More than one-in-ten Auckland residential properties sold in the third quarter was sold at a loss, according to property data company CoreLogic's latest Pain and Gain Report.
The report found 7.4% of the residential properties sold across the entire country in the September quarter were sold for less than their owners paid for them.
In the major centres, people were most likely to make a loss on the sale of their property in Auckland, where 11.3% of sales fetched prices below what owners had paid for them, and were least likely to make a loss in Christchurch were the loss making rate was just 4.7% of total sales.
The proportion of loss making sales has increased rapidly since the beginning of 2021 and is now at its highest point since 2015.
The median size of the loss on properties sold for less than their purchase price was $45,000.
However that would likely balloon out to $70,000 or more once selling expenses such as agent's fees and legal expenses are added.
In Auckland the median size of losses was $63,000, which would likely rise to around $90,000 once selling expenses are added, but the biggest losses on average occurred in Wellington where the median loss was $136,000.
The median ownership period for the loss making properties was two years, while the median length of ownership for those that sold for more than their purchase price was 8.1 years.
The median gain for those that sold for more than their purchase price was $284,806.
"None of this should be too surprising," the report said.
"After all, driven in no small part by higher mortgage rates, the wider downturn in property values began in late 2021 and ran for around 18 months, meaning that a pass-through to less gain (or more pain) for property resellers was always inevitable, especially if they'd only had a relatively short hold period of 1-2 years," it said.
There can be several reasons people would sell a home after a just one or two years, such as moving across the country for a new job.
For those people, the drop in price may not be a huge disaster because they will likely be buying back into the market at a lower price as well.
However it's also likely that some of the sellers will be people who have been caught by the steep rise in interest rates over the last couple of years which has left them struggling to stay afloat.
In such cases they may have decided it's better to cut their losses and salvage whatever they can from their equity rather than struggling on and risk facing a mortgagee sale.
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101 Comments
So still well over 90% of houses selling at a profit in NZ, after 2 years of downtrending prices ! Quite astonishing really 🫨
Probably because 90% were bought more than ten years ago,
"The median ownership period for the loss making properties was two years, while the median length of ownership for those that sold for more than their purchase price was 8.1 years."
Not adjusted for inflation.
Read the article before commenting, it's all in there!
Edit, I see you have now read the article and changed your original post.
BTW I believe the average tenure in NZ is 7 years.
7 years was the average length of a bank's mortgage.
That's probably the amount of time it takes before a person get's pissed off, realises they're being gouged, and switches to another bank. ;-)
It would be interesting to see the figures when adjusted for inflation and taking into account legal fees, interest payments. I would have thought that after 8 years the "profit" would have been much higher.
There wasn’t generally much in the way of capital gains from ‘16-‘19, at least in Auckland. Things obviously boomed 2020-2021, but a large proportion of those gains were wiped out by the slump/crash in 2022-2023
And capital gains "flatline" was thanks to Auckland Council's 2016 Unitary Plan that facilitated far higher densities, i.e. more "houses" on the same bit of land.
One should note that that version of the Unitary Plan is being updated to allow even higher densities that are enabled by the NPS-UD & MDRS.
As are almost all zoning plans in all our major cities.
Auckland needs more density (and the infrastructure to make it work). Endlessly sprawling low density with longer commuting distances, unviable public transport and loss of productive land is not the answer
Between 2017-2019 prices also fell in Christchurch. Only started to pick up again in 2020.
The Chch earthquakes also resulted in a change in the parameters affecting supply. Like Auckland Council's 2016 Unitary Plan, ChCh likewise had higher densities enabled, and some might say, forced upon them. These became the models that proved that Council's restrictions on where and what could be built was the fundamental cause of NZ's housing crisis. In light of this evidence, Central government had to act. And they did.
Not really. Almost any house that was bought before 2019 should have made a gain. The issue is the small proportion of all owners who bought in the last 2-3 years and have had to sell.
I wouldn't think that way. holding properties has expenses and not free of risks.
It may seem to have some 'gain' on paper but would be actual loss when taken into consideration of holding costs.
Indeed, the NZ housing market displays a remarkable reputation for RESILIENCE....... 💰 😁
It's now two years since house prices peaked, but they're still way above their pre-Covid level. And now there are signs that the market is bottoming out, with prices in some regions starting to rise again.
Notably also, rental returns (ROI) continue to be strong....... 💵 💪
TTP
Taking the Proverbial ......"rental returns continue to be strong" - apart from people who bought years ago or bought with a massive deposit, show me examples in Auckland where residential rental returns (less rates and/or body corporate) are strong ie over 6% ?
** WARNING **
Huge vested financial self interests are operating.
CN - these clowns ie "Taking the Proverbial" et al never answer the REAL questions.....so on a site such as this, why do they waste their time just supplying crap, banal rhetoric ? when so many of us can see straight through it !
Give us the FACTS not the CRAP !!! .....in the end they would get so much more business, but they are not that bright and think that "everyone" believes what they say, and will follow their verbal diarrhoea, like so many "sheeple" out there........ridiculous !
CAVEAT EMPTOR DYOR BUYER BEWARE KYC etc etc
Life is too short to have untrustworthy people in your life - the best choice is to keep them out of your life.
Boarding and minor dwelling tenancies
Not good for the one in ten who got hooked up in nonsense that house prices won’t go down and rates won’t go over 3%. Unfortunately many more will have same fate as people continue trying to get out of the market without losing much more. The million dollar mortgage has gone from costing 950 per week to 1700 per week. Now over 12600 properties in Auckland for sell and only top 10% in income earners can afford to by from scratch.
What about the overwhelming 9 in 10 majority who gained? Or shall we just focus on the 10% minority to suit your biais ?
Not sure you understand Yvil everybody who purchased over last two years and then sold property lost money, the 90% who sold at a profit would be people who purchased maybe over four years ago. Unfortunately many people purchased with low rates and are now having to come to terms with much higher weekly mortgage payments and the people selling at a loss are just trying to get out before running into financial problems.
Here are some comments that were made by some commenters on interest.co.nz to tell people to buy - they couldn't see the house price risks, and didn't know what they didn't know. These commenters were bullying and giving negative labels in order to discredit those that could see the elevated house prices risks who were giving warnings to owner occupiers buyers about those high house price risks, so that they could avoid becoming potential collateral damage. Some of those commenters telling owner occupiers to buy were acting in their own vested financial self interest.
The people who followed the commenters advice to buy and bought using high leverage are now facing the financial consequences of following that advice - potential cashflow stress, potential mental stress, potential loss of their initial equity used as a deposit saved over many years, potential negative equity, loss of future financial security, potential relocation to social housing, potential loss of a loved one due to self harm resulting from financial stress and loss of their home. There will be likely thousands of households in New Zealand affected - some of these could be your family or friends. Had close relatives who experienced most of those when they lost their real estate and owner occupied home previously - they never recovered financially, living in social housing and when they died they didn't have sufficient funds in their estate for their own funerals.
Those commenters who told people to buy are blissfully unaware of the consequences of that advice on those households that bought using high levels of debt.
1) 23rd Nov 21, 8:52am
It makes absolutely no sense for a couple like this to bank a capital gain now rather than wait two years and avoid 90k in taxes. The market is not going to crash 10% in the next two years.
2) 9th Nov 21, 2:38pm
locally, I can not see anything in the near future that would decrease these current values.
3) 9th Nov 21, 5:52pm
... don't hesitate, be brave and go for it, you'll be fine
Its ok to wait for those who don't need to borrow
The last 2 years has seen banks vastly restrict their criteria so that young buyers still cannot get a home, what sort of life is that. They are left throwing much more dollars at the slimlord
"The last 2 years has seen banks vastly restrict their criteria so that young buyers still cannot get a home, what sort of life is that. They are left throwing much more dollars at the slimlord"
For those who require accommodation:
A) under most market conditions the financial choice is between:
1) pay rent
2) buy their own owner occupied residence
B) under market conditions where there are elevated house price risks, the financial choice changes to:
1) pay 10-20% higher rent
2) risk losing 100% - 250% of their life's savings / entire net worth (assuming their net worth is used as equity on a deposit on the purchase of an owner occupied residence) when they buy their own owner occupied residence assuming a 80% LVR mortgage
Most owner occupier buyers are unaware of market conditions when the financial choice changes from A to B and taking on the risk of losing 100% - 250% of their life's savings.
Over the past 2 years, it would have be better financially to rent rather than buy an owner occupied residence using a high LVR loan. There may be non financial reasons for owner occupiers buying in the last 2 years (and these were of a higher priority than the financial reasons), and they chose to buy - they are now facing the financial consequences of that choice.
These buyers of their owner occupied residence might be regretting their choice to buy - they are now in cashflow stress, potentially mental stress - https://www.nzherald.co.nz/kahu/peak-ocr-pain-auckland-couple-working-f…
Look at this Kiwi buyer in Australia - initially overjoyed when they purchased. Now in cashflow stress - https://youtu.be/Nomji5pmhEU?&t=45
At the time, this guy disappointed that he was unable to obtain financing but it was actually a blessing in disguise as he was saved by the bank - if he had purchased, there is a high probability that he would have faced significantly higher cashflow payments, potential cashflow stress - https://www.newshub.co.nz/home/money/2021/11/first-home-buyer-not-very-…
Now he can use his increased deposit to buy a residential property at lower prices and take on less debt to finance that purchase.
Here is something previously written:
Let's take a look at the situation for an owner occupier buyer in Dublin in late Jan / early February 2007:
a) Property prices in Dublin have been rising from 1900 to 2007 - that's 107 years of historical data of house prices rising. Based on that, the owner occupier believes that property prices will continue to rise, or not fall by much
b) They read that property market commentators are saying that there is a housing shortage in Dublin and read the following article in the local newspaper on 25 Jan 2007 - https://www.irishtimes.com/.../dublin-housing-shortage-to...…
c) They proceed with a house purchase in 2007 using high amounts of leverage.
Details of purchase:
i) Property price: 162,000
ii) Mortgage @ 80% LVR - 129,600
iii) Equity value saved and used to buy the house - 32,400
Value at 2020 (13 years of ownership)
i) Property price: 137,000 (fall of 15.4% from purchase price - AFTER 13 YEARS of ownership)
ii) Mortgage @ 80% LVR - 129,600 (assumed to be interest only for illustration purposes)
iii) Equity value - 7,400 (77% decline from original equity to buy the house)
House price data - https://tradingeconomics.com/ireland/housing-index
That 7,400 in equity may be used to either:
1) upsize (into a bigger house by younger owners for children), or
2) downsize (into smaller house for retirees)
(Remember that there still payment of sales commissions which would reduce the 7,400 equity value even more - say 3% on 137,000 sale price or approximately 4,100 in sales costs which would result in net equity of 3,300). Haven't even included interest costs in any of the above calculations.
Now how is that 3,300 going to be sufficient for a 20% deposit for a new house (either for the upgrader, or downsizer)? That 3,300 is now only 2.4% of the median house price of 137,000 in 2020.
The owner occupier's financial security had experienced a real set back. These people will have less to retire on. All because of that one decision to purchase a property in 2007.
Now that scenario assumes that the owner occupier was able to hold on. What happened if they were unable to continue debt service payments (such as lost their job, experienced lower weekly wages, etc) and were forced to realise those losses?
This is the potential situation that owner-occupier buyers today are facing. I don't believe that hard working owner-occupiers buyers who have taken years to save their deposit to buy a house should be potential collateral damage as a result of a large presence of speculators in houses. Owner occupier buyers should be fully informed of potential property price risks and make fully informed decisions, rather than accept blindly the highly promoted viewpoints of those with huge vested financial interests.
So they had no responsibility then of their own and did zero due diligence? Yeah and you want to shelter those people who knowingly made bad investment decisions who, given your statements, only did so out of greed and incredible astounding foolishness and ignorance.
You could say many thought with greed and ignorance and had no understanding of basic investment or property purchases leading them to be close to incapable of legally signing a property contract, or they brought a property with known severe critical issues that would make it uninhabitable in less than a year for above market value expecting to sell for a profit in two years. But actually it is worse because we have to also include the fools who brought leasehold apartments with unmet remediation issues for around the CV expecting a profit too and those who knowingly knew they would make a loss but were buying because the rental income was still worth it.
Go back to worrying about people who actually face financial poverty and loss because they had literally no choice and struggle for housing at all. The 10% selling for a loss are not those people and the 10% all made their choices they had the option to make. The 10% should have as much responsibility as you otherwise claim those who are homeless do (even though most homeless did not have any choice available to them and certainly many do not have accessible housing available to them at all).
Alternative headline: 92.6% of properties selling for a profit
No that would be crazy talk and not aligned with interest.co.nz reader rhetoric.
Also the idea that the DGMs have read “8% of total houses sold for a loss” as a sign the property market game is over is all I need to know from these comments
The rhetoric before when house prices were increasing, is that prices double ever 10 years. Then once prices start slowing, then it's a blip, then once it's dropping, is buy now if you can afford, then once it stops dropping, market has turned, green shoots. Now it's 90% making profit. All headline stuff and no drilling into detail.
The banks have better data on customers as they do due diligence on mortgage. The ANZ is provisioning for mortgagee sales, forecast is for job losses, interest rates at 5 years are 7%. For once DGM is right, but looks like that's the banks forecast.
For those people, the drop in price may not be a huge disaster because they will likely be buying back into the market at a lower price as well.
But that 11% loss was their equity, so now they dont have another 20% deposit to buy back in at the same level so they have to go down the ladder to get back in or go to a cheaper region or another country and start again.
I would call that a disaster
I think you misunderstood RCD, the 11% is the proportion of people who sold their houses for less than they bought them for in Auckland. It doesn't mean they lost 11% of the purchase price.!
The average loss in Auckland around 90,000. That seems like about 11% of a property value to me regardless of the misunderstanding.
Exactly, Why some folks try to minimise the tragedy being experienced by others - baffles me.
"so now they dont have another 20% deposit to buy back in at the same level so they have to go down the ladder to get back in or go to a cheaper region or another country and start again"
Most of those highly leveraged owner occupier buyers in the 2020 - 2022 period have lost a large proportion of their initial equity deposit which was the result of a lifetime of hard earned savings. Some will be in negative equity and still have an amount owing to their lender after the sale of the property. Some may now need social housing.
These owner occupier households may now face mental stress.
Unfortunately there will be some who will resort to self harm.
And the borrow and hope investors as well.
Does anyone have any insight as to what prices are doing in Wanaka?
Will it just sail on through the next bump and be immune or, assuming a fall, will it follow a bit behind Auckland?
Isn’t it pretty much immune these days? It’s all big money which is nearly invincible, save a major financial meltdown
The rate of new listings on a daily basis is probably the highest for location's of that ilk.
I'd say they've gone up a little bit in the last 12 months. There's so few "affordable" houses that the competition pushes the cheapest dump up and despite there being ample land, sections are expensive. Add on top the $3.5k-$4k/sqm to build with half decent tradies and building is out of the question for most people too.
The cheaper houses (under $1m) get a bit of interest and will get a couple of offers. Places between 1m-1.5m can hang around a bit. There's a house the was purchased in 2020 for $800k and now they've got it for sale for $1.26m, it's been advertised since June.
Under $1.5m on trademe listings have gone up from around 150-160 over winter to 210 today. Around half of the 210 are sections.
I would say that is pretty high but how many of them were bought at the peak. How many have had a or two section carved off and changes the basis
I think we can all agree that no-one wants to sell at a loss. Can anyone disagree forced selling is on the rise. Again, Autumn 2024 will be quite telling as to how well mortgagors have "adjusted"
Everyone would prefer to sell at a profit, but selling at a loss isn't always as bad as it might seem. Sell your starter home while its 20% down from the peak, and upgrade to a nicer place while its also 20% down from the peak. All depends if that loss wipes out most of, or almost nothing of your equity as to how much of a problem it is.
lower quartile homes dont tend to drop as much proportionally as median homes. Because of the cost of rent and building costs they hit their floor sooner.
Çase in point, this year I sold my first home (lower quartile 3 bdrm bungalow). It was about 75k down from the peak. I also bought my forever home that was 300k down from the peak. The way I see it, the 2022 house price crash brought me 225k closer to my dream home.
Forced sales or some of the 71,200 people who left the country this year. One of the top questions from people moving to Australia is whether to sell or rent their NZ house out. Many are finding that it is unaffordable to rent it out due to the dire returns, and the cost of meeting Healthy Homes negates any return at all. So the advice is generally to sell it.
Just the start of it still along way to come back yet.
Ride in WP
Possibly correct but an interesting Stat- technically prices are back to Oct 2020 levels - so effectively 1 in 10 houses were brought in the last 3 years.
Would be curious to know when houses are meant to be a decision for 10-20 years we are changing houses so often.
"Would be curious to know when houses are meant to be a decision for 10-20 years we are changing houses so often."
For highly leveraged owner occupier buyers in the 2020 - 2022 period, cashflow stress has been the cause - inability to maintain mortgage payments due to rising mortgage interest rates.
There are a number of properties being bought and sold by property traders, property renovators, property developers which also lowers the total average holding period.
NZdrs long run average house change was ~7 years, may be less nowadays with changes in domestic economic & other circumstances (eg. Covid, ChCH earthquakes)t
It’s interesting how people talk about ‘profit’ when selling houses. For me, that’s telling.
Housing has become, increasingly, a commodity rather than a place to call home.
In my opinion, that has - and is - causing all sorts of problems for our society and economy.
Correct to a point, a house is a store of value against a fiat currency in a world of willful incompetence by Western leaders.
However, if you are selling your investment property or holiday house and there is a gain then I would consider that profit.
a house is a store of value against a fiat currency
And therein lies the problem. That many have been ignorantly led into this belief that stems from a place of fear. No problem with those that continue to play the game for their own personal gain and security. It just enforces and encourages the problem though. At some point though, does it not make more sense for the intelligent and aware ones (and i think you're one of them), once they're in a place of security, to educate the masses to change the game rather than continue down a path of insanity?
"a house is a store of value against a fiat currency"
There are certain circumstances where this belief may not hold.
No s#!t Sherlock, are you new to Interest HM ?
Oh no the hall monitor used a bad word!
Mummy!
Imagine if the narrative 2 years ago had been in 2 years, 1 in ten will be selling at a loss instead of you always make money buying houses.
Don't let the truth get in the way of a good story. Especially when its being peddled by the ticket clippers.
As I mention below - it was 3 years ago that research out of the Helen Clark Foundation foresaw this and made a recommendation to avert the disaster that we now see unfolding.
I was the same, started my research on the rental market post-COVID just after the 'rent freeze' was lifted - as I could foresee disaster on the horizon for renters..
Yet, up, up, up goes the amount taxpayers in general are paying for this crisis - and down, down, down go the youngest and the best of our fellow citizens.
As Bob Dylan wrote, "how many times can a man turn his head and pretend that he just doesn't see"?.
Off the topic a wee bit, just look at liquidation report on supie, don't care what people think, but to owe that many creditors and IRD that much money in 2 years of business is just irresponsible. Not sure why she getting accolades, obviously terrible business person, maybe had good idea, but terrible at running a business.
The willingness to burn through capital and raise debt at ferocious levels is behind the biggest 'success stories' of recent years, your Ubers and Spotifys and Atlassians etc. It's stupid but hey, the incentive is there to push the limits and pray that you pull through... billions and accolades await if you do.
The YOLO approach to starting a business.
It does seem like they were following the We Work business model a little bit
Research from the Helen Clark Foundation saw it coming three years ago (2020) and recommended:
...the Government could help those who were pushed into negative equity - where they owe more than their houses are worth - by refinancing a proportion of each of the existing mortgages of people's primary homes.
Not surprisingly, no government has paid attention - they'd prefer to see the dreams of these first-home-buyers turn into nightmares.
If this had happened to my husband and I when we bought our first home - which coincided with our starting a family - I don't know whether our marriage would have made it through the financial heartbreak and disappointment.
This is no one-off, unfortunate incident - this is widespread, government-induced accumulation by dispossession. These NZers are being dispossessed of their home deposits, and perhaps even more than their deposits - while recent governments sit idly by.
I feel sorry for anyone in that position but there's already enough taxpayer handouts to keep property prices artificially inflated. I'd remove them all - FH Buyer handouts, accomodation supplement and interest deductibility. Keep the foreign buyers out and prices might fall to affordable levels. And a few people going broke might help to retrain the locals away from the mindset that property is a one way bet.
Thing is sparrow, "feeling sorry for" is committing those first-home-buyers to misery and failure, likely for life. Misery for life means an even greater burden on the state in the future.
I presented to Parliament an easy way for government to get rid of the accommodation supplement - and it was rejected by officialdom - despite the Parliamentarians I spoke to in Select Committee stating I was well-researched and had made some very compelling points;
https://www.facebook.com/petitionscnz/videos/274553815085411
My appearance starts at a bit over 11 minutes in.
There will be losers in any market correction - my point is - it should not be renters and first-home-buyers who bought during the peak. Investors who bought during the peak, I have no sympathy for - they all have homes of their own to live in - they made a business bet that didn't work out. Renters and first-home-buyers are just trying to house their families.
Kate, your posts are excellent, good to see others who actually care about people on this forum.
Thanks, Crayhunter. And, I have no intention of giving up either. I feel we all have a duty to point out injustice where we see it. I'm in a better position than many who are suffering those injustices, to conduct research and speak out about it, given I'm semi-retired and have the time.
Were I younger and raising my family - just struggling to pay the bills and meet the needs of our children on a daily basis - I would not have had the time.
NZers and NZ have been good to me - this is the least I can do back for it. These are troubling times, for sure. Of all people, our politicians need to step up. As soon as this new government forms it's coalition, I'll be back to lobbying again. If they want to cut costs - then the $2billion+ accommodation supplement is an easy target which can be solved through market regulation.
Their "hands off" approach over all these periods of years while this accommodation/property price train wreck was worsening in front of them is almost unbelievable.
Legend stuff Kate.
Unfortunately I can believe they are willing to do it, when you see the perks, if you own property and you have potential of being a Chairman of a bank. Nice cushy number, if you like hob knobbing and patting each other on the back.
I agree. Nobody held a gun to an investor's head and told them to leverage up 100% of the purchase price for a house.
However tenants/FHB don't have that same flexibility of choice. Either rent, buy, or live on the street/in the car/couch/garage. As you mention in your meeting the landlord expects the tenant to cover all costs. But the landlord's to blame for choosing to burden themselves with those costs in the beginning, not the tenant.
Why should tenants be screwed for every last dollar of discretionary income because landlords in this country made reckless financial decisions?
Amen to that :-). My husband criticised me for pointing my finger at them (like a scolding parent) during that select committee hearing (lol) - but I said to him, who else should I point the finger at? The housing market is a market and government's exist to regulate markets on behalf of their citizens.
He still laughed at what a 'school marm' I am on this topic :-).
Imagine if all rents dropped $100 per week. The median rent in NZ is $580 per week, so it drops to $480 per week.
Wonder what all the non-property related businesses (supermarkets, cafes, retail, mini-golf etc.) would think about that extra $100 per week per household? The only reason I can think of as to why that could not happen, is mortgages. Which again, wasn't the tenant's decision to take out the mortgage, and the house probably didn't materialize from nothing the moment the loan document was signed.
Wow. Great preso. The degree of govt funded subsidy at the lower end is clearly highlighted. When you then consider the historical debt offset tax avoidance this allowed landlords, and the same debt fueled banking profit exiting to West Island its amazing more people didn't vote to see meaningful change in this area.
The amazing thing is that after all this time Kiwis still haven't wised up.
Thanks!
Government shouldn't be doing this.
The banks knew the effects of very low interest rates when they were low. (See my post below for evidence.) For governments to "come to the rescue" simply socialises the losses while privatising the profits. Further, it enables banks to behave the same way next time.
If the government was to hit the banks with a super profits tax, then I'd be happy for the government to reimburse people experiencing losses up to maybe 90%, leaving them with a much smaller loss to remind them that banks are not their friends and they would be wise to choose the friends more carefully in future.
The advantage of this would also be that it sets a precedent to the banks that they will be hammered for reckless lending and it would likely gain strong public support.
Key would never let Luxon do it.
Privatising the profits while socialising the losses is at the heart of every major financial crash. No way should the Govt be bailing property owners out for their poor choices in buying houses they cannot afford. I'm sick of hearing sob stories about people who cant afford their mortgage on their $1.2M home because they "had to have" the big 4 bedroom home in posh area, instead of a smaller, less affluently located house that they could have bought for half the price. When your eyes are bigger than your stomach you deserve to get indigestion.
Anyone with intelligence and awareness could have seen it 20+ years ago. A true science that believes it understands human behaviour (rather than trying to control it) would be able to take into account the various conditions of the times and update it's theories and methodologies. Economics and especially bank economists fail at this, aided and abetted by weak and ignorant governments. It's already contained in all the economic literature of the past.
The notion that having a home is a "dream", rather than a requirement for a healthy society, that many are buying from a place of fear further signifies the issue we have created. That it continues to be promoted, to be normalised is just another symptom of what could easily be viewed as an illness.
We didn't really have a property market that long ago. We had people wanting homes to raise a family, a utility function of shelter as well as a sanctuary, and neighbourhood. Now it's become somewhat of a beast consuming all around it.
Part of the issue is that we've allowed corporate business speak and accounting mechanics into human living. Reclassifying homes into "assets" when if one is to truly do the numbers, they are nothing of the sort.
Can you get $1250 a week in rent for the 3 bed 1 bath house on 800m2 you bought in Manurewa for a million?
No. Then do you have $700 a week of your own money to make up the shortfall of interest payments, rates and insurance? No. Then you better sell and hope there is someone dumber than you who thinks they an make the numbers work.
Saw a property in Manurewa sell for 2,400,000 in Sept 2021.
Subsequently sold in Feb 2023 for 705,000
Loss of over 70% (before inflation)
are you sure it was the same property, not just a subdivided section?
Have a look for yourself.
https://www.oneroof.co.nz/property/auckland/manurewa/41-hywell-place/kG…
House on 833 sq mt section sells for $2,400,000 in Sept 2021.
Also note that a property trader bought it in Feb 2023 for $705,000
The trader resold the property in May 2023 (3 months later) for $876,000
https://www.oneroof.co.nz/sales-type
'Other' sale definition: The classification encompasses sales transactions with one or more of the following attributes:
• Sale of part of a property
• Multiple property sales under a single transaction.
• Leasehold sales
• Non-market sales:
• sales to family members or related parties including companies and trusts
Interesting illustration. One in ten were on a housing snake, rather than a ladder.
Sorry, bit off topic but triggered by listening to RNZ just now. Does anyone else find their financial news coverage very poor? Some pretty poor opinions spouted regularly. The one a short time ago had the person commenting on it being a pretty strong week for NZ stocks. Did he not see the big fall yesterday, and did he not note that the NZX50 is only up marginally for the week?
re ... "However it's also likely that some of the sellers will be people who have been caught by the steep rise in interest rates over the last couple of years which has left them struggling to stay afloat."
Instead of it being "likely" - it would be good to know the exact number.
Why? Because the Credit Contracts and Consumer Finance Act makes it clear that banks must exercise the care, diligence, and skill of a responsible lender. Were these people making the losses collectively able to show that banks breached their obligations and the law, then the banks become liable for their losses.
"No way!", I hear you cry. "There is no way banks could have known high interest rates would follow very low interest rates."
Really? Then let me leave you with the words of ASB chief executive Vittoria Shortt.
In this article she calls the low interest rates "abnormal".
Source: https://www.stuff.co.nz/business/129535649/asb-boss-the-low-interest-ra…
And in this article she says, "We've been preparing for higher interest rates ever since we had record low interest rates."
Source: https://www.goodreturns.co.nz/article/976522089/times-are-tough-for-borrowers-but-not-as-bad-as-the-gfc.html
So lets be clear ... Banks knew exactly what they were doing.
Yet another thing ComCom needs to investigate.
The CCCFA is the worst thing to happen to Kiwi's since I don't know when. Do you realise how many Kiwi's working seasonal work, or starting small businesses were prevented from getting on the housing ladder because of conservative bank lending terms. Most borrowers find a way to meet the mortgage, getting second jobs, working longer hours, partner has to work. It's tough but they get by and in a decade or two have a valuable asset.
It's the difference between the haves and the have nots. I know this will trigger the DGM's, but it's spot on.
That's not the fault of the CCCFA ... The fault lies with how the banks chose to interpret it.
The banks made a conscious decision to interpret it the way they have because other parts of the CCCFA made banks liable for their practices I refer to in my post above. What they have done is classic monopoly and oligopoly behavior. In essence, they withheld their services until they got their own way. Please don't be fooled.
Yup. Spot on.
Only half my household inc0me could be considered when being assessed for a mortgage. The CCCFA is horrendously conservative in this regard.
In Columbia they consider illegal income from drug dealing for mortgage assessments. There is probably a happy medium somewhere.
Colombia (sorry), but yes you are correct, CCCFA needs to be repealed, it's awful.
No. The CCCFA does NOT need to be repealed. But it does need to be enforced which is not happening at present.
What does need to happen is banks in NZ need to stop throwing their considerable weight around to get their own way. The banks must stop being so predatory and milking their customer at every opportunity. The banks are not Gods. We must stop treating them as such. What they do is not that complex and yet we allow them to act in unison to derive massive profits for providing what is, in effect, a pretty simple, old and not very complex, service.
The cheering for people to lose money on their house is incredible on Interest, there are so, sooo many self-centered people rejoicing in others losing money on their house out of jealousy, it's quite sickening! (bring on the abuse folks)
The only people losing money are the DGM's though?
Nobody is cheering on unfortunate FHB’s with genuine intention.
The collapse of a sick market and economy, far removed from fundamentals, of course, and unfortunately not everyone can have a fairytale ending.
A reset is required where people buy a home to live in and investors seek yield, not appreciation.
There isn’t much can left to kick down the road, we can either deal with it or let gravity do it for us.
Either way, it’s going to happen, sorry bud.
We're not cheering on anybody's loss.
We're pleased that the cancerous narrative is being exposed. Sometimes you need to cut out a mole to save the cancer from spreading, it's not nice and nobody would wish it on anybody.
People like you were telling people to go sunbathe in the middle of the day because having a tan was healthy. And also price-gauging the govt on sun block.
To the folks who don't own a house and think of me and others who do own a house as the evil people who have to be hated. Despite being aware that you see me as "the enemy" and there's no way in hell you would listen to a person like me, I have that wild, unrealistic hope, that I may help someone into to home ownership. How about you lie down, relax and consider with as little prejudice as possible what is best for you. Don't get questions like "how" get in the way at first. The first step is to truly figure out what's best for you. Only once you know the true and honest answer to that question, then start to make a plan how you can achieve it. Cynics will say BS, experience says this strategy truly works. To the one person who may listen to my advice, good luck, persist because there will be hurdles, you will get there. There is no benefit for me in this advice other than the crazy hope to help someone.
Lol, some psychobabble speak might suggest you're starting to feel a guilty conscience.
I don't own a house and nor do I think those that do are evil or to be hated. It is said, hate the game not the players.
I do have a challenge with those that don't see their own lies, that take on a narrative as a means of self justification. It is especially apparent in the property investment sector. There are a minority that do care about the wellbeing of their tenants and attempt to find balance within "market" forces. The majority do not though and are just milking it for all they can. Do i hate them for that, no. I do enough self reflection work to acknowledge that I also have that trait somewhere in me too, albeit in a different form. I would rather they be straight up and honest though. Instead of the self justification of providing shelter just be honest and admit they're really just in it for themselves, to get as much as they can and they don't really give two hoots about their tenant. Am I going to hate them for that? No, I'll love them more for their truth and honesty. I'm aware that our model of fear and scarcity influences this attitude, and I can have compassion and empathy for them. Maybe if their honest with themselves that's the first step to changing the world.
Other ancient teachings suggest that by serving the best interests of others serves one's own best interests. One could help others own their own home by not pumping up the prices of homes. It could be in the best interests of many to not encourage them to buy in at this time, to encourage power of the people in unity, not division. Sure there may be some "economic" pain for some, some "financial" losses, but to deny this, to continue attempting to prevent it is possibly denying some much needed lessons, that in the long run serves the interest of many, not just a few.
That is a clear "NO" from you then Meh.
OK then Meh, you're clearly not the one to advice.
.
So they had no responsibility then of their own and did zero due diligence? Yeah and people want to shelter those people who knowingly made bad investment decisions, who had housing choices to begin with, who, in most cases, only did so out of greed and incredible astounding foolishness & ignorance. If they truly had no choice to learn about basic investment or property purchases it would lead them to be close to incapable of legally signing a property contract. These people had choices, they had the ability, they made those choices, here are consequences that any fool could see. Given the governments massive propping of the housing market during covid it is no surprise some steam went out once the splurging money tree died from us throwing it into the wood chipper.
Go back to worrying about people who actually face financial poverty and loss because they had literally no choice and struggle for housing at all. The 10% selling for a loss are not those people and the 10% all made their choices they had the option to make. The 10% should have as much responsibility as you otherwise claim those who are homeless do (even though most homeless did not have any choice available to them and certainly many do not have accessible housing available to them at all).
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