The runaway truck that is the Auckland housing market, has continued surging onward, with average prices climbing to $685,350 in November, up from $676,053 in October.
According to latest figures from government valuer Quotable Value (QV), Auckland's prices have risen some 15.2% in the past 12 months - with the rate accelerating in November, up from 14.5% as of October. Auckland's average price has risen by over $90,000 in the past 12 months.
Values in Auckland are now 25.4% above the previous peak. When adjusted for inflation values are up 13.7% over the past year and are 8.1% above the 2007 peak.
Nationally, prices are continuing upward as well, although at a slower rate and with the overall average dragged up by the large Auckland market.
The average value across the country hit $460,067 in November, up from $457,312 in October and 9.2% higher for the past 12 months. Again this rate of growth has accelerated in the past month, up from 8.9% as of October.
Nationwide, property values have increased by 2.5% over the past three months. This means they are now 11% above the previous market peak of late 2007. When adjusted for inflation the nationwide annual increase drops slightly to 7.7% and values actually remain below the 2007 peak by 4.3%.
Among other main centres, the Wellington average price was up just 3.1% to $529,888, Hamilton gained 5.5% to $356,829, Tauranga rose 3.5% to $438,540, Napier lifted 2.1% to $322,922, New Plymouth rose 5.9% to 343,184, Palmerston North climbed 2.4% to $287,683, Nelson gained 3.6% to $399,829, Dunedin was up 3.5% on $288,993, and Invercargill average prices firmed just 0.1% to $205,273.
As of October 1 the Reserve Bank introduced "speed limits" on high loan-to-value (LVRs) lending, principally to protect financial stability, but also with the intention of cooling the house market.
While the anecdotal evidence suggests first home buyers have retreated from the market for now, there's as yet no obvious impact on prices - though this would not have been anticipated to occur straight away.
The RBNZ is picking annual house price inflation to peak at about 10% within the next six months and then fall - to about 4% - by the end of next year. It expects that the LVR measures could trim 1 percentage to 4 percentage points - or to take a midpoint, say 2.5 percentage points - off house price inflation.
QV.co.nz's research director Jonno Ingerson said while it was still too early to see any definitive effect on values from the LVR changes, there were signs of changes in the market. There were reports of fewer potential buyers at open homes, longer marketing periods, and fewer auctions selling on the day.
"In the last three months there has been an increase in the number of completed sales to first home buyers. Some of this activity will have been due to people trying to purchase before their pre-approval expired. While there is anecdotal evidence of far fewer first home buyers in the market this has yet to come through in the statistics.
"A slowdown in activity in Auckland may be due to people sitting back to assess the impact of the LVR caps on the market. There remains a fundamental imbalance between supply and demand, with an increasing population and not enough houses. This should continue to fuel activity so this current slowdown may be temporary."
In areas of the country outside Auckland and Canterbury, where there was not as much of an imbalance between supply and demand, the LVR changes were likely to have a more marked impact. The reduction in first home buyers would lessen activity and the reduced demand should see values slow down, Ingerson said.
"Christmas is usually a time of the year when property market activity slows down dramatically and people use the holiday period to reconsider their intentions. It should start to become clear by March which direction the market is heading," he said
Here is QV's breakdown of the latest activity, region by region:
Auckland
Values across Auckland are still increasing, with the supercity now up 15.2% above last year. Waitakere still has the fastest annual increase of 19%, with North Shore the next closest at 16.8%.
Over the past three months, growth has continued across the entire city, with Rodney in the north seeing the least growth at 3.5%, and Waitakere seeing the most at 6.8%. Papakura is next in line with 6.1% growth over the last three months, whilst North Shore is sitting at 5.6%, old Auckland City at 5.3% and Manukau at 5.0%.
Within these areas, North Shore Onewa is still performing strongly having seen a 6.5% increase over the past three months, with Auckland City East and Manukau East the best performing areas in their regions, both seeing a 5.3% increase over the past three months.
QV Valuer Bruce Wiggins said “Although there has not yet been any distinct impact of the LVR changes in the Auckland market, we are starting to see some changes with open home numbers decreasing and more sales by negotiation as opposed to auction. Investors are also in the market, however they are only progressing on properties where they will see good returns.”
Hamilton and Tauranga
Values in Hamilton are still steadily growing, now up 1.8% over the past three months, and 5.5% over the past year.
QV Valuer Richard Allen said “The LVR changes might be taking a slight toll in the western areas of Hamilton, which traditionally attracts first home buyers, as we have seen demand start to drop here.”
Tauranga remains patchy, with values now3.5% above this time last year and 1.5% over the past three months.
“Although interest from first home buyers is lacking, investors and holiday home buyers still appear to be in the market” said Richard Allen.
Wellington
Values across the Wellington area have been pretty flat with only a slight increase to see the region sitting 3% above this time last year.
Lower Hutt, Upper Hutt and Porirua continue to fluctuate, all having seen a 0.2% decline over the past three months. Annually, these regions are hovering around the 2-3% mark.
In the city, things aren’t much better with increases at their highest in Wellington East, which saw 1.8% growth over the past three months.
QV Valuer Pieter Geill said “Both the Wellington and Hutt Valley markets remain pretty flat, with buyers seemingly taking a lot of caution.”
Christchurch and Dunedin
Values in Christchurch still continue to grow, with fluctuations throughout the different suburbs. Values are now 12.4% above last year and 3.2% up over the past three months. Apart from Banks Peninsula, which is down 1.1% over the past three months, all other areas have increased with the Central and North area of the city seeing the highest increase of 3.6% increase.
QV Valuer Daryl Taggart said “The market remains active but the LVR changes have removed some of the hype, and this is best seen in the activity at auctions.”
Dunedin remains fairly steady, with values now 3.5% above last year having seen a 1.3% increase over the past three months.
QV Valuer Duncan Jack said “Although we are seeing an improvement in listing numbers, the LVR changes are potentially the reason behind the slight drop in first home buyers in the market.”
Provincial centres
Most of the provincial centres are still experiencing growth, although it is limited in some areas. In the North Island, Whangarei, Thames-Coromandel, Taupo, Rotorua, Gisborne and Palmerston North are all up over the past three months. Gisborne has seen the highest increase of those regions, having grown 2.9%.
In the South Island, nearly all regions seem to have experienced growth over the past three months, with one of the exceptions being Queenstown Lakes, with a 0.8% decline. Southland and Gore have seen some of the larger increases, with 4.4% and 3.9% increases respectively.
No chart with that title exists.
56 Comments
bob..... if people believe the "mantra" that property "always goes one way and that is up" and do not allow for the possibility of interest rates rises etc, they obviously have not thought all the factors through when purchasing........Caveat Emptor.
The "ticket clippers" would find that their business would actually decrease .......then they could actually do something and help "produce" something for the economy, rather than relying on the non-productive residential property market sector.
"....and for all those who say that if they fell, it would be a "blood bath", I ask this question...it would be bad for who ??? ......V E S T E D I N T E R E S T S ..... that's who."
Your confusing me. The "vested interests" who deserve the bloodbath are "not your working family, who own a house, saddled with a ridiculous mortgage..." unless they believe "the "mantra" that property "always goes one way and that is up" then they they are included and should suffer?
"Ticket clippers" that have repeat work in the property industry, builders, plumbers, sparkies, roofers, agents, lawyers etc etc. are 'vested interests" and deserve the bloodbath whereas "Ticket clippers" that get profits out like property speculators who could benefit greatly from a bloodbath if they get their timing right obviously aren't (because it wouldn't be bad for them)? ... are you sure your not just spouting forth mindless rhetoric?
No not vested interests. When prices fall then the banks go insolvent, then they probably have to get bailed out by the Govn ie us the tax payer.
Now it maybe that the OBR actually succeeds in passing on the losses to the vested interests, one to watch with interest.....however I suspect I and my kids will be paying for this for years aka Ireland.
regards
bob ....what I am saying is that people, say that have purchased recently, without allowing for future interest rate rises and house price fluctuations in the future, while bidding themselves to a frenzy at the auction, salivating greedily at the thought of "endless" capital gains, are the ones I have no sympathy for.
Remember "ticket clippers" also covers, local and national govt, banks, RE agents etc..... I am sure (unless the person has an interest in these organisations/businesses) most people wouldn't give a hoot if the likes of these entities turnover were reduced .... ???
Sounds like to me bob, you yourself are involved, somewhere along the chain of the residential property industry......???
salivating greedily at the thought of "endless" capital gains, Bob you only have to get a copy of last week's Listener and the first part of the article is about a young couple (from overseas I might add) investing in the real estate market in Auckland. They have absolute faith that it is going to keep going up ad infinitum and I would say they are salivating! All capital gains on paper at the moment and making them sound very wealthy. None of this will be realised until they sell in the right market (like maybe now!) Then carry on reading about the two young couples who have left Auckland because they couldn't afford to buy there and chose to have a better life i.e. not paying out exhorbitant mortgages.
All the would-be economists that contribute on this site espousing this that and the other don't seem to have any real answer to this. Greed, greed, greed thats the only thing that I perceive this is about and no one with the power seems to know how to stop it. Or maybe they don't have the guts to.
Why am I not surpirsed?
As long as we just keep adding more people the problem is going to get worse .
How many migrants have landed at Auckland Airport since the last months house price data was released and been given some kind of Visa to join the party ?
Q What did Einstein say about Insanity ?
A . Doing the same thing over and over again and expecting different results.
The purpose of a home is to provide a roof over one's head that prevents rain from splashing you in the face.Homes are also useful for storage,work,play,protection from vermin[human or animal],and aesthetic beauty.
That fromSteve Cortes of CNBC.
Obviously, he doesn't live in New Zealand, the land of milk and honey and get rich schemes buying houses.
I went to an auction on the weekend. There were less people bidding, the property sold but only on negotiation afterwards. Expectations for of the seller are over optimistic and buyers are being more cautious. Its very difficult to know what the true value of an asset as everything has gone up due to money printing and cheap credit. All you can do is compare it to a price that sold down the road and say whether it is similar or too much in price. Since the financial crisis of 2007/2008 debt in develop countries has gone up by 30%. Increased debt is in correlation with increased asset prices. Are governments around the world repeating the same senerio another bubble which will eventually create another set of problems ?
It's reminding me of 2008 when we bought our house (inner city suburb). it was passed in at auction twice by two different agencies. We bought it at roughly 18% lower than the highest bid they had. About 6 months before we bought, everything was on auction, then within a few months all were listed with "price by negogiation"..
I've noticed that too, but just put it down to the time of year. Anyone listing now, who is going to have their auction December 25? They are going to have the auction late Jan / early Feb and just have it listed now as PBN until the new year when they confirm their auction date.
I wasn't here last year... was it not like that then?
During 2007 prior to the GFC in the USA, their housing average was increasing too. The reality was that more higher price homes were being sold which was artificially dragging up the average. In effect many home prices were actually declining.
I wonder if the same is occuring now?
"..Investors are also in the market, however they are only progressing on properties where they will see good returns.”
Interesting comment. I assume he means yeilds. Or does he mean capital gains? Or is it a combination of both? I doubt anyone would seriously call yeilds in Auckland "good returns" at present so he must be meaning returns based on capital gains. How do these investors know where the good returns will be?
High med and low brackets of housing in auckland, they can't be viewed as a whole.
High value 1-2 million bracket, overseas interest, money not an issue, doesnt matter too much if these prices soar in this bracket, the money is there
Mid -low bracket - warning bells, sell up now it nearing peak...........this is because NZ economy is not following suit.......and rents are at about there maximum for what can be afforded by rentors.......if they go much higher rents will start to default and the value as an investment if you are to get a return on it will start to be less and capped at this level........this is because it will be cheaper to rent than borrow and pay the bank more for interest than it would if you rented..........
I dunno maybe people could cut their grocery bill, to pay more for rent.........how far will this thing go.......kids go hungry all in the name of greed
...if newbies are struggling to enter the market, then those who may have been ready to trade up can no longer do so. Just like a train crash, some will keep going that little bit longer before the market realises the front end has come to a stand-still. No wage growth, job insecurity, LVR.....can't see how a decline isn't imminent.
I would stay clear of properties located near where the government is going to build 2000 homes or large housing developments, as these areas will then have over supply and could bring down prices in those areas. Central suburbs are generally safer as they cannot suddenly overbuild in these areas. although they may experience drops they will not be a big as large developments on outer city locations.
SK, econmic fundamentals have nothing to do with prices of houses. Increase in demand and a decrease in supply will make prices fall. A strong economy and low unemployment means people will spend less and that we're about to have another recession. Consumer and business confidence up is another very bad sign. I've learned all of this from the school of Interest.co.nz commentary.
Cripes... that graph in the article is steeper than I thought.
Better go out and borrow money... buy still more property.
This is getting easier all the time.
And of course there is the iron law of interest.co.nz economics. The more people whinge about houses on this website the healthier the housing market is.
That graph proves it too... all's well in landlord land.
No you have a sheep mentality........reactionist rather than proactive predictor, the man who made all the money is selling or has sold months ago and banked the money, taken the safe gains and got out........or invested in safer investments like beachfront real estate.......Don't follow the graphs mate you will walk over a cliff!
Haha......oh you can't win eh? point was that there is a split in the Auckland property market, the higher end is still safe and a good investment. Is growing population going to push up the family income? what may happen is lower income earners leave auckland due to people who want to move here and can afford the rents etc? or else 6 people end up living in a 3 bedroom house........hmm sounds horrible
ZZ I drink to that. Working in Aust, I am contributing 7% and employer's 19% - That is 26% of my salary into Super. OK I know some people would argue against tjis and prefer to have it cash but I am more than happy to have it locked away (plus it comes with Life and income protection insurance)
It's been well studied
I see your point, but I also see where the money is coming from. Lower end property relying on WINZ SH1T I would be a little cautious, I don't see WINZ keeping up with the property market, they haven't enough resources, they are tightening their belts.......I would suggetst they are at their max now.....as for families just saw the programme on closeup lastnight about poverty situation of many families, while this may not be true for a lot, I bet they are pretty tight when it comes to money left over at end of week. Maybe lower end property will continue to go up somewhat, but the rents are going to struggle to keep pace, maybe have to accept a lower return on investment.
Higher end property, while it doesn't yield as much rent wise is relatively safe, because it fuelled by actual money people have, not so much debt. Money is no issue to these buyers, they want and they get.........A lot of them are looking for a nice place to live in Auckland and cash is king........
A couple of comments on house prices and land grabs
Firstly, agree with some above - things are really alot slower at open homes, many properties on my watchlist (originally auction) have fell over, apparently 50% are not selling on auction night now.....and then they pop back up with a price or PBN - this was unheard of 6 months ago. Things are changing. Meanwhile the media continues to pump it up without giving the true picture e.g. price brackets, current situation,.......The word in Chinese circles is that the price is now too high, they are also backing off, so I am told.
Question: WHy is it there has never been (to the best of my knowledge) a comprehensive article published in mainstream newspaper, or a doco on tv, with the stats on Asian purchasers?
APparently, a house to house survey just gone uncovered many empty homes (i.e. overseas for most of the year, here for a short period.....) and many who duck for cover as not meant to be here......one report was two or three in each street in certain areas. But do we get to read the stats on this. NO! Methinks our leaders prefer getting through trade agreements, at the cost of robbing our future grandkids of quality of life.......Has anyone ever done any investigative journalism as to what percentage in what areas are owned by non-residents. We need to wake up and see what is happening as our government is not doing anything about the demographic trends. Overseas, just look at Denmark - by 2050 it will apparently be an Arab state (8.1 cfhildren as compred to 1.8 of Denmark Euro families) - this is not about racism.....it is raising the question of whether you want your children and grandchildren to be living in a country where they are the renters, and Chinese people the owners of land.
I see another huge farm is coming up near Taupo....watch that space. It will become an offshore food supply source for China.....they have just taken off their one child policy, there is a food shortage, where will they get food? From complacent countries like ourselves that allow all of our rich agricultural land to be sold off. One day we will be begging them for food or paying huge premiums. Its rediculous. I say, shut the doors, we have a wonderful country here, we have water, food, power.......why sell it all off?
And why are there no gutsy journalists out there uncovering what is really going on......all it take is a snapshop of property guru....the names and high percentages of Asian owners are obvious....just do a search of any street in the 'good school zones.....and lets not even talk about how many resorts, hotels, and motels are now Chinese owned. The BIG difference between Chinese owners and kiwi.....once sold off, it usually remains in the family......large hotels never return back to kiwis, and the same applies for farms. Gone forever.
For anyone interested, heres the gorgeous piece of land up for sale now.....what's the bet we lose this forever....I want my grandkids to grow up with freedom and opportunities. Its sooooo unbelievable our politicians dont seem to give a rats about the houses being sold off, land.....and the huge demographic changes that will be here in 15 years.
http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=11168326
Concerned-Ant.... If you mention these things out loud and in main-stream media you are immediately screamed down as being a racist... Debate over! Watch 3rd Degree from a few weeks ago - the presenter/s announced anyone who didn't like the way things were going, in Auckland in particular, was just a green-eyed bigot - or similar words just dragged out over 24 minutes of a one sided story.
Even on this site you will meet firece resistance from some contributors. Am afraid you will just have to watch it all unfold in slow motion and the best you'll be able to get, is the chance to say "I told you so!" But by then of course... well you know, it'll be way too late!
China food, yes they are poisioning the rivers, land and draining thier water tables. Parts of china are now going back to traditional dry farming as the pumping costs for water are not giving them the return.
So the Q to ask is why do we need a TPPA when the world needs our food and will pay for it.
Note however that in effect NZers will be paying or matching whatever the top bid is for food.
Thats going to add to CPI with a vengence I think, voters will love that.
regards
I agree with Concerned-Ant over property policy on sales to foreigners. All countries should have some forms of restrictions or quota on sales of land & properties to foreigners. I dis-agree however with blue-meanie's conclusion - it's about foreign ownership - it's not about racism or Asians in particular. The fact that most of these rich foreigners happen to be Asians - is a side issue. That is something no one can change or refute - that the Asians & Chinese in particular is the next super-power. White Superiority may just have to take a back-seat in the next decade.
About house prices and FHBs......
I did a bit of an informal survey of friends and coworkers etc etc about how they got their start in the market and how they got into their homes. The results I tallied up and derived a sort of typical situation. This obviously isn't the story of everyone, just kind of an average of the people around me.
1. Most born in 50s-70s.
2. No university interest fees.
3. Family helped them into work.
4. Parents/grandparents loaned deposits (often on never never repayment scheme)
5. Inherited property from family at least once, usually more
6. Traded up several times in 90s-early 2000s before the bubble
7. Made substantial CG during the bubble (some losses for some)
Most now hold substantial property portfolios of rentals etc etc as well as beach places or other holiday retreats like Pauanui, Queenstown and Wanaka etc etc.
Various farmer friends inherited farms from parents who also inherited before them, and sometimes the grandparents inherited as well, although other times those g'parents broke in land at no or little financial cost to themselves, or the 1 pound annual rental before passing down to children.
No conclusions from this, I just thought maybe it would be interesting to compare with others.
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