Spring arrives early at property auctions

Property

Auction room activity is going from strength to strength with the sales rate hitting two thirds

22nd Aug 20, 10:07am by Greg Ninness

An early spring appears to have arrived for the real estate market with auction room activity going from strength to strength.

In the week of 10-16 August, interest.co.nz monitored 275 auctioned properties around the country, compared to 228 the previous week and just 175 in the equivalent week (12-18 August) of last year.

Auction activity has been rising steadily since June and the latest numbers suggest the market has now fully recovered from the effect of the main COVID-19 lockdown in March and April, and is now significantly more buoyant than it was at this time last year.

But it is not just the number of properties going to auction that is rising. The number being sold is also increasing, with sales achieved on 181 of the auctioned properties monitored by interest.co.nz over 10-16 August, meaning two thirds of the properties auctioned found new owners.

In the equivalent week of last year just 98 of the 175 auctioned properties monitored were sold, which gave a sales rate of 56%.

Prices are also firmer.

Where interest.co.nz was able to match a sold property's selling price with its rating valuation, 87% of selling prices were above the corresponding rating valuations in the week of 10-16 August.

The latest results are all the more surprising given that the country's largest market, Auckland, was in Level 3 lockdown for half of the week, putting significant restrictions on auction activity in the region.

However those restrictions, such as banning open homes, limiting private viewings and closing auction rooms, which meant auctions could only be held online, clearly did not dampen the enthusiasm of buyers and vendors during the week.

Details of the individual properties auctioned and the results achieved, are available on our Residential Auction Results page.

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146 Comments

by Zachary Smith | 22nd Aug 20, 10:57am 1598050634

Starting to think there is never going to be a property downturn.

by tothepoint - d… | 22nd Aug 20, 3:03pm 1598065432

As much as an eternal Spring might be an appealing thought for some property owners/investors - a tapering off in market activity is always inevitable......

A slowdown will shake out a few of the gung-ho - but most people will simply see it as a normal part of the property cycle and continue on regardless.

TTP

by J.C. | 22nd Aug 20, 12:51pm 1598057464

Starting to think there is never going to be a property downturn.

Probaby not a good thing to be thinking. You should always be prepared for a property downturn, particularly in NZ. Why? Because our nation's 'wealth' has been captured in houses in a game of 'I bid higher than the other person' using mortgages created out of thin air by the monetary system. It's potentially a recipe for disaster of epic proportions given the current economic climate. Therefore, people should be thinking about what the implications are.

by b21 | 22nd Aug 20, 1:34pm 1598060047

Spot on J.C. Many commentators here seem to miss the point of the risk we are facing as a country because of this real estate bubble madness, which is putting most debt and savings into just one single, overpriced asset.

by J.C. | 22nd Aug 20, 2:18pm 1598062703

Mispricing or not understanding risk is a huge issue right now. It's also an important element in why asset bubbles burst.

by alittle | 22nd Aug 20, 2:27pm 1598063244

'Mispricing or not understanding risk is a huge issue right now. It's also an important element in why asset bubbles burst.'

Bubble always burst when everyone is sucked into and least expecting it to burst AND now we are not in a bubble but Hyper Bubble so.... Interesting time ahead.

by Yvil | 22nd Aug 20, 4:45pm 1598071504

"Bubble always burst when everyone is sucked into and least expecting it to burst"

With all the warnings on this site, we must be very far away from that mythical "burst" then

by J.C. | 22nd Aug 20, 4:58pm 1598072294

Wrong. The bubble burst could be in full swing right now but you're not aware of it. The great unwashed are only aware after the fact. You're demonstrating all the attitudes and behaviour of why bubbles exist in the first place.

by VeryInterested | 22nd Aug 20, 2:18pm 1598062735

It amazes me that very few on here appear to comment on the longer term affects of covid19. It’s as though many believe we’ve had it, it’s done so everything can go back to how it was before. There is definitely a mindset here that property prices can never fall but if they do they’ll bounce back and be higher than they were before so why worry. Debt levels have never been higher across the world than they are today. The FED tried increasing interest rates and that failed miserably because there is too much debt for people and countries to afford to repay. Their answer is to issue even more debt. There is massive worldwide unemployment, businesses are failing, tourists are not travelling governments including ours are continuing to pay wages and support failing businesses. We hear buy local, support your local businesses which is fantastic but all the other countries are saying the same. It is therefore not entirely implausible that our exports could suffer a decline. If you’ve got $10 to spend on meat do you buy the local cheaper meat or the NZ meat that is more expensive (but obviously much better quality). It is these types of scenarios that many need to play out in their thought processes. Everyday businesses could be greatly effected by cv19 for the next 2-3 years. It’s not what is happening now here in NZ it’s what is happening around the world, the way other countries are coping with the outbreak and thinking how that is likely to have a knock on effect here. If you take on high debt levels now be confident that you aren’t just taking advice from one group of people. Think about your job security, the business that pays your salary and how reliant it is on traditional world markets. I don’t believe we have seen anything yet and the effects of cv19 will be far reaching and long lasting. We won’t be back to normal any time soon.

by J.C. | 22nd Aug 20, 3:24pm 1598066652

It’s as though many believe we’ve had it, it’s done so everything can go back to how it was before.

Yes. But regarding thinking about this issue of things returning to the 'status quo', the problem is not only amongst the proletariat. It's also quite common among institutions. Essentially this is fear of change.

Worst crisis since the Great Depression, and it's still the property 'ladder.'

by Hans Brink | 22nd Aug 20, 9:47pm 1598089632

I think all this happened in the Roman Empire. Hey, we are still here. Admittedly we have some pretty heavy environmental issues going on. But persevere and things will come good.

by Rob Reid | 23rd Aug 20, 1:14pm 1598145267

After the Roman Empire fell, the Dark Ages followed. Just because we have been here before does not mean we should not worry.

by Tombo77 | 23rd Aug 20, 8:27am 1598128077

Respected Sir , You are correct with all of your comments. Normality in World Economy is decades away if ever. If I was long any RE in this country it would be on the market already.

by Uncle Bulgaria | 22nd Aug 20, 3:34pm 1598067290

I need a house in Wellington This one way street is so depressing. I’m going to buy a small damp shed with windows for a million bucks. Tragic.

by alittle | 22nd Aug 20, 2:23pm 1598063004

Yeah it seems that in NZ housing boom with house price rising on a weekly basis will never end.

Samecapplies to stock not only in NZ but in most developed countries.

Boom time to make money. May be panademic is best thing that happened to asset class in over a century.

by JimboJones | 22nd Aug 20, 7:15pm 1598080528

Interest rates can’t go much lower Zachary. They can’t prop it up forever.
In my opinion it’s all a matter of demographics. At the moment there are a large group of boomers who have money to invest; at some stage that same group will be wanting to cash out.

by Tombo77 | 23rd Aug 20, 8:29am 1598128158

Thats correct but there are more likely to be "more diers than buyers" in simple terms for the next decade and a half due to the very demographics you allude to.

by Rob Reid | 23rd Aug 20, 7:53pm 1598169207

Regarding downturns, Neil McCoy-Ward released today the Youtube below on the potential for a crash.
Around 17.27 he rates NZ as #1 bubble, followed by Oz, then Canada and UK, then US.
He thinks crunch time for NZ probably early 2021.

Housing Market - Has The Housing Crash Started?!
https://www.youtube.com/watch?v=529Hq5rAXYI

by tothepoint - d… | 23rd Aug 20, 10:48pm 1598179680

Hi Rob Reid,

By suggesting that, "crunch time for NZ [is] probably early 2021", your friend with the hyphenated name creates the spurious illusion of precision.

You're welcome to trust him if you wish, but I would caution against it.

TTP

by Rob Reid | 23rd Aug 20, 11:17pm 1598181433

Quiet right - I don't trust anybody on future predictions (more so than ever these days), including myself.
Just thought it might be of interest to some others as a viewpoint.

by MortgageBelt | 22nd Aug 20, 11:04am 1598051044

Just sold one of our properties, listed one month. No sign of any downturn in demand.
In fact first home buyers seem very active. And then mature buyers for newish larger homes seem in demand as well selling quickly.
Where is the predicted downturn?
Will it ever really eventuate?

by Rob Reid | 22nd Aug 20, 11:29am 1598052586

The downturn is compressed into a growing pile of debt for future tax payers to worry about.

by Fritz | 22nd Aug 20, 1:13pm 1598058816

No one can say for sure.
We might get out of this all ok. I doubt it. I think there's a lot more pain to come, especially if we keep going in and out of lockdowns.

by printer8 | 22nd Aug 20, 1:55pm 1598061350

Fritz
Agreed
We seem to be possibly - but very slowly - getting on top of this one cluster but the likelihood of further out break is extremely high and there is growing tiredness and dissent.

by tothepoint - d… | 22nd Aug 20, 2:12pm 1598062334

Hi printer8

Whoever comes up with an effective/cost-effective vaccine for Covid-19 could be awarded a Nobel Prize.

Perhaps the DGM might be persuaded to pursue this line of endeavour.......

It might well prove more rewarding for them.

TTP

by Rob Reid | 23rd Aug 20, 1:21pm 1598145667

You RSVs have all the money - you come up with a vaccine.

by Yvil | 22nd Aug 20, 11:33am 1598052790

- Middle of winter
- Election around the corner
- CV lockdown
Nothing matters, the RE market is taking off to infinity & beyond.
Maybe the RBNZ & government don't need to pour sooooo much fiscal and monetary stimulus on the fire after all?

by b21 | 22nd Aug 20, 11:37am 1598053027

Glad to see we are all starting to see this is total nonsense.

by Fritz | 22nd Aug 20, 1:14pm 1598058844

See my comment directly above yours.

by mikekirk29 | 22nd Aug 20, 1:35pm 1598060130

Taking off you say
You mean prices I take it
So far I am afraid sales in June and July have made up 42% of the 1878 lost in April and May comparing to sales in 2019. Sales below 750k are lower by 15% for whole of 2020 than in 2019 and v little of that is due to price increases because 750-900 k bracket is only up 5%. Meanwhile bracket over 1.5m sales up 45% in 2020 cf 2019
So really FHB trumpeters should play new tune

by Fluffybunny | 23rd Aug 20, 9:08am 1598130539

Good analysis.

by Tombo77 | 23rd Aug 20, 8:37am 1598128672

You must be insane to believe that. We are head long crashing into the biggest downturn in 90 years. Of course RE will not be spared as it mean

by Jackson.D | 24th Aug 20, 9:26am 1598217989

I Don't think the election is adding any uncertainty this time around. If we know who's going to win the election and its going to be the same party as last time with similar polices, why would that affect any of their decisions?

by printer8 | 22nd Aug 20, 11:33am 1598052810

Well . . . despite Covid lockdown 2 property is proving resilient. RBNB talk of further OCR cuts and QE is clearly outweighing talk of job losses and business downturn. Those posts of 30 to 50% are seemingly to be so wrong.

by tothepoint - d… | 22nd Aug 20, 12:04pm 1598054678

Hi printer8,

For sure, those posts/predictions have been wrong.....

But I wish you luck in trying to get the DGM to be accountable for them. They duck and dive in all directions.

TTP

by printer8 | 22nd Aug 20, 1:27pm 1598059652

ttp
There is always a risk - even in crossing the road - but clearly with Orr's talk of further OCR cuts and QE whether one agrees with them or not the reality would seem to be that asset prices including housing are likely to remain strong if - not show some upside - at least in the short to medium turn.
The government has or is prepared to continue to push out mortgage deferrals and job and business subsidies. However, their attitude may change post-election when at some stage they will be looking to address the cost of these actions; however, to maintain a bouyant economy, rather than a short sharp action it is likely to be a slow long process of a variety of actions over many years.
With some mortgage rates currently under 2.5% and it likely that it will have a "1" in front in the near future, it would seem that for FHB, as long as they have job and income security they should consider acting.
As mentioned there is always uncertainty and risk, but as long as FHB are confident that they can service their loan, short term fluctuations in the market - even 10% or so - are irrelevant as they are in for the long term.
For me, due to lack of returns for cash and, at my age not prepared to look at high risk investment, I am still considering getting back into property but cheap properties are seemingly unlikely.
I loved Foreign Buyer's comment last April - "Buy a house now and be laughed at and pointed at by everyone you know, because you will officially be stoopid". Well, it is not FHB proving to be "laughed at and officially called stoopied". :)

by J.C. | 22nd Aug 20, 1:47pm 1598060864

There is always a risk - even in crossing the road - but clearly with Orr's talk of further OCR cuts and QE whether one agrees with them or not the reality would seem to be that asset prices including housing are likely to remain strong if - not show some upside - at least in the short to medium turn.

Do you have any evidence of low or negative interest rates and QE protecting asset prices in NZ? Of course you don't, but you could always say it's 'common sense' and people react to these monetary settings by buying houses. This is what the govt, central banks, and commercial banks think. However, it's a heck of a lot deeper than than and the understanding of behavioral economics in NZ's institutions is woeful.

by Yvil | 22nd Aug 20, 4:47pm 1598071674

Oh com'on J.C. if you really don't know that you shouldn't comment on housing. Still since you need proof, overlay a graph of interest rates and house values since 2000 and see how strong the reverse correlation is

by J.C. | 22nd Aug 20, 5:17pm 1598073442

Not what I said. There is no evidence of monetary policy protecting housing prices. The correlation between falling interest rates and rising house prices is irrelevant. If there were any relevance, house prices would have never fallen anywhere under monetary easing conditons. You can troll all you like, but you're out of your league in the face of facts.

by Yvil | 22nd Aug 20, 6:46pm 1598078761

I don't troll, I just state the obvious

by al123 | 22nd Aug 20, 7:10pm 1598080233

Yvil, you are frequently really rude to other posters and often resort to personal insults.

by Yvil | 22nd Aug 20, 9:46pm 1598089613

I never resort to personal insults, it's not nice of you to make stuff up like this. On the other hand I'm straight up with my comments and I do not tippie toe around, I'm sorry if you consider this to be rude

by al123 | 22nd Aug 20, 10:47pm 1598093227

Twice just on this post you've either straight out said or implied that some imagined personal fact about someone is a good reason to discount their comments. I will be straight up with you too - it comes across as rude and patronizing. As you will see from other comments it isn't just me that thinks this. I take it from your comment you don't intend to come across in this way.

by Yvil | 23rd Aug 20, 10:27am 1598135278

Is that an admission that I don't resort to personal insults Al?

by J.C. | 22nd Aug 20, 7:29pm 1598081385

OK, if you're not a troll, don't behave like one. The above strawman response to my question is a quintessential troll tactic.

by Yvil | 22nd Aug 20, 9:53pm 1598090037

Troll, straw man, you seem to like you're fables. I like fables too but on a business site like Interest I prefer to be factual, just like above when I put you right with great advice on superimposing two graphs. Please stop focusing on what time of person I am and concentrate on the issues discussed, thanks

by J.C. | 22nd Aug 20, 11:20pm 1598095217

OK 'not a troll'. Go back to my original question as to 'evidence of low or negative interest rates and QE protecting asset prices in NZ.' A negative correlation between interest rate changes and increases in house prices is not evidence of this. The decimation of the cost of money is a global phenomenon that is not unique to NZ.

Prove you're not actually a troll and put your money where your mouth is. You won't because you can't.

by VeryInterested | 23rd Aug 20, 10:59am 1598137174

There you go again Yvil. Several months ago I called you out for saying Interest was a website for businesses only and here you are doing it again! Interest is for everyone to help you make personal financial decisions.

by Independent_Observer | 22nd Aug 20, 7:29pm 1598081363

Yes so what happens when rates hit zero and inflation is back? We’re building the perfect storm.

by b21 | 22nd Aug 20, 12:02pm 1598054534

Certainly have been but given the current events the room for a larger fall is becoming more feasible by the day.

by b21 | 22nd Aug 20, 11:36am 1598052982

All I see are the effects of the RBNZ attempts to keep the bubble growing in an outraging attempt to pass the issue to the next management team which will put everyone in even more trouble down the road.
People buying now motivated by seemingly low rates (high total interest due longer terms) and the removal of the LVR restrictions will surely regret the decisions we are making in these troubled times when more jobs are being lost every day. Hopefully banks giving these high risk loans will be found accountable.

by MortgageBelt | 22nd Aug 20, 12:06pm 1598054800

Maybe home ownership rates will be higher by year end.
Less renters, more homeowners - isn’t that a good thing?

by b21 | 22nd Aug 20, 12:15pm 1598055351

It is not when people buy objectively overpriced assets compared to incomes in an uncertain context and they are likely to lose their jobs while being highly leveraged, it is actually a very serious risk for the whole economy.

by MortgageBelt | 22nd Aug 20, 12:21pm 1598055681

But most FHBs outside of Auckland are paying less on their mortgage than their previous rent.
Homeownership improves all the socioeconomic factors according to the research.

by b21 | 22nd Aug 20, 12:35pm 1598056506

Care to share this data? When you cannot pay your rent you can move out to a cheaper place or with someone else, when you cannot pay your mortgage what are the options, specially in a context of falling house prices? Like everything, all depends on context.

by MortgageBelt | 22nd Aug 20, 12:32pm 1598056355

You still have to pay rent if you lose your job.
If you have a mortgage & lose your job you can have a holiday.
All the benefits accrue to the homeowner.

by b21 | 22nd Aug 20, 12:37pm 1598056674

Not if you move to your parents', which is unfortunately happening a lot these days. Mortgage holidays are temporary and debt still accumulates so it is not a solution. Please share that data when you get the chance.

by MortgageBelt | 22nd Aug 20, 12:37pm 1598056647

“The majority of studies, noted in this section, found health promoting effects, both physical and mental, resulting from homeownership. A number of studies also demonstrated beneficial outcomes for vulnerable groups including children, elderly people, low-income families, some cultural groups and drug users. ”
http://familycentre.org.nz/wp-content/uploads/2019/04/Social_and_Econom…

Many studies bear this out.
Of course the fringe over leveraged maybe not.

by b21 | 22nd Aug 20, 12:40pm 1598056836

Thanks for that, as I mentioned earlier everything depends on context, not just regarding economy but each person's. buying is definitely more risky these days unless you are cash rich and can pay most of your home/investment without becoming super leveraged, which is the exception these days.

by C'est la vie | 24th Aug 20, 11:20am 1598224832

Hi MortgageBelt. Can definitely anecdotally confirm we are now paying much less on our mortgage even only having bought in March last year (when everyone was warning about some sort of bond inversion and hence looming price collapse from memory). Since then we have renovated the house ourselves; although it's been hard work our equity if re-valued now would be very reassuring too, I'm sure.

by printer8 | 24th Aug 20, 2:50pm 1598237451

C’est
Congratulations.
March last year we had a predominance of posters claiming bubble burst so congratulations on making the right decision. Many of those posting negatively at the time are seemingly unable to distinguish between a home and an investment.
You will be getting considerable intrinsic value out of homeownership- as is seen by your renovations- as well as social and financial security For your family.
Short term fluctuations in the market are irrelevant- it is a home - and as long as you are confident of servicing the mortgage you have nothing to fear. While the mortgage has already fallen, and is most likely to continue to do so - it is prudent to pay that debt down. Conditions can change - both at the personal level as well as the wider economic level - and to have that buffer gives added security.

by C'est la vie | 24th Aug 20, 4:40pm 1598244022

Thanks Printer8, I must give credit to my wife for egging us on during those times; I was quite skeptical up until the perfect house presented itself to us during our search (big section, excellent bones and separate art studio). Also, It was just our time and we had put off buying for a while; we were ready. I'm glad we got in when we did as out deposit would buy significantly less today. I know what you mean about intrinsic value; there is a lasting sense of pride/security in home ownership. Ready for the next chapter :)

by Shoreman | 22nd Aug 20, 12:30pm 1598056239

B21 - The removal of the LVRs has made no difference to bank lending. The Banks are very tough on approvals and taking no risks. They are still working around 7% interest rates and looking in detail about security of income. Next year when it is crystal clear the market is no going to crash and banks ease up the market is going boom !!

by b21 | 22nd Aug 20, 12:36pm 1598056602

This is just not true, banks are now giving loans under 20% LVR which means more risk for them AND their customers. Please share your crystal ball, need to check some lottery tickets.

by MortgageBelt | 22nd Aug 20, 12:40pm 1598056806

Why are you so anti-homeownership?
Have you hit some barriers yourself?
There’s probably some brokers and bankers on here who could advise you and help.

by b21 | 22nd Aug 20, 12:42pm 1598056954

I am not, for what you care I might be an owner that doesn't want people to get into financial troubles, which will hurt us all. not going to share my personal background here but everything depends on context, how about you, why are you so pro-ownership?

by MortgageBelt | 22nd Aug 20, 12:53pm 1598057602

I agree with you that younger FHBs need warning on being over leveraged.
However many FHBs do need to ‘stretch’ themselves to some degree otherwise they’ll find themselves sidelined for too long - then once kids come along its even tougher.
I’ve seen some in my extended family who could have bought, didn’t, & now face a soon retirement era still renting. That’s another risk over a lifetime.

by b21 | 22nd Aug 20, 12:57pm 1598057874

Agree with you, I just don't understand what many have against people waiting until uncertainty wears off to buy a house, unless there's some vested interest of course.

by MortgageBelt | 22nd Aug 20, 2:22pm 1598062948

Uncertainty is the ongoing human condition.
Rogernomics scorched earth 80s, 87 share crash, bird flu 90s, ruthenasia, 2001 e-commerce crash, 2008 GFC, SARS2 2020 etc.
“If a farmer considers the weather he’ll never sow his crops”

by Yvil | 22nd Aug 20, 4:52pm 1598071927

"I just don't understand what many have against people waiting until uncertainty wears off"

Answer: we're trying to help you and by the time you wait, house prices will be much more expensive. (also you'll end up a renter your whole life as there's never "no uncertainty")

by Njay | 22nd Aug 20, 10:41pm 1598092863

House prices will be much more expensive if you wait, and you know this how. What happens if house prices slowly decline over the next 10 years which is possible. It hasn't happened in the past but it could happen. They could also increase slowly over the next 10 years which has happened in the past so therefore could happen again. My point is, there are lots of people on here who are very smug and pounding their chest saying I told you so at the moment that the market is still holding up. I just hope that if it doesn't hold up, they have the good grace to come on here and say that they got it wrong. My other point is, I aren't prepared to say what will happen either way as I really have no idea. The whole world is being tipped upside down at the moment so anyone who thinks they can predict what is going to happen over the next few years is a lot wiser than I am. As a few posters have said, this is a very different financial mess that we are in compared to what's happened in the past so therefore the outcome could also be very different, I wish I only knew.

by Yvil | 22nd Aug 20, 12:45pm 1598057105

b21
Lottery tickets you say??? I thought you were in favour of fair and equality? Surely Lotto is the epitome of the unfairest re-distribution of money, 100'000's of thousands of people pay money so 1 can be a millionaire. Are you saying you buy lottery tickets in the hope of become a millionaire without having to work by just getting lucky and taking other people's money?

by b21 | 22nd Aug 20, 12:52pm 1598057540

Cannot think of anything more fair than thousands of people having the exact same probabilistic chance of getting a winning ticket based on plain randomness, that being said lotto is a tax on people that are not good at math, take a guess whether I play or not. Not sure if you do.

by Fritz | 22nd Aug 20, 1:16pm 1598059000

'Lotto is a tax on people that are not good at math'.
Brilliant.

by realterms | 22nd Aug 20, 1:19pm 1598059191

NZ lotto does occasionally cross over into positive expectation, depending on your utility and assumptions about number of players.

by Pragmatist | 22nd Aug 20, 5:06pm 1598072771

Only powerball when its a "must be won" draw, and depending on your guess of how many ways the prize is going to be split, and plain lotto when the first division prize is over $3m if my memory is correct. Overall its still pissing money against the wall.

by MadMax | 22nd Aug 20, 2:05pm 1598061939

I’d guess you probably do.

by Jonny_Utah | 22nd Aug 20, 3:10pm 1598065830

Said by someone who doesn't understand emotional value. People don't buy lotto tickets because they think they're going to win. They spend the $10 for the day dream of winning.

by Fritz | 22nd Aug 20, 3:45pm 1598067922

It's an almost futile dream. Today's equivalent of organised religion?

by Final Account | 24th Aug 20, 11:14am 1598224440

Lotto deals in hope, nothing more, nothing less.

by Shoreman | 22nd Aug 20, 4:26pm 1598070384

B21 - We have 2 children who have just gone through the process, I believe there is a small percentage getting away with less than 20% deposit 5-10 % care to share some stats to back up your comments. My crystal ball is near 40 years in the market, always there are DGM's sighting xyz why the market is going to crash. The market is not going to crash but boom,boom,boom, sit on the sidelines if us wish but there is upside to this market. Hey we all get to see the outcome.

by b21 | 22nd Aug 20, 4:38pm 1598071087

My own experience tells me banks are profit oriented, at times like these they still need to show profits to their shareholders, giving higher risk mortgages is one of the tools they have to keep doing so. They have done in the past and now it is not different. I have seen a few cases of 7-15% LVR in the past few months, some to borrowers that had been getting wage subsidies and even with jobs in sectors suffering most such as retail and tourism.

by Pragmatist | 22nd Aug 20, 5:20pm 1598073639

I believe there is a small percentage getting away with less than 20% deposit 5-10 % care to share some stats to back up your comments.

RBNZ c31 stats, FHB with 20% deposit has averaged 40.9% of the $ value lent to FHB so far this year. Its 37% by count, so more than 1 in 3 FHB are buying with less than 20% deposit

by Pragmatist | 22nd Aug 20, 5:29pm 1598074159

Not correct Shoreman, ANZ and I think one other bank has dropped its serviceability test to 5.8%, and plenty of 20% deposit lending
RBNZ figures are that 44% (May) &43% (Jun) of all FHB mortgage lending (in $ terms) was at >80% LVR, for Jan - Mar this figure was at or under 40%. May was a record, its not been that high before, got to 43% twice last year (July and Sept).
FHB are massively leveraged in general.

Edit: and for overall mortgage lending, June 2020 hit 12.14% of all new lending was at over 80% LVR, the highest ever.. From 2014 to 2017 it had never exceeded 10%. , got just to 11.11% Sept last year, and May and Jun this year blew past it with 11.93% and 12.14%
Dropping the LVR limits made no difference huh?

by Yvil | 22nd Aug 20, 12:39pm 1598056763

b21, I imagine you're very young, had you been around the block a couple of times you would recognise that your statement
"People buying now …. will surely regret the decisions they are making".
Was made by so many in April 2020, in September 2019, in 2017, in 2011, in 2008, in 2003, in 2001, in 1992…

Don't confuse what you wish to happen or what you think "should" happen for the good of many, with what forces are at play, these are more, cheaper money and that leads to higher asset prices, whether this is fair or not has no effect on the outcome.

by b21 | 22nd Aug 20, 12:44pm 1598057045

I imagine you are very old and don't care about the future much. At any of those times there was a global economic downturn like it is happening now.

by Yvil | 22nd Aug 20, 12:47pm 1598057279

Yes many times before there were different types of downturns and despite this, NZ house prices kept increasing in value with only very small, short lived dips, and long strong growth phases

by b21 | 22nd Aug 20, 12:54pm 1598057685

Past performance is not guarantee of future results. It all depends on how long your sample is to suit your narrative.

by tothepoint - d… | 22nd Aug 20, 1:09pm 1598058565

Hi b21,

That's a cop-out.

Yvil is correct. We have dips in NZ - like anywhere else. But they're characterised by soft-landings and sustained recoveries.

Given NZ's increasing profile on the world stage - and the pent-up demand for property here - that's most unlikely to change anytime soon.

TTP

by b21 | 22nd Aug 20, 1:27pm 1598059639

That one is new TTP, "increasing profile on the world stage" as a catalyst for higher home prices in an market where foreign buyers are banned?
Also, pent-up demand in an environment with low population grow and virtually no immigration?
I guess the lobby needs to find new excuses to support their narrative about never ending exponential growth of real estate prices as they usually do, specially since the recent debacle of the real number of returning kiwis, but please take your time thinking of better ones.

by tothepoint - d… | 22nd Aug 20, 1:42pm 1598060552

Hi b21,

Note that the Foreign Buyer Ban and subsequent lower immigration are not set in concrete..... They can vanish with a mere stroke of the regulatory pen.

But factors like the underlying demand for property here, Covid-19 and our growing status globally, are not subject to manipulation in the same way.

If you don't like it here, then go live in New York or Melbourne - or wherever you fancy......

Please be assured that there are plenty of others who would like to live here - and happily take your place.

TTP

by b21 | 22nd Aug 20, 1:31pm 1598059879

"If you don't like it here, then go live in New York or Melbourne - or wherever you fancy."
Clap, clap, clap.

Since I like it here I wish the best future for this country, which is the hole point of this conversation, yours seem to kick out of the country those that disagree with you.

by Crazy Horse | 24th Aug 20, 2:01pm 1598234518

Just how does the great "Oracle of Palmy"aka tothepoint, come up with blanket statements like .......... "Please be assured that there are plenty of others who would like to live here - and happily take your place." ........Where are the facts ttp? not just your rhetorical pomposity because "I said so" .

The people I know from overseas, when I take them for a drive around Auckland, they say "all fine and dandy" if you already have at least USD 1 mil as your deposit ! - then when we drive through the state house areas of Mt Roskill etc and I tell them how much for that cold, depressing, damp 3dm + 1 bth house and I casually say, "oh about $975k" they just about choke up and fall round the back seat laughing hysterically !

by Yvil | 22nd Aug 20, 5:04pm 1598072680

by b21 | 22nd Aug 20, 12:54pm
Past performance is not guarantee of future results

Please stop posting this quote. FYI it comes from the Law Society and it's mandatory to have it printed in any material like IPO's, to cover the financial institution's back side.
Now to the main point, "Past performance is not guarantee of future results" yes it's true but past performance is bettered only by "knowing the future for certain" which none of us do know.
If my employees have been performing well in the past, yes I trust them to do the same in the future
If I find good prices at my favourite grocer in the past, yes I trust it to still have good prices tomorrow
If you're always on time, I trust you to be on time tomorrow.
If you have been great in the kitchen, then you will most likely be good tomorrow too
If my car starts up first time every time, I trust it will do so tomorrow too.
Of course one day some of the above will not be true, but for the vast majority it will be true and that's what matters

by al123 | 22nd Aug 20, 5:36pm 1598074575

Yvil, the type of argument you are talking about is an inductive argument, and it's a bit more complicated than you are making out. Take your last example - if there had been a big flood the night before and your car had been underwater, it would be silly to expect it to start up right away, even if it had done so every time in the past. You are arguing that every time in the recent past that a property crash has been predicted, it hasn't happened. But there are lots of relevant differences between NZ now and NZ in 2008 or NZ in 1992 (previous recessions). This is not to say there will be a crash - at this point who knows really - but the fact that previous predictors of a crash were wrong is just not a very good reason to think that people predicting a crash now will be wrong too, because the circumstances now are very different than they were in all the times you are referring to.

by Yvil | 22nd Aug 20, 6:49pm 1598078950

Fine, your prediction will be right 1% of the time when there's a flood, mine 80% of the time when the unexpected doesn't happen overnight. I far prefer my odds.

by al123 | 22nd Aug 20, 7:13pm 1598080406

From that comment it looks like you only read half the post. Do that and then Google inductive arguments if you still don't understand the problem with your argument.

by MadMax | 22nd Aug 20, 8:43pm 1598085833

Methinks someone’s a pretty good property investor
And someone is a pretty good at googling how to argue

by Albert2020 | 22nd Aug 20, 9:25pm 1598088310

Then others need to learn how to construct a sentence.

by Yvil | 22nd Aug 20, 9:43pm 1598089391

Thanks MadMax

by al123 | 22nd Aug 20, 10:34pm 1598092457

It is in fact my area of expertise. But more importantly, it doesn't really matter what people are or say they are on an anonymous website. What matters are the comments. And I'm afraid the reasoning that property downturns have not happened in the past despite predictions is not a good reason to think it won't happen this time, even though people are predicting it. This is a very unusual situation - likely the greatest recession since the great depression. This is not to say that houses will crash, but it would be a pity for people to make decisions based on the poor reasoning offered above.

by realterms | 23rd Aug 20, 1:49pm 1598147349

They have to post this because it's true.

There's an important distinction between your examples and property, though: the rationale for the expectation, not just past performance. Your best employee can continue to be better than the rest, indefinitely. Your favourite grocer can also continue to be run well. But property prices cannot continue to grow faster than incomes indefinitely.

by Hans Brink | 22nd Aug 20, 10:11pm 1598091068

Don't blame the lender when things turn to sh8t . The borrower always have to convince the lender they are good for it. If you are uncertain don't borrow. Quite simple really.
PS I would like to add that sometimes in life you have to take risks. Come what may.

by iconoclast | 22nd Aug 20, 1:43pm 1598060627

It would be more meaningful if the sales data was published by value and volume in quartiles
Interest.co.nz monitors the data
Are the sales occurring at the top end? or the bottom end?
I suspect leveraged investment property owners will be exiting because the reliability of both jobs and future rental incomes is about to become uncertain. For a year or so anyway

by mikekirk29 | 22nd Aug 20, 1:29pm 1598059752

I do provide this data here and on my LinkedIn pages

by iconoclast | 22nd Aug 20, 1:54pm 1598061240

Can you link to your last post containing that data on interest.co.nz
Found your LinkedIn page - I'm not a member so couldnt see anything other than a page from May 2020

by mikekirk29 | 22nd Aug 20, 3:24pm 1598066668

https://www.linkedin.com/posts/mike-kirk-142541122_has-nz-housing-marke…

Hope that is better.

by iconoclast | 22nd Aug 20, 1:57pm 1598061458

In your opinion
Are the sellers meeting the market?, or
Are the buyers coming up to meet the market?

by mikekirk29 | 22nd Aug 20, 3:59pm 1598068755

Hate to split hairs, but it depends what market you look at.
Auckland has far South and far North market.
It has FHB market (geographically as well, mostly Waitakere and parts of periphery where prices under $850k)
Answering your question, prices are rising most above $1.3m who we can fairly assume have no trouble with whatever banks loan or do not, since they do not need to borrow, or can leverage up. Lower down, sales are MUCH more sedate and so are price rises.
Price rises are driven by reasoning of those with plenty of money, as to why they want to send $200k plus over CV for stuff, probably related to low listings up there in stratosphere, plus it being seen as safer than stock market.
Yes, market is strong for winter but plainly that is due to it being so weak for 10 weeks in Autumn.
So, looked at in round, or in terms of how much it has recovered its lockdown losses, the market (buyers and sellers) is NOT recovered and no where near it.
Sales in 7m of 2020 so far are 1.7% higher in Auckland than in 2019 for same period.
And sale sin 2019 were lower than in 2009.
If anyone can regard a "market" as healthy when sales are lower than a decade earlier, despite adding 225,000 people to the population , I am waiting?

by mikekirk29 | 22nd Aug 20, 1:28pm 1598059682

“Market fully recovered”
No sorry it’s not
To end of July Auckland sales in June and July had made up 42% if loss of sales sustained in April and May, compared to 2019. Outside Auckland it is 27%
Sales for whole of NZ excl Auckland in first 7m of 2020 are 25% below those of 2019. All figures available on REINZ website

by Hans Brink | 22nd Aug 20, 10:33pm 1598092412

Why is it that i am getting this thread of thought that some people expect every financial move they make is on the basis of a comentator. Read and listen and make your own mind up. If it dosn't work out Oh Dear how sad. Don,t blame the commentry they are only trying to help all of us to make sense out of a very unseemly world.

by Yvil | 23rd Aug 20, 10:36am 1598135780

Wonderful comment Hans!
Indeed, when someone with 25 years professional experience gives free advice, some see it as "trolling" of "self serving" or "rude" or even "insulting" and more…
If a professional Chef with 25 years international experience gave me advice on cooking some better meals, I'd simply say "thanks so much, that's aewsome"

by al123 | 23rd Aug 20, 12:40pm 1598143203

OK, Yvil, maybe you'll accept this advice then from someone with over 20 years professional xperience managing and moderating productive discussions on issues people disagree about. The reason you get so much pushback on this blog is because a lot of your comments look like they are deliberately designed to antagonize people who disagree with you. If you want to give people advice that's great, but it will land better (and make these comments are lot more pleasant to read) if you think a bit more about how your comments come across on an anonymous forum.

by Yvil | 23rd Aug 20, 3:02pm 1598151743

Al, thanks for the advice, I don't mind pushback at all and I expect it on an anonymous forum as I'm (proudly) in the minority group. What I dislike though is other commenters making up false, nasty stuff about other like this one:

by al123 | 22nd Aug 20, 7:10pm
Yvil, you are frequently really rude to other posters and often resort to personal insults

It's hard to believe that with your experience of "20 years professional xperience managing and moderating productive discussions" you resort to making up false, harmful accusations about others

by al123 | 23rd Aug 20, 3:11pm 1598152317

Well, this is actually a good example. I consider your comments to be personally insulting. You don't. That's fine - reasonable people might sometimes disagree about what counts as a personal insult. Accusing the other person of deliberately making up false accusations is unproductive. Better to acknowledge their point of view, state that that wasn't your intention (as I assume is the case) and move on.

by Yvil | 23rd Aug 20, 4:31pm 1598157104

by PonziKiwi | 22nd Aug 20, 2:30pm 1598063441

Wonderful news it proves the fundamentals of the economy is strong. Unemployment down after lockdown.

by mikekirk29 | 22nd Aug 20, 3:29pm 1598066954

Actual, factual degree of recovery of NZ and Auckland housing "market"
https://www.linkedin.com/posts/mike-kirk-142541122_new-zealand-v-nz-exc…

by b21 | 22nd Aug 20, 4:21pm 1598070099

Hi Mike, this data obviously contradicts the narrative of most media outlets and the real estate lobby, what is the source of it?

by mikekirk29 | 22nd Aug 20, 4:34pm 1598070888

REINZ website.
As an agent I analyse sales figures for my area and other areas.
I, like a few others, want to know what breakdown is by price bracket, to see trends in market as a whole.
So, if you interrogate the website data, you can obtain more detail that might not be in the press releases.
Presentation is all in media and its always about what you are seeking to achieve in target audience and what the "narrative " is you want to maintain.

I am interested in what parts of market are good and what direction of different markets, by price and type of buyer.

by b21 | 22nd Aug 20, 4:40pm 1598071240

Thanks Mike, will look at that in detail. You are absolutely right, usually media cherry picks what's more interesting to support their narrative and the data you present coming from one of the sources they tend to use is a proof of that.

by mikekirk29 | 22nd Aug 20, 3:52pm 1598068326

When CV19 started in NZ and we first went into lockdown, my view was (and still is) that sales in Auckland would fall by 25%, in the following year (April 2020-March 2021) compared to the low point of current market, which was 2017 (when China stopped overseas export of capital for 6 months, having sprayed it around liberally 2014-end of 2015).
For period of April-July (4m) Auckland sales are currently 14% below the level of the same 4m in 2017

by Carlos67 | 22nd Aug 20, 3:55pm 1598068546

Certainly not getting any of the good news out of the USA like we have in NZ where all we can do is pump the property market to death. Some of the stuff I'm watching from over there is indicating its the end of the world as you know it. Our MSM is now horribly biased and heavily censored if you want to see whats really going on it the world you have to watch the likes of Aljazeera or YouTube.

by bw | 22nd Aug 20, 4:20pm 1598070023

I had to laugh!
I've lost count of the number of people who've said that "If I can't get another l job, I can always sell real estate!"

"Rawdon Christie was everyone's friend over Breakfast for five years, before getting the axe in 2016. "I enrolled at the Open Polytech and now, five months later, I have my Real Estate licence. I've just started working for Barfoot & Thompson in my local suburb of Remuera and I absolutely love it."

https://www.nzherald.co.nz/spy/news/article.cfm?c_id=1503840&objectid=1…

by J.C. | 22nd Aug 20, 4:31pm 1598070687

Thought crossed my mind a number of times. I have a colleague who's probably one of the most successful REAs in the Ponsonby / Grey Lynn areas in the past 10 years. Have to admit he's very good at what he does. Having a bit of celebrity factor always helps if you want to play at the top end.

by company of heroes | 22nd Aug 20, 4:56pm 1598072216

Lots of people have been caught up with what the lockdown has impact housing market and economy. Then if they see housing price is not coming down after lock down, they would think our economy and our housing market is strong. But the real deal that they seem to ignored is the aftermath caused by lock down like extreme low interest, national debt. These and global recession are the future risks for our economy. Our economy is tied with housing market. The bubble will burst, it just a matter of when.

by EmperorXi | 23rd Aug 20, 8:58pm 1598173112

Well said, people will rush into the property market only to realize that prices are holding (or even going up).

by iconoclast | 22nd Aug 20, 7:07pm 1598080061

Perhaps, just perhaps, the ungrateful should be grateful to the Boomers and the elderley who own their homes outright and not forced to puke their properties onto the market, thus stabilising the property market, allowing the movers such as new arrivals, evacuees, departees, internal migrants, any exodus, those moving up, those moving down, those moving out, to set prices at the margins

by Rob Reid | 23rd Aug 20, 3:43pm 1598154233

Please define what "stabilising the property market" means.
It's a loaded word these days - "stabilising ". eg. in politics, those who are winning call for stability, and those who are losing can't call for "instability" because that's sounds negative, so they call for "change".
So what is your spin on "stability"? Should we be thanking my fellow Boomers and the elderly for keeping the property market "the same".

by blobbles | 22nd Aug 20, 9:59pm 1598090373

Huh? You print money by the truck load while simultaneously lowering interest rates and it results in asset price appreciation???

Who would have known?

by J.C. | 22nd Aug 20, 10:42pm 1598092952

It does in the short term. The performance of the Nikkei would suggest it doesn't necessarily happen in the long term.

by RickStrauss | 24th Aug 20, 10:22am 1598221373

It's like being a CEO of a company approaching bankruptcy before people know it. You focus on inflating your own exit package and offloading your stock as much as possible, before you hand the mess on to others.

by Ben72 | 23rd Aug 20, 4:29am 1598113754

This applies here too...

https://www.forbes.com/sites/sarahhansen/2020/08/21/the-housing-market-…

by Ben72 | 23rd Aug 20, 5:55am 1598118954

Even all stocks are not equal. Both property and stocks are disconnected from real economy all over the world.

https://www.google.co.nz/amp/s/www.cnbc.com/amp/2020/08/22/coronavirus-…

by gingerninja | 23rd Aug 20, 7:44am 1598125455

You guys are up hella early for a Sunday morning!

by Zachary Smith | 23rd Aug 20, 10:04am 1598133895

There's a lot of chatter about "property ponzies" and "bubble bursts" however I think most people that have a property and some other investments would be reluctant to sell now if they had cash flow positive property. Better to have the money tied up in a property rather than cash in the bank. Even a mortgage could well be a good thing to have, especially it the tenants are servicing it.

by company of heroes | 23rd Aug 20, 10:58am 1598137116

Then we will never get out of recession, if most of our money are tied up in properties. Where is the money to boost our retail and other industries? Yes, the tenants can serve it, but without our other booming industries? who is gonna pay the tenants salary? Can't you see the issue here? Everyone will suffer from this.

by Zachary Smith | 23rd Aug 20, 11:18am 1598138333

Property is not the only game in town. And business is not as pure as you imagine. Now that the passive earning of cash has evaporated there is no reason why property and business cannot both continue together. Property is a business too.

by EmperorXi | 23rd Aug 20, 9:31pm 1598175067

Just to give most folks a clear inside picture from a landlords perspective in Mt Roskill, AKL (a real hot spot for investors, who are still willing to pay over CV, whilst squeezing in immigrants / students in the name of flat-mating if they can't get a sucker to pay off a higher rent commensurate to the mortgage).

Two of our tenants have left and gone are the days when we had 20-30 over enthusiastic folks turning up on the weekend for a viewing:

Tenant 1: On a work permit has been stuck in India since the end of March, has been paying 25% of the rent (We're allowing them to keep their place, but I'm not sure for how long will either of us continue).

Tenant 2: Family moved to an apartment in the city (I believe its a new build in Vincent Street where they were supposedly given a brand new fully furnished apartment and a reduction of $60 on the advertised rent per week (beat that..........).

So are the happy days over for landlords or is this just a little gully, where immigrants and students come back in droves.......and help us put our derelict housing in AKL on a pedestal again.

by Just a farmer | 23rd Aug 20, 2:31pm 1598149893

Residential is certainly cranking, I have a family member buying at the moment and she has missed out on so many properties in the Waikato, some listings are selling within hours of being listed. She has a place under contract now though, viewed the same day as it was listed, then put in an unconditional offer the next morning. That seems to be what it takes in this market!

On the other hand, the rural market is cooling drastically, my farm for sale hasn’t sold and has received some worryingly low offers so it is not looking like I am retiring to town just yet. It is still a profitable business we have here though, and actually looks like a good return on investment compared to putting money anywhere else now. I am putting it down to the government and new environmental rules, that is what a lot of buyers feedback has been. If it is this bad for our low intensity dry stock farm, I hate to think how much dairy farm prices must be affected now.

by Te Kooti | 23rd Aug 20, 7:41pm 1598168494

Thank you for the only informative comment on this entire thread. I must admit that I'm not that close to the environmental changes, good luck anyway - I hope it all works out for you.

by Seve | 24th Aug 20, 7:14am 1598210059

I'm blown away by what is happening in the residential market ;but,bewildered by a farm like yours that unlike a house once built generates no real additional income ,government should be supporting the farming community more not imposing more taxes or stupid environmental policies.

by Stuart Mason | 23rd Aug 20, 2:56pm 1598151361

So it seems after 9 years of National during which The Opposition banged on endlessly about years of rising asset prices and an ever widening wealth gap, we are moving towards an Election when a Labour win will deliver years of exactly what they were complaining about. I say .... a plague on both their houses. They really do deserve each other. I'm 70 in January and am voting TOP.

by Just a farmer | 23rd Aug 20, 3:16pm 1598152585

Yes I can see some of the smaller parties taking a bigger share of the pie this year. Many of us are realising that National and Labour are just 2 sides of the same coin.

by Carlos67 | 23rd Aug 20, 11:47pm 1598183254

Yep there is going to be more of a mix in parliament after this election. Labour is proving to be no different to National. Labour got in on what people wanted sorted then did nothing.

by Seve | 24th Aug 20, 7:18am 1598210297

Agreed ,I'm looking at the policies promoted by the new conservative party ,they seem to have a more common sense approach to supporting businesses.