Auckland house prices rise in 2017, more sold for over $1m despite fewer sales

Barfoot & Thompson managing director Peter Thompson says there is still buyer support for current house prices.

Average house prices in Auckland rose in 2017 despite sales numbers falling, with 37 percent of homes sold for over $1 million in the year, realtor Barfoot & Thompson said.

There were 674 sales in December versus 721 sales in the same month a year earlier, Barfoot & Thompson said in a statement. The average sale price rose 2.9 percent from the previous December to $939,871, with the median price up 3.6 percent annually to $870,000.

In 2017 the number of homes sold was down more than 25 percent from each of the previous three years, but average prices still rose 4.5 percent to $926,632 and the median selling price jumped 2.7 percent to $843,583, said Peter Thompson, managing director of Barfoot & Thompson.

"Normally when sale numbers fall by such a large percentage, prices retreat from their record high levels," Thompson said. "But this has not occurred, and prices have continued to rise modestly. It underlines there is still buyer support at current prices."

The Reserve Bank's restrictions on the level of new bank lending to owner-occupiers with less than 20 percent deposit and leveraged residential property investors, along with retail banks being more cautious on mortgage lending and buyer apprehension have "all played their part in cooling the market", but "a housing shortage when the population is growing creates demand", Thompson said.

In the year, 37 percent of all homes sold were for in excess of $1 million, compared to 35 percent in 2016 and 29 percent in 2015. At the other end of the scale, just 9 percent of homes sold for less than $500,000, compared to 11 percent in 2016 and 15 percent in 2015.

Barfoot & Thompson said sales of lifestyle and rural property in Auckland and Northland followed the same pattern in the year, with sales numbers lower but firm while prices held steady. Dairy farm sales were affected by the downturn in the industry.

(BusinessDesk)


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17 Comments & Questions

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There's always a demand for housing but what buyers are willing to pay can fall when prices have got higher than what is sustainable due to sentiment. Even if you assume 3% capital growth, most Auckland houses are a terrible investment!

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These real estate agents are masters at spin......like pull the other one, it plays giggle balls.

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Property is only an investment as such because of the tax deductions available. Imagine that you have $1.5 million in the bank that you want to invest. Buying 1 Auckland house mortgage free is unlikely to be a good use of that money.

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That's not the case for most homeowners or mum&dad investors - I mean $1.5m in the bank. For those with merely equity in their own house - property so far has scored over other classes, especially given it's something tangible as against a piece of paper. Housing stock shortages are sending message of future value increases, albeit somewhat restrained.

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Looking at the actual numbers, we can see that every suburb except 2 were either down or well down on average prices from a year ago. Apartments especially are taking an absolute hammering - a great sign that the bottom is falling out. Then you factor in overall sales number down 25%-30%, and auction rates averaging about 75% failure rates and you can see why these guys are spinning as fast as possible to try and keep the market up so they can make bank this year.

The Report: https://www.barfoot.co.nz/market-reports/2017/december/residential-sales...

Prudent real estate agents who know the gig is up will already have found other jobs - I suspect the panic is only just beginning for those that haven't!

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Down or well down is some rose tinted glasses going on.

Looking at the Dec to Dec figures in that report. Two are up and one is flat. Of those increasing, two are middling in the margin of error, two are down modestly, and a couple down more significantly. The 22% drop in the central Auckland being the most impressive. but the increase in the higher value north shore making the overall market average not be impacted.

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The sad thing is he says the prices haven’t dropped. True negotiation in this market is stifled by realtors stating what the price should be as opposed to what it can be in a free market. Now we have rates ratifying high values which drives further vendor perception to ask for unrealistically high prices. The catalyst that drove the market up is now gone. Apparently. Sadly the children of those that have invested here can still buy due to becoming citizens from purchasing the right as a student. The problem is now they are not so sure they can get there money into NZ or possibly even get it out without there country becoming aware of it and thereby incurring a tax bill both here and at “home.”

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No GFC like 2007 when house prices tanked and the Herald front pages predicted doom and gloom. 2007 and 2008 was the end of the world.

2015 House prices Tripled!

2016 house prices slowed engineered by the main Banks who shafted their own customers equity.

2023 house prices will Double possibly triple in price.

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Who in Auckland is going to pay 20-30x the average wage for a house if incomes keep stagnating?

Yeah, thought so.

Just keep ignoring reality and basic economics mate, she'll be right...

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It is all about existing equity and long term low interest rates never about a singular average wage.

Most purchasers of houses are a couple multiplying income and equity power in the realestate market.

Equity increase is a factor that multiplies home values enabling a cycle of rapid increase in value within the seven year cycle.

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The higher prices rise, the less people are able to afford them, even with vastly over-inflated real estate values.

Interest rates are already rising in the USA - you'd be silly not to notice that, or the concordant ride in bank lending rates. Take a look at the latest Fed dot plot and tell me what you see. Interest rates ain't going any lower!

Doesn't matter anyways, the momentum is all going the wrong way. Why don't you actually read the report (I handily posted a link above to make it easy for people such as yourself).

Have fun finding a new job in 2018 :)

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Really, Robert," the house prices will Double possibly triple in price by 2023 ". So ,going by what you stated an average Auckland house will cost $3 million. This can happen only If foreign buyers/cash investment from abroad, are given a free hand .

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Robert is probably one of those desperate real estate agents. What will the rent on that $3 million house be - $800 a week which would mean a gross rental yield of 1.4%!

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Economists and media were sure house prices would fall further in 2009 with the GFC worsening.

Economists quoting Income and rental yeilds not supporting house prices in 2008 and 2009.

2015 house prices Tripled in Auckland.

Economists guess again in 2017 talking up a slowdown just like 2008 this time without the GFC and with extreme demand for housing waiting to pounce when lending is eased.

2023 house prices may Triple again in Auckland.

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A "savvy investor" such as yourself should be heeding such time immemorial mottos as, "Past performance does not equal future returns".

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What are the alternatives to investing in NZ? Put it in the bank and earn about 3.5% pre-tax at best, or give it to some wide boys in our share market to lose on their flash cars and huge salaries. Most of us understand residential property and it is a tangible asset that many of us can maintain and upgrade ourselves. The 1987 and 2008 crashes have rightly made us wary of the so called wonder-kids and experts on where to invest.

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It also happened in1997,its every 10 years,the market drops of,its happening again now.

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