An "abnormally high number" of sales above NZ$1 million has seen the average sales price for houses in the Auckland market reach $645,928 in March, according to Auckland's biggest real estate company Barfoot & Thompson.
“This is our highest ever average price and exceeds last month’s average price by 6.9%, and the previous highest average price of $627,721 achieved in November last year by 2.9%,” said Peter Thompson, managing director of Barfoot & Thompson. Barfoot & Thompson accounts for about 40% of the houses sold in Auckland.
In addition, the company sold the most houses in a month for nearly 10 years - going back to the last big housing boom. It also sold the most million dollar-plus houses ever in a month.
The latest figures will add to worries about the increasingly overheated nature of the Auckland market, which is pushing up national prices and causing the Reserve Bank to become concerned about potential inflationary impacts.
Westpac senior economist Michael Gordon says his bank is forecasting a 9% rise in nationwide house prices this year, followed by a 4% rise next year.
"Notably, the RBNZ's house price forecasts are now not too dissimilar from our own. The main point of difference is that the RBNZ expects the knock-on effects from house prices to household spending and inflation pressures to be more muted compared to past cycles. We're not convinced that this time will be different, and we maintain our view that higher interest rates will be warranted by the end of this year."
The situation is being fuelled by an acknowledged shortage of new housing in Auckland.
The latest Barfoot & Thompson figures show that supply of houses is barely meeting demand. The company said that it had 1476 new listings in March - but there were 1430 sold. And many of these were in the higher price bracket.
“While we expected to see a major lift in the average price between February and March, as it is a trend evident in our sales statistics since 2010, the most critical factor in the price increase was undoubtedly the number of homes that sold for in excess of $1 million," Thompson said.
“186, or 13% of all our sales, were for more than NZ$1 million, whereas the percentage last year was 8.5% of sales.
“This is the highest number of sales in excess of NZ$1 million we have ever sold in a month, with the highest concentration of sales being in the eastern and central Auckland areas, and along the North Shore beach suburbs.
“A higher-than-normal number of sales at the top end of the market does have a significant impact on the average price, and the same influence was felt when our previous highest average price was established in November, when we sold 146 homes for more than NZ$1 million."
Thompson said the company had “"an exceptional month’s trading in March".
“While there was a great deal of focus on top-end homes, market activity was also strong in the under NZ$500,000 price category where we sold a total of 550 homes, making up 38.5% of total sales.
“New listings during March at 1476 were solid, but down 15.8% on those in February and down 4% on those for last March.
“The level of new listings combined with high March sales saw available listings at month end at 3721, down 6.7% on those at the end of February and down 22% on those last March.
“It is the second lowest number of listings at a month’s end for more than a decade, and is yet another sign of the acute shortage of property available for sale in Auckland.”
58 Comments
So when the DBH report shows that intensification is what provides affordable housing http://www.dbh.govt.nz/UserFiles/File/Publications/Sector/pdf/residential-land-available-in-auckland-report.pdf the sooner the Unitary Plan is Operative the better.
So why does the government want to delay it for 2 extra years?
I went to a Unitary Plan meeting last night. Based on what I saw it's ill-conceived. Looks like Len Brown took a top down approach and told the planners to find a place to put people.
Plans for development in my area seem to have been made with no regards to infrastructure, amenities, visual pollution etc. I along with many others in my area will lobby long and hard to keep this poorly drafted plan from becoming operative.
The meeting questioned the Planners over a number of items. They were unable to articulate how the plan had taken account of impacts on people, property, infrastructure and environment. They were also unable to relate how the plan met the tenets of good planning e.g. height graduations away from areas of visual interest.
You can understand how people become emotive when lifetime savings and lifestyles are under threat. 16.5m apartment blocks on the Kohi flats, with an extra 2m for lift shafts. That will do nothing for adjoining property light, views, parking, stormwater loadings. Design protocols not being established until September, yet 31 May is the submission date.... and the purpose is to intesify, yet the Planners couldnt even tell us how many more people will be housed.
The overall sense is that Len Brown is putting existing ratepayers on the ropes to satisfy new future ratepayers with an ill conceived plan based on ideology. At the very least we need time to challenge this plan and that will take time. I very much oppose early adoption of this plan, it's undemocratic to rush this through when the affected people seem to only just be waking up to what's proposed.
"an ill conceived plan based on ideology". We know from the report above that the vast majority of affordable housing comes through intensification. It's hardly ideology. It's what happens as reported by DBH.
Waking up to what's proposed? Would help to read it first. NZ Herald headlines are not very informative.
that's more like it - specifics.
By Kohi flats I assume you mean the area facing Kohi Beach Apartment/Terrace zone between Kohi and Sage roads?
When I look at this area it already has 4 through to 16 level buildings. Looks like Res 7 zone in existing plan. Therefore existing height limit is 10 to 12.5m with no limit on number of stories. It has light around zoning. 12.5 easy takes 4 levels under existing rules.
The new Terrace /Apartment zoning has a 14.5m limit (not 16.5) and 4 stories max.
It has the pre 1944 buildings protection that doesn't currently exist. It has setbacks as opposed to the light around (which would tend to make buildings further from side boundaries).
It has a rules that make for nicer apartments (like 2.7m min stud). It makes apartment RD activity so has to be assesed (unlike a Res 7 complying development which council have no control over design).
Stormwater loadings? - the impervious area rules are similar to existing also.
In reality it's not that much different to existing zoning. it would be harder to develop under new rules. To say "lifetime savings and lifestyles are under threat" is way over the top.
Again we see the disconnect between Len Brown's vision and reality. Ordering people to stay closer together and stacked on top of each other does not mean they will follow....after all Aucklanders are People and not Sheeps......The Unitary Plan should be a plan until it's acceptance by Aucklanders....After all we are suppose to be a Democracy...otherwise it is no different from China where the Goverment decides everything.
Meanwhile the shortage caused by Auckland Council lack of interest and action the past few years, and the Left wing parties own ideological fixation is strangling Aucklanders hope of affordable housing.....Everytime I think of South Aucklanders living in containers my heart weeps and my head rages at Len Brown's hypocrisy.
The area most affected is six properties deep fromTamaki Drive back through to Melanesia Rd. The Tamaki Drive facing properties are currently zoned 7a. The next two sets of properties are 6b, followed by three properties deep zoned 6a. The vast bulk of properties in the area are no more than two storey. Either the effective rules don't allow any more or there is no demand for more height. If there is no demand, then why change? If two storeys is all you can build now, then four storeys is a big change. It is DOUBLE what's there now.
Reading the current rules, it looks like zones 6 and 7 are restricted to heights of 10 and 12.5 metres, with an extra metre for aerials. Zones 5~7 must currently have a building coverage of no more than 35% and landscaped area of no less than 40%.
If the plan goes ahead, these will all be zoned for Apartments and Townhouses. Maximum heights will go to 14.5 metres. You are correct, I erred in relying on what the Planners said. Building coverage can go to 40% and landscaped area reduces to 35%
There also appear to be changes to outdoor living area requirements.
My take on this is that is something to be very much concerned about. The area in question is typically occupied by retired people. They often can't afford to move, and will suffer if their units have 4 storey buildings next to them. Mind you it could be worse. They could be next to the Reserve and classified SEA. Some are losing up to 50% of their property with regards to flexibility of use.
These areas are affected - but probably not because they'll get apartments. Any development in the Terrace/Apartment zone (like an alteration to an existing house) is a Discretionary or Restricted Discretionary Activity. So if you want to alter your house you'll need a serious Resource Consent which Council could probably decline if they want to force apartments to be built. This should be a concern to residents.
Realistically no apartments will happen here for decades (so not really a concern for the elderly) and if it does their property values should boom. The Terrace/Apartment zone has a rule that requires:
1. A site must be at least 25m wide:
a. at the road boundary
b. for at least 80 per cent of the length of its side boundaries
where a building of up to four storeys is proposed.
The sites in the area you note have 18m frontages. Most are subdivided down further. To develop amalgamation of multiple sites (cooperation of multiple owners in the Eastern suburbs!!) would be required. Council can't force that so nothing much will happen in this zone.
Bob, really like your informative responses but one thing that Auckland Council doesn't address in affordable housing is how they charge for their fees, it's nothing short of extortion! Here in Brisbane and I'm about to start our house extension, 62 sqm and the fee was $1440. Back in auckland Auckland Council was going to charge me roughly $7000 for a carport!
The fee I am paying in Brisbane included inpsections. Because I am building within the council rules for the area, I only need to appy my permit via a building certifier, hence they have lower overhead than the entire council. Now this is a model Auckland council should revisit!
Exactly, have you been to the Council Office (Graham street)? Back in 2011, I came in 3 times for our carport permit and I got 3 different answers.
At the end I was told that didn't need a building permit (Building Acts, Schedule1) from a friend who was working at another council !
Probably true. Council seem keen on best results therefore intensification. The Government wants votes therefore want sprawl. With sprawl they know that house prices will keep going up (Which they can say isn't their fault) and there's less NIMBYs to upset. Sprawl is wins all round for the Government and loss to those wanting affordable housing.
Almost , Starfish1...Auckland Council is raising the rates based on Land value appreciation... there is a per sqr mt formula, though getting that out of them for the coming August 13 assessments is darn near impossible.
Just went through the process with them for the last 5 years where I had been overcharged through file error on sqr mt basis , a total of four weeks to arrive at refund, a further three weeks to produce a breakdown of how they arrived at those figures.....
With emails and phone calls toing and froing over this period ( well mainly toing), i coudn't help but reflect that 1 department head, one survey valuer, two subbordinate staff, had devoted their time and my money to produce a result (with paperwork) I could have had a coffee gopher do.
Bureaucracy is in it's very nature ,self proliferating , therefore unchecked in it's growth.....and associated funding required.
Any idea how much beuoracy costs?
We have a modest suburban section with a 4 bed home and are able to build 2 more detached 3 bedrooms..all single storey
To subdivide gets well up in the 60/70 K before even getting to resource consent, permits, engineering reports.
Have finished building a 84 sq meter seviced high stud shed....all up around the 33K mark.
Of that 7K in resoruce consent and another $1200 in geo tech etc engeering reports.
For a simple lean to pole shed.....
We still have the room to build 2x 3 bedroom single story homes, or 2 bed + 4 bedroom +2x garage.
Mind boggles if where to build multi story, even so the lay out to cover subdivision/ RC , permits, engineers prevents such action action without selling up and having a building company to do it.
We have people around us in the same boat, would like to take advantage of the land banks they purchased years ago... so staying put.
Don't ferget, chaps and chapesses, that DIA is currently reviewing the Development Contributions debacle.
Auckland has DC imposts which are massive, cause time=money cost layers in general via time of imposition, and are so complex as to add time (=money) and consultant fees via their very opacity.
Christchurch arguably has no rational basis for DC's for a generation (renewed infrastructure via insurance and Gumnut $, oodles of brand new reserves - thanks, red-zoners - and a new, harder-edged LG Act purpose).
So, for both these markets it would be a minor coup if the DIA review just concluded that DC's were off the table for 10-15 years: AKL because they stand directly in the way of Len Brown's push for 15,000 sections or 100,000 houses (whatever the numbers du jour are...) and CHC's because the infrastructure is being renewed without 'em anyway.
Win-win-win. I'd say.
And there'd be nothing like a sudden flush of, say, 10,000 sections or subdivsional possibilities, onto the AKL market to cool the jets of the housing market, eh.
But yer won't hear this argument from the 4.95% fee-funded Barfooties, anytime soon....
b o o m e r s g r e e d y b u b b l e
the boomers were lucky. 2003. Cheap assets. They had the collateral to borrow against. They bought the cheap assets with gusto. Cheap interests fuelled it creating a perfect storm. Interest rates increased for a while. Some got caught. Then emergency interest rates world wide to stem the blood flowing as a result of such greed. Boomers descendents buggered. Need mum and dad to help into homes. Talk to their descendents. To a person they say us boomers were greedy and fuelled increases in values. Some boomers will disagree with what I am saying but you would rather than admit we were greedy and stuffed it up for our children.
That's a bit of a stretch.
Lucky is not greed.
Having collateral is having savings, which is a good thing.
Gusto is a reasonably morally neutral activity I believe.
I am sure greedy boomers must exist, vice is no respecter of persons. However, what you state doesn't seem to offer much evidence of it.
Ralph I was in the industry at the time. Believe me they were greedy. The stench was over whelming at times. Like pigs in a trough. In fact just like the politicians in NZ and all over the world. Give them an opportunity and they go for it. Perfect storm. Remember most investors in NZ are on average incomes. People with real financial horsepower are into equities,private companies and commercial investments, even farming assets. The people with average incomes like nurses, police, teachers and alike do not have the capacity to save for retirement through equities or alike so had to borrow normally the lot for their rentals. They used their homes as their deposit and generally have bought more than one property because it was easy. Cheap assets, cheap interest rates and collateral security. They were lucky and many were greedy. Who needs 30 ,50 70 or even more rentals? Surely such a bun fight pushed up asset values. To our overall detriment hence todays first home buyers generally need the boomers to help them get on the ladder.
Not necessarily. In time there will be a cohort needing money for medical expenses and looking to trade down into something smaller and more managed. House prices ill drop, but that endgame is still at least ten years away. I suspect though that another debt-fuelled GFC will hit before then, but the bailout options used last time will no longer be available.
HOUSTON, USA
Houston, we have a problem: You're ugly. This is the United States' fourth largest city when it comes to population, but the attraction sure isn't scenery. There are many other ugly American cities (let's face it -- American metropolises aren't exactly beauties: Atlanta, Cleveland...), but this one should win the title of ugliest of them all, with a large impoverished and homeless population (close to one in five families live below the poverty line) and a cityscape with no formal zoning regulations.
8 | DETROIT, USA
........
So Houston isn't nirvarna either.
JH. Have you spent much time in either of those two places? As American cities go, Houston is one of the prettiest, made only so because of its humid climate. But there, you have antebellum mansions, green grass, flower beds, old oaks dripping with moss as the anchor look of the place (think of inside AKL Domain Wintergardens' hot house). Dallas, by comparison is nothing, with only windswept prairies parched brown and hardy trees. Yep, Houston is a nice place.
Detroit would have to be the lost fascinating city in America for obvious reasons. You have miles of abandoned areas, hulks of industry slowly rusting and locals who are struggling as best they can to survive, which makes them interesting. On the plus side, there are four distinct seasons, with temperate types of plantlife and trees, lots of mansions in older areas. I've spent lots of time there and like it. Plus, as a bit of useless trivia, is almost only place in US where you have to head south, to enter Canada.
"
“How do you attract the talent of the 21st century? Houston has to turn itself into a destination of choice, a place where people who can live anywhere will say, I want to live in Houston, Texas. And so suddenly quality of life issues that were never important for Houston when our location of the East Texas oil fields was a basis for our wealth is now essential the economic prosperity for Houston in the 21st century.”
He says up until 1982, Houston attracted millions of people who worked in oil and gas. But after the city’s recovery from the recession of the early ‘80s, the energy industry no longer made up more than 80 percent of jobs as it did before. Today that number stands at 45 percent.
“Still very, very important, but so is the Medical Center and so is the port and so are a whole range of different technological developments. Applied technology is really the engine for economic development in Houston.”
Klineberg says during the oil boom, people didn’t care if the city was ugly, smelly and dirty as long as there were jobs. But now, he says, the best and brightest won’t come to Houston if the city’s beautification is neglected.
“This city has no prayer of making it as a major city in the 21st century economy if it is perceived by people outside Houston to be not only flat and hot for much of the year but also ugly and dangerously polluted. Forget it. And the business community knows that. We all know that.”
Klineberg says while there’s still a lot of resistance to changes to the city like the light rail expansion, recent developments indicate that we’re on the right track.
“Green spaces and parks and downtown vitalization and this remarkable vote in the last election to raise $100 million in public moneys to be matched by $150 million in private moneys to take the bayous that in typical Houston fashion that had been concretized in the cheapest possible way by the Army Corps of Engineers to serve as drainage ditches for our flooding problems — that was their function — and turning them into linear parks.”"
Houston didn’t develop organically. The original street grid was planned, the Heights was planned, Montrose and River Oaks and the Villages and Cinco Ranch, etc., all planned. At least 90% of the people who wax poetic about Houston’s ‘vibrancy’ and ‘free spirit’ probably live in a place that was very carefully planned. Our freeway system was the result of planning, and our organic twisty-turny roads were straightened out. Everything within 5 miles of Rice University was aggressively planned, and people love it. Property values in Houston are high in places that were planned, low in places that weren’t, which tells you what the market wants: Planning.”
Houston makes top 10 (most congested cities) in U.S.
http://www.khou.com/news/local/Houston-makes-list-of-top-10-most-conges…
Would you be surprised if I said Auckland, Wellington and Christchurch have the most traffic in NZ?
Houston is the 4th biggest city in the US so you would expect to see it in the list. It comes in at 6th on this report so is it is doing relatively better than some. For example, Boston (a higher density city) which is 21st for population comes in at number 5.
It isn't just about population but how we build our cities.
http://www.sdearthtimes.com/et0500/et0500s15.html
Agreed. And no city is built from the start to accomodate millions of people. As population increases then the traffic stress on the roads increases as it is not always possible to go back to the centre and widen the roads. So as population increases, so does congestion.
I am happy for you to refute if you can find me an established city (not a Chinese newly-built one) with more than 1 million people that does not have significant congestion.
"Sixty-nine percent of the increase in driving from 1983 to 1990 was due to factors influenced by sprawl, such as longer car trips and a switch to driving from walking or transit. Population growth itself was only responsible for 13 percent of the growth in driving."
(Above link).
Shows the inefficiency/ unsustainability of the Houston model beloved by (or forced on?) Nick Smith.
The answer is planning; not planning doesn't work
http://www.washingtonpost.com/blogs/ezra-klein/post/that-traffic-jam-is…
http://www.ceosforcities.org/work/driven-apart#more
http://www.fastcompany.com/1756746/building-more-roads-causes-traffic-s…
http://www.infrastructurist.com/2011/06/06/why-building-roads-creates-t…
Interesting. The Auckalnd property/house across the road from me just sold after many years on the market. The vendor turned down an offer two years ago of 700K on a GV of around 900K. Same offer was presented again recently and accepted. Yeah real estate is booming alright.
If you were the geezer who sold this for $1300000
You may be excused for thinking things are rather rose tinted.
http://rwponsonby.co.nz/PON21378
The other problem that is a major contributor to house prices is prospective buyers can't keep their mouths shut and divulge their spending power/ability to real estate agents. Agents are very good at finding out a persons ability to pay. Certain manipulative lines of questioning are used to find what value a potential buyer places on a home.
The demand side of a market also has an ability to pay mechanism built in. So far the ability to pay mechanism has not reached its potential. When this happens the market will plateau.
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