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December’s residential property sales in Auckland were the strongest they have been in a December for the past decade, with sales numbers up significantly, prices reaching all-time highs, and the number of available listings reaching an all-time low.
“It was our busiest December in the last 10 years with demand never being higher, or choice lower,” said Peter Thompson, Managing Director of Barfoot & Thompson.
“Even though December was the shortest selling month of the year we sold 1050 properties, our fourth busiest month of the year.
“Sales in December were 28.5 percent higher than in December 2013.
“The average sales price in December 2014 was $758,891, $1982 higher than November’s average price.”
The median price increased to $720,000 in December, which was $28,500 or 4.1 percent higher than November’s, and it is the first time the median price has moved above $700,000.
“At the same time the number of properties on our books at the end of December was 2500, our lowest number for any month end in the past 10 years.
“For us, this represents less than two months’ stock, and indicates that in the first quarter of this year, buyer choice will remain severely limited.
“In part, December’s strong activity was a flow over from October and November, which were catch up months following a relatively low period of activity during September caused by the General Election.
“Although the year ended with record prices and sales activity, overall prices in 2014 rose slower than they did in 2013.
“The average price increased by 10.3 percent in 2014, compared to 11.1 percent in 2013 while the median price increased by 11.1 percent compared to 12.7 percent.
“The past two years of strong price growth is reflected in the significant change in sales volumes in both the higher and lower price segments of the market.
“In 2014 29.5 percent of all homes sold for under $500,000. A year earlier, 38.6 percent of all sales were in this price category.
“The same trend is found at the top end of the market, with sales of homes in the $1 million and above category in 2014 representing 17.2 percent of all sales. A year earlier it was 12.4 percent.”
Barfoot Auckland
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74 Comments
Many properties in the Auckland central surburbs (east & west) that were listed towards the end of Nov-2014 were mostly sold out!! I noticed the SOLD signs left right and centre when driving around town 1x week before X'mas so I am not surprised by the news at all. Up up and away Auckland...you have done it again :)
Not a very logical comment Olly. The poor were never going to get on the ladder. What is so galling is the arrogance of people like you who go on about prices increasing in Auckland without any thought about those who are not on the ladder yet because they are not old enough to do so such as our children and grandchildren. Having so many people alienated from owning property of their own is going to have some serious consequences one day. JK and the Reserve Bank are certainly asleep on the job in relation to this problem.
ok, well it's good you are catching on finally.
Now, I would like you to try and understand that there are a lot of hardworking people, who don't have high paying or medium paying jobs, who live in places outside of Auckland. These people would like to own their own homes too. But they can't due to the long list of problems with NZ's property market.
For these people, everywhere in NZ is like Auckland.
This situation is not my personal situation. I own a home freehold. I am an observer who thinks housing shouldnt be controlled by a few. It should be cheaply available to everyone.
I just dont think they care Big Olly, while rents are stable for many they always have the choice to move to places were they can still get value for money. The door has been shut on FHB in Auckland, so the boomers can keep trading up untill?
Of course, Australia is not the only nation where retiring baby boomers are likely to present headwinds for growth and asset prices – most developed nations (and particularly those in the Anglosphere) are in a similar position. Indeed, legendary fund manager, Stanley Druckenmiller, is even predicting that the retirement of the boomers will cause a financial meltdown worse than the Global Financial Crisis, as the economy chokes on mushrooming old age-related entitlement spending:
bang on, its just a current line of thought, it doesn't "have" to be this - or any other way...
Faced by a growing number of complaints, City Hall has toughened its rules.
There was already a so-called "rule of compensation", designed to maintain the stock of residential properties in Paris.
Under this, an owner who turns a residential flat into a commercial flat (by using it for holiday lets) has to compensate for the loss to the regular rental market by acquiring a commercial property and turning that into residential.
In theory this should be a major deterrent, because it means that an investor in holiday lets has to buy two properties instead of one [the 2nd a commercial, that becomes a residential].
http://www.bbc.com/news/world-europe-30580295
What a load of rubbish BigDaddy!
I remember reading "The Day the Bubble Bursts" by Olly Newland. I foolishly believed the author and sold 2 properties i had at the time in Remuera which were both zoned for Grammar.
Prices never fell in Remuera. I lost over a million dollars from that one bad move.
You are full of it Olly.
I've had a newborn baby to assist the wife with...... so i've had little spare time.
I have to admit you were right with prices rising quickly towards the end of last year.
In my opinion this was due to interest rates dropping - which made absolutely no sense to anyone who listened to the economists.
I think our property market is quite simple - if rates rise, housing activity will slow quickly (like it was mid 2014). If rates drop, then we will see more price inflation (like the end of 2014).
The problem i have Happy is i have no idea what rates will do in the future.
Congrats.
Rates internationally are set to stay lower for longer in the major economies. Domestically the RBNZ would love to rise rates to control AKL housing but general inflation is low. Any rate rise would put upward pressure on the NZD which would hurt manufacturing and export sectors so IMHO it's not going anywhere anytime soon. Foreign investors would dearly love us to rise rates here as they would make a profit on the FX trade when they sell up.
All part of the perfect storm.
I think with Grexit looming and the underlying problems in Europe/USA/China that interest rates will actually come down over the next two years and the Reserve Bank governor will have to slash our OCR. Lower interest rates for longer would be the more likely scenario.
But the percentage we all want to know, but will never be told - what percentage is overseas buyers? And how much of this is the proceeds of corruption?
Chinese "black money" in Auckland is so rife that the Chinese President had to comment on it. Where's your journalism on this interest.co.nz?
Taking our life savings and emigrating elsewhere is starting to look like the best of a bad bunch of options...
VA, I’ve just came back from Singapore for xmas holiday. Interestingly, house/apartment price increase in Singapore had been in the region of 20% in the last few years due to high level of Chinese buyers. Within the last 6 months, price has been dropping 3-5% as Chinese buyers are slowly withdrawing from the housing market there (and some government interventions). Would be interesting to see how Auckland market will pan out going into 2015/16
Singapore has large levies on foreigners, hence the market is less attractive to the Chinese now in favour of ones like Australia (where they have rules but lax enforcement) or NZ, which has no rules at all.
John Key has proven time and again he's got no desire to even look into this issue so while the Nats are in power, don't expect a change (I'm a Nats supporter by the way, in general).
All those who know exactly what the scale of foreign buyers are, have a vested interest in keeping the status quo, and deliberately downplaying the issue to the press/public since there would be political upheval if the true magnitude was known.
Yes and no, in Singapore having 10% stamp duty instead of 3% doesn't really deter them from buying, it's just a bit of extra cost. I know in Australia, the Chinese buyers are buying existing home in good suburbs, rather than new home in average suburbs and willing to pay the 85K fine if caught. They are looking at this $85,000 fine as cost of doing business
I live in Singapore. The Market is tanking, but there is no news of it. Sellers are leaving apartments empty rather than sell at a lower price or rent for lower rents.
There are literally thousands and thousands of apartments unocupied, and some have been for several years now.
The Singapore government is very good at saying "there's no problem here", look away. Remind's me a bit of John Key.
The banks are bending over backwards to facilitate borrowers, giving payment holidays etc. House prices don't decline if everyone refuses to sell at a lower price. But it's really how long this can be kept up, with thousands of new properties coming online in 2015, it's not looking good.
However, still a better bet than the Auckland market, which looks to me like a combination of property speculators (PI's), foreign investment, and idiot mum and dad's. All it takes is one event to trigger a loss of confidence.
The fallout will be "interesting" for the little old backwater called NZL.
Double peak boom...
It's the perfect storm of land scarcity, construction skills shortage, high migration, property friendly govn, massive FDI, domestic migration and rising wages. I was predicting a 12% rise in Auckland prices in 2015; I might have to revise to 20%+.
What's different this time around is the massive surge of Chinese buying; they seem to be happy to keep bidding if a local is bidding, their way of ensuring they are buying a desirable property at the right price. All of the foreign buyers I talk to have 5, 10 or 20+ year strategies, in my opinion this is only the beginning....
The percentage of population that are Asian in the Howick/Pakuranga/Dannemora/Botany/Bucklands Beach area is now 38% so it is highly likely that much of Auckland will head to the same sort of percentage. Probably already there in Mt Albert and not too far behind in the double grammar zones.
Most Asian families pool their resources, they don't see themselves as having individual wealth as such but rather family wealth. When they buy houses it tends to be Dad, Son and Grandkids all in it together. This is part of the way that Chinese money is funnelled into NZ, one new Chinese migrant might be buying for the whole family back home. Another reason the old ways of measuring affordability and whether or not a market is in a bubble are flawed. You can't just say things are overpriced if they are over 3 times the average income because buyers don't start from $0 anymore and it's not 1 individual servicing the loan.
Barfoots sell 40% of the homes and it is interesting to look at the line up of their top salespeople
http://www.barfoot.co.nz/News/2014/April/Top-25-salespeople.aspxa
Pay in Auckland increased by 7% or approx $5,500 in the last 12 months. $5,500 divided by a fixed mortgage rate of say 5.75% = an additional $95,652 of mortgage that an average income could service which correlates very closely to the amount house prices in Auckland have increased.
No foreign investement tax? No restrictions?
Free healthcare for immigrants, and aging families of immigrants?
Why my dad's healthcare bill for medicine alone runs above 1M per year, guess where he's emigrating to?
Have any of you Kiwi's seen the movie "Dumb and Dumber" ?
I wouldn't bank on it lasting. The UK health service is in a mess and we will follow close behind. I always remind myself that the impossible never lasts, the rug will get pulled.
The Uk health system has reached its apex.
http://www.theguardian.com/society/2014/jun/04/hospital-chiefs-urgent-r…
http://www.bbc.com/news/magazine-17429786Hmm except I think if its NZ he has to declare this and wont get a visa or if he lies can have his visa revoked?
http://www.immigration.govt.nz/migrant/general/generalinformation/qanda…
” investors have continued to assume that monetary (and at times fiscal) policy could contain the long-term business cycle and produce continuing prosperity for investors in a multitude of asset classes both domestically and externally in emerging markets.
http://www.zerohedge.com/news/2015-01-06/bill-gross-2015-outlook-good-t…good times have passed?
Just try Kunslter's predictions for 2015, bar actual war(s) I can imagine much worse.
http://kunstler.com/forecast/forecast-2015/
"
Here are my financial forecast particulars for 2015:
- Early in 2015 the ECB proposes a lame QE program and is laughed out of the room. European markets tank.
- Greek elections in January produce a government that stands up to the EU and ECB and causes a fatal slippage of faith in the ability of that project to continue.
- Second half of 2015, the rest of the world gangs up and counter-attacks the US dollar.
- Bond markets in Europe implode in first half and the contagion spreads to the US as fear and distrust rises about viability of US safe haven status.
- Derivatives associated with currencies, interest rates, and junk bonds trigger a bloodbath in credit default swaps (CDS) and the appearance of countless black holes through which debt and “wealth” disappear forever.
- US stock markets continue to bid upward in the first half of 2015, crater in Q3 as faith in paper and pixels erodes. DJA and S & P fall 30 to 40 percent in the initial crash, then further into 2016.
- Gold and silver slide in the first half, then take off as debt and equity markets craters, faith in abstract instruments evaporates, faith in central bank omnipotence dissolves, and citizens all over the world desperately seek safety from currency war.
- Goldman Sachs, Citicorp, Morgan Stanley, Bank of America, DeutscheBank, SocGen, all succumb to insolvency. American government and Federal Reserve officials don’t dare attempt to rescue them again.
- By the end of 2015, central banks everywhere stand in general discredit. In the US, the Federal Reserve’s mandate is publically debated and revised back to its original mission as lender of last resort. It is forbidden to engage in further interventions and a new less-secretive mechanism is drawn up for regulating basic interest rates.
- Oil prices creep back into the $65 – $70 range by May 2015. It is not enough to halt the destruction in the shale, tar sand, and deepwater sectors. As contraction in the failing global economy accelerates, oil sinks back to the $40 range in October…
- …unless mischief in the Middle East (in particular, the Islamic State messing with Saudi Arabia) leads to gross and perhaps fatally permanent disruption in world oil markets — and then all bets are off for both the continuity of advanced economies and for peace between nations."
oh and,
"prosperity for investors"
and the rest of us? guess not.
Yes. I remember his 'forecasts' for 2013 - they were so far off the mark he gave up being specific for 2014. But they are worth remembering, as a cred check:
"So, finally my picks for 2013:
– Dow 4000 (What!? Did he say that!? Again!?). Even the algos will run squealing into the underbrush this time.
– Gold $2500 by 12/31/2013 (and headed higher) after a Q-1 deleveraging swoon. Silver $125. Uncertainty trumps greed and fear.
– Two-way Stagflation — massive asset deflation combined with high energy and food costs. Americans go broke fast, go hungry, go nowhere.
– California, Illinois, and New Jersey beg the broke federal government for bailouts. The federal government pretends to bail them out. Austerity has a field day.
– Despite willingness to do so, the Federal Reserve can no longer “print” money to overcome the deflationary contraction of wealth. They are finally “out of ammunition.” They will try nonetheless. Consequently some nations will stop accepting dollars for trade, possibly the Middle Eastern oil exporters. That would be very bad news.
– Shale oil and gas production stop increasing, possibly turns around to decline. The event hugely demoralizes “energy independence” cornucopians.
– Gasoline shortages return to the USA on a scale last seen in the 1970s. Cause: broken oil market allocation system. Some regions suffer more than others.
– Drought continues in the US heartland. The grain belt withers in 2013. Dixieland cooks like a chicken-fried steak. Food costs go crazy. The American public finally begins to freak out when confronted with $9 boxes of Cheerios.
– A major earthquake hits the West Coast."
I think that was 0 out of nine.
Agree it doesn't look flash. The move like that in oil says to me that something is seriously amiss, isn't central banking supposed to smooth out the peaks and troughs? Anyway works of PDK spring to mind when he talking about extreme volatility going forward, seems that was an accurate prediction. I suspect there is headroom in the money printing stakes to contain at least one more crisis though.
Matt Simmons said the same thing on volitility (maybe he was the original?). Where I came to not agree with MS was that he thought oil could go to $200, $300, $500 a barrel. Meanwhile other economists thought no one / economy can pay that in a sustained manner or even $120 as we are seeing. That suggests a very asymetrical Hubbert's curve, all or most of the $120+ oil is going to stay in the ground because we cant afford to pay for its extraction.
"One more" MS also said he thought it would take 3 of these events for the world to come around to the view we are screwed, this is no2. Meanwhile the free marketeers and "investors" continue to blame everyone else but themselves.
I have pondered this at length. My gut feeling is that a financial collapse to clear all the debt just as you probably do, but a little way off just yet. However the divergence between the real world and the financial claims on it means the time gets closer. But I expect a monetary system to replace it not argamageddon as such. However oil will become more valuable once there is a reset and maybe then in comparative terms it could reach where MS predicted.
In the process of getting to financial collapse then I see plenty of headroom for expansion of the money supply, it isn't anywhere near the steep part of an exponential curve if plotted. Perhaps 4x what it is now, maybe even 10x. (in the next few years)
"valuable" except people will get priced out so no I dont agree on its price going this high even in comparitive terms.
As an example I read that in africa villages that used to take their grain to a "local" deisel powered mill had stopped doing it and gone back to hand grinding. The reasons were 2 fold, cost of deisel to run the mill made the charge to grind too high, un-affordable or deisel couldnt be bought at any price. Same applies to say fertilizer and GMO crops in Bangadesh without the exact amount and type of fertilizer GMO crops wont work very well, so if you cannot get the fertilizer at price you can afford your crop is worse than non-GMO crops.
So in terms of an economy, sure the top 1% and even the top 50% can buy fuel, but the economy cant survive like that as we are seeing I believe. Sure desiel can get cheaper but if your wages have dropped even more its even less attainable. So the consumer economy/society we have is poked, the Q is how smooth is it going to be to get back to pre-consumer economy/society our grand parents lived in. For some parts of the world I cant see that being bloodless.
I had a look at his 2014, not too hot either. However I cant say Ive read anyone that has predicted "next year" well since 2008 either and especially multiple "successes" in a row.
I tend to work on the house of cards scenario, it has an amazing ability to stay together until it doesnt and then everything falls apart at once.
and what of you DC? think its going to be a better year?
I told someone close to me to buy US Treasuries when they were at 3%, I wish I had been in a position to take my own advice.
That article almost goes hand in hand with this one.
http://www.zerohedge.com/news/2015-01-03/peak-dream-death-young-america…
If there were huge amounts in the junk bond market thatwas the shale oil industry and that's run for cover, putting it into bonds I assume makes sense. Add in the oil price dropping points at recession or at least huge stress in OPEC and big losses again running to "safety" makes sense. Then add teh EU looks to be going into deflation,
http://krugman.blogs.nytimes.com/2015/01/07/panic-fast-and-slow/?module…
Greece exiting....
Japan still DOA....
China also a mess...about to spnd 1trillion? to re-kickstart things?
hardly surpising "investors" are running for cover?
Absolutely overlooker BrandUS's willingness to do anything to keep itself in power.
The more things like that list that start to pile up, the more you can guarantee those in power will just change laws and move the goalposts. Pretty much after 5 items you can guarantee it will be done, then when you revisited the list "free printed money" and media support suddenly those things above chnage noticeably. Dow...free money? goes down. Gold? why buy it, it's expensive to own self it to others. Stagflation...free money generates momentum. States need money, politicians and Fed buy favours. Fed can always print money, it has the government bent over a barrel of oil and in a sound proof vault built of cash. re Shale...see previous, especially buying favours to get to the reserves. Gas shortages? never in BrandUS, expensive yes, short never.
Take a tin of waterbased paint. Then keep adding water.
Eventually you no longer have paint you just have tainted water and absolutely useless as paint.
Just like the paint he world fiat currency has been diluted that much it is useless as a currency. That is why Central banks have not been able to fix economies.
Central banks will wake up to this diluted currency by years end and introduce a new digital currency.
Then the game can start all over again.
Except your analogy doesnt work as our economy/finance is a lot more complex than a can of paint needing some inflation to work it seems.
I suppose you could say as an example of a better analogy a 2 yr old doesnt eat that much to grow but a teeneager a hell of a lot more, dont feed the child more and more and it doesnt grow same with our economy, overfeed it of course and it gets fat and fall over, LOL.
A move to a digital currency doesnt solve anything I can see (in fact it seems to get stolen all to easily), in effect fait is that now, the FED just adds some numbers to their "spreedsheet" and away we go.
For me 2 things a) despite all the QEing since 2008/9 we have seen negligable inflation except in speculative assets. b) P/E price to earnings as a result are insane. So by this I mean sure people are paying lots for assets but the earnings/interest from those assets are getting worse and worse so the P/E is terrible.
For me that means at some point when the fools who think they can sell their assets to a bigger fool find they cannot will be in the poo. They wont have the earnings off the asset to justify so it will mean massive "wealth destruction" as the assets fall back to a value commensurate with their earnings potential. So all this 'money printing/QE will be wiped away and those holding it will find they still owe on it, ergo default is probale.
Which are "useless as currency" Mike? Be specific. When I have a wallet-full of notes I can hand some to a barman and he'll give me a beer. Pretty damn useful that. Works in most countries I go to and I have noticed these notes seem to be holding their value a heck of a lot better than they did in the '70's and '80's. The guy at the gas station gives me 30% more gas for these notes than he did just 3 months ago. Really useful that.
What matters is how many hours you had to work for that gasoline or beer, a youngster today gets a whole lot less now than did the one in the 1970's due to compounding interest on debt. Compounding interest also explains the effect you outline, interest rates have to go down over time.
as well as the compunding interest, the modern consumer has to pay for massive hidden costs (sponsorship, advertsing, a mass of passed on Intellectual Property charges, over enthusiastic safety compliance costs). It's not so bad for the old guard who have managed to keep their employment for much of their life, but for the new folk and the restarters, they don't have the resources to pay the butchers bill.
Re: Increasing Property Prices.
It appears many people think prices can only continue up.
Surely i'm not the only person who remembers the property cycle clock???
The media and those with vested interests act as though this doesn't exist. But it does, and has been proven time and time again to be correct.
I wonder if it's time some people reminded themselves of the property cycle clock. It never stays at 12.
It was 2009 when I bought my house in central Auckland suburb for 20% off the asking price after it was on then market for 5 mths and passed in auction twice.
Sold it for a good price couple of years ago and people who bought it sold it again for another massive gain. People have short memory and tend to take the last 4-5 years data as on going long term trend.
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