The housing market set new price records in September, with the national, Auckland, Waikato/Bay of Plenty and Otago median selling prices hitting new all time highs, according to the REINZ.
The national median selling price was $484,650 in September, up 4.2% compared to August and up 15.4% compared to September last year.
In Auckland the median price all set a new record of $771,000, up 4.2% compared to August and up 25.4% compared to September last year.
The median price for all parts of the country excluding Auckland was also at an all time high, hitting $365,000 in September which was up 4.7% compared to August and up 8.3% compared to September last year.
The number of sales was also strong, with 8174 homes selling in September, which was up 5.3% compared to August and up a whopping 38.3% compared with September last year.
REINZ chief executive Colleen Milne said there was continued evidence of Auckland investors buying homes in other regions of the country, particularly in Northland and Waikato/Bay of Plenty.
"These regions have recorded very strong sales growth so far during 2015 and this is now starting to be seen in the median price data," Milne said.
The median price in the Waikato/Bay of Plenty was $390,000 in September, up a massive 10.5% compared to August while the number of sales in the region was up 8.9% for the month.
The forthcoming relaxation of the loan to valuation (LVR) mortgage lending restrictions for regions outside of Auckland would also have a positive effect on those markets, Milne said.
There were 1042 of homes that sold for more than $1 million in September, up 143% compared to the 428 that sold for $1 million or more in the same month last year.
Auction sales were also strong, particularly in Auckland, where auction sales accounted for more than half of all sales for the first time.
In the Wellington region the median price of $413,375 was up 2.7% compared to August and up 3.3% compared to September last year, while the number of sales was up 22.7% compared to last year.
In Christchurch the median price was $444,000 in September, up 3.3% compared to August and up 4.4% compared to September last year, while the number of sales was up 9% compared to year earlier.
In a Quickview note on the REINZ's figures, ASB economist Kim Mundy said strong migration, record low interest rates and low housing supply were supporting prices.
"On the other hand, the impact of tax changes and investor LVR loan restrictions are less certain," Mundy said.
"The pattern following the last implementation of LVR restrictions in late 2013 was a flurry of sales activity ahead of the introduction, followed by six months of weaker sales and slower price growth.
"We may see a similar pattern once the new investor measures are in place," she said.
To read the REINZ's full report for all regions of the country, click on the link below:
The interactive charts below show the monthly changes in the REINZ's median selling price for all regions since 2002.
Median price - REINZ
Select chart tabs
35 Comments
You would be sensible to be a seller in the Auckland market right now. 2% yields are unsustainable and there is limited scope for further increases across the board, however individual investments may still prove good over the long term, it's going to be down to your stock selection.
Growth investors never do well buying at market peaks unless you go for GARP.
Whether this month is the peak or not is not important, it is the fact that we are nearing a peak in the Auckland market as prices push lending to unsustainable levels. The peak is somewhere soon, and may be the starting of a flat period rather than a sharp decline anyway.
Ah no, I never said it was going to peak in any of those past years.
It will be much as it peaked in 2007, 1997, 1988 and 1976.
This is a bit Auckland specific, the rest of the country won't see as substantial a downturn as Auckland, but the peak may hit this year or could have already passed or may be next year, but there are so many factors pointing towards an end sooner rather than later.
It's interesting that in 2008, there was still talk about the booming market even though it had turned in late 2007.
The real question is whether the ridiculously low interest rates will give the market a second wind. I am not so sure that it can in Auckland as funding investment purchases with yields of 2% is entirely unsustainable unless you are either exceptionally cash rich or using stolen money. The tighter rules squeezing out investors will seriously impact the market in due course and will have a far greater impact than rising interest rates alone would.
So we may see a strange conundrum in Auckland - super low interest rates and prices not rising substantially, which will of course prompt many to sell up.
A last gasp before the 1 October deadlines?
Note the massive jump in the average sale price in September compared to the previous 3 months. ($917k compared to $860-870k).
That tells me there was a lot of high end sales (perhaps foreign buyers getting in with their shady money before 1 Oct), hence the median is higher too.
Probably just the beginning of the end. Will make good headlines though if October figures fall (probably based on fewer top end sales...). Downturns tend to be self fulfilling, although with interest rates where they are it might take until there is an upswing in rates before the market truly shudders, so could just be a low slow grind down. Rather than a sudden derailment.
Banks began applying the 30% LVR rule to Auckland investors late August/early September, as it was originally set to apply by 1 October - the Reserve Bank subsequently pushed the commencement date out to 1 November but banks stuck with the 30% regardless. Auckland based investors with less then 30% deposit then flooded into the Waikato, BOP and Northland areas in numbers never seen before - the real estate agents in those areas are absolutely creaming it and cannot keep up with demand.
A smart move would be to now look at the Hawkes Bay and Manawatu, particularly Napier and Palmerston North and maybe into the Hutt Valley area of Wellington as those areas have not seen the impact of the Jafa investor just yet - but it is just starting to happen in those areas.
So prices look like they are increasing in Auckland but this is only due to less activity in the investor end of the market due to banks already applying the 30% rule and the data skewed by more sales of family homes above $1m. NZ median price now influenced by frenzied Jafa activity in cities outside of the Auckland area where they are paying way beyond the fundamentals - rents may actually fall as too many people from Auckland are out bidding the first home buyers in places like Hamilton and Tauranga and rental market is becoming over supplied.
So congratulations to the government and the Reserve Bank - they have set off the start of the strongest house price boom this country has ever seen - the unintended consequences of economic meddling have come back to bite them. On the Auckland front the Chinese have now disappeared from the market - scared off by the IRD/Bank account and ID requirements. There was a massive amount of turnover/trading of real estate undertaken by Chinese "under the radar" - now the government has fixed that problem.
Seems the Auckland problem is being exported to the regions, don't see how that can be a good thing. The RBNZ should have kept the LVR limits intact for a few months instead of lifting it and letting all this hot money fly out of Auckland and find homes there. It will price the locals out of the market, create unnecessary housing/rent inflation and shrink spending, how can that possibly help the regional economy. Even worse when the economy deteriorates, it will impact the locals more than it does to speculators. Seems the Govt and RBNZ are content moving the chess pieces on the board, they don't want to take bold steps to address the root cause of the problem.
I can guarantee you that a majority of the locals who are holding property will be very happy to see their property values are rising. Nothing gives them more pleasure than seeing the price of their house going up as it makes them feel richer. It makes them feel better about their retirement. Stuff the generations who have not hit the market yet because they are too young. They can worry about themselves.
Stratified median house prices in Auckland were up 29% year on year in Auckland. Pretty fecking insane. Median house prices up $30k in the one month from August, and average auckland house prices increasing $47,290 during September to $917,248.
If we repeat last years normal seasonal pattern Auckland's average house price will be $996k by December, and finally break the $1m mark at $1.068m in March 2016.
Buying expensive with historically the lowest interest and not much more room left for ocr cuts doesn't seem a smart retirement investment plan to me.
Speculation, buying and selling quickly looking for capital gains? Maybe. But expecting prices to increase further now that the Chinese vanished from the market and the glonal crisis is around the corner is rather naive.
Many dad and mum investors will be trapped under water too.
OU lets give it another month shall we. How many were buying in Auckland in September in order to beat the new IRD / Bank Account rules? We just don't know. Thos buying outside of Auckland are taking more of a risk in my opinion. Less restrictions on building and smaller job markets add risk that does not exist in Auckland. Look at New Plymouth. Hit by dairy and oil downturns therefore stagnant housing market. All markets have their risk fractures.
Homes failing to sell at auction
http://www.stuff.co.nz/business/72936382/homes-failing-to-sell-at-aucti…
are we heading for another 2009, this time its not the finance companies at the forefront of lending on property
http://www.scene.co.nz/buyers-beware--appeal-court/308347a1.page
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