April saw a big drop in both the volume of homes sold by Barfoot & Thompson and in median and average prices, which tumbled by around $50,000.
Barfoot, which is Auckland's largest real estate agency by a substantial margin, sold just 664 residential properties last month, compared to 1110 in March and 944 in April last year. That means year-on-year, sales fell 280, or 30%.
It was the lowest number of sales the company has made in the month of April since the Global Financial Crisis in 2008.
Prices also took a a tumble, with the median price dropping back by exactly $50,000, or 5.6%, to $850,000 after hitting and all time high of $900,000 in March.
The average price fell $51,491 to $917,079 after hitting its all time high of $968,570 in March.
That puts the median price back to where it was in August last year and the average price back to within a couple of thousand dollars of where it was in September.
Listings down too
There was also a drop off in the number of new listings the agency received in April, with 1292 additional properties being signed up for sale compared to 1983 in March and 1496 in April last year.
It was the lowest number of new listings the company has received in April since 2012.
Inventory levels (the total number of homes available for sale through the agency) also dropped, with 4214 residential properties available for sale at the end of April, compared with 4413 at the end of March.
But the April inventory levels were well up on the 2846 properties the company had on its books at the end of April last year, and it was at its highest level for the month of April since 2012.
Market 'changing'
Barfoot & Thompson managing director Peter Thompson said the market was changing.
"It is a changed market from what we have been experiencing for a number of years and you have to go back nine years to find an April in which fewer homes were sold," he said.
"Buyers are being far more selective, are taking their time over committing and are only prepared to pay the market price.
"Vendors are not lowering their price expectations significantly but are accepting that to achieve an above market sales price in the current climate their house has to be special.
"New listings in April were excellent as 1292 and combined with lower sales, this allowed stock numbers and buyer choice to remain high."
Thomson said the decline in sales numbers was felt across all price ranges but only 6% of the agency's sales in April were for under $500,000.
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95 Comments
It is time for the house prices to flatten or come down to help the local Kiwis and those who have been struggling to get into the property ladder. It is not fair for house prices to keep rocketing out of control and it is definitely not something that we wish to happen to any economy. Things will get better for those we have waited so far while those who’re thinking of fleeing Auckland can now reconsider staying put. The news today has brought us hope.
True.
I struggle to imagine that in the past days of government builds, land tax and low interest housing corp loans that these things were ever about a ladder of investment. Rather, they seem more about a society that cared about people having homes to live in - especially with a pension in mind that was designed on the basis pensioners would be living mortgage-free in their own home.
The current government has let the housing market run riot while denying that there is a crisis... now house sales have dropped dramatically, thus impacting the jobs of thousands of people dependant on this sector.. its ridiculous how we can let Mr. Key and party get off scotch free after causing such mayhem.. Mr. Key is fine, he has found himself a new job, what about the rest of the kiwi's who are impacted by his blatant lies and denial
Having a job does not necessarily equate to having an income. A job is good for our health and our soul, and keeps our mind active. I personally know of people who are volunteering for charity or work for non-profit organisations. So, yes IMHO I think John Key needs a job to keep himself occupied rather than sitting on his bum everyday.
Based on the many company directors I've worked with it can be anything from "a great deal of work actually" all the way down to "only turns up to board meetings to eat the biscuits".
In this particular instance it seems more towards the lower end of that scale, given he was seemingly appointed mainly as a promotional aid for AirNZ.
I would rather play golf, dive, surf, fish, paddle board, sail, windsurf, kite surf, ski and go to the gym.
Follow my kids around with sport, take photos, learn to fly, go to the tennis slams, golf masters, follow the All Blacks and go on holidays with my significant other, explore this awesome world, before I die.
But hey if it floats your boat working, then knock yourself out. But I can think of a lot of things to keep my mind busy and my body active, and it doesnt involve work.
Swapcrate
You provide a typical example of Kiwi lifestyle choices
It's an attitude that has held NZ back with the attitude by most kiwi business owners that having a home a beach house a couple of cars and a boat is enough
Then those that make it to creating a $50million plus business look to sell
Heck now we are even selling our losing money farming enterprises to foreigners
NZ seduces It has one of the best lifestyles on the planet
Will have been through the BnT spin "its all good" machine, makes you wonder how bad it really is. A lot of agents will be hitting the job market to boost unemployment numbers soon, if the low producers havent been cut already.
Also heard that a large chunk of the houses being built in Orewa and sold dont have COC, as high as 70%. On a new build, I and most Kiwis would never never settle without a COC unless I got a real knock down price . Selling for around $1m, easy to speculate that they are being sold sight unseen to overseas money.
Interested to hear that (about them failing COC) there was a lot of concern around a year ago from Auckland council about very substandard work on a lot of these developments. Many of the issues were of a significant structural nature. One outfit were even trying to build a house with the slab 100mm out of level! Bond beams being supported by the cladding! I even heard of one lot that would remove the slab reinforcing prior to pouring concrete
I would be very hesitant about buying some of this stuff even with a council sign off. Are things better now or are we just not hearing about it?
I've been looking to buy in Mt Wellington for the last 4 months but am now just going to wait it out. It's so clear that prices are going down, but vendors (who tend not to do any market research) gobble up RA lies and are mostly totally unrealistic.
I'll just wait it out and buy the same house in a years time for $100k-$200k less thanks.
Just wait until Peters wins 15% of the vote and becomes the king maker. Slashing migration then becomes part of his coalition negotiations and BAM, a major foundation of the over priced Auckland housing market is gone. Just when the market is already looking soggy. If you're long houses, now is the time it start smashing bids.
Hmmm. Interesting. Clearly houses are highly overpriced (The Economist rates them as the most overpriced in the world, particularly relative to rentals). So... are they due to fall?
A lot depends on the flood of immigrants linked with hot overseas money (NZ's rate of immigration from memory is about three times that of (say) the Brexit-mad UK.)
The limitations to building new houses will still remain. Partly through geographical issues (having your biggest city on a narrow isthmus), regulatory barriers, & also the excessive cost of building here.
The inability of first home buyers to buy might reduce if prices drop, but not if interest rates go up.
The generous taxpayer-funded landlord subsidy only make sense if there is a tax-free profit to be made. It's not much use getting a fat tax refund if you can't see a big injection of free $$$ in the future.
So... put that in the mix and what do you get?
Given that a major housing crash would be existential for our banks (note I'm not predicting one), you'd think that they would be trying to tidy up their loan books by giving low equity borrowers sh**y rates and jacking up their entry criteria. When you think about it, this is exactly what we've heard they are doing. David Hisco wanted higher deposit requirements as cover for ANZ raising their requirements and banks generally have been raising their advertised rates even if borrowers coupe negotiate much better based on their own circumstances. This seems completely consistent with banks actively preparing for a downturn.
We have just received a newsletter from Ray White stating it is a great time to buy, that banks are looking for custom and that the banks are willing to cut their rates or do deals, so unfortunately the REA and banks are now going to work together to keep the scam going.
Sadly UK probably not a great example. BREXIT a positive but got to take some pain over the next 5 years to come out the other side. Finance sector has to lose 10-20% of its jobs and the new Inheritance Tax rules on the non-Dom's is scaring the mega wealth offshore again.
Do not agree with BREXIT and neither will the UK Public once they feel the true pain of segregation from the EU. Although imperfect the EU on a economic level is the way forward To think separation will provide the UK with wealth will sadly prove wrong
The USA is not axing NAFTA because the clown trump was shown a map of red
To Axe NAFTA would drastically reduce the economic wealth generated between the 3 signatories.
35 to 37 US States rely on Canada as their biggest export market
US cars are built in Canada & Mexico to cut assembly costs for American vehicle buyers
None of this is changing under trump much at all
He will be impeached anyway
Do not agree with BREXIT and neither will the UK Public once they feel the true pain of segregation from the EU. Although imperfect the EU on a economic level is the way forward To think separation will provide the UK with wealth will sadly prove wrong
The USA is not axing NAFTA because the clown trump was shown a map of red
To Axe NAFTA would drastically reduce the economic wealth generated between the 3 signatories.
35 to 37 US States rely on Canada as their biggest export market
US cars are built in Canada & Mexico to cut assembly costs for American vehicle buyers
None of this is changing under trump much at all
He will be impeached anyway
Do you know an isthmus is a strip of land between to large areas of land? As a city on an isthmus gets bigger the availability of land increases (after it reaches the end of the isthmus) and the cost of land duly falls.
Of course if you are Len Brown/Phil Goff and absolutely committed to inflating land prices until no one can afford to build anything then you confine the city to the isthmus forever. But this is not a geographical constraint.
I believe another dynamic is also in play. Spare a thought for the developer who paid premium prices for properties to develop who is now sitting on their hands waiting for funds from overseas or resource / building consent, all the while building costs are going up and potential returns on the sale of the developed property is going down! A few sleepless nights I would imagine. When developers start off-loading in quantity we will know the dam has broken!
Government announces emergency drought package for Barfoot agents.including a food parcel in the form of a hamper , with picnic utensils to seamlessly allow indoor outdoor flow, condiments to include designer pepper spray to keep property bears away, and a neutral coloured plastic self inflating swimming pool for wallowing. Agents will be allowed to flip the packages between themselves, whilst maintaining utmost professional standards. Government will consider introducing package for mortgage brokers if more fools cannot be found promptly.
I can hear our PM now. "National has brought down the cost of housing in Auckland without collapsing the market." This is a fantastic win for National and Bill...
Am betting a six pack of your favourite beer of course, to the first person who accepts my bet... I bet National is going to win the election with no help, other than with the usual suspects...
The baby boomers will start asking why their capital gain on paper for the last 7 years are wiped off and if National are going to do anything about it to make them ‘rich’ again. There is a serious chance that these traditionally loyal National voters will start voting for other parties if they can't get rich on paper again under National.
Immigration is a double-edged spoon for boomers though. Higher house prices are nice for them, but I'd imagine there are a fair number who are starting to get uncomfortable with just how much Auckland is changing in other ways. Not all of them will be happy to sell up and shift out to a more "local" feeling regional centre.
The ties that bind - Many people have hung in here in Auckland because of "family ties" - as the children have increasingly found it difficult to survive in Auckland - have made the sacrifice to move elsewhere - which loosens the family ties - particularly the parents who are now finding those ties holding them together in a place called home are gone - and now the parents are also leaving Auckland - leaving it to the plunderers - in the words of ZAC, the place is now a migrant city - it is no longer home
This article should be archived
it's been 6 months since November 2016, the first month price trend started reversing
it's been 4 months since January 2017, when China clamped on capital flight
free money is not flowing back. the party is over, the only ones left standing are the ones who were here to begin with. we cannot possibly continue to sell houses to each other at 10 times average income. expect the market to quickly react and get back to basics
i suck at predictions, but what i would say is some suburbs would crash harder than others .. so good news for Double-GZ is that those $2M houses would probably still sell at around $1.9M, but those Otara and Ranui "mansions" at $800k will probably be rightfully be valued at $400k when all is said and done..
so whether that works out to be 10% overall (or 20% or 40%) is all up in the air
I no longer wish my home or many other neighbouring homes to sell for $2m or $1.9m. These homes should be made available to our average local Kiwis who have been struggling to find homes thus far. Looking after the locals is top priority for the incoming government instead of sweeping them aside in favour of immigrants and foreigners (both housing and jobs). Ideally all the homes in Auckland should be banned from selling over the CV's, or even better capped at 20% below the 2014 CV's. This will make Auckland more liveable and to prevent locally born Kiwis from fleeing their own city.
Only dropped about 10% in the GFC in Auckland region so doubt it will drop - just level off. Migration is strong, banks have started negotiating lower mortgage interest rates and offering cash again so should be a stable market. Meanwhile Hawkes Bay, Wellington and Bay of plenty showing 20% plus price growth over last 12 months
http://www.stuff.co.nz/business/92165471/sales-numbers-in-auckland-hit-…
Yep I still stand by my 20% drop for Auckland over the course of a year possibly two. I just can't see how selling between Kiwi investors is going to keep prices high or that Ozzy and Kiwi banks are going to drop their rates to the ultra low rates in the 1.5 to 2% bracket? Asian foreign investors may return at some point but I can't see that happening for quite a few years.
Actually Zachary, DGZ prediction could happen. More so for the higher end properties in the supposedly wealthy Auckland areas. Most of which is on a fixed retirement income. So now that the market is no longer being driven by Foreign Buyers from China. There's nothing to support those several million dollars homes. There's no one there to buy them with that kind of free credit.
And as capital value erodes so will prices. Well at least to a -20%. Which is a crash by the way.
I dont think it is just lower South Island that will drop off, I think all out lying areas that are propped up by Ak centric specuvestors will suffer at the hands of these specuvestors. To many played keeping up with the Joneses so they had something to talk about at dinner parties, wont take much for them to jump ship as the whole deal is based on capital gains.
Outlying areas encompasses outlying suburbs within AK borders also.
What is the difference in price between what upper quartile NZ wage earners can afford, and what (up until recently) Chinese capital flight has been paying for the same houses? I would guess it's somewhere between 500K and 1 million dollars. That would indicate that prices in Auckland could go down a long way. Foreign capital still seems to be leaking into Auckland though. I still see high end houses going to auction and being sold. just not very many. Interesting dynamics.
Saw Tony Alexander speak at a BnT "Property is still ok" session at the end of 2016. He said "Auckland investors always overshoot in the regions thinking that the upside dynamics are the same". He went on to say, they are "always wrong", and it "happens every cycle". To can remove his word "investor" and insert "specuvestor".
I agree it would be best for all if outside influences continue to be removed, and housing returns to what is justifiable in peoples wages within the NZ economy.
Vote for return to housing normality. Only 142 days to go...
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