There is growing evidence that Auckland's booming housing market has plateaued, with the latest REINZ figures showing the median house price in the region dropped by -1.8% in November compared to October.
Median prices were down in most parts of the region, with the biggest fall occurring in the central suburbs of the Auckland isthmus (within the boundaries of the former Auckland City Council) where the median selling price was down -4.4% compared to October, followed by Waitakere -2.1%, Manukau -0.7% and Rodney -0.3%.
But the North Shore bucked the trend, with the median price there up a whopping +10.5% to hit a record high of $1.105 million.
However Auckland's median price of $851,944 was still up +11.4% compared to November last year.
The median price also dropped in the second most expensive region in the country, - Central Otago Lakes - where it was down -3.6% compared to October.
Nationally, the New Zealand median price hit a new record high of $520,000 in November, up +2% compared to October and up +13.2% compared to November last year.
Around the rest of the country median prices rose in most parts of Waikato/Bay of Plenty except Rotorua where it was down 11.9% compared to October and Gisborne where it was down 1.1%.
In the Wellington Region the median rose 4.8% to hit a record high of $500,000 in November and in Christchurch the median was up 3.7% to $465,000.
The REINZ's full report with median prices and sales volumes for all regions is available on this link:
Nationally 7576 residential properties were sold in November, up 13% compared to October but down 6% compared to November last year (see the interactive chart below to follow the trend).
In Auckland 2400 residential properties were sold, up 12.4% compared to October but down 4.5% compared to November last year.
In Waikato/Bay of Plenty, sales were up 18.5% compared to October but down 13.3% compared to November last year.
In Wellington sales were down 0.3% compared to October and down a whopping 19.5% compared to November last year and in Christchurch sales were up 22.3% compared to October but down 6.9% compared to November last year.
In a First Impressions note on the figures, Westpac acting chief economist Michael Gordon said they suggested the market was steadying after the impact of the latest loan-to-valuation ratio (LVR) mortgage lending restrictions.
Gordon also noted that mortgage interest rates had been creeping higher.
"This turnaround in borrowing costs could have a more meaningful impact on house prices than the LVR restrictions," he said.
Volumes sold - REINZ
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79 Comments
Some people on Interest.co keep on telling us that people were abandoning Christchurch and prices were dropping!
The reality is that Christchurch is developing nicely, and the median price will continue to increase gradually which is far better than in large amounts as it prices so many out of the market.
The median price is also skewed due to the "as is where is" property still being bought which drags the prices down quite alot and the many 2 bedroom units being bought up.
You are wrong about people not buying in the eastern suburbs.
I think you will find that many of these areas have had the biggest increase in prices over the past couple of years.
Christchurch doesn't want to be lumped in with Westland either as Westland clearly drags figures down.
Why isn't Auckland lumped in with a north Auckland on the same basis?
I don't think that price drops in the regions is going to be immediate. Although measures have been put in place to cool the market, fundamentally the issue is that Auckland prices are overheated, and in comparison provincial prices are under priced, so there is a little bit of catch up.
Lots of anecdotal accounts of Aucklanders arriving here in the Hawkes Bay; it would appear that a number of Aucklanders are selling out and moving to the provinces - as the Herald reports - for lifestyle and cheaper housing. An acquaintance sold up in Auckland to buy an orchard for lifestyle and semi retirement at 50 and still had money left over.
Still a little while for price differentials to balance out.
I am not suggesting that the last out of Auckland needs to turn the lights out, however if future you may notice slightly less gridlock around the airport!
P.S. We don't know what gridlock means here in the Hawkes Bay :)
Nothing is really underpriced when compared to average earnings, its just now the rot is spreading everywhere. Sooner it is over and some normality returns, the better.
All well and good for the wealthy Aucklander to go buy up somewhere else and keep some change, but what happens to the locals - just what happened to Aucklanders, where are they supposed to go once they too, are booted out of their own home towns. This is not that much of a good story in reality
Sales up 30% in Palmy a few days ago the local paper called the market "berserk" so I think it's got too much momentum to slow anytime in the next couple of years... Long term renters have given up waiting and are coming out of the woodwork to get on the ladder before prices get out of reach
hi simon
I knew exactly what your view about PN market
I was watching your commends on stuff as well
I guess you are Wellington based
Can you add me to your contact for information sharing
Liuyingheng@gmail.com
I am not a land agent
I love the creativity in property press releases. And the obsession with every graph rounding out in a nice plateau. I've been up and down many hills and mountains and plateaus are not the norm. It's like predicting a draw in a rugby game, you know the odds are stacked against it. In any market a plateau is statistically the most unlikely scenario of all.
First time buyer strike is in effect from what I can see. Everyone is just bored of property obsession and happy to let the investors, foreigners and agents play out the end game whatever it is. Any investors buying into Auckland right now should be sectioned and moved to their own safe space, well away from their bank manager and Barfoot's sales people.
Cashing up and buying in The Regions is just fine - as long as you don't intend to look for work. You'll perhaps find it, but not at wages that reflect your capacity to be able to buy a home there if you become income reliant.
The misguided attempt to cool the property market in Auckland 2 years ago with discriminatory LVR's fuelled an unnecessary price escalation in The Regions that has distorted the wages/price ratio to dangerous levels; dangerous for current property owners. Now that the LVR's etc are equalised across the country, I wouldn't be surprised to see a rush of selling in The Regions as those who bought in from outside 2 years ago, hit the exit. Time will tell, as it does for everything.
There will be some occupations in which one can readily shift to the regions to find work and in some instances no difference in wages or salaries.
An example is teaching. In the Hawkes Bay we have a number of teachers moving here from Auckland to be able to afford to get onto the property ladder leading to a competitive oversupply of teachers in all subject areas while I read in the Herald there is a shortage of teaches especially in maths, sciences and English (but I note not economics).
The same rationale will apply to other professions such as accountants, junior doctors etc., and many trade people.
A don't knock the social life in the regions; there is plenty of social life, and with competition between the airlines and roads not congested, getting to the big cities for a weekend away, shopping, or a concert is relatively easy.
Teachers, uni staff, hospital workers, government workers, defence force workers, all tradies - all very liquid the same across the country... all the stuff Palmy has in loads - 147 sales in pn last month is similar to last boom so definately a strong market for a long time to come there
They build new stuff in the Waikato and BoP regions much faster and more efficiently than in Auckland. When the capital investment moves to these provinces it generates more jobs, much more than when the capital flows the other way. Apart from the upper/middle realms of employment type, it is more beneficial to move towards Waikato/BoP than Auckland. And even for the upper/middle and above it becomes a case of how much more income is available over relative asset value.
Building houses and associated infrastructure isn't real job creation. It is boom bust cycle.
There is plenty of work in the provinces at the moment building houses and associated infrastructure for displaced Aucklanders, but long term job prospects depend on the productive sector.
We aren't creating more farmland, the fisheries are depleted and the boom in tourism is cheap airfares dependent, not to mention tourists prefer areas of low population.
So our booming rock star economy is just us selling our low population statistic with the financial hang over yet to come.
The regions are creating more office space, more commercial space, more homes per capita than Auckland. The regions are attracting people and capital. Their future economy will compete with Auckland for jobs, so farmland and fisheries and tourism will not be the growth sectors - service and industry will.
We live in a time when Auckland has taken stock of its position as the largest, most attractive urban centre and made a plan for the future. That plan is to slice its own feet off, by applying the methodology of a cargo-cult Auckland has made land really expensive, because expensive land happens in the most successful cities. It is a horrible, stupid, harmful plan for NZ - but as long Auckland has the plan the best outcome is diversification to the regions.
"This turnaround in borrowing costs could have a more meaningful impact on house prices than the LVR restrictions," he said.
Exactly.
What counts as money is not what almost everyone still thinks it is, though those view should have been shifted almost a decade ago in August 2007. Money is instead “money”, where all the various forms of those bank balance sheets become the conditions that drive either monetary growth or contraction. Indeed, it is in many ways impossible now to separate money from credit, a further complication that has only rarely been considered.
The problem from a monetary policy standpoint that might ever acknowledge this arrangement is that it diminishes greatly the standing of monetary policy and the central bank. To realize that banks are at the center rather than central banks would be for monetary policy to be reduced to one input among many; and, more often than not, especially the past few decades, an unimportant one. Read more
Do I detect a hint of worry and rationalisation here in trying to explain away Auckland's house price and sales drop?
It is correct that there are fewer sales In December simply due to the holiday period - and in particular lawyers being closed - which makes for a far shorter trading month. And yes, the drop in sales is November, not December.
TradeMe Auckland listings are continuing to decline. Now down to 9003. It could go into the 8000's this week. This is almost a thousand properties less than a few weeks ago which is quite a number. I suspect it is due to the upcoming holidays although it's also not signifying a rush to the exit just yet.
I have just settled on my house in Auckland central suburbs and moved to the Bay of Islands, swapping an old tired home on a crosslease section for a newish house and 15 acres of prime land. I haven't felt less stressed in at least 10 years, even when I've been on holiday. I am mortgage free and now have a six figure term deposit and money left over to start a small business. I don't know why I didn't leave Auckland earlier, but somewhat glad that I didn't because my capital gain ended up larger because of it.
The first year on a lifestyle block is the best year. After that you really miss the opportunity to just chill on the couch and read a good book. Been there and done that. My advice is don't skimp on machinery. Buy a tractor with a mower to keep things looking nice.
Most regions are under pinned by fhbs and kiwisaver which basically gives anyone with a job who's been in kiwisaver for 3 years a free deposit if buying a house up to 400k.
In auckland fhb's can't use this as prices are 700k for a fhb house and they earn similar wage to the regions and even if they can get 70k plus deposit they'll fail the serviceability test eg banks won't lend them 500k plus.
Narrabeen Boy, I did notice that and was a little surprised. I think Auckland Central statistics suffer from too few sales and high ticket sales or lack of them one particular month can dramatically skew the figures. A single month's figures are not enough to draw an accurate conclusion. It would take a year to determine whether I am right or not I suspect. Like another commenter said the graphs never show plateaus but are always jagged up and down lines.
I'm not sure about the regions. I think prices will be stable as long as interest rates stay below 6.5%. The lower quartile house will always be popular because there is a huge market for those.
Maybe Auckland Central had more apartment sales this year (as far as I know, REINZ don't filter out property type e.g house, townhouse, section, apartment etc).
It's going to be an interesting summer - I'm expecting a bit more demand than what is showing now - but no property appreciation.
by the way, @zach - # of properties on TM are now down to 8983!
8949 houses now!
Only 160 houses for sale in PN is very low. That is quite an interesting comparison. How many houses are there in PN? My guess is around 28,000. If they sold every seven years and were on the market for one month you would expect to see 333 for sale at any one time. Hamilton is twice the population at 161K yet has 622 houses for sale which matches my guesstimate. What's going on in PN?
If you do a search on TradeMe for houses in Papakura under 600K you get quite a few results with asking prices. Also houses claiming "price reduced". Here is a standalone house for under 400K:
http://www.trademe.co.nz/property/residential-property-for-sale/auction…
That should be cheaper than rent. Houses around it look okay as well. A little box but easy to look after and quite sunny. I was talking to a contractor the other day who said that he wanted to get a full time job in order to get a mortgage because house prices were getting affordable in South Auckland.
BTW Auckland listings down to 8888 now.
Fake
That is not a stand-alone house - it's a portable cabin
Otherwise known as a mobile home
https://www.google.co.nz/search?q=mobile+home&sourceid=ie7&rls=com.micr…
Strewth $400,000
USD $2500 to $6000:
https://www.alibaba.com/trade/search?fsb=y&IndexArea=product_en&CatId=&…
Yes, you could just stack these things on top of one another and solve homelessness practically overnight.
https://www.alibaba.com/product-detail/1-bedroom-mobile-homes_768389221…
Of course it is a dressed up Portacom.
However would be better to own it than continue on renting for first home buyers.
most of the value would be the land value rather than the accommodation, and if you want to live in Auckland then that is what many will need to get their head around this.
$400k will buy you a 3 bedroom permanent material 100m2 home on a cross lease section in an average area of Christchurch at the moment, so similar size section but definitely better home, and better lifestyle!
New homes not a lot bigger with attached single garage around $500k. on very small sections.
Nymad, why do you say you would not be better off in 25 years time if you purchased it.
I believe that property will be worth far more than the current 400k in 25 years time and you are paying off the mortgage rather than renting and having not a lot to show for all your payments plus you have something to pass on to your kids.
Interest only wouldn't be much more if any than renting it I would guess, not knowing what it would rent for in Auckland at the moment.
The fact that it might not look like your dream home doesn't mean that it is not fair value if you want to live in Auckland.
If I have understood properly, I think Nymad is saying that after 25 years the property owner will have paid very much more, in mortgage repayment + interest, than he would have paid to rent the place; and that the increase in value of the property will not be enough to justify the differential.
Thus, in 2041: (value of house minus amount paid to own the house) is less than (amount paid to own the house minus amount that would have been paid to rent the house)
It would be interesting to see the workings and in particular the assumptions that have gone into that conclusion.
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