Archive | Residential

After 14 years, 3 more years’ income needed to buy same house in Auckland

Auckland’s year-end stalling of median house price rises (up only 0.7% over 12 months), combined with a 14.2% increase in median household income, returned the region to an unaffordability rating in single digits in Demographia’s latest annual international survey.

It also made Auckland the second least affordable urban area in the country, swapping places with Tauranga.

Demographia survey authors Wendell Cox (US) & Hugh Pavletich (NZ), said in their introduction the improvement in New Zealand’s rating was largely the result of a statistical update.

As for Auckland’s standing, they said the consistently poor affordability meant buyers of houses in Auckland now had to spend 3 more years’ income than they did 14 years ago to buy the same house.

“New Zealand’s housing affordability indicates an improvement that’s largely due to an upward restatement of median for the last decade by Statistics NZ. Even so, New Zealand’s housing remains severely unaffordable, with a median multiple of 5.8.

“Auckland has a severely unaffordable 8.8 median multiple. Housing affordability has deteriorated from a median multiple of 5.9 in Demographia’s first survey (2004), thus adding the equivalent of nearly 3 years in pre-tax median household income to the house prices.”

New Zealand markets with median multiple (2016 in brackets), median price, median household income and their rankings – international affordability, major market ranking (Auckland only) and NZ ranking:

Auckland: 8.8 (10.0), $836,700 ($830,800), $94,800 ($83,000); rankings 281 (401), 84 (89), 7 (8)
Christchurch: 5.4 (5.9), $448,300 ($435,300), $83,700 ($73,900), 226= (305), 2= (5)
Dunedin: 5.4 (5.4), $363,300 ($322,000), $67,400 ($59,700), 226= (323), 2= (2)
Hamilton-Waikato: 6.5 (6.2), $530,100 ($444,900), $81,800 ($72,100), 257 (356), 6 (6)
Napier-Hastings: 6.1 (5.7), $409,100 ($340,500), $67,000 ($59,300), 253 (342), 5 (3)
Palmerston North-Manawatu: 4.5 (4.7), $278,000 ($255,800), $62,000 ($54,900), 181 (275), 1 (1)
Tauranga-Western Bay of Plenty: 8.9 (9.7), $617,000 ($591,900), $69,100 ($61,200), 282 (398), 8 (7)
Wellington: 5.5 (5.8), $508,700 ($463,700), $92,100 ($79,600), 231 (348), 4 (4)
Median market: 5.8 (5.9)

The international picture

The survey covers 293 metropolitan housing markets (metropolitan areas) in 9 countries – Australia, Canada, China, Ireland, Japan, New Zealand, Singapore, the UK & the US) for the third quarter of 2017.

92 major metropolitan markets (housing markets) with populations over 1 million are included, 5 of them megacities, which are defined as having more than 10 million residents – Tokyo-Yokohama, New York, Osaka-Kobe-Kyoto, Los Angeles & London.

Hong Kong was again the least affordable, with a median multiple of 19.4, up from 18.1 last year.

Sydney was again second, at 12.9. Vancouver was third least affordable, at 12.6, followed by San Jose at 10.3 and Melbourne at 9.9. The next 5 least affordable were Los Angeles (9.4), Honolulu (9.2), San Francisco (9.1), Auckland (8.8) & London (8.5).

Osaka-Kobe-Kyoto is the most affordable megacity in the survey, with an average multiple of 3.5, earning a moderately unaffordable rating. It was also the most affordable major housing market outside the US, ranking 19th out of 92. TokyoYokohama was the second most affordable megacity in the survey, with a seriously unaffordable average multiple of 4.8.

There were 10 affordable major housing markets, all in the US, and 28 severely unaffordable major housing markets, including all in Australia (5), New Zealand (1) & China (1). 13 of the major markets in the US were severely unaffordable (out of 54), 6 in the UK (out of 21 major markets) and 2 out of Canada’s 6.

The most affordable major housing markets were in the US, with a moderately unaffordable median multiple of 3.8, followed by Japan (4.2), Canada & the UK (4.3). Singapore & Ireland both had median multiples of 4.8.

Overall, the major housing markets of Australia (6.6), New Zealand (8.8) & China (19.4) were severely unaffordable.

The survey rates middle-income housing affordability using the median multiple, which is the median house price divided by the median household income. Demographia rates a median multiple of 3.0 & under as affordable, 3.1-4 moderately unaffordable, 4.1-5 seriously unaffordable, 5.1 up severely unaffordable.

The authors said the median multiple was widely used for evaluating urban markets, had been recommended by the World Bank & the United Nations, and was used by the Joint Centre for Housing Studies at Harvard University.

With this year’s survey, I’ve run an extensive list of links below, mainly to give you an idea of how – despite awareness of an acute problem for so long, solutions haven’t been forthcoming.

However, in Auckland, some change can be expected as the influence of the region’s new unitary plan starts to change housing patterns (which I haven’t linked to).

The links are in 2 groups – first, those relating to past Demographia surveys, and second, those containing suggestions of change.

Links:
Demographia, 14th (2018) annual international housing affordability survey
Demographia
Performance Urban Planning

Earlier stories:
23 January 2017: Auckland still near top of Demographia’s international unaffordability table
25 January 2016: Demographia ranks Auckland severely unaffordable
19 January 2015: Auckland worsens on Demographia’s affordability rating
22 January 2014: Property Council uses Demographia to combat unitary plan constraints
23 January 2006: Demographia survey rates Auckland 15th least affordable city in 6 countries, but authors don’t give evidence to prove cause theory

Other related stories:
24 June 2016: Fairgray works through the question: Who’s really the house price villain?
25 January 2016: Introducing “middle income housing affordability”
25 January 2016: Australian senator says affordability crisis ‘contrived’
25 August 2014: National promises easier access to first-home money, Pavletich says it’ll fuel housing inflation
20 January 2014: More housing action a 2014 certainty – plus links for affordability story & research
21 January 2013: English warns of another housing demand shock on way
13 April 2012: Productivity Commission misses key affordability point – again
10 February 2012: Council presents the garbled nonsense response on housing affordability
3 February 2010: Canadian researcher fires broadside at Demographia affordability report
23 January 2008: ARC strategy chief rejects Demographia solution as over-simplification (again)
21 January 2008: The Demographia view on what’s wrong, how to fix it
28 January 2009: Heatley promises housing initiatives
21 January 2008: NZ rated most expensive for housing affordability
10 December 2007: Pavletich sets out ways to gauge unaffordability triggers
10 December 2007: Government introduces affordability measures
6 September 2007: Curtis loses fight to remove “compact” from development framework
11 April 2007: Pavletich reckons NZ under-building by 10,000 homes/year
11 April 2007: Expect 4-5 centres to be earmarked in growth strategy review
1 April 2007: Lee proposes formal integration of regional growth & sustainability strategies
12 March 2007: Pavletich says improved land supply will defeat inflationary speculation
22 January 2007: Affordability campaigners berate governments for their failure as Auckland ranks 21st least affordable in world survey
15 October 2006: Our choice: Closed cities of despair or open cities of opportunity
30 August 2006: Townsend lashes regional containment policy
7 July 2006: Compact-city concept “destroying the Kiwi way of life”
6 April 2006: Housing affordability – how to measure it
5 January 2006: Growth forum embarks on review – and the chance to adjust its thinking
10 November 2005: Curtis sets up scrap over containment policy
28 May 2005: Housing affordability calculations: What you get is not what you want
3 April 2005: McShane derides Smart Growth, and says why
6 June 2004: Scorecard indicates regional growth far more rapid than anticipated, increasing pressure to expand urban limit
2 March 2004: Auckland land shortages for both business & housing

Attribution: Demographia release.

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Auckland still leads cyclical house sales shift downwards

The Real Estate Institute said yesterday the median house sale price nationally rose 5.8% in December compared to a year earlier, and 6.6% excluding Auckland.

In Auckland, the median rose 1.8% over the 12 months.

The moves were:

Nationally: 5.8%, from $520,000 to $550,000
Excluding Auckland: 6.6%, from $422,000 to $450,000
Auckland: 1.8%, from $855,000 to $870,000.

The cyclical context

Those differences are normal. Auckland habitually leads cycles up, peaks as other centres start to rise, and softens while the rest of the country is still trying to catch up. When everything settles down, the margin between Auckland prices and those everywhere else will be bigger than it was before the cyclical rise.

The difference that is abnormal is that Auckland has been subjected to a hefty population increase for the second time this century – first in 2003-04 under the Clark Labour government, from which it hadn’t fully recovered before the National-led government enabled a new influx into Auckland over the last 5 years, with no attempt on either occasion to spread the growth.

Through a period of 15 years, Auckland’s housing supply has been inadequate to meet demand. For the real estate sector, and for political purposes, that’s been just fine: a tight market encourages competition & price hikes.

The Real Estate Institute said prices rose in 13 of its 16 regions in December, 3 of them to record levels:

Waikato: up 11.7% from $470,000 a year ago & $490,000 in November to $525,000 in December
Bay of Plenty: up 20.4% from $496,500 a year ago & $575,000 in November to $598,000, and
Wellington: up 4.7% from $535,000 a year ago & $550,000 in November to $560,000.

At the other end, prices fell from a year ago in 3 regions:

Marlborough: down 2.1% to $372,000
West Coast: down 1.6% to $185,000, and
Canterbury: down 0.7% to $439,000.

Real Estate Institute chief executive Bindi Norwell said December 2017 was the first time all 7 districts in Auckland (the institute still bases its statistics on the boundaries of the 7 cities & districts that formed the super-city in 2010) had a median price above $700,000.

She said this highlighted “how expensive the city is becoming”. In addition, “North Shore City [as it was] has reached a record median price of $1,113,000. The nearest the price has been to this point previously was $1,105,000 in November 2016.”

Volumes still struggling

The institute said sales nationally fell 10.1% in December from a year ago, from 6567 to 5903; 11.6% excluding Auckland, from 4733 to 4184; and 6.4% in Auckland, from 1808 to 1693.

Nelson was the only region where sales rose from a year ago, from 71 to 76.

The institute’s house price index increased nationally by 3.8% from a year ago to 2655, by 6.8% excluding Auckland, and by 0.7% in Auckland.

Auctions fall away

Auctions’ share of the national market fell from 18% a year ago to 14% – down from 1154 sales to 827.

55% (455) of the December 2017 sales were in Auckland.

Inventory

The number of properties available for sale nationally increased by 9.3% (from 22,521 to 24,610), and by 2.1% excluding Auckland (from 15,784 to 16,113).

Price bands

Broken into price brackets, the number sold in December fell compared to a year ago in all except the $2-3 million category, which increased by 4.3% (from 92 to 96).

The number sold for less than $500,000 fell 18% (from 3148 to 2577). The latest figure for that bracket represented 43.7% of all sales.

Link: Full Real Estate Institute December report

Attribution: Real Estate Institute release.

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Focus on Northcote in push for affordable home development

Government-owned company HLC (2017) Ltd – the former Hobsonville Land Co Ltd – is pushing hard to increase interest in 5 development superlots at Northcote, in keeping with the new government’s desire to get 100,000 “affordable” homes built over the next 10 years, half in Auckland.

Bayleys Real Estate launched an expressions of interest campaign late last year, seeking private sector partners to develop the 1.58ha in the 5 superlots.

Under Labour’s KiwiBuild policy, The Government wants to get 100,000 affordable homes built within 10 years, half of them in Auckland.

HLC has supervised development at Hobsonville Point, in West Auckland, where over 1000 houses have been built in 5 years. On completion, that 167ha masterplanned development will have 4500 houses & over 10,000 residents.

At Northcote, the focus in stage 1 of redevelopment of the state housing block will result in 298 old state houses being replaced by 400 new ones.

For stage 2, HLC, a subsidiary of Housing NZ Corp, appointed Bayleys to release the 5 superlots, which range in size from 2572-3665m². Registrations of interest close on Friday 16 February.

HLC chief executive Chris Aiken said a shortlist of potential home builder partners would be identified by March and the final selection made in April.

55% of the potential 165 homes in the 5 superlots have to be “affordable”, defined as a maximum price of $600,000 for a terraced home, $500,000 for apartments.

On completion, the whole project will provide about 1200 new homes near the Northcote town centre over a 6-year period.

Earlier stories:
19 September 2016: Unitary plan helps lift Northcote housing target to 1200
16 May 2016: Council & Government join forces to redevelop Northcote land

Attribution: Agency release.

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Agency records residential slowdown, but prices still rising

Barfoot & Thompson managing director Peter Thompson said this week the agency’s average selling price of Auckland homes continued to rise in 2017, but at the lowest rate in 5 years.

He said the era of rapid price increases had been reined in and the market had settled into a more stable trading environment.

“In 2017 the average selling price increased by 4.5% to $926,632 and the median selling price by 2.7% to $843,583. [Those figures are for the whole year, distinct from the monthly figures charted below.]

“What did change significantly in 2017 was the number of homes sold, which fell by more than a quarter on the numbers sold in each of the previous 3 years. The sense of urgency to buy a property regardless of its asking price has disappeared. It has been replaced by buyers taking a more considered approach.

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

“In part, this was aided by the recent release of new capital values by the council as sellers & buyers have the same information as to the potential value of a property.

“In December we sold 674 homes, a number in line with the number we sold each month for the previous 3 months.

“However, the average sales price for December at $939,871 was 2.6% higher than the average for the previous 3 months and the fourth highest on record.

“The median price in December at $870,000 was 3.6% higher than that for the previous 3 months and the second highest on record.

“Undoubtedly, the measures progressively introduced by the Reserve Bank, a more prudent approach to mortgage lending by the trading banks and a growing apprehension among buyers as to the prices being paid all played their part in cooling the market.

“At the same time, a housing shortage when the population is growing creates demand.

“New listings in December, at 571, were low, but for calendar 2017 the average number of listings each month was 1510, the third highest on record.

“At the end of the year we had 4160 listings on our books, a quarter higher than at the same time last year, while across the year average available listings on a monthly basis, at 4229, have been at their highest for 5 years.

“The growing value of Auckland’s housing stock is reflected in the changing percentages between property selling for under $500,000 and those for in excess of $1 million.”

Sales under $500,000 fell from 14.9% in 2015 to 11.1% in 2016 and to 8.9% in 2017.

$1 million-plus sales rose from 29.1% in 2015 to 35.4% in 2015 and to 37% in 2017.

Mr Thompson said sales of lifestyle & rural property in Auckland & Northland followed the same pattern in 2017 as for Auckland residential sales, falling compared to the previous 2 years but still at firm prices for good quality properties.

“Dairy farm sales in the north also had to contend with a downturn in the dairy economy, which affected activity.

“Lifestyle living retained its attraction for many and inquiries remained strong throughout the year.”

The figures:

Attribution: Agency release.

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QV says rise in average Auckland home value just $4583 for year

The average residential property value rose by 6.6% ($41,660) nationally last year, according to Quotable Value Ltd’s index.

In Auckland, the rise was just $4583 (0.4%) for the year.

In a few places the movement over the year was downward, including a 0.1% fall in Christchurch.

QV recaps

QV national spokesperson Andrea Rush said the general trend was for slowing in the rate of growth due to loan:value ratio (LVR) speed limits, stricter retail bank lending criteria & uncertainty ahead of the election, but in some areas values rose rapidly while decreasing in others.

Ms Rush said sales volumes fell every month from the 2016 figures. From February-October the drop in sales exceeded 20%/month, before picking up in November, when a post-election late spring surge saw them jump to just 10% lower than November 2016 levels.

“A slowdown in the rate of value growth in the housing market that began in the latter part of 2016 with the introduction of LVR speed limits, requiring a 40% deposit by investors, continued throughout 2017.

“The frenzy in the market of the previous 3 years, induced by high numbers of investors in the market, subsided and we saw a return to more normal levels of activity in housing markets around the country.

“By October, nationwide annual value growth had slowed to 3.9%, the lowest rate of growth seen in 5 years, and for the Auckland region it slowed to -0.6%, the slowest annual rate of growth seen there since Mach 2011.

“High prices, constraints on finance caused by tightening in retail banks lending criteria and higher deposit requirements removed many buyers from the market and sales volumes plummeted.

“Potential housing policy changes in the lead-up to the election also caused uncertainty and people took a wait-&-see approach, causing activity to slow dramatically over the winter quarter, and this resulted in value decreases in many areas.

“The usual annual spring surge was very slow to arrive and listing levels and market activity did not pick up until November and December and this can be seen in both sales volumes and value growth recovering in the last two months of the year.

“The annual rate of value growth recovered to 6.4% in November & 6.6% in December, and sales volumes for November lifted 21.0% higher than in October. This was partly due to buyers delaying purchasing until the election result was decided, and may also have been in part due to some buyers racing to purchase before the new foreign buyers’ ban in December.

“The slight easing in LVR restrictions by the Reserve Bank due this month is likely to help improve activity & demand in the market as we move through the summer months.

“Low interest rates, relatively high net migration & lack of supply means market drivers remain, and we are likely to see values hold for the most part during 2018 in the main centres, but the trend of lower rates of growth is likely to continue.

“However, areas where investors were previously very active may continue to see values drop back where prices remain too high for first-homebuyers, particularly in Auckland, Hamilton & surrounding districts.

“Some regional areas may continue to see stronger value growth than the main centres during the year.”

Below, the dollar figure is the average value for December. The first percentage is for the 3 months to December, the second is for the last 12 months (QV switches those around in its tables) and the third is the change since the 2007 peak. For Auckland, QV still works on the old council boundaries:

Auckland region, $1,051,762, 1.2%, 0.4%, 92.5%
Rodney, $941,029, 0.1%, 1.3%, 60.4%
North, $961,471, 1.6%, 0.4%, 60.1%
Hibiscus Coast, $921,890, -1.7%, 2.0%, 57.0%
North Shore, $1,226,509, 2.6%, 0.7%, 90.1%
Coastal, $1,405,509, 3.1%, 0.7%, 86.5%
Onewa, $981,844, 2.1%, 0.6%, 97.9%
North Harbour, $1,192,164, 2.1%, 0.6%, 96.2%
Waitakere, $824,271, 1.0%, -1.9%, 94.4%
Auckland City, $1,245,536, 1.6%, 2.2%, 100.1%
Central, $1,085,314, 0.6%, 2.2%, 90.6%
East, $1,575,133, 2.8%, 3.6%, 97.7%
South, $1,100,710, 0.1%, -0.4%, 104.5%
Islands (low volume), $1,161,110, 6.6%, 13.7%, 81.6%
Manukau, $895,606, -0.3%, -1.0%, 95.7%
East, $1,150,996, -0.7%, -0.9%, 93.1%
Central, $695,724, 1.1%, 1.1%, 85.1%
North-west, $769,615, -0.3%, -1.5%, 108.3%
Papakura, $696,713, 2.6%, 2.2%, 93.7%
Franklin, $666,676, 0.5%, 1.0%, 68.5%

Northern border, down country & national:

Far North, $421,582, 3.0%, 11.8%, 5.9%
Kaipara (low volume), $496,551, -3.7%, 6.2%, 25.2%
Hamilton, $543,446, -0.5%, 1.6%, 50.3%
Tauranga, $693,725, 1.0%, 3.2%, 44.1%
Gisborne, $293,346, -0.6%, 8.9%, -1.3%
Wellington region, $628,450, 3.6%, 9.4%, 37.9%
Christchurch, $493,706, 0.4%, -0.1%, 30.1%
Dunedin, $391,098, 2.7%, 10.4%, 36.6%
Queenstown-Lakes, $1,111,995, 3.0%, 8.8%, 61.7%
Total NZ, $669,565, 3.6%, 6.6%, 61.6%

Link to full index: QV house price index for December 2017

Attribution: QV tables & release.

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NZ residential investment rules to tighten, while portfolios around the world are traded

In contrast to the new New Zealand government’s quick move to lock foreign investors out of buying existing homes, residential (apartment) portfolios are becoming a tradeable commodity in much of Europe.

Large institutions have long owned much of the intensive housing – condominiums – in the US.

There are differences. Most of the European portfolios being traded are apartment blocks, and New Zealand has developed an investment style of individual purchase of units in them.

Another difference is that Chinese investors, in particular, have looked for suburban houses to buy in countries such as New Zealand, Australia & Canada, and have left them empty. The regulatory approach might have been different – even non-existent – if those homes had been tenanted.

The NZ Government introduced its bill controlling foreign investment to Parliament last Thursday and it’s first on the order paper tomorrow, to get its first reading.

The bill will amend the Overseas Investment Act 2005 “to ensure that investments made by overseas persons in New Zealand will have genuine benefits for the country”. More specifically, the bill will ensure that overseas persons who are not resident in New Zealand will generally not be able to buy existing houses or other pieces of residential land.

Residential portfolio transactions occur frequently in Europe, where long-term rental is common. Among the latest investments, Paris-headquartered AXA Investment Managers bought into Finnish housing in June, added to its portfolio in November and took the total value to €170 million with a €130 million purchase last week.

AXA’s latest acquisition contains 909 modern rental apartments, a mix of freehold & leasehold, in 22 buildings, mostly in or near the capital, Helsinki, and second largest city, Tampere. Constructed since 2010, the lettable area totals 44,198m², and individual units average 49m². AXA said the portfolio was almost fully occupied.

AXA’s latest purchase was for 2 funds, but it didn’t say where they were from. The June purchases were for 2 German funds, and AXA noted then they were in line with its investment strategy “of acquiring modern multi-family residential properties in attractive European markets. Finland presents a particularly compelling investment proposition with regards to this asset class, benefiting from steady rental growth over the past decade, coupled with a backdrop of undersupply”.

In a different segment of the residential market, Cushman & Wakefield’s annual report on UK student accommodation says 602,000 purpose-built bed spaces are available to students for the 2017-18 academic year, and the private sector has delivered 87% of the new stock of 30,000 new bed spaces. The average headline weekly rental growth between 2016 & 2017 was 2.9%.

Packaging real estate investment makes sense, as US giant the Blackstone Group shows with its holding of 147,000 multi-family units in the US & elsewhere. But it also differs from the old European policy of long-term ownership, with a philosophy of “buy it, fix it, sell it” – “We acquire high quality, income-producing assets at discounts to replacement cost, we unlock value by proactively addressing any physical or operating issues through aggressive asset management; once assets are stabilised we sell the investments to long-term real estate holders and return capital to our investors”.

Securitisation has worked alongside owner-occupier & individual investor holdings of commercial & industrial real estate in New Zealand, but many investors burnt by the sharemarket collapse in 1987 turned to hard assets as an alternative, and that ill feeling towards securities still exists.

One thing the new investment regulations won’t do is to deprive the apartment market of the seed investors needed to launch new products. Foreign investors will still be able to buy into those – and without those investors, most of New Zealand’s central city apartment market wouldn’t exist.

The new government’s tightening of investment rules is one of a few prongs to attack the escalation in home prices. Others are the freeing of land from anti-growth urban boundaries, the provision of funding to supply the infrastructure for more housing (the absence of which was a primary cause of the urban boundaries being created), and a government focus on providing lower-cost housing.

All those measures are being introduced almost simultaneously, but their effects will occur at different speeds. Together, though, they should quickly change the face of markets in 2018.

To see what others are doing, the Taylor & Francis research link below takes you to a number of articles on ideas around the world, and how global investment crosses local residential intentions.

Links: Overseas Investment Amendment Bill
AXA, 15 December 2017: Acquisition of 909-unit residential portfolio in Finland for c.€130 million
Cushman & Wakefield, UK student accommodation annual report
Taylor & Francis, International Journal of Housing Policy
Taylor & Francis, special issue January 2017: The globalisation of local real estate: The politics & practice of foreign real estate investment

Attribution: AXA, Government, legislation, Cushman & Wakefield, Taylor & Francis.

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Twyford launches the KiwiBuild plan

Housing & Urban Development Minister Phil Twyford.

Despite widespread construction sector doubt that delivering 10,000 more homes/year is beyond New Zealand’s capacity, Housing & Urban Development Minister Phil Twyford continued to talk yesterday as if the Government’s KiwiBuild initiative would deliver precisely that: 100,000 affordable houses over the next 10 years.

Treasury forecasts showed that KiwiBuild would boost residential construction investment by 10% by 2022.

The country, and particularly Auckland, has been running well short of housing demand, and well short of the previous government’s aspirations to get more homes built.

Consents have been stuck on an annual rate of 30,000 new homes for months. I wrote in July that, at an average 2.7 residents/household, New Zealand’s population increases of the preceding 2 years would have required housing increases of 36,000 homes built in the year to June 2016, and 39,300 built in the year to June 2017 (ignoring demolition or falling into disuse).

Mr Twyford said yesterday: “The latest forecast in the half-year economic & fiscal update shows an extra $5.4 billion of residential construction investment will take place over the next 4 financial years, largely as a consequence of KiwiBuild.

“Ministry of Business, Innovation & Employment projections under the previous National government had shown the number of houses consented would stall and start to fall in coming years. This government is focused on turning that around.

“Through KiwiBuild & policies to drive speculation out of the market, including the ban on non-resident foreign buyers, the Government is delivering a more stable housing market.

“Wages are forecast to grow faster than house prices for the first time since the global financial crisis, and interest rates are expected to remain low. Home ownership will become more affordable for New Zealand families.

“The Government will make these forecasts a reality by:

  • delivering 100,000 affordable homes through KiwiBuild
  • building more state houses, rather than selling off the ones we have
  • ensuring there is enough skilled labour, through our immigration settings & training initiatives
  • freeing up land supply
  • enabling infrastructure financing, and
  • enabling higher productivity in the building industry.

“The Government’s housing package will deliver more affordable homes, more state houses, improve the quality of rentals & security of tenure, and tilt the balance in favour of homebuyers, rather than speculators.”

Attribution: Ministerial release.

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Home sales jump

The Real Estate Institute said today residential sales increased by 17.8% from October to November, the biggest jump between those 2 months in 6 years. After the institute’s seasonal adjustment, the rise was 4.5%.

Outside Auckland, the rise was 19.4%. Inside Auckland, it was 13.9%.

The national median sale price rose 1.9% ($10,000) to $540,000. Outside Auckland the rise in the median was 2.3% (also $10,000) to $450,000. From November last year, the national rise was 3.8%, ex-Auckland rise 8.4%.

Auckland’s median rose 3.8% to $880,000 ($848,149 in October) and 0.6% from November last year ($875,000). The Auckland median has increased by $50,000 over the last 4 months.

Institute chief executive Bindi Norwell noted one unusual change, in Rodney (the institute still does its statistics on the council boundaries pre-2010), where the median sale price rose 14% over the year to $985,000: “Looking into this data further, the increase was largely driven by a change in the mix of properties sold, with 41% more properties sold for more than $1 million compared to the same time last year. The institute’s house price index further confirmed the impact of the change of mix with an annual increase of 2.2%, indicating a more stable & moderate price growth in the Rodney District.”

Attribution: Institute release.

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QV house price index shows uptick around Auckland

Average house values recorded by Quotable Value Ltd (QV) for the last 2 months, and rolling 3-monthly percentage shifts through to October & November, show a barely perceptible upward tick in Auckland in November.

Below, I’ve listed a comparison of average values around Auckland in the last 2 months, along with rolling 3-monthly shifts through to October & November.

Secondly, I’ve listed latest average values in Auckland and for a spread of other places around the country, along with QV’s index movements for the last 3 months, 12 months and since the market’s previous peak at the end of 2007. You can check QV’s full index from the link at the foot of the page, but note that QV puts 12 months ahead of 3 months, then goes back to the 10-year figure. I switch the first 2 columns every month, so the latest 3-monthly figure comes first.

In QV’s 2 graphs you can see the levelling off in Auckland since mid-year, and how areas around Auckland (the pre-2010 council areas) have tracked in the last 5 years.

And last, you can read the QV commentaries nationally & for Auckland.

The recent upward shift

For the first set of figures below, I’ve taken QV’s most recent rolling 3-monthly changes to show more clearly the recent upward shift in Auckland, which followed a spreading over several months of plateauing, then of slight decline.

The figures in this set compare the average value in November with that in October (in brackets), and the rolling 3-monthly movements to November, with the 3 months to October in brackets.

Quotable Value’s average current value is the average (mean) value of all developed residential properties in the area based on the latest index. It’s not an average or median sales price, which the Real Estate Institute and Auckland agency Barfoot & Thompson use in their monthly calculations. Those measures only take into account what happens to have sold in the period.

All up, there are 20 statistical divisions – the region, under that the 7 cities & districts which formed the super-city in 2010 and which statisticians generally still use, and under those 7 a geographic breakdown in 4 of the old council areas.

In the 3 months to October, 15 of the 20 showed declines in value. Roll through to the 3 months to November, and only 7 showed declines.

The average dollar value shows 15 up from October to November, 5 down.

If you look only at the most local areas, ignoring the regional & whole old council figures (but including Waitakere, Papakura & Franklin, which don’t have further breakdowns), you’ll find 5 down & 10 up in the latest 3 months, whereas in the 3 months to October 10 were down and 5 were up.

Auckland region, $1,045,741 ($1,038,722), 0.4% (-0.5%)
Rodney, $935,590 ($933,909), -1.1% (-1.7%)
North, $956,318 ($954,769), -0.6% (-1.8%)
Hibiscus Coast, $916,063 ($913,845), -1.6% (-1.5%)
North Shore, $1,212,617 ($1,201,452), 1.0% (-0.1%)
Coastal, $1,380,575 ($1,362,746), 0.5% (-1.3%)
Onewa, $974,440 ($981,196), 1.8% (3.0%)
North Harbour, $1,190,355 ($1,168,764), 0.9% (-1.0%)
Waitakere, $821,105 ($818,706), 0.6% (-0.1%)
Auckland City, $1,241,504 ($1,223,913), 0.7% (-0.9%)
Central, $1,086,373 ($1,079,721), 0.2% (-0.3%)
East, $1,570,354 ($1,534,549), 1.8% (-0.7%)
South, $1,094,265 ($1,090,843), -0.6% (-1.4%)
Islands (low volume), $1,155,463 ($1,114,609), 3.5% (0.8%)
Manukau, $891,394 ($893,580), -0.9% (-0.5%)
East, $1,144,569 ($1,151,198), -1.9% (-1.3%)
Central, $687,444 ($690,284), 0.7% (0.5%)
North-west, $770,341 ($764,261), -0.3% (-0.4%)
Papakura, $692,175 ($684,268), 3.9% (1.3%)
Franklin, $659,650 ($665,843), 0.5% (1.1%)


Below, the dollar figure is the average value for November. The first percentage is for the 3 months to November, the second is for the last 12 months (QV switches those around in its tables) and the third is the change since the 2007 peak. For Auckland, QV still works on the old council boundaries:

Auckland region, $1,045,741, 0.4%, -0.5%, 91.4%
Rodney, $935,590, -1.1%, 1.3%, 59.5%
North, $956,318, -0.6%, 0.7%, 59.2%
Hibiscus Coast, $916,063, -1.6%, 2.4%, 56.0%
North Shore, $1,212,617, 1.0%, -1.0%, 87.9%
Coastal, $1,380,575, 0.5%, -1.5%, 83.2%
Onewa, $974,440, 1.8%, -1.0%, 96.5%
North Harbour, $1,190,355, 0.9%, 0.2%, 95.9%
Waitakere, $821,105, 0.6%, -2.9%, 93.7%
Auckland City, $1,241,504, 0.7%, 1.6%, 99.4%
Central, $1,086,373, 0.2%, 3.0%, 90.8%
East, $1,570,354, 1.8%, 3.3%, 97.1%
South, $1,094,265, -0.6%, -1.9%, 103.3%
Islands (low volume), $1,155,463, 3.5%, 12.2%, 80.7%
Manukau, $891,394, -0.9%, -1.6%, 94.7%
East, $1,144,569, -1.9%, -2.0%, 92.0%
Central, $687,444, 0.7%, -1.3%, 82.9%
North-west, $770,341, -0.3%, -0.3%, 108.5%
Papakura, $692,175, 3.9%, 1.8%, 92.4%
Franklin, $659,650, 0.5%, 1.8%, 66.8%

Northern border, down country & national:

Whangarei, $499,955, 0.5%, 9.4%, 26.2%
Kaipara (low volume), $492,074, -4.3%, 13.0%, 24.0%
Hamilton, $544,050, -0.1%, 1.4%, 50.5%
Tauranga, $687,310, -1.0%, 3.3%, 42.7%
Wellington region, $621,289, 2.6%, 9.8%, 36.3%
Christchurch, $493,899, 0.2%, -1.5%, 30.2%
Queenstown-Lakes, $1,105,213, 0.7%, 10.5%, 60.7%
Invercargill, $251,884, 4.6%, 8.0%, 14.2%
Total NZ, $664,698, 3.6%, 6.4%, 60.4%

The QV commentaries

Quotable Value said in its release today its latest monthly house price index “shows nationwide residential property values for November increased 6.4% over the past year, which is a much faster rate of increase than last month’s annual growth of 3.9%.

“Values rose by 3.6% over the past 3 months, which is also much faster than last month, when the market slowed to a quarterly growth of 0.9%.

“The nationwide average value is now $664,485, which is 60.4% above the previous market peak of late 2007. When adjusted for inflation, the nationwide annual increase drops slightly to 4.4% and values are now 33.9% above the 2007 peak.

“Meanwhile, residential property value growth across the Auckland region was down 0.5% year on year, which is the slowest annual rate since March 2011, but values ticked up over the past quarter, rising by 0.4%.

“The average value for the Auckland region is slightly higher than last month at $1,045,741, and values are now on average 91.4% higher than the previous peak of 2007. When adjusted for inflation, values dropped 2.4% over the past year and are 59.7% above the 2007 peak.”

QV national spokesperson Andrea Rush said: “It appears the spring/summer upturn has finally arrived in the housing market. Nationwide value growth has surged 3.6% over the past 3 months, led by stronger growth in Wellington, Dunedin & many other regional centres around the country.

“Meanwhile, Auckland & Christchurch values also ticked up slightly over the past 3 months, bucking a downward trend seen over the past couple of months.

“However, values in Hamilton & Tauranga ticked down slightly and some areas to the south & north of Auckland that have seen very strong growth in recent years also saw values drop significantly, including the Kaipara & Hauraki districts, both down around 4.0% over the past quarter.”

Banking influences

“The easing in loan:value ratio (LVR) restrictions in January, and retail banks lending criteria, is likely to help improve activity & demand in housing the market as we move through the summer months, but it’s possible the usual slowdown over the Christmas period may mean we don’t see the full impact of this until February & March next year.”

QV on Auckland

QV Auckland senior consultant James Steele said: “There’s been no significant change to the market dynamic since the change of government, values are holding in well located areas while they have dropped back in some areas further out of the city centre.

“An oversupply in some areas of Manukau is continuing to cause a decrease in prices, particularly in large new subdivisions which are above the median house price, while in parts of Waitakere values have also dropped back in some suburbs.

“However, other tightly held areas, particularly in central Auckland, are still doing well and seeing values still rising.

“A lack of pressure on property owners to sell, particularly given low interest rates & solid rental levels, has meant that the large decrease in demand over the past year instigated by LVR restrictions has meant prices have remained relatively flat.

“Across the board, we are still seeing a mixture of strong & weak sales where buyers can be more selective under more ‘normal’ market conditions and, where a particular vendor has a strong desire to sell, a buyer can usually be found, but perhaps at a discount to the market peak.

“Some developers are seeing a gap in the market where they are able to pick up a property at a discount and ‘add value’ through resource consents, taking advantage of the favourable development opportunities presented by the unitary plan.

“However, finance can be an issue in completion of such developments and often they can be offloaded as a ‘ready-to-go’ project to a developer with the financial capacity to see it through.

“Over the next year, if the availability of finance improves and market demand dictates, we would expect to see a number of smallscale, high density infill developments come to the market as more consents are approved.”

Link: Full QV house price index for November 2017

Attribution: QV tables & release.

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Barfoot sees residential sales lift

Auckland real estate agency Barfoot & Thompson lifted its residential sales in November, but both the average & median prices fell compared to the previous 3 months & November last year.

The 757 sales were up by 123 on October but down from 947 a year ago.

The average sale price of $913,244 was up $2700 from October but down $20,000 compared to a year ago.

The median sale price of $830,000 was $500 short of the October figure and $35,000 down compared to a year ago.

For agency director Kiri Barfoot, the lift in sales was a sign of the market stirring after a 2-month hibernation: “They were small signs, but it indicates the Auckland market is holding firm and buyers are returning. There are certainly no signs of a general market retreat,” she said yesterday.

“At 757 sales in the month, we had the highest number of monthly sales since August, and November’s sales were 9.7% higher than the average sales number for the previous 3 months.

“Both the average price at $913,244, and the median price at $830,000 were right in line with what we have been achieving over the previous 3 months.

“While those numbers are down on their equivalents in November last year, that was a time when the market was close to reaching its peak. This November’s trading is a sure sign that at current values buyers are returning to the market.

“New listings are continuing to reach the market, and during the month we listed 1955 properties, a third higher than the average over the previous 3 months. It brought the number of properties at month end to 4838, the highest number we have had in more than 5 years. There are now a quarter more properties on the market than at the same time last year.

“At the high end of the market, buyers are still seeing value in property at current prices, with a significant rebound in the number of properties sold for in excess of $1 million. In the month we sold 55 properties for in excess of $2 million and a further 262 for in excess of $1 million, the highest number of high-end property sales since May.

“Even during the height of activity in 2016, sales of 55 properties for in excess of $2 million would have been regarded as an excellent month.

“A similar pattern of activity was evident in the lifestyle & rural sectors, with sound sales numbers in Mangawhai & Wellsford in the north and in Pukekohe & Papakura to the south. Properties valued in excess of $2 million attracted strong interest.

“We sold 62 rural & lifestyle properties in November, the highest in a month since March, and during the month at a Pukekohe lifestyle property auction 50% of the properties sold on an unconditional basis.

“Interest from local developers & land bankers is returning, but there is still a degree of hesitancy as they await a clearer understanding of future Government policy.”

The figures:

Attribution: Agency release.

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