House price growth appears to be slowing and flattening out, according to the latest figures from Trade Me Property.
The national average asking price for homes newly listed for sale on the website in September was $600,850, up just 0.6% compared to August.
Trade Me's head of property Nigel Jeffries said the market was levelling out after years of climbing and turbulence.
"With month on month increases of 1% or lower over the past five months it looks to be taking a bit of a breather," he said.
Average asking prices on the website were just 6% higher in October than they were in October last year, well down on the annual increases of 10% and 16% that had occurred over the previous two years, he said.
Although the average asking price in Auckland hit a record high of $871,800 in Auckland and was up 12% on a year earlier, that was well down on the annual increases of 20% that had been evident in previous years.
"There's a definite easing after the frenzied growth of the last couple of years," Jeffries said.
A particularly noticeable recent trend was that prices had slowed much more for multi-unit properties such as apartments, homes units and townhouses compared to stand alone houses, Jeffries said.
"The average asking price for urban [multi-unit] properties has grown steadily over the last couple of years but is slowing down and lagging behind the overall market," he said,.
"Even the Auckland apartment market had calmed down from highs of more than 40% year-on-year to a much more modest 2.8% increase in the year to September."
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I notice the trend on this site is that articles about rising prices get loads of comments (90% raging against the increases).
Articles about steadying prices, signs that LVR limits etc may actually be working , get just a handful of comments.
So well done Wheeler and the RBNZ? or if they've gone too hard, too late - then ........
Penfold I have noticed the bulls have gone very quiet of late. I suspect some fear is creeping into Auckland. Rightfully so if you talk to the agents who are honest. It has gone a lot quieter.New Zealand investors are struggling to get money for exisiting houses and for their developments.
One does not simply anticipate rises forever. There is a time to baton down the hatches and prepare to hold what you have for 10+ years without expanding the portfolio. This will generally mean stable prices or small declines with very low volumes being transacted and new builds not being started/ incomplete projects being canceled.
The compound effects of the points below have the potential for a bit of a bite and no one wants to be the one bitten ( well those planning for it now don't want to be bitten, the rest probably don't mind ):
A reduction in migration (more than just the government decreed bit, because people may move overseas for better prospects).
Lower investor demand due to higher LVR requirements.
Lower demand in general due to DTI ratios being introduced.
Rising swap rates and risk premiums raising interest rates regardless if the RBNZ cuts ( They kinda neutered their powder a bit by not using it when it was dry, and letting it get wet by current global conditions).
Big businesses restructuring jobs out because of the anticipated need to tighten belts in the near future.
The potential for a Green/Labour government which appears to be a fan of the idea of steering us straight into a recession.
Having said that I reckon that by the end of 2017 we will know how bad things will be and if we can poke our heads back up.
Sometimes contributor to this site, John Bolton's, take on it.
https://www.squirrel.co.nz/news/musings/will-rbnz-inadvertently-create-…
BTW, can't comment on their website. But, John I do like your articles. Always good reading.
Fear as election year is approaching and government will be forced to take U turn against their will. Politicians love for power will makethem do anything - shamelesly for their own vested interest and nothing to do with welfare of thepeople or the country.
Also bubble has to burst.
There's a simple answer as to why the Auckland property market is slowing down and that because Foreign Buyers who are global players have recently been stung by Canada's new foreign buyer property taxes. So the Chinese banks have tightened up their lending powers for overseas capital on foreign property and that includes NZ.
Though this of course doesn't do much to restrict all that dodgy money laundering that's still going on with the non legitimate lenders. So I'm sure our Real Estate Agents will still reap those rewards considering that Mr Key doesn't really want to restrict money laundering activities as he can give the appearance of GDP growth through dodgy capital.
BBC article: 'Gangster grannies' and China's shadow banking world
http://www.bbc.com/news/business-37114643
Sill not sure if you're going to be able to keep up appearances with Transparency International? Remember; you can only fool some of the people some of the time not all of the people all of the time.
If Canada is making it harder for foreign buyers, wouldn't that have a positive effect here (for now). If they're looking to invest offshore, Canada shuts it's door, ours is open for now. Depending on what policy they fear, maybe we should be seeing a rush (get in before NZ adds exra requirements on foreigners)?
Maybe - first you have to get into the head of the foreign buyer - maybe as other markets shut out foreign buyers, they look at Auckland and it may not be as desirable as people think. I think it has been established that NZ gets the lower quality foreign investor compared to say Canada or Australia and they maybe hurting at home.....
If you were a money-launderer, would you want to end up with your moolah trapped in an declining no-yield mould farm in Papakura? Hell no. As to the dumb/naive bubble frenzy buyers throwing the extended family's life savings into the pit, that could all spook at once. Just because we've done everything possible to increase the pool of greater fools doesn't make this thing any more stable or less bubbly.
Even watching from the sidelines I can sort of tell it's quieter. There are zero wooden for sale signs at the end of our street where, 6 months ago there would be at least 5 if not more.
I'm also getting real estate agents turn up to my door on Saturdays looking to talk to me about 'my property', they quickly turn on their heel, it's not what I want to be spending my weekend doing but there's a steady stream of them turning up now.
Hang on in there Hardworker; and yes I've been experiencing the same with Real Estate Agents trying to get me to sell. Problem is there's no where left really to downsize to.
Here's my theory on what's happening:-
1) Auckland's prices are coming off the boil mainly due to Foreign Buyers having their property appetite reduced due to the recent events around the world and restricting their impact on major cities. The biggest exponent of this is Canada BC having introduced major changes; 15% tax on foreign buyers and their about to tax empty homes. That's put the Chinese banks on the back foot and their now restricting their overseas lending.
2) There's only a certain amount of property affluent Boomers who are able to downsize and can either sell off existing investment properties and reinvest in the provinces and or downsize to free up Auckland equity for their children to be able to afford to purchase a home.
3) Holding ground; there rest of us in our 30's and 40's and still working in Auckland are holding ground, since even the provinces are now too expensive to run to. But as business dry up in Auckland due to high cost of living and it's inability to attract quality migrants due to that high cost of living. We may be forced to flee as well from NZ as those in the 20's are currently doing.
So in short; property prices really need to come down.
One thing EVERYBODY should realise is the disclaimer on all TradeMe data. It is highly unreliable and shouldnt be taken too seriously.. this is their disclaimer "About the Trade Me Property Price Index:
The Index is a detailed analysis of expected sale price. Listings are from private advertisers and real estate agents.
The Index is produced from data on properties listed on Trade Me Property in the three months leading up to the last day of each period. Each period's value is a truncated mean of three months' worth of listings. This is to better reflect trends in property prices rather than month-to-month fluctuations in housing stock.
The Index uses an "80% truncated mean" of the expected sale price. This excludes the upper and lower 10% of listings by price, and averages the expected sale prices of the remaining properties.
It is the first report to provide an insight into 'for sale' price trends by type and size of property. Other reports tend to aggregate the property price data across these various properties."
Asking prices can vary alot. I know of a property that sold in Wellington for over $100k of asking price, where a lot dont even achieve being close to asking price. I personally thought Interest.co.nz would use more reliable sources than TradeMe. By the way i am a property valuer by profession.
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