The housing market was heading for a bumper month of sales before the Coronavirus lockdown brought it to a crashing halt.
The latest Real Estate Institute of NZ sales data shows that the national median house price hit a new record of $665,000 in March, up from $640,000 in February and up 13.7% compared to March last year.
Record median prices were set in eight regions: Northland $565,000, up 14.1% compared to March last year, Auckland $950,000 +11.1%, Waikato $600,000 +13.4%, Manawatu/Whanganui $431,250 +28.7%, Taranaki $425,000 +13.3%, Tasman $670,000 +10.7%, Canterbury $490,000 +6.8% and Southland $364,580 +28.2% (see the interactive chart below for the median price trends in all fegions).
The number of sales made in March suggests trading was very strong leading up to the lockdown, with 6866 residential properties sold in March, down just 4.8% compared to March last year, even though events such as open homes, private property viewings and personal meetings came to a halt two-thirds of the way through the month.
In Auckland sales were particularly strong, with 2307 properties sold in March which was up 10.8% compared to March last year.
For the rest of the country excluding Auckland, sales were down 11.1% compared to a year ago (se the interactive chart below for the sales volume trends in all regions).
"Right now, in the Alert Level 4 lockdown period, people are still able to list their property for sale, but inspections can only be carried out online or via means such as virtual reality ," REINZ Chief Executive Bindi Norwell said.
"Going forward, we expect people to take a bit of a wait and see approach when it comes to listing their property for sale.
"But for those who have decided after four weeks of being locked in their bubble that they don't like their house anymore, they will be desperate for the chance to move, so there may be some great opportunities for those wanting to buy and sell in the coming months," she said.
However Norwell also acknowledged that there was a great deal of uncertainty in the market.
"How big the effects of COVID-19 are, is up for debate," she said.
"The impact will depend on a huge number of factors including how long the country is in Alert Level 4 lockdown for, the level of unemployment, consumer and business confidence levels, people's ability to access finance and finance their own mortgages and how long the wider community takes to recover.
"Property is a long term investment and the market will recover, the question is how long it takes to recover," she said.
The comment stream on this story is now closed.
Median price - REINZ
Select chart tabs
Volumes sold - REINZ
Select chart tabs
180 Comments
Here we go- can’t beat Auckland
I can hear John McEnroe for some reason?
Well done Yvil.
Thanks ShoreThing
Yes well done. A good prediction. We've given each other a lot of flack, but I take my hat off to you on this one,
I'm also quite happy you were right. I bought in November. As I've said before, I got the place for about 5-7% less than what I think is fair market value, and prices have risen since then, so even if prices fall 10-15% from their March peak hopefully I won't be too badly off.
Thanks Fritz
Take my hat off to you Yvil.
You're a very skilled analyst - a Mastermind.
TTP
Thanks a lot TTP
Any prediction you missed by any chance?
What your next call Yvil, where to from here?
What a bunch of looneys!
A comment that ridicules people for congratulating someone, for making a correct prediction, gets double digit thumbs up. It's sad that many commenters have to stoop that low.
yep.this article may be of interest to some but otherwise the figures are totally irrelevant at this point of the game
I really don't know Kezza, I think Greg Niness is right when he said "it would be foolish making precise predictions in such uncertain times"
Fair call, it is impossible to call if we don't know if well be virus free or not.
Yes, well done to Yvil on extrapolating a decade of March record prices forward into 2020.
Yip, we know what's coming next... The red team, causing more problem, too slow to respond, too hard on lock down.. we need an injection of assurances for the F.I.RE productivity economy - Let's bring back on the blue team, they'll inject more into this AI economic, the main source of direct funds from mainland master is open, the blue team is the first one to advise as such... open up the border to receive capital injection, people need to move from there to here again to allow it to happen, our GDP/RE stat number should be maintained to pre-lock down period.
Yes Keen Observer i agree.. keep the borders closed and do not allow the flow of cheap money into our housing or land.
I'm typically team blue but that team is a bit too buddy buddy with China for my liking at present.
The silliness of August’s 50 basis point cut.
Apparently it was to help drive new investment – just where exactly?
It certainly helped drive residential property to all-time highs – and that’s about all.
Same houses – just more expensive – and more debt.
Quite pointless really.
Read the Monetary Policy Statements released with the OCR - it says in plain english that their intent for the OCR cuts is to stimulate house price increases. The RBNZ's sole purpose is to provide stability in the financial system, and as our financial system basically consists of selling ever more expensive houses to each other, this should come as a surprise to no one.
Yep, the August statement starts off delusional:
"In New Zealand, low interest rates and increased government spending will support a pick-up in demand over the coming year. Business investment is expected to rise given low interest rates and some ongoing capacity constraints. Increased construction activity also contributes to the pick-up in demand."
Then lead into why they really are doing it:
"The outlook for household spending was discussed with regard to the assumed dampening impact of soft house price inflation. Some members noted lower mortgage rates could contribute to a stronger pick-up in house price inflation, which could support consumption."
It makes you sick after reading it. It can be paraphrased as such:
If we sell houses at ever increasing prices, this drives consumption and therefore the economy. Screw social or generational issues, productivity or actual economic activity, we just want more expensive houses as our entire economy is predicated on paper wealth through ever lower interest rates.
Exactly - thank you for the excerpt. They really are the most insidious force destroying the social fabric of this country, this is why the RBNZ should be disestablished.
Not just here ShoreThing, it’s all central banks everywhere. They are all in this together. The policies are strictly aimed at destroying the middle class so that wealth can be transferred to the top 1%. We are all losers in this game. Look at the stockmarkets - nothing but bad news and debt, debt, debt yet they are all up. It’s like Hansel and Gretel being lured into the gingerbread house where the wicked witch plans plans to eat them. The FED and central banks are the wicked witch eagerly persuading those with cash and pension funds Etc to come in... look you can’t lose, even with news this bad you can still make money. Then WHACK! down it all goes again. I am personally expecting a massive drop of at least 40% In the stockmarkets anytime from the end of April.... just need to lure a few more $!into the gingerbread house. Housing market will follow with those who are forced to sell taking 20% to 30% hits.
I agree. But, New Zealand was the first central bank to introduce inflation targeting. All other central banks followed our lead. If we can remove the central bank, the world will see that central banks are not only unnecessary but harmful to civilised society.
Corona Virus has pressed the reset button that all government and reserve bank was trying to avoid by throwing easy and cheap money.
Despite all efforts house price in near future will change/ fall and anyone who bought in last few months may be disapointed as they will witness their equity falling but if have bought a home for themselves for long term within their budget should be fine unless hit by job or business loss/earning.
Anyone who was planing to buy should definitely wait and watch as will get more for their deposit going future. Also can know the repercussion of corona virus on their livelyhood to make better informed decession.
Most important to be aware of propoganda that will be launched by powerful and rich real estate agencies like B&T, Raywhite and likes.
and more debt that cannot be paid if you are on reduced or no income for 3 weeks without the help of government assistance. We could be about to get a lesson in the effects of unforeseen consequences, although I note that many have been aware if the consequences building for some time. So shall we say no government or bank relief for mortgages holders - sell your investment and take the profits...... before it’s too late.....
You are missing the point: for every 1m new lending on a new house, government will get between 300K and 400k in taxes (GST, PAYE, Business tax etc). And the person who has now paid $400k in taxes will need to work for 20-30 years to earn the money to repay the loan. And the poor bugger will be paying more taxes as he goes. How else NZ government manages to pay for all the social welfare, free health, free education and all other things without creating a massive deficit? and why every single government, irrespective of their color, have done everything in their power to maintain increase house prices? the biggest beneficiary of house price increase is NZ government.
Yep , and as you said they will do everything within their power to maintain the ponzi scheme.
March was a distant memory.. It can be only one way from here
Adrian Orr will have to dust off that speech from last year where he said people needed to step up and borrow......
I reckon Bill English and Steven Joyce to come back!!!
This story is a bit like saying how nice the Great Barrier Reef was to dive before coral bleaching.
This story also like saying that people were partying and having a great time before tsunami hit Indonesia in 2004.
Be prepared to be bombared by more such propgonda / news / data.
Nagasaki Real estate News report on 7th August 1945. "Report from REING House prices going strong on 5th August 1945".......... and?
Sudden shortage of housing will propel house prices to new highs in 1946?
House price explosion imminent! A real estate BOOM if you will...
And once the coral recovers which in a lot of cases it does, it's nice again? Coral bleaching does not mean the coral is dead. It's merely excreted the algae from itself which can give color to the coral. This can happen due to BOTH warmer water and cooler water. Just to be clear you realize how it relates.
which takes many years and assumes no further shock.
Which is a good thing and I suppose and a bad thing depending..
I am the most eligible bachelor in Auckland, or at least I was 12 years ago.
"The REINZ House Price Index for New Zealand, which
measures the changing value of property in the market,
increased 9.3% year-on-year to 3,034 – a new record high.
The HPI for New Zealand excluding Auckland increased 10.3%
from March 2019 to 3,010 another new record high.
The Auckland HPI increased by 8.2% year-on-year to 3,063 a
new record high for the Auckland region.
In March, Manawatu/Wanganui had the highest annual
growth rate with a 22.9% increase to 3,661 a new record high.
In second place was Southland with an annual growth rate of
17.5% to 3,411 and again in third place was Gisborne/Hawke’s
Bay with a 17.2% annual increase to a new record high of 3,195."
Well done Yvil.
Thanks, Snow
It'll be interesting to see what the default rates are within New Zealand banks in a month or quarter. Their risk appetite is astonishing.
I don’t think many people are aware of the global crisis (apart from on here of course) that is unravelling as a consequence of too much debt in the system oops I mean the Corona Virus...... too many still believe in a V shaped recovery. Should be a great for the stockmarkets this week as lots of really bad news is expected on the earnings side which will enable a recovery so lets see those green lights At the end of the trading day and if that makes sense to anyone feel free to let me know.... but you are not allowed to mention FED goes brrrrrrrrr in your replies!
I am now picking they won't pick up at all. Because I think the RB will step in by taking distressed mortgages off the hands of the banks and basically writing them off by extending their loans forever at zero interest. At which point - it's all on. Everyone in the know (bank employees and investors) will go out and buy as much property as possible with as much lending as they can from banks that now know they hold no risk for issuing loans, then claim poverty in the first month of repayments. RB will take on all their loans as they are now distressed and we will have another few rounds of crazy house price inflation. Which will continue until people realise the NZD is basically worthless. On it's way down though it will be great for exporters!
And why not? The RB has it's "whatever it takes" hat on and that means "whatever it takes to keep house prices increasing". What's a couple of trillion in printed money cost them? Nothing!
It comes down to the question of whether you think you'll experience more pain ripping the band-aid off slowly, or quickly. We've backed ourselves into a corner now with no good options.
This is insane, no matter what way I look at it. I thought human stupidity had reached new levels leading up to the GFC, but now it would appear that its going to be surpassed. The behavior the last 7-10 years in NZ wrt debt/property had alarm bells ringing. We thoroughly deserve whats coming in my opinion.
Yep, it's totally insane. But the next level of insanity is to do what I suggest and abandon the idea of moral hazard from financial transactions. And I am fully expecting now for central banks worldwide to follow the Fed and abandon any thinking that moral hazard exists. https://www.wsj.com/articles/feds-evans-unworried-coronavirus-effort-wi…
This means that they are acknowledging that their money is worth essentially nothing, which will enforce the idea that currencies and debt is actually just monopoly money played with risk free consequences. The smart money may wake up to this (or judging from the recent shareprice action, already woken up to this) and send all asset prices skyrocketing.
I'm reminded of Cisco at the end of the .com bubble (Gather round kids, uncle squishy is about to show you how old he is!) Cisco was one of the first stocks to slump because their revenue fell, other .com companies kept rising for a couple more months because they typically didn't have any revenue to report so it didn't fall. Cisco actually got punished by the market for showing revenue. Ultimately Cisco would survive and most of the others in that bubble did not.
I think we'll see the same thing with illiquid assets like houses, farms etc. They have been spared the early revaluation seen in financial markets but that may be more an indication of the financial sophistication of market participants than an indication on direction of travel.
Why would you put houses and farms in the same category Squishy? Farms make an income (I know houses can too but not quite the same), by selling necessary commodities particularly through export. Income which will be assisted by a falling NZ dollar. If we take a DTI view then farms would be looking much much healthier than houses and in a different catagory.
Fair point. I was thinking most people would cut their grocery spending before missing a payment on their house. Maybe I am wrong, we will see.
Sounds like a good recipe for societal unrest - a good portion of the country unemployed and struggling with the day to day, while the govt essentially gives houses to the rich? I think that would be too bold, even for this lot.
Why would it be too bold? Govt's of all colour in NZ have been doing this for the past few decades with it getting worse more recently. OK maybe not unemployed, but is under-employed or receiving slave labour wages (just enough to pay the bills for the land owners) even worse?
What risk?
The govt. has pretty much assumed all the risk over the next 6 months.
Like I said weeks ago, be prepared for the largest corporate welfare grab in human history as a result of this shock.
Yep and that is why a total housing meltdown will be avoided.
The massive support from government is indicator by itself, how bad the situation is and will be.
This support is required to minimize the loss of jobs and business but this 'minimize' will also be Big and hoping that it remain minimize. So the pain will be felt and how deep or long it will last depend how early one is able to contain the situation but shortto medium termpain/loss/fall is inevitable.
Hoping that my stock price goes up or house price goes up or my salary or profit goes up or get a jackpot is good as one has to be positive but at the same time should realuze the situation and not be stupid.
Did the report have a picture of Wile E Coyote, legs pumping furiously, with no Terra Firma immediately below?
Pretty much the state of every asset market right now.
We may have "broken the chain"of Covid but we have also broken the chain of large parts of the economy. There will be no "pent-up demand" effect for many quarters, consumers will rightly remain in hibernation, and we remain at best in a deflationary world where the jig is up for NZ property. The other wildcard, quite likely, is stagflation, as our domestic economy reels with large parts shut down for a year, but consumers also feel the effects of a collapsing currency.
Keep those plates spinning Mr Orr
Mr Orr goes BRRRRRRRRRRRR.
There wont be a shortage of toilet paper.
$1 million for a can of coke soon, never mind a house in Auckland.
Mikekirk, can we now, once and for all time, put this behind us?
Hi Yvil,
see below, containing my congratulations on your accurate forecast.
My forecast remains the same. 25% drop off the prev high of $900k in Auckland of March 2017, by the end of 2021, meaning $670k by then.
Collapse in leverage, demand and excess of supply is about to cause a perfect storm.
Thanks Mike, happy to move on
The swan song of real estate speculation in NZ.
The actions of Central banks extended the last cycle and blew up asset and stock market bubbles even further. It created so much irrational exuberance that prices went to astronomical new highs. Those bubbles are now going to pop like never before as the perfect storm is hitting. Central banks have rushed in to try and put a floor under stock markets but given the wave of defaults and other troubles ahead I'm not so sure the floor will hold this time. Not much they can do to prop property prices up though in an environment like this with unemployment going through the roof and all of the other negative impacts going on with this situation.
Sure they can. RBNZ could buy collateralised mortgages from the banks. Whether they should is another question, but do not discount their ability to keep this situation going.
My money is off to the Perth mint. Money is about to lose all meaning.
That may be one of their options but it most likely wouldn't be enough.
Data is always historical the more interesting data will be in 3 months we are currently inactive frozen state , a few weeks after lockdown we will begin to see the real state of play as stressed owners start to make decisions on their individual circumstances . Also as shown already in oz banks start to make decisions on their exposures. So far banks have been quite here but I bet their management is a hive of activity behind the scenes assessing options . No doubt there is also meetings with the reserve bank regarding these I hope the word nationalization comes up in these discussions to remind banks of their place in the scheme of things they are companies not nation states .
Of course data for 3 months in advance would be "more interesting" as you say, but who can predict accurately where house prices will be in 3 - 6 months time?
Time for another prediction, Yvil?
Yeah, why not? Things are a bit boring. Come on Yvil, join in!
Here's mine. I'm going to use HPI, not median.
And this prediction is for end of 2020. And taken from the start of 2020 - so whole of year (not taken from March)
Auckland - HPI down by 7% (median might be down 10-12%)
Wellington - HPI down by 3%
Christchurch - HPI down by 10%
Hamilton and Tauranga - HPI down by 10%
Queenstown - HPI down by 15%
Come on Yvil, put your balls on the line!
Fritz, I make a prediction when I see clear reasons for an outcome to occur, in these uncertain times, I really can't predict where house prices will be, say at the end of 2020, so I'll refrain from "putting my balls on the line" lol, I don't like making wild guesses
You have to admit my prediction of an event leading to price falls of at least 10% by 2022 look pretty good.
Indeed, especially that you have given yourself a window of 2 years for the prediction to come true.
I assume you think they will go down at least?
Or you won't even make a call on that?
The trick is to keep changing the prediction as events unfold, a la Westpac.
Yes.. being fluid and agile with forecasts, and pivoting as required...
Ha!
Another question...., what will go first, the private school fees, the batch, the investment property or the family house?
investment property, hands down
I'm going bach - after all there's always Air BNB. Look out for coastal property prices to collapse.
Yup, luxuries will always go first before assets.
I agree they will collapse. That's why I think many will try their best to hang on to them, to minimise loss.
Also the Bach has that family aspect. An investment property doesn't.
In order from first to last - Bach, investment property, family house, private school fees.
Family house before private school fees ?!
Line call.
Selling family house and moving kids out of their established schooling are both disruptive.
I would say more people would sell the family house than move kids out of school. But it will be case by case.
The toys will go first.
This astonished me ,
2019 Bentley Bentayga
ONLY 10 IN THE WORLD
ONE OF THREE IN NZ in little old NZ !!!!!
How much wealth is in NZ or is it all on credit?.
https://www.trademe.co.nz/motors/used-cars/bentley/auction-2579096937.h…
Real Estate Institute of NZ, we know this, Barfoot & Thompson has already show its statistics early April, how about during lock down time and after lock down? Dont we get a weekly updates for barfoot & Thompson's sales report?
LOL
Back then, it was more affordable for FHBs to buy a roof over their head in Tokyo than in Auckland
Have you ever seen those safari documentaries where the lion is on the hunt for prey on the African savannah? You will notice how he lifts his head and sniffs the air if he thinks that there’s maybe a wounded beast or unsuspecting grazing gazelle upwind.
Well, now that I have taken my 96-year-old mother and my 67-year-old sister into my place (I am 72 years-old) as a joint bubble for the lockdown, I sneak the corner of my lounge curtain back and see young would-be FHBs stopping at my driveway entrance as they are going for their daily exercise. I know that they know that down that driveway inside that house are three aging house-owners who are in the bracket most susceptible to the virus.
I can detect them raising their heads and sniffing the air just like the lion I mentioned above. They are thinking that here are three old property owners in a leafy suburb and we are would-be First Home Buyers………
I sometimes spot one of them, usually the male, although sometimes the female if she’s holding the male’s hand, take a few hesitant steps down the driveway. The other day a bolder male took three or four steps down the drive, and was going to take yet another step if the female hadn’t pulled him back. I had only pulled the curtain aside a little so I’m sure he didn’t see me.
Sometimes, they walk slowly past my driveway and barely glance down at my house, but then a minute or so later they reappear at the driveway entrance looking down at the house intently.
The other evening around tea time I heard a knock at the front door. Who could be knocking at the door during the lockdown?
If/when banks stop lending and prices start falling - the meat might have gone off and not worth sniffing. At least for a few years.
At least with the lockdown.. Most will be well fed.
Dear Yvil,
briefly, congratulations on your spot on forecast fo record median prices in NZ and Auckland, fulfilled today.
There were many reasons for my forecast of a 25% fall I prices from the previous high of $900k in March 2017.
My forecast fo $670k median in Auckland by end of 2021, stands.
The main basis for that was reversion to the mean and the ridiculous rises of 2014-16, which distorted the mean rise pa, sometimes by 23% pa in Auckland.
My view is that the long term median average increase pa, from 2005-21 should have (and will be) 3% pa.
That is basis of my forecast.
Thanks Mike
Driven by?
More easily obtained debt and leverage.
Do we all really think that such conditions will apply after Covid?
Maybe mortgage rates will remain record lows, but willingness to lend to same numbers? No
And buyer willingness to take on risk of leverage? No.
hence market prices and sales will fall. A lot.
I am happy to be corrected, but is it not the case that REINZ data is based upon unconditional sales. Auctions aside, many of these "March" sales would in effect commenced in February. With the changing landscape, all non settled conditional March sales, will now be subject to any conditions agreed. Bank finance, valuations, building reports, legal documentation et al may not been finalised before lockdown. How will a bank accurately value a property post lock down. How many "sales" will fall over
Why repeating - Beating the Drum that house market ended on high before the lock down.
Lobby / Propganda Macinery all geared up to prove otherwise what is inevitable - softening / fall of housing market even if it does not crash (though it may very well).
Why is it not being highlighted that not only house price but even Stock Market was all time high before the lock-down.
Infact befor the tsunami of Corona Virus - Tourism, Hospitality, International students, Immigration, Airlines and many other sectors were all time high BUT WHAT IS IMPORTANT IS NOW WHAT HAPPENS AFTER THE LOCK-DOWN IS OVER.
Propoganding false narrative / trying to create fallacy in general public when being fully aware that what has happened is unprecedented and the impression that is being trying to creat is wrong and should be punishable under the law unless the person propoganding and agency promoting it can gurantee as to what they are trying to create in the mind of the people is true and are not playing on greed and fear..
RE agents are supported by so called experts, agencies and media to.............. Be Aware.
It would be crazy to buy housing now. Wait just a year and prices will be 20% to 30% lower than now. Anybody who bought in the last 6 to 12 months will be shafted big time.
I agree it would be crazy to buy a house now.. However, not everyone who bought 12 months ago will be shafted, many will be able to hang tight and not realise the losses. I would suggest that the shafted will be a combination of the following;
* the highly leveraged
* the ones who lose their job or take a serious income hit
* those without a wet weather fund
* RE agents
* property speculators
* people nearing retirement with investment properties (especially those whose pension funds just took a big hit)
* those who have just realised after spending 4 weeks with their significant other that they hate their guts and must sell up and go their separate ways
What can recent buyers / current owner occupiers in above situations do under current circumstances?
REINZ data showed that March 2020 median house prices for Auckland reached an all time record of $950,000, so owner occupiers are likely to be profitable on their property purchase, assuming they paid market value for their property. Depending upon market conditions, they may be able to get a decent price for their property after the lockdown.
If owner occupiers believe that property prices are going to fall substantially, remember, they still have the choice to sell and rent when the lockdown ends.
That is entirely their choice.
If owner occupiers choose to hold on, and in future comment about having sustained large losses on the equity value in their house or being in negative equity, then that will be a consequence of their choice today.
Owners are free to choose to hold on or sell. They are not free to choose the consequences of their choice.
Choose your scenario and act accordingly.
For owner occupiers, a reminder of the impact of leverage (it amplifies property price changes both on the up and down):
Scenarios of impact of leverage on equity, assuming an 80% LVR for owner occupier, for a recent $100 property purchase, $20 initial deposit, mortgage $80.
A) Scenario - property price rise:
1) property price rises 5% to 105, mortgage 80, equity 25, so 25% gain in equity value from 20.
2) property price rises 10% to 110, mortgage 80, equity 30, so 50% gain in equity value from 20.
3) property price rises 15% to 115, mortgage 80, equity 35, so 75% gain in equity value from 20.
4) property price rises 20% to 120, mortgage 80, equity 40, so 100% gain in equity value from 20.
5) property price rises 25% to 125, mortgage 80, equity 45, so 125% gain in equity value from 20.
6) property price rises 30% to 130, mortgage 80, equity 50, so 150% gain in equity value from 20.
7) property price rises 35% to 135, mortgage 80, equity 55, so 175% gain in equity value from 20.
8) property price rises 40% to 140, mortgage 80, equity 60, so 200% gain in equity value from 20.
9) property price rises 50% to 150, mortgage 80, equity 70, so 250% gain in equity value from 20.
10) property price rises 100% to 200, mortgage 80, equity 120, so 500% gain in equity value from 20. (i.e if property price doubles every 10 years as repeated by property market promoters)
Remember, the owner occupier must be able to hold on under ALL economic environments (including any potential significant reduction in household income).
B) Scenario - Property price falls:
1) property price falls 5% to 95, mortgage 80, equity 15, so 25% loss in equity value from 20.
2) property price falls 10% to 90, mortgage 80, equity 10, so 50% loss in equity value from 20.
3) property price falls 15% to 85, mortgage 80, equity 5, so 75% loss in equity value from 20.
4) property price falls 20% to 80, mortgage 80, equity is zero, so 100% loss in equity value from 20.
5) property price falls 25% to 75, mortgage 80, equity is NEGATIVE 5, so 125% loss in equity value from 20.
6) property price falls 30% to 70, mortgage 80, equity is NEGATIVE 10, so 150% loss in equity value from 20.
7) property price falls 35% to 65, mortgage 80, equity is NEGATIVE 15, so 175% loss in equity value from 20.
8) property price falls 40% to 60, mortgage 80, equity is NEGATIVE 20, so 200% loss in equity value from 20.
Which will the owner occupier regret most:
1) missing out on future potential gains in equity?
2) potential actual loss of their invested equity or even potential negative equity?
The REINZ report is published by Interest every single month. It's not propaganda, it simply publishes the most recent and complete set of data for Real Estate in NZ. Also it doesn't talk about the sharemarket because REINZ focuses on RE.
Insanity
The real insanity will hit a couple of months from now...
Will be lucky if can avoid a bloodbath and all those trying to suck gullible and Vulnerable targets should be ready to face Karma.... Is a Bitch.
"But for those who have decided after four weeks of being locked in their bubble that they don't like their house anymore, they will be desperate for the chance to move, so there may be some great opportunities for those wanting to buy and sell in the coming months," she said.
These guys are like H and S consultants - "It could kill you if you repeatedly stabbed yourself with it"
Puzzled why most people on Interest.co only comment on the prices in Auckland?
Is it that these specialists on what the market is going to do All live in Auckland?
What do these experts think house prices should be, that are affordable for people and what the rent should be on these houses that should be for tenants?
Are you talking at 10, 20 or 30% unemployment?
"All live in Auckland?"
Yep Auckland and Wellington.. just hick towns elsewhere..
Are you all forgetting TTP's love affair with Palmerston North? Tut tut. It's never only been about Auckland.
And TheMan2 vs Gordon bowl over Christchurch!?!?! Never a harder battle fought on these comments than these two!!!
The Boy you have let your family down by not getting out of your comfort zone and renting poor quality housing to people with shaved heads, camo pants and steel toed boots. You live in a town a huge majority of New Zealanders do not want to live in.
I'm going to have a punt now. While I have no meaningful way to measure my bet, many NZers and the ruling elite will regret bubble economics going into the future. It doesn't matter how much skin you have in the game, people will realize that engineered bubbles are futile and destructive. Across the socio-economic spectrum, most h'holds seem to be ill-prepared in terms of actually taking care of themselves. And yes, the bubble is to blame.
While all this is happening, money will be created in an attempt to plug a hole in the dam. Using gold to NZD as a barometer of how people see this, the price is up 13% in a month, 24% year to date, and 49% in the past 12 months.
It's a paradigm thing - we haven't been taught a lesson yet that we need to learn.
It's a paradigm thing - we haven't been taught a lesson yet that we need to learn.
Sure. I could be more cynical and suggest that Orr gets paid regardless. So does Cruella. But screw the rest of you while the govt scratches around trying to preserve the status quo.
I'll be even more cynical - Orr owns in excess of $4m in property in NZ. At these rates of house price growth, he earns almost as much from his property as he does from his day job, and all of it tax free. Certainly a good personal incentive to keep the music playing when you have the ability as Governor.
ShoreThing
A sad indictment of the quality of the comment which is becoming all too common for some on this site.
I shall put it another way then - if he were to do anything in his capacity as Governor to reduce house prices, his personal net worth would suffer an eye watering decrease. Or are you suggesting that those in power would never use their position to enrich themselves?
how does he earn from the house he lives in, if anything it costs him money to live in it?
I had a coworker that used the same phrase with me before lockdown and I asked her how she was going to make that profit was she going to sell and live in a tent.
for an OO the only time they can release that profit is if the downsize later in life and how many actually do that I know many an old person that will never sell as they have lived there most of their life
He owns more than just the one house. And for someone of his age approaching retirement, selling up the properties in Auckland and Wellington and moving to a nice lifestyle block somewhere regional is the standard way to take the profit and downsize.
ShoreThing
Your comment is very sad in three respects:
- it will surprise you people don't act in their role where personal self enrichment is a primary consideration,
- Orr does not act alone and is accountable to the Board and ultimately the Government for decisions and personal self enrichment is far from acceptable justification ,
- Clearly you do not understand the meaning of the term "integrity".
To defend your initial statement shows a very sad indictment on you and the quality of your comments.
People don't act in their role for personal enrichment? John Key got a nice job at ANZ after his tenure. Peter Dunne was responsible for the party pill legislation that led to deaths and illness in this country while his son (nephew?) got rich importing the crap. In the US, a number of members of congress were just outed as having sold millions in stock and buying healthcare stock while supressing information about how bad COVID would get. Nancy Pelosi increased her net worth from $0m to over $100m in her time in politics - and that doesn't come from her salary. I think your comment only shows your naivete. I understand integrity well, and I understand that those in politics with it are very rare, and usually don't last.
So true, ShoreThing. Astute call I reckon.
Also an opportunity to hold the mirror to ourselves and to ask some honest questions of our own integrity. Because, I think - regardless of Dunne, Pelosi et al - we can expect to effect best change by leading personally with as clean hands as possible.
And to do this, in spite of inevitable 'bau' clamourings of cynicism or blatant inordinate greed!
To moot the notion of 'common good' here may I think be too much for some, but not for others (and I say this as more often than not, a blue team supporter).
Before this halt, everyone took advise from Adrian Orr to: spend, spend, spend specially if it's borrow/loan more from RE valuation, Now?, same principle - Kiwi just need to beat the OZ pace right now, in order to come at the top, plenty of expat returning home, this is expected to flare up into RE market with recent wages subsidy and other economic handout for this crisis. The slow red team, shall be removed shortly with the bluey team, which is very acumen in business and specific funds channel to keep the flame of NZ neo-liberal F.I.RE economy bonfire.. long live the rock star!
https://www.youtube.com/watch?v=MGrBCtOt4Qs
House prices climbing to record levels, with record debt, at a time of possible record unemployment.
Anyone else have issues with this picture?
this is a perfect description of an impeding housing crash. If house prices decrease by less than 20% I will be hugely relieved. But it might well be a harder landing than that.
What a typical stupid remark to make.
"But for those who have decided after four weeks of being locked in their bubble that they don't like their house anymore, they will be desperate for the chance to move, so there may be some great opportunities for those wanting to buy and sell in the coming months," she said.
If house hunters even entertain purchasing at this time they’d be mad. Wait and see people. Don’t get sucked in by interested parties.
I agree 100%. We must not get new FHB's sucked into this housing Ponzi scheme. Like all such schemes, it will sort itself out: it is just a question of time.
" House price set new record in March"...
This is old and stale news so why beating it now.
Motive is questionable
Everything was high in Februay and Match be it house price or stock price.
Stock price crashed first being liquid asset and stock market had no lockdown so was operating. House market will follow when it too start operating But Keep trying to create a false Smoke that housing market is invincible despite everything falling around it be it jobs, business and may be governments and banks in future.
Experts or fools trying to cliam otherwise.
Wow, thanks for the info. Must be a perfect time to buy. I'm 'ALL IN' REINZ. You must be able to sleep so well at night helping all us struggling FHB's !!!!
Congratulations to the idiots that drove the Auckland median price up to a batshit insane 950k.
You've just taken one for the team.
Mentioning the word 'bat' in any context is now a direct reference to China and therefore you are being racist https://www.nzherald.co.nz/spy/news/article.cfm?c_id=1503840&objectid=1….
Just part of the insanity.
Ozzie Osbourne ate bats, back when it was cool.
Ozzy was who JK was referring to when he said 'NZ was a Rockstar economy.'
Bats and Drugs, now there is a combination.
You can't have quarter of New Zealand receiving wage subsidies while homes in Auckland are almost $1m.
Adrian Orr: Hold my drink.
Adrian Orr: Hold my punch bowl...
Exactly right. Some housing speculators still think that gravity does not exist. It is going to be a rude awakening.
You can if you do it by transferring wealth from savers and pensioners to asset holders. It's a bit of a morally corrupt approach to society...but we've a bunch of people who hold a lot of assets who have been running the place.
You can do this only to a limited extent. The RBNZ has done it already, as much as possible. Once savers and international investors start quitting NZ and move their money elsewhere, the game is up. Nothing can prevent the housing slump that is coming. Why would anybody invest money for a 2% return, in a small economy with no deposit guarantee, when for a slightly lower interest rate this can be done with a bigger and more solid economy like Germany, for example (which by the way does provide a deposit guarantee) ?
The problem with housing speculation is that it parasitically relies on the real economy, so that people can earn money enough to keep paying their mortgages.. Once the real economy is in trouble, the housing Ponzi scheme is going to run out of steam.
Why not RWC, what's your logic? I would think the more wage subsidies the less house prices are likely to drop
Let's say someone earns $1500 per week, is told by their cashflow stricken employer they need to take a 50% pay cut. Don't worry, they can apply for the Government Wage Subsidy which reimburses the employee up to 30% of their lost pay. The employee is now missing out on $300 per week.
It's okay, the bank will still honor last month's pre-approval.......riiight?. "Oh sorry sir, due to the responsible lending code a 20% reduction in your income is actually a 50% reduction in your disposable income therefore your new pre-approval amount is now 2/3rds lower."
So why don't we just give everyone free houses Yvil and don't worry about even putting a price tag on them - if the government effectively pays for them?
Nowdays everything / forcasting is based on Model.
So in best case scenario (Model 1: lockdown is lifted on 23rd April and unemployment is 6% or below) house price to fall between 10% to 15% and in worst scenario between 15% to 30% and below that will be disasterthough even 20% or near around fall be carnage.
Show us your model then.
Absolutely not surprised either. Simply underlines that house prices go up as the cost of borrowing retreats. One does note that this is a "rear-view mirror" report. I would suggest the champagne popping should be limited to those best positioned to gain from these sales - the agents and sellers. Hopefully the buyers are not Airline Pilots or crew, any Aviation/related operators or staff, Cafe/restaurant owners or staff, Tourism related operators or staff, Retail Operators or staff, Academics or staff, Construction related operators or staff....the list goes on.
Capital gains work by leveraging future, hopefully positive, appreciation. Note the word "future". Covid makes that a very different proposition than last month/year/life.
Good on the people who managed to sell their properties before the lockdown. Might not be so good for those who bought them, especially the FHBs who mortgaged to their eyeballs...
Yes, Doesn't matter whether you invest in property or go to the Casino.
Success = Good financial management.
Failure = Bad luck
And that is why we are where we are.
A reminder that as around the world money printers are going brrrrrr.... driving the relatively value of money down to nothing, bitcoin is about to undergo its third halvening in 28 days, reducing the amount of new bitcoins produced per day to half. Money is going to Qualative easing. Bitcoin is going through qualative hardening. Which monetary policy do you prefer?
History shows that it is not possible to insulate yourself from the consequences of others holding money that is harder than yours.
-The Bitcoin Standard
Things were looking shaky b4 covid came along. The top level investors were selling up and getting top $.
NZX 50 - Increased 2.85% until midday
This is almost funny if the story wasn't going to end so badly for many. Record prices the month prior to the crash. It's evidence of a negligent RB, credit mania & irrational exhuberance right to the bitter end. Almost a complete denial of any fundamental problems. Household debt is at 160%, if that doesn't look like much on paper we're about to see what it looks like in reality.
Often the last bounce for a dead cat is the highest...
yeah right, you drop a cat from the 10 floor, it hits the floor, bounces back 50cm, then has another small bounce of 10cm then, the last bounce of 2 metres
Grab a cat and try it..
Gareth, is that you?
.
AUD/NZD fast approaching 1.06. Why is the AUD doing so well compared to the NZD? What are the two countries doing differently?
FB I have noticed that also and it has been a rapid decline for our dollar against the aussie dollar. I believe traders are simply thinking that the Australian economy is going to recover from the coronavirus hit quicker than the New Zealand economy. When markets are uncertain traders generally take up more conservative assets and drop speculative assets. Australia is much bigger than us and has a broader base of assets compared to us. You just need to consider its mineral resources that we don't have so much of, the huge companies that we don't have such as BHP and it has markets that turnover colossal amounts every day they are open compared with our diminutive NZX. And they have not killed their business world as much as we have and their recent stimulations have been much more generous than ours. Ours have been immediate but when the Australians get their wage subsidies they will be very happy indeed. Tourism which is a big part of our economy has been destroyed for years. I suspect they do not rely quite so much on tourism as they have that huge mineral base which they export for a start. We have to accept that we are a small nation with not a lot of diversity and it will take us a long time to get over the current hit on our economy. We will pay dearly for this currency wise and income wise.
This is a classic case of "yesterdays news" the fallout from Covid-19 is going to be epic.
Yes, because so far, nobody has managed to publish tomorrow's news, today
Things will get tough for a while but once things have settled and the confidence is back, will it be crazier than ever? How many people are wanting coffee or craving take outs? Those services won’t be there to serve the crave. Same goes for many other things. Interesting times.
"Housing market was particularly strong" Yes, except for sales.....
NZ total residential sales March 2017: 8622. March 2020: 6866
NZ, excl Auckland: March 2017: 5910. March 2020: 4559
Not quite so impressive eh?
That is what happens of course, when prices go up too. much.
Hence, they need to revert to mean, ie decline.
Exactly what we can expect in next 20 months
Com'on Mike, surely you understand that March 2020 had fewer sales because of COVID-19 ? Closing of borders on the 15th of March, lockdown announced on the 23rd March. There was only 3/4 of the month to transact houses.
Since you like number NZ sales 6866 /3 x4 = 9155
NZ ex-Auckland 4559/3x4 = 6079
It's just not true that fewer houses were sold because of record high prices, it's only because March had only, max 23 days to buy/sell a house
No, sorry.
Last week of sales not really affected because that is the v week that most sales are recorded.
When you examine REINZ dates of sales, as I can, in tabular form, you see that a v large proportion (disproportionate) are in last 3 days of any month.
Plus, due to 6-8 week settlement, sales in March are of contracts agreed between buyer and seller in February also.
Sales in any month you choose of 2019 or 2020, will be lower for NZ and Auckland than in 2012 or 2013.
That is because price has gone up too much
Not interest rate because that has gone down.
Mike, I don't think you're correct about the 6-8 week settlement being relevant here. The REINZ stats are from when the sale becomes unconditional. That typically happens well before settlement.
I've waited so long for a house in Auckland that I'm not sure I even want one anymore.
Shitboxes in crap suburbs shouldn't be worth half what they currently are. Have we gone collectively insane?!
Never understood why people were celebrating when we have people – lots – living in cars.
Have you watched The Big Short? People were living in cars after the crash. Here we have people in cars before it when everything is supposedly rosy – truly a sad state of affairs.
I feel sad for my fellow FHB who have pressed go on buying a house, on moving forward with their lives, bowing to the societal pressure. They really really don't deserve a crash.
I feel the same. It's so easy to get caught up in the hype - auction after auction, time pressure to do your due diligence, so many people wandering through each property, RE agents convincing you you're in with a shot, spending 2K on builders and lawyers to then find out the reserve was way higher than your max, and watch a tonne of other people in the room fight it out. You keep thinking, oh whats 50K more on the mortgage really. Then suddenly you realise your potential mortgage repayments are more than your partners take home salary!! It shouldn't be this difficult. We've been trying to buy for a while now, and were feeling really depressed about the situation. And now I'm glad we missed out and aren't locked into a huge mortgage. God knows how we would have afforded children. We've had time to unwind, think about everything, what's important, consider all our options. After the lockdown we'll be coming into the market with a fresh, open mindset.
Yes I don't think those who are 50+ appreciate the strain the whole situation this economy has put younger kiwis/families under. No wonder the mental health stats are so bad. There is significant ignorance from those who own multiple properties - wealth before community in my opinion has destroyed the kiwi way of being. Quite sad to see. NZ isn't the place I remember as a child. When a house was a home, not a speculative investment. The greed is an embarrassment.
Bindi Norwell Fails to mention some other factors like the debt bubble in real estate and how over valued it is. It’s burst
Prices won’t recover at least for 10 years. NZ escaped the impact of GFC by wilfully allowing money laundering and will now have to learn two big lessons together
Hah! Yes, JasBurnt.
I'm going to suggest an alternative headline for this piece: "Dangerously growing NZ housing bubble shows no sign of slowing".
Rather like Fukushima, with no-one in charge until far too late - another shameful elephant in the room (that $254T global debt, anyone?).
And then overheating in the nuclear plant continued to a critical point where reality had to trump the elephant - and suddenly hit the decision makers square in the jaw.
But, lasting, multi-dimensional damage already done.
Oh, human folly!
"Bindi Norwell Fails to mention some other factors like the debt bubble in real estate"
She may not know even know what a debt bubble is, let alone recognise one.
Property industry participants typically use a framework of underlying supply and demand where there is a underlying housing shortage - like this
1) https://www.interest.co.nz/property/97513/auckland-councils-chief-econo…
2) https://www.interest.co.nz/property/102278/david-norman-assesses-risk-c…
When the nation gave control to the neoliberal participants/any govt at the helm to keep afloat NZ F.I.RE economy, then this is the most difficult part to undo. Albeit everyone can sees the dark cloud ahead. The merry chanting of RE agents only affecting the 'market sentiments' BUT the real works of socialising the loss, borrow/loan/print more money, subsidies, grants, QEs etc. are on the way from the govt, any economist paid/independent/academic/custom/journos that mostly owned/multiple REs - their 'tune' are all the same..tax payers bail out.
Mortgage rate renewal. Where do people see rates in another month or 2?
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