House prices in Queenstown-Lakes declined by 3% between May and June and are now 9.1% lower than they were three months ago and 7.6% lower than they were in June last year, according to the Real Estate Institute of NZ's House Price Index (HPI) .
The HPI is considered a more reliable measure of the overall movement in residential property prices, because it adjusts for differences in the mix of properties sold, while other measures such as average and median prices do not.
Across the whole country, the HPI rose by 0.9% in June but remained 1.2% lower than its March peak.
A similar trend, where the HPI rose in June but remained below where it was in March, was also evident in Auckland, Hastings, New Plymouth, Palmerston North, Wellington Region, Upper Hutt, Wellington City and Christchurch.
Although Queenstown-Lakes showed the biggest price decline, the HPI also declined on both a monthly and three monthly basis in Hamilton, Tauranga, Rotorua, Porirua, Lower Hutt, Dunedin and Invercargill (see table below).
So the HPI figures suggest that price movements were something of a mixed bag in June, and tended to be a bit stronger in Auckland than in many other parts of the country.
But with the exception of Queenstown-Lakes, the movements were mostly small and it's probably too soon to try and pick a post-lockdown trend from them.
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REINZ House Price Index June 2020
110 Comments
Housing market in Auckland uptill now is strong as mentioned/ repeating myself again like many other on this website that it will be important to watch if it continues to hold even towards the end of the year (when subsidies end) or not.
If it does hold than unlikely that will fall in future so is wait and watch as all other indicator except low interest rates points towards fall (unless government print more money and distribute) but will it ?
Exactly its still being propped up by government subsidies but thats all scheduled to end. The only relief I can see is if it gets extended and then it suddenly becomes permanent and called a UBI and that is a real possibility.
UBI is just not viable at this point. Nor financially, nor politically. It's a wet dream for many, but a meaningful level of UBI would cost too much unless the way people and businesses are taxed is completely redesigned.
MMT man, they can print as much money as they want without consequence...
There are consequences, one being higher asset prices.
I hope you are right. When did financial viability ever enter the picture with the Greens or Labour? It may just be squeezed through be politically if the Greens are part of a new coalition without Winston First.
Just for the sake of clarity
Do some research for yourself about the actual and historical budget management under different governments in NZ
You may be disappointed if you you really want to know facts rather regurgitated stereotyping
"When did financial viability ever enter the picture with the Greens or Labour?" - has it ever entered the picture with Nats? Certain things in life can't and shouldn't be financially viable. Basic services like healthcare, police, benefits, infrastructure - these should be paid for with a percentage of everyone's income. We will never get a direct financial return from these, but there's more to life than money. You don't beat yourself up for not doing something productive 24/7, right? The same mentality should apply to the basic needs of a modern society.
In my previous comment I was referring to simply not having enough money to actually do this. Like going to Fiji - it's fun and you don't expect it to be financially viable. But if you have a grand total of $20 in your bank account, you really shouldn't go to Fiji.
Queenstown's housing price actually gives a very good indication of how local economy impacts housing price. Auckland's price is still strong only because the hit it has taken is not as hard as queens' town's. If you want to figure out how Auckland housing price moves in future, I suggest you to take Queenstown as a case study. This also shows that economy and housing prices have very strong correlation. For people who think housing price can only go up and never come down. Stop dreaming and come back to reality. Also once it starts falling, it will fall for a while due to investor's psychological effect.
queentowns prices are because a BIG proportion of their stock is owned by overseas investors, most of the apartments are owned by offshore as are the top end housing, locals were priced out of the market years ago
Yep and I'd suggest the fall is because of the large stock of airbnb homes which are vacant and now being offered for sale and the reduction in local employment. Recently did a trip down there and the local staff telling me they can renew their rent up to 30% lower as there is a flood of ex airbnb rentals on the market for tenants.
Hi company of heroes,
Note that many investors adopt a counter-cyclical strategy.......
If/when house prices fall they buy into the housing market. (This mitigates downward price pressure.)
Also, the prospect of Judith Collins leading National into government (if not this year, then in 2023) will do much to boost investor confidence.
TTP
On that last, the expectation of yet more welfare for investors.
And that counter-cyclical strategy. Does it involve selling when prices are rising? It should for anyone who wants to take advantage of The Cycle. But from what I see, The Cycle is all about buying the dip and holding the rally. And that...will likely be the undoing of a lot of 'investors'.
It's 'easy' to buy a dip, but much harder to have the sense to sell a rally ( there's always just one more rise left in it, isn't there!)
Long-term property investment is the key unless it's a necessary sale. Hold forever and occasionally there will be an even better property that makes it's way into your realm.
Ah, yes.
The Terry Serepisos Property Investment Strategy.
Didn't that work out well!
Brilliant. You highlighted an aging single male reluctantly living with his mother. Remind me who Terry was aiming to imitate with a tv show.
bw
I agree that a number of property investors - usually the ones who brag as to how well they are doing - overstep a prudent line and unsurprisingly go bust.
I recall the buoyant period for property 2000-2008 and at the time I was a member of the Property Investors Association.
I became quite skeptical of the Association; at the monthly meetings most of the presentations were essentially leveraging to the max and about the gains or bragging about the size of portfolios, as was the theme of the features in the national magazine (e.g. "25 year old has six properties").
When the GFC hit many of these high flyers - including Terry Serepisos - not surprisingly went bust.
The long-term, quite, conservative investors are still there and now living comfortably.
It is simple - if one doesn't want to be boom and bust, it is not about blood-rush, over-confident, highly-leveraged and consequently risky investment, rather more-so about being long term and prudent.
And JC/Nats also relaxing foreign investor criteria
I totally agree with our argument. I just wonder would you say the same when prices are soaring? or then that will be a Ponzi? a scheme or whatever other term?
Your puddle deep analysis fails to recognise Queenstown is geographically isolated and probably the most exposed location in NZ to the suspension of inbound tourism. Extrapolating Queenstown to Akl and Wgtn and attempting to join the dots is like my trying to remove your intestine after watching a youtube video.
Certainly not upset by this. If this means people who work in Queenstown might actually be able to afford to live there, then that is wonderful.
So we still have this situation with medians
Auck 928 Syd 875 Melb 683 Bris 503 Perth 441.
Auck still seems over priced.
Just happened to overlook the exchange rate, not intentional though
No,they actually earn more in Aussie, so Auck even more overpriced.
My sister bought a new build in Perth circa 4 years ago. They bought at the height of the market at ~550k. Now valued 470k. For them, its a home but the market suggests they wont be making any kind of capital gain in the next 5-10 years, so they're kind of stuck there. On the upside, both her and bro in law earn 3x what they would here in similar roles.
Even if we don't have the sudden plunge in prices here - we could follow Perth - who I understand have prices below and falling from where they were 10+ years ago. The mad rush to buy now, which was the same when I spent quite a lot of time in Perth around 2004-2008, won't always necessarily be present in the market, even though many like to tell us otherwise.
You have been everywhere man... and also successfully resisted 'the urge to splurge' on a home. I know you're very happy with your decision(s), however isnt it funny how nz pulls through the worst times fairly well
The tough times have only just begun. The next 12 months will be a long slog
2008 to 2012 was just a precursor ... lol
Yes all countries have until they haven't.
I listened to a report yesterday with interest of sheep farmers making a living despite failing wool returns. Strong meat prices are doing the trick for them and keeping them profitable. Yes this example is small and insignificant I know but I thought how many times has that happened in the macro-economy. When one sector is down another pops up and has a run and it keeps the country chugging along.
Yea but wool and meat come from the same animal. If meat and wool prices crashed, they'd be screwed. Sheep farming is a unique sector - most sectors do not have this advantage. Also, wool still costs the farmer $$$ in shearers, mustering, crutching, dipping etc.
The end of the last mining boom was apparently the catalyst for the fall in the Perth market and then it kind of stabilised through oil and gas. Who knows whats in store for WA in the next 12 months
Have family over there as well and they're not that happy after purchasing about 3-4 years ago only to see prices falling further.
Which is 1.07 NZD / AUD... It's pretty much insignificant.
Seven percent is Insignificant ? Wow !
Please take note people. And please remind me of that statement the next time Jester is talking about house price falls in Auckland and making a big deal over one or two percent movement.
It is absolutely insignificant when comparing, say, Brisbane vs Tauranga prices, where the price difference is 503k vs 664k(AUD!). 32% difference in price, using the exchange rate vs 1:1 conversion isn't gonna paint a prettier picture.
And let's not even start talking about wages...
By the way, a 7% drop in house prices YoY is VERY significant due to leverage. But spruikers only understand how leverage works on the way up...
Quick sidestep to the left to get out of a tight spot ! Throw the ball up in the air and re-catch it to create a diversion...
Well, I tried to explain it to you. Not my fault that you don't understand the difference.
You might have to do it slower, much slower...
Brisbane/Sydney/Melbourne/Perth and NZ cities aren't like for like. Sydney stretches 50km North, South and West from the CBD, Brisbane who knows but I'm sure it's similar. I know Melbourne is similar. Try and buy 800 sqm within 10km of the CBD in Sydney and let me know how you go, if it's East you will start at $6m. Australia has stamp duty of between 3% and 7% of purchase price as well. You wouldn't let your child anywhere near an Australian state school either. Penrith = 40c+ in summer, 10c in winter, drought, bush fires - Tauranga looks like paradise.
Exactly. Australia is no longer the lucky country.
Yes but way out in Papakura people are paying 750k for dumps.
Papakura is 30km from CBD, same as Hornsby in Sydney. https://www.domain.com.au/14-silvia-street-hornsby-nsw-2077-2016278939 add in stamp duty, fx, and the fact this will go for more than guide and you are comparing $750k for a dump in Papakura with about $1.4m for this dump. Sure, maybe you earn more in Sydney.
Like everywhere, there is state school and"state school. You can't make generalisation all state schools are the same! Clendon School and Auckland Grammar are both state schools by the way!
Small correction: I believe the best academically performing high schools in Australia are in fact state schools. Specifically they're "selective schools", i.e. state schools with academic entrance criteria. In New Zealand the best academically performing high schools are private schools.
Yup my son went to a selective school in Brisbane, it's a state school. It's ranked amongst the best in IB curriculum.
I admit it's a very small sample, there may be some good ones. Still, independent schools are miles ahead on average given how few students attend them. https://www.matrix.edu.au/high-school-rankings/2019-high-school-ranking… It would be interesting to compare to NZ.
Note that 8 of the top 10 schools are selective schools, as shown on that page you linked to.
Meaningless without considering the percentage of apartments and distances from city centre.
good news for retirees (boomers) looking to move to Queenstown, they deserve a break...
Queenstown is a beautiful place to visit but a totally different story if you live there. It's incredible expensive and remote, I've done it for 7 months!
Quite right!
After a year, you've done everything that there is to do - more than once, and you set about doing the same thing again as the next year rolls around, but with a new set of 'friends' - the last lot having moved on to another location.
It's great for a one-off stay when your relatively young, but as for retiring? It's cold; remote; divorced from less than minor healthcare when it's needed and a trap for bored money, made elsewhere, looking for something to do.
Must be tough being a boomer these days - maybe head back to Auckland to warm up and free trips to Waiheke Island to drink chilled chablis? Maybe with your spare time you could do some volunteering at the food banks (quite busy).
Boomers shalt not enjoy the fruits of ones hard labour when millenials have a god given right to have their cake and eat it first before they have laboured.
Millennials have labored for 20 years now, we are in our 30's, and the home ownership rate has just plummeted. Boomers benefited from better social services, then pulled the ladder up behind them; while expecting millennials to continue paying for their superannuation and healthcare, like it's their god given right.
Yes and the central banks dropping rates - meaning that its harder to save a deposit while the mortgage deposit requirement rises as house prices climb - mean the 'housing ladder' philosophy is literally one where the ladder is raised to the roof by the older generations, out of the reach of younger generations, and from those lofty heights, they talk down to younger generations calling them lazy and entitled.
The greatest generation appeared to grow greater humility and compassion with age, while their children, the boomers, appear to do the opposite. Donald Trump being a classic example. Everything is the opposite of humility and compassion.
Most boomers could buy their own house by the age of 30 on a *single* average income. Try that as a millennial before you call us entitled... How ironic.
.. replace "cake" with "avocado"
very good!!!
While there, he can lecture the recipients on work ethic and frivolousness.
After turning up in your AMG Mercedes
Possibly Jap used import ordinary 4cyl Merc with AMG badges bought from eBay.
That's what's wrong with Australia, no jap imports only Holdens inauspiciously closing down... oh and major outbreaks of disease. No longer the lucky country Chairman Moaner
Nice! ... what is this with you and TTP about names calling, is that your trick so shut people down?
Bytheway, here you can buy a brand new VW Golf for 23K or a BMW 1 series for 38K .. try that in NZ
I could ask you the question of what's up with you always on here moaning and having a dig at nz. We know you left the country in search of greener pastures but even though you landed in oz I think you're still not happy. Having a moan on interest is the way you're letting off some steam. Chairman Moaner fits you perfectly. I always get great car deals bytheway. Making comparisons as one-up-man-ship is really dumb
Since when I am not happy? FYI I am very happy where I am.. and it's very good here.
And for "having a dig at nz" it's called free world, we are not North Korea. Do you own NZ or this website? If not, get a grip!
If it makes you feel better then go have you cheap thrills. You are really thin skinned though
Take your medo man..
Im not the one comparing the budget line of cars mate lol did you get a bulk buy deal
lol.. you do have short memory.
Enjoy your day.
Yes you love to constantly tease people. It shows up your petty nature
You two are hilarious - better get back to my supporting of the entitled boomer clan - I see they have picked one of the most entitled ones to lead the blue bi-grade
She said the party's policies would not see any major changes..what policies?
She said something about not taxing the country into oblivion so I guess tax cuts are the motto?
There there ..have a horlicks and turn up the heater paid for by the winter energy top up (thank taxpayers)
Once Tiwai shuts down, taxpayers wont need to fund the winter payments!
report the median yesterday and the HPI today to get two articles out of it?
Who are doing all the buying?
A phone call by the resident columnist to Barfoots would get some indication
Just broad brush stuff - no names required
Are they
Queen Street Farmers?
Smart money?
Domestic FHB's (unlikely)
New arrivals buying their first house here as FHB's
Expatriates scuttling back to NZ
And while we are at it - who is doing all the selling?
The smart money?
Distressed sellers?
Jafas heading south
Who is buying?
Well sorry but buying in nz is 41% down in last 4 months compared to 2019
But media not interested in this fact due to advertising need for promotion of the “confidence” theme
On that front- noticing a lot of real estate agents are advertising themselves. Is it a case of trying to get inventory, reduced advertising costs or a last roll of the dice? Can't quite figure it out for myself why I am seeing so much more and not a case that I have changed my behaviour to drive it (I.e. targeted advertising)
I imagine they're desperate for listings. It's slow out there.
Advertising because no "funnel " of listings due to CV19 shutdown for 8 weeks
I have read multiple times that you said you cannot compare June 20 with June 19 sales due to pent up demand in 2020. I agree. But then you happily compare 2020 four months period with the 2019 one? things have been very unusual since Feb 2020. So comparing with historical figures is probably not very telling.
The only thing that is truly surprising is the fact that prices are holding up, even if number of sales have dropped. How is this even possible? How in face of less effective demand (much lower net immigration, a certain increase in unemployment and a certain decrease in average income per head in NZ) prices are holding?
the same with share markets.
And this is not only NZ phenomenon. This is a global trend. In places much worse hit by the COVID-19
That's exactly why you need to compare 4 months this year and the 4 months last year, instead of just June 2020 vs June 2019 -- you need to look at that extended period for meaningful insights.
Compare it to a Rugby game, where Team A dominates the first half, and still hold a comfortable lead well into the second half. They then bring their subs in for the final 20 minutes of the game effectively taking the foot off the pedal, while Team B continues to go hard so as to not finish the game scoreless. Say Team B scores 2 tries while Team A does not score in the final 20 minutes of the game. Good job for Team B as they performed better than Team A in those final 20 minutes, but you still need to look at the result of the full game to determine the winner.
You need to compare comparable periods! was there a lockdown in April and May 2019 and a restriction of movement in March and June? how on earth these two periods comparable? they are not. That is the point. In your rugby example, it is like to compare a four month league period when a team played 20 matches with a wining rate of 65% to a four month period of between seasons with 2 matches and a 100% winning rate. Absolutely pointless comparison as there is no basis to compare.
That’s exactly why you’re comparing the 4 months, because you take into account the lockdown in 2020 that didn’t happen in 2019!
June 2020 is pent up demand from the lockdown, while June 2019 did not have pent up demand because there was no lockdown. The June months in isolation are not comparable, so you’d need to include the 3 months prior to get a full picture. That is the point.
And your 20 matches vs 2 matches analogy is not even remotely similar to what I said so I don’t even know why you brought that up.
Ok. Just look at 2019 in Auckland. It sold FEWER than in 2009 and also 26% fewer than 2012.
Trend is quite clear and looking only at 2020 merely obscures it.
More stock, fewer buyers, higher prices.
This is not a healthy "market"
A "market" refers to buyers and sellers.
A present we have a shortage of both, compared to historical trend
Owner occupation is declining by the year. Price is clearly the reason.
Yet, many folk continue to cheer whenever prices go up, merely for their own equity rising.
Who are doing all the buying?
Most likely downsizers to a smaller mortgage..
For that to be true they'd have to be selling.
Why are people so determined to hold on to these inflated prices. Lance the bubble now once and for all.
Too much personal debt wrapped up in a deadend asset class
Is NZ not worried about competitiveness in an increasingly competitive world.
There's a weird narcissism/ego attachment/passive aggressive thing going on with NZer's and house prices. If you talk about the bubble bursting, its like you're the devil. But having expensive houses isn't a good thing, its a disaster for the economy long term - but getting the average kiwi to look past their own self financial interest and see what might be beneficial for the economy, for all kiwis (current and future) long term...well that discussion is going to fall on deaf ears.
Much wants more.......
My Dad tells me his Dad (we are from Yorkshire) put it like this: "Them as 'as, gets" (those that have, get)
But having expensive houses isn't a good thing, its a disaster for the economy long term - but getting the average kiwi to look past their own self financial interest and see what might be beneficial for the economy, for all kiwis (current and future) long term...well that discussion is going to fall on deaf ears.
Correct. If the housing cost components of a h'hold are lower or the price-to-value proposition is better, more can be spent elsewhere (ultimately good for the wider economy) and the standard of living improves.
Personally, I think NZ as a whole doesn't understand the extent of the problems caused by doubling down on a housing bubble. I'm not just talking self interest of those with skin in the game. I think the lack of understanding extends to the political class, the banking industry, and even the business community. The people who really understand the problem are those knees deep in the FMCG world, particularly those who work with data sets on what's actually going into whose shopping basket. This is where the wealth effect is really understood.
It's also about economic mobility driving productivity. High house prices traps people into debt that they must service, so they get very worried about moving anywhere or changing anything. Over the long term, that's disastrous for the economy as it creates people who never change their ways and never have to change their ways. They can't take any risk (too much debt already) to create new businesses and you have an economy mired in yesterday's tools/processes/products/industries, instead of an economy moving forward. I know of 2 of my friends who have fantastic businesses ideas for tech companies who should be starting new businesses and actually want to. But they are stuck in their current roles because they cannot miss one of their huge monthly mortgage payments as it would spell disaster for them...
'Personally, I think NZ as a whole doesn't understand the extent of the problems caused by doubling down on a housing bubble. I'm not just talking self interest of those with skin in the game'
We're going to find out one way or another this decade, now that rates are more or less at zero. And given that it is housing and we all need places to live, it will impact everyone, not just those with 'skin in the game'.
Unaffordable house prices in desirable large urban areas is a global phenomena. Look here for some European cities:
https://www.numbeo.com/property-investment/region_rankings_current.jsp?…
And while it is obviously true that cheaper housing is a good for all of us (well at least most of us), there must be global mechanisms that are driving the house prices higher and higher (relative to income) (immigration? QE operations by the central banks? Serious competition from Asia and the end of colonialism meaning that the rest of developed world cannot have the insane added values to support a high standard of life for more people?) . And even if house prices crash it will be only a good thing if people income is not reduced in the same proportion (reduced income being at least one of the contributing reasons to the crash).
This isn't just a NZ issue, same goes for Australia and Canada. At least in some other countries the heat was taken out of their markets during the GFC and generally speaking they are now more cautious when it comes to property investment - while at the same time NZ, Aus and Can have doubled down on their housing investment/debt creation. It really could be a bloodbath this decade. I'm not saying its going to be, but I'm saying that we've created the conditions for it to be a possibility - but we didn't need to allow that to happen, but we did...in an almost egotistical and narcissistic fashion.
Debt regulation is a very tricky area. How do you suggest that Canada, NZ, Australia, Sweden, Germany, Norway etc must have gone about regulating their debt creation? forbidding lending to anyone other than a FHB or an owner-occupier plus a DTI ratio of 5 for any borrower? What if the prices that FHB can easily pay are below the point that building new houses makes economic sense? should we only allow state to supply houses? and what would be the most efficient way for the state to solve the problem? building large block of small apartments. Soviet style. Would you consider that a superior outcome?
There are multiple factors that have got us into this position - ranging from macroeconomic to human psychology (FOMO, greed etc). Creating a culture of property investment is fine with rising prices, greater debt burdens and falling home ownership rates - but you have to deal with those consequences eventually - probably coming at us later this year and possible for the next decade until it all resolves itself.
I'm not quite sure I understand the remainder of the comment. Living in a soviet regime isn't the answer - but nor is turning a country into a property speculators paradise and placing large debt burdens on younger generations. Not sure which is worse but no doubt we will find out.
Isn't Wellington just one giant UBI experiment? Thousands of people "employed" to make work for each other. With thousands more employed to give them something to spend their money on. Not to mention the massive subsidies to rail in 100's of people a day from Manawatu, Wairarapa and Kapiti to feed at the trough.
Q'town hammered? Hardly. I expected to see something like a 30% drop. This movement is largely insignificant.
Q'town hammered? Hardly. I expected to see something like a 30% drop. This movement is largely insignificant.
Problem is Kate that 10% in a sales index can actually mean 30% or more. Think of it like this. If a fixed proportion of property owners wanted to sell their properties tomorrow (say up to 20% of stock), at what level would they have to set their prices at? 10% below their expectations? 30%? 50%?
Nobody really knows, but I think it's fair to say that 10% lower would be conservative. This is actually how bubbles unwind.
For now.
Based on Qantas' announcement last year, I don't expect international tourism to return before the end of 2021. The govt can either turn the subsidies into a permanent guaranteed minimum income, or we'll see a lot of bankruptcies in 2020 Q4.
Queenstown property prices were beyond the pale , its time they got real down there
Housing crisis already started....
https://www.rnz.co.nz/news/business/421239/demand-for-residential-mortg…
Great! I've got my eye on a sub-division down the road from me that's just got the roads sealed, sections just on the market. One show home just built. Keen for a bargain.
Anyone buying a house now please remember you were warned !
Tell that to FHB and investors piling it all in like Sharesis.
cheap money everhere
What are the fundamentals for the price rise- can anyone explain it please
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