Well, 2019 is gone. But it went out with a big bang as far as the housing market is concerned.
Real Estate Institute of New Zealand (REINZ) figures out on Thursday showed that around the country house sales in December were up 12.3% compared with the same month a year ago. Median prices actually rose 12.3% as well, year-on-year, while the number of days taken to sell decreased by four days to 31 days - the lowest also in three years.
The sales figure, at 6285, was the highest for a December month in three years.
In Auckland - which has been the market laggard recently - the temperature was even hotter.
Its sales rose by 31.7% compared with December 2018.
The number of sales in Auckland, at 1860, was the highest in the City of Sails for a December month since 2015.
This activity occurred against a backdrop of very few listings nationally.
REINZ says the total number of properties available for sale nationally decreased by -24.5% in December to 18,230 down from 24,158 in December 2018 – a decrease of 5928 properties compared to 12 months ago and the lowest level of inventory since records began.
Kiwibank senior economist Jeremy Couchman said overall, momentum "has certainly shifted" in the housing market "and it is likely to continue to heat up over 2020".
He said the Reserve Bank's move to cut the Official Cash Rate from 1.75% to 1% during 2019, leading to record low mortgage rates, "looks to have stoked demand".
"In addition, NZ continues to face housing supply and demand imbalances – exacerbated by population growth remaining well above average."
ASB senior economist Mike Jones said the December REINZ data "joined the collection of other economic data" suggesting the NZ economy had a strong end to 2019.
"Indeed, we suspect at least part of the bounce witnessed in the likes of business confidence and retail spending late in the year can be traced to the clear brightening in the housing market.
"Low interest rates work, eventually. House price inflation is accelerating faster than RBNZ expectations thus today’s figures add to the risk the Bank won’t have to cut interest rates again."
The detail:
REINZ says median house prices across New Zealand increased by 12.3% in December to $629,000 up from $560,000 in December 2018 and just $1,000 off November's record of $630,000. Additionally, five regions saw new record median prices.
Median house prices for New Zealand excluding Auckland increased by 11.5% to a record equal of $535,000, up from $480,000 in December last year, but the same price as November 2019.
In Auckland, median house prices increased by 3.5% to $890,000 – up from $860,000 at the same time last year - and was the highest price for the region in 33 months. These results are in line with the REINZ House Price Index (HPI) which saw property values in Auckland increase 4.0% annually to a new record high of 2,931.
Record median prices were recorded in:
- Northland with a 12.3% increase to $539,000 up from $480,000 at the same time last year
- Manawatu/Wanganui with a 27.8% increase to $402,500 up from $315,000 at the same time last year
- Taranaki with a 14.1% increase to $430,000 up from $377,000 at the same time last year
- Tasman with a 12.5% increase to $655,000 up from $582,000 at the same time last year
- Southland with a 32.0% increase to $330,000 up from $250,000 at the same time last year.
The only region to experience an annual decrease in median price was the West Coast with a fall of -13.6% from $220,000 in December 2018 to $190,000 in December 2019 – the lowest price in three months.
The number of homes sold for less than $500,000 across New Zealand fell from 41.6% of the market (2,327 properties) in December 2018 to 31.9% of the market (2,008 properties) in December 2019.
The number of properties sold in the $500,000 to $750,000 bracket increased from 29.9% in December 2018 (1,672 properties) to 33.1% in December 2019 (2,078 properties).
At the top end of the market, the percentage of properties sold for $1 million or more increased from 13.0% (726 houses) in December 2018 to 16.5% (1,039 houses) in December 2019.
REINZ House Price Index (HPI) reaches new record high for NZ and 10 regions
The REINZ House Price Index for New Zealand, which measures the changing value of property in the market, increased 6.6% year-on-year to 2,915 – a new record high.
The HPI for New Zealand excluding Auckland increased 8.9% from December 2018 to 2,902 another new record high.
The Auckland HPI increased by 4.0% year-on-year to 2,931 a new record high and the second consecutive positive annual increase in 15 months.
In November, Southland again had the highest annual growth rate with a 20.6% increase to 3,292 a new record high. In second place was Manawatu/Wanganui with an annual growth of 19.2% to a new record high of 3,408 and again in third place was Gisborne/Hawke’s Bay with a 13.8% annual increase to a new record high of 3,022 – only the second time Gisborne/Hawke’s Bay has gone over the 3,000 mark.
In December, 10 out of 12 regions reached record high HPI levels; the only exceptions were Taranaki (+10.4%) and Canterbury (+2.9%) showing the overall strength of the property market.
Days to Sell decrease
In December the median number of days to sell a property nationally decreased by four days from 35 to 31 when compared to December 2018 – the lowest days to sell in three years. This figure was two days fewer than November 2019’s figure of 33 days.
For New Zealand excluding Auckland, the median days to sell decreased by four days from 34 to 30 – the lowest days to sell in three years. Auckland saw the median number of days to sell a property fall from 39 to 34 year-on-year – the lowest days to sell in two years.
Southland again had the lowest days to sell of all the regions at 21 days, down two days from the same time last year, but three days higher than November 2019’s figure, which was the lowest median days to sell since August 2007.
December saw six regions with the median number of days to sell below the 28 mark, the highest number of regions with property selling that quickly since April 2017.
Northland had the highest days to sell at 45 days, down three days on December 2018, and down two days on November 2019’s figure of 47. The West Coast had the second highest median days to sell across the country at 41 days – down 35 days on the same time last year, and down 31 days on November 2019’s figure of 72.
'A solid end to the decade'
REINZ chief executive Bindi Norwell said the property market "had a solid end to the decade".
"Looking around the country, 12 out of 16 regions saw annual increases in the number of properties sold – the highest number of annual increases in three months – with particularly strong increases in Auckland, the Bay of Plenty, Southland, Northland and Canterbury," she said.
"Sales in Auckland were the highest for the month of December in four years, with particularly strong uplifts in sales volumes in Papakura District (+65.0%), North Shore City (+63.6%) and Waitakere City (+58.3%)."
Norwell said December saw 15 out of 16 regions with annual increases in the median house price and five regions with record median prices, "reflecting the continued uplift in residential property prices that we’ve seen for a number of months now".
Around the regions
"Southland, Manawatu/Wanganui and Gisborne again saw really strong uplifts in price, with demand for properties in these regions outstripping supply and adding to the premium people are prepared to pay. There’s also likely to be an element of increasing vendor expectations adding to the price increases as month after month sellers in the region are reading stories of higher property prices.
"Wellington was also a standout region in December, with four areas seeing new record median prices - Kapiti Coast District ($675,000), Masterton District ($477,000), Porirua City ($775,800) and South Wairarapa District ($625,000) showing the continued strength of the capital city’s property market.
“Looking at the Auckland region, Manukau City hit a new record median high of $900,000 in December, with Rodney District not far behind with a median of $890,000. North Shore City also saw a 7.1% annual uplift in median price, reaching $1,050,000 – the first time the median has been over the million-dollar mark in four months,” Norwell said.
Volumes sold - REINZ
Select chart tabs
Median price - REINZ
Select chart tabs
Days to sell - REINZ
Select chart tabs
129 Comments
How I owned three homes by 25 - without using mum and dad
http://nzh.tw/12300206
The article contains the deposits + purchase prices. At face value he has taken out $973,000 worth of mortgages on $1.24 million of properties, so 78% before mortgage payments?
Let's be generous, $973k of mortgages amortized at 25 years @ 3.5%. After 3 years he's paid off $77k of principal so a 72% LVR.
Off course, none of them need to study further to become what they aspire to be, exploit their genetic potential. To him three homes by 25 is lucky without using mum & dad, and to some others also lucky after several failed attempt at 25, just to get into Med school or other course, with student debt pile up, without using mum & dad. But hey, even richer than him? are plenty of those drop out from Uni eg. Sam Morgan or Bill Gates, some of their productivity 'tools/products', we use it for sure (as you type the comment here).. none of us using his three houses, apart from just a feel good 'story' to inspire..RE activities. Life is more than just that, even more important is your Health. Trust me, even more than him in term of assets came to us regularly.. hopeless on their advanced stadium IV cancer. From long study, we have a privilege to break the news how much time they're going to have.. unlike RE speculative market, our prediction is fairly accurate.
Funny how a couple of years ago the sentiment in rural NZ was that "who cares, the housing crisis is an Auckland problem". I bet those people care now...
It must be a lot of fun to see a whole generation get left behind because of greed and lack of balls from government and RBNZ. I'm guessing it must be a lot of fun because if not, then why aren't politicians doing anything?
It's everywhere now CJ, rural, provincial and? most of those we know which earn a handsome pay packet even (Not all of them greed, most of them are helping others.. even from their own pocket) - lack of balls by those two is for the same on maintaining the current/phantom 'market equilibrium', without realising what happened under the balancing act. First thing came to my mind is that.. Boeing & FAA for the 737max certification.. went along the chain of complacency, conformity, self assured/certified, follow others/flock mentality etc.
Funny that how those so call "successful" people are using not having coffees as an advice for FHB to get on property ladder. Such a lie! If you save one cup of coffee per day, it's a $1825 a year. A small annual housing price increase would easily beat that number! So what you are saving is not even catching up with the speed of housing price increase. There are only two scenarios you can get on the property ladder. One is earning more. Another one is housing price coming down. End of discussion.
If a $300k property increases in value by 3% p.a. then the first $9k you save in a year is keeping you in line with house price inflation i.e. going nowhere to save for a house. In dollar terms, this is the first 20% of the median salary ($56k Gross) after tax. Not many houses can be had for $300k these days.
This article suggests the Median House Price for the country increased $69k YoY. That's over 1.5 median salaries after tax.
We started to hear more about the word 'ladder' from mid 2000 onward, odd eh? in 70s 80s 90s we heard for sure a property moguls made their fortune, but now days? even money awareness education to our kids have to be like that.. in our time 'savings' .. today? 'borrowings' get a loan from your parents, training for later to get a loan from Banks, get into 'the ladder' otherwise the snake will catch you. We created protocols to prevent disease epidemic outbreak, but not the housing epidemic. Vested interest in leadership? could be, may be just leave it to 'self regulated/self control/market stabilisation'... very unlikely(when it's being manipulated), most likely the whole Nations that has to carry the pain in future.
With almost free money from the banks what else would you expect?
The is a false market where interest rates are the lowest in 5000 years.
The same "teaser loan "mentality in the USA brought on the GFC
It cannot last. There will be a day reckoning sooner or later.
haw haw ..... the bank always wins....more hard earned moolah from the plebs out there, working for low wages masterminded by my ilk don't you know, to pay off over priced houses....anyway haven't got time to dilly dally around here ...off to the Cayman Islands, as one has an appointment to rearrange one's "shell" companies ....toodle pip for now
How I owned three homes by 25 - without using mum and dad
http://nzh.tw/12300206
Saved $70k in 2.5 years while paying $120 per week rent, working part time washing dishes and then part time in a retail shop. Either he was well paid or didn't eat? Current minimum wage ($17.70 p/h) @ 40 hours is $700 a week before tax, yet some how he managed to save $500+ per week working part time? Good on him!
It gets even better after that.
"By January last year, he and his new partner had together saved a $160,000 deposit"
Mind you, they put all their previous savings into their first home mid-2017. So he and his partner managed to save $160,000 in about 18 months. Him working in a health supplements shop, part-time then full-time.
So either he makes $100k per year as a part-fulltime shop assistant, or his partner makes $150k or so. What's the median wage in Christchurch?
CJ - Can't you just be happy for this guy, he is young and commited to a better future for himself and family. The Tall Poppy Sydrome is a sad part of our makeup or as Tony Alexander would say those who are jealous of others success then wait and hope they get their comeuppence !!!
I don't care about the guy, I care about these "news" that fail to present crucial information. The whole point of the story is that you can get rich no matter your background.... but leaves out crucial information, like where did that $160k come from.
Everyone could buy a house in Christchurch if they could save $100k+ a year.
Tall poppy syndrome my ass... "he is young and commited to a better future for himself and family" - I'm young(ish) and committed too, I certainly make a lot more than the average dishwasher or protein powder salesman, yet I somehow can't save $9000 per month. Gotta be because I'm bitter and jealous, right?
Yes. It's telling that 'young person buys house without parental support' is a newsworthy item.
It's also telling that there is *always* something missing in these stories. And it is doing a social disservice to propagate them without scrutiny, because it encourages the political divide between landowners (who insist they are deserving) and the young (who see property ownership as an impossibility, and for most of whom it actually *is* in the current situation).
Let's all follow this great example! This country only needs dishwashers and landlords, right?
Also, they don't say how much he owes to the bank. I too could have a $1.2 million portfolio. Just need a small loan of a million dollars...
This story just shows how bizarre the system is. It encourages people to borrow millions while on minimum wage - a real "capital gains or BUST" mentality. What about the risk? What about productivity? Nope, just expect capital gains to continue forever and you will be RICH too!
I've made a groundbreaking discovery. Previously thought impossible, there is actually a way to predict the future. Simply read what the DGM crew on interest.co.nz are commenting. The opposite will happen. Particular weight can be given to comments with a high number of upvotes. With great power comes great responsibility - please use it wisely.
haw haw Yvil my good man, keep flying the flag for the property bulls and that Auckland property "doubles every 7 -10 years" mantra ol' boy ...you are doing a damn fine job !
As you have so eloquently eluded to many times, for all potential buyers, get out there, buy and mortgage yourself to the hilt, as the more mortgage interest payments coming in, the more profits for moi and my ilk !
We here at the top 0.1% NEVER LOSE ....we can borrow at -0.05% so the reserve bank PAYS US to lend out at 4% ...what a winning combination !!!
Let's not let this "transfer of wealth" gravy train slow down in any way ! ....in fact keep up the encouragement to all and sundry to BUY BUY BUY .....bye bye.
Following the hyperinflation and economic chaos of 70s and 80s, central banks have done everything they can to prevent unplanned inflation. It seems that their success is only superficial though. Inflation has now migrated from everyday goods and wages to assets.
Another contributor to crazy asset prices are off course lack of real investment opportunity on one hand and the rise of mega saving/investing entities (who need to invest their money in something) on the other hand. In what other world, something like a crypto currency would have had any value? Massive piles of money, with nowhere to go to will inflate all the existing assets.
That seems logical to me too. No sign of it happening though, the powers-that-be are very ingenious at keeping everything afloat.
There's also the problem: how to respond? If you genuinely believe in this scenario, surely you want your money in tangible assets rather than saving.
Yet it's the drive to put money in all assets that's causing this problem in the first place.
Correct easy and cheap money money piling up as a result 2020 will again artfically push up assets but whenever it falls.....will be a disastor as many valuation be it stock or housing market are unsustainable.
Still 1% to go before zero percent (Easily Reserve bank can play around for a year or two with 1% OCR) and than not to forget the back up comfort that they have - negative interest as reserve banks world over will have no choice but to enter into negative interest to sustain the monster created by them.
Interesting looking at the 5-year HPI data - Auckland has dropped down to nearly the lowest compound growth rate of 6.3% pa (only beating New Plymouth at 5.8% and Chch at 1.4%). I wonder if the regional 'catch up' will run out of steam soon. Certainly looking like Auckland is dragging itself out of the last few years stagnation.
I continue to hope that house prices will stabilise or gently fall to make the country a little more competitive, but no signs of that happening at the moment.
Well some signs -Auckland HPI up 6.3% over 5 years while wages up around 14% over the same period, so we have edged more toward affordability. The 6% increase over the five years roughly equates with inflation over that period, so market is holding its own but not growing faster.
CJ; hang in their with your negative waves.
Most people such as myself and others like TTP and Yvil always accepted - and posted - that coming off the high in 2017 that there would be not unexpectedly some correction to the Auckland market as occurred following other previous periods of rapid house price inflation.
However, what we advocated was that due to drivers (such as high immigration, housing shortages, low and falling interest rates) there would not be a bubble burst and nor would be a slow bubble leak (in one case a claim of 8 years) when it became apparent that a bubble burst was unlikely.
What I have advocated for the past nine months (and a view as early as September that there were signs of a firming of the Auckland market) is that FHB should not be anticipating a market to bottom and should be acting if they were able. The response to this was unsubstantiated bollocking and claims from the likes such as yourself of an impending bubble burst.
Get over it - there was a peak in 2017 the market and, "the spruikers" such as you call us, have been accurate. Unfortunately, the reality is that affordability for Auckland FHB is going to become more difficult but all you can add is "ha, ha, ha, 2017, 2017"; you seem to not be able to comprehend that March 2017 is totally irrelevant as to the current and future affordability issues facing FHB.
I think most FHB dont care too much about price and also are not "waiting until the market bottom" as it might take a few years until the market bottom, but they are concerned about where this house market is heading, it is pretty risky for FHB to get in market now if they dont be careful. I've talked to a lot of people who are planning to and aiming to buy their first house. None of them mentioned about waiting until the market bottom. But they are concerning that it's risky to get into market right now.
Thank you! Yes I bought very well (distressed accidental landlord), Corelogic now has our property at 40% - 50% above purchase price a little over 2 years ago. But I was extremely lucky for a number of reasons/circumstances.
As an owner occupier, the equity gain is no real use except via mortgage top up but it does illustrate opportunity cost. If I'd waited then a) i'd have spent 10's of thousands on rent and b) had to borrow an extra 30% - 40%. My mortgage/rates/insurance combined is 10 - 15% cheaper than market rent.
Even if you do work out being right and the market never crashes, that doesn't mean there was no risk. If I put all my money on black at the Casino and it comes up black, that doesn't mean it was risk free.
I agree with you that it seems unlikely the housing market in Auckland will crash considering the high demand. But it definitely is possible. As for the rest of the country, I can't really understand how land prices can stay so high when there really shouldn't be a shortage of land.
Thanks Yvil :)
But noting, I was 'lucky' in the sense of my high income allowing me to service a pretty large mortgage. Plenty of people are doing essential jobs on half of my income, and it's pretty sad that they are really going to struggle to buy in Auckland despite working hard in important careers.
I would also say that I still think a significant correction is quite possible, at least 50% chance. It's just, as you say, you can't live your life in fear, but it's understandable to be fearful if you've got a 10% deposit and are mortgaged to the hilt, with very little breathing space.
Having a good deposit mitigates the risk, as does the fact that one is buying as an owner occupier for the long term. Because in my view, even if there is a 15% correction, property will inflate again in the future, albeit at a slower rate.
Also their are few, who with this price rise again have given hope and though concerned and disapointed are not bother as now it is beyond for many FHB is Auckland unless ready to pay a premium for s..ithole.
So if the house prise jump again for many will be of no interest as will be beyond so no point in trying unless looking to invest elsewhere but in Auckland.
Look at you all cock-a-hoot.
Well the cycle hasnt come to an end yet, and this is basically only due to the OCR rate going so low and still based on low sales numbers by historical standards.
Warning!!! There is a lot of corporate debt coming due this year, the repo markets are on fed life support. A big global shock is coming and if it doesnt play out this year I would be surprised.
Even without the global shock i'm expecting a big slowdown in the NZ economy this year, add in a global shock and we will be on the ropes.
The Auckland housing market may be looking like its about to run hot again but I will put my neck out and say by the end of the year it will be in negative territory.
I'll admit that I expected bigger falls and was wrong about that.
The situation still seems fundamentally askew to me, and I still think a serious decline is possible. But as you say -- timing the market is a 'looser's game'.
I'm also not egotistical enough to imagine that any FHBs out there are hanging on my word before making a transaction.
I agree, and am man enough to admit it.
I predicted a fall of 5-10% from peak, then flatness, in Auckland. They fell about 4%, so I wasn't too far off.
But I didn't expect things to lift off again as much as they seem to be.
I think the big, incremental OCR cuts have had more impact in stimulating the market than I expected.
Like you, I also think a significant decline is foreseeable, and definitely things seem out of whack. But again, as I said above, the consequences are mitigated if you have a good deposit and are in it for the long haul as an owner occupier. Also if you get a good deal (I reckon I bought the place 5-10% below its true market value) then any price declines moving forward are mitigated.
If you can get a good deposit together, and pay a fair (rather than over-inflated) price, then I think it's a good time for FHBs to buy.
Having said that, I'm not convinced its a good time to buy investment property in Auckland, as a general rule of thumb.
We all know that market shot up /changed sinc October 2019.
Want to know about 2020.
Hard to believe experts predection/opinion as in 2019 stock market was suppose to underperform and it turned out to be the best year of the decade and housing market was uppose to be flat, if not falling but it jumped with a bang.
Now 2020 ?
Should be positive but one never knows so wait and watch.
Printer8 For clarity, on 3 October 2019 I wrote
by Cowpat | 3rd Oct 19, 1:26pm
13 up
"What you should do Printer8 is come to Auckland and purchase a home, or a second or third or fourth investment property. You should walk the walk rather than quack constantly. "
Apparently it was sound advice. It is unclear whether you took heed of my "bollocking." .
No cowpat - you have a very poor memory.
On the basis of a low auction rate you were clearly trying to bollocks me.
by Cowpat | 8th Oct 19, 10:31am
Barfoot auction sales slump 34 percent week on week.
by printer8 | 1st Oct 19, 12:15pm
"Another swallow - while this and other data is not on their own indicators in a upswing in the Auckland market they are at least indicating a growing firmness. "
Your earlier comment re me coming to Auckland just sounded like a frustration on your part due to your inability to read the market signals correctly.
Accept it and smile mate.
Very low 12 months in sales, with a surge going into Xmas when its sunny, house look as good as they ever will. Pretty normal, sales are historically always strong. Cannot hurt that money cheaper than ever as well.
Lots of talk globally starting to position negative rates as being the next step to keep us all in debt. One thing is for sure, it is clearly really really really important to those setting global finance policy that we all stay up to our eyeballs in debt, and protect asset prices at all costs. This in turn fuels noise from those with large debt leverage/assets exposures. #vestedinterests.
My 5. If you need a house to live in and you plan to live there for some time, buy it. If your on the low equity, debt leverage up for the win bandwagon, be aware that game has had a epic run, and is now surviving on abnormal metrics that aren't guaranteed for ever. Can the global finance music box keep playing ....if your happy with risk, that then go for it.
Still on the fence. See what Brexit brings. Hate think all the talk of it being the end of Europe was just noise.
Great comment. This is what an actual investor thinks like - analyses the causes, the possible outcomes and the RISKS, and admits uncertainty.
Gamblers on the other hand are very confident and only ever talk about the possible upsides.
I'm in the situation where I could buy something decent (with a 20% deposit) if I handed over all my savings to the bank... but renting at the moment is cheap compared to house prices in my area. Knowing that I can save more than the average Aucklander, I'm confident that my savings will outpace the price increases, plus I think there will be a significant correction in 2020 or 2021. So it makes more sense for me to wait and see.
CJ - I don't know where you live I'm guessing Auckland, it is a bold call I give you that - " I'm confident that my savings will outpace the price increases, plus I think there will be a significant correction in 2020 or 2021. So it makes more sense for me to wait and see ". Happy to check in at years end to see who is correct but Auckland will be knocking on double digit house price inflation by the end of the year.
Not wanting to argue or endlessly debate this, my comment comes from being in the Auckland market since 1983, there are trends/cycles that are reliable. The 5-year brightline test is the topping on the cake holding alot of property off the market. Happy investing and/or saving.
House price inflation in Auckland will in dollar terms exceed the average salary for a year? Suppose if you take First Home Buyers out of the equation then yes, house prices could even double over the next 12 months as existing owner occupiers swap houses.
E.g. you have 2 people, person A owns a house worth $1 mill and person B $800k. They decide to sell their houses privately to each other, what difference does it make to them if person A sells for $2 mill and person B for $1.8 mill? The transaction is still $200k being paid to Person A.
'My 5. If you need a house to live in and you plan to live there for some time, buy it. If your on the low equity, debt leverage up for the win bandwagon, be aware that game has had a epic run, and is now surviving on abnormal metrics that aren't guaranteed for ever.'
Excellent comment.
Also, you are on the money in terms of the huge vested interests to keep the bubble going. Rest assured that everything will be done to keep the bubble going.
Link to full report here (ICYMI) https://www.reinz.co.nz/Media/Default/Statistic%20Documents/2019/Reside…
The sales figures for Auckland are astonishing relative to 12m trend and even comparing to Sept-Nov which 3m period was indeed showing improved sale but nothing like on this scale.
Comparison to Barfoots sales figures shows this is difficult to analyse because Barfoots show a 56% jump in NSC for instance in Dec and REINZ shows 63%.
Yet, if you look at 12m series from Barfoots, it shows (for Rodney) that sales were 17% lower in Aug, Sept, Oct than same month in 2018, for the 12m comparison. Then in November it was 16% lower and in December 11.7% lower.
Barfoots 12m series to end of Dec 2016 for Rodney showed 885 sales
In Dec 18 it was 860
In Dec 17 it was 632
In Dec 19 it was 759
Rodney stock risen v fast in last 3 years.
Yet sales are stilling last 12m, 14% lower than in 12m to Dec 2016.
Yvil is certainly right that median prices are rising again and are not likely to fall in this type of market.
This is undoubtedly due to low listings and little quality stuff about to buy, unless it's new stock.
But one month's highly unusual figures are not enough to be convincing.
price bracket showing only increases in sales in last 3m compared to 2018 in Auckland is that between 750 - 900k
Which of course is marginal area for FHB that has been boosted by interest rate cuts.
Can this continue? We will see.
REINZ showing highly aberrant results for Hibiscus Coat compared to Auckland, with sales down about 16% compared to 31% up in Auckland.
This is v strange and I suspect that there will be revisions
So:
FBB removed foreign buyers at the top end
5 year brighline extension removed the speculators
LVR, ring-fencing of losses, healthier rental home rules stopped the investors
FHB are priced out by sky high needed deposits
So... who is buying all these homes at ever higher prices?
https://www.interest.co.nz/property/103110/existing-home-home-owners-st…
FHBs mortgage lending up 21.2% November 2018 -> 2019, to $1.23 billion
Other owner occupiers up 1.9% to $4.12 billion
Investors up 24.9% to $1.36 billion
so, investors haven't been stopped and FHBs are still holding their own. Both helped out by this
https://www.interest.co.nz/banking/103137/we-look-who-cut-what-home-loa…
Good on the young felah!
To be fair what he has done is not that overwhelming at all.
The ones that are truly getting ahead on the property investing ladder do not want their stories published to all and sundry.
Good luck to him and great to see him doing something to improve his life, I would also suggest that the young fellah isn’t the best investor that I know by a long way, as you can get ahead successfully without needing to save a deposit at all, and build far better equity than what it looks like he has.
He is also very wrong about buying positively geared property as well.
What is wrong with publishing positive stories Rather than the stories about less than average tenants or landlords?
Yvil, this is an excellent question.
The 400 odd extra sales this Dec compared to Dec 2018, however, appear to be largely new builds in South and North Auckland, where sales have increased most.
These are priced below $850k largely, esp in S Auckland.
Note that Auckland sales up 31.7% in Dec. Quite remarkable that Wellington only up 1%
NSC up over 60% of course but it is a small sample compared to whole of Auckland.
I prefer 3 month figures but even those show. Auckland up 13.3% on 2018.
Also, Dec 2018 figures were a little low, flattering the comparison
"So... who is buying all these homes at ever higher prices?"
Some possible buyers of Auckland residential real estate:
1) foreign buyers not subject to foreign buyers ban - non resident New Zealanders (expats), Australians, Singaporeans
2) upgraders, downsizers who have a lot of equity in their home and need smaller loans than first home buyers
3) first home buyers with the help of the bank of mum and dad, or other family members
4) out of towners with equity in their own home, buying property in Auckland (I know of 2. One bought to be able to have a place to stay when they visited their grand child, another bought as they traveled to Auckland for business frequently)
5) operating businesses with excess cashflow looking for investment alternatives to investing cash
6) small time property developers - have heard of some buyers, buying real estate with large land size, and removing the existing dwelling to build townhouses.
7) newbie property investors who have large amounts of untapped equity in their existing home (property mentors have been targeting these people as potential clients). They may sufficient equity in their existing house (even mortgage free) and only need to borrow very little to buy a lower priced property in Auckland, and the property is cashflow positive.
8) co-owner buyers - have heard of situations where 2 or more people (say family members or friends, or even some financial JV) may co-invest in an investment property
9) immigrants who have since become NZ residents (I.e previously didn't meet foreign buyer ban criteria who are now eligible due to the passage of time, and paperwork)
I'm sure there are many more buyers with different circumstances.
Camel's back - "you can no longer make money from money"
Making money from money has always seemed a bit dubious to me. When interest rates were 15% you could get 150k from 1M just having it sit in the bank and it would compound too. Mind you inflation was high. It seems that TD interest rates have always simply matched inflation.
Perhaps what we have now is a better, more equitable, situation? Now you have to think about how to make extra money. Money in the bank shouldn't passively earn you a handsome living.
Hi Zac, I was thinking more in the context of banks and pension funds, bond holders and suchlike. But I agree money should be used for more research and development, improving businesses and funding great ideas. Or... like a good Kiwi... buy another investment property.
Above you write, "He is also very wrong about buying positively geared property as well" Is that because he seems to be against the idea of buying older positively geared properties?
He says, "Whereas the new ones have a 10 year guarantee, are brand new and come furnished.". Is that true? In Christchurch you can buy a new property that is furnished and is cash flow positive?
Personally we have never bought a new home as a rental property.
Bought one at mortgagee 3 years old and the no.s were right, however I don’t think the no.s work for brand new homes generally although the property spruikers will say otherwise.
Most new homes in ChCh are not furnished at all, however I would say that if he has paid $410k for a one bedroom then he has possibly overpaid for it.
They are probably furnishing them to enable them to sell with the look good factor.
There are box’s being built at the moment in ChCh with no car parks and often no off street parking, and buyers are going to get totally burnt and doubt there will be a lot of capital gain in the future.
They doze old houses and chuck many terraced 2 storied box’s on them and call them affordable housing.
As for the ones that are new and cashflow positive, yes there will be some if you can keep them occupied.
We have just advertised 3of our 4 bedroom homes for rent and we have had more enquiring on them than we ever had.
Rented 2 and had multiple applications and the 3rd had open the other night and it was like a railway station.
Demand and returns are great in ChCh at the moment and we have raised the rents as well this year for the new tenants.
"Z, Caltex and BP are celebrating today as fuel hits record prices, up 12% YoY".
"NZ Doctor's Association reports the average cost of doctors visits increased by 12% YoY. NZDA spokeswoman Bondi Nirwell said health care in New Zealand 'showed exceptional demand and growth towards the end of the decade.'"
Sharemarket, or pretty much any other investment vehicle, including antiques, vintage cars, art, watches etc... Thought they tend not to get anywhere near the same level of coverage. Probably because the antiques industry isn't a large source of revenue for the media.
448 extra sales in Auckland in December compared to Dec 2018. Up 31.7%
Yes, but in which price brackets?
A little flavour: in Auckland City sales between 2-5m went up from 44 to 68 or 54%
In NSC they rose from 19 to 42, or 121%
A great number went for above CV, as readers have been reporting
When they go for 25% over a CV of $1.2m, then people seem a little desperate.
Who is desperate to find safe haven for their cash all of a sudden?
Sales in Auckland were not up 31.7% in October and November and December has a lot fewer buying days.
Wellington up 1%
Sales 600-900k only up 8% in Auckland.
These expensive properties are not going to people needing finance.
All the property posts and back and forth...yawn. End of the day being in debt is a form of financial obligation, aka enslavement. The winners...the banks (and their shareholders). The Property bulls are just the fall guys for the banks, a proxy if you will. The proxy pass the risk to tenants and employers via salary inflation. Will I expect to wipe my butt on $100 doller notes soon. Its been a great run for sure but when the emperor is found naked, will the banks still be your friend? Print away.
All the fury on this forum is about the in debt proxys vs. the wanting to avoid debt. Bring on the reset. Thankfully its time to vote again... vote proxy slave or vote enslavement avoidance.
Averageman, Not all debt is equal, debt for consumables and depreciating items is indeed a bad thing but debt for an appreciating asset is wonderful and the key to riches. It is a very old mindset to think all debt is bad, the sooner you understand that debt for appreciating assets is not just good , it's absolutely wonderful, the sooner you will be on the road to financial freedom
We welcome your comments below. If you are not already registered, please register to comment.
Remember we welcome robust, respectful and insightful debate. We don't welcome abusive or defamatory comments and will de-register those repeatedly making such comments. Our current comment policy is here.