By Bernard Hickey
Barfoot and Thompson, Auckland's largest real estate agency chain, has reported selling 994 houses in June, the highest sold in a June since 2007. The average price hit a record high and was up 13% from a year earlier, with the average price in the central suburbs of Ponsonby, Herne Bay, Grey Lynn, Epsom, Mt Eden, Remuera and Parnell rising 22% to NZ$705,850.
The volumes sold were down 15% from 1,165 sold in May, but up 13.8% from June a year earlier.
But Barfoot and Thompson said it had total listings on its books of 4,078 at the end of June, which was the lowest level in 7 years. This represents just 19 weeks of inventory and is close to inventory levels seen during the housing boom from 2003-08.
The average price achieved in June was a record high NZ$589,251, which was up 1.2% from May and up 13% from June a year ago. This was also 8.5% above the average price seen for all of 2011.
“While the market is active and prices are at an all-time high, properties that are selling way in excess of CV remain the exception," said Barfoot and Thompson CEO Wendy Alexander.
“For most properties, prices are edging up, and the average sales price in June was 3.2% above the average price in March, which is a modest increase over the three months given the tight supply of properties," Alexander said.
“Buyers are measured as to what they are prepared to pay, even though mortgage rates are low and the banks’ mortgage lending criteria are competitive," she said.
“What has changed is an increase in the number of buyers, and they are creating a demand that was not there 12 to 18 months ago. This increase is coming from a combination of people moving from renting to buying and growth in Auckland’s population. At the end of June we had 19.5% fewer properties on our books than in June last year and 14.4% less than at the start of the year.," she said.
“Demand is outstripping the availability of property.”
The average price in the Central Suburbs area rose 22% to NZ$705,850 from June a year earlier. The average price in the 12 months to June on 1,973 sales in the central suburbs was NZ$674,513, up 11% from the previous year. Eastern Suburbs prices actually fell to an average NZ$791,872 from NZ$797,862 in June a year earlier, while the average North Shore price rose 12.8% to NZ$637,571.
Average prices were flat to lower in Central Auckland (mostly apartments), Franklin/Manukau and Rodney. Prices rose in Pakuranga/Howick, South Auckland and West Auckland.
See all prices and volumes by Auckland area here at Barfoot and Thompson.
Barfoot Auckland
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48 Comments
House prices are underpinned by population growth (80% net from offshore). Population growth is Government poicy .
http://www.stuff.co.nz/business/money/4622459/Government-policies-blamed-for-house-prices
Renters the most unhappy, according to the Sydney Morning Herald
http://news.domain.com.au/domain/blogs/talking-property/homes-dont-buy-…
"What we found was that people who rent tend to be people who have lower levels of mental health and that they were poorer and had higher levels of disability to start with."
"We found that homeowners were the tenure type with the highest mental health scores, followed by private renters," said Baker. "Renting in itself does not make people unhappy ... but higher proportions of unhappy people end up renting because of their circumstances."
Can't really blame people in their pursuit of happiness - to go buy themselves a house.
wonder if the next generation will do to the same to the current landholders as the Pioneers did to the real Tangata Whenua... just a thought...
But that's right MB, you had to work 8 jobs while living in a shoebox in the middle of the road and cleaning Auckland streets with your tounge to get where you did, didn't you? Bloody illiterate and lazy gen Xers and Yers...
Never fear, I have redeemed myself and bought a house in Brissy.. moving next month. I am safe for now.
Brissy isn't in a hype like Auckland.. and for a mid $500k house with 487 sqm land 3.5km from CBD - my council rates is only $1200/year.. Try that in Auckland !!!! and now Len is putting in his trainset - it'll be even more.
CTNZ - I'm pretty sure the banks do not hold the titles. My understanding is that the titles/mortgage is actually bundled with others and sold into a trust etc. The banks collect the interest and I'm not sure how the other lot get paid.
I believe that it has been common in NZ for people to think that this mortgage bundling (as it was called in the USA) didn't happen here. However I asked pretty direct questions at one of my banks who is part of the big four, about this and was told yes they are onsold. I immediately inquired as to how I could purchase them as I felt it could offer a lot of extra security over any mortgage I might take out.
Maybe Bernard and his team should investigate this for a future article.
Ctnz - I think your correct on the name on the title. It is the security over the title that is sold.
If people can purchase what the trusts are purchasing from the banks then technically and legally you would own the security which could be highly advantageous in certain circumstances.
I'm sorry I haven't worded the above very well. Not many people seem to know about this and so it is not spoken about very much.
I agree fully with you that people are under the illusion of ownership and if banks get into any kind of difficulty they can demand full payment on anyone's mortgage at any time. This was practiced in the 1980's when the proverbial hit the fan. However if one happens to own that security the banks won't/can't call it up.
Lol I did both now just rent but have interests in a few properties scattered around the country, residential and commercial, so when property goes up its great for me because my interests increase in value on paper, I just have no ambition on owning an overpriced shack. I know value when I see it.
Another bubble, another bank failure?
Who can tell, but depositors are now charged with the responsibilty of monitoring their banks' liquidity status in preparation for the eventual introduction of OBR.
How does one do this? Especially when the RBNZ undertakes the rare action of overnight injections of $256 million cash at penalty rates (ORRF, details section 2.8) with one or possibly more anonomous counterparty banks.
It's time transparency was the feature of these central bank actions so we really can be aware which institutions are handling their daily affairs in an orderly manner. Creditor's funds are at risk, so the RBNZ tells us.
Don't forget about the deficit in depositors funds due to covered bonds. The average bank deposit holder wouldn't know an OBR or covered bond, from thier left elbow.
And neither should they be expected to, bank deposits are viewed as a no fail safe haven by most depositors.
Which is why I think the OBR is politically undoable, as most depositors are also voters.
Lunacy. In 2001, I was staying in a place that sounds identical to this one which reached 275K at auction. Inflation adjusted that is 365K. Auckland is not that much bigger today and people don't earn more in real terms. This is an irrational exuberance bubble fueled by cheap credit and baby boomers looking for what they think is a safe haven.
Latest QV top 22 (on average house value):
1 Herne Bay $1,815,278
2 St Marys Bay $1,457,722
3 Parnell $1,320,056
4 Epsom $1,137,833
5 Stanley Point $1,101,944
6 Remuera $1,075,444
7 Takapuna $1,071,333
8 Mission Bay $1,051,556
9 Devonport $1,014,167
10 Ponsonby $970,722
11 Mt Eden $964,389
12 St Heliers $950,000
13 Freemans Bay $946,111
14 Westmere $942,889
15 Kohimarama $939,611
16 Cambells Bay $936,889
17 Omaha $888,222
18 Castor Bay $880,333
19 Grey Lynn $868,667
20 Glendowie $862,111
21 Orakei $838,944
22 Mellons Bay $816,167
I tend to agree that this is a fools rally. A slight swing upwards would have made sense, this is getting illogical and silly again.
There is nothing fundamentally strong in the Akld economy to support this.
Wasn't it the king spruiker Olly himself a few months ago who said that this little boom had the risk of turning into a bust?
As long as one can afford the mortgage and have a life.
Bearing in mind:
- People are holding of selling; hoping the the fragile economy stops contracting and credit crunch debt issue resolves itself.
- Generation Y X or what ever? can not afford the current prices with student debt and current income levels.
- A real risk you will loose money.
- Know that there are less high maintenance investments with better and safer returns.
- Natural disasters.are onthe increase.
- Renting is good - less hassels and risk, more flexible to lifestyle - hey and where just passing through this life anyway.
C'mon I just wanna see how far this inner Auckland "ponzi scheme" can keep going ...let the prices rise ! I say the faster and higher the better ......as we all know the higher they go, the further they have to fall.... anyway there are far more important things happening in the werld than the price of Auckland houses... cue NZ Herald and the poodle media, yes we all know your advertising revenue relies heavily on property ... so gotta keep the ponzi scheme going.... hahahahahahaha ... that's the sound of the bwankers laffing all the way to bwank ...
This price spike is actually quite simple to explain/understand. There is a slight but material imbalance between supply and demand because:
- the buyers are those that (for general 'life' reasons) are trying to buy an Auckland house for the first time or because personal circumstances dictate (i.e. having more childen etc). As the article says, they are mostly first home buyers or migrants from other cities/countries. For these people the low interest rates make it a natural time to buy
- on the other hand, the vast bulk of existing property owners are generally nervous about the fickle and uncertain economic conditions and do not see this as a time to upsize (and take on increased debt). Consequently, they are staying put rather than looking to sell and re-buy like they might have done in the past before the GFC. I think this is an entirely rational decision.
In turn this means that any houses that do get put up for sale attract a modest premium. This is likely to prevail until the supply imbalance evens itself out. This might be when either:
- prices rise sufficiently that existing owners overlook the economic uncertainty and list their property anyway; or
- the economic conditions stablise; or
- the deleveraging phase is complete.
Jandel some good observations. But please explain how a first time home buyer can buy into an Auckland housing market when the median price is well over 500k? It's a given that some first home buyers can afford this, but when the average family income is a notch above 70 k in the big smoke, how are they the majority? My suspicion it's wannabe property investors hoping to make a killing in rent money from desperate renters because of the present Auckland housing shortage.
God knows how they can afford that median price mandalay!
I was only going off what was stated in the above article:
"This increase (in sales) is coming from a combination of people moving from renting to buying and growth in Auckland’s population"
Given that by definition 50% of the sales occur below the median price perhaps the bulk of these below the median price are first home buyers (or others than for other reasons may have been renting temporarily) and the remaining 50% above the median price are more likely to be migrants?
Just a thought.
On a income/property-price ratio like that I wouldn't touch property, not with the world economy looking as volatile as it is at the moment.
A good thought indeed and I agree in part (MHO of course) but I still think a big chunk are novice PIs leveraging themselves to breaking point, who think they can make a whole bunch of easy cash from desperate renters in Auckland/Christchurch and then make huge capital gains in the short to medium term. While this in itself has it's own ethical concerns, I must agree with BigDaddy's comment above (heaven forbid) that this insane buying has the potential of turning to custard for a whole lot of people...
I think a lot of the people who are jumping into the market now are in one of three groups:
- Cahsed-up immigrants (mainly mainland Chinese) who have insanely cheap lines of credit available to them.
- First home buyers who missed out on the '01-'08 boom or who are just coming into the market, who can't remember the last time property went down any appreciable amount. The pathetically small dip we've been through '08-'11 which erased maybe 12 months worth of the '01-'08 gain nationwide, they see as "the worst that could happen" and are finally entering the market after delaying for a few years to see how low prices would go. These people are convinced to a fault that the next boom is taking off and that we're entering another decade of 10%+ growth.
- People who were in their first/family home during the last boom and made a bunch of equity in that period. Having seen that the correction '08-'11 wasn't any more than a flattening-out, they're bullish in that it's haymaking time again and want to buy-buy-buy and leverege themselves up significantly to allow them to cash-in on another prolonged round of gains.
The first group will dry up overnight when the forthcoming global shitstorm hits and the other two groups will do very very nicely until the supply of new entrants into the ponzi scheme fails to meet demand, or interest rates creep up even slightly.
If any of those things happen, it's going to get very ugly, very fast.
We're at a point we used to see in the cartoons. Wyle E. Coyote has run off the cliff and is slowing down. He's still okay until he looks down, but when he inevitably does so, he'll stall, hold up a "HELP" sign and plummet to the desert floor. I just hope that when he does hold up the "HELP" sign, the government doesn't step in to bail out the greedy "Mum and Dad" speculators.
Well NZ is certainly bucking the world housing trend. Looks like the Bulls are in this market.
Any investor of ANY property should do the basics in valuation themselves. This includes those buying a home to live in. Housing/Land valuations are based on what people can afford to pay. Which is an absolutely stupid way of valuing them.
1. Cost to build per square metre.
2. Rent income achievable in the same location and building type- should be a surplus over all costs including any up-front capital/deposit. I certainly would want a consistent return on any capital input I made as otherwise it is dead money.
It is the increase in land-value that is being paid that is the most concerning.
I would suggest some people take up sport to alleviate their competitive bidding-up tendencies.
Housing is just like any other form of stock. There are low-end and high-end products across all stock types. Many people put more time into selecting their appliances than buying their homes.
Housing affordability information only really tells one thing and that is: How much income a household is "prepared" to sacrafice to own a house. Standard of living is obviously not factored into the bigger picture. I don't want to hear anyone complaining of cold, damp, leaky, uninsulated, high rates, bad builders, overcrowded and cramped homes ever again.
Maybe the industry is best left to the professional property investors at least they will do their figures on a property because they sure don't want to pay too much for it ;-]
and yet ... haaaaaa ... Mammoth Lakes Land Acquisition versus Mammoth Lakes municipality ... and the municipality files for bankruptcy over $43 million ... deja vu ... this saga is identical to the Robbins Corporation versus Devonport Borough Council (Auckland) over Ngataringa Bay development in the 1970's except Devonport didnt file for bankruptcy .. details exactly the same
At end of this month, me too in Los Angeles. Have green card (am dual res), so currently making sure tax and credit records will qualify me for 15 years fixed at 2.95%. AND GET THIS... Upon asking CitiBank what happens if rates go down even further. They said standard arrangement now is for the bank to cover the difference. Just beautiful.
Having said all this. I really wish I could buy here in AKL, but just can't. Everything is wrong about it right now. It's a SELL or HOLD, but only BUY of you got big silly brass balls.
The extraordinary persistence of loose monetary policy is largely the result of insufficient action by governments in addressing structural problems. Simply put: central banks are being cornered into prolonging monetary stimulus as governments drag their feet and adjustment is delayed. BIS
Got to love the way BIS lays the blame directly on politicians and hence voters. But that is probably a just conclusion - not a single seller is complaining about higher Auckland property prices, even those not selling. Just as I never complain when the NZD/USD breaks above 0.8000. Higher is better - right?
There is no inflation overall, core is 2%...everything looks like dis-inflation and deflation. I wonder what % is mortgages in Auckland or are monied ppl using cash.....
I think the term that springs to mind is nero fiddling while rome burns....sure some nice areas are doing well...everywhere else looks at best flat.
regards
Posters should be reminded that rising prices and rising rents were predicted months ago by Olly Newland. He correctly warned that tax disincentives and direct attacks by the Reserve Bank and the Government on property investors would result in rental shortages. This has come to
Pass and have made a big contribution to the present over heating of the market. Every action had a reaction and we are seeing the reaction right now. Reversing the tax disincentives might be one flip flop worth doing.
You are wrong on the tax reversals, it doesnt not make sense. Here in Wellington ppl I know are getting no higher rents. Rental shortages from the tax changes in so short a time would suggest PIs selling out, cant say we have seen that? Something more short term...say from the Chch EQ as ppl "run" ppl with thier money....Auckland would seem a logical choice...or ppl buying thinking there will be inflation so a flight to safety....
regards
Auckland Is leading the charge and many other centers are following. The Auckland paradox will spread and it's only a matter of time before the same mania will be wide spread. It would be best to take gentle action now by flip flopping failed policies and thereby slowing down excessive price rises. One thing is for sure. House prices are going to continue to rise steadily . It is only a matter of moderating rises from frantic to reasonable.
Was at Barfoots' auction yesterday to (maybe) bid on the Quattro apartment, which was passed in at 600k due to reserve not being reached. Might have sold by now. Can report lots of people there, and interestingly, not as many Asians as has been the case recently. With the clapping and all, these auctions are a funny thing, almost as if the 'lucky' purchaser is there to give all us a show or something. Call me selfish, but when dealing with sums as large as this I have ZERO INTEREST in wowing the crowd, which helps the agent, which helps the vendor, and all I end up doing is paying too much. So I stop dead in my tracks when the environment is like this. And when the agent realises this is the sort of mark they are dealing with, they seem almost put out.
These affairs are reminding me more and more of a casino, and yesterday the staff there overseeing things seemed to morph into the same 'look' that the hard ex-mob guys do who typically stand around behind the dealers in Las Vegas.
I don't know what to do... In some ways I feel like I might be missing out, but I instinctively cannot put myself in position (knowingly), where I am allowing any advantage I have by being the cashed-up buyer to be eliminated. So I HATE AUCTIONS!
That they are the standard gatekeeper for anything half attractive in NZ/AKL is a big turn-off. Is it just me?
Yep, it's theatre. A sort of reality tv without the cameras rolling. Don't blame you for not wanting to become the object of everyone elses amusement. If we have ever been interested in bidding on a property going to auction - we always 'attend' as a telephone bidder.
"I don't know what to do... In some ways I feel like I might be missing out, but I instinctively cannot put myself in position (knowingly), where I am allowing any advantage I have by being the cashed-up buyer to be eliminated. So I HATE AUCTIONS!"
The whole market is like this at the moment. In trying to buy my first home between October '11 and March '12, despite being a buyer with a LARGE deposit and easy finance, no house to sell etc, yet I was competing against every tom, dick and harry fresh from having no deposit other than a government tick from being in Kiwisaver and a bank drooling at the prospect of lending someone 95+% and locking them in for 30 years.
So I quit.
A TALE OF TWO CITIES...
Well actually several countries, but I liked the title.
Can never happen here of course.
We is all way to clever.
A must read. A must invest, a cautionery tale......Of Two Cities...
Well three Countries....and greed ...and and...and....basically a scam...a ponzi...a real....investment.
Cos houses only go up.......
http://www.housepricecrash.co.uk/newsblog/
http://news.bbc.co.uk/2/shared/spl/hi/in_depth/uk_house_prices/regions/html/region4.stm
http://www.bbc.co.uk/news/magazine-17390729
Personally you can keep Awkland....but who am I to judge.
Howdy Quattro.....cashed up front...or borrowed to the hilt....or leveraged to the max.
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