By Bernard Hickey
Figures from the Real Estate Institute of New Zealand and Quotable Value showed only modest sales volumes in September despite the arrival of spring, but the figures also showed prices nudged higher nationally, mainly because of strong price growth in central Auckland suburbs and in Christchurch.
The Real Estate Institute of New Zealand (REINZ) says house sales volumes rose just 43 in September from August to 5,235, representing a "modest result" given the increase normally expected in spring.
REINZ said when adjusted for the seasonal pattern expected in spring, sales are about 2.3% weaker. The national median house price fell by NZ$5,000 to NZ$350,000, or -1.4%, in September compared with August and is flat compared with September last year.
Compared with September 2010, September 2011 house sales volumes rose 912, or 21.1%. See our interactive charts on REINZ house sales volumes.
REINZ said Northland recorded the strongest rise in volumes compared to August (+30.0%), with Otago next, (+12.7%), followed by Manawatu/Wanganui (+12.4%). Wellington saw the largest drop in sales (-9.3%), followed by Taranaki (-7.9%) and Waikato/Bay of Plenty (-6.5%).
"Volumes in the Auckland market were just a 1.5% increase over August, which is relatively flat given the seasonal lift usually apparent at this time of year," REINZ said.
Auckland strongest big city
Hawkes Bay prices rose the most (+8.3%), followed by Auckland (+4.9%), Wellington (+4.1%) and Nelson/Marlborough (+1.9%). Compared to September 2010, Auckland recorded the strongest lift in prices (+5.6%), followed by Canterbury/Westland (+4.7%) and Hawkes Bay (+2.2%). See our interactive charts on REINZ median prices.
“The volume data indicates that the New Zealand real estate market is in better shape when compared with this time last year with volumes up over 20% compared to September last year and a continued reduction in the number of days to sell. That improvement is flattening out with a weaker than usual seasonal lift from August volumes. There is clear evidence from across the country that buyers are very focused on value and are well informed about what they can afford and are prepared to pay,” said REINZ Chief Executive Helen O’Sullivan.
“We’re seeing is a very interesting market with listings improving though still reported as tight, plenty of buyer interest but only on a very rational basis – there is no appetite on the part of buyers to overpay or rush to purchase.”
The national median ‘days to sell’ (measuring the number of days from listing date to unconditional date) improved by 2 days from 39 days in August to 37 days in September and is below 43 in September a year ago.
The REINZ Housing Price Index rose 1.7% in September compared with August. The REINZ Housing Price Index recorded increases in all markets during September, with the strongest rises recorded in Christchurch and Auckland. Compared to September 2010 the REINZ Housing Price Index rose 2.7%, and the Index is now 3.0% below the peak recorded in November 2007.
See the full REINZ release with regional breakdowns here.
See the full REINZ tables here.
QV figures
Figures from Quotable Value (QV) for house values, rather than prices, showed a gradual rise in house prices nationally, although it was also driven by price rises in Auckland and Christchurch.
“Nationwide property values have been gradually increasing for the past six months and are now 0.7 percent above the same time last year and 4.6 percent below the market peak of 2007” said Jonno Ingerson, Research Director QV.co.nz.
“Much of the nationwide increase over the past few months can be attributed to Auckland and to a lesser extent Christchurch. Values across the rest of the country have varied” said Ingerson.
“Values in the Auckland area have increased 3.7 percent since January, and are now 3.4 percent above the same time last year. As a result of these recent increases, values are now 0.6 percent above the previous market peak of late 2007” said Ingerson.
“The old Auckland City continues to have the fastest increasing values within the Super City having increased 5.4 percent since January, and 4.6 percent over the past year. Values are now 2.6 percent higher than the 2007 market peak. North Shore has increased 3.0 percent over the past year, Waitakere 2.3 and Manukau 1.9 percent” said Ingerson.
QV's measure looks at house values rather than house prices and looks at how they have changed in the three months to September over the same period a year earlier. It looks at how the house price sold compared to capital values and works out an index comparing the value to a year ago.
See our interactive chart of the QV value indices here.
REINZ's figures are a simple measure of house prices sold and median house prices over that period, which means it can be skewed by the type of house sold and the region it is sold.
Here's how QV describes its methodology with a link to frequently asked questions.
The Property Value Growth uses QV’s House Price Index methodology, which generates a residential index for each area by recognising the sales price of each property sold compared to its capital value. This ensures the index provides a measure of change in property values, without fluctuations caused by higher sales volumes in one or more property sectors (e.g. high volumes of apartment sales or investment properties). Residential sales compiled for the previous 3 months are compared to the same period of the previous year to identify the annual percentage change in property value.
See the full QV report with regional breakdowns here.
ASB Economist Christina Leung said the housing market remained supply-constrained.
Today’s result points to a housing market which is continuing to recover at a very gradual pace. Other housing market reports have also highlighted the continued low level of housing inventory on the market, and it appears this is constraining sales. Nonetheless, the tightness in the housing market is helping to support a recovery in house prices, and we expect further modest price increases over the coming year.
Today’s data have no fresh implications for the RBNZ. While there has been an improvement in household sector conditions in recent months, the continued high level of household debt means that households are likely to remain cautious. With the global outlook continuing to dominate market attention, we expect the RBNZ will leave the OCR on hold until March 2012.
JP Morgan economist Helen Kevans saw house prices rising 3% this year.
Recent signs of stabilization come after a particularly weak 2010, when home values crept lower amid changes to the way property is taxed and weakness in the labour market. We suspect, though, that house prices will rise around 3% in this calendar year, owing mainly to persistent stock shortages. The worsening demand-supply imbalance will continue to put upward pressure on house prices, with gains likely to be dampened only modestly by expectations of higher interest rates, with the RBNZ likely to hike the OCR as soon as conditions stabilize offshore.
See our interactive chart below of the REINZ-RBNZ stratified house price index, which strips out the skewing effects of more houses sold in some price brackets than others.
(Updated with detail, links to full reports, QV details, interactive chart)
House price index
Select chart tabs
67 Comments
Didn't the REINZ note in its last report that the traditional spring selling season appeared to have been forwards so as not to clash with the RWC? If so, aren't we comparing a 21.1% rise in the Sept '11 figures with a non-brought-forward Set '10 lot? So the Spring Bounce Effect, brought forwads, has brought us a.... lower median price.
Interesting to note the lift in Hawkes Bay prices..everyone's heading to the bush...great value down there...i bought a stunning house there last week with everything in it... incl. a lift from the basement garage into the main house..surrounded by lovely trees but close to all things needed.
GV 825K....asking price 775K...paid cash and left an unhappy vendor closing a deal for under 700K...future proofed maintenance- wise...up here it would be over a mill. as it was in Hav.North which is the Remuera/Epsom of H.Bay...
With technology it don't matter where you live...and the cash i paid is now safe from the gathering financial Tsunami heading our way from Europe and the rest of the world...
When the going gets Weimar, the wise get going...when the going gets weird, the weird turn professional.. :-)
From the south of course the Gorge Road is still closed and expected to be for another 2 months. We live just off the Pahiatua Track Road (one of two alternate routes) and hear the transport trucks struggle with the steeper grades. I often wonder whether additional costs of these alternate transport routes are having an effect on the HB local economy.
Ah, but, Jimbo, is that the seller, selling ( before whatever new taxes we get with the 'new Government) or the buyer, buying ahead of....well...an imaginary property prices rise. With Bill English now publically saying 'they' want to discourage property speculation...I'm gonig for 'the sellers, selling... a bit like Rob oTHN's vendor, taking ~$200k off the price to move it on ahead of the Novemeber vote...
Your the dreamer, wheres the boom comming from, borrowing - admittedly rates are low but how long?
Wheres the big income earners comming from to support/maintain this boom; the next generation L.O.L, Lotto or big mineral strike.
NZds in economic dire straits and caught blindingly in the headlights, media continues to paint a rosey picture whilst the a finacial crash looms.
Property at the current prices are unaffordable. Ggovernment well have no choice but to lower land prices through re-zoning to make NZ an attractive place to live.
Major corporates well relocate where there is a future for families, as it is not working under the current ragime. Basicly preserving the rich minority is not a priority.
Holding young working people in the country is cirtical and shelter is a need.
Ones suspects continued falls in the over priced property sector.
http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=10758532
"Nationwide property values have been gradually increasing for the past six months,"
I note that article is all about' values' SK. What is value? Is it aggregate selling price? Or median asking price, or what? Maybe it's CV, that has been moved up to allow the new council to collect more money? But one thing the article does concede is "..Real Estate Institute figures, which showed sales volumes are still struggling, and the recovery slowed in September". Note that, SK...struggling Thats' something a market does before it dies.. Add that to all the cash that the Government will have to collect from...property., to repay all the unfoseen disasters the ecnomy has had, and it looks dim for any 'recovery' in sales volumes.
What do these word mean to you, SK ? ".. we’re trying to shift the incentives in the economy to favour savings and investment, and returns from working, and to penalise excessive consumption and property speculation," . It's not me an my opinions you have to fear, it's the words and coming deeds of...Bill English. And in few weeks time, National, will be the least of property investors problems. Imagine if another party squeaks in; they'll be harder on property. I doubt they will, but National told you, in this quote from yesterday, what will happen....
So the alternative squeaking in is Labour who want a CGT....I cant see in terms fo effect the difference between Labour and National, both will hit on "property speculation".....not that Labour has a hope in hell IMHO...and neither have a clue what to do about the coming Depression or Peak oil......
regards
These words mean that govt is going to increase the costs of home ownership while doing nothing about the lack of supply in Auckland (refer new Auckland Plan). I already know you don't believe in supply/demand so don't bother. This will put even more upwards pressure on prices and rents as there will be even less built.
Since those depreciation rules came in rents in my areas are up over 10% - before the effects have even hit the bottom line.
Forget supply/damand arguement, as you say. Just answer me this:
Where is the money going to come from to (1) pay higher rents, with other CPI items rsing about our ears and wages /employment stagnant at best and (2) debt money going to come from to 'push up prices' with a consumer unwilling to take on debt at the rate of the past 'just in case things get tough' ( NB: a slowdown in the rate debt take-up is actually a fall in debt issuance. The property market needs debt level to increase contunuously for the new buyer to pay the old buyer out, and give them a profit. When this stop, prices fal; and the Government is telling us,; me you and everyone, that debt levels are too highl)
(1) less money for other things and/or overcrowing just like every other city which has more people than houses.
(2) for starters more rent = more return = more house price.
I agree there's too much debt and prices high, however disagree that making houses more expensive will make them cheaper.
Yes, bob, NZ will re-densify. But here's what happens: there are currenlty 4.5 mio of us @ 2.53 per household = 1,778,000 dwellings. So if we buddy up, one way or another, by say just another 0.25, another one extra person for every 4 houses, ( 2.78 ratio) we only need 1,618,000 dwellings. What happens to the surplus 160,000 houses that are now empty? Immigratiuon was always seen as the saviour. But with unemployment looking nasty, and emmigration to Aussie, looking nasty...the only thing those 'empties' can do is drop their rents to attract tenants back from the fuller houses. Until such time as rents stabilise at lower levels, the ratio will remain 'up' at 2.78 ( and that, by international standards, as you infer...is not high!)
The 160,000 empty dwellings are in places like Ohura. The houses crowding up with extra people are in Auckland. The extra .25 person per house you mention means the rent can increase by 33% before they need to cram more folks in or divert spendingfrom elsewhere. That's how rents can increase without wages going up - quality of housing goes down.
It doesn't actually matter 'where they are' but who owns them. Have a look closer than Ohura, say north of Auckland, and see how many properties are on the market there. If they can't sell them empty or otherwise ( and much is just bare land), and can't get the cash, then they will sell.. their Auckland properties, if they will move better. The 'investment' dollar went where it was cheapest towards the end, and now it's needed back. Look at Rodney etc. and see what a glut there is on the market. That will feed thought to all centres, especially Auckland, where 'investors' paid far to much, out of town.
PS: Auckland is ,what, 1.250,000 of us? @ 2.53 going to 2.78 gives, just Auckland, a surplus of 44,000 empty properties. That's enough to get landlodrs with a mortgage to service and no income desperate enough to get a tenant by... dropping rents? And yes, they will be dispersed across the city. But the less spread out the surplus properties are, the more attractive it is to travel to work. And the more people go to individually cheaper rent ( more people per unit), the more properties are left empty, especially at the top end; again forcing a rents drop. Better quality for 'less' rent.
I live in a city with a University. There are many students here now who stay at home while studying......every 3 who stay at home is one less property demanded. The same is also happening with kids who leave school and go to work (or on the UB), they are staying at home much longer than they used to. It all adds up.
My bank account actually, bob. As I have posted many times here, my rent has fallen $50 per week since we came off '12 month fixed' in January, and that was because the complex manager didn't want to lose us, as it took him 8 weeks to rent out the mirror apartment of ours for the same as we now pay. Now re density. That apartment had an Aussie couple in it; then two couples and a singleton ..and now, just re-rented ( after a lesser 3 weeks free this time!) there are three couples in there ( I'm glad we're moving soon!). So that 3 bedroom apatment has gone from...2 people to 6 people in the space of 22 months and is rented at nearly 8% less.... But, of course, that may be an isolated example :)
Likewise, SK. But the difference being that the worst that will happen to me if my opninion is wrong is.... I will have been wrong. The worst that will happen you is that you likely lose all you have. It's a risk/benefit world that we are in at the moment SK, and if you see benefit in an asset that has barely moved in 4 years, that is 'supposed' to be up 50% or more by now, well you view of risk and benefit differently is to mine.
So, the property prices are on the rise. The Government's threats are just that, as there are no viable investment alternatives. As to the risk, if inflation takes off your cash will turn into nothing whereas owning property will, at least to an extent, help with countering the inflation effects.
Ultimately and in view of so many unknowns, one would be wise to diversify. (Nothing new in this really...)
Sadly, Alex, it's just about out of our Government's hands. The ratings agencies have put a shot across the country's bow; 'reform your ways or suffer more downgrades, and the accompanying reduced access to debt at a viable cost' Do we have to wait until our borrowing rates go to 100%, like Greece's, before ' we get it?' And cash may loose it value, but try paying off a mortgage at 100% p.a. ! It was tough enough, last time we had stagflation, at 22% p.a....
They are still there, Kate, caught in a property time warp of the past, often from the UK, and played on Sky on channels like Living or the Box, at time-filler spot, and with overiders like " Note: Theses prices are as at August 2006" etc. And you look at the poor saps who, with hope in their eyes were buying 'because it only goes up from here' and wonder how, or if, they financially made it to today.
Just goes to show you how the media twist the truth to suit their agenda ( and this site is no different) .
This is how the same story as reported on "Stuff".
What a difference in attitude- I know which one I believe- and the facts, when you read them, prove it.
"September property sales up 21 per cent
JAZIAL CROSSLEY
The property market rebounded strongly in September from a year ago, but the usual spring lift failed to materialise with just 43 more houses sold than in August.
The number of properties sold across New Zealand last month was up 21.1 per cent from September 2010, with the latest figures from the Real Estate Institute of New Zealand showing 5,235 unconditional sales were written in September.
The median house price of $350,000 weakened 1.4 per cent, or $5,000, from August.
However, house prices were increasing from the low levels they sank to during the recession, with fresh data from QV showing property values were back to only 4.6 per cent below the 2007 market peak."
Link
http://www.stuff.co.nz/business/money/5774002/September-property-sales-up-21-per-cent
I love these property-related articles on this site now. Nick A is getting shriller by the day as he tries to justify his collapse theories.
Nick... you are responding to anything and everything now. It's sounding desperate.
My iron law of property markets is that the more Nick A posts about coming property collapses the healthier the property market is.
So far the theory is 100% correct. :-)
I certainly do buy steven.
And you will also be pleased to know that I too think cash is king and my rents have risen to the tune of 6-9% in the last 12 months (varies for all properties of course) so not only am I getting the properties I am increasing the cash as well.
More property and more cash...can't be a bad thing can it.
Your landlord used "healthy and "property market" in the same sentence....
Good material for the Daily Show!
I like this Q&A forum for landlords... the lead question is quite typical ... along the lines of 'hey I just sold my rental property for less than I bought it for...."
http://www.landlords.co.nz/ask-an-expert-full.php?askanexpert_category_id=5
Yes, many of them do - I mean, who needs an accountant when you've got a mate at the pub telling you how to "do it" - and a willing mortgage broker ready to take a promise on the equity in Mum's home as a waiver of the deposit requirements.... and hey, bingo.... you're a landlord!
As long as we can get cheap credit from offshore, the price of property will not come down. The Banks here know that a 20%+ drop in property prices will hit them hard and will try their best to keep the prices at current levels. I think the European meltdown will have a huge effect this time. No more cheap credit from offshore.
Good thoughts, but you haven't included a time variable.
Short term comment.
Global liquidity is tightening right now, which in 2008 resulted in a strengthening USD to the expense of asset classses and commodity dollars (Canada, Australia, Brazil, NZ). This will undermine house prices.
Long term comment.
Stabilisation in this context means economic stagnation. Stagnation that lasts for long has historically caused social unrest and political problems as people look for someone to blame.
Would be good to know the views of the bulls (BigDaddy etc) on the wider economic issues and their possible impact on house prices
The bulls must surely concede that there is a reasonable chance ( I would say at least 50%) that the world is going to fall back into recession, that this would pull NZ down driving unemployment up and house prices inevitably down.
the bulls seem to be confidently (I think the confidence is misplaced) assuming that the economic situation (local and global) has stabilised and will improve
Would love to know thoughts of SK, BigDaddy etc on this
Macrobusiness 'Under Attack' ...
Started out wanting to quote from H&H.... something like;
" Its bulls and bullies have no respect for sanity or the truth. They simply want to make more money by creating ever greater numbers of greater fools"
Thought better of it though, hence the odd placement of the "Under Attack" link.
Tell me Nicholas, is this number of sales even statistically relevant (e.g 5235 sales out of '1,618,000 dwellings' (your figure)). I see why it is used, but it just seems like statistical noise. Price Up/Price down on such small samples(0.3%...?). Odd game...
QV suggest the national average housing price is down 4.7% from the 2007 peak.
According to the Reserve Bank accumulated CPI for the period starting Q1 2008 until Q2 2011 was 10.8%.
So the average house value, in real terms, is down something like 15.5%.
Individual results will vary. It's significant for any investment class to slump 15.5% backwards, but it's not as bad as some countries who had 30-40+% slumps in their housing prce alone.
It seems odd that in a roughly flat national market you would highlight the regions where prices have increased the most relative to the national median - Hawkes Bay, Auckland, Wellington, Nelson/Marlborough... and yet say nothing about prices that fell the most.
You can hardly have notable above-mean activity witout there being notable below-mean activity somewhere else. We have to go the source document to find ths out...
Southland -13.6%
Central Otago Lakes -11.5%
Waikato/BoP/Gisborne -6.1%
Otago -4.7%
Northland -4.6%
Canterbury/Westland -4.2%
Taranako -3.0%
How about some analysis Bernard? What's going on here?
In 2007, Ireland had the lowest gov't debt in the EU. What killed them was the private debt, as this chart shows: http://www.nytimes.com/interactive/2011/09/23/business/economy/Why-Some…
The parallels between Ireland and New Zealand are compelling for anyone looking for the true picture of this nation's balance sheet. Our house prices have held up because the Australian market bubble remained inflated. The Australian economy was able to do that because of commodities exports to fuel that other great mother of all bubbles.... China. But the music is about to stop; for China, Australia, and us.
Actually I think Ireland and Iceland had no Govn debt....they were regarded as "perfect" models by the ratings agencies because of their right wing agenda....look how that flopped.
The OZ house prices held up in no small part due to the first home buyer sudsidy if you follow Steve Keen... Since China's demand is still hig h for ores, yet the market is soft maybe mineraqls is not the biggest driver, maybe house porking was...
Im hoping our let down aka Ireland wont be so bad, certainly our RB and in turn our banks are not as naked as the Irish ones.....but still....
regards
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