House prices slip in Auckland but set new records elsewhere

Property

Housing sales were strong in May and prices set new records in several regions but declined in Auckland - REINZ

15th Jun 16, 9:44am by Greg Ninness

May was a reasonably buoyant month for the residential property market with median prices and the number of sales both rising strongly compared to April, according to the Real Estate Institute of New Zealand.

The national median selling price set a new all time high $506,000 in May, up 3% compared to May and up 10% compared to May last year.

It was the first time the national median price has been above $500,000.

And 9075 homes were sold unconditionally in May, up 5.9% compared to April and up 13.6% compared to May last year.

However the increase in median prices was driven by sales in regions south of the Bombays, with Auckland's median price falling from $812,000 in April to $805,000 in May, a decline of 0.9% for the month.

It was the second month in a row that Auckland's median price has fallen since it hit a record high of $820,000 in March, although it was still up 7.5% compared to May last year (see chart below).

Outside of Auckland record median prices were set in Waikato/Bay of Plenty, Taranaki, Wellington, Canterbury/Westland and Central Otago/Lakes.

The number of sales in Auckland was reasonably strong, with 3189 sales in May, up 13.7% compared to April and up a more modest 1.2% compared to May last year.

Within the Auckland region, median prices declined on the North Shore and in the Central Auckland suburbs, Manukau and Papakura/Pukekohe compared to April, while median prices in Rodney and Waitakere went against the trend and were up compared to April.

Very strong price increases continue to be recorded in the Waikato and Bay of Plenty.

In Hamilton, May's median price of $480,000 was up 4.8% compared to April and up 29.7% compared to May last year, while Tauranga's median price of $550,250 was up 2.4% compared to April and up 33% compared to May last year.

In the Wellington region the median price in May was $465,000 up 2.2% compared to April and up 14.7% on a year earlier.

In Christchurch the median price in May was $455,000, up 1.1% compared to April and up 7.8% for the year.

Click on the link below for the REINZ's full regional reports for May:

Median price - REINZ

Select chart tabs

Source: REINZ

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59 Comments

by General HubHub | 15th Jun 16, 10:04am 1465941851

All good news -
. I bet a dozen Steinies, Auckland property will be up 20% by years end!
What could possibly go wrong?
http://www.zerohedge.com/news/2016-06-13/another-real-estate-market-rip…
Fortunately this is New Zealand and property only ever, ever goes up!

by cmat | 15th Jun 16, 11:23am 1465946624

Amazingly good link, thanks!

by General HubHub | 15th Jun 16, 11:41am 1465947685

my pleasure... but just remember, Zero Hedge is a glass half empty kind of site.. as opposed to some on this site, who are glass is always going to be full kinda guys!

by cmat | 15th Jun 16, 11:43am 1465947804

Ha, yeah - "my glass is different to other glasses"

by J.C. | 15th Jun 16, 1:39pm 1465954763

Yep. Zero Hedge's content would get the thumbs down around the water cooler at "the office." Rated highly among contrarians and traders. World of difference.

by Machiavelli | 15th Jun 16, 10:30am 1465943435

Auckland is practically flatlining at 7.5% growth compared to Hamilton and Tauranga's 30%. I expected growth in these locations and changed the focus of my investing accordingly but this level of growth exceeds what I imagined.

by Sluggy | 15th Jun 16, 10:50am 1465944623

its not investing when you are speculating on Capital gains. Its gambling - ie you have no real control over the outcome.

by Machiavelli | 15th Jun 16, 11:08am 1465945719

Agreed. But buying property where you can achieve rapid increased equity is just smart investing. If you bought a year ago in Hamilton with 100% LVR you now have a 70%-80% LVR. That's not bad. Keep in mind this side of it is just a bonus with the focus being cashflow and passive income.

by cmat | 15th Jun 16, 11:50am 1465948225

"If you bought a year ago in Hamilton with 100% LVR you now have a 70%-80% LVR"

I have two words for you:
1. On.
2. Paper.

And not the good paper either - The shitty, uninsulated, tenants-with-P-addictions, illiquid stuff.

by Machiavelli | 15th Jun 16, 11:53am 1465948414

All my wealth is on paper. Except the gold bullion under my mattress of course. Better to be a millionaire on paper than not at all.

Cmat do you hold all your wealth in cash?

by Su30 | 15th Jun 16, 1:12pm 1465953164

Isn't cash printed on paper as well? (or plastic for the pedantics). If somehow cash is not paper money in your definition of 'paper', note that banks will happily give you cash against so called paper money.

by Machiavelli | 15th Jun 16, 2:11pm 1465956707

Indeed. And is your cash in the bank really safe? Property values may go down on paper but no-one can just step in and take them, subject to certain conditions of course. Can you say the same about your cash in the bank cmat?

by rmnz | 16th Jun 16, 4:10pm 1466050228

they pretty much can actually, highly unlikely yes and a bit more contentious than an OBR event but its still possible in certain conditions (much the same as cash can only be seized under certain conditions)

by mathclub | 15th Jun 16, 4:07pm 1465963659

then you haven't paid attention to the history.

Last time around some of the regions were going up at nearly 50% over a 12 month period.

by Averageman | 15th Jun 16, 10:49am 1465944563

Hmmm...election year next year.

All it will take is some clear opposition policy's to cut immigration, stop or restrict offshore property purchase, enforce tax on capital gains, and do away with income tax debt interest offset and the opposition could very easily sail into the Government benches. Even the existing "head in the sand" government is talking about debt to income rations, and waving its hands asking the Ponzi junkies to stop. Imagine the impact of 4.5x income and minimum rations of 20% real cash vs Ponzi inflated fake cash. Property speculators all riding the boon of the current ponzi model don’t vote Left, so what does the opposition have to loose here?

If Labour and the Greens are too dumb, or simply unwilling to compromise their own property portfolios, Winston could easily pitch a subset of this and be the king maker one last time. So keep acting like a mindless debt speculation junkie. Good luck. Im clearing the last of my debt as fast as I can and battening down the hatches and will vote for who ever will stop this madness next year.

by lac | 15th Jun 16, 11:01am 1465945314

I think the property market will be targeted in the coming months by the Govt, I think if they dont "show" like they are doing something about investors buying up all the real estate it is going to hurt them at the elections.
I think they will make drastic changes to prove to the people they are making an effort......I am going to sit back as an investor atm, too volatile for me:) Or they can have another flag episode to keep the sheep looking elsewhere and not on Auckland property.

by sharetrader | 15th Jun 16, 11:24am 1465946645

I like your positively, but I gave up on this mob a couple or years ago actually doing anything meaningful or useful ,
all they can do is blame everybody under the sun and spin like mad whilst tinkering about.
I think you will find many like me (and more by the day) that realize its time for a change, even if only for one term to focus the nats back to actually doing stuff

by lac | 16th Jun 16, 8:26am 1466022419

Totally agree, was a National supporter twice, but not next time round.... The other options out there are pretty slim picking but will decide closer to the date but I too have given up on the current bunch running NZ.

by Zoltuger | 15th Jun 16, 2:51pm 1465959094

No party will stop the madness. Any party that tries will lose in a landslide, as the people who actually vote are property owners.

The people who complain about rising property prices are renters and first home buyers - i.e. those that typically don't vote.

by lac | 16th Jun 16, 8:35am 1466022921

I think times are a changing..... I own properties, been an investor for many years but even I think that the Govt is selling us out. My kids will not be able to buy in NZ and I think a heap of people are realizing that. My parents who own a heap of real estate and not happy with the current situation. Sibling have all left NZ altogether..... so I think times are a changing. NZ is affordable for the middle class and is starting to affect other classes.

by Clarence68 | 15th Jun 16, 11:19am 1465946373

It's laughable that people think it is just going to continue when regional growth is being fuelled by speculation with no connection to real wages. Particularly with the growing uncertainty around the world, Europe etc, not to mention the growing pressure on our government to curb property investment.

by sharetrader | 15th Jun 16, 11:28am 1465946896

we have brexit soon which looks like happening, and once the british are out of the EUR Germany and france will have to sweeten deals to keep others onboard.
it is already affecting markets worldwide,

by Kaper2 | 15th Jun 16, 11:43am 1465947810

BREXIT could be the black swan the world has been waiting for

by Simon | 15th Jun 16, 12:00pm 1465948850

Was likened to y2k hype just now in cnbc! UK already has own currency. Nothing will change.

by Clarence68 | 15th Jun 16, 12:16pm 1465949784

Personally I think Britain will vote to stay in as polls so close and leaving would be too dangerous. My point is that prices here are artificially inflated with no relation to actual incomes and that is a house of cards. Many people don't see or feel that & continue to buy up investment property and I find that extraordinary.

by Simon | 15th Jun 16, 12:29pm 1465950579

Nothing unusual about borrowing at 4% to earn at 7%. Think auckland has done it's dash though and nothing I would touch anymore in Hamilton or tauranga. HB and Palmy will be the next to crack the 20% mark after a decade of nothing it's not surprising to see these markets finally move

by Clarence68 | 15th Jun 16, 12:52pm 1465951978

Was talking about Auckland. Investors still buying here I believe

by frazz | 15th Jun 16, 2:29pm 1465957799

Still spruicking Palmy?? may as well add Shannon, Marton, and Fielding, and Foxton!

by Simon | 15th Jun 16, 2:47pm 1465958878

Too small and have declining populations. General flow of ppl from smaller towns into pn especially as schooling and retirement and Healthcare are considered

by tomalteruk | 15th Jun 16, 11:29am 1465946946

My friend is buying a house and house that was $800000 in march is now if not more than a million if not is atleast $900000 so hard to say what data are they talking about. Yesterday was at barfoot auction at manukau with a friend and most houses went on premium - a house that my friend was told will go for $6000000 went for $708000. Is this flatening.

If it happens good but till now govt has done nothing (except last year) and is in denial mode. Time is to put some more measures to control speculation but the will and intention is lacking in gkvt to act.

Though for all hue and cry in the media and all over will be hard for them to ignore and may do something when forced against the wall but will be token gesture only.

Even RBNZ is following govt policy of not doing or delaying though worried but is not doing anything except warning and considering but no action.

Need of the hour is action and no talk or thinking and buts.

by Esprit | 15th Jun 16, 11:58am 1465948703

6 million dollar house going for just over 700k sounds like a crash-bargain to me ;)

by J.C. | 15th Jun 16, 1:42pm 1465954968

Yes, I"d like lie and steal to get the deposit on that one.

by surfisup | 15th Jun 16, 12:06pm 1465949173

That zerohedge article is typical of that website -- they are pessimists on everything. And, the article certainly doesn't even mention the busloads of chinese driving around Auckland looking for realestate. There are tens of millions of rich chinese who would love to move to auckland. Prices are certainly not going down anytime soon.

by Clarence68 | 15th Jun 16, 1:14pm 1465953284

They just have done

by ex socialist | 15th Jun 16, 2:15pm 1465956940

'Prices not going down' is the call before every bubble bursts. The proof that this is a bubble, and not immigration based, is that rentals have moved very little and are commonly not above those in Wellington. It is difficult to interpret the real estate industry figures as the recent increase in apartments in the CBD will bring down the average. However, any expectation of future increases at the past levels is very naive. The very best we can hope for is a slow decline.

by Mystery | 15th Jun 16, 9:56pm 1465984602

Rents are going up at the moment and in my opinion they will go up FASTER if there is a property crash. Because if people start losing their houses then they will need to start renting instead. Look at what happened in the USA. The crash was good for the landlord investors who were in it for the yield not the speculative gains. Those investors benefited from the crash because it made rents go up and house prices go down, meaning that landlords now had higher incomes and could buy more houses at a huge discount and with much lower mortgage interest rates.

by Independent_Observer | 15th Jun 16, 4:07pm 1465963639

What about the flipside? Those who choose not to buy (saved the difference between rent and mortgage repayments), then step into the market and stop renting?

But any 'investor' who purchased in the last year certainly wasn't in it for the yield as you point out above. And I understand that was almost 50% of buyers in Auckland of late.

by Mystery | 15th Jun 16, 10:04pm 1465985053

I think that many of the people who have the idea of waiting for a crash before they enter the market are always in danger of being left behind. I had a friend who joked about someone he knows still waiting for the market crash from the 1960s because they thought that the house prices were too expensive then. People who bought a house with a positive cash flow have even more money to save for the deposit and to enter the market when it "crashes". Properties have been doubling every 12 or so years historically on average. they are close to being 90-100% in Auckland since the last peak of 2007-8 (or is it only 80%? according to official stats?). They might overshoot the mark this time because of the strong fundamentals and then eventually correct themselves. It might go up 120% and then crash 20-50%. As you said, there are people sitting on the fence waiting to enter the market, so as soon as property prices start going down, those people might start entering the market finally, thus preventing the correction from actually correcting as far down as it otherwise would have. That's just a theory, but hey, time will tell.

by Justice | 15th Jun 16, 4:49pm 1465966179

Are your wages going up 20% a year? See cause if they aren't then maybe those that see a bubble have a real point along with many other dead obvious economic facts out there.

by Mystery | 15th Jun 16, 4:59pm 1465966780

Landlords with a positive rental yield , increasing rents and decreasing mortgage interest rates have their "wages" going up heaps! Also, look at China, their income to house price ratios are something crazy like 1:30, that dwarfs the 1:9 in Auckland or the 1:5 in the provinces, etc. I am not saying it's right, I am just pointing out that if we look at China then we see that it's not impossible for the bubble to keep inflating regardless of people's incomes. In fact, if we introduce the limits on "income to price" ratios that will be even worse and more unfair for the average NZer because that will mean that only the rich people can now buy property and many of those rich people got rich from the real estate in the first place! talk about the rich getting richer and the poor getting poorer!

by Justice | 15th Jun 16, 4:58pm 1465966691

Ummm, that's not "wages". That's interest income for the banks who actually own many of those properties

by Independent_Observer | 15th Jun 16, 5:18pm 1465967899

Hey Mystery - you sound like the type of guy/girl who would tell someone to buy stocks in 1929, 1987, 2000 or 2008 for the fear of missing out....

There are times to buy and there are times to sit on the side-lines....

And you seem to be forgetting the influence of increasing interest rates following a purchase at the peak of a cycle which would significantly harm your investment over the long run. I'd much rather buy a property when it's relatively cheap with higher interest rates, than a largely overvalued property in a period of lower interest rates - as history would suggest both values eventually regress to means....And who would want to pay a lot of debt over 30years at a higher interest rate than when they purchased?

by ian64 | 15th Jun 16, 4:23pm 1465964630

so they can't afford a mortgage but can afford a higher rent. Yeah right. It's called confirmation bias.

by Justice | 15th Jun 16, 4:53pm 1465966439

Yeah, I think you may be forgetting the huge US job loses also so.....please stop generalizing

by Mystery | 15th Jun 16, 9:06pm 1465981573

That's a very good point 'Justice' . Well, this is a bit far fetched and isn't backed by any stats so I'll say it as a joke- maybe the job numbers in the US fell because many landlords stopped working since they could just live off the rental incomes? :)

by Justice | 15th Jun 16, 6:49pm 1465973393

;-) Ok, I will say this as a joke. Clearly, a great deal of this economic stuff is a 'mystery' to you.

Problem is Mystery, A great deal of this economic stuff is NOT a joke for many who are living week to week, trying to start a family or get rid of the student debt...etc etc.

It's very real. The needs are very real. People need homes and not just a place to live so someone else can line THEIR pockets at their expense, particularly the hope of having a home of their own.

Justice has now spoken.;-)

by mfd | 15th Jun 16, 7:53pm 1465977209

Quite right, cheap house prices are great for investors. Makes it very confusing when you see landlords crowing about their favourite investment class getting more expensive. I've even fallen for it myself when I cheer share prices rising, which is completely illogical as I'm a net buyer not a net seller. Most expensive assets only benefits those who are selling.

by ex socialist | 16th Jun 16, 7:27am 1466018874

There really is a lack of logic to this remark. People can't put up rentals because the 'choose' to, else they would have done that already. And that is reflected in the second part of your comment - that prices dropped and people could buy at a return that was appropriate for the investment, despite no change in rentals.

The original commentary that initiated the discussion was a real estate boss upset about talk of a crash. If the numbers are fundamentally solid why is he concerned about talk about a crash? My concerns with the current situation is the commentary that serial speculators have been replaced by 'ma and pa' investors in the Auckland market, who I have more sympathy for.

by Zachary Smith | 16th Jun 16, 8:02am 1466020954

Crash talk could be irresponsible if it convinced someone not to buy and the market continued to boom. Years later their children could be living in the homeless camps.

by Zachary Smith | 15th Jun 16, 1:28pm 1465954124

Phew, crisis over in Auckland then?

by evita | 15th Jun 16, 1:52pm 1465955549

The data is far away from realityas in Auckland in last3 to 4 months prices have gone up by 15 to 25%. Or may be just to put the heat off the national party as do not wantto do anything to curb speculation.

So beware may be the data is to suit JK.

Chevk with anyone in property market and will vouch that the price rise from feb to now is anywhere between 15 to 25% in Auckland.

by Crazy Horse | 15th Jun 16, 2:01pm 1465956060

Yee hii pardners !! ...I just dropped en from those hills way o'er yonder ..yee hii !

Now folks ....don't let da "facts" get in da way of a good storee .....

Lil' ol' Aaawklaand ....as per the abuv graph lil' doggies ...March 2016 $820,000 ..... April 2016 $812,000.....May 2016 $805,000 ...now li' doggies call me krazee or what !! ....if those little numbers haven't got a little "pattern" to dem and you lil' property "speculata's" out dere thinks dats great ??? ....I'll eat my 10 gallon hat .....that's why they cawl me "Craazee Hoss" ....Yee Hii !!

Gonna be interesting from dem hills o'er yonder, watching how this all "pans out" ....."fools gold" comes ta mind !! ....yee hiii lil' doggies ! ....be seein' ya !

by tomalteruk | 15th Jun 16, 3:15pm 1465960503

Rubbish data to suit national and anither reason not to take any action. Auckland housing prices have been on fire in last 3 months much higher than before anytime. Minimum jump even in units is from $75000 and in house from 1500000 ONWARDS. Can check with any real estate agent. All this data is to divert attention from Auckland as the situation has become too hot for the national to handle infact they themselves have said that their is nothing much that govt can do and NOW has thrown the blame to RBNZ to act and before was Council. Everyone buy they themself who were elected to govern. Next time should not even come to people if cannot face a situation that too which is their own creation and o e can sèe so many option but them.

by tomalteruk | 15th Jun 16, 3:17pm 1465960661

Rubbish data to suit national and anither reason not to take any action. Auckland housing prices have been on fire in last 3 months much higher than before anytime. Minimum jump even in units is from $75000 and in house from 1500000 ONWARDS. Can check with any real estate agent. All this data is to divert attention from Auckland as the situation has become too hot for the national to handle infact they themselves have said that their is nothing much that govt can do and NOW has thrown the blame to RBNZ to act and before was Council. Everyone but they themself who were elected to govern. Next time should not even come to people for vote if cannot face a situation that too which is their own creation and o e can sèe so many option but them. Real shame to be in time when national is in govt.

by Carlos67 | 15th Jun 16, 8:06pm 1465978007

Look at the Auckland graph you can still draw a straight line to average it out and the line is only going in one direction. Sure it may now "slow" for a few months but its winter so what do you expect ? as we head towards summer its off we go again.

by mfd | 15th Jun 16, 8:11pm 1465978307

And you're happy to base complex financial decisions on sticking a ruler on a graph? The world would be a very simple place if that worked.

by Upside | 16th Jun 16, 10:00am 1466028007

Perhaps we are coming into the winter months for a traditional slow down. Boom started in AKL and is spreading, are we seeing a slow in AKL and will eventually move out further in a year or so...Maybe!??. One thing remains true we are still only building half the houses needed to meet demand. Each month we do not fill the quota it adds to the backlog and we are getting behind even further. Keep predicting a bust and a slow down...it will eventually come, many have predicted for years now and we are still moving upwards. Why? simply we do not have enough housing to support the need and we are getting further behind. It only takes 2 cashed up willing buyers in an auction to drive the price up although the vast majority can't afford. You would however be foolish to think this will last forever, as property, like commodities and markets moves in cycles. Predict the worst and it will eventually happen, when....who knows, but I still see growth to come until the Supply/Demand issue is seriously addressed!!

by unaha-closp | 16th Jun 16, 10:31am 1466029892

Why? simply we do not have enough housing to support the need and we are getting further behind.

The problem for Auckland is that the provinces have significantly higher rates of building per capita than Auckland. Over time this suggests that the pre-existing demand in Auckland will be diffused by construction in Tauranga/Hamilton. As those cities become progressively bigger, quicker they begin to rival Auckland as the attractive place to do business.

Longterm unless Auckland increases its rate of construction it will be reduced in stature and value.

by evita | 16th Jun 16, 2:00pm 1466042412

Supply is important and prices do move up but what we are seing now is speculation as the pace which it is growing does not justify NZ ecenomy.

It may stabilise but for that it is important for govt to put measures to curb specualtion and more so from offshore money but govt is in denial and if it continues the way it is - bound ro crash heavily that is more likely possibilty.

One may not get drown in 5 feet of water and then every inch is dangerous. Now we are in dangerous teritory and if yhe national party has wisdom shoild act now as runinh awah ftom reality will not make yhe ptoblem go away but will come bavk wiyh more force.

Sorry but current national party government is not helpjng NZ nor themself ad should face the situation. People want their leaders to aCT and not to pass the blame and responsinilty to council,RBNZ.

ONLY IF PROBLEMS COULD GO AWAY BY DENIAL. WHAT A WORLD IT WOULD HAVE BÈEN. IT IS FOOLS PARADISE