The average price of homes sold by Auckland's largest real estate agency surged past $800,000 for the first time last month.
Barfoot & Thompson's average selling price was $804,282 in April, an all time high and well up on the average price of $776,729 achieved in March.
That means Barfoot's average selling price in April increased 3.5% in a single month and has increased by $95,679 (13.5%) since April last year when it was $708,603.
The median selling price increased at an even faster rate.
It was $753,500 in April, up 6% compared with the March median of $711,000, and up a whopping $133,950, or 21.6%, compared to April last year when it was $619,550.
That means Barfoot's median selling price has increased by $133,950 in the 12 months to April.
Barfoot & Thompson chief executive Wendy Alexander said although the increases were significant, they were not extraordinary and suggested that prices could fall back over winter.
"They are similar to the levels of increases experienced over the last two years," she said.
"More top end properties are sold in the summer/autumn months than in the second half of the year, and this results in the average price easing back after strong starts to the year.
"Demand for properties remained rock solid in April and is reflected in the prices buyers were prepared to pay," she said.
The company sold 1070 homes in April, its highest number in the month of April for more than a decade.
It also added 1580 new listings to its books which was broadly in line with the 1630 new listings in April last year and the 1532 new listing in April 2013.
However lack of choice may once again be becoming an issue for buyers, because the total number of properties listed for sale on Barfoot's books at the end of April, was 3151, compared to 3347 in March and 3623 in April last year.
The company sold 314 properties for more than $1 million in April, its second best month ever for million dollar-plus sales.
But it only sold 157 homes for less than $500,000, which means it sold exactly twice as many homes above the million dollar mark as it did for under half a million.
In a Quickview newsletter about Barfoot's April figures, ASB senior economist Chris Tennent-Brown said the Auckland housing market remained very supply constrained while demand was very high.
"Accordingly, we expect continued strong upward pressure on Auckland house prices," he said.
Barfoot Auckland
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70 Comments
This is not even funny .
Prudence dictates that you should not spend more than 30% of your take-home pay on the roof over your head .
The instalment "interest only" on a $640 ,000 mortgage ( $800k less 20%) is $3,200.00 a month in AFTER TAX MONEY .
So this implies that to be a careful person , you need a family income of $11,000 a month after tax or $15,000 a month before tax deductions .
The Banks are being irresponsible and lending recklessly if they are not applying normal risk- lending criteria when granting loans .
And if ( sorry .....when ) it goes wrong , the NZ taxpayer will bear the brunt of it.
This is no longer the case, has not been for about 20 years, 30% of your income you cannot buy a house, try more like 80% of your income and your a starter. Its still doable with two incomes if you both work and have no kids...and plan to have none. Its simply about choices now, you cannot "have it all" anymore its a simple as that.
Interesting that volumes are right down. I was at the auction rooms last week and many were passed in. It was only those in the higher price ranges that sold and even those only just made it to reserve. Often the seller had to be asked to lower their reserve. I think that things are turning as the economy slows and the average selling price is only high due to the top end of the market being where the selling s happening.
The other houses are being unrealistically priced
He means that the winning bidder needs only pay $1 more than the highest price the second highest bidder offered, meaning that the winning bidder may get it for much less than they were prepared to go to.
In reality, it probably works the other way when there's two bidders battling each other, they both go a little beyond their "limit" to see if they can trump the other.
In the current market, nobody can value a place as people are prepared to pay crazy money for the right place.
In my experience it's the bargain hunters in the auction room, people like me.
And I'm sure that agents would like you to believe that the auction room holds some kind of magic that gets you a higher price but a persons limit is their limit. Ask an agent how much they earn and how many more properties can be managed at once when selling by auction. Auctions remove the need to drive all over town getting contracts signed and counter-signed; the auction conveniently herds all buyers into one place at the same time.
And the buyers you really want, cashed up foreign buyers, can't buy at auction (logistics), they won't even be in the room.
And let's not even discuss the advantage that is handed to buyers if the property is turned in.
Price by negotiation means all buyers are in, you see all the cards, buyers are completely in the dark and a good negotiator will tease out the best price.
Hypothetical... you have three buyers desperately wanting your house, one can pay up to 750k, one up to 800k and one up to 850k. You sell that property at auction the bidding starts at 750k, all hands go up. Bidding reaches 800k, two hands go up. Bidding goes to 801k, one hand goes up, no more bids, property sells for 801k.
Hypothetical 2... you have three buyers desperately wanting your house, one can pay up to 750k, one up to 800k and one up to 850k. You sell price by negotiation and none of the buyers know what other cards are being held, only you the seller does. You've chosen your agent wisely and they are a canny negotiator and teases the best offer out of each buyer. The 850k buyer offers their best price, not knowing that 801 would have secured it.
Net result you are 50k better off.
In my experience foreign buyers fly in one day, view one property only (they are very guided by their buyers agent), make a conditional offer that day or the next, then fly out. The conditions are satisfied and all other formalities completed while they are at home in Singapore or Hong Kong. They don't buy at auction because the logistics of first viewing, then getting conditions satisfied before auction, then being available at auction day and not having a guarantee they will secure the property (yes they have the same frustrations as the rest of us) just make the process too difficult. They like to fly in, know the deal is secured then fly out.
Another common misconception is that they finance abroad, most I know finance here and again the logistics of getting finance pre-approved for auction is difficult.
This image that is portrayed in the media is of ruthless foreign buyers snapping up ten at a time at auction just doesn't seem to be reality. Most I know are from Hong Kong and are buying bolt holes here as the situation in Hong Kong has got worse since the succession to China. Just my experience/opinion; could be 100 other reasons I guess.
It sounds like you're familiar with these people. Are you some kind of consultant by any chance? A recent survey suggests that most "emerging affluent" Singaporeans plan to retired with approx SGD571,000. Not sure how local banks are just loading people with money to invest in Auckland property prices. Most house prices in Auckland would exceed their retirement expectations.
http://business.asiaone.com/news/personal-finance/singapore-workers-fal…
I just advertised a place today. Rent is 4% higher than I rented it for 9 months ago. Had 5 inquiries in the first hour. People asking if they can see it sooner (then the 3 days away I suggested) because "it's a hot market and good places going fast". I could be asking higher rent and I'd get it.
I think a lot of landlords are actually decent people and aren't asking as much rent as we could be.
Like the Finance Company fiasco , why is the Government of the day doing nothing while seeing all the evidence of things getting out of hand ?
Any responsible Government would take steps to curb an overheating property market , Almost all OECD countries have done this at some point over the years .
Why are we doing nothing ?
There will be tears when it all unravels .
Trust me , Mr iconoclast , after the crash there'll be bargains galore for those of us who are holding cash , and willing to walk through the ruins & rubble of the once mighty Kiwi property bubble ....
.... it's just a matter of when , not if ...
... the " rockstar " economy is in truth the " rocks in its head " economy ... Paul Glass is correct , real GDP growth is a mere tick above zero , and the dairy industry is on it's knees , curdling downhill for the next 5 years or more ... but for the Christchurch re-build , and the record immigration into Auckland , we would be on the cusp of a recession already ....
Just sitting on my big fat butt , scoffing on my mega bag of Gummibars , waiting for the house of cards to tumble .... mmmmmm ....... gummies ...... arrrrrrrrrrrrrrhhhhhhhhhhhhhhhhh ....
There must be a lot of Chinese nationals sitting on significant asset appreciation in the AKL housing market, that's those who purchased a few years ago or more. Talk of buying restrictions and taxes on Foreign nationals,a strong NZ $, may be enough to get them to flee to safe territory while the assets appear to very exuberant and not based on fundamentals. Know what I'd do if I was one of them, Singapore here I come.
Conclusion
A simple and important principle of finance is mean reversion. While housing markets are not as subject to bubbles as some markets, housing bubbles do exist. Long-term averages provide a good indication of where housing prices will eventually end up during periods of rapid appreciation followed by stagnant or falling prices. The same is true for periods of below average price appreciation.
Goodness Gummy. Your comments surprise me. This is the same thing people (e.g. BH) were saying about a million dollars worth of tax free capital gains ago for me. On paper of course, so it doesn't count right guys ;)
The sad thing is some people believe you and will wait and wait and wait. All they'll get is a flattening of prices for a few years, possibly a 10% drop in prices. You watch. In winter we'll get some average price reductions and you lot will say the sky is falling in. Then Spring will hit and you'll be proven wrong again.
Until I see 20,000 houses built in Auckland or Auckland becoming a sh*thole to live in nothing will change. If you want to buy a home in Auckland and can afford it, buy it now because there is no great crash coming any time soon.
Smalltown - you are so right
Unless people actually go there and see for themselves they have no idea
two otherguys, 21/04/2015
Once owned and occupied a house in Hillcrest on the North Shore for 15 years. 10 minutes from the CBD. More desirable now than then. All the neighbours kept their places neat-n-tidy, lawns always mown, everything spick and span. Went back for a look-see, to revisit old memories. Now, most of the street looks like a street of rentals. Scruffy, tired, run-down, unkempt. Wouldn't live there now
http://www.interest.co.nz/property/75084/academics-say-unprecedented-re…
With Australia introducing a 3% foreign buyer tax and already having stamp duty and CGT we should see even more people switch their property buying focus out of Australia and onto NZ. Interest.co.nz should send a reporter down to Barfoots Auction rooms tomorrow armed with a camera and take some notes on the number of Asian buyers that secure the purchase of properties tomorrow and while there why not interview the buyers and ask are you a fly in / fly out buyer, will you rent it or leave it vacant, or are you actually a resident. C'mon interest.co.nz do John Keys job for him - let's see some decent investigative journalism into this issue.
Crazy. The "doing the opposite of what BH recommended in 2007" index is now running at around 600% - that is ones net wealth is around 6x what it would be if one had sold up a somewhat geared central Auckland property in 2007 and invested. Interestingly the "renting rather than paying a mortgage like was recommended in 2007" index is around 2x - that is, the person above's mortgage repayments are around half of what rent would be for same house.
Exactly right, and rents arent lifting. Its only the top end of the market which is selling and thus the avg price is going up. When i was in the auction rooms last week, lots of houses in the average price range were passed in.
Interesting i was with the vendors as their house sold to some asians, These asians almost walked out and when the vendor agreed to lower the price it sold and the vendor asked them if these people lived in NZ and the agent said mostly they dont. I found it intersting that even these foreign speculators dont have unlimited pockets
I'm not a labour man. In fact I have detested them and their leadership for the last 10 years.
But I'll sooner vote for them than National / John Key given National's willfully incompetent handling of house prices. The affordability of housing and its potential impact of financial stability and those poor sods who are taking out mortgages is the single biggest social and moral issue that we currently face.
I'll hold my nose and vote for labour or the greens just to prove the point.
I watch question time this arvo labour $ greens not interested the only one taking the government to task was winston peters and they had no answers jokey was comparing Chinese owning milk plants and farms here to fontera owning there's in China. As usual forgot to mention they can't buy the land and can only own 49% of the company
I watch question time this arvo labour $ greens not interested the only one taking the government to task was winston peters and they had no answers jokey was comparing Chinese owning milk plants and farms here to fontera owning there's in China. As usual forgot to mention they can't buy the land and can only own 49% of the company
Parity Party time!
Soon we will be celebrating a different one - house prices! Auckland already has higher prices than every Australian city bar Sydney, but....
Auckland region median house price: NZ$720,000 (REINZ) - March 15
Sydney region median house price: AU$732,500 (CoreLogic) - March 15
Let's wait for April's statistics with auckland likely to grow faster than Sydney, and parity on the dollar, and boom! Auckland will be more expensive in actual dollars than every city in Australia! Wha hoo when it comes to bubble territory we're number one!
Trouble is Keyser, a lot of like minded individuals such as unemployed, union members, renters, students, Maori, Polynesians etc just don't make it to the polling booth. Baby boomers with their investment properties however are first in the queue. I don't see National being that interested in making voting compulsory - ever. It is one thing the Aussies do much better.
Admittedly, I am getting bored and tired of the endless "chat" regarding the overheated/bubble/un-affordable housing in Auckland. Most of you have probably read the Housing affordability report by http://www.demographia.com/dhi.pdf
If not, then check out the graph on page 11. Auckland is quickly gaining ground on the likes of Sydney, San Fran and London.
I see the government is blaming the Auckland council for the lack of land supply; however, in the same light John Key continually denies there is a "housing crisis" in Auckland.
So what is it? If there isn't a housing crisis, then why partition the blame elsewhere. The government and the Council both have tools to deal with the situation, it just appears neither want to spook voters sitting pretty in Auckland as they watch their bouncy castle bursting at the seams.
For the second year in
a row, the United
States had the most
affordable housing
among major
metropolitan markets,
with a moderately
affordable Median
Multiple of 3.6.
Canada (4.3) Ireland
(4.3), Japan (4.4), the
United Kingdom (4.7),
and Singapore (5.0)
had seriously
unaffordable housing.
Three national markets
were severely
unaffordable, with
Median Multiples of
5.1 or above. These
included China (Hong
Kong), with a Median
Multiple of 17.0, New Zealand, at 8.2 and Australia at 6.4. Annual major metropolitan area Median Multiples
are shown in Figure 2.
... being around Godzone since the time of the moa , I can remember great swathes of years roll past with never a mention of house prices in this fair land , girt-by-sea ... decades merged into new decades ... and no one stirred by the thought of " houses " .... life was peaceful , sweet ....we worked , we raised our children , grew some kumara and puha in the backyard ...
But of late , as you correctly point out , all we hear about 24/7 day in and day out is " houses " .... all the chit-chat , the adverts on the TV & radio spruicking property as an investment , seminars , cheap loans , better real estate services , lower fees , yadda yadda .... non-freaking stop , on and on it goes ... assaulting your senses like a Justin Beiber song on endless play .... the tortuous endless yabba of it all ...
... which says what to you ? .... hmmmm ..... the Kiwi housing market is now in what ? .....a weeeee hint , it rhymes with the word " trouble " .... and eventually causes quite a lot of trouble , too .....
Crazy. Look at 5 Seccombes Road, Newmarket. Listed at $2m, with fixed rent of 46.8. = 2.36 percent return. At 5 beds, that's $180 per week per room in rent. Hard to see that doubling or tripling to get that return anywhere borrowing at 5 percent or there about. Will watch closely to see what it actually sells for.
$2 million could buy you this winner
http://www.realestate.co.nz/2544836
Or 5 of these
http://www.realestate.co.nz/2545321
To understand why the new Chinese taxes and penalties are so dangerous, you need to grasp what is now happening in the Sydney and Melbourne property markets.
In Sydney, over 80 per cent of inner city apartment buyers are Chinese or Asian investors. In Melbourne’s CBD the figure is even higher.
http://www.businessspectator.com.au/article/2015/5/5/australian-news/ch…
What if the Chinese are borrowing money in China to invest in the Australian and NZ housing market?
A bit like NZ farmers who borrowed off banks like ASB, to invest in NZ Farming systems Uruguay.
Most Chinese are new to Capitalism and at present it looks like a free ride to great wealth, fellow country men who invested 5 years ago, in many cases have doubled their money and it's tax free in NZ but what if they only made a %20 deposit on a 500k house that's now worth 1.2 mill... ?
Houses like farms are very liquid on the way up but not so on the way down. Key was smart enough to earn a small fortune but not smart enough to make sure the countries economy was built on stone, so he turns out to be not so smart after all, just like his predecessors.
Now we have yet another job lot of dairy farms selling to an unnamed Chinese company, Northland about $42m involved. http://www.nzherald.co.nz/northern-advocate/news/article.cfm?c_id=15034…
I wonder where the tip point is for Key where the whole "tenants in our own land" thing kicks in and he does something?
I have been looking in Queenstown which is supposed to be as bad as Auckland but it's not, they crashed big time down there in 2009 due to most where owned by overseas investors who all left at the same time only leaving the locals to wait it out to recover,
It's funny because they keep sending me beat ups how it's just like Auckland then the following month price reductions from owners trying to get there money out this time. If there is another world scare God help Auckland and the NZ taxpayer as they will be putting in to make sure the big 4 banks don't fail
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