Current market observations in Flatbush
"There are houses in Flatbush Ak reduced by 100k"
"I know a dev down there he has so much stock he cant get rid of. Also alot of suplus land in flat bush right now and its not selling."
It is interesting that the properties that the property developer has built are not selling - yet many property market commentators state that Auckland property prices will continue to be supported due to underlying demand for housing in Auckland still growing (due to population growth, inbound migration, demographics, Auckland is one of the three most liveable cities to live in so foreigners will move to Auckland, etc). Now why is it that properties are not selling given the positive demographics? That is due to most property market commentators talking about underlying housing demand, yet it is effective housing demand which determines prices - refer https://www.propertytalk.com/forum/showthread.php?42341-Housing-demand-calculation-methodology&p=431261#post431261
The fact that the properties are not selling, and that there are cuts in selling prices by vendors suggests a buyer's market. A quick search on trademe.co.nz shows a total of 657 properties currently listed for sale in Flat Bush. A quick search on QV.co.nz show 85 sales in the last 3 months in Flat Bush, so at that sales rate it would take 23 months to sell all of the listed inventory. For the developer to move their inventory, they may need to reduce their asking price. Of all the current Auckland property listings for sale of 12,625 on trademe.co.nz, the listings for sale in Flatbush represent 5% of all property listings for sale in Auckland. What is also particularly interesting is that in the former Manukau City Council region, there are a total of 2,368 properties listed for sale which means that the property listings for sale in Flat Bush represent 27.7% of the former Manukau City Council region property listings.
Also, here's a scenario for you to think about - what happens if the developer comes under financial pressure from the bank and has to repay the bank? They may have to cut their selling prices in order to raise cash to repay the bank ... That's how you can get a sudden increase in effective supply to the market (which can put downward pressure on prices) whilst according to official long term population projections by the Auckland council, there is a currently an underlying supply shortage of housing.
Using the underlying demand and underlying supply figures (as opposed to effective demand and effective supply) can easily lead to conclusions that property prices always increase, yet without regard to market forces, banks can exert financial pressure on highly leveraged borrowers.
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