Residential property sales slumped dramatically in February, suggesting the market could be heading for a tough end to the summer season.
The Real Estate Institute of New Zealand recorded 5597 residential sales throughout the country in February, down exactly one third compared to February last year.
February is usually one of the busiest months of the year with sales traditionally peaking in March.
Sales were particularly low in Auckland where just 1741 properties were sold in February, down 40% compared to February last year (the interactive chart below shows the monthly sales trend in all regions).
However, prices remained firm in most parts of the country with Auckland and Northland being the only regions to record median price falls in February.
The national median price increased from $880,000 in January to $885,000 in February, giving an annual gain of 13.5% since February last year.
However February was the third month in a row that the median was below the November 2021 peak of $920,143.
In Auckland the median price dipped from $1.2 million in January to $1.19 million in February, giving an annual gain of 8.2% (the second interactive chart below shows the monthly by trend in all regions).
The number of properties on the market is also rising steeply, with the REINZ recording 23,270 residential properties available for sale in February, up by 47% compared to February last year.
Properties are also taking longer to sell, with the median number of days taken to achieve a sale rising from 31 in February last year to 42 last month.
"Market sentiment has shifted over the past couple of months which is evident throughout our February data," REINZ chief executive Jen Baird said.
"While prices remain strong, increasing annually in all regions, the number of sales continues to trend downward and an influx of stock across New Zealand is easing demand side pressure, which may in turn further ease price growth in the coming months," she said.
The comment stream on this story is now closed.
Volumes sold - REINZ
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Median price - REINZ
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Median house price growth
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149 Comments
"....Auckland and Northland being the only regions to record median price falls in February."
This is a lie. I was repeatedly told by The Man 2 and all his other accounts that house prices never fall in NZ, and especially not in Auckland.
In their defense, I think some of them point out you just need to tweak the time series you use to still show positive returns.
House prices won't collapse......
But the DGM's credibility will collapse - even though it's already gone subterranean.
Enjoy the new week, folks!
TTP
Such emotive language. Surely nobody will be fooled by such a thing.
Don't be discouraged, realterms.
Enjoy the week!
TTP
The only thing that has gone subterranean is CWBW.
Why won't they crash TTP? What will hold them up?
Speaking of a "crash" imagine this scenario .....a certain pilot of a light aircraft is about to make a so called "soft landing" at Palmy airport .....like today, its a cracker day and great visibility ...he looks at the skyline, all looks perfect .....then a certain noise comes from the engine "cough cough" it goes ...oh that must be interest rates rising which creates puffs of smoke from the engine of the plane..... then a strange "whining noise" from the propellor .....which turns out to be the war between Russia and Ukraine causing world instability ......then BANG a bird strike ! that was the govt. wiping out claims on mortgage interest .......then it turns out the bird strike caused the rudder damage to the tail ...oh no that's the fact that NZ house prices are up to 11x annual gross income ! ........sheez what ! the landing gear will not deploy...that's inflation for ya taking a chunk out of the folks disposable income ......OK lets land this thing ! .... with limited steerage, no landing gear, engine running rough, bird strike damage .....what to do ! .....see that field over there, lets go for that ! ....the planes undercarriage his the grass BUMPH ! CRASH ! RUMBLE ! WHOOSH !.....sliding along a wing tip digs into the ground, causing the plane to cartwheel to a grinding halt, into the airport security fence,,,, dangling from one of the metal fence poles .....there, the very lucky unscathed pilot emerges from the cockpit and makes his way down the wing to the awaiting emergency services and announces with a broad, beamy smile "that was my soft landing". Then a voice of an airport fireman yells out "please, we never want to see what your hard landing looks like !"
Exactly!, and the plane has gone out of the earth's stratosphere and now trying to land from great heights. House prices have gone up exponentially, so only a few transactions have defined the recent insanity which means that many investors can still sell at crash prices and be in profit. This is why we can very well see a crash. The situation we are in is 40 years in the making a 40 year joy ride in the sky devaluing currency to make some people feel rich which as you say now has ended. I don't understand how the spruikers can't even question how a market that has been sustained by ever decreasing interest rates will not be challenged by an environment of ever increasing interest rates ...
There's a new suburb planned in Palmy and it's called Mayday
Speaking of credibility TTP.
Advocacy group Renters United says it has been approached by landlords horrified at Property Brokers stance.
https://www.rnz.co.nz/news/national/412965/property-brokers-tell-landlo…
Tim, I guess your team of spin doctors were not able to hide this article.
Enjoy the week, folks.
Thanks for your views TTP/Carlos67
Please back up your claim that you've been told that "house prices never fall" with a quote. Can you?
Don't have to look very hard when the Church of Ashley consistently parrots his mantra that over the last 30 years (forever in Ashleys brain) property prices have always risen
Yep good response, and there's plenty of others.
Church said late last year it's 'highly unlikely' (though not impossible) that prices will fall, and he was picking small increases this year.
He's going to be shown up as the charlatan that he is.
Wait six or 8 months for this cake to rise or fall flat
In a free market, prices would likely fall significantly. The issue is what more welfare and and rescue efforts are poured into the market by reserve bankers/government.
Try giving a bit of balance mate. Mind you, if you were on the level there will be Bullcrap coming from both ends
The front of the roller coast carriage (Auckland) already on the way down. Some carriages at the back (regions) still on the ‘way up’ due to Aucklanders trying to flee the downturn. Soon the whole lot will come down. 20-30% not a crash, just back to some normality after 2 years of outrageous increases.
A 30% drop would see the national median house price at $619,000.
Which is still 7.2 times the average after tax household income ($85,800). The gross average household income is $107,000.
So a 30% drop just dosen't seem sustainable. House prices would need to drop further to get them back into some kind of alignment with household incomes.
Can anyone think of any housing market correction ever where prices corrected down to such a high plateau w.r.t. incomes? I can't. Normally they correct right down until they make sense compared to incomes.
A 50% drop would get us back to a more "normal" house price to income ratio.
With shares, commodities & property, prices usually overcorrect on the way down.
This madness has gone on for so long I don't think a 50% plus fall is out of the question.
The time to buy will be when the herd around the BBQ can't envisage prices rising ever again.
All Trade me listings for Auckland - Saturday 19 February 11,276 .........today 12,125 ......nuff said.
A 50% drop would put the median from peak 920K to 460K, which takes us back to the median in Feb 2016.
In Feb 2016 Labour were telling us there was housing crises and something needed to be done about housing affordability. So on that basis we want prices to drop further than 50%. Wage increase hasn't been that dramatic since 2016.
Minimum wage has increased over 36% since then.
That's the hourly pay rate; weekly median earnings have grown 16% in 6 years, much slower than the nominal GDP growth (>40%) and house prices.
This can be put down to employers unable to raise prices to such levels have either shut shop, compensated for the cost increase by giving lower wage increases to those earning above minimum rates and/or given fewer shift hours to minimum wage workers.
Fitzgerald, I don't really think anyone knows what's going to happen. We've just had the lowest interest rates in 60 years. Inflation in the USA is at its highest in 40 years (not sure what the stat is for NZ). We are in unknown territory.
Markets don't move to the level someone deems as right or nice or even fair. What one person thinks would be great, i.e. a drop of 50% in values so they can buy a house, would be considered terrible by another person who just recently bought, as they would lose their house.
And about 80% of the population think house prices should fall (according to polls) so from a utilitarian perspective which is the best outcome? (i.e. greatest good, for the most people, over the long term).
Genuine question, would they lose their house if they can still sustain mortgage payments. Didn't they buy the house because they liked it and can afford payments.
Not only that, but why on earth would the bank want them to stop repayments and make back only a fraction of is owing to them. And further force house prices to fall by introducing a large number of mortgagee sales. If you are in significant negative equity the last thing the bank wants is you to go bankrupt, so they won't be putting interest rates up so you can't afford them. For you, go bankrupt wait 3 years, buy another house at a significant discount.
You need to look at it from the banks point of view.
In a declining market they face a bigger loss if they hold off forcing a mortgagee sale. This applies to all banks, and competition to lose the least means one of them will pull the trigger before the others, maybe too soon from a rational viewpoint.
No one wants to be the last one standing in a crash.
What's going to be even more interesting than the banks pulling the trigger will be when the tens of thousands of Chinese overseas investors pull the pin. They are a sight to behold during a market collapse.
Also depends on how many Chinese investors there are that used laundered funds for their initial purchase. Selling a property for a 50% loss is a 100% gain for this type of vendor, and can drag a market down with them.
Wow, didn't realise people were still on the blame the foreigners band wagon. You'd think the last 2 years would have been slam dunk evidence that the housing price issues in NZ are largely driven by domestic lending and investment habits. Of course foreigners still influence the market but A. are not the primary influence and B. are not mostly Chinese.
It's not a "band wagon". The fact is that overseas investors (mostly Chinese) own a lot of houses. Concentrated mainly in select areas. If they sell all at once, it will be felt.
Maybe you've forgotten, but John Key granted wealthy Chinese special category visas to fly into Auckland with suitcases of laundered cash, ostensibly to spend at Sky City but in reality laundered through the Auckland property market.
Now the Chinese residential market is entering full on collapse, that money will be flying home soon.
There are many factors that led to the speculative bubble at different times.
Chinese investment during the Key years was just one of them, but nonetheless they purchased 10s of thousands of investment properties, and were responsible for the beginning of the bubble.
And now they will be the beginning of the end.
Banks will put up interest rates the second their cost of funding increases. So yes, they very much WILL increase rates whether you can afford it or not. You seem to forget mortgages in NZ are full recourse, meaning if they sell the property for less than the value of the outstanding loan, the borrow is STILL liable for the full amount.
Full recourse mortgages are the norm everywhere, i get sick of people trying to make it seem thats its not the norm.
"Markets" aren't powered by welfare support from government and Reserve Bank either. Or shouldn't be.
In a market price discovery should be allowed.
Correct. We could easily be looking at a 30% or so decline by the end of 2022. At that stage, with NZ, and most of the western world, likely in recession, who's going to be buying? The mood will be downright negative and another 10-20% of declines will be on the cards. And that scenario doesn't even begin to factor in the risk of a Chinese property decline / crash. If Chinese property gets hit, how many houses in NZ will all of sudden find their way onto the market? When the Chinese realise that property has been a big ponzi in their homeland, they will be rushing for the exits in their offshore portfolios as well.
100% agree PitU. Last couple of years was printed FIAT stupidity.
Interesting. A little tick up in HPI outside Auckland which is now down 5.5% over 3 months vs a 2.3% fall for the country as a whole. NZ ex Auckland has just reversed the falls, now flat over 3 months.
Makes it an easier decision for the RBNZ to raise rates.
https://www.reinz.co.nz/Media/Default/Statistic%20Documents/2022/Reside…
Looking at the 5 year CGR, Auckland has really underperformed the rest of the country recently.
Better than expected other than Auckland which now has I believe 4 consecutive months of price falls. Orr now has full justification to do a couple of fiddy drops.
The herald used to describe the price rises in the regions as the Auckland "Halo effect". What heavily metaphors will they come up with to describe the reversal.
The tightening sphincter effect perhaps?
wait for the Labour to claim the decrease in house price as one of their success.while blaming Putin for high living costs.
haha
xing,
I only blame him for invading another country with no justification and causing untold suffering. That seems enough.
They would be correct
Who the hell upvotes this clown?
I always wondered why Germany happened in WWII and then I see Trump supporters and now I see whats happening in NZ, and now Ukraine.
Don`t hesitate and buy now quick, invest into your vendor`s future ! :)
Prices flat, sales volumes sharply down, and inventory sharply up. Tells a story of vendors figuring out that they can't get the money they thought they could, and deciding to hold.
What happens in the broader economy over the next few months will determine how long they're able to hold for.
Yep, teetering is how I'd describe things at the moment.
The standoff between buyers and sellers has begun
Higher interest rates could break that standoff.
It could indeed tip the balance in the buyer's favour
Indeed. Higher rates, reducing tax rinsing, and young renters departing for sunnier shores in Aussie.
Higher interest rates indeed, what evidence do yo have about "tax rinsing" and "renters departing for OZ" so far?
NZ has a long history of negative net migration for the <30 age bracket. Go back to most any migration/census data in the last 40 years and you'll find this. The primary country of out migration is Oz, as it has lowest barriers to entry (a minimum of ~500k kiwi live in Oz at any given time). This age group is also the most likely to be renters, as they have the lowest home ownership rate (for obvious reasons).
During Covid, the negative net migration trend basically halted, which has likely created a backlog of <30s waiting for their chance to go overseas. With the rent price and cost of living also ballooning in NZ, the value proposition of working overseas is only looking better to this age group.
Stagflation
deer oh me
With the seemingly turn in the market and wider uncertainities, here are some comments for recent FHB to think about
- Whatever the market does (up or down), walk around your home with your partner and you will find that you have exactly the same house
- Short-term fluctuations of a few years in the house market can be expected but are really irrelevant. Homeownership is long term of forty or more years, and over the long-term increases in wages and even modest house price inflation will see your home’s value increase considerably
- High inflation over the short term of a few years or so does have a risk but also a positive. Inflation as a positive, means your mortgage remains the same but as your wage is most likely to increase, the mortgage becomes proportionally smaller in real terms.
- Inflation as a negative means that the OCR and mortgage interest rates are likely to rise; this is likely to be your main short-term concern. It means that you simply need to be prudent and seriously look at discretionary spending and best starting now – maybe put that proposed deck or car upgrade off for a year or two and look to pay down debt especially any high interest debt.
- With falling mortgage interest rates over much of the past decade, short term was the better option, however with increasing rates now signalled at least over the short to medium term, an attractive longer-term rate could be both prudent and give one greater assurance.
- Remember that your bank has assessed lending to you considering their self-interest. The LVR was there in the event of a fall in market value, and stress testing at a higher interest rate if interest rates go higher. No matter what may be posted on this site, the bank knows your particular situation and if they weren’t confident, they wouldn’t have lent you the money in the first place.
- As long as one is meeting mortgage payments, you have no fear in even in the extreme case of being negative equity – banks in their own self-interest are not going to want to precipitate a run-on mortgagee sales. A renter is probably 1,000 times more likely to have a landlord knock on their door giving them notice to vacate.
So, focus on the appreciation and enjoyment the financial and social security, as well as the intrinsic value, that homeownership has.
Is that financial advice, or the sales script of a RE agent...
I'm just saying it looks copy / pasted...
Fluffybunny
You flatter me. :)
It was written based on a list of quickly scribbled points. If you are unsure, use the University markers check of googling some key phrases.
It’s really quite simple. Not unexpectedly the market has turned and the pessimistic bias on this site is likely to needlessly cause recent FHB some concern. That pessimistic bias can clearly be seen in unsubstantiated and unsupported claims that market is going to fall 40 to 50%.
Over the past two years over 60,000 mortgages (100,000+ people) have gone to FHB. Affordability has been a significant issue and I admire them. Meanwhile some posters needlessly scaremonger and continue to rent.
Maybe some people choose to rent because they didn't want to make a 40 year commitment to die in an overpriced house that is going to devalue? Just a thought.
Whether the scaremongering was needless remains to be seen.
As you were practicing your sales pitch in the mirror as an REA and/or Mortgage Broker etc?
"As long as one is meeting mortgage payments, you have no fear in even in the extreme case of being negative equity"
This goes into 'Financial Advice' territory. But sure, I'll bite. The whole 'you still have a house!' thing only works if you take on stonking huge amounts of debt and buy a 'forever home' first up. If you buy a starter home and go into negative equity, you're trapped, possibly in a house you can't fit a family in, in an area with schools you don't want them to go to, or absorbing the costs of a mega-commute on a long-term basis.
The bank assess you for their self-interest, not yours. They don't care if you put off having kids until it's too late, or can never afford to be sick with a serious illness or have a career setback, let alone quality of life things like holidays or seeing loved ones who don't live locally. They just care about being paid.
This isn't a Broadway musical. Betting your bottom dollar that the sun will always come up tomorrow is a nice tune, but it's not really relevant when it comes to a 30 year obligation for an over-valued starter house that you have to save for half a decade to get a foot in the door.
If you are planning to upgrade you still have to pay exactly the same amount as you did in the first place, as a bonus assuming all properties go down by the same percentage means the difference in price between the current property and the next will be smaller.
If you where never capable of paying off the starter home, how would expect to do it with the price difference going up. Yeah I get it leveraging, but then you are in the realms of property speculation and deserve what you get. You know people need a place to live they don't need a dream home. If you can't buy your dream home that's too bad, you are in a lot better situation than all the people now who will not be able to buy a home at all. As an added bonus your kids will be able to afford to buy their own houses.
Not sure I follow.
An upgrade may well be impossible if you cannot sell it for what you owe. The bank will then only lend you 80% of the new one... even if the nominal cost of the upgrade is cheaper.
E.g. You bought a $1.2m house with 20% depo... so owe $960k. You now want to sell that house, but market has dropped 20%, so now worth $960k. You will likely have paid off some principle... so let's say you owe $940k. Your $960k sales price will be closer to $910k after sales costs, so you would still be in the hole. How will that buy you anything? Recent buyers (2020, 2021) will absolutely be locked in to wherever they are should prices drop
Having gone through an upgrade recently, we had the unique situation of using some cash to bridge the purchase before we sold.
First home was mortgage free, we initially proposed 15% deposit on the new place but the bank insisted a minimum of 20%, despite having 50% equity across the 2 properties if we went 15%.
While you can trade up in a rising market, you end up trading down in a falling market. In your scenario, they sell their house for $960k but still owe the bank $40k. What do they use as a deposit? Since a sale and purchase triggers a refinance, will the bank let them go ahead given they're bound to the responsible lending code? If so, I wonder what the no equity premiums are on the rates.
As values drop, and you keep your payments up it is the banks owns more and more of your house. Oh the joy financial enslavement....
The current state of affairs is financial enslavement. You will spend the rest of your life paying off your 1 million dollar shack, and maybe like what is happening in other countries pass that debt onto your children. The only way out of it is cheaper house prices, people who bought at the higher prices are not going to be as well of as people who didn't, but that's a sunk cost. Just like buying something then finding out the next day it on sale for 50% off. It sucks but you decided you where willing to pay the price at the time, nothing has changed.
Jesus, if I want waffles for breakfast, I know where to go.
The comment: "Short-term fluctuations of a few years in the house market can be expected but are really irrelevant. Homeownership is long term of forty or more years, and over the long-term increases in wages and even modest house price inflation will see your home’s value increase considerably" I agree in principle with the idea of it being a long term asset but whether you do well out of it or not, it really depends on your entry price. If you've bought a house in Tokyo in 1989 during their property bubble for example, I don't believe that you are in positive territory still. To glibly say it doesn't matter what price you buy at, assumes that prices always rise in the long term regardless if you've bought at crazy levels. But in bubbles, you might find that the long term is very long indeed.
Yes it becomes difficult when you have just experienced 40 years worth of house price inflation in the previous 10 years. You've essentially absorbed future gains into the present price. Unless of course you believe that the average NZ house will be worth $2-3 million in 10 years time. Might be true but we will need massive wage inflation to make it true and so will the rest of the world (otherwise we may have experienced localised runaway inflation).
When Irish property fell 50% it took around a decade for them to recover back to the peak. A decline of that magnitude completely break the markets psyche. The way people have felt about property up until now, may never happen again in our lifetimes. It will not be the one way bet it has been. Japan had declining house prices for 30 years or so. I'm not saying that will happen here, but there are no guarantees that in a decade NZ house prices will have recovered.
Agreed, look at the example of the Irish property market bubble burst to find out what happens next.
What dumb leadership in NZ to allow the same thing to happen after seeing examples of bubbles in other countries in very recent history.
Why would you recommend people to buy now when the housing market is on way down, just wait over next 2-3 years you will probably buy same house for 40% - 50% less.
Because it is written with the interests of the writer, and not the reader, in mind.
realterms
Please explain how me being retired six years and no involvement in property (other than my own home) my post is in my interest.
Your comment is a poor post attempting to deny the actual situation for recent FHB.
You need to take your pessimist’s hat off.:)
What about talking up property to protect your children’s property investment portfolios that you’ve mentioned on here before? Is Daddy going to talk to market down on their behalf (especially if they have a background association with the property investor association..probably not).
Don't even need that. Owning your home in retirement is already an interest in high residential property values.
realterms
Your nom de plume was not an appropriate choice. :)
For me, whether my home goes up or down in value is totally irrelevant to me. Same house . . . going up in value doesn’t even buy me an extra slice of bread each week.
P.S. Any increase in value will only be to the advantage the beneficiaries in my will . . . and that’s not in the forefront of my mind.
"whether my home goes up or down in value is totally irrelevant to me"
who are you kidding?
That's because of the conditioning of a generation and probably purchased his first home for $30,000.....since then its going up 20-30x in price...while the mortgage repayments and inflation dropped throughout the course of paying down the debt (1970's-1980s - 2010 ish or there abouts)....while wages went up 10x.
Now young people face buying in with the complete reverse picture - yet apparently the 1970/1980's economic picture is about the repeat itself (apparently).
If history were to repeat and younger geneations experience what boomers just have, it would mean the average NZ house if purchased now by the average FHB for $900,000 will be worth approxiately $22,500,000 in 30-40 years time (25x purhcase price) and the average wage will be around $750,000 (approx 10x current median wage)- meaning the price to income ratio of houses will be 30.
Yeah nah.
I do agree with printer8 on this point. If you own your own home, it is not excessive to your needs and have no mortgage, you are "neutral" property i.e. you should not care if its value rises or falls so long as it moves in line with the rest of the housing market. But I am ignoring whether you need funds from your house to ultimately go into a retirement home. In saying that, the purchase price of a unit in a retirement village is pretty correlated to the housing market.
IO
No need to try to talk the market up . . . I don’t have any influence.
As to my children, they are doing fine, thanks.
Two have got a rental now; rents have gone up, they are in for the long haul so short term fluctuations irrelevant.
As you will know, I previously posted that one sold four investment properties late 2020 in anticipation that the market was likely peaking due to wider affordability and yield issues. Not bad for a millennial.
Ah so you were talking the market up so that your children could offload their rentals at maximum price to another sucker - gotcha now...it makes sense.
Got to watch out for the wolf in sheep's clothing huh!
Its almost unbelievable that one would talk to market up publicly but while at the same time telling your kids there are problems ahead and to reduce their exposure/cash out.
How many times are you going to modify your original post now that you've spilled the beans on what you really think about the housing market?
If you thought it had great prospects and was a good time to buy, you'd be talking your kids into holding their houses or buying even more - not selling them!
There's that Nasem Taleb quote along the lines of "don't tell me what you think, show me what's in your portfolio'.
Having your kids sell multiple properties last year (or now 2020 in your updated post) certainly reveals a few things about what your really think!
Corrected 2021 to 2020 as you point out - that a major?
As an investor there are many reasons for cashing out - in his instance it was about trading up but also considering that the market was likely peaking. Nothing improper about that.
At the same time (Nov 2020) I posted that I considered that the then increases were not sustainable. It did surprise me that it took a further ten months and Government action to bring that about.
Heres hoping bought a business instead of buying a house and working in corporate again. Couple of years time business should be doing OK, and fingers crossed the froth has been taken off the top of housing. While I can take holidays instead of going to meetings listening to loud mouth people who want to hear themselves speak.
Wonder if Orr will drop the OCR & LVR again? To keep the Ponzi scheme going.
Sales down 40%
properties for sale up 47%
If this was a business it would be in critical position, this is with rates still only above emergency levels it is looking quite obvious the market is on its way down how far will depend on rates and inflation but you can safely say any one who has purchased in last three years will lose deposit and be in negative equity.
Sales volume is a leading indicator.
As is days to sell.
Both these measures have blown out in a way I've never seen since the GFC when everyone was too afraid to buy.
Where sales go, prices follow.
Fasten your seatbelts
Article on stuff - more landlords face making losses (Deloitte)
https://i.stuff.co.nz/business/127892770/more-landlords-face-making-a-l…
Assuming a 20% deposit - how many recently acquired investment properties will be yielding 800 per week on a $500,000 mortgage?
Homes NZ tells me my house would yield about $800 per week and the mortgage for an investor would be 2x that.
Those sorts of property values would be typically yielding $650 pw.
Sounds like leverage has a carrying cost.
At last. The ridiculousness had to end.
Everything is going to be so much better now.
LOL
But you can't put off the hangover forever.
Prices holding steady over the past month and up 14% compared to last year.
Just like Wile E Coyote waiting for gravity to kick in.
Assuming your comment wasn't sarcastic, the 14% increase over the past 12 months is due to the peak being in November, if you look at the 12 month price increase reported each month, it has been declining for the past 4 months. There is a lag effect. Prices are falling month on month but are still higher than a year ago.
How many of these infill developments mushrooming up all over Auckland will end up being purchased by Kainga Ora as the buyer of last resort? Maybe Kiwi Build was real all along.
Kainga Ora buying all those homes on the cheap and efficiently expanding social housing sounds like an optimal policy outcome to me.
Then, as social housing expands we can dial back the accommodation supplement and reinvest the proceeds in more social housing. That is what you call a virtuous cycle.
Totally agree. Farming the poor should be a function of the state. Not private renterprise. Heaven forbid that we should have again a country where working class people could afford to buy their own homes.
Most private infill developments don't meet Kainga Ora's over the top specs, nor get anywhere close.
Still, wouldn't bet them going against their standards and principles to 'get the numbers up'.
And we haven't even felt the effects of the Russian freeze yet.
Things are about to get a lot worse as a result
Let that sink in with respect to the potential for the property declines.
Hint - Huge.
The interesting situation facing the central banks could be whether to save the markets, or the real economies. And the two appear to have become highly detached from one another (in healthy economies they should be well correlated).
This is different to 2008 because we're more or less already at 0% OCR and we have inflation like its the 1970's (to save our markets in 2008, the OCR had to be dropped from 8% to 2.5%).
In my view there is no point having property/share/bond markets hitting record highs if the real economies falter under runaway inflation. If pushed, the Fed/RBNZ etc will have to favour the real economies over the markets - despite the narrative among investors (property/share/bond) that the central bank will come to their rescue because that is what they have done 2008 until now. That narrative is fine in deflationary conditions...but it all comes falling apart in an inflationary environment with the OCR at zero. There is no point having million dollar homes if you can't afford to buy bread at the supermarket or put fuel in the car.
I agree it should be this way. But to date we have seen central banks sacrifice the real economy protect the everything bubble. How deep does the tentacles of the likes of Blackrock reach into the Fed and the global banking system?
If that is the path that is followed - it will likely result in more social unrest eventually political instability. Neither are good for financial markets. Capitalism is a system based upon trust. i.e. I trust that other party to keep their word and pay their debt. If that social contract is broken, so is the price of the asset you own - which is primarily based upon the amount of debt another person owes upon it - and that reflects everything from houses (mortgages) to bonds to share prices (company debt/equity strucutures).
FED announcement in only a couple of days time now. My prediction ? probably no rise or 0.25% or something stupidly low. Everything has gone to hell in a handcart and they don't know how to fix it now and possibly its now so broken it cannot be fixed without some serious hurt.
Thanks for your views TTP/Carlos67
It's all looking good to be honest. My 5 to 10% up ytd by Christmas is looking like a good guess.
Auckland? What about the 3 and 6 month return?
Is that 5% to 10% of house buyers in negative equity by Christmas?
Up.. up.. and away, was the favorite tune of spruikers..
Wonder what they are going to replace it with?
Probably with "buy buy buy.... to keep our story afloat "
Unfortunately for you, your not going to get your massive crash. Sorry to break it to you.
Do you personally control house prices - is that why its a certainty from your perspective?
None of us can predict the future with certainty. What probability do you put on, say, a 30% fall in house prices? If it's zero, I would give the same number for your credibility.
Personally, I'd say a 30% fall is not the most likely outcome but would have a chunky 20-30% chance of happening.
Luke. Are you one of CWBW’s boys?
In life you can bet that you will suffer and die.
That is where you can be sure 100%, not much else.
Yep sorry still don't see a massive crash coming. The only thing I really think about is what are over half the people on here going to say if the crash doesn't happen. Sure all the indicators are for declining prices but only if interest rates start climbing fast and that's not happening yet either. If the crash doesn't happen in the next 6 months its not going to happen. At some point you have to just give up on a market correction and move on.
Well lets reconvene in 6 months
3 months will probably do it.
Thanks for your views TTP/Carlos 67
Won't be long now, Orr will be looking at a golden parachute exit package so he doesn't have to front up to the disaster he has had a massive hand in creating. Wouldn't surprise me if the Finance Minister might be looking at the additional disasters which have happened in his term as well and be seriously contemplating a move...
Be quick to avoid disappointment!
Fridays proposed changes to the CCCFA rules wont do anything to bolster the market.
Reading the fine print they will not come into effect until at least June - which is still 3 months away and by then the OCR will have increased a minimum of 0.5% - but likely to be 1%.
For every 1% increase in the OCR - borrowers will find their borrowing power reduced by 100K Borrowers need to earn 13K more to be able to offset every 100K in borrowing power.
Where are the 15%-20% price decreases, many on interest.co.nz have been saying this?
The housing market usually moves up and down fairly slowly (measured in months and years, not in days and weeks), unlike the stock market. Check back in in 9-15 months :)
Auckland HPI is down ~10% from Dec. I don't know that anyone contends that 15-20% drops have already occurred? The (two) million dollar question is what happens next.
Yes, a couple of prolific commenters have gone very quiet about this.
All those first home buyers who missed out because of the insane values being paid for housing that is generally very average at best in terms of quality and condition should hold back. You missed out because you were born after those who had it much easier. Keep saving if you can and keep renting. It is now obvious we are entering a time of house prices dropping in price. To what extent no one knows. It will be tens of thousands for many so in comparison rent over that time of waiting is cheap.Be patient. You might not get in at the bottom but you will get your first home.
Nifty's comment is about what the data shows actually happened over the last few months... not what may or may not happen over the next few.
This is the beginning. A crash is what to accurately call it at the end. Right now, it’s falling values.
3 months is not enough to accurately gauge especially when 60% of mortgages need to reset in the next 12 months.
But 10% down in the index is a hell of a drop in 3 months… and that was before Ukraine really kicked off and we were enjoying our summer.
So, the REAL impact is 12 months away when debt affordability is stretched and owners/landlords are either forced to sell or see the cost/benefit of selling to rent for less or preserve wealth.
When Irelands boom ended, prices stabilised for a year then sank 1-2% a month for 4 years.
Our bubble is well documented, but it was very hard to argue against when it was inflating. It turns out the source of all the hot air was simply low cost debt and immigration.
Now we have the opposite of both.
Housing booms are always because of debt availability, I can't remember a time I have ever looked at when a bubble wasn't created by debt availability. With the collective stupidity of central bankers for the past 10 years in reducing rates to nothing to "encourage inflation" and printing of an absolute tonne of funny money which ended up all financialised instead of in the economy, it's no wonder we are in an everything bubble that is starting to pop.
My place has bounced already on homes.co.nz, its up again by $10K in March.
Did you get an Agent friend to boost the price for a small fee, cos everyone else is doing it. So common that this website has little to no credibility.
Thanks TTP/Carlos67, thought you were a renter
Did anyone say it would happen within 2-3 months???
I monitor New Plymouth & Whanganui on TradeMe. For the first time since I have been doing so, I am consistently getting "a property on your watchlist has had a price drop" messages and quite a few of them i must say. Often around the $40k mark.
We are looking to buy In Dunedin and I’ve noticed exactly the same thing. Almost everyday a property changes from deadline to by negotiation or with a price including many properties also reduced in price. Dunedin seems to be in the doldrums with 670 listings today compared to 300 in December
Same in Nelson. Also noticing that when you compare some asking prices to homes data the homes estimate is above the asking price which is nonsensical.
So, then supply must have finally caught up with all that crazy pent up demand out there? Whew. Because as One-Roof and their merry band have been saying for many years, this has been the only problem all along and the only REAL thing EVERY one knows that could ever dampen prices.
Approaching 6000 properties in Auckland for rent on TradeMe. Is this quite high?
Lots of townhouses coming online. 3 of the new ones in the next stage of where we live have been sitting there for about 4 weeks. Suspect the landlords will need to lower rents, I don't think they have, or hardly.
With negative net migration and lots of supply coming online it's hard to see rents rising much.
And it was a sure thing that property prices would rise when they started building those units.
Now, it's possible they are in for a rude shock and will have to exit the market at any price...
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