Average Auckland house price hits record $700K

Auckland's average house price rose to a record in December as property values benefited from a lack of supply heading into the peak summer season.

The average sale price rose to $700,387 in December, from $684,646 in November and $624,015 in December 2012, according to realtor Barfoot & Thompson. The median price rose 1.2 percent from November to $629,000 and was 14 percent ahead of the year earlier month.

New Zealand's Reserve Bank introduced restrictions on high debt mortgage lending from October last year in an attempt to cool rising house prices, driven by shortages in Auckland and Christchurch, on concern a house price bubble could cause financial instability.

"Seasonal trends which traditionally see higher value properties traded have not been offset by recent Reserve Bank changes and nor would they given the next three to four months of high summer season," Barfoot & Thompson managing director Peter Thompson said in a statement.

"With listings being so restricted and buyer demand so high, it suggests that as we enter the New Year, the Auckland real estate market will experience a strong first quarter."

The company had just 2,969 listings on its books at the end of December, close to the firm's record low of 2,837 listings at the end of July.

Barfoot & Thompson sold 817 houses in December, down from 1,118 in November and 920 in December 2012. Still, it is the second highest sales amount for a December month in the past 10 years, the company said.

The real estate agency added 631 new listings to its books in December, down from the 1,665 new listings added in November and 697 additional listings in December 2012.

At the end of the month, the firm had 18 percent fewer listings on its books than at the end of November, and 13 percent fewer than December 2012.

(BusinessDesk)

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The only annoying part of the story is that this price rise effects the whole of NZ when in effect it is regionalized. If you live outside Auckland, you are now being penalized via the banks and the RBA.

The banks' loan policies & interest rates are due to Auckland house prices as is the Reserve Bank’s intention to increase the OCR. So in effect one third of the people in NZ are deciding the financial fate of two thirds.

It is time everyone protested to their MP’s about this and stopped saying Auckland’s house prices are a everyone’s problem. They are not!
Yes Christchurch is also adding to the inflation conundrum, but if that was in isolation it could be tolerated.

The Government of the day needs to find their cojones, put in place a foreign ownership model that if you’re a non resident then tax must be paid on each and every dollar earned on your rental. Only NZ citizens are exempt. A Capital Gain on all rental property will also go someway to fixing the problem, but its not a pancea.

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Agree with JP. The LVR is one of the least thought-through pieces of nonsense going. Penalising the provinces for Auckland and Christchurch 'bubbles' is madness. But then for the Reserve Bank it was a simple thing to do, one blanket ruling. Much easier than researching the real causes and actually earning their salaries. Auckland's bubble is from cheap foreign money, Christchurch's is from decimated stock. No LVR will make any difference to either cause. The Reserve Bank is a laughing stock.

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So a 1.2 % rise gets a Headline "New Record!"

But number sold drops 27% on November
Listings drop 46% on November.
December Listings drop 10% on last year.

If the columnists could actually look past the Headline Peter Thompson wants them to put up. Perhaps they would realise that he has a vested interest in pumping the market so everything he says should be taken with a grain of salt; we might all be better off!
Nobody belives "Big Tabacco" when they try and tell you "its ok to smoke" So why do we belive "Big Real estate" when they peddle this misleading rubbish. And you can lump "Big Construction" in their too.
Last time anything like this happened was when "Big Automotive" predicted massive problems with Jap import cars. Thankfully they were ignored and 20 years on we are posting record low fatalities - due inpart to a moderized fleet.
"Big Realestate" and "Big Construction" are feathering their own nest... they dont have to live with 30+ year mortgages.. they are worried about this financial year and the size of their profits.

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New Zealand's Reserve Bank is running out of ideas. Perhaps it should follow what Hong Kong and/or Singapore has been doing....no ifs or buts.

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Because housing is so cheap in Singapore.

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Great idea. Sounds like perfect solution for NZ.

HK government requires banks to have a 50% deposit on home loans and puts stamp duties and other taxes on loans to high value properties.

That has slowed loans to high value properties somewhat but house price inflation on "regular " properties still rages at 20% last year. Hong Kong housing still most expensive in the world.

NZ Reserve Bank guys must have their morning laugh if they read comments in NBR.

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Looks like we'll be well primed for Labour's Capital Gains Tax housing crash then.

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The real issue is artificially low interest rates. When government have made the price of money so low compared to what the market what have rates in the case of low savings supply and high borrowing demand, people will buy more houses at higher prices. For people to think the solution is more tax or purchasing restrictions such as margin requirements, is the ultimate folly. It's like asking the government to subsidise something then asking them to tax it when too many people rush in at the subsidised price. The government should bet out of the market period and allow true forces of demand and supply to set the price of money and price of housing.

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This housing boom in Auckland is not caused by a shortage of houses. Most cities in the world are having the same problem.
It started when the Americans strarted to flood the world with cheap money. This was soaked up by house inflation and not production.

Rents have not increased by anything like house prices, which would have happened if there was a major shortage.

As house prices escalates, investors and speculators climb over each other to buy houses to gather the tax free capital gain, thus creating a artificial shortage for owner occupiers.

When the Fed starts to tighten up the opposite will happen.
This will end in tears for many people who do not understand the market!!

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This is an average sale price only. It be that the LVR limits are preventing the lower value first homes from selling. Those homes that are selling are therefore of a higher value. This would push the average sale price up, but have minimal or nil impact on the actual value of the housing stock.

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This point may have some validity. Does anyone have further details on the proportion of sales made across the different price brackets to confirm whether this is correct?

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The Auckland Council and its policy of restricting urban growth is at the heart of the problem. They are deliberately rationing land in order to force people to knock over perfectly good suburban houses and replace them with socially and environmentally damaging blocks of flats that, per square metre, cost more than houses.

All over the world, councils are following similar policies and, wherever they do, there is a huge escalation in house prices. But in many American cities, there are no such restrictions and, for instance, in Houston you can buy a perfectly good four-bedroom house for less than USD300,000.

Not long ago, houses in Auckland cost about three times the average salary. Now it is more than seven times. Increases in the cost of building houses is only a small contributor to this massive increase. The rest is excessive land costs, excessive development costs and general bureaucratic interference by the Council.

There is ample land north and south of Auckland locked up in lifestyle blocks and in land that is virtually worthless for agriculture. But, as Len Brown has a lifestyle block, I conclude he is interested in making sure that his environment is preserved and cannot be shared with others.

What we need is new satellite city centres North and South of Auckland to take the load off the transport networks and limit development in an area subject to volcanic action.

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Why not encourage development outside of Auckland?
Suddenly regional development seems like the only real alternative to unbalanced Auckland growth.

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Stop immigrants buying houses... stop the ridiculous price rises.

The Auckland CBD is mostly foreign owned, our farms are all being brought up and soon all the residential will get brought up and we will be over crowded like Japan is in 15 - 20 years.

Stop Immigration and keep the kiwi lifestyle!

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Tax all forms of realised income equally

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