The latest figures from Quotable Value show the housing market appears to be finely balanced but it is too early to say whether values are likely to rise or fall.
The QV House Price Index measures average housing values in 98 districts throughout the country. It shows that average values in June were higher than May in 51 districts and lower in 47.
Although that suggests a fairly balanced market, a closer look at the numbers suggests a slight easing overall in June.
That's because average values declined in major housing markets such as Auckland, Hamilton, Wellington and Dunedin in June, where sales volumes were high, while many of the areas where values rose were provincial districts with lower sales volumes.
In the main urban areas combined, the average value of residential properties declined from $847,497 in May to $845,386 in June, while the average value for all of New Zealand dropped from $739,539 in May to $738,018 (see the table below for the value movements in all 98 districts).
However whether values were up or down the differences were mainly very small, and if anything they suggest property values had flattened out in June.
The way the HPI is calculated would have been a significant factor in the changes. The HPI figures are a rolling three month average, with the May figures based on sales that occurred in the three months to the end of May, and the June figures based on sales that occurred in the three months to the end of June.
That means the May figures included the sales that occurred during March, when the market was still buoyant and prices in many districts were reaching record highs. Although sales numbers dropped away in April, the sales that were achieved largely reflected the buoyancy of the previous month.
However the June figures are based on sales that occurred over the three months from April to June, which were more subdued.
While housing values appear to have flattened, it is simply too early to tell whether they are catching their breath before starting to rise again, or whether they have crested the peak and are ready to begin the slide down the other side.
"The QV House Price Index data continued to reflect a gradual decline in quarterly growth in June, with 13 of the 16 major cities we monitor showing a reduction in the rate of growth since May," QV General Manager David Nagel said.
"This indicates the heat we saw in the market pre-lockdown gradually dissipating as the market begins to settle."
However he warned that there could be worse to come.
"With government wage subsidies ending in September and many homeowners that sought relief from banks with mortgage holidays likely to feel some financial pressure heading into summer, the worst is still ahead of us," he said.
"Our earlier projections that the market will experience a correction of 5% to 10% by Christmas from the pre-COVID high of January to March is still looking likely. While some parts of the country will be harder hit than others, any fall in value should be put into context," Nagel said.
"Most parts of New Zealand have experienced value growth in excess of 5% to 10% in just the past 12 months, so for those that can weather the storm, this is simply a passing aberration," he said.
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| QV House Price Index | |||||
| Territorial authority | Average value 3 months ended May 2020 $ | Average value 3 months ended June 2020 $ | Change +/- $ | Change % | |
| Auckland Region | 1,086,223 | 1,082,541 | -$3,682 | -0.34% | |
| Main Urban Areas | 847,497 | 845,386 | -$2,111 | -0.25% | |
| Wellington Region | 787,288 | 783,655 | -$3,633 | -0.46% | |
| Total NZ | 739,539 | 738,018 | -$1,521 | -0.21% | |
| Far North | 492,137 | 495,326 | $3,189 | 0.65% | |
| Whangarei | 586,665 | 579,632 | -$7,033 | -1.20% | |
| Kaipara | 577,135 | 570,218 | -$6,917 | -1.20% | |
| Auckland - Rodney | 984,069 | 982,802 | -$1,267 | -0.13% | |
| Rodney - Hibiscus Coast | 962,786 | 959,114 | -$3,672 | -0.38% | |
| Rodney - North | 1,005,310 | 1,006,216 | $906 | 0.09% | |
| Auckland - North Shore | 1,257,549 | 1,247,243 | -$10,306 | -0.82% | |
| North Shore - Coastal | 1,433,058 | 1,415,153 | -$17,905 | -1.25% | |
| North Shore - North Harbour | 1,213,823 | 1,208,258 | -$5,565 | -0.46% | |
| North Shore - Onewa | 1,025,011 | 1,018,912 | -$6,099 | -0.60% | |
| Auckland - Waitakere | 857,957 | 857,496 | -$461 | -0.05% | |
| Auckland - City | 1,285,679 | 1,277,755 | -$7,924 | -0.62% | |
| Auckland City - Central | 1,120,273 | 1,111,692 | -$8,581 | -0.77% | |
| Auckland City - Islands | 1,139,027 | 1,156,945 | $17,918 | 1.57% | |
| Auckland City - South | 1,150,720 | 1,139,483 | -$11,237 | -0.98% | |
| Auckland_City - East | 1,621,782 | 1,614,325 | -$7,457 | -0.46% | |
| Auckland - Manukau | 937,860 | 939,908 | $2,048 | 0.22% | |
| Manukau - Central | 722,671 | 722,999 | $328 | 0.05% | |
| Manukau - East | 1,198,734 | 1,202,416 | $3,682 | 0.31% | |
| Manukau - North West | 819,547 | 821,734 | $2,187 | 0.27% | |
| Auckland - Papakura | 723,750 | 728,414 | $4,664 | 0.64% | |
| Auckland - Franklin | 688,500 | 696,001 | $7,501 | 1.09% | |
| Thames Coromandel | 820,759 | 809,016 | -$11,743 | -1.43% | |
| Hauraki | 461,644 | 451,506 | -$10,138 | -2.20% | |
| Waikato | 525,823 | 539,667 | $13,844 | 2.63% | |
| Matamata Piako | 504,510 | 505,499 | $989 | 0.20% | |
| Hamilton City | 628,992 | 627,777 | -$1,215 | -0.19% | |
| Hamilton - Central & North West | 590,005 | 587,512 | -$2,493 | -0.42% | |
| Hamilton - North East | 774,291 | 767,383 | -$6,908 | -0.89% | |
| Hamilton - South East | 585,008 | 587,117 | $2,109 | 0.36% | |
| Hamilton - South West | 557,493 | 561,994 | $4,501 | 0.81% | |
| Waipa | 637,689 | 633,778 | -$3,911 | -0.61% | |
| South Waikato | 322,854 | 316,981 | -$5,873 | -1.82% | |
| Waitomo | 246,397 | 267,759 | $21,362 | 8.67% | |
| Taupo | 569,868 | 570,682 | $814 | 0.14% | |
| Western BOP | 707,391 | 698,426 | -$8,965 | -1.27% | |
| Tauranga | 792,643 | 794,189 | $1,546 | 0.20% | |
| Rotorua | 517,916 | 520,222 | $2,306 | 0.45% | |
| Whakatane | 515,250 | 520,589 | $5,339 | 1.04% | |
| Kawerau | 295,923 | 281,996 | -$13,927 | -4.71% | |
| Opotiki | 369,224 | 357,893 | -$11,331 | -3.07% | |
| Gisborne | 434,358 | 431,295 | -$3,063 | -0.71% | |
| Hastings | 593,522 | 587,931 | -$5,591 | -0.94% | |
| Napier | 611,969 | 614,322 | $2,353 | 0.38% | |
| Central Hawkes Bay | 405,052 | 423,655 | $18,603 | 4.59% | |
| New Plymouth | 507,023 | 508,666 | $1,643 | 0.32% | |
| Stratford | 322,034 | 335,179 | $13,145 | 4.08% | |
| South Taranaki | 285,157 | 286,371 | $1,214 | 0.43% | |
| Ruapehu | 259,370 | 259,480 | $110 | 0.04% | |
| Whanganui | 370,057 | 368,891 | -$1,166 | -0.32% | |
| Rangitikei | 285,094 | 294,119 | $9,025 | 3.17% | |
| Manawatu | 466,009 | 467,254 | $1,245 | 0.27% | |
| Palmerston North | 509,859 | 508,716 | -$1,143 | -0.22% | |
| Tararua | 282,279 | 292,004 | $9,725 | 3.45% | |
| Horowhenua | 439,748 | 438,518 | -$1,230 | -0.28% | |
| Kapiti Coast | 669,337 | 669,773 | $436 | 0.07% | |
| Porirua | 692,364 | 691,176 | -$1,188 | -0.17% | |
| Upper Hutt | 633,343 | 639,489 | $6,146 | 0.97% | |
| Hutt | 688,394 | 686,283 | -$2,111 | -0.31% | |
| Wellington City | 894,710 | 887,633 | -$7,077 | -0.79% | |
| Wellington - Central & South | 886,705 | 873,702 | -$13,003 | -1.47% | |
| Wellington - East | 964,454 | 948,794 | -$15,660 | -1.62% | |
| Wellington - North | 817,550 | 819,472 | $1,922 | 0.24% | |
| Wellington - West | 1,016,824 | 1,005,844 | -$10,980 | -1.08% | |
| Masterton | 426,012 | 440,126 | $14,114 | 3.31% | |
| Carterton | 475,628 | 477,087 | $1,459 | 0.31% | |
| South Wairarapa | 583,811 | 578,835 | -$4,976 | -0.85% | |
| Tasman | 629,768 | 634,688 | $4,920 | 0.78% | |
| Nelson | 658,374 | 661,345 | $2,971 | 0.45% | |
| Marlborough | 515,394 | 513,507 | -$1,887 | -0.37% | |
| Buller | 208,475 | 207,752 | -$723 | -0.35% | |
| Grey | 228,338 | 229,443 | $1,105 | 0.48% | |
| Westland | 277,150 | 282,820 | $5,670 | 2.05% | |
| Hurunui | 398,995 | 405,820 | $6,825 | 1.71% | |
| Waimakariri | 463,281 | 465,639 | $2,358 | 0.51% | |
| Christchurch City | 517,376 | 518,369 | $993 | 0.19% | |
| Christchurch - Banks Peninsula | 547,999 | 539,096 | -$8,903 | -1.62% | |
| Christchurch - Central & North | 605,070 | 607,304 | $2,234 | 0.37% | |
| Christchurch - East | 394,006 | 393,126 | -$880 | -0.22% | |
| Christchurch - Hills | 701,439 | 709,750 | $8,311 | 1.18% | |
| Christchurch - Southwest | 491,701 | 492,086 | $385 | 0.08% | |
| Selwyn | 564,650 | 567,795 | $3,145 | 0.56% | |
| Ashburton | 374,168 | 380,087 | $5,919 | 1.58% | |
| Timaru | 392,001 | 391,462 | -$539 | -0.14% | |
| MacKenzie | 594,010 | 566,913 | -$27,097 | -4.56% | |
| Waimate | 290,466 | 287,190 | -$3,276 | -1.13% | |
| Waitaki | 352,206 | 352,549 | $343 | 0.10% | |
| Central Otago | 597,205 | 599,540 | $2,335 | 0.39% | |
| Queenstown Lakes | 1,218,418 | 1,192,613 | -$25,805 | -2.12% | |
| Dunedin City | 552,475 | 547,531 | -$4,944 | -0.89% | |
| Dunedin - Central & North | 562,304 | 558,691 | -$3,613 | -0.64% | |
| Dunedin - Peninsular & Coastal | 492,355 | 493,532 | $1,177 | 0.24% | |
| Dunedin - South | 539,072 | 525,107 | -$13,965 | -2.59% | |
| Dunedin - Taieri | 577,302 | 575,953 | -$1,349 | -0.23% | |
| Clutha | 290,886 | 279,588 | -$11,298 | -3.88% | |
| Southland | 355,928 | 370,950 | $15,022 | 4.22% | |
| Gore | 279,245 | 281,661 | $2,416 | 0.87% | |
| Invercargill | 350,019 | 355,952 | $5,933 | 1.70% | |
| Auckland Region | 1,086,223 | 1,082,541 | -$3,682 | -0.34% | |
| Main Urban Areas | 847,497 | 845,386 | -$2,111 | -0.25% | |
| Wellington Region | 787,288 | 783,655 | -$3,633 | -0.46% | |
| Total NZ | 739,539 | 738,018 | -$1,521 | -0.21% | |
87 Comments
What is everyone's take on these figures ... 'Come in spinner' come and spin a back story
My take is that y'all property obsessed.
It must be quite a worry to the Real Estate Agents since you all up at the wee small hours of the morning. Lets see how long the banks can keep propping up the housing market with record low mortgage rates. Oh and don't forget to let the Overseas Investors in via the property market Trust Company back door, got to keep those prices up!
I don't know why you would think this is a worry for RE agents, they are rubbing their hands with glee that the volume of sales is about to skyrocket, they make money on downs as well as ups in the market, its all about volume, not price.
RE agents are taking commissions from sales. If housing price is going down, they are going to take less proportion of their commissions. People only buy houses when housing price is going up, when it's going down, there won't be many people are buying so the sales volume can go down too. It's just human nature.
Yes most people that I know, that are looking to buy are happy to watch and wait for prices to drop back down to reality. REA's will need to drop their bloated commission rates too as price drops set in to help sellers to meet the current market.
Thanks for your sincere concern CJ99 but would'nt say 5am is the wee hours. Besides we are working on a new business so it requires and justifies our efforts for a big return later. No it's not property business so be happy for us. Regards.
"Oh and don't forget to let the Overseas Investors in via the property market Trust Company back door". You are absolutely right and I know it is happening unfortunately.
A society stuck on brick and mortar investing lacking any inclination or knowledge for alternative investment strategies.
I'm sure I saw an actual enterprising business founder on these pages once or twice.
Housing market proving remarkably resilient.....
The winter housing market train-wreck, as enthused by certain people here, simply didn't come about.
TTP
Please tell us why you think it didn't come about?
FB
Maybe because those that claimed bubble bursts and 50% falls were simply just making baseless claims and expectations as a benchmark.
Maybe it is better that you explain the basis for:
"If you have debt on property please tell me how you are able to sleep? I expect 50% reduction in NZ house prices when this is over. It is the greatest ever reset!" (by Foreign buyer 23rd Mar 20, 4:09pm)
P8 - This is FAR from over!
FB
I do not think that the full impact on the property market is yet to be realised and acknowledged numerous times that there are still elephants in the room such as the wage subsidy scheme, "mortgage holidays" and business support schemes.
However, your posts are typically extreme and lack substantiated rationale. If you are going to make extreme claims compared to those of RBNZ and bank economists, then you need to justify them.
You have your view, but by being unsubstantiated and extreme they are simply tantamount to baseless scaremongering and need to be called for that.
Friendly message for the homeowners and speculators - "Scaremongering" for the poorer, younger and less fortunate masses who are renting and do not own a home is saying that prices will remain the same or go higher. These situations make their lives harder than they already are. It is hard to see things from other peoples point of view but it will make the world a better place if this happens.
Bank Economist are saying 10%-15% down.
Real Estate Industry is saying nothing to see here, stop talking about it.
It's absolutely OK to question them and their conflicted cheerleaders who are deliberately peddling distorted narratives.
HAHAHA how can someone assume that this was already over by July 2020? It hasn't even begun!!! The wage subsidies and mortgage holidays have really put a pause on things, so I was expecting the first signs of distress would show up from October 2020.
Everything that is happening right now is just statistical noise. Prices can inch back up if buyers are still willing to play inflated prices. But I really can't understand why people think prices won't go back down when massive unemployment hasn't even happened yet. If people don't have an income, they can't pay for their mortgage. If they're renting, then would landlords be happy to let them live there for free? Doubt it.
A lot of people are still on life support but when plug is pulled in September, expect massive layoffs which would force owner-occupiers and landlords to sell en masse.
There are several hundred thousand kiwis and permanent residents overseas that could come back over the next two years as countries recover at different rates. Many are cashed up. Expats are looking in the NZ$3MM+ range as the value for money in NZ is very good compared to many countries overseas. It’s a good long term investment. The world is not going to end, population will continue to grow, people need housing, and NZ is ever increasingly desirable.
Anecdotal. How many of them will actually end up doing this? 5? 10? 15? There are at least 1.8 million homes in NZ. I doubt this very small group of cashed up expats will have enough sway in the market.
Presumably these cashed up expats will be the marginal buyers, and I bet there are more than 15 in that category who come back. Still, I'm not sure that even Covid is enough to bring many of these Kiwis home. For some who were already considering a return, Covid will be enough to tip the balance. For many others, it will be too hard to leave career situations that will be impossible to match in NZ.
Sure it’s anecdotal. But also, as per Statistics NZ in June, for the first time since records began NZ had a net gain of kiwis returning home vs leaving. There are 800,000 expats still overseas as well. The net gain is 11,000 in the past 3 months and let’s estimate that 10% are cashed up, so there would be 1,100 buyers most likely in the financial hubs where the jobs are ie Auckland with Wellington a distant 2nd place. There are significantly more than 10 or 15 currently looking for property and thousands more offshore weighing up when they should return. It’s a financial decision usually when to come back (outside of COVID retrenchment or fear) having done it myself after 18 years offshore.
"With arrivals slowing at a faster rate than departures, the net gain of 43,799 arrivals in February turned into a net loss of 63,078 in March.
In April, May and June arrivals and departures had been reduced to just a trickle compared to their former levels, with passenger numbers bottoming out in both directions in May, when there were just 5577 arrivals and 10,111 departures"
https://www.interest.co.nz/property/105905/march-number-people-leaving-…
more people leaving NZ than arriving ... those 1,100 cashed up Kiwis can buy one house each and it won't even make a dent on the net loss over the last few months (whether they buy an owner-occupied house, or a rental that was previously rented by one of those who left).
You are combining tourist arrivals with returning migrants. Tourist numbers are zero whereas nearly all arrivals are returning citizens and permanent residents. https://www.google.co.nz/amp/s/www.newshub.co.nz/home/new-zealand/2020/…
Pretty sure those claims were talking about the next 12-24 months. Govt cant keep wage subsidy/bank support up for ever.
Averageman
No. FB's claims were not about the next 12-24 months.
"The agents mobile phones will busy next week. Its obvious now that the market is about to plummet and there is absolutely nothing anybody can do about it. We are going back to 2006 prices." by Foreign buyer | 22nd Apr 20, 11:08am
Fair enough P8, I have already admitted that I jumped the gun a bit because I did not know just how low the RBNZ and government would go to keep the ponzi going. But, seriously, what do you think would have happened if the mortgage holidays and wage subsidy payments were not rapidly introduced?
FB
You - as well as a couple of others - have made numerous extreme unsubstantiated postings.
Great to see you own it.
Maybe will continue to see postings of differing views but substantiated.
Cheers and I wish you well. :)
Thanks P8, but please answer the question. What would have happened if the wage subsidies, mortgage deferrals and massive drop in interest rates were not rapidly introduced?
FB
In response to your question: "What would have happened if the wage subsidies, mortgage deferrals and massive drop in interest rates were not rapidly introduced?"
We will find out.
The action of the government in introducing the wage subsidies and mortgage deferrals has simply delayed the consequences of the impact of Co-vid on housing. After all, once these come off then we are going to be exposed to the actual consequences of Co-vid.
We really do need to remember that all that the wage subsidies and mortgage deferrals have done little else but simply delayed the impacts and not reduced unemployment nor reduced mortages (or given free money to mortgage holders). In doing so it has also probably eliminated the risks associated with possible sudden shock and over reaction - I suggest that claims by posters of 50% fall in house prices is akin to the over reaction that could have existed. You can see that over reaction of the sharemarket which most of the time tends to be more over reactive and more sudden than the housing market.
In the longer term (e.g. post September 1 for wage subsidies) the wage subsidies and deferrals are no longer going to reduce levels of unemployment - those companies and jobs which are not sustainable under the Covid conditions will go anyway.
So we need to really wait and see what the actual effects of Covid are on the housing market. Government action has simply delayed that.
As for the RBNZ cut in the OCR? There is the removal of LVRs and QE which you don't mention.
When Orr announced the OCR rate he did not mention housing - rather he talked about targeting and trying to encourage businesses to invest and job creation. But, yes there are consequences for mortgages and the housing market.
However I think that while the OCR and LVRs may support the housing market, they are unlikely to have any considerable effect on it. Firstly the mortgage rates were so low I think that in practice it has meant only a slight change to the already very very low mortgage rates. Although the OCR and mortgage rates are down and LVRs removed this does not necessarily translate into an advantage - sadly especially for FHB. It seems that due to the economic uncertainty, banks have tightened up due to perceived risks which could outweigh any positives - they still have the stress test (6.2 to 7%); they are far tighter on their appraisal of work and job security and saving history; and importantly they are applying an interest risk premium on carded rates for low LVRs. What changes RBNZ has introduced seems as though it is going to only advantage investors with special rates (below card rates) rather than FHB who will be paying a premium above the carded rate - and investors are more likely be able to meet bank thresholds, and will be likely paying 1% less than FHB.
As for QE - I think that is likely to have a significant effect on housing market just as we have seen on the share market as those that can look more to assets rather than cash investment as happened following the GFC.
P.S. I see today ANZ have reduced their estimate of the fall from 15% to 12%.
Ok. Would agree that its more or less unrealistic to expect any great changes until after subsidy's wind up, which is conveniently setup to work in with the election. Then its Xmas, and then end of financial year etc. IMO the true picture of what will happen will be apparent this time next year onwards.
I've just heard the Anna Bligh of the ABA and the Federal Treasurer on the AM program in Oz. Aussie Banks are going to extend the Mortgage holiday of up to an extra 4 months. What's the likelihood of that being implemented here in NZ?
More time to delay the inevitable? Or will it buy more time for the overall health of the economy?
"As customers approach the end of their six-month loan repayment deferral period, Australia’s banks will implement a new phase of support to assist customers to get back to making their repayments".
See: https://www.ausbanking.org.au/banks-enter-phase-two-on-covid-19-deferre…
"The winter housing market train-wreck, as enthused by certain people here"
LOL, as 'enthused' by you too IIRC.
TTP wins either way.
In March he was telling everyone he was the oracle who saw this all coming in... [checks notes]... late February and he predicted a price correction or something.
Now he's right too.
Very incredible.
Hi cmat,
Indeed, I was nervous about the housing market earlier this year - with the onset of Covid-19. I was upfront here about that.
But I did not predict a massive fall in house prices, like various people here did...... I foresaw no more than a 10-12 percent correction (fall) in house prices - and that remains my position.
To date, however, the housing market has remained resilient. In some regions, house prices have continued to rise (as reported in the latest statistics).
TTP
We've got a wage subsidy in place, mortgage holidays and business support schemes to cushion the economy after the lockdown. I think we'll have to wait until the wage subsidies are gone until we get a better picture.
The returned kiwis all need somewhere to live.
Mortgage interest rates keep getting lower.
The post election Govt will keep printing and propping up the economy.
But, yes, must be challenging for QV and valuation agencies especially trying to set the Sept 2020 valuations.
QV . A rear vision mirror reporting model operated by slow bowlers who can’t get a real job
Hi Flo Tinaway,
Shooting the messenger shows bad form.
TTP
Shooting the messenger is just as bad as names calling btw..
Don't we have a net migration deficit presently?
and adding to that we have just pushed the pause button on returning Kiwis due to having run out of quarantine space
Heres the article around the deficit
https://www.interest.co.nz/property/105905/march-number-people-leaving-…
Yes. The pressure on our stock of housing was largely the result of the 50K+ annual net migration. This has turned from positive net inflows to net outflows, yet people still keep saying "returning kiwi's will push house prices up". From what I've seen a lot of the returning NZ'ers and not likely to be home buyers, but are often younger people who had less stable employment overseas and had to return when their job situation changed (and didn't have the resources to remain overseas).
And then if you add on top of that the expiration of wage subsidies, mortgage deferrals and high levels of new builds (that were being constructed to accommodate a growing population ... that is no longer growing).
Depends on who you talk to. I know of a number of expats returning and looking at property. Some of the younger ones have been disrupted by jobs losses overseas and have cut their OEs back for the time being but they wouldn’t have afforded a house anyway. It’s the hundreds of thousands that have been overseas for 10+ years with no assets living in the US, HK, Singapore, UK and Europe that’ll be in the $3MM+ range. They’ll be thinking they need to get on the ladder or grow their asset bases to fund retirement as jobs pay way less in NZ and the senior jobs are all held by boomers clinging on for redundancy.
Mortgage Belt, regarding valuations : David Norman
"• Auckland Council has requested that the three yearly revaluation of properties be delayed a year to allow the re-establishment of the market. At current low sales volumes post-pandemic it is extremely challenging to show the medium-term trajectory of the market or credibly revalue properties." It would appear however that Auckland completed new valuations in 2008 when sales volumes were actually lower than 2020 ?
When your perpetual increase paradigm runs out of gas, you just stop reporting numbers. Propaganda in place of facts on the ground. Brilliant.
Yeah right. Most of the returnees are coming from Australia, where they're coming home because they've lost their jobs, then have a choice to stay in a country with no income or benefits, or come back to NZ for a free two week hotel stay followed by benefits including dole and ongoing accommodation support.
I reckon those betting on these returning kiwi's to be house buying writ-large are going to be largely disappointed.
I don’t disagree with most of what you have written. But are returning NZers, fleeing Australia following redundancies and being unable to access the Australian social welfare system, really in a good place to buy a house here, no matter how low the interest rates? And even those with children are surely more likely to shift back home to parents than pay inflated rents, at least in the short term?
Edit - in reply to MB.
Wage subsidy and bank payment support have worked well. Todays Stuff article cites both of these as preventing mortgagee sales, so this is a form of life support. Will the banks continue their payment deferment (unlikely)? Will the Banks plunge interest rates even further (also unlikely)?
Thus agree it is finely balanceded indeed. Finacial life support has created an "easing" market. How will the patient fair when removed from life support?
Exactly, looks all pretty flat for now.
There are a lot of job losses and 25% of business expect to cut jobs. That along with the $20B taken out of the economy from tourisn and intl students all has a flow on effect.
I would be very surprised if it was still flat by the end of the year.
Agreed. Once the Govt is reconfirmed at the election, it will be time to "take our medicine" as the pollys will all have another three years of job security. National keeping up the "own goal" strategy will continue to erode any slim chances they had.
Do we have figures for the 12 months? Year to year that is?
While searching for historical figures, I found this. Didn't age so well: https://www.interest.co.nz/property/86171/nz-house-prices-look-set-fall…
Well, not a huge surprise since the assumptions of "rates rise and population growth eases" is exactly the opposite of what happened.
At least Covid is now fixing the latter.
Deleted care of nymads comments below
You do realise that Property Guru = CoreLogic, right?
Thanks for that. I was incorrectly under the impression QV was fed by only core logic data. Just did a random search and most of Barfoots incorrectly reported June sales done in May are accurately recorded.
CoreLogic captures the transaction upon settlement, not unconditional status.
Does that mean QV also captures all condo pre sales ? Not sure if they class as unconditional sales
Yea, that's always been an issue with the data.
Those aren't captured until the keys are handed over (and at a lag).
One way to capture them would be to back out an index from the deposits taken. However, this isn't required to be disclosed.
Understood. So I guess then condo sales cant really be accurately measured until quite some time after completion.
For example there is no record of 39 Beach Road on QV (The Antipodean). Taking a quick look even the older completed blocks like 132 Halsey still aren't accurately listed.
I presume therefore all Auckland CBD data is reasonably inaccurate whereas house data looks fairly accurate.
For now market is on roll with no sign of panademic consequences.
Though should fall but the way share market and housing market is moving / strong (share market making new height) since last few weeks makes wonder if QE = Economy and is the only fundamental for the economy ignoring that various subsides and low interest rates are all pointing towards Disastor and not sign of booming economy.
Now if it burst will be catastrophic and logically/fundamentally Should burst but one never knows as mint is open by all government to print as much as so wait and watch.
"on a roll"
I love these rhetoricians.
Sales, according to Barfoots figures, are down 11.5% for period March-June incl
QV showing prices basically flat
$40b mortgage subsidies and about $1m wage earners getting 80% of their wages paid by government for another 7 weeks yet.
Auckland market should show drop in sales primarily starting when JULY figures are released
But its prices likely to bifurcate with those under $800k CV dropping most and those with CV over $1.3 rising as listings at that end fall away.
Most of the action in this market will occur after the election.
Not rhetoricians but reality as of now though am of the opinion that house price should fall by year end / after end of wage and other subsidies BUT now still houses that are being successful in Auction are going at premium price.
The current property market can be compared to Lance Armstrong. He was doing just fine when he was getting pumped full of drugs (Jobkeeper). Wait 'til that finishes in September and see how good he is.
In endeavouring to draw conclusions from QV data it needs to be remembered that QV data is like the "SS Queen Mary" - it may be seemingly solid and reliable but is very, very slow to react to change in direction.
The positives of QV data is that it includes all sales or property transfers - REA and private sales - and is based on property sales being registered with LINZ (the official holder of property titles). Importantly it is based on the very final step in a property sale; not only after a sale agreement has been signed, gone unconditional and settled, but after the lawyer has notified LINZ which is a signifcant time lag.
QV data also covers a three month period; the article tries to address this drag by comparing May and June QV data to determine the "June shift".
However, it needs to be kept in mind that while the data is based on transfers registered in June, those sales may well may be contracts which are likely to have been agreed to some six to eight or more weeks previously and are therefore a better reflection of the market at that time.
Clearly the "June QV data" is probably heavily weighted to sales agreements signed in April. The bottom line is that QV data is not the ideal data to determine the current real time trend in the market.
It is probably worth appreciating the reason for QV data and why it is over three months. The origins of QV was the old government Valuation Department one of whose key roles was determining Government Valuations for rating purposes (now RVs). The purpose of the three month period as a basis was to provide a valuation which was free of short term (e.g. monthly) fluctuations and for that purpose was considered to be a fair and reasonable valuation - however by its nature and purpose it was not intended to reflect the current state of market direction. So care should be taken in trying to interpret QV data based on a purpose it was not really intended.
The REINZ data is based on monthly REINZ sales going unconditional. Its short comings is that it does not include the increasing number of private sales and is based on contracts likely signed two to four weeks earlier. It is however probably the best part of a month or so ahead of QV data in picking up market trends and changes.
B&T data is much like REINZ data, is available a little bit sooner but is based only on one company's sales going unconditional and is limited to the Auckland market.
Auction data provided by interest.co is the best real time data - being auction sales which are usually unconditional and - most importantly - that week. The short comings are that the properties are not necessarily reflective of the whole market and the sample sizes are very small.
However, looking at all the data that is available, it would seem that there has not yet been a significant fall or "bubble burst". For an individual currently looking at buying a particular property, the market fall to date is somewhat still secondary to the significance of "buying well and buying poorly".
However, as is regularly pointed out in many articles; the elephantS in the room are the effects of the wage subsidy scheme, "mortgage holidays", and business support schemes.
So still watching and waiting but increasingly feeling that the data - along with considering current market drivers - RBNZ and bank estimates of 7 to 10% falls are seemingly realistic and that claims of "bubble burst" or 50% falls were extreme and baseless.
I tend to ramble when I am worried too.
Lots of good info, especially with detailed breakdown of the benefits and shortcomings of the different datasets.
While I agree the most likely scenario is falls around the 10% mark, with the high level of uncertainty caused by covid, means that people should be assessing a range of scenarios. Lets say you are a buyer with 15% deposit and the chance of various scenarios are:
20% chance prices stay flat
60% chance prices fall 10%
20% chance prices fall 20%
So the upside is you retain 100% of the equity you put in, and you now have a home (that will hopefully gain value over the long term). There is a 60% chance you lose 2/3 of the equity you invested in the short term, locking you into the property for the foreseeable future (less of an issue if you have stability in location and employment). But the downside is that your equity is wiped out, and you are probably locked into the property for years - and a change of circumstances could see you wiped out financially and lose the property.
Saying just "buy right" is just such a nonsensical argument. There is almost no upside to jumping in now, but the potential downside could be catastrophic for an individual without sizeable equity available.
Constantly saying "there won't be a 50% fall" so there is nothing to worry about is such a straw man argument, as virtually no one is warning of these sorts of falls. But most importantly falls could be a fraction of these non-existent predictions, but still have catastrophic consequences for FHB's.
"Reserve bank considering an extension of mortgage deferral scheme"
Perhaps to give those who have to get out, more time to do so?
"New Zealand Bankers' Association chief executive Roger Beaumont said mortgage deferrals could provide customers in need with immediate relief at an uncertain time. "Banks are responsible lenders and suggest customers only defer all loan repayments if they need to. Before making any decisions to extend mortgage deferrals banks would need to assess the customer need."
la la land extend and pretend continues.
All these bankers are running the 2008-9 playbook like that worked for world economy and for most who wanted to buy a house.
This is not the 2008-09 situation, this is a collapse in world demand and money circulation.
Printing money that does not circulate only inflates asset prices.
Meanwhile, those in bottom 40% will get wage cuts, job losses and no help with rent. Very fair. NOT
Printer8, Upvoted a wet hoof for thorough l explanation.
Hi Printer,
thanks for your consistent effort in informing people of detail of what is going on and explaining things
This contribution is best today I think. V measured.
Meanwhile, CoreLogic updated my homes value to 102% of 2017 CV as at 5/7/20. I have grown impatient waiting for the big drop and bought some more Gold. Bullion this time.
First home buyers this is your most important election. Vote to see the foreign ban/money laundering maintained and reinforced, and immigration fire hose reduced (Covid doing this really). This will yield two fold benefits. One = cheaper property values, and two, job/wage security as no cheaper resource to undercut you.
Vote accordingly. Hint anyone but Nats and Act.
After this latest round of dirty politics I don't know how anyone with any decent morals could come to vote for National.
Agree, but given the COL's performance I expect ACT to benefit. The rest have dodgy behaviour of their own as yet unanswered.
Self-interest beats morals in most cases.
Bloomberg says this..
https://www.bloomberg.com/asia
QV figures will be for sales that actually settled in that period - many of these sales took place before lockdown. Now we have this interesting combo of low level of listings, investors that don't need to sell when they can refinance at 2.55%, LVR altered, Kiwis arriving back in NZ in large numbers and unlikely to see Kiwis heading to the UK, Australia etc for the next 18 months. Looks to me like its going to be a sellers market for quite a while and we could see NZ median house price escalate by at least 10% over next 12 months. Most small towns and cities across NZ are seeing a boost in buyers using Kiwi Saver to get into a house and its only going to get more tempting for first home buyers and investors as these interest rates drop lower and lower.
True to your username, you're only looking at the upsides. What about:
- record number of new buildings finished,
- net immigration at negative(!) 12000 this year so far,
- lower interest rates has a minuscule effect at this point (3% vs 2.6% doesn't make much difference),
- no students or tourists for 12-18 months = no short term rental demand,
- banks sensing risk will be reluctant to lend in this environment,
- houses are already extremely unaffordable for most New Zealanders,
- home owners losing their jobs en masse will result in mortgagee sales,
- job losses will also negatively affect rents, thus investors' yields are expected to fall.
I noticed TV3 this morning referring to the "property curve" - Is that what happens when the ladder folds in on itself ?
'Property curve' and 'property cycle' are subjective nonsense used by people who want to sound knowledgeable.
So are the banks wrong in their 10% price drop predictions?
So are the banks wrong in their 10% price drop predictions?
It's irrelevant. If I say "house prices could fall by at least 10% in the case of x,y,z", that whole claim is 100% sound. It's propaganda designed to influence the attitudes and behavior of the masses and is not designed as a steadfast forecast. There's enough modification in the language to protect the banks from any accusations of misleading the public.
Banks, Robbing Peter to lend to Paul...multiple times, will always end in.....a life sentence............Aussie Rules...not withstanding.
Cynical, but at the same time bang on
Its not a Mcdonalds drive through outcome. Give it a few months and the truth shall reveal itself.
Australia’s housing market brisk as well.
https://www.domain.com.au/news/homes-are-selling-faster-than-last-year-…
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