about anyones own house!), even if the next one has fallen from $1mio to $800k, and especially so if they are trading down to a $400k to a $320k one. And also if by selling low, they lose their equity for the downpayment or deposit on the next one. That's when people end up 'trapped'; volmes drop off ( now?) and inventory shrinks...
Very true - people who paid, say, 500K for their house are always reluctant to sell them to the person offering $400K when there's other offers on the table for over 500K.
It's inexplicatble that they refuse to sell their houses for what they are worth and insist on selling them to the highest bidders. This is what keeps pushing house prices up - if they would just sell their houses to the lowest bidder then prices would drop.
I don't disagree with your theory NA, I know quite a few people in our community across Auckland who have sold their "houses" and hardly anyone suffered BIG drops like what you described. Few lost 10-15K on 4-500K houses but some of them have made good capital gains (even at 2007 prices)
However, I also know some who bought and sold their "apartments" and that's another story! But this is Auckland story...
Replace "Auckland" in your arguments with say "Northland" and then things change. Huge unsold inventory, houses on the market for years, biggest drops in the country. No one to the auctions. Houses onto their third auction. Tenders close with no tenders. Huge difference between amount of sales and amount of salespeople. No one at the open homes......
That's the way it's always been in the regions during downturns Stuffed and how it always will be until someone invents a cheap replacement for oil. In "out of the way" locations prices drop so much you could buy a nice old house on a decent chunk of land for a fraction of the replacement cost of the building. There should be plenty of opportunities coming up for folks wanting to go all PDK. One good growing season will pay for the place if you don't smoke too much of it.
"People go bankrupt slowly, and then all at once." Ernest Hemingway
No, Vera. I beleive it is you that is smokin some wacky tobaccy. What NA is trying to illustrate is that many of these homes, that are not selling, are SECOND homes to homeowners in Auckland, some who are coming under sigificant mortgage stress, having to pay 2 mortgages, dependent on 2 salaries, etc. while discovering that they don't have the time or the desire to drive several hours to visit said second property "investment."
Further, if they lose their second home to foreclosure, that will have further knock-on effects on their ability to get credit elsewhere- so fewer purchases. That, in addition to losing their main home to foreclosure to satisfy the loss on their Northland property.
As more and more people go into distress, there becomes what's called a "shadow" inventory. This represents the hidden, building inventory that is probably keeping a lot of people awake at night, including banks. Apparently you haven't taken this into account. Apparently also you don't talk to many people who are "on the street," running a business that pays employees, so you have yet to get a feel on the pulse of the very people who will be paying your rents and mortgages. You will discover that this is a very, very sick market, if you remove yourself from the computer and get out there once in a while.
So unless you plan on renting all your houses to government employees, with "secure jobs" (ha ha ha- tell that to those government employee in America getting laid-off and having pensions slashed today), we can all expect to see a snowball gathering momentum starting about now...this selling season. Renting to government employees might buy you 2 years, at the most, and only if you are lucky. They will pay you rent so you can pay your mortgage on a depreciating asset.
If you dare going further away from your computer, you can have a look at the China miracle, which makes Aussie "lucky," and see it for the farce for what it is. The broader market is about to take a big dump, and you somehow think NZ real estate is immune? What are you smoking? Can I have some?
"
“A fool and his money are soon parted.”- - Thomas TusserReading these posts one senses Nick A is getting more and more desperate that his wacky theories on housing markets are proving more and more silly as time goes by.
All these kind of "closed-loop" theories, completely ignoring demand ... are you some sort of hermit-type mad professor Nick, to come up with this stuff?
Certainly gives me a chuckle though mate :-)
Regards.
CEO's and insiders of publically traded companies are selling their shares as fast as ever. If you are selling yor own company, instead of buying it, what does that say for your confidence in business generally. Does anybody even look at this stuff? Are we somehow immune?
http://www.marketwatch.com/story/insiders-selling-at-unusually-fast-pac…
Aussie sales not healthy! http://www.macrobusiness.com.au/2011/08/new-housing-sales-tank/?source=…
Do you think NZ is immune, given that all our banks are Aussie? Hello?
Think about it for a second...if a bank's reserves are tied to lending on residential property, and said residential property goes down in value, what makes you think that said banks would want to lend on more residential properties? You are watching this happen right now in America.
Banks balance sheets will be decimated, and they will be looking for people to pay-off their loans, not make more loans. That means tighter lending standards. Who will qualify for all these loans required to buy all your houses in NZ, especially at these inflated prices? ...especially if banks need cash, because so many of their loans are going bad? This is already happening, but the mainstream news doesn't talk about it much.
How many buyers can come up with a 20% down payment, much less want to take on the risk in an uncertain job market? 20% down payments will kill the market.
The differences between 2006, the last serious "up" year for real estate, and today are many. Jobs and debt matter more than anything, AND foreign exchange rates- debts of entire countries!!! This wasn't considered a issue in 2006, when "ya can't lose with property, mate!" All of that has changed as the skeletons come out of the closet.
FYI Barfoot figures out today show the average weekly rent in Auckland in July was NZ$417, down for the second month running.
However, it's up NZ$9 or 2.2% from a year ago.
More here
http://www.barfoot.co.nz/Rentals/Stories/July-2011-Rental-Market-Update.aspx
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