Auckland's largest real estate firm reported that its sales were down 23.6% compared with a year ago in an Easter-disrupted April, while the median house price dropped nearly 5% during the month to $619,550.
Barfoot & Thompson said today that for April it sold 811 properties, compared with 1062 properties for the same month in 2013.
Comparisons with the same month a year ago are difficult. Last year Easter fell between the end of March and beginning of April. This year Easter fell entirely in April, while Anzac Day fell on a Friday - probably also having an impact on potential sales.
ASB has estimated that on a seasonally-adjusted basis (taking account of the timing of Easter), the latest B&T figures might be down around 14% on the comparable figures a year ago.
B&T's median sales figure is continuing to be very volatile. In the past month it gave up the $32,000 gain it had made in March when it climbed to a record $652,000. The median in April was still 9.5% higher than for the same month a year ago.
The average price also dropped back from the record levels of the previous month, down to $708,603 from $725,728. But in March the average figure had jumped up from just $678,533 the month before.
The Reserve Bank's 'speed limits' on high loan-to-value lending appear to be continuing to have an impact on the market - not least through much fewer numbers of lower-priced houses being sold, which is skewing the average and median numbers.
The latest B&T figures show that in April 2014 the firm sold 376 properties for under $600,000, which is down some 33% on the 562 properties sold for under $600,000 in April 2013.
In contrast, the 435 houses sold for in excess of $600,000 was down just 13% on the comparative figure (which was 500) for the same month a year ago.
In the April 2014 figures, properties sold for under $600,000 made up 46.4% of the total compared with 52.9% in April 2013.
ASB economist Christina Leung said, however, that unlike recent months where the change in sales activity was concentrated at the lower end of the market, reflecting the effects of the LVR restrictions, the April decline in house sales was "across the market".
"We estimate sales of houses below $500,000 fell 13.2% on a seasonally-adjusted basis, while sales of houses above $1 million fell 12.4%. The broad-based nature of the declines in Auckland house sales in April suggests higher interest rates are starting to be the dominant influence on housing demand. Nonetheless, the LVR restrictions should continue to weigh on housing demand at the lower end of the market."
During the month B&T picked up 1630 new listings, which is its most for an April since 2003. The firm had 3623 listings at month-end, which is its most for an April since 2011. This figure represented 19.1 weeks of inventory.
The latest Realestate.co.nz figures showed that total listings in Auckland were, on a seasonally-adjusted basis, down 6% in April. The unadjusted figure for total new listings in Auckland was 3329.
This would suggest B&T has been picking up a disproportionate amount of the new business. Generally B&T is reckoned to have about 40% of the real estate market in Auckland. The latest figures suggest that in the past month the firm picked up 49% of the total new listings coming on to the Auckland market.
B&T's inventory level, at 19.1 weeks is considerably higher than the total given Auckland figure of just 15.
ASB's Leung said housing market pressures had clearly eased in the six months since the RBNZ’s LVR restrictions came into effect, "and the broad-based nature of the house sales declines in April suggests higher interest rates are starting to become the more dominant influence on housing demand".
"Despite some improvement in the housing supply/demand imbalance the Auckland housing market remains very tight, as reflected in the very low number of houses on the market," she said.
"Price growth in Auckland seems to have peaked in Q3 2013. We expect house price inflation to continue to slow over the next year or two as higher interest rates take hold and, eventually, greater construction activity adds to supply."
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21 Comments
"The average price also dropped back from the record levels of the previous month, down to $708,603 from $725,728."
That's interesting. The last paragraph then says:
"The Reserve Bank's 'speed limits' on high loan-to-value lending appear to be continuing to have an impact on the market - not least through much fewer numbers of lower-priced houses being sold, which is skewing the average and median numbers."
So despite the alleged collapse in the lower-end of market the average price has dropped? That makes it quite a significant fall.
Or have I got it wrong?
I've added a little extra information into the article now regarding the average price as it was in February. Both the average and median prices shot up in March, which appeared to be simply due to the skewing effect of the LVRs. The falls in both the median and average prices in April have simply undone that March increase. There may be real significance in the fall, but it's a little early to judge yet, in my opinion as the figures continue to be so volatile.
There is real significance to the volume drop but probably less to the price drop.
Yes we had two long weekends which impacted trading which is different from March last year. Fine. But the total of March and April sales is still down 12% from the total of March and April last year. It is an irrefutable fact that turnover is decreasing.
The price will still have dropped on a seasonally adjusted basis but not as materially as the headline number implies. Slowing prices will still take time but if the decline in sales continues to accelerate that time might be getting much closer!
As predicted, it's a RE agent's cook up in an attempt to spook the RBNZ away from raising interest rates. What did Disraeli say about stats? Watch others (pollies, bankers, mortgage brokers, stock traders et al ) join in too. All with vested (some statutory monopolies) interests in easy credit with someone else's money- this is the new, post GFC, FREE market economy!
Ergophobia
There is nothing wrong with "fairly" easy credit, the problem is the system is adicted to it and needs more and more to get the "hit" ergo like heroine sooner or later the heart is going to "pop" and its game over with huge consquences...
So really its mis-allocattion of capital and resources on a huge scale, no wonder there is whining.
regards
Surely BD and ZZ will report buying opportunities around the corner. I know I am gearing up to buy more property as soon as soon as you all start heralding blood on the streets.
Normally I would view this as just a cyclical downturn after an impressive upward run. However, I assume this is not just a normal cyclical downturn and more related to the lvr restrictions. I see good things ahead for existing property owners when the lvr restrictions are eased and people allowed back into the market. After all it's property. As safe as houses they tell me!!
Machiavelli it is a bit like shares. If interest rates continue to increase and if house prices start to fall back as people get less confident about investing in the housing market it will take a brave person to say now is the time to buy. My share broker in the 80's and 90's always said to me when I was looking to buy into a dropping market it is better to watch it drop to the bottom and then buy when it is slightly off the bottom. The trouble with housing is the dollars involved. I would hate to buy a house for say $800k and then watch its value drop to $700k and I have borrowed the lot as a lot of people do. Generally shares involve more modest amounts of money invested so the pain can be less if you make a mistake. It pays to be patient.
Like any tradable commodities;
1. if you know when it reaches the bottom, you'd be a very rich person.
2. Unlike housing, it's a bit tricky to borrow money from the bank and buy shares. You can walk into a bank and borrow $200-300K to buy a house (if you have a stable decent income). try to do the same for shares and the loan manager's response would be "You want what?"
CM you are missing the point. If you buy some shares and the market keeps dropping you will generally be talking thousands at the worst. In Auckland if you get it wrong in housing you could be talking tens of thousands and you have borrowed it generally for investment. That would not be a great feeling for many. I have always been able to borrow for shares as unlike many people including yourself I presume, I have balanced investments, both property and equities. i don't think you realise just how much you have missed out on in not being involved in equities. And many forget that many buyers at the top of the tree housing wise have solid investments in equities which they partially liquidate to buy their dream home. What are you afraid of? If you do have any equity investments I bet they pale into insignificance compared with any property investments you might have.
Housing is simple enough for Joe Kiwi to invest in. Haven't you heard them chattering on about their "property portfolios" in Auckland's cafes? Poor fools are leveraged up to their eyeballs thinking it's a one way bet. These same fools can squeel very loudly and wield a lot of political clout making property prices a difficult problem to address.
I agree with the points made gordon and CM. My view is that Auckland property prices are not going to drop significantly any time soon. I don't see demand reducing enough. On the supply side we are heading in the right direction with consents but it will be years before any significant volume of new houses is built.
I think National will get in again at next election despite the muppet performance being revealed around Key.
Based on these factors any dip in prices is an opportunity to buy. Sure I could be wrong. What I percieve as a dip could be the start of a major price drop but I just don't see it. That's the gamble I guess.
I don't think the government really wants us to diversify. I tried to buy $20k of Genesis shares and they gave me 75% of my money back, flogged the shares off to overseas investors who flicked them on immediately for quick profit. It hasn't left a good taste in my mouth at all. Shares seems to be mostly about making institutional investors wealthy. Anyone can do well out of property. The playing field is more level.
M the problem with Genesis was that the government did not want another disaster like the earlier floats therefore they allowed brokers in NZ to take up sizeable numbers. Those brokers in turn looked after their clients both corporate and individual investors who have been loyal to the brokers in the past. It was easier for a broker to deal with say 20 big clients rather than deal with 200 smaller ones. Anyone who thought they could ring up a broker who they had never dealt with before and get shares was dreaming. Life is all about being loyal and those who chose to trade shares on the internet are in fact shortchanging themselves. They get short term gains but lose out on building relationships with professionals who will think of them when a product is available. I have chosen to always use a broker when I buy or sell shares and as a result I got 30000 genesis shares from my personal broker. I would have got more but at the last moment the government scaled back allocation to brokers as demand was greater than initlally expected.
Why did they allocate shares to overseas institutions? To make sure the sale was successful and not embarrasing like earlier sales. We New Zealanders only have ourselves to blame. We are not great savers and we do not generally diversify. Many of us are fixated solely on property. In Australia where they have over a trillion dollars in super funds they would not need to go to overseas institurions to make sure such a sale goes ahead smoothly. CM well done on your australian super funds. I suspect you only have them because they are compulsory. I wish the politicians would stop using super as a political football. We need consensis and we need brave politicians to make some strong decisions for us all.
Gordon, we are doing fine I bought Central Auckland duirng the slump and got out almost at the peak ( think I missed the peak by few months - but never mind). My shares portfolio, not much now.. got out of the "darling" shares few years by the skin of my teeth, the like of Rakon, Pumpkin Patch. But my Super portfolio in Aust is doing very well.
Equities market, unfortunately I don't have the abilities to grow my own bxlls so if you are doing well, good on you!
PS. you are not Ex Agent by any chance?
It's not just a shares vs property investment category debate. Because of the values, people are usually leveraging heavily in property. Buying stocks at 5:1 or 10:1 margin is viewed as reckless, but perfectly normal for a residential house. This is supposed to be justifiable by the reduced volatility and hence risk, but...
Property v. Shares is not a easy comparison at any time. Long term it may well be except for the easily obtained gearing that has reinforced Property. That is also potentially it's archilles heel as was found out in US and even UK in recent times.
Shares have the great advantage of liquidity and ease of disposal. gearing is also readily available using options, CFDs or spread betting but mainly outside NZ.
No one will convince the property investors here to venture into anything else so why bother trying.
rjf if Labour/Greens are the next government and that is increasingly likely when you look at the actions of the idiots who surround John Key, you will be staring down the barrel of both capital gains tax and interest rate increases. That might have some effect on those who have their eggs in one basket with a lot of debt attached. Remember those on the left are generally jealous of those who have taken risks and who work hard for what they have got. Things will change pretty quickly. It will be quite a risk to go into the election with large holdings in property, equities and foreign exchange. Depending on what happens between now and the election it might be a good idea to liquidate some assets of all classes and hold some cash instead.
Your landlord I do not need any help from the government as I enjoy retirement in my late 50's but a lot of others do who are not so fortunate. If only we had some brave politicians who would lead the country strongly in the area of superannuation for example. Look at what the Australians have saved in recent years. When they retire they have some real funds to live on not the pop gun proceeds from kiwisaver accounts New Zealanders will get.
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