To complement the full NZ Property Report for January we have from this month started a regular interview with Bernard Hickey of Interest.co.nz covering all the key salient points of the report. This video format provides what we hope will be an easily consumed summary of the report with a professional and authoritative commentator of the market in Bernard.
The video is provided for viewing here and is also featured in a detailed summary of the NZ Property Report on Interest.co.nz.
You should have asked Bernard what his latest house price prediction is. Didn’t he predict a 30% house price crash by about now then later revise it down to 15%?
Agreed Alistair that it is a sellers market and in Auckland it is one of the strongest sellers market I have ever seen particularly in the Grey Lynn, Westmere, Pt Chevalier and Sandringham area. We are selling homes for well above what they last sold for in 2006 or 2007 so the previous peak has been well and truly exceeded.
One reason people will not list is that potential sellers in Auckland expect the market to rise around 8% to 10% in Auckland during 2012 so there is no rush to sell, particularly while they cannot find a replacement house. They do not want to sell and then be left out of the market and the other major factor is that if they sell they may not be able to find a temporary rental property.
At a rate of increase of 8% per year house prices would double within 9 years and despite the recent global financial crisis of 2008/2009 they have almost doubled from December 2001 to December 2011 according to REINZ the Auckland median house price increased from $255,000 to $484,375 in that period.
With a population increase predicted for Auckland from 1.5 million to 2 million over the next 20 years, building consents at an all time low, plus a Council that is totally set on constraining residential zoning to the existing boundaries, rental investors will also be more likely to retain their properties and enjoy strong rent and price growth.
So listings are very tight but on the buyer side we have been swamped with open home visitors, emails and texts about properties and enquiries asking when will we have more new listings available.
If we could get another 30 or 40 bungalows, villas and ex states in the Pt Chevalier, Grey Lynn and Westmere areas we could easily sell them all in February as we have hundreds of cashed up unconditional buyers ready to make offers!
Well, that’s a lovely piece of advertising for yourself, there Ross. Bit of subtley could be worked on maybe, though? Unfortunately, at the end of the day, Agents like Ross talking up the market for their own benefit will only do so much.
I’m surprised not to see mention of house prices relative to income. If you’re looking for a reason for the lack of match-up in asking price to the typical supply and demand trend, then that’s certainly a factor to look at.
I’m not sure Alistair’s theory personally – if there’s a lower supply, surely you’d see an increase in potential competition between Estate Agents? Its possible I suppose, but I think there’s a general feeling amongst buyers still that house prices are simply not realistic relative to income, and are perhaps holding off to see the government/council will start to make any substantial efforts to deal with housing affordability. That’s my best guess.
Interesting that we have here an interview between two people who have no background in real estate. Their analysis is quite flawed.
Better to have people interviewed who understand how the market actually works. Just one example, a drop in prices could mean more lower valued homes on the market, not an overall drop in value.
In responding to Peter Cox’s comments
I think Peter there are always a myriad of factors which ultimately impact the property market – it is always the most considered and protracted process and the most infrequent. I would agree with you that affordability is key and Bernard as part of the analysis undertaken at Interest.co.nz regularly analyses and reports on house affordability as well as the balance of rent or buy.
As to Ross’s comment or percieved view of “talking up the market” – he in my view has the initiative to bring his personal / local view on the market – such perspective is in my view of added value especially as he is very open in a online framework – prepared to engage and discuss his views.
In response to Peter Ward
I am not sure how you come to your conclusion that the commentary should come from “people who understand how the market works” – the report is factual data sourced from the website – the report analyses the data and presents facts. This interview is about the data, you will always have another persons perspective and that is the point and value of this website – to allow anyone to comment, raise a different perspective and join in the discussion.
It could be said that in this digital age – there a no experts, there are merely people who are expert at engaging with people who on an open platform can bring insight and objectivity to help everyone become their own expert.
As to your comment that the fall in asking price could be a factor of mix of property with more lower price properties – certainly this could be a factor, the data set of c.10,000 new property listings per month would certainly tend to negative this influence. However recognising this valid assertion I think in future it might be good to look as part of the report as to the representation by price range to see the extent of this factor.
Peter Cox – when the market was sick I reported it as such and for a while there it looked like Bernard might be right with his percentage drop prediction. However it’s now a strong sellers market and likely to remain this way for the next few months and maybe all of 2012.
Prices around Pt Chev, Westmere and Grey Lynn peaked late 2007 then by late 2009 had dropped around 15% but have since recovered all of that drop through 2011 and added some to achieve new record high levels.
On that topic of affordability – these affordability surveys assume that everyone has an 80% or 90% mortgage but this is simply not the case and in addition around 30% to 35% of home owners have no mortgage at all.
Low interest rates, not enough new homes being built, restrictive council development rules, difficult government resource management law and limiting the prospects of expansion outside existing city boundaries in Auckland will most likely keep upward pressure on house prices for at least the next 2 or 3 years.
The government and the council do not seem to have any plan that will increase the supply of new housing in the immediate future.
Any other opinions on this?