The Real Estate Institute of New Zealand (REINZ)has reported 4,287 property sales in August, which was down on the record low July volumes of 4,411 and down 27% from 5,878 in August 2009. It is not however the lowest August ever, given there were 4,220 sold in the pit of the recession in August 2008.
(Updated with regional detail below, Interactive chart below, ASB comment on prices to fall a further 3%, JP Morgan comment on debt repayment stifling demand)
REINZ said the median house price in August was NZ$350,000, up from NZ$349,000 in July and above NZ$346,750 a year ago. However, REINZ's stratified house price measure, which strips out the skewing affect of more expensive or cheaper houses selling than usual, showed a 0.3% rise for the month to around NZ$360,600.
However, the stratified measures shows house prices are down 1.2% in the three months to August and are down 5.3% from their November 2007 peak.
REINZ said property sales were continuing at the subdued level seen since June.
“These sales levels are almost identical to what REINZ reported during 2008 when the market was at its worst in the midst of the Global Financial Crisis,” REINZ spokesman Bryan Thomson said.
“However what puts a different perspective on the strength of this year’s market is that the August 2010 median selling price of NZ$350,000 is up again on the July median of $349,000 as well as NZ$20,000 higher than in 2008, and average days to sell are stable at 43," Thomson said.
“The days to sell statistics in particular suggest underlying market demand in a number of locations is being frustrated by potential sellers holding off from listing their properties for sale,” Thomson said.
“Compared to 2008 our current market appears slower than conditions indicate it should be,” he said.
“So the impact of Spring weather and the expected flush of new listings soon will bring an interesting period in which we can gauge a more accurate measure of the market for the rest of the year."
Thomson said Christchurch earthquake would also have an influence. About 15% of sales nationally are in Canterbury.
The breakdown of the values of the properties sold is 139 for NZ$1 million plus, 478 between NZ$600,000 - NZ$999,999, 1,070 between NZ$400,000 - NZ$599,999 and 2,600 for under NZ$400,000.
From district to district, changes in the median prices varied from falls as high as 7.7% in four districts, and increases of up to nearly 10% in the other eight when compared with the same month last year.
The largest rise in the median price was in Manawatu/Wanganui which is up more than 9.3% on the previous year, and the largest fall is in Taranaki down 7.7%, REINZ said.
'Repaying debt'
JP Morgan economist Helen Kevans said there were signs demand for property was drying up as households looked to repay debt and as changes to the tax system encouraged saving rather than spending. She also said this result and weak retail sales figures for July showed the economy had slowed to a crawl and meant the RBNZ was likely to hold the OCR at 3% on Thursday.
"The government has announced measures aimed at encouraging saving and steering New Zealanders away from their debt-fuelled spending habits. With households set to realign their spending patterns and consolidate balance sheets, which have historically been too leveraged to housing debt, retailers likely will have little pricing power," Kevans said.
"These changing habits also will impact the property market, where signs already are growing that demand for property may be drying up as more cautious households choose instead to pay down debt.
"With migration flows easing and interest rates higher, property sales ventured to near decade lows. Given a backlog of unsold property sitting on the market, we expect further moderation in house price gains this year," she said.
"Changes to the way property is taxed (announced in May) also probably will dampen housing market activity further. The measures prevent property investors from offsetting their losses against income and other taxes, making investing in property much less appealing than it was before."
'Prices to fall 3%'
ASB economist Chris Tennent-Brown said seasonally adjusted turnover was down 3.9% on the previous month and sales in the last 3 months were down 26% on year ago levels.
"We do not expect the market to soften to the degree seen in 2008, but expect conditions to remain tipped in favour of buyers as the market remains subdued over the coming year," Tennent Brown said.
"House prices held up surprisingly well over the first half of 2010, given the weakness in demand during this time. Given the weakened fundamentals for housing demand, we expect house prices will come under pressure, falling around 3% over the next year," he said.
"The ongoing weakness in the housing market will be of little surprise to the RBNZ, which is factoring an economy that is rebalancing away from household-led growth toward export-led growth. A slow housing market will be part of this rebalancing over the next year."
See full REINZ regional report below:
Northland
From $280,000 in June the Northland median price rose to $307,500 in July and $310,000 in August, a 5 per cent increase on the August 2009 median of $295,000. But Northland residential property sales volume fell from 102 in July to 88 last month, also down on the 126 in August 2009. In the Whangarei County the median price eased back up to $340,000 from $320,000 in July, but is well down on the August 2009 figure of $458,000. Sales rose to 22 residential properties from 19 in July and 14 in August 2009.
Sales in Whangarei City fell further to 34 from 43 in July, and 69 in August 2009. But the median price increased from $280,000 for the previous three months, to $302,500, more than $40,000 up on the August 2009 median of $262,000.
Auckland
After falling to $445,000 in June the Auckland median residential property price eased up to $450,000 in July but dropped back again to $445,000 in August, down 1.1 per cent on the median price of $450,000 a year ago.
At 1,487 total sales were down on the 1,505 sales in July and also less than the 2,067 sold in August 2009. The median sale price for a North Shore City home increased to $520,000 in August from $490,000 in July, but is still down on the median of $537,500 in August 2009. Sales totalled 279, a slight increase on the 277 houses sold in July but down on the 426 sold in August 2009.
Sales declined in Waitakere City from 206 in July to 198 in August, also below the 258 properties sold in August 2009. And the median price decreased to $375,500 last month from $390,500 in July but is slightly up on the August 2009 median of $374,000.
After rising to $550,000 in March the median price for an Auckland City house declined to $492,500 in July and $485,500 last month which is also down on the August 2009 median of $500,000.
At 534 sales were up on the 520 houses sold in July, but down on the 662 in August 2009.
In Manukau City the median residential property price fell back from $455,000 in July to $441,750 last month, slightly up on the median of $439,500 a year ago. The number of sales increased to 296 from 289 in July but is down on the 406 sold in August 2009.
The Papakura District median price eased back from $320,000 in July to $315,000 last month which is also down on the August 2009 median of $360,000. The 30 sales in Papakura in August are down on the 45 sold in July and the 61 in August 2009.
The slide in median prices for Metropolitan Auckland homes has continued from $455,000 in July to $450,000 last month, which is also a decrease on the median price of $460,000 in August 2009.
But sales at 1,337 were the same as the number sold in July though down on the 1,813 in August 2009.
Sales in the Rodney District eased back to 92 from 98 in July and are down on the 132 sold in August 2009. From $500,000 in June and $459,500 in July, the median price fell further to $443,500 but is still above the August 2009 median of $437,500.
The median price for a Franklin District home continued to fall from $364,000 in June and $340,000 in July to $308,500 in August which is also below the median of $360,000 in August last year. With 40 houses sold in August, sales are down on the 51 sold in July (August 2009: 57).
In Thames/Coromandel sales further declined to 18 from the 19 homes sold in July, and less than half the 65 sold in August 2009. The median price fell from $390,000 in July to $326,250 last month, well below the August 2009 median of $355,000.
The median price for an Outer Auckland home eased back from $420,000 in July to $393,500 last month (August 2009: $395,000).
Sales volume decreased to 150 from 168 houses sold in July (August 2009: 254).
Waikato/Bay of Plenty/Gisborne
At $323,000, the Waikato/Bay of Plenty/Gisborne district median price has recovered from $315,000 in July, and is 1.7 per cent up on the August 2009 median of $317,500. Altogether 557 houses were sold in the district, a decrease on the 588 sold in July and the 796 sold in August 2009.
In Waikato Country 69 houses were sold, down on the 97 in July and the 133 sales in August last year. At $228,000 the August median is down on $257,000 in July, and the $260,000 median twelve months ago.
The median price for a Hamilton City house remained the same at $335,000 in both July and August which is fractionally below the August 2009 median of $336,500. Sales volume stayed steady at 151 compared with the 155 sold in July but was down on the 223 sold in August 2009.
In Western Bay of Plenty Country the median price rose to $420,500 from $347,500 in July and is up on the $345,000 median in August last year. Sales volumes eased up to 44 from 38 sold in July (August 2009: 51). The median price for a house in Mt Maunganui/Papamoa decreased to $405,000 from $412,000 in July but is still up on the August 2009 median of $395,000. Sales stayed steady at 47 for a second month but are down on the 75 sold in August 2009.
In Tauranga the median price rose from $339,250 in July to $353,500 last month, an increase on the August 2009 median of $340,000. However sales of residential properties fell from 90 in July to 78 last month, the same as in August 2009.
Rotorua’s median price rose from $262,000 in July to $285,000 in August, and is also up on the August 2009 median value of $256,000. The sale of 61 properties is down on the 63 houses sold in July, and the 76 in August 2009.
In Taupo the median price dropped to $289,000 in July from $336,250 in June but has recovered to $350,000 in August. However it is still down on the August 2009 median of $357,500.
There were 32 sales in August, two down on July, and less than the 52 sold in August a year ago.
The median price for King Country residential properties fell from $140,000 in July to $125,000 in August but is still substantially above the August 2009 median of $78,000.
Sales at 8 are up on the 6 sold in July but almost half the 15 sold in August 2009.
The median price for a Gisborne City home eased back further to $220,000 from $259,000 in July and $270,000 in June and is now significantly below the August 2009 median of $280,000. At 35, the number of sales is up on the 27 in July and the 32 in August 2009.
In Eastern Bay of Plenty Country the median price dropped from $310,000 in July to just $185,000 in August, also well down on the August 2009 median of $257,500.
Houses sold totalled 29, up on the 27 sold in July but less than half the 60 sold in August 2009.
Hawkes Bay
In the Hawkes Bay district the median price of $272,500 is 7.7 per cent up last year’s August median of $253,000 and is also an increase on the July median of $265,000. Residential property transactions rose from 157 the previous month to 159 in August but are still well down on the 213 sales in the same month last year.
From $286,750 in July, the Napier City median price eased up to $308,000 in August, and is still up on the median of $268,000 in the same month last year. Sales totalled 69 houses, up three on the 66 sold in July, but less than the 93 in August 2009.
In Hastings City the median price declined from $285,000 in the previous two months to $269,500 in August but remains up on the median of $255,000 a year ago. From 67 in June and July, sales slipped to 66 last month, also a decrease on August 2009 sales of 79.
In Hawkes Bay Country the median price recovered to $350,000 from $189,000 in July and $193,000 in August 2009, but there were only 5 sales for a second month compared with 14 in August 2009.
Manawatu/Wanganui
Across the Manawatu/Wanganui district the median price eased from $232,000 in July to $229,500 in August but is nearly 9.3 per cent up on the median of $210,000 a year ago. Sales at 200 are down on the 207 houses sold in July, and the 298 in August 2009.
At $256,444 the median sale price for residential properties in Palmerston North City is an increase on the July median of $255,000 and the August 2009 median of $250,200. Sales of 90 in August are a decrease on the 99 in July and the 120 houses sold in August 2009. Sales volume in Manawatu Country eased up to 20 last month from 18 in July but is down on the 25 in August 2009. But the median price increased from $202,500 in July to $230,000 last month, which is also well up on the of August 2009 median of $162,000.
In the Manawatu region the median price continued to decline from $237,000 in July to $231,250 last month, which is still up on the August 2009 median of $225,000. At 160, the number of sales is down on the 162 sold in July and less than the 228 sold in August last year.
The median price in Wanganui City rose to $215,000 last month from $190,000 in July, and is also higher than the August 2009 median of $178,000. There were 25 houses sold in August, down on the 27 sales in July and the 46 in August 2009. After remaining steady for three months at $185,000 the median sale price in the Wanganui region rose to $193,250, which is up on the August 2009 median of $160,250. At 40, sales were down on the 45 houses sold in August and the 70 in August 2009.
Taranaki
From $292,000 in July the Taranaki district median house price fell to $265,500 last month, 7.6 per cent down on the $287,500 median in August last year. Across the district 134 houses sold, a decrease on the 145 sales in July and the 150 in August 2009.
In the Taranaki Country area the median price decreased from $274,000 in July to $206,250 last month which is also $10,000 below the August 2009 median. July sales totalled 24, three more than the month before and six more than in August last year.
The median sale price for a New Plymouth City residential property firmed from $324,500 in July to $325,000 last month, an increase on the median of $322,500 a year ago. At 65 the number of sales was down on the 84 sold in July and the 80 in August 2009.
Wellington
From $385,000 in July the Wellington district median residential property price returned to $397,500 last month, just half a per cent up on the August 2009 median of $395,500. Sales for the month slid back to 501 from 512 in July and are also down on the 622 in August 2009. In the Wairarapa sales rose to 47 from the 41 residential properties sold in July, and is also an increase on the 40 transactions in August 2009. But from $248,000 in July, the median price fell to $227,000, though it is still up on the 2009 August median of $217,500.
The median price for an Upper Hutt house continued to increase from $322,000 in July to $324,000 last month and is up on the August 2009 median of $310,000. Sales of 49 residential properties were recorded in August, up on the 47 sold in July and the 48 in the same month last year. The Hutt Valley median recovered last month to $342,500 from $330,000 in July and is up on the August 2009 median of $317,500. In August sales totalled 79, down on the 100 sold in July and the 126 sales in August 2009.
For a house in Otaki/Paekakariki the median price increased to $355,250 from $320,000 in June and $328,000 in July (August 2009 median $310,000).
The number of sales increased to 80 from 75 last month (August 2009: 107). From $386,500 in July, the median price in Pukerua Bay/Tawa increased to $410,000 last month, but is still well down on the August 2009 median of $450,000. At 53 sales were down on the 67 in July and the 75 in August 2009.
After rising from $435,500 in June to $524,500 in July, last month the Central Wellington median price fell back to $428,000, well down on the August 2009 median of $560,000.
The number of sales at 35 is up on the 32 in July but down on the 55 residential properties sold in August 2009.
Nelson/Marlborough
Across the Nelson/Marlborough district the median price increased to $330,000 from $327,000 in July, and is up on the August 2009 median of $325,000. From 159 in July, residential property sales eased back to 145 in July, also down on the 213 in August last year. In Nelson City the median price increased from $312,000 in July to $330,000 last month (August 2009: $305,000) and sales volume rose from 59 the previous month to 63 in August, though still less than the 73 in the same month last year.
The median price of a Nelson Council Zone house rose from $332,000 in July to $336,500 last month, but is down on the August 2009 median of $346,250. The number of sales eased to 104 from 113 in July (August 2009:142).
In Marlborough the median price decreased from $307,750 in July to $280,000 last month (August 2009: $300,000). At 41, sales were down on the 46 in July and the 71 in August last year.
Canterbury/Westland
After falling from $325,000 in June to $310,000 in July the Canterbury/Westland district median price recovered to $315,000 last month, nearly 6.8 per cent up on last year’s August median of $295,000. From 683 sales in July, turnover decreased to 623, well below the 885 in August 2009.
The median price for a house in Christchurch City increased to $335,000 from $328,250 in July, and is also up on the August 2009 median of $316,500. Sales eased from 482 in July to 416 last month (August 2009: 600).
The median price for a home in Rangiora rose from $289,000 in July to $340,000 last month (August 2009: $283,000), but sales volume eased to 17 properties from 26 in July and 37 in August last year.
From $320,000 in July the median price in North Canterbury fell to $291,250 in August and is also down on the August 2009 median of $336,000. From 19 houses sold in July, sales are down slightly at 16 last month, and on the August 2009 figure of 27. The median price for a Canterbury Country home eased from $367,500 in July to $360,000 last month, the same as the median a year ago. Sales at 42 were up on the 34 properties sold in July and 37 in August 2009.
The median price of houses sold in Mid-Canterbury increased from $235,000 in July to $255,000 last month, and is also up on the median of $232,000 in August last year. And the number of houses sold more than halved from 29 in July to 13 last month (August 2009: 39)
After falling to $190,000 in July the median price in Timaru recovered to $200,000 in August, but is still below the median of $232,500 a year ago. With 37 properties sold, turnover in Timaru is up on the 33 sold in July but below the 58 sold in August last year.
The median price for a house on the West Coast eased last month to $180,000 from $180,750 in July but is up in the August 2009 median of $165,000. Sales increased to 39 from the 32 residential properties sold in July (August 2009: 32).
In Outer Canterbury 207 houses sold last month, up on the 201 sales in July but less than the 285 in August 2009. At $265,000 the median price last month remained the same as July, but is an increase on the August 2009 median of $260,000.
Central Otago Lakes
Across the Central Otago Lakes district the median price recovered to $450,000 from $390,800 in July, 3.4 per cent up on the median value of $435,000 a year ago.
Sales also increased to 77 from 48 in July but are down on the 87 sold in August last year.
The median price for a house in Central Otago increased to $430,000 last month from $333,500 in July, and is also up on the August 2009 median of $330,000.
Sales of 47 properties are up on the 24 sold in July and the 41 in August 2009.
From $436,000 in July the Queenstown median price rose to $515,000 last month but is still only slightly up on the August 2009 median of $506,250. Sales are also up at 30 properties compared with 24 in July (August 2009: 46).
Otago
In the Otago district the median price decreased from $245,500 in July to $230,000 last month, and is 2.4 per cent down on the August 2009 median of $236,000. Across the region 199 dwellings sold last month, up on the 196 sales in July but less than the 275 in August 2009.
In North Otago the median sale price declined from $211,000 in July to $189,000 last month but is still up on the median of $185,000 a year ago. At 32, sales were up on the 26 in July and the 29 in August last year.
The median price in Dunedin City eased back from $259,000 in July to $245,000 last month, also a decrease on the August 2009 median of $263,500. At 145 sales are down on the 151 dwellings sold in July and the 212 in August 2009.
The number of sales in South Otago increased to 17 from 15 in July (August 2009:25), but the median price fell from $227,000 in July to $148,000 last month, still up on the August 2009 median of $128,000.
Southland
In Southland the median price has decreased 2.7 per cent over the past year from $200,000 in August 2009 to $194,500 last month, and is also down on the July median of $210,000. Sales volumes increased to 117 last month from 109 in July (August 2009: 146). In Invercargill the median price slipped from $210,500 in July to $210,000 last month the same as the median in August 2009. At 71, sales are down on the 80 sold in July and the 98 in August 2009.
The median price for a house in Gore eased back from $183,250 in July to $171,500 last month but is up on the median of $143,000 in August a year ago. But from the 14 residential properties sold in July, sales turnover increased to 28 last month (August 2009:24).
Volumes sold - REINZ
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103 Comments
The Duke,
Many thanks. Really?
Let me quote from the REINZ's own stratified measure built with the RBNZ as a more accurate measure than the raw median you refer to (for one month).
"However, the stratified measures shows house prices are down 1.2% in the three months to August and are down 5.3% from their November 2007 peak."
I'm still picking a fall from that November 2007 peak of 15%.
Your view?
cheers
Bernard
NZ has one of the most backward ways of measuring house values. We need to adopt a method which compares the actual selling price of the same property, i.e. comparing its value when it was sold on a yearly basis. The so called "average" price is highly distorted by the number of sales, and the values of those sales. When there is a low number of sales in a region and the sales involved high value properties, it will raise the average prices in that region, but it is not a true reflection of the actual value of other properties in this region. The same applies to how we gauge affordability according to the gross personal income, it should be based on the net personal income, which is the real disposal income.
True Value,
Here's our report on QV's figures, which do compare the value of like for like houses.
And here's our Roost Home Loan Affordability series, which looks at disposable incomes.
http://www.interest.co.nz/property/home-loan-affordability
cheers
Bernard
err......"REINZ's stratified house price measure, which strips out the skewing affect of more expensive or cheaper houses selling than usual, showed a 0.3% rise for the month to around NZ$360,600."
Is this new all time high median price?
Also, more than 50% of sales are in lowest price bracket, which indicates first home buyers might be back in market and also drags average price down.
Bernard - to truely win the argument you can't use one set of statistics when it suits you (prices fall from month to month) and then ignore them when they increase month to month. Likewise - you say prices fell 1.2% in the last three months. Well - I too can cherry pick statistics:
Prices UP 0.3% (yes stratified) month on month, and up 0.9% on last year! Wow! Section prices UP 4.9% month on month, and up 6.1% on last year.
Stop the spin to win the argument.
The Man/Fool you are dreaming. There is not one positive factor out there in the economy to keep prices up let alone stop them from continuing to fall. The recession is just starting to really hit the majority of new zealanders who are just coping with the daily costs of living and their existing debts. Ask any lawyer and accountant and they will tell you small businesses are really struggling.
Yeah median prices mean nothing.
'Manawatu/Wanganui (median) which is up more than 9.3% on the previous year"
Look at the charts, august 2009 was down over 9% on august 2008 (the 'pit of the recession'), so the fact that manawatu is up 9.3% on 2009 only means 2009 august was terrible. Also with so few houses being sold hard to get a good picture.
I live here and i can tell you there are now more houses selling below GV than ever since possible 2003 (years valued were 2006, 2009, pretty much got exactly the same GV across most houses).
Can we get either the stratified index or QV index charts up for each region in the charts section?
Year on year % changes are hard to see trends etc, much prefer the raw index values.
The Question I believe is what are....... you......... seeing...?
I am hearing ..... I am reading.....evidentially I am not seeing.
I am suspecting that Banky Boy is influencing suppliers of data to protect their interests in
the short term at least.
it is always...... in whose interests.....when the data defies logic.
..and what we say is right today is wrong tomorrow.
..and again and again.
..and we are still taking about the NZReal Estate industry every day.
..and it is interesting for “B”, because “A” is 2.15% wrong tomorrow.
..and we still aren’t productive in NZ – no wonder, because we are talking about why "B" will be 2.05% wrong after tomorrow. - HA !
“So the impact of Spring weather and the expected flush of new listings soon will bring an interesting period in which we can gauge a more accurate measure of the market for the rest of the year"........classic BS...not even the govt spin doctors can beat stuff like this...he deserves a prize Bernard....it really is very high quality effluent.
House prices are down but there aren't any good listings out there either. I think this has soften the blow a little (yes, I've been looking to upgrade our current home)
Interestingly, I can recall not so long ago, SCF and Hanover were rated highly by "interest.co.nz". No one really know where things are heading. So I take BH 15% drop is a guesstimate (may be made over a few beers)
Since 1992, median house prices in NZ have increased by 4.1%/year in real terms. Real GDP growth has averaged 2.75%. Is growth of 1.35%/year above GDP unsustainable?
If you think it is, you might think the period 1992-2002 is shows more 'normal' behaviour than the boom that followed. That period showed real increases of 3.1%/year. Following that trend, present prices are about 15% overvalued so we could either see a price fall or a return to trend by prices remaining flat for another 4 years or so.
Either way it is not a huge drama. Prices were flat for 5.5 years from 1997 (despite the economy growing at an average rate of 2.6%/year in real terms). At the moment, prices have been flat only since April 2007, 3.3 years.
In the 1997-2001 episode, annual volumes fell from 89,000 to 64,700, a 27% drop. (Monthly volumes fell 54% from a peak of 9960 to a low of 4562). The drop is twice as big this time, from 120,000 to a low of 53,000 (presently 62,000), but then the summer of 2003-2004 when volumes reached 120,000 was a particularly crazy period.
I think the 1997-2001 period can be seen as a dry run for the present episode which we should expect to be somewhat more severe but still not that exciting. Unless there is a big shock to the economy (unemployment to 9%, interest rates to 9%, collapse of an export sector, withdrawal of financing from the banks) prices will probably stay in the 330K-360K range for another 4 or 5 years and life will go on as we know it.
Interesting info/stats, Robert - aand given we were quite active sellers/buyers throughout that 1997-2001 period, I remember it much as you've stated.
What I find regarding this present recession is that properties often first come on the market with a way overshoot in terms of price expectation. It's been a saying in real estate that your first offer is often your best offer - and I think that applies presently. If you don't take the cash now from someone who has it... you could be waiting months and months - if not years - for a better offer that actually confirms.
yippee!
RE porn fresh off the griddle....luve it..snuffle,snuffle!!
i reckon it's more fun watching the spurious comments posted by the delusionists like the Duke of Moral Hazzard above...you must live in the countryside, mate, 'cos you've obviously been into the mushies with your views.
and then there's dear old Wally our burger winner for August with his Zionist take on thangs..and so it goes.
Hey Duke...if you want to base your decisions on medians and moving averages then good luck with that scotch mist.
Robert M above is pretty much right on the money with his summation.
make the most of the RE porn, team, as it's going to get more dreary by the month until it'll be like watching the movement of your grandma's knickers....a slow decline into boring greyness..ha ha ha....
The Man agree the property market has been remarkably resilient but that changed about three months ago as the economy started to slow down again and now we have had three months or so of very poor sales and weakening prices which is going to carry on well into next year at least. We will see if you are so smug in 12 months time. I do not think you will be at all.
Maybe but at the moment you look like what you are calling him as you have no sense of reality as evidenced by what the Banks,QV and todays terrible confidence poll result. One cannot listen to the REINZ as they have their result put together by a PR firm who are paid to put a gloss on the result even if it a dog of one. Their only aim is to sell at any cost and bugger the punters who are buying now in a dropping market. No wonder society in general rates them with politicians and car salemen. I am ashamed to think I used to sell property.
When you have a sum of values (a total) in column A and a sum of values (a total) in column B the question to ask is is the difference between these two values simply due to chance, or can the difference between them not be explained by chance therefore indicating that something else is going on, e.g., a raising trend?
Statisticians have invented numerous tools to determine whether the difference between two or more numbers is statistically significant (not due to chance) or not (due to chance). Without doing the sums myself, I’m guessing that the very small difference ($1000) between the median house price in July and August is so small that it’s pretty unlikely to be statistically significant, i.e., the difference is just due to chance and median house prices in NZ have actually remained the same during this time. So it looks as though median house prices in NZ are flat on a reduced number of sales, although they are up on where they were a year ago. Sorry, but there’s no sign of a collapse in house prices just yet!
Now what would be interesting is to see long term graphs , say going back to 1970 or so of ave price and volumes.
Then compare the long term ave upto around 2000 expolated out from there, removing the bubble/boom (whatever the correct term is).
This then will show when the current meets the long term and what the current valve should be.
I doubt any great drop or fluctuations, a few zig zags from now on in till these meet.
Or put another way...how long the current flat market is going to last before normal (pre 2002) markets return.
I would also use this a guide to indicate when the recession, flat markets else ware in the economy will start to become normal again.
The share market died after the 80s crash and returned to normal fluctuations, the same will happen with proproperty.....It is only now one can seriously start to look at what markets will be worth looking into for the round of investment, speculation.
Just dont forget to pull out in time, dont be greedy...and listen to the doomsayers when the time comes.
hey Duke..A big majority of New Zealanders have lost confidence in the economy, according to a new poll out today....so where are the buyers for your houses going to come from?
Apparently,the Consumer Comfort Index (CCI) has been pushed down by faltering economic perceptions, with 68 percent of New Zealanders saying the economy is either 'poor' or 'not so good', up 16 percent since June.
The new poll, by UMR Research, found only three people in 1000 think the economy is excellent while 31 percent believe things are going well.
The CCI calculates consumer comfort based on how people feel about the economy now and how they rate their ability to buy things they want and need. Because of the poll, the CCI has slipped to minus 14 compared with minus 1 in June.
"There was a lot of optimism around in June and a feeling that things were getting better. But when that hasn't happened and there are very bad unemployment numbers which have struck home with people," research director Gavin White told NZPA.
The biggest issues on people's minds were unemployment and general cost of living increases, Mr White said.
Since June there has been little or no change in perceptions of personal finances and the buying climate, with 58 percent rating their personal finances as either 'excellent' or 'good' and 40 percent thinking that it was a good time to buy things they wanted.
Just like RE stats the margin of error can be up to 3% but don't like your odds for a property resurgence when the average/median Kiwi is closing their wallets?
another " mushie" for you now, Duke?
I think some of you should go back and read the full txt of those precictions...including the time frames......just rememdering or reading the headlines or going from others memory doesnt cut the cloth.
And keep in mind to take into the account that they where made FOR those in the market at the time and the type of house the speculators where trading.
Interesting thu is that those types of houses have dropped in real values around 20+%, which is not reflected in todays market, of buyers and sellers.
Its like comparing todays market price of apples with market prices of oranges in 2006/07...
Another thing, anyone who takes any predicutions as 100% correct, rather than a guide line on trends in the future should take up needle piont....ok so not a 30% drop, but a 20% is so is a 15% and 10% significant.
If there has been only a 5 or even a 8% drop in REAL values, how the hang does one explain way all those people/speculators who have got burnt then? How then have the ended up being leveraged well beyond the value of the properties? And not all went for 100% loans.
I cannot see where BH is predicting further drops in the market in $ value..but if the market is going to stay level for the next few yrs, the real value for investors is going to be eatten away with inflation etc, unless they are getting a good return on the amount invested. From earlier this yr and here on in the markert is going to be stable, no signicant increases or drops untill the 30/40 yr long term ave increases to meet the current price
If in late 2007 one took the long term ave, compared to the current over inflated prices then it indicated that the real value was about 30% lower....BH used other fundimentals that indicated the same thing.....this doent say there will be a big crash over night, but prices would rectify. If prices did not drop, they would have remained flat for decades....which any idoit knows will not happen, that just leaves prices dropping considerably and several yrs of stabilty waiting for the long term come up.
Thats not doomsayer its just plain common sence right?
BH is right about property prices dropping 30%, but the sector that is affected is the bankrupt developer/ Finance Company foreclosures, where the liquidators are flogging whatever is on the books for what ever they can get. There was a deal publicised in the NBR/ Dom about a brooklyn wgtn development that was worth 8M but got sold for 2.
A lot of the dramatic big drops you read about are not actually big drops relative to other similar property at the time, but drops relative to what was paid.
There's lots of apartments and some land subdivsions (by now extinct companies) that sold apartments or properties to themselves or associates at inflated prices. This meant they could get inflated valuations on those properties and sell them to people who believed these valuations and didn't compare to similar property.
"The biggest issues on people's minds were unemployment and general cost of living increases, Mr White said."
The biggest issue on The Duke's mind is whether Wolly turns out to right about the govt beefing up the tenant's protection laws before the election...aint that so Dukee!
Tisk tisk we are pissed off today VF...did we miss out on pna...oh how sad for you...still a good buy but I'm happy to have folded when I did. Who's to say what the govt plans to do. Stands to reason they will move to take labour support and the tenants are such a large group. Bill did warn the delegates!
New Zealand has to replenish that EQC funds, quick~smart. We hadn't banked on using it in Christchurch. So we need to get ready to be covered for anything the North Island. A quick way would be to bring in a 5% flat Stamp Duty (ie: a turnover tax) on property in the next Budget, and allocate it to where it came from~EQC for property. If turnover falls ( and the S/Duty isn't collected) then it just means that NZ will have less overseas interest to pay each week on it's borrowings, as those decline with less new mortgages to be funded, and that saving inturn can be used to top-up the EQC.
EQC is all a ruse, if you factored the supposed returns which should have been in there since the schemes inception, there should be over 20B in reserve, but stupidly the EQC has been investing in Govt bonds, effectively meaning that the money that you thought you were having squirrelled away in case of a shaky day is actually being spent on welfare, and hiphop tours or what ever has taken the polies fancy... all to be repaid at some later date, by guess who? uh huh, you and I the ever generous taxpayer
I actually think Bernard's estimate of a 15% decline in house prices is conservative. We are still sitting on a median multiple well above 5 versus a long term norm of 3. During the Clark years (dark days indeed) did it look and feel to anyone that NZ was experiencing boom growth (a la the Asian tiger)? We certainly had growth in government and welfare and borrowing and house prices...but where was the growth in industry/productivity? We had absolutely nothing to underwrite any of it. Do people understand that the money supply (I'm talking broad money) increased by 140% between 1999-2008. Welcome to the great NZ souffle...move over pavlova, we have a new national dish.
I like it! And to provoke a point of discussion; Why not 7% in the first year or less, decreasing 1% p.a. to zero after 7 years on established houses? 7 years being the average time a home owner stays put; and 7% being that 'mythical' doubling time in 10 years that 'property always goes up'. It would also encourage 'new builds' as it would not make sense in the short term to flip established houses.
CM has a very valid point. There are many things from Singapore we can emulate or copy. Unfortunately many Euro centric Kiwis just cannot bear the ideas of learing from an ex third world or an Asian country. Many topics have been raised, including Singaporean style Super Scheme (which is one of the best in the world, our super scheme is just a mess compared with the Singaporean scheme), crime and punishment (no griffi in Singapore, why?), government support in R&D (many top NZ scientist are working there, including the Scottish scientist who cloned Doly the sheep), the best water treatment system in the world, the best Airline (Singapore Airlline), and the most important part, they have visionary leaders who have balls.
That's not much is it? In France capital gains tax is 28.1% if you've held a property for less than 15 years (the rate does start to decrease after 6 years). On top of that you can expect to pay around 8% in various taxes at time of purchase (on top of agent's fee of course) + two types of annual rates. On the other hand if you start a business, you may be exempt from paying income tax on your profit for 2 years and pay a reduced rate for the following 3 years (not to mention a whole lot of other incentives). Quite different to NZ hey!
Forgive my ignorance but can anybody explain the limits of declaring bankruptcy?
ie if you have a house thats under water and get laid off, would it be worth going bankrupt then living frugally for 5 years or whatever the stand down period is and getting back into the market then?
"would it be worth going bankrupt"
Yes it would VL, of course the sleazy money lending establishment won't be so keen to lend to you (good) but they'll soon forget - be posting you a credit card with a $20k limit soon enough (bad)
Can't help themselves see, they're even more addicted to debt than the poor schlebs they're targeting.
It's quite conceivable that houses prices here will come back 10% from this point - I suspect a 20% to 30% correction in the DOW and then other world sharemarkets medium term will set it off. The DOW's rise lately is based on nothing and their economy continues to tank under Obama's stimulunacy.
Here's my recent experience in the real estate mkt... I'm in Auckland... Royal oak/Epsom/Mt Eden suburbs... I suppose they are Central Auckland Leafy suburbs ( As Olly Newland calls them ).
We put our house on the mkt 3 wks ago .... and had an unconditional offer after only 2 days. ( Bought end of 2008 .. sold for more than we bought for ).
Here was I thinking the mkt was flat... and I should be able to re- buy easily.... and have a bit of negotiating power.!!.. Ha. I've been blown away at 2 auctions.... Outbid easily.. I come across a place I like... and it is already sold.
Because I am looking in those areas, I see good quality ( I don't mean flash or expensive) properties sell very quickly.
Reality , for me, is actually a strong market , with healthy demand and a lack of good supply. ie. There are shit properties that are not selling... (and there is crap out there.) Good stuff is selling quickly. ( in the area I'm looking ).
My experience may explain the statistics.. ie.. low volume but resiliant prices.
Maybe the mkt has become fragmented, and different areas are responding very differently to the fundamental supply/demand dynamic...
trying to reconcile all this with the Global picture ... has me scratching my head.
The start of the Global Crisis was in 2007... almost 4 yrs ago. In my area , there was a 10% collapse in prices, and since then I believe they are back to where they were..if not higher. ( this is not what I expected.)
AND... I would not want to extrapolate the past into the future... We are in very uncertain times.... but what I have just said is my experience of the present.
cheers Roelof
I would also add.... that in the current mkt... the difference between trying to sell an "ugly" property and a "pretty" property. ( to use a metaphor ).... is like the difference between night and day....
I think people who own crap properties will/are taking a hit. People who own good quality properties will be ok . ( taking into account the economic fundamentals of supply/demand)
Went to hear ANZ economist Cameron Bagrie last night and would recommend him as a person to listen to- very compelling speaker and calls it as he sees it.
His main points?
-biggest driver of property market in past 15 years has been availability of credit and people's willingness to take on debt.= the old normal. This is no longer sustainable
-there is no shortage of housing, a slight surplus, but not in Auckland or Christchurch.
- globally governments are regulating banking towards a more prudential policy and to control supply of credit to ensure credit doesn't go into a speculative market eg Reserve Bank in NZ
- people, including NZ'ers now, are looking at their balance sheets and focusing on debt = deleveraging. Emphasis now in property market on yield and cost control= the new normal
-rural land prices are way too high, and dairying sector is stilll carrying a massive $29 billion debt- prices will corrrect over next 6-12 months as economic model moves to yield on capital.
- the housing market is still on weak side but is stabilising as NZ'ers are fixing up their finances. If present pattern continues over next 3 years, things will be good, and NZ does have products the world will want and our 2 major trading partners are Australia and China, which are positive
-the government is working on introducing whole lot of small steps, cumulatively designed to attract investment eg abolishing depreciation on property a first step
- 2011 looks quite good but next 5 years will see some ups and downs, it will be 'grumpy growth'
- those who predict extreme outcomes in NZ are focusing on short term factors or not seeing the mixture of positives and negatives at work
When you say "rural land prices are way too high", I don't imagine you're talking about residential sections (including larger blocks)? We paid $5/m2 for ours which doesn't seem like bad value compared with $1000/m2 or even more in some areas of Chch (and from my very unscientific calculations, you'd be hard pressed to find anything under $500/m2 even in crap suburbs). I won't even go into the fact that the land, because of its size, has a lot more potential than a tiny city section since we can (and are/will) grow our food (this includes four-legged food), trees to turn into logs for heating etc on it.
And he was 'gilding the lilly' Muzza!
Keep your powder dry mate and avoid the debts.
Beware of govt munny grabs.
Same for the local council.
Start with the veg garden and them chooks.
Go in with mates for an electric Kontiki and make the weekends count at the beaches.
Hello Mr Hickey
You are far too negative in outlook and too bearish on NZ house prices: NZ can take many more immigrants (and will undoubtedly do so), Auckland's waterfront is sadly underdeveloped, there is a continuing undersupply of new builds, small I'll admit, but it's real, there will always be an inflationary component to alterations and new construction unless the deflation beast bites, and I don't think that's likely as our reserve bank is already in a tightening cycle, the house market is less variable than the stockmarket and finance companies (and the collapse of SCF has reenforced that message in people's minds)... and the list of things supporting house prices goes on.
Here's what Tony Alexander says the economic data suggest:
"continuing flat prices for the coming year then mild rises from the second half of 2011."
(NZ Herald, Sat Sep 11)
Certainly when house prices don't keep with the headline inflation rate that's an erosion of wealth, but that is balanced with periods where price increases outpace inflation. I don't see any need for price FALLS for a little heat to come out of the market for a while.
I suppose if you keep predicting significant (10%+) housing price falls you will get more hits... it sucked me in for sure, but really, it seems intellectually dishonest.
Yes, I'm aware there is an economist predicting a 3% price fall coming. I'm sure he's wrong too, but you are so far off the mark I just can't figure out what you have to gain?
When are you going to stop hiding behind memorised property investment seminar slogans and face the reality that New Zealand's property market is readjusting downwards because it has to?
Property prices increased insanely during the bubble period only because banks were able to lend idiotic amounts to anybody who asked.
Those days are over and silly lending is finished, but property prices are still far too high, and average NZ incomes remain far too low to meet those extravagant property asking prices.
The cost of living continues to trend strongly upward and GST is set to rise, impacting the vast majority of New Zealanders, while income tax is reduced only for the top earners.
There is no reason whatsoever to assume that immigration into NZ will increase, but plenty of reasons to believe that the large outward flow will continue.
It is plainly obvious that the pressure on property prices can only be downwards.
Sorry to disappoint you, but I've never been to a property investment seminar.
"The cost of living continues to trend strongly upward and GST is set to rise"
That is called inflation. Wages will, over time, creep upward to keep pace with it. House prices are not immune to inflation - they reflect the long term inflationary environment.
If other pressures are downward, we can have periods where houses do not rise as fast as they *should* due to inflation. That is what is currently happening. A few years of that can let plenty of "air" come out of the price bubble without significant price falls.
In fact, I'm not saying that small price falls are impossible. I'm saying that big price falls are extremely unlikely... for a large number of reasons, our inflationary economy being only one of them.
"That is called inflation. Wages will, over time, creep upward to keep pace with it. House prices are not immune to inflation - they reflect the long term inflationary environment."
No, that'd be the CoL. And wages are certainly creeping, although in many cases they are creeping backwards due to the fact that the CoL is roaring ahead at an alarming rate, a pace much faster than NZ wages can ever hope to match. That's been the problem for a while: the CoL has been leaving pathetic NZ average incomes for dead. It's why as amalgam explained that house prices are unaffordable, because you cannot get the 105% mortgages any more which were necessary to actually pay asking prices.
House prices are going backward: one reason is because nobody is buying them, even those with some money, because they know that the longer they wait, the lower the prices will go. And house prices "should" be going up? Get real. House prices were last on a par with incomes and the CoL back in the early 1990s. During the latter part of that decade they crept up a bit, but were still largely attainable by most families, but post 2003 prices went stupid because of course anyone could borrow however much they wanted and so sellers asked for more and more.
"In fact, I'm not saying that small price falls are impossible."
People who aren't as desperately stupid as yourself are saying that small falls are highly unlikely. Think "rout". House prices can only go one way -- down, and fast. And for a long time. Because there's nothing that can prevent them from doing otherwise, save a collective brain aneurysm among bank CEOs leading to more Hallelujah lending policies like those of the 2003-to-2007 bubble.
Instead of insults and restating your opinions, try putting together a sound argument.
You say that prices increasing are not an example of inflation, but are "CoL" - presumably cost of living. I'm fairly sure that CoL is comprised of the costs of food, clothing, shelter and essential services like say healthcare and education. If those things are increasing in price, that is inflation in action... and it puts upward pressure on wages and salaries.
Until we see headlines that we are in a deflationary economic environment, we can assume it's business as usual - inflation.
However much you don't want to admit it, inflation is supportive of house prices.
Instead of criticising your intelligence I'll critique your argument.
"desperately stupid."
So let me see if I have this right. In your argument you have factored in the governments massaged inflation figures from decades past which have enabled wages to be kept artificially down? Because frankly NZ wages are not experiencing upward pressure/movement even though they clearly should be, and show no correlation to your argument on house prices. This is illustrated by the simple formula of (average wage to average house price ratio), and the fact that they are severely distorted in recent years, against historical trend lines.
So where will your housing inflation come from exactly? Dont say immigration because that is not the answer. I will concede that there are some very powerful forces at work frantically working together to keep the system from collapse, but the horse has bolted now and it's simply a matter of time..
How the Government defines inflation is another thing entirely - I'm aware that it can be, and is, manipulated. How is that relevant to the fact that there *is* an inflationary economic environment in general?
Sure, wage growth has been curtailed somewhat by the global financial crises, but it certainly has not stopped altogether. Maybe there is more to come of the GFC, maybe there is even generalised global deflation in the future for all of us, but economists seem divided on this, and I sense that more are worried about hyper-inflation than deflation. It seems inflation is most likely here to stay.
Yes, average wage to average house price ratio has blown up. However, if the ratio is fated to return to historical levels, it can do so slowly, simply by having current house prices inflate more slowly than other prices. (ie house prices can rise, but more slowly than historical norms for a period of time.) As another alternative, house prices could simply stay flat for a while. Or house prices could fall by a small amount over time. A house price crash is not necessary for this ratio to correct.
It seems most likely that NZ and world economies will stay fragile for a while, reserve banks will keep interest rates low, wages will rise, if only a little, and immigrants from many parts of the world will continue to want to come and live here.
Of course, it's possible the ratio will correct with sudden and savage price falls for housing, but if you're predicting that, you need to explain why that way, and not by some less dramatic mechanism?
No I was not looking to lay claim to a sudden or dramatic correction. Merely saying that BH is quite likely to not have been far off the mark at all with his 30%, when all is said and done and the "real" bottom has been found. That is likely to be some years away yet, and which time house prices are likely to remain stagnant for a number of years. I fail to see where the wage pressure will come from in NZ? IS there industry starting up I am unaware of, or will the jobs magic themselves up, or perhaps plane loads of cashed up immigrants all highly skilled will decide to move to NZ for the nice weather, space, poor wages, and ridiculously high cost of living....
Remember that there is a war on right now for the skilled labour required to keep economies running. NZ fails to appreciate this fact, or be able to do anything about it, and believes that our image will attract people no matter what, it won’t! We will lose out to those countries who position themselves to attract high quality people through tax systems & infrastructure & benefits which are highly desirable to many mobile skilled employees. So again I fail to see where the “real” house price inflation might come from anytime in the medium term, note I said real, not bubble like the last 7 year mess we just had!!!
OK, some interesting points. You seem to be arguing that the NZ economy is completely stuffed, that it will create, no new jobs, and won't be able to compete internationally for the forseeable future. In fact, many of our skilled workers will leave for greener pastures. And there will be no strong inflationary effects over all of this time. Because of those things house prices will erode away over an extended period of time.
Essentially I think the flaw in that reasoning is in the foundational assumptions:
My belief is that:
1) NZ's economic position is not as bad as all that. Dairy production, tourism, education, a country where extremists are not at war, are all things we can continue to sell to the world.
2) Even if things are tanking for us, we are in a *comparatively* better position than many developed countries.
3) The world's population outnumbers us dramatically (1000:1 or more ?) and our standard of living is better than the vast majority's. If only a tiny fraction of the billions of Chinese, Indians, etc etc who choose to make a life in different location pick NZ, then population growth is assured for us for a long time to come. These new entrants tend to be motivated and hardworking. They drive productivity growth with effort.
4) World governments *must* keep the inflation bandwagon rolling to erode the size of their huge debts. They have little other choices than dramatic falls in living standards, or insolvency. The political pressure to inflate is huge. So we'll see this globally for a long time to come... and NZ will be swept along with this wave.
For those reasons, I believe a long slow decline of NZ house prices is exteremely unlikely.
I guess time will tell.
If you can give me an example of Mr Alexander being further off the mark with his predictions regarding the housing market than Mr Hickey's woefully poor predictions of 30% price falls from peak then I'll take your point.
Bet you can't.
I think you'll consistently find Mr Alexander is closer to correct when it comes to house price movement prediction than Mr Hickey. And by a significant margin. Truly, economics is a dark art, but here Darth Alexander is the master and Darth Hickey the apprentice.
Certainly Mr Alexander is credible enough for the BNZ to keep him employed as their chief economist.
Is there not enough decent supply out there so anything decent retains a high (to income ratio's) value? If so we need more quality houses built at lower values. The land price needs to drop to achieve this and that means releasing land for residential development. Done right and leaving green belts it would work.
"The land price needs to drop to achieve this and that means releasing land for residential development."
No, it means sellers must get a clue and finally discover that they are asking way too much for their silly patch of dirt. It's not worth it. And everyone now knows it. When you expect to be paid much more than would-be buyers can afford to pay your choices are very simple: drop your price or refuse to sell. Fine unless you HAVE to sell because you paid to much for the silly patch of dirt and the bank is hounding you for their money.
There's no need to cover any more land with your cheap and crappy slums.
Bernard you forgot to post DBH data this month, so here it is:
http://www.dbh.govt.nz/market-rent-analysis
In summary “ Market rents are growing across most regions and dwelling types”…” the growth in rents continues, stronger in Auckland than for New Zealand”
Be aware, this is very conservative way of calculating data, as it is calculated by adding up the weekly rents for all bonds and dividing this by the total number of bonds, and does not take in account increase of existing rents…
Roeloef - even the shitters are selling. Went to a Barfoot auction a couple of weeks back, total pile of crap dilapidated dump, deceased estate - even had skeleton of a dead cat on the floor but had huge interest and many people bidding - sold $590,000! Many young hopeful couples left scratching their heads after that auction. Need at least $200k spend to make it liveable but I guess it's central Auckland and the demand was there.
From watching the central Auckland market up to about 6 or 7kms from CBD sales are strong - most selling now are achieving well above the prices that were paid in 2007/2008 in fact suburbs like Sandringham, Mt Eden, Grey Lynn are very strong with most open homes I have attended packed with people and surprisingly high auction results.
Nothing stacks up as a rental investment but they are selling regardless to owner occupiers and there are plenty of them keen.
Cameron Bagrie is the pick of the economists, he openly states that the day his Bank tells him what to say is the day he leaves. So no gilding the lilly from Bagrie, and he is a bit more learned than most bloggers who bang on about something without much in the way of credentials, rather like the biggest loudmouth at the bar who has lots of opinions how to coach the All Blacks, even though probably a bit short on actual experience of coaching at international level. If you read what Bagrie said, he has a pretty good grip on where we are at and heading- it's not all good but it's not all bad.
Then he's not as well informed as I thought!
I've posted this before, but........ note that even if we had twice the oil we currently think we have (4 trillion barrels rather than 2) the peak would only go out to 2030.
If it's 2, we're there now.
Take a look around tomorrow - get back to me if you spot any activity - economic or no - which is being done without energy. (note: even massages don't happen without cornflakes for brekky, which need tractors....)
At peak, you can't do any more, unless you get more efficient - a law of diminishing returns.
Beyond that, economic activity declines. It won't be smooth (see Orlov's latest thoughts on that) but it will be down.
I suspect he knows that. It may be a matter of not frightening the horses, if your income is relies on there being a stable
We need to be aware of peak oil but we don't need to be scared of it. We will transition toward greater use of public transport, build more fuel efficient vehicles, better solar cells, higher capacity batteries, safer nuclear power plants, and, most importantly, figure out a sustainable and efficient way to create biodiesel.
Industrial Production of Biodiesel Feasible Within 15 Years, Researchers Predict
http://www.sciencedaily.com/releases/2010/08/100812171943.htm
The next best thing to oil
http://www.newscientist.com/article/dn19308-the-next-best-thing-to-oil…
The earth is continually bathed in energy, and energy is, to all intents and purposes inexhaustable. We can make the oil we *do* have last while we transition to alternatives, we don't need to collapse to a low-energy economy. We're not going back to the stone age, unless perhaps we extinguish ourselves with a massive nuclear conflict or some sort weaponised virus.
Read up on Energy Returns on Energy Invested here
http://www.tlpr.com/Documents/strategyinsights/tp0510_TPSI_report_005_L…
This explains in clear terms why alternative fuels you have suggested will not replace the efficiencies of fossil fuels.
I don't think it does. That document is simply a rehash of Chris Martenson's thinking from
http://www.chrismartenson.com/crashcourse
Everyone should check out the Crash Course - or the document you supplied.
It's nice to see Chris's theories gaining some traction, but evryone should also be aware that alarmists draw too long a bow from his position and this sort of analysis.
The graph towards the end of your document comparing efficiencies of various energy generation methods shows that EROI for biodesel is currently very poor, based on CURRENT methods of generating biodesel (using highly energy inefficent intensive agriculture.)
The links I supplied explain new possibilities for generating biodesel which, if brought to fruition, will move its relative efficieny to a much more attractive position on the EROI curve.
A number of the other technologies on that curve will improve their positions too.
I never said biodesel would completely replace the efficiencies of fossil fules, I said that a variety of improvements would mitigate the effects of peak oil, and that sustainable biodesel would be one of the most important ones. I make this judgement because if we CAN get economically biodesel production underway, we can fairly easily, over time, retool a lot of our infrastructure to run on biodiesel rather than petrol, without dramatic changes to our supply chains, manufacturing processes, vehicle technologies etc.
Yes we have a problem to solve with respect to our reliance on fossil fuels, but it is gracefully solveable. The sky is not falling.
http://www.empowereducation.com/Olly-column-Sep2010.bz
A year ago empty headed analysts and sundry 'property gurus' were predicting massive falls in prices, catastrophic losses for investors and general mayhem all round.
They continue to be spectacularly wrong as predicted by me 18 months ago when I said that the market would stay more or less flat and would remain so for a year or two longer yet.
ollie 1 whingers 0
So are you Olly Newland or are you a part time shop assistant?
Make up your mind please.
Never ceases to amaze me how there are still people just can't/won't or don't see that the NZ economy is as far in the toilet as it has ever been, and has a very long way to go. Seems we are in a race to see how far and how fast we can break the floor records.Yet somehow the housing market will continue to climb upwards...They are called fundamentals for a reason. No matter how much the vested interests are talking it up, its going down. Quality in good areas will be fine, otherwise it's going to be very stagnant at best, and the next step in the cycle is falling.Those who think NZ can compete with the likes of Singapore to attract quality immigrants, are out of their minds. NZ has very little to offer these days. That is why after returning home from 9 years abroad, I left again. I love NZ, but the country is in serious trouble!
Bagie did say that as households concentrate on getting debt under control there will be a tension between growth and deleverage, and retailing in NZ will be particularly difficult over the next 2 years.
But the emphasis on retailing was part of the old norm of spending/consumerism, the new norm is an emphasis on yield and control of costs
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