Record house prices were supported by strong sales volumes in August, the latest Real Estate Institute of New Zealand sales data shows

The report, to save you looking for it:

https://reinz.co.nz/Media/Default/Statistic%20Documents/2020/August/REI…

Dude, you're contradicting the Mikes

HH
Auckland up 10.7% YOY, national 10%.

Many sales have undisclosed sale prices these days, very likely due to lower than expected values. No wonder the HPI goes higher if just those with higher prices are taken into account.

Thanks P8, there's a lot of clarification needed :)

9/11

That's terrific, what would you rather - freehold 100acres in Northland or freehold 1/4 acre near Akld or apartment in cbd
Its great to have options

Because of the boom, chances are value in mortgagee sale is higher than value of the loan. Simple!

The Answer lies in many things - building more houses AND tax being but two.
But the biggest issue we have to address is - expectation.
The expectation that as individuals and as a Nation that we can 'get rich!' but not actually work to do it.
It's not a choice that most people have - it's a necessity. There is very little opportunity for New Zealanders to 'get ahead' without speculating on property prices because - we don't have viable alternative work for them to do to allow their 'day job' to provide a future for them.
So ever-rising property prices does two thing - (1) validates the proposition that property speculation is THE way to get ahead and (2) make the economic, work and social landscape even worse.
Something HAS to change, and at least we will have 3 years after this election to give us a run at it.

most people are happy that their net wealth is increasing and in times like this the wealth effect is good for the economy

This is exactly what the ruling elite wants. The more people that get out there and spend up on whatever (spa pools, holidays in QT, new cars), the better it will be for the economy.

"most people are happy that their net wealth is increasing" - Most people? Are you sure about that? Or did you mean "most people in my circle of friends who all own their own houses and some own multiple rentals"?

You may ignore reality as much as you want. That doesn't make you more right, just the opposite.

First of all, this being a report of the housing lobby, I would take it with quite a few pinches of salt. It is not taking into account those unreported sale prices which are quite common these days.

Secondly, it is all about unemployment and income, all bullish commentators on this site ignore this as if the economic context would not exist, which is completely absurd. I can only imagine they might be blind by the desire of higher returns, i.e. greed.

And lastly, this can never be good news, higher prices on a first necessity asset, even if they were for real, means more social and health issues. Any government with a minimum concern about their population should do something about this.

Agreed. I find this profoundly depressing, and we own our home so nominally benefit. Sorry future NZers.

It's wooden dollars till you have the cold hard cash in your hands or do something with your new make believe equity.

BW - you can always give the buyer a discount on your property if it makes you feel less guilty.

Doesn't this how capitalism work?

Increase prices are linked to interest rates lowering, that's it. We'd already (more or less) reached the collective household limit the at the last round of rate drops pre-covid & They can't keep dropping rates forever..

Plus to your point, when they drop rates like they have post-covid, it doesn't really mean I put more of my income into housing, the interest portion just decreases, and then we push the total back up to compensate. These recent increase in price is just the cheap & recently created money finding its way back into the economy. As intended. Short/medium term boost to keep us afloat whilst we sort the Covid mess out.

At some point we will need to wait for productivity to catch up. Hopefully once rates stop decreasing, we kind of settle into a long period of price stagnation, in line with general growth, rather than any dramatic falls. But there are wider issues at play globally, much more significant than the drop in the global bucket that is our local housing market.

Global warming, the decreasing efficiency with which we secure our increasing energy needs etc.

Don't get me wrong.. I'm a landowner and also like you find the current system a mess. But what you going to do? Humanity must grow. Growth needs more debt.

Spot on -nicely summarised.

Yes, one of a handful of sensible comments amongst a sea of greed, blinded by easy gains at the cost of others. Like some other responses, own my house so of course massive property increases will be of financial benefit, but will also come with a heavy societal and moral cost in the future. But hey we are all getting rich so it's ok right? Very disturbing, but in line with the modern way of thinking I guess, money money money.

That was part of the previous government's mandate too. It's patently clear that neither party is at all serious about properly addressing the issue. They are full of hot air. And for me Ardern is worse than Key because you could kind of think that affordable housing for the masses coming from him might be fake, but Ardern? She's a phoney.

Have a look at the number of people trying to get into NZ...

Another way to look at it is that people are worried that their money in the bank is losing its value.

Btw, if there's an over supply of rentals, wouldn't that be a good thing? Depends which side of the fence you're on I guess.

Bugger
"there'll be an over supply of rentals very soon"
A 10% rise in house prices does not create a single additional house or rental. Builders do that.

Hope so, advertised a property to rent on Tuesday afternoon and had 50 inquiries within 1 hour. Have 30 viewings coming through this weekend. Had to take the add down Wednesday but still have people messaging me who screen shot the add begging for a viewing. Several applicants have already said they would pay more than the asking rent and asked if there could be a bidding process for the property. It's crazy out there at the moment.

Yes printer, a key nail you are hitting on head is that most of those hit by CV19 and unemployment economic woes are not owners or prospective owners of property.
This can be seen to some degree in the fact that peripheral districts of Auckland have performed not in stellar terms, sales wise this month (see Papakura, Manukau, Franklin and to a lesser extend Rodney, compared to the average of 44% increase). People from whom RBNZ buys bonds of course, have a lot of cash and this will continue.
Short term, most are happy. But you know as I do, that this will lead to inflation, along with the shortages emerging in China re flooding and pork prices, plus harvest trouble in USA. Printing money causes inflation, it is simply when. And if inflation goes to 5-7%, what will central banks do to defend currencies? Can they then really NOT raise interest rates. We are in a cleft stick and cannot go back. No interest rate increases are possible as they would crash the real estate and stock market bubbles with massive feedback problems. This is what I see happening later in 2021 and more so as 2022-23 approaches. This printing and avoidance of reality is a mirage and it is a shame to see NZ, owing to its finance dominance, marching straight after the Fed and ECB and Japan.

I never said it was all Hong Kong money P8. What I did say is a lot of money it the top end of Auckland's housing market (In the multi million price bracket) is likely to still coming from Hong Kong. There's still a lot of unrest there, even with the new extradition laws and people are still likely to trying to find safe havens for their cash. Would you want to live in a country that does this to its people: Hong Kong: Police tackle 12-year-old to the ground in Hong Kong. https://www.bbc.com/news/av/world-asia-china-54065743

I guess those who are not hit by covid are much much higher than those hit so demand more than supply.

This is different era in economy suited to bororrow borrow and make profit supported by government and reserve bank.

OMFG, pls STFU
This was your cue...

fat pat
We talk about the disparity between rich and poor in this country.
There is also disparity as to how Covid is affecting people - some are losing and some are winning.
Many of the 80 to 250K unemployed that you mention who are negatively affected are low waged (e.g. hospitality and tourism) and non-home owning. Those advantaged by government and RBNZ actions tend to be higher paid, have job security and home-owners who are benefiting from lower mortgage rates.

Debt deleveraging appears to be in progress.

Wrong. But always up for a bit of evidence.

the greens could become the balance of power and bring in a CG tax as part of the coalition agreement and they will use information like this to get it over the line.
labour will say its not on us but part of the agreement for partnership

The RBA's vehicle of choice to put new money into the economy is property.

We prefer the Greek solution of more debt and living beyond our means, off the wealth of others.

AJ..
My own view is that it is a story of gross Monetary system mismanagement. House prices and farm prices have simply reflected that. The levels of Monetary inflation over the last 40 yrs has been profound.

At the same time there has been an agenda to suppress wage level inflation.
Reserve Bank has always warned of readiness to respond to wage inflation and on the political side, we have had the deregulation of the Labour mkt.
Throw in the the whole work visa industry , where employers and special interest groups can lobby Govt and be able to "import" the labour they want .
(At the moment Agricultural Contractors are lobbying to be able to get their seasonal workers over here... I'm betting they will get what they want.)
How can wage rates rise much when there is such a large pool supply of labour..?

The whole Globalisation paradigm , which has been embraced by both labour and National has become a wealth arbitrage.
Wealth , in the form of immigration and FDi becomes the price maker for assets and imported labour plus the pressures of low labour cost exporters like China having a deflationary bow wave like pressure on wage rates .
The love of globalisation has also lead to commonsense being pushed aside.
Why do we keep imposing costs ( eg. labours renewable policy ) on our exporters and yet allow countries that ignore the environment to openly export to NZ. ?
In the name of "fair trade" , ..." level playing field".... should we not be imposing tariffs ( for want of a better word) on imported goods that reflect NZs policies..., for example, environmental policies...

In a Macro view, all of this has lead us to where we are... Its not just socalled greedy "speculators" that have brought us to our current place.

As much as one can argue about House price inflation being caused by a taxation issue, one might also argue that it is NZ wages have lagged badly behind, which has helped cause unaffordability issues.
My own view is that house prices are largely a function of Monetary inflation and immigration. ( John Key said as much in 2017.... that GDP growth under his watch was largely a function of immigration + credit growth )

The real estate bust isn't going to happen just yet.... My view is that Govt and Central Banks are going to totally wreck the monetary system, with money printing and deficit spending and ultra low interest rates....
MMTs' time has come....

Taxing housing will solve nothing... It will just help impoverish another class of people.. in my view.
Imagine a wealth tax on a farm..?? I'm guessing that would be a nail in the coffin for a few farmers..?

oops... I just wanted to say I agree with what u said... I ended up spieling !

Is it wrong, when people have to take on more debt to purchase an overvalued home. Working harder for longer to pay back debt shortens ones life expectancy by 9 years. https://shorturl.at/eEHZ2

that's only govt debt, you have missed the monster in the corner that is private debt.

You can add it all up here
https://www.rbnz.govt.nz/statistics/c5

Government debt is taken on, on a longer timeline than us mere mortals correct?

Good, as our economic "growth" is based on asset price inflation I suppose this could be interpreted positively.

Correct. Their will also be a few moments of optimism in the boardrooms of the banks here and in Sydney.

So what! Better than -5%.

Comparing March with July but also, after inflation the rise is less than NIL, re median.
However, in last 4m median for a 4 bed size 200-275m in Auckland has risen 10% which is pretty remarkable.

Welcome to the Jacinda team. Let’s keep moving.

Yep, no matter what you think about the housing market, it's always worth examining the best and the worst possible outcomes. Even if prices go up 10% every year from now on, my savings increase much faster than the deposit needed. The "buy now or get left behind" bullshit doesn't apply to me unless Auckland house prices increase 25% YoY. Which one is more likely? A 5-10% fall, or a 25% increase? The reality will most likely be inbetween these two, and thus pretty much irrelevant in my case.
As for the masses... yeah, many people are already so far behind with no chance of ever catching up, thus price increases are already irrelevant to them. They're also irrelevant to the average family who lives in the same house for a decade or two and doesn't own rentals.
The only people getting shafted here are the ones who have to really stretch themselves to scrape together a deposit - so most first home buyers.

Same happened in Europe in the late 19th century. And the debasing of currency severely affected morality.

Theft from young workers and old pensioners to prop up speculators will have consequences for NZ society.

I don't care what houses are worth, but I really care about debt.

I feel your pain. We held out for as long as we could but it became apparent Kiwibuild was going to die a spectacular death so we had to jump and bought something a year ago. In the space of four months I've gone from stressing about losing the house to having made a sizable-but-unrealised paper gain. I have no idea what the hell is going on anymore.

The team of 5,000,000 can be rightly proud of Jacinda’s crisis management. We are healthy, safe and most are wealthier.

Be Kind mate.

Of course they can keep borrowing (printing). They are in an MMT environment but just don't realise it yet. No government will remove the life support now or it will all turn to custard and nobody wants to be in power when that happens. So that $100b being printed will turn into $150b... $200b...$500b. Doesn't matter, so says MMT. We can all be rich by printing our own currency, none of us have to work. Wait... scratch that... those that do work now have to be taxed more... those that buy houses, no tax!

Only solution long term when it all turns to custard will be mass debt jubilee, written off by the state.

Yes you're correct, I know many investors and with rates so low, tenant demand and rents so high it's a gravy train. But only for those with pre approvals. The other thing is new planning rules means instead of just doing 2 houses on your section now you can do about 8 townhouses without providing carparks. So yes that's the investor view from those I know about.

As an investor, I’m pretty nervous with the bubble thing.
Long term interest rates look stable however, and NZ Inc. should be ok hopefully....
Def very risky, but where there’s risk, there’s reward. And where there’s risk is reward.
Very important to stay hedged, and def no time to be gung-ho
Very important to be able to add value to your investment, rather than be passive with it.
Very tough times ahead I believe IMHO

I have given up guessing. I think there is a bit of head in the sand going on, and I think our economy will deteriorate in the next 6 months. I know very few people whose business is thriving, about a third are about where they normally are, about a third are about 10-25% down, and about a third are 25-50% down. I know a couple of guys, quite successful, whose businesses have been badly hit, they seem down and I really worry about their mental health.

National Party = Housing Crisis is a good crisis

Now

Labour party = Housing Crisis is a good crisis

Result

FHB screwed by polticans of all breed.

Now : Think whom to vote. May be Green.

Definitely. Flawed party, but less flawed than the others!
At least their policies are there or thereabouts.
Labour are hugely disappointing. I should go with my gut, I always thought Ardern was a flake, then I got swayed by her.

Maybe time to vote Green

What is a DCM? I see it everywhere on this site. Also a TOP?