Auckland house sales volumes plunged 31.5% in September, year-on-year, meaning sales in the city were the second lowest for a September month since interest.co.nz's records began in the early 1990s.
The latest Real Estate Institute of New Zealand (REINZ) national monthly sales data, out Thursday, showed big falls in sales volumes but prices holding up.
As the chart below shows, the 1,591 monthly sales in Auckland was the second weakest September month in terms of number of sales in the country's biggest property market, after 2008, going back at least 25 years. Unlike this year the 2008 election was held in November. However, Lehman Brothers collapsed in September 2008.
Meanwhile, the median number of days to sell in Auckland rose by three, year-on-year, to 37. And, REINZ notes, only 422, or 26.5%, of the Auckland sales were made via auction. That's a 57% drop versus September 2016.
Inventory, or the number of properties for sale in the Auckland region, increased 916, or 14%, year-on-year to 7,429 from 6,513.
In terms of prices, national median residential property prices increased 1.2% year-on-year in September to $525,000, the REINZ says. Nationally, excluding Auckland, median prices increased 5.7% year-on-year. The September Auckland median price came in at $845,000, down $5,000 year-on-year.
The national REINZ House Price Index, developed in conjunction with the Reserve Bank, increased 0.7% during September month-on-month, reaching an all-time high of 2,699. REINZ says this indicates the ratio of sales prices when compared to CVs is at its highest point since the Index began. The Index also shows all NZ regions except Auckland, Taranaki & Canterbury, reached a new high during September.
ASB senior economist Jane Turner suggests Auckland house prices are likely to remain supported - at very high levels - given the ongoing imbalance between housing supply and demand.
"In saying that, indicators in September are conflicting, with the median number of days to sell remaining elevated in Auckland. This suggests the balance between buyers and sellers remains tilted toward buyers, and hence the outlook for Auckland house prices does remain highly uncertain," Turner says.
Running in favour of the Auckland housing market is ongoing record inward migration and historically low interest rates. Running against it is the Reserve Bank restrictions on high loan-to-value ratio mortgage leading, and less money coming into the market from overseas. There's also political uncertainty until a government is formed following the September 23 election.
"Signs of Auckland house prices stabilising despite soft demand and Wellington prices still growing strongly, reinforces the need for the Reserve Bank to remain vigilant for signs the housing market may reaccelerate. The election has added another layer of uncertainty to housing market trends, and the Reserve Bank will want to see how the housing market trends develop over the coming months once a government is formed," adds Turner.
*The charts below both come from ASB.
*This article was first published in our email for paying subscribers early on Friday morning. See here for more details and how to subscribe.
102 Comments
Um ok so cause and effect. The cause is artificial market intervention (40% LVR), effect is the lowest volume of house sales. It's like building a dam then saying we are surprised by the water volume down below have decreased immensely. Haha funny how we are all for introducing more restrictions to purchasing a house (DTI, higher LVR etc) but also complain about low home ownership rates? Aren't they essentially cause and effect as well? :) They make it worse for the poor/less well-offs to get into housing.
Cause, unprecedented buying of houses, land by foreigners, particularly foreigners who could not freehold real estate in their home country, foreigners with pots of money acquired by fair means or foul, happy to pay OTT money for property, so long as they owned it. Effect, house and land prices going through the roof. Cause, government of country whose money is being splashed around all over world clamps down on it leaving their shores. Effect, house and land prices begin to fall. No more, no less, whatever minor interventions have been applied here. Once people truly understand what happened they will be less enthusiastic about paying stupid prices for houses. It has started.
How quickly we forget
This week the RBNZ released the sort of data on mortgage lending that we have not previously seen. It revealed banks have made three times as many loans to investors as they did to first-home buyers in the past year, and the average amount lent to investors was larger. That's 3 to 1 or 75% v 25% in investors favour
http://www.nzherald.co.nz/politics/news/article.cfm?c_id=280&objectid=1…
Stev-O First home buyers and owner occupier percentage numbers have actually increased since the LTV came in. So they have **improved** home ownership rates. Nothing like where they should be, because of the inflated prices to incomes but any improvement is welcome.
Plans for new Key family home on tennis court revealed...and it's still in DGZ!
http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=119…
'Outlook for Auckland house prices remains highly uncertain' ...
It just goes to show that certain or uncertain, if you're building a family home for your family to live in for the long run like Sir JK does, who gives a toss about what you say about the current market?!?
Reduced sales volumes eventually leads to price declines. Price declines will herald a property bust, then regretfully job losses. Migrants will not come, they will leave despondent. It's been a good lucky run, a hard and noisy party helped along by printed money and good old fashioned herd mentality. A correction is healthy, it is the new normal and it is coming. The more those involved remain in a greed and debt driven denial, the bigger the correction will be. Its going to be a big one.
Migrants with money have a different effect on the housing market than migrants without money. Rather obvious. 15 years ago as a middle aged migrant I sold up in London and used the money to buy in Auckland and it has been a good investment (it would have been a reasonable but not quite so good if it had been left in London). How many of the current applicants for 'skilled' residency are bringing wealth with them and how many are in the students from poor countries category? Obviously there is a mix but it does seem to be heading towards the younger and low-wage immigrants. If so (I've seen no stats) then the pressure will be on overcrowded rental accommodation.
If that analysis is right then the demand for owner occupied property will be less than anticipated by population growth.
The whole rotting debt-soaked mess is about to sink our; Australia's and the World's economy.
Well done Central bankers! Your rewards are on the way....
The Reserve Bank of Australia is opening the door to even tougher regulatory restraints on risky bank lending after announcing it would do its own "bank stress tests," a task usually performed by the prudential regulator...amid a fresh barrage of warnings that limits on investor lending would not reduce high household debt levels....The report comes as the property market shows ongoing signs of cooling even as the cash rate remains at a record low.. attempts to curb ..... mortgages had come too late...Macro-prudential policies can at best moderate the growth of credit and prices for a while but they cannot address the high levels of debt and prices"..
http://www.afr.com/business/banking-and-finance/reserve-bank-to-stress-…
"Macro-prudential ....cannot address the high levels of debt and prices". Quite right! The Market is going to do that all by itself, and markets being markets....there will be losers.....
You are quite right. I sold my first $1m + home in 1992, but that's not where I made my money. And I'm still a homeowner today! The property I sold in Queenstown has been remodelled by the current owner; he's done a nice job! and is worth far more than Jonh Key sold his Auckland plots for. But my comments above stand. "The whole rotting debt-soaked mess is about to sink"
You forgot the denominator - number of owned stock sold. Number of houses has increased quite a bit since 1992? Also, please stop referring to prices being supported by interest rates and immigration. This is tired assumption based thinking. Affordability - not mentioned. % of people who can afford or get a mortgage? Not mentioned. Medians are held up (average more so) due to those over $1m price who do not need to borrow. Sales below $850k have fallen most. A little depth of analysis would be expected of you on this site
Winston is more likely to be Minister of Foreign Affairs - indulging himself in the baubles of office in hotels/restaurants/limousines abroad.
I can't see Winston targeting property prices - especially since he and his partner have a $3million house in the ultra-exclusive St Mary's/Freemans Bay area of Auckland.
Highly likely that Winston will hold hands with Bill English. We'll find out within the next few weeks (or months) anyway.........
I made a comment the other day where I questioned whether we can even claim that we have a civilization. I thought it was rather profound. Similar to Fukuyama's claim that we are witnessing The End of History and the Last Man.
He argued that the worldwide spread of liberal democracies and free market capitalism of the West and its lifestyle may signal the end point of humanity's sociocultural evolution and become the final form of human government.
We have become atomized, highly individualistic and secular in a very profound sense. Stuff, especially property, is now our God. Which makes sense when we are no longer striving for a civilizational destiny but only a personal, materialistic, destiny. We will not see property prices implode. Much more likely the opposite as the wealthy are drawn to the magnetic World Cities, the jet transport hubs and ultra safe spaces of the planet. This is it, this is the end.
I think you've forgotten what actually drove the NZ and mostly the Auckland property market to such over inflated extremes. And those top end buyers are GONE, never to return in the numbers that they had before, all you're left with now is worst of the money launders (For top end buyers).
Here's a little article to remind you, so you can hope all you like that's not going to help the sales figures. We need to let property prices fall to affordable levels it's as simple as that. :)
Better Dwelling article: China’s Massive International Real Estate Buying Spree Is Officially Dead
https://betterdwelling.com/chinas-massive-international-real-estate-buy…
Quote: Impact On Global Real Estate Markets; New Zealanders that were complaining about a “flood” of Mainland Chinese buyers, are now complaining about the market cooling faster than expected.
Signs of Auckland house prices stabilising despite soft demand and Wellington prices still growing strongly, reinforces the need for the Reserve Bank to remain vigilant for signs the housing market may reaccelerate.
What you fail to grasp CJ099 is that the money is already here. Desirable property in the Global Cities doesn't consume money, it generates money, so it doesn't need to be constantly fed.
No Zachary what you don't seem understand that in order to keep prices 'UP' you need to keep the money stream going which was all know has been well and truly shut off, hence why prices are crumbling especially for the million dollar homes since there are very few sales.
And yes a property market does need to be constantly feed, that's how you keep prices up otherwise it just stagnates and prices gradually fall. You'll understand this as we go in to the second phase of a property correction next year since they'll be no hiding behind year on year data. :)
"Property is only worth what someone is willing and able to pay for it"
That's misleading and deceptive nonsense, CJ099. You ought to know better. (You've been coming here long enough.)
Clearly, you only need to be willing to pay. If you're not able to pay, you can borrow the money - which is what most people do anyway.
TTP
For most people, what you are willing to pay already included what you can borrow!
Someone might be willing to pay $500k for a property, but if they have $1 and Credit of $2, then willingness aint gonna help....
Common expression: " I'd be willing to pay a million bucks for that place if I won Lotto!"
"For most people, what you are willing to pay already included what you can borrow!"
Really??!
Typically, people find a house they like at a price that they're willing to pay. BUT, they have to borrow money to be able to pay for it.
They're "willing" - but they're not "able" until they've borrowed the money. Importantly, at the point of "willingness" many of them don't actually know whether they'll be "able" - because they don't know how much they'll need to borrow. (For instance, they might not know how much their existing house would sell for.)
TTP
Of course, not everyone is typical!
I recall envying a particular property that I would have been willing to buy, if I had the resources available at the time, and determining that "One day, I'll buy that!' and, 'one day', I did!
So again, willingness and ability to pay can have barriers in between them....time, personal circumstances, all sort of things, but capacity to pay....trump them all....
@ TTP You're an RE everyone knows that you're an RE! And you are unbelievably pathetic if you think the average Kiwi can afford a million dollar home when the average joint income is 80K. The maximum they can borrow is $500k and even with a $100k deposit the MAX they can afford is $600K
And by the way every time you use that "You should know better" line. Hey guess What! I and most of the commenters on this site know you're an utter moron because you can't even calculate basic math!
Here's a link to mortgage calculator help you: https://tools.anz.co.nz/home-loans/borrowing-calculator/true?cid=sem--h…
You're incredibly sad TTP is that the best you can do in a retort? :)
And by the way, I don't need to drink but you clearly do, according to the latest declining sales figure you and the other RE's should be looking for another job.
Lets face it you don't have a shred of evidence to support your claims that Auckland's property prices will rise again, not now or even in a few years.
And haven't you shuffled off to Palmerston yet since you complain that you can't afford a home in AKL?
Chatting to a friend while I was back in NZ. They've got one foot out the door. Both highly educated and both highly paid, albeit with kids They've calculated that they can only borrow 800k so probably limited to 1.1m. Still nothing reasonable in nice areas for that price so they'll probably leave Auckland. Can't you all see what's happening. All the innovators are leaving.
Great people with good incomes are leaving ...
It is not a given that Auckland will forever have the capacity to be home for everyone. If you have some common sense you'll know that some stay and some leave. Great people with good incomes like Zachary, Ex Expat, Eco Bird and myself are STAYING!! LOL
People want to buy a house where they live so they have a HOME, that's H.O.M.E. somewhere they can make their life with no fear of being turfed out by a landlord deciding to cash uo, without having to go cap in hand to said landlord if they want to have a pet in their life, maybe they want to completely redecorate. And maybe they don't want to recreate the same crappy circumstance for some potential home owner somewhere else by pricing them out.
Time for this sh$#y culture around housing to end!!!
Still not your own home, not under our tenancy laws, and while I can see that renting forever will become more of a "thing" I reckon the way it is structured here, needs completely revising. However, the ideal is still owning your own, really. Sorry, but the majority of the people cannot become the means by which a minority become rich especially where housing goes.
Pessimism would be accepting the status quo without a squeak.
Do you own your own house Pocketaces? Do you know people who are suffering because they have to rent? Or is this just happening in your imagination? We have to change the structure of our society so people can rent cheaply in desirable locations and keep a pet forever?
I had a tenant for about ten years who would still be there now if I didn't sell the property. I offered to sell him the place at what was probably 50K less than I sold it for at auction. House would be worth 300K more now five years later. People do get stuck in a rut and need a bit of a push sometimes.
I would say that tenants leave of their own accord much more often than getting evicted.
It's not reasonable to expect to rent the same place for life.
Pocketaces is over empathizing the plight of tenants for political reasons. It's great to have an excuse not to have a pet. It's great to not have to worry too much about the house and so on. It can be great to move around often.
If you really, really want your own house you make it happen. House in Bluff, under 100K.
Lol I thought I would Chuck lol in so I can be a groupie.
Well just because your staying means nothing. What it means is that if people with great incomes cant afford houses in Auckland where is all the money going to come from. Not from the Yves St Laurent property speculators. You need more people with cash.
Actually they might be able to get this shack for less than $1M in Ponsonby, but you never know it might just go above $1.1M LOL! http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=119…
Nice place!
However the article has this to say:
On the same street as Harper's property, a 3-bedroom pre-1914 villa with a rating value of $1.09m was sold for $1,495,000 - $405,000 (27 per cent) above its valuation.
Just around the corner on John Street a two-bedroom villa, dated pre-1914, with a rating value of $980,000 sold for $1,372,000 - $392,000 (26 per cent) above valuation.
Can anyone see a problem with these two sentences?
There are 400 Investor Visa's being issued each year. Those Visa holders typically want $3m++ properties in Central Auckland. That's why I believe the top end is holding up and will continue to as also those people are cash buyers. Lower end is a different market and will make it more attractive to FHB's which is great.
Dear “Penguin”
The 3m+ homes purchased by investors are only part of their portfolios in Auckland property
My wealthy Chinese neighbour purchased many properties both for himself and for his friends back in China
all in his companies name
You do not know the half of what’s going on
So, September 2008 was a month of low volume house sales in Auckland. That's 9 years ago.
In fact, I remember the time well....... The doom and gloom merchants came out in force saying it was the "beginning of the end" for the Auckland housing market - and that house prices were about to tumble big-time. "Fundamentals" would not support house prices at their September 2008 level, we were being told. Prices were "unsustainable".
But they got it WRONG. Believe it or not, since September 2008, Auckland house prices have actually increased.
Anyone who bought in Auckland in September 2008 would have done very nicely indeed. (Unfortunately, I'm not one of them.)
Don't let the facts get in the way of a good story. Unfortunately what your are refering to being the "Doom and Gloom Merchants" on this site are actually reading all of the "Leading Indicators" as to what is happening in real time on the ground. Have you noticed the conversations around the water cooler have changed dramatically over the past few months? The herd mentality is alive and well. Just as many people piled into the Auckland housing market all at once, many more people are now trying to get out. Unfortunately the doom and gloom is all yours to own.
Indeed Zachary,
The "any day now" mantra is beginning to wear a bit thin.
Also, I note that some people are pushing the "slow crash" mantra. Now, of course, this is as silly as it sounds. By the time the so-called "slow crash" is complete, prices will, in fact, have risen considerably on what they are now.
There's an insatiable demand for property, particularly well-located Auckland property - and it's growing by the day.
Dear spruikers
If you believe Auckland property is going to increase in value over the next 12 months why are you waiting ?
Buy now
No you are not buying now because you know the overall market is in decline and you will wait
So dear spruikers your lack of action preferring to wait exposes your hypocrisy
DGZ has just bought a place in Puhoi. I'm a bit maxed out and need to do some renovations. Any more questions?
We're not multi-millionaires just ex P&T workers. You're the hypocrite, you made money in property, now you're nice and comfortable, swanning about the world, you're a social justice warrior.
I’m in a different space to you two. I have a single unencumbered home, cash in the bank and follow the market because I need to be aware of trends for my looming retirement, in a decade or so.
My wife and I are extremely financially conservative so any decision to mortgage the home would have to be very well researched. I’d borrow to secure houses for my children. I’m a buyer if I can see an opportunity in my area (1071) to downsize, but I’m very fussy. It must have the attributes of my existing home I.e. North facing, elevated and close to the beach. I will trade down living space to get money out. Right now those opportunities are not there. A single site house is still better value than any options. I’m not seeing the doom and gloom right now. Listings are next to nil and buyer demand is strong for what listings there are as seen at the auction I attended a few weeks back. I suspect I’ll be watching for a long time.
Yep, and that is a trend that seems likely to continue. Count me amongst those displaced Aucklanders who simply wasn't prepared to pay a million dollars for what is in effect an investment grade quality. Aucklanders and Wellingtonians are flooding here to Napier where a search this morning on TradeMe reveals a grand total of just 91 properties available for sale.
A lot must have changed in Palmy since August:
It sure has. Palmerston North's average house price fell $49k from August's record-breaking high.
http://www.stuff.co.nz/manawatu-standard/97802809/Nearly-50k-price-drop…
Interesting. I have been watching for these sorts of contracts to start showing up:
For the first time in 18 months, there were plenty of offers coming in that were conditional on the sale of the buyer's previous home, Klue said.
Offers coming in but were they accepted? A big problem with the hot market is that it is quite difficult to upgrade your current house and has led to people acquiring rentals (their original home) when they really didn't particularly want one. Being confident with a contract that has this condition is a good thing and was very common in the past. I found that article to still reflect a hugely healthy interest in buying property.
Buy in Palmy now if that's where you want to live, it's just possible the market has bottomed out already.
Palmy doesn't suffer from a shortage of land which has driven up Aucklands prices. There are so many new building projects going on that there is a wait list of 12 months just to get to talk to a builder and then a further 12-18 months to get an architect. Commercial builds are also popping up everywhere, so we won't experience the price inflation like so many other areas.
Similar issues the world over.
https://www.bloomberg.com/gadfly/amp/articles/2017-10-10/eight-charts-s…
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