Barfoot & Thompson's average price set a new record in November but the volume of sales tanked

The average selling price of homes sold by Barfoot & Thompson hit a new all-time high of $876,075 last month, although the number of homes sold declined significantly.

Barfoot’s average selling price of $876,075 in November was up 4.2% compared to October’s average price of $840,402.

In November last year the average selling price was just $756,909 meaning its has increased by $119,166 (15.7%) in the last 12 months.

November’s median price of $795,000 was also a new all-time high and was up 1.9% compared to October’s median of $780,000.

However the number of homes sold by Barfoots, which is the largest real estate agency by far in the Auckland region, dropped significantly in November when just 986 homes were sold, down 8% from 1068 in October, and down 11% from 1105 in November last year.

That made last month the slowest November month for sales since 2011.

“While prices have ignored Government and Reserve Bank measures designed to cool prices, there has been a measurable decrease in market activity,” Barfoot & Thompson director Kiri Barfoot said.

In October market activity slowed and that trend continued into November.

“New listings for the month at 1683 were also down, being 7.5% lower than October’s and the lowest number in the past seven months.

“At the end of the month we had 3252 properties on our books, which was in line with those at the end of October and represented the highest level of choice since March this year.”

The decline in sales had mainly affected properties priced between $500,000 and $750,000, which was a popular price bracket with investors that had portfolios of less than three properties, Barfoot said.

In November Barfoots sold 286 homes priced between $500,000 and $750,000, down 19% compared with the 353 that were sold within that price bracket in October. 

“It remains to be seen if prices continue to ignore tighter regulations, or whether November’s prices are the last remnants of momentum that built in the lead up to the introduction of the tighter measures,” she said.

‘Marked impact’

Westpac senor economist Michael Gordon said the Barfoot figures show the tax and foreign buyer rules for property investment that came into force in October have had a “marked impact” on housing turnover.

“Sales fell by 16% in seasonally adjusted terms in November, on top of a 20% fall in October. The level of sales is now back at the lows reached in mid-2014, following the Reserve Bank’s cap on high-LVR (loan-to-value ratio) lending and ahead of an uncertain election outcome. The scale of the decline in sales is partly a product of the surge between July and September, as buyers looked to get in ahead of the new regulations. To the extent that this reflected purchases being brought forward, we could reasonably expect to see a comparably-sized hole in housing demand over the next few months,” said Gordon.

“New property listings have also declined since October, and the stock of available listings has fallen. This suggests that property owners also recognise that the window of opportunity ahead of the new regulations has now closed.”

Gordon suggested the Barfoot data gave no clear signal on prices, with the average price up slightly and the median price down slightly in seasonally adjusted terms.

“We note that in unadjusted terms, the median sale price rose to a new record high; however, this measure is highly seasonal and typically experiences most of its gains during the Sep-Dec period. The absence of any meaningful softening in prices over the last two months stands in contrast with the Real Estate Institute of New Zealand’s stratified house price index for Auckland, which saw a dramatic 4.7% fall in October. We’ll be interested to see whether this decline is sustained in the November REINZ report, which is due sometime next week,” Gordon added.

ASB economist Kim Mundy said there were now two months of data suggesting anecdotal reports of weakened demand in the Auckland housing market were correct.

“However, the fall in sales has been accompanied by a fall in overall housing inventory, which is keeping a degree of tightness in the market. And indeed, the increase in average house prices in November suggests that the market is still out of balance and price pressures remain,” Mundy said.