The average selling price of homes sold by Barfoot & Thompson hit a new all-time high of $876,075 last month, although the number of homes sold declined significantly.
Barfoot's average selling price of $876,075 in November was up 4.2% compared to October's average price of $840,402.
In November last year the average selling price was just $756,909 meaning its has increased by $119,166 (15.7%) in the last 12 months.
November's median price of $795,000 was also a new all-time high and was up 1.9% compared to October's median of $780,000.
However the number of homes sold by Barfoots, which is the largest real estate agency by far in the Auckland region, dropped significantly in November when just 986 homes were sold, down 8% from 1068 in October, and down 11% from 1105 in November last year.
That made last month the slowest November month for sales since 2011.
"While prices have ignored Government and Reserve Bank measures designed to cool prices, there has been a measurable decrease in market activity," Barfoot & Thompson director Kiri Barfoot said.
In October market activity slowed and that trend continued into November.
"New listings for the month at 1683 were also down, being 7.5% lower than October's and the lowest number in the past seven months.
"At the end of the month we had 3252 properties on our books, which was in line with those at the end of October and represented the highest level of choice since March this year."
The decline in sales had mainly affected properties priced between $500,000 and $750,000, which was a popular price bracket with investors that had portfolios of less than three properties, Barfoot said.
In November Barfoots sold 286 homes priced between $500,000 and $750,000, down 19% compared with the 353 that were sold within that price bracket in October.
"It remains to be seen if prices continue to ignore tighter regulations, or whether November's prices are the last remnants of momentum that built in the lead up to the introduction of the tighter measures," she said.
'Marked impact'
Westpac senor economist Michael Gordon said the Barfoot figures show the tax and foreign buyer rules for property investment that came into force in October have had a "marked impact" on housing turnover.
"Sales fell by 16% in seasonally adjusted terms in November, on top of a 20% fall in October. The level of sales is now back at the lows reached in mid-2014, following the Reserve Bank's cap on high-LVR (loan-to-value ratio) lending and ahead of an uncertain election outcome. The scale of the decline in sales is partly a product of the surge between July and September, as buyers looked to get in ahead of the new regulations. To the extent that this reflected purchases being brought forward, we could reasonably expect to see a comparably-sized hole in housing demand over the next few months," said Gordon.
"New property listings have also declined since October, and the stock of available listings has fallen. This suggests that property owners also recognise that the window of opportunity ahead of the new regulations has now closed."
Gordon suggested the Barfoot data gave no clear signal on prices, with the average price up slightly and the median price down slightly in seasonally adjusted terms.
"We note that in unadjusted terms, the median sale price rose to a new record high; however, this measure is highly seasonal and typically experiences most of its gains during the Sep-Dec period. The absence of any meaningful softening in prices over the last two months stands in contrast with the Real Estate Institute of New Zealand's stratified house price index for Auckland, which saw a dramatic 4.7% fall in October. We'll be interested to see whether this decline is sustained in the November REINZ report, which is due sometime next week," Gordon added.
ASB economist Kim Mundy said there were now two months of data suggesting anecdotal reports of weakened demand in the Auckland housing market were correct.
"However, the fall in sales has been accompanied by a fall in overall housing inventory, which is keeping a degree of tightness in the market. And indeed, the increase in average house prices in November suggests that the market is still out of balance and price pressures remain," Mundy said.
Barfoot Auckland
Select chart tabs
45 Comments
So if the drop in sales was mainly in the $500,000 - $750,000 bracket (below the average, and covering most of the lower prices in the Auckland market), then naturally the average & median will increase, even if the house prices have remained the same or even decreased month on month.
Listings down. I'd expect this trend to last a couple of months until Feb/Mar when activity will pick up again.
If the drop in sales was in the $500,000 - $750,000 bracket, what bracket are all these FHB'ers who can't find affordable housing looking at? I thought they couldn't win properties because always beaten by investors. FHB'ers should be using this window of opportunity to buy.
Or wait as it was always going to take a few months to see where it goes. I struggle to understand why anyone would be borrowing to buy a house in Auckland currently when there is more chance of downside than upside. I would not fancy borrowing money that disappears as average prices and median prices are in real terms dropping when B and T put out figures that show houses in the higher prices brackets are dominating statistics.
There's been a few windows for FHB'ers to get in, most if not all of which some of us have pointed out and every time others here have declared "wait the sky will fall in". The window most similar to the one we are currently in was when the LVR rules were introduced. In hindsight it would have been a great time to buy. No doubt we will look back in two years and right now will look like it was a good time to buy.
I don't believe prices will push up 20% yoy but I do believe they are still trending up. If prices in 6 months are down on today's prices I'll admit I was wrong. I don't see many people who have been telling us about the impending market downturn (for a number of years now) admitting they've been wrong.
If the current restrictions are not seen to be working by the Reserv Bank they will impose more measures to get the result they want. A stable Auckland economy that no longer puts the NZ economy in danger of imploding in some way. The last thing we need is Banks under stress.
Be bold Mac - I reckon we should shoot for that 20% yoy. As a nation we can do it! Just think in 10 years time every man, woman and child will be banking $160,000 per annum in house price value increases alone. By 2035 we can all be banking a cool million every year.
Anyone borrowing money would have to have rocks in their heads to be buying currently. All the signs are there that the market is shifting down in Auckland. To what level no one can guess as you need hard data for a start. You have two ways of looking at it. You lose part of your hard earned equity or you are paying interest on part of a loan part of which has disappeared down a big black hole. Makes no sense as their is no need to hurry.
Wait a minute X and Y want it now.
As a FHB currently looking, whilst $500k - $750k is the bracket I am looking in, I am still looking at what the property is worth compared to the price (even though this term "worth" is very subjective and seems to be changing all the time)
i.e. I am not going to pay $650k for a 3 bedroom in otara, but it may have been previously purchased at $550k and I would have been prepared to pay this much (both fitting into the above range). $250k is quite a large range for a FHB.
Has anyone considered that the 1 Oct & 1 Nov rule changes may have had the effect of unnaturally bringing the spring peak forward into winter such that most of the spring momentum is now spent? The logical outcome if you subscribe to the above reasoning is that the next peak would be when sales usually next gain momentum in early March.
..still can't understand why there is not rioting in the streets of Auckland. In allowing such nonsense, this gummit has effectively given all non home owners the biggest income/wealth cut in recent history. Instead of blankets and trinkets,we have smart phones, the kardashians and the cloud. Biggest land dislocation since colonisation.
because right now we're in the situation that even the victims think they're victims only because the bank tells them they cannot afford to pay the price.
In other words, people still WANT to buy houses, they simply can't, so resignation is the only choice.
It's like a party in a fancy club where some people are left in the street and told they cannot join the party because they are not good enough. These people outside don't want to burn down the club, they want to join the party and later they might even want to keep the next ones in the street wanting to get in but not letting them in.
When people get over their greed (especially home owner wannabes) and realize how stupid all this bubble situation is maybe things change. But that would require a change of the mindset and to stop believing in dogmas like the "property ladder", "safe investment", "better to buy today expensive than tomorrow more expensive", and so on.
But the riots will come when the bubble bursts and the stupidity of so many is obvious. When they loose "everything" and realize how fool they were wanting to join the madness club instead shutting it down.
I personally won't then be supporting them. Whoever buying in today's market is fully responsible of his madness and greed.
No sympathy for speculators, no sympathy for those who sell the nation's future for quick bucks and no sympathy for those who instead protesting for the insane suicidal situation they protest because they cannot join the party.
..and that's why there are no riots, because nobody has learned any lesson yet. But we will..
I am no teacher, but I have seen EXACTLY the same problems, EXACTLY the same mentality and the dramas that, when things turn (and they always do), happen to families.
These are the riots we will see, but not yet, not while we haven't learned the lesson
https://www.youtube.com/watch?v=fFeymMcwcf4
Violence, resistance trying to prevent families from becoming homeless when they are unable to pay their mortgage and when selling simply it's not an option (unless being prepared to loose a lot of money) and when banks come to claim what is THEIRS.
I have the feeling in NZ many think we're special here and that these things don't happen here. We thought the same in Spain. Why would it? Spain, a country where everyone wanted to live in, good food, good and safe lifestyle, good weather, a rockstar economy overtaking economies like Italy or France.. there would be always "overseas investors" willing to "invest", and immigrants brought to build (and buy) houses chasing the dream.
We also though that the source of wealth was in property and that property was the best "investment" to keep value and even to make profit in the long term. Sure, we built more than in NZ.. but property bubbles are not standard offer/demand markets in regards to price, it's an irrational market with many variables.
Speculators bought and sold. That's what they do.
But many families bought simply with the intention of living there and having their own house. They bought thinking that a few million lemmings can't be wrong.
In NZ I see the same. It's already deep inside people's minds. Unfortunately I know nothing can be done but to wait and hope the drama is not that of a big drama.
I see that when I talk with people or when I make a comment about not buying and I pretty much read answers like "poor you, you'll end up as a poor old homeless still waiting for house prices to crash and unable to pay a rent when you retire". "You'll pay the price for not accepting our god property and for not doing the required sacrifices!"
If I have learned something is that wealth and value is not in properties, or assets. It's all about work, labour, people! And if real productive markets based on labour are unable to keep pace with financial markets, property markets or tulip's markets, eventually things adjust. It can take longer if distorted by central banks, cheap credit or society momentum and cultural or irrational beliefs. But reality always wins.
For many this is a game, gambling. But there are families and a whole society at risk behind this game. Anyway, the damage is already done.
t' because we're sold the 'cult of aspiration'.
.
People are tiold they're just jealous and lazy, when they protest about the red hot housing market. So they thry try and participate in it 9because theyve been told to and if they won't, now, they will never be able to), and so help pepetuate the problem.
.
There is no rioting because we are all too eager to makea buck, too greedy.
.
More and more people are waking up, though.
More homeless on the streets. More mentally ill people on thw streets.
It's getting rather visible, all these undesirables whom used to be tucked away, decently out of sight.
Getting harder to ignore.
.
it's like the dairy debate waging now: I believe a LOT of people (city folk) simply had no idea of what a cow (and her calf) have to go through in order to bring us our daily flat white, and cheese on toast.....
.
At lease it's being talked about now, which is a start....
Think about this one.
Overseas owners who may wish to sell are now trapped by having to register their tax details.
Just as the sales figures have caused buyers to hold back, there are many existing owners who have the same problems. They may not yet have an IRD account if they have left the property vacant or would embarrass their proxy local who would have to show where they are disbursing the proceeds.
The "real situation" ....but don't let the facts get in the way of the "Great NZ Property Mantra and it always doubles 7-10 years etc etc etc " !!
I have a property I want to sell in Auckland (very good area) and I can even feel the market getting "cold feet" ...a relative sold a DBGZ property at auction on October this year - could not of picked a better time to sell !! ....2 phone bidders duking it out from China ...sorry folks, those days are gone.......Cue all the property bulls to say "it will be back early next year" ..... don't think so.
I think his reference "DBGZ" is to "double-grammar zone" in that the house is in zone for Auckland Boys Grammar and Epsom Girls Grammar. Two prestigious public schools which add substantial value to properties in zone for both.
See http://www.nzherald.co.nz/nz/news/article.cfm?c_id=1&objectid=11154046
Machiavelli .....all I am saying is that IMHO prices in Auckland, in the next 2-3 years, will not go up at the same "pace" as they have done in the last 2-3 years. If that was the case, you should be out there "mortgaging yourself to the eyeballs" !
I would NOT buy anything in Auckland at the moment ....if fact the only property I have in this city, I have had for 22 years and invest overseas where I get a 16% gross return on my rentals.....far better than the 3.8% gross I get for my Auckland property.... anyway don't waste your time reading this, call your mortgage broker and fill yer boots son !!
So why aren't these figures reflecting what we are seeing at ground level?. Is it that people who have recently sold in the market are buying at the high figures whilst there are houses sitting there not selling due to unrealistic expectations. So the average prices stay high? Beats me.....
The figures do reflect the situation - hold out (unrealistic) sellers, fewer buyers willing to meet them leading to reduced volumes. Think about what the average and median prices would look like if the auction success rates were higher (i.e. if sellers were willing to meet the market). Make no mistake, this is how it starts - price in itself is not that important, on balance volume is what tells the story.
What makes you think they’re left? Isn’t it government restrictions causing an inelastic supply response to high house prices? The people who have profited greatly from housing inflation have been the people selling to communists. Maybe you are the red under the bed.
DGZ blah blah blah. Accepted they are reputable schools, but are they really so great you spend million(s) more just to get your kid(s) there?
A lots of kiwis that have accepted they can’t compete with the Chinese finance ponzi, and have focused on the next group of state schools, all of which are showing marked improvement. Both schools are struggling to deal with capacity now, including a recent hint at zone retractions which saw barrister-cudas deployed to defend the rights of DGZ. What right is that by the way? How will they deal with the additional pressure coming from increased density/apartments under the new unified plan? Interest only on $1M (the premium for a like for like entry into this area) is roughly the same as 2 kids private school fees per year -a no brainer for most, which is why a lot of private roles are full as well.
Summary: it’s been a great ride for the speculators, land bankers and agents, but is DGZ really worth the premium anymore?
We welcome your comments below. If you are not already registered, please register to comment.
Remember we welcome robust, respectful and insightful debate. We don't welcome abusive or defamatory comments and will de-register those repeatedly making such comments. Our current comment policy is here.