The housing market pendulum appears to be swinging back towards buyers with stock levels rising and asking prices flattening.
Property website Realestate.co.nz had 19,897 residential properties available for sale at the end of January, up 29% compared to January last year.
That was the highest number of properties the website had available at the start of the year since 2019, suggesting the severe shortage of new listings evident last year has eased significantly.
New listings were also running at healthy levels, with Realestate.co.nz receiving 7912 new listings last month, which was just 136 shy of the 8048 new listings received in January last year.
That means new listings were at their second highest level for the month of January since 2016.
The biggest increases in the total stock of homes for sale compared to the start of last year were in Manawatu/Whanganui +121%, Wellington+112% and Wairarapa +105%.
Stock levels were particularly high in the country's largest market, Auckland, which has 8494 residential properties for sale across the region at the end of January, up 23% compared to January 2021.
While asking prices remain high they appear to be flattening.
Realestate.co.nz's average (non-adjusted) asking price peaked at $1,003,413 in November last year, declined to $938,136 in December and bounced back up to $985,846 in January this year.
That suggests the rampant price inflation that characterised the market last year may have come to an end.
With more properties to choose from this year buyers will be under less pressure to bid up prices to secure a deal and vendors with unrealistic price expectations may struggle to achieve a sale.
"Property seekers could find themselves with more time to consider their purchase, rather than making one of the most important decisions in their life in a state of FOMO (Far of Missing Out)," Realestate.co.nz spokesperson Vanessa Williams said.
"A significant factor at play is that the sale of properties is slowing," she said.
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171 Comments
Great news. First they flatten. Then they fall.
But still the DGM lack the wherewithal to get a footing on the property ladder……
TTP
77% of kiwis want house prices to fall 47% said by a lot 1 news public poll. House prices are going to fall and most people in New Zealand will be happy about it. At this time TTP your continued push for people to get on the ladder is bad advise and people who have taken you advise over last couple of years will soon have lost deposit and be in negative equity if they have not got out of market already.
Yes and despite that poll, the advice the PM is receiving (from RBNZ?) and is then communicating to the public is that 'most people want their home price to keep increasing'.
But what she says is not a true reflection of the voice of the people of this country.
That statement is not true. In fact, it is a lie.
A public poll is what it is and in a free society you saying it a lie is fine but I believe many will disagree with you. Anyway prices will come down quite quickly the only people who will be sad and have a tantrum about it are investors and people who have purchased it last couple of years through FOMO. The Smart investors have already sold and moved on.
I'd hardly say we live in a free society at present - its perhaps more reflective of a communist state...closed borders, tracking and controlling the movement of people, state agencies choosing who will be rich and who will be poor, dailyy propaganda broadcast in the television by the government.
NZ is one of the most free society’s in the world try living in China, Russia Syria I could go on but I think you get my point.
No it’s not…not the last 2 years.
Becomes a negative feedback loop. If you could go out if NZ and come back easily you'd see most of the issues we're facing are more to do with privilege.
Less of us died and life was mostly pretty good? Waaah, worst place EVER
Compared to England, most of Europe, even Australia. Yeah we were the envy of the rest of the world whilst other countries were locked down hard for close to 12 months. Time will tell whether our Omicron response will change that....
Hopefully we will get back to less restrictive measures soon I know this government has gone to far because of COVID but we still have the right to vote them out unlike other countries.
That was a bs survey.. there should have been a follow on question "How much do you want the house prices to fall" and that will tell you the real answer. What if 77% want it to fall by only 1%, 5%, 20% etc etc then how would you view that poll result then?
If anyone is wishing for prices to crash/fall has rocks in their head as it will only tank the economy. We need a long pause in any rise or a slow decent over years to avoid the carnage
Its called lip service. People say they want house prices to fall but in reality they don't really. Your free to sell your house at any price you want so if you feel that strongly about it, sell if for a few hundred thousand less than its worth.....yeah right.
Selling your own house for a bargain does exactly nothing to solve the broader problems. Happy to see my house fall by the 30% it just put on, or more.
ok so you are happy for things to stay as they are in play if it means it will cause 30% to wipe off your property value? What if those same factors in play continued on and wiped off 40%, 50% or 70% then how would you feel? You can't just automatically say stop thats enough now and it magically happens. Once these forces get momentum there is no quick way to stop it especially with this government and RB in control.
For what things to stay as they are? Things as they are haven't done anything to improve affordability yet - I'm happy for more action to be taken. Obviously I don't have any control over the market - none of us do. This doesn't mean that I can't state a position that society would be better off with a 30% fall in prices.
As it happens, 70% fall is fine with me - I'd be a little underwater on the mortgage but it's pretty affordable and I could pay down with other investments if needed.
Im glad your in a position to handle a 70% drop, I would probably be able to handle that to, but majority are not in that position and that will cause wide spread issues to the economy. I want to see a long pause in the market or slow decline over years to avoid the economy getting ripped to pieces and for wages to increase.
Affordability will always be an issue, when you have immigration who bring in overseas money or just the fact that not every one earns the same wage will always have an impact on house prices and sets the market. Do I think its fair no, but unless government sets house prices so it removes the auction/bidding process and who ever has the most money wins it wont change.
Sounds reasonable to me. A cross-party agreement that Governments of both stripes would aim towards a gentle deflation with house prices falling ~2-3% per year for a decade or two would work wonders and perhaps even direct investment to something productive.
I would be happy with all those falls, whats the difference to me, had a house, still have a house, had a mortgage still have the same mortgage, if I go into negative equity and can't afford the repayments go bankrupt, that's the banks problem if house prices go down by 70% I probably could wait 3 years and buy another house, probably still faster than paying a loan for the house prices.
And yes the economy might tank, that's just speculation. If the economy is based on the the speculative house price bubble then it needs to tank, whats the alternative keep the bubble going while the next generation can't afford a place to live, then have it tank in a more spectacular fashion latter.
Think of the economy, is used more than think of the children to justify keeping the absurd going.
Good perspective.
The alternative - continuing policy driven wealth transfers to the wealthy - is arguably far worse indeed. We need to stop folk leeching off the wealth of the younger and coming generations.
That's a poor argument.
If the market overall falls about 20%, and I sell my house for 20% less, then I should be able to buy a new property for a lot less as well.
The loss I incur in the sale is compensated for in my new purchase at a much lower price.
Yes I agree, but what I was saying is you cannot just say I am happy for prices to fall 20% or 30% and for the market to stop since you say so. Once things get on a roll they can be hard to stop and with current powers to be I wouldn't expect they will act fast enough even when you can see the writing on the wall before they can. Then of course there will be a knock on effect through out the economy when it really starts going down hill
My comment was intended for Carlos's silly comment.
Not silly at all. If 47% of respondents want a big market correction then all sell your house for less and crash the market. Its simply not going to happen when you know that when people sell they want every possible cent so what they say is horse shit. They like the idea of a price correction but in reality they know big drops are never going to happen. All sympathy but no follow through, sounds like Labour.
I’ve got rocks in my head then - but anyone who is benefiting from the bubble will tell you that has always been the case.
You position them… ‘I shouldn’t have drunk 12 beers because I don’t want to deal with a hangover, therefore I shall remain forever drunk and in denial to my alcoholism’ or perhaps you shouldn’t have got drunk in the first place (ie created a massive property bubble and financial distress they always cause when they end…ALWAYS…there are no historical exceptions)
People have been saying property bubble for years. I brought about 8 years ago and remember everyone on here saying its a bubble and it will pop any day now back then. Everyone said it wasn't sustainable and look where we are now. If I had trusted everyone back then and sat on the fence I would be in a worse position.
If you truely think a housing crash will solve everything is crazy.
If you think maintaining a property bubble via fiscal and monetary policy is manageable with good financial and social stability outcomes you are equally crazy.
ok tell me when the property bubbled started? where you one of the ones back in 2015 that called it a bubble? tell me what happened since then and should I have still sat on the fence because I'll be better off?
All I was referring to was people said it was a bubble back in 2015 and im sure people even said it before then. So if you are saying the bubble will pop/crash/correction then prices are going to fall back to 2015 if not earlier levels? Then tell me how that is any good for the economy or anyone in that matter.
I’ll take that ad you’re equally crazy because you want to maintain a bubble via fiscal and monetary policy that will in the long run destroy financial and social stability.
When did you want the bubble to start? 1945/46 at Bretton Woods or when we left the gold standard? Or when everyone became obsessed with property investment the last 20 years, or the 25% increase in prices during a global pandemic with populations locked up in their houses with reduced incomes. You choose. Ultimately it doesn’t matter.
Your the one who is saying the property market is a bubble and yes it does matter to a degree of when you think it started because you want the housing market to crash so it will magically solve everything as it will rewind to when the "bubble started". Since you can't tell me when you think the bubble started then I am going to think you were one of them back in 2015 who said it wont last and its a bubble. When is a bubble not a bubble?
I personally don't care if prices fall 10% or go up 10%, I care enough to not wanting the economy to tank. You cannot just have the housing market crash with no flow on effects. The boarder is closed, no immigration, tourism is on our knees or a few feet under and hospo is going the same way along with our horticulture. Who or what will save the economy when NZ has crashed and burned with the boarders still up?
I can see you’re afraid of prices falling. If you have a lot of debt that is understandable.
BTW - I’ve never said when the bubble will pop, you can only tell that after the fact. When did it start, do you want an exact year, day and month to satisfy your insecurity? I can make one up for you if you like.
Read - Shiller ‘Irrational Exuberance’ if you want to explore the topic (he has a Nobel prize for asset pricing aka the topic of this thread)
I think you need to go back and read my comments. I said I don't care about house prices increasing or decreasing I just don't want the economy to tank but I think your quite happy for it to and not worry about the fall out once it does. Btw im not concerned about my debt levels ill be just fine.
I like your post from 2016, just confirms my earlier comments and what I suspected.
What do you suspect?
You understand that the fact that it has not yet popped is not empirical evidence that it is not a bubble.
Bubble = exuberance not underpinned by fundamentals. Being 20x the median individual wage and over 10x the median household wage is surely a case study if there ever was one.
To prop it up indefinitely only increases the future pain.
Your -> You're
Boarders -> Borders
The generally accepted definition of a bubble is when "asset prices are much higher than the underlying fundamentals can reasonably justify".
When was the last time that buying properties here made any sense whatsoever from a cashflow perspective? It's all been about the tax-free capital gains.
The economy exist to serve the people. These days it seems like the people just are there to serve the economy.
Perhaps nothing will save it. It's gone past the point of no return.
So basically everyone is crazy ? That would explain a lot. The bubble is here to stay, Labour said so, therefore it must be true.
iwantit2 you will be glad you did not listen to this guy...
by Independent_Observer | 15th Jul 16, 12:30pm
I'll happily get the ball rolling....I think there will be a 50% correction over the next 5 years. Timing - I don't know.
Wow would you look at that, thanks for sharing. Just backs up what I was saying and he was denying or not saying
That's 1 month after we moved into our first home. He was right about the 50%, just the wrong direction!
So I did…and the funny thing is I would have been right in 2020 where prices were expected to fall by that amount…had the government and RBNZ not gone to ‘unprecedented’ extremes to save the market…
I guess the central bank and RBNZ will always ensure prices never fall eh?
And there will be no consequences from their actions.
I agree, seems they miss that point => In the absence of ridiculous zero interest rates and removal of all prudent lending restrictions (I'm looking at you low deposit FHBers and investors), house prices WOULD have corrected (although I am not sure I would have picked 50%) .
Everyone can surely expect the RBNZ to repeat, even though there are now no more bullets in their gun??
They still have ammo:
Immigration to fill up the rentals
Money creation in some form (nothing to pay back - it's stolen purchasing power - "And it's gone")
This will go on for years.
I would have thought they were out of dry powder.
Can the immigration tap really be turned on that quickly?
The pressures on the global economy right now are unprecedented surely, to which NZ is not immune.
Public faith in government’s is crumbling, and if not then monstrously divided. England and Canada particularly spring to mind at the moment.
I’ve certainly lost ALL faith in our government with it’s lies and spin. Feels like a perfect storm is near.
Surely this madness can’t go on too much longer, with no push back? :(((
Very much why property is now a welfare scheme for the wealthy not a market.
Young people are being screwed by older generations with the power to prop up their own investments.
I'll happily get the ball rolling
Not happy anymore to roll balls. Well 5 years has passed and more and the statement has been refuted though IO does not want to own it. Still today there are new commenters who want to make equally tragic claims and predictions which they will bet their grandmothers life on. If you beg to differ they love to label someone as troll etc
The 50 percent part was indeed spot on.
So genuine questions for you :
1) Are you happy with house prices being where they are?
2) Are you comfortable with generations being locked out of ownership on the grounds of affordability?
3) Do you fundamentally believe house prices can ever go down?
4) What is an appropriate house to income ratio and how do we get there?
by Independent_Observer | 15th Jul 16, 12:30pm
I'll happily get the ball rolling....I think there will be a 50% correction over the next 5 years. Timing - I don't know.
Hahahahahahaha.
Taxi!
how do you search the comments?
I don't know, search for Retired Poppy if you want a laugh.
?
Google interest.co.nz and Retired Poppy.
by Retired-Poppy | 20th Nov 17, 8:53pm
TTP, that response was a bit shallow. Is this your way of expressing sympathy towards feral cats?
These are warnings from well respected and credible sources!
FHB, wait for the distressed sales!
Emphasis added. Sound familiar?
Where did you brought the property to?
A report from the real world:
Of course it must be realized that any pronouncement by the real estate industry, to which realestate.co.nz belongs, has the ultimate purpose of promoting sales. For instance this latest pronouncement could bring more sellers to the table if they are panicking that prices might drop. This could also be seen as preparing the way in the sellers' minds that they should be reducing their price expectations and accept lower offers.
Whatever the case, the ultimate goal is to keep sales turning over and the commissions rolling in; that is the sole purpose of realestate.co.nz.
In the case of my sisters home-unit's leafy street leading up to Cornwell Park, and which has a high density of home units, (brick & tile built between the 1960s and 2005) there were no properties for sale (unusual) until the last lockdown finished (early January?) and suddenly there were five of these properties for sale ($850,000 to $1.5 million range) within a couple of days. At that stage I thought here we go, hold on to your seat-belts. But those properties were sold within a week or two and now there are none for sale except for a reasonably modern large townhouse made of monolithic cladding for which they want around $2,500,000. No other properties have been listed over the last couple of weeks. Many of these units are rented out by investors.
So, as a report from the real world, this would indicate that there may have been a brief flourish of listings within the time period covered by this realestate.co's survey but it could be that it hasn't been sustained, especially in the more sought-after areas. The only places I see an increase in listings is for less desirable properties and/or locations much further out from the city centre.
A survey of renters?
77% of kiwis want other peoples house prices to fall.
I wonder what answer you get when you ask if they want their own house price to fall by 20%...
Most people would be quite happy with it costing less money to upgrade to a better home.
Big assumption that they want to upgrade. Many already quite happy with what they have.
for my 2 properties the answer would be hopefully its more than 20%
You do realise you can already sell them at any price you want (below market anyway) right now. Lead by example.
But you have repeatedly told us you are still stuck renting. Haven’t you managed to take the plunge yet?
Perhaps he owns property that he doesn't live in? Or perhaps he just lies. Half the posts seem like trolling for a reaction, so I wouldn't take it too seriously.
Perhaps he heads a crooked real estate agency...
I wonder if he got to keep his ONZM award.
Or the head of property brokers...
Surely someone in a position like that would disclose their interest? The CEO of NTL on the NZX was recently fired for posting anonymously about his company on sharetrader.co.nz, it's always a bad look.
I have said all along ....since 2014 the problem with this NZ residential property market .....it is all about "VESTED INTERESTS" !
The joys of an online forum. Troll's pretending they have your best interests at heart - while actually trying to shape the narrative in order to benefit themselves. That is why I've been pushing that people should state their bias in their views at the start of their comments.
e.g. I own $10,000,000 of rental properties, hence why all of my posts are pro property and against anything that might see prices come down to affordable levels.
or 'I'm the head of Property Brokers...everyone keep buying and selling as much property and at ever increasing prices to ensure my proftability remains high....I also tell people I'm a renter....but I also own 5 rental properties that I don't tell you about'.
Or the flip side...'I'm waiting to buy my first property and don't want to buy because it looks like a bubble and I might be ruined financially if I purchase at the top of the market while interest rates rise'.
Isn't it strange that TTP can come onto this forum and make these ridiculous, false and basically "self promoting" statements, as it's about the NZ holy grail of "residential property" .....plus most of us know who he actually is .....it's a very bad look for his business, so the more he carries on, the more he will lose clients, as if in his area, would you go to him to sell your property or believe anything that came out of his mouth ? .....but then again, the CRAZY thing, says the Crazy Horse ! is that most of the others are just the same ! ......what a clusterf**k this market is !
There are things that people in a position like that should do...
Then there are the things that people in a position like that actually do...
https://comcom.govt.nz/news-and-media/media-releases/2017/property-brok…
The shock for me was not that people/companies are able to easily manipulate a small market - that is easy to see throughout our little back-water - but that it was the commerce commission actually doing something. I had to sit down.
Aren't you always banging on about being a renter? Perhaps you should practice what you preach rather than venting your spleen about DGMs.
Doesn't matter mate ....the more they fall the more commissions you'll get.
First you get the sugar. Then you get the women. Then you get the power...
Clarke G ?
Escobar?
Is that Jacinda's pet name for him?
Homer.
Donald Trump?
I would like them to fall but there are still a lot of kiwis out there who have missed at auctions in the last two years and they are still in FOMO phase and trying to grab what they can.
They are still making ridiculous offers on properties which are not worth it.
We are a very small country and we do have the tendency of rat follow rat. So I am a bit sceptical that a fall would happen.
There is still a lot of stupidity left out there.
I see what you mean but is it stupid to want to live in a house you own? Are FHB’s stupid or are they looking to raise a family one day and have had years of ‘its going to burst’ so just tune it out now.
Its not stupid to own a house but it's stupid to fight at an auction with your fellow kiwi and keep bumping prices up bcos some real estate agent tells you to do that. They have vested interests. RE agents are the parasites causing most of this stupidity.
As a citizen of this county, we need to ask for affordable housing from this government. We are ready to pay for it. It's in our constitution for government to provide affordable housing. We shouldn't be fighting for it in the auction rooms.
Hopefully now you understand my point of view. But i doubt the point will be understood bcos we are housing obsessed nation.
So many investors having houses in multiple ls of 10's. That's just absurd and highly unethical.
Where is the commerce commission to regulate this market? They can regulate telecommunications, grocery ans supermarkets,why not housing and investors?
"Great news. First they flatten. Then they fall."
Unless the government and RBNZ panic and throw measures and $$$$$$$$$$$$$$$ to retain power as falling housing market is a depression in NZ being the only economy.
Wellington, for example, had 111% increase in stock but 19% increase in new listings. Does that point to longer days to sell too?
Who is going to buy right now with inflation up and interest rates about to take off just sit and wait for the bargains as prices fall, nobody knows how high rates will go as depends on other governments around the world NZ will just follow them. NZD is already tanking.
Yeah, I can't see property holding at such high levels, when we have likely:
- Got rid of the 65-80k home shortage reported a few years ago
- Restricted lending dramatically via higher interest rates and CCCFA
- Stopped migration
The two things that will pump it more could be shenanigans by the RBNZ once they realise the real estate industry is "too big to fail", or Labour turning on the migration flood gates. Won't put it past either of them.
But if the proverbial does hit the fan before they can react, I suspect we will be like Ireland and lose a decent chunk of our population pretty quickly, as the follow on recession bites. And they will be the young productive ones, i.e. the ones we need. And all of these issues can be laid at the feet of an out of control RBNZ (quick to drop rates and far too much, slow to raise), a series of useless governments who pander to the real estate lobby and further entrench inequality and an unproductive economy.
A 1 news poll showed that 3/4 of the population want house prices to fall. Not stagnant, but FALL. It’s going to be increasingly difficult for governments to continue to ignore the wishes of 3/4 of the population
Not disputing that at all. But I bet if you asked those same 3/4 if they want house prices to fall AND the resulting economic carnage (which because of our over reliance on real estate in the economy will likely cause a recession, the likes of which NZ has never seen before), they will have second thoughts. I would personally love house prices to drop 60-70%%, but would I want all the banks to close up shop because they aren't viable entities anymore? Would I want the dollar to drop to all time lows as the economy tanked, causing the price of fuel to skyrocket and a death spiral of economic carnage? And half a million young kiwis to leave as a result of not having jobs on offer, causing a double whammy of lower tax take, just when we need a higher tax take to support more and more retiree's? Not so sure...
The thing is, that while a recession might cause our talented young people to quit NZ, the prospect of never being able to afford to buy a place to live in is causing them to leave already.
It has to happen sometime when average wage earners can’t afford a house and are doomed to rent for rest of life society is falling apart and if they don’t do this now it will be much worse in few years time.interest rates will raise and NZ government cannot do a thing about it as we will just follow the rest of the world.
If you don't want the popping of a bubble to cause economic carnage, don't inflate the bubble in the first place. No easy way out of this. There will always be a price to pay.
Lol. Get out of here with your common sense.
But then banks would not be as profitable, and some businesses might fail. I think the Fed can be proud of their woke progressive stance on this "no lame duck, me to business left behind!"
Great comment, so sick and tired of the whole "We can't have a drop in house prices, it will crash the economy!!!".
Its like having a huge fleet of commercial fishing vessels pillaging the oceans and then someone stepping in and saying "Hang on a minute we need to change the way we do things or there will be no fish left" and the outcry being "Oh you can't do that, some people will lose their livelihoods".
Indeed, everyone knows from the experience of being alive that - life is full of trade-offs. The tragedy of an inflationary fiat monetary system is that it steals the time and energy of the average person, in fact most people. I highly recommend the writing of Robert Breedlove as regards the philosophy of money. https://substack.com/profile/1629894-robert-breedlove
It’s code for ‘don’t change anything because I might lose some of my capital gains’.
Or we could close down virtually every business in the country and have people sitting home still eating and then feign surprise that stocks of loo paper are non existent. NZs ability to look after itself has disappeared since the 80s so one of the few remaining economic industry drivers left is housing. The govt knows it, Orr knows it and their jobs rely on others having jobs.
Property investment...NZ's biggest social welfare scheme.
We shafted the economy when we decided to funnel billions of borrowed money into bidding up non-productive assets. Sure it looked good in the short term and National could bang on about our “rockstar” economy and low public debt, but every year it requires increasing levels of stupidity to sustain.
Banks got rich, a tiny sliver of society siphoned off some profits, and the taxpayer will foot the bill.
The underlying causes of the GFC was low interest rates, banks lending up a storm, and fed using the “wealth effect” to create the illusion of economic growth. All sounds pretty familiar.
We have already put it all on the tab, we just have gotten around to paying the bill.
No ...long before April 2020. That just made it twice as bad
Great post, and most people wouldn't make the link between house prices falling and wider economic damage.
Also as you say we don't know what sort of house price falls most could be happy to see I bet your bottom dollar many would be ok with 5-10%, but not OK with 20% plus.
Most people (yourself clearly) haven't made the link that the wider economic damage has already been done - by increasing house prices.
You have it a#se about t#t.
Nope, you are wrong there. I am well aware of the economic and social impacts that sky high prices generate, which is why I am on this forum whinging about it so much :)
But there will be significant economic impacts if there is a crash. And so be it. We need it to happen.
My main point being people probably don't put those things together in their mind in a quick survey, or if at all.
"But there will be significant economic impacts if there is a crash."
The significant impacts are here...crash or no crash. That's the bit you are missing. It's a done deal.
Different types of impacts. With crash the impacts will be more severe. With a long running property bubble they are more insidious and still pretty nasty.
Also if the bubble pops, maybe just maybe people will start investing in productive sectors of the economy and in the long run we will be better of. While people are making millions of doing nothing but buying properties and feel safe doing it nothing will change.
This is a good way to go put money into productivity more jobs start exporting products this country has such a small population but with so much talent once exports take off the whole country will prosper. Just selling houses to each other has just hit brick wall .
If only the incentives were set up to benefit investing in productive assets instead of housing.
Yes and I am all for that. But that can happen with tax changes, discouraging property investment through targeted tax on it, then using that tax money to subsidise investment in productive assets. Of course this should have been done 10 years ago.
But successive governments have now built up the property bubble to be so big, the only thing that can happen will be a pop.
It's so predictable it's laughable.
Once the construction slump hits, we will see a mass exodus of builders and trades people to Australia.
It's happened several times before and will happen again.
It would be nice to think Kainga Ora would have a plan to redeploy them, but I doubt they do.
Thats what happens when banks stop lending on property
It's when prices go up 25% in one year and surprise, surprise FHB can't afford them.
Nope, it really hasn't changed for many years, at 10x average wage (2 earners) it is now more extreme for sure but it was 8 before that and that was still unrealistic.
This change is much more about the restraint of credit meaning investors are unable to buy.
It's a combination of things:
- much higher prices
- significantly higher interest rates which will rise further
- LVRs reinstated
- the CCCFA (to what extent, up for debate)
This is fantastic news.
A significant repricing of all assets will be fantastic news if/when it happens.
Watching central banks create financial repression against those who are already struggling by setting interest rates far below the inflation rate is a modern form of torture. Everything gets more expensive and buying power eroded, in order to protect the debt held by 'rich' asset owners.
Central banks have run out of ammunition and they can't support the housing Ponzi for much longer, now that the devastating effects of their reckless ultra-loose monetary policies (such as inflation) are starting to appear.
The NZ housing market might well end up like the Irish one during the GFC, as prices are now so inflated that a disorderly correction is a distinct possibility. As economic fundamentals are finally reasserting themselves, I would not touch residential investment with a barge pole.
Not only a possibility, in light of mortgage interest rates going North, restriction of credit due to CCCFA and now a surplus of stock they are likely to crash hard. Given they rose 27% last year the fall will need to be 20% or so to make a dent.
Difficult to do, unless you do something like this https://www.patreon.com/posts/new-liberals-61077693
Does anyone have a link to the asking prices per region? Weirdly been omitted from this article...?
This shouldn’t be a surprise to anyone. The past 18 months were purely the result of emergency ocr settings and (foolish) move to drop LVR limits. With LVRs reinstated, and interest rates returning to pre-covid levels it’s hard to justify that those price gains won’t be unwound. The question is will the momentum of that unwinding create a feedback loop?
Coming up with housing figures is a nightmare really. Take my partners place in Tauranga, its a new development but all 3 places around here have re sold in 12 months. Property churn in NZ is nothing short of unbelievable, the thing is all those that sell end up buying, sometimes just up the road. Do people just get bored ? Maybe its people getting tired of waiting for a post covid environment so are selling anyway. Its not unusual for people in the UK to stay in their house a lifetime but its pretty rare in NZ. Total listings down here are still half of what they were in 2020 so perhaps it varies considerably from region to region. You wouldn't blame people for trying to get the hell out of Auckland, the listings there could double.
Such activity is almost always covered in one word: Speculation. We are mostly a nation of property speculators, who think we are smarter than we are.
LOTS on the Market.
https://www.trademe.co.nz/a/property/residential/sections-for-sale/auck…
You could always buy a section as there is a lot for sale.
Maybe you could put a tent on it and watch it be blown away, come Winter.
The Winter of our Discount Tent is what I see for Poor People, within Awkland....Taint just the House, beyond reach...Franklin, I do not give a damn.
Nor wonder why any one would. Over priced is not just in Houses.
Some people need their expectations fall a little lower.....
75%...might agree...
Funny how they only just noticed, More Houses, More Sections, More the tide may turn. More the better, for 1st Home Buyers, who need a roof over their Bonce.
a big part of the UK staying put is STAMP duty -- whihc adds a significant cost to moving and its just dead money not kept in your new asset - justmakes people think a bit more about moving down teh road a few miles !
I don't disagree, but I would point out that for many purchases in the UK the stamp duty would be roughly equivalent to the excess charged by NZ real estate agents. 2% stamp duty +1% agent fees vs 3% agent fees.
It does slow it down but mainly what slows it down are there old'e world property chain legislation (Property chains and why it all takes so long | Rightmove Advice), the stamp duty is just bundled and accounted for through the sales process (can be added to the mortgage).
Still room for upwards valuation.
BE QUICK
Forget to change accounts?
Na lol just turning him into the interest.co.nz meme :D
Ah got ya. Hard to tell these days. I was hoping I'd caught him in the act ;)
Be quick for what mate ? ......to buy an extremely overpriced property with interest rates going up and bad inflation ???
Or are you really trying to say ...BE QUICK ! my commissions depend on your stupidity ?
He's taking the proverbial out of a certain trollish commentator
BE QUICK ... to secure that chair before the music stops
WAIT AND WATCH
:D
Let me guess ? .....CWBW
Hmm - interesting. The point of the article text is,
"A significant factor at play is that the sale of properties is slowing," she said.
But then they don't give us the normal graphic used to illustrate this - the Inventory of listings, noting average days to sell and change to average in each of the regional markets.
As per the graphic in this previous press release.
Annoying as that is my favourite market analysis/statistic from them.
Also noticed that REINZ graphs now only show the last 4 years so you can’t see how insane the price appreciation has been the last 20 years. Intentional…? Let’s hope not.
Yeah, notice that too, but at least the full historical detail of sales and CV can still be found under the heading Past sales & timeline on the homes.co.nz website - here's an example of a house recently sold;
https://homes.co.nz/address/lower-hutt/woburn/1-sherwood-street/5r5PK
Records data all the way back to 1920 (the year the house was originally built). Ownership stayed with the first owner for 65 years!
Thanks 🙏
In a system that only allows boom or bust, the only way to bring prices down is via a bust, or at least falling to the historical mean, at which point change the system by removing restrictions so demand can equal supply and from that point, we would have a stable market that only increases by the general rate of inflation.
We need to sort this crazy overheated housing market soon. I spoke to a young builder yesterday. He is about to shift to Australia with 3 mates. My daughter has a friend who is about to shift to Holland with her husband and children. All of them are seeking better incomes and the chance to buy a home. They do not believe they have a secure future in New Zealand. We are getting what we deserve. Our greed is alienating those who are entering the housing market.
Good on the young builder, whether he knows it or not there is going to be a construction slump here this year.
Great decision.
ex agent.
And so it begins....my 3 kids moved overseas after the GFC , couldnt get work in NZ . They will never return , couldnt afford to now . Remember Houses are Financial instruments now , like shares , BC , etc . Of course they shouldnt be , but 20 years of poor gov have got us here......l lived in ireland after the GFC....carnage ...we dont wont that.....my father inlaws house is still below its 2007 value....15 years later......
won't happen here mate .......we're diffrunt ... all the baby boomers scream !
People shift out of NZ and replaced with people with money into NZ…
There is one question - would you be OK if the price of your property and all properties fell to its value from 12 months ago?
And every single home owner in NZ should be able to say YES. They don't have to be happy about it, just acknowledge they accept property as a long term game / way to have stability long term, and that spikes such as 25% in one year are ridiculous and a sign of failure by regulators.
The consequences of that fall would be complicated, chain reactions and side-effects of course... Maybe interest.co will one day have a piece about what a real property crash would look like?
A house price to income ratio of three to four would be the dream
Even 6 would be a huge improvement...
From the BBC where quality is standard:
Minsky had a theory, the "financial instability hypothesis", arguing that lending goes through three distinct stages. He dubbed these the Hedge, the Speculative and the Ponzi stages, after financial fraudster Charles Ponzi.
In the first stage, soon after a crisis, banks and borrowers are cautious. Loans are made in modest amounts and the borrower can afford to repay both the initial principal and the interest.
As confidence rises banks begin to make loans in which the borrower can only afford to pay the interest. Usually this loan is against an asset which is rising in value. Finally, when the previous crisis is a distant memory, we reach the final stage - Ponzi finance. At this point banks make loans to firms and households that can afford to pay neither the interest nor the principal. Again this is underpinned by a belief that asset prices will rise.
Are people really too blind to see the obvious here?!
Certainly highlights that the CCCFA and personal responsibility for bank directors is a good thing.
"I want house prices to drop" is not the same as "I want my house to drop in price"
Everyone seems to want the first. But for the first to happen, the second must also occur, and no one wants that.
House price reset or hyper inflation/stagflation....its a no brainer... its the reset. Should be real obvious for a left leaning Govt as well as inflation punishes their core lower income voting demographic. But for what ever reason they seem happy to fiddle while middle and lower income NZ burn in favour of protecting bankers bonuses/profits and rich leveraged speculators capital gains.
Truly surprising to watch unfolding, and by the day its is becoming the greatest political sell out in NZ history. Wow...
The great "Reset" should have started at the beginning of this Pandemic, but instead governments around the world did the complete opposite and prevented it from happening. Those that were onto it could see it happening and jumped into property.
Labour is not really left-leaning anymore...
I suggested about 3 weeks ago that housing stock levels were going to rise to a record level by end of March. Of course several posters mocked me including a few who do not understand the difference between new listings and stock levels
That was the highest number of properties the website had available at the start of the year since 2019, suggesting the severe shortage of new listings evident last year has eased significantly.
This is the golden nugget.
Did house price decline since 2019? Dreams are free.
Be quick!
BE QUICK .......to the financial slaughterhouse ! .....btw meaning of mortgage in Latin .....mort = death gage = grip ....so "deathgrip" .....says it all in this current market
dp
The moment when you are going to have egg on your face is fast approaching.
For some reason people think that more listings = lower prices. The two are not necessarily linked.
I'm not very smart, but I do know the difference between a home and an investment property. The two get smashed together constantly with almost every breath spoken about house prices, however they are the furthest away from each other that is possible. Yet they are conjoined twins from the same mother. It seems one cannot exist without each other. For now.
Increasing house prices to a homeowner means increases in rates, insurance, upkeep (via inflation) and the GST increase that goes along with every price increase. The said homeowners also often having to lend to family that cannot afford to own their own home using up savings, remortgage or other borrowing. Which then gets lent to family into a (recently) rising market. A risk both to the money "invested" and to the repayment capability of said family now facing higher interest rates. Putting the homeowner at risk to the market whether they like it or not.
As we are currently at the bottom of the heap regarding worldwide housing affordability, the vast majority of working class people are already committing 90% of their annual income paying for a house and upkeep and food and electricity and petrol getting to work to pay for it all - for at least 30 years. Where is their excess money being spent? Not into the economy, but into the profit vaults of the big offshore banks.
The icing on this money cake for the well healed is that the rental stock decreases in quality because landlords don't care to put profits into upkeep as much as a proud homeowner would do. (ex-landlord). If the homeowner sells it is only because they are buying another home in the same rising market.
The only people that really care about house prices increasing is the investor. Every other metric hurts the homeowner. It increases their costs and increases the GST and increases the profits of the investors and the banks. The homeowner gains nothing. Ever. Until retirement maybe if they can downsize and/or get out of the city. Sold my Auckland home and rental March 2020. Waiting, hodling, renting for now.
The governments have encouraged mum and dad investors to invest in stocks and shares for the past 10 years or more. That went well. What bank would lend me three quarters of a million dollars to buy stocks and shares. hahahahah That is a major reason why mum and dads and professional investors bought housing, to the detriment of business and manufacturing/innovation in this country. Where has all the money gone? hmmmm.
Please, if anyone disagrees with my view on this I would love to hear it. Not anti anyone, and certainly not against people investing their money where it earns them the best return, it is the reality of the system we all live in. It's just an observation from a cynical optimist.
The problem exist because of incompetency by successive governments and nothing else.
Because none of them are capable of creating better paying jobs and raising the income of its citizenry the blame has to be diverted.
The greatest of all diversion is to have Kiwis blaming one another instead of the government.
I agree. However WE let them do it. WE encouraged them because WE got richer buying a second home. Many many thousands did. I did. In fact anyone I know that could, did.
My kids that do not own their own home may regret what we/they (governments) did. Especially if I manage to spend all my gains before I die. Working on it!
Of course it's the criminally negligent successive governments.
They have incentivised all money into land speculation rather than productive work. We reward those who sit around on assets rather than those who add value to the economy.
One area I'd say homeowners benefit from ever rising prices is the "property ladder". The idea that you can sell your house and buy another that suits your lifestyle, I think it goes hand in hand with rising prices. I suspect it just wouldn't be possible/economical with a flat or falling market. Certain posters here disagree.
My reason is the banks. For the past decade or so, banks happily lent any amount buyers asked for, as prices were always rising. But I reckon banks would be far less willing to lend money to an asset that's falling in value. Would you happily lend your money to someone if it were likely they'd lose 20% of it before they paid you back?
So I think that's one way single home owners have profited from rising house prices, the relative ease to sell and buy another home when it suits you. Take that away and first home buyers may stop perceiving their first home as a stepping stone, but as a very long term home. Another reason I think the market won't go flat for long, it will start falling fast.
However I could be wrong and I also welcome people's comments on this.
A well reasoned and thought out post but a couple of points i'd like to challenge you on:
"the vast majority of working class people are already committing 90% of their annual income paying for a house and upkeep and food and electricity and petrol getting to work to pay for it all"
Where did you get 90% from?
"rental stock decreases in quality"
I'd argue that rental stocks have been increasing in quality over the last few years as it has become far more profitable to knock down an old house and put a bunch of new build townhouses on the same site.
"The governments have encouraged mum and dad investors to invest in stocks and shares for the past 10 years or more."
I'd argue with the tax benefits from housing that governments have encouraged investing in houses over investing in shares or setting up small businesses. Government should have encouraged investing in shares & productive assets instead of housing but failed to do so.
(own my home with mortgage and have bought an investment property August last year so my kid can own a home one day)
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