The housing market remained in grim territory in August with sales barely changed from July's lows and prices continuing to fall.
The Real Estate Institute of NZ recorded 4891 residential sales throughout the country in August, down 18.3% compared to August last year and down 20.2% compared to pre-pandemic levels in August 2019. There were, however, 91 more sales in August than in July, suggesting the sales slump may have bottomed out.
However prices continued to decline with the national median price hitting $800,000 in August, down $10,000 (-1.2%) compared to July, and down $50,000 (-5.9%) compared to August last year.
The REINZ House Price Index declined by a further 1.3% in August and and is now down 5.8% compared to a year ago.
The REINZ noted prices in August were "weaker than expected."
"Since the peak in November 2021, we have seen median prices ease, REINZ Chief Executive Jen Baird said.
"In the past six months, the median price across New Zealand has decreased by 9.6%, while Wellington has seen a decrease of 21.6% - from $995,000 in February 2022 to $780,000 this month.
"These are the greatest six month drops in prices each has experienced since REINZ records began in 1992," she said.
Nationally, the median price has now dropped by $120,143 from its November 2021 peak and in Auckland the median is down by $200,000 compared to its November 2021 peak.
The price falls in the Wellington region have been even more spectacular.
Prices there briefly hit the $1 million mark in October last year and have since retreated back to $780,000 in August, a decline of $220,000, booting Wellington well out of the million dollar club.
In Waikato the median price has declined by $78,000 from its April 2022 peak, in the Bay of Plenty the median is down by $74,000 from its February 2022 peak and in Canterbury the median is down by $68,000 compared to its February 2022 peak.
The interactive charts below show the full regional median price and sales volume trends.
The comment stream on this article is now closed.
Median price - REINZ
Select chart tabs
Volumes sold - REINZ
Select chart tabs
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231 Comments
Everything is fine, be quick etc...
TTP
Its a soft landing
over the long term there have been massive gains except for this little downturn
Signs are there that the market is about to take off again
those who buy now wont regret it, they never do
in 10 years the prices will have doubled, its a scientific fact
blah blah blah...
Prices doubled in Ireland over the past 10 years. But you just have to ignore the 60% to 70% fall that preceded it.
Prices in Ireland not quite back to 2007 levels. And their 2007 prices were much less overvalued than NZ 2021….
Last I checked they were roughly 10% off their peak, this is in January 2021.
National Index:
- 2007 Peak Index 130
- 2012 Index 60.9
- 2021 Index 116.9
https://www.irishtimes.com/business/economy/property-prices-defy-cost-o…
Different indices but similar story…15 years since the peak they are still 10-20% lower despite very strong economic growth last 7 years or so. NZ mightn’t see 2021 prices till 2040s, which would be great because more people will be able to afford it, and capital will be invested more productively.
This is like watching an Avengers End Game movie between the Thanos of speculator Entitlement Mentality (and its regulatory capture) on one side and economic fundamentals / productive enterprise on the other.
Even the DGM's questioned my -50% non-prime and -30% prime forecasts. Well, if you have to sell a house tomorrow, you are already looking at a minimum 30% discount to the peak and lot's more to follow.l's
For those DGM's celebrating, this works out well for very few. The lagging indicators will start to flash red very soon and they are the ones that really matter. Very hard to pay your rent or buy the bottom if you're out of work - which many will be. Orr has lost control of this, just incredible. Aroha.....
Totally disagree.
while I certainly think unemployment will rise - to circa 5-6% by this time next year - that’s nowhere near enough to have the kind of impact on peoples’ ability to purchase, that you are alluding to.
Or do you see unemployment rising to 8-9%? I think that’s unlikely.
Even the DGM's questioned my -50% non-prime and -30% prime forecasts.
What's your model for this? Or is it a reckon?
It's proprietary JC...strong track record.
You were one of those dissing us bears, or ‘DGMs’, last year…
Yip it wasn't that long ago that TK was telling me to be considerate to the fact that the RBNZ was allowing him and his rental owner mates 'to make life changing money' (his words) and to not fight the central banks (again his words). That was back in 2020-2021. I told him that making money in this fashion wasn't a good idea because of the risks it posed to society and our entire financial system.......to which he showed no concern to at the time.
Amazing how people can change their tune. Its like they've got split personalities.
Good Lord IO, listen to yourself. Markets move up and done, people change their views accordingly. It's common amongst the thinking population.
Lol - you should have listened to yourself there TK when claiming that some people were making life changing money through insane fiscal and monetary policy in 2020-2021 - and that people shouldn't fight the central bank. All the while those same policies were causing financial and social instability. And yet no concern about that at all. Just an apparent glee that some people were making life changing money. What about the people that weren't?
And it just seems odd that here you are now bashing Adrian Orr in 2022. Why bash him now - is it because his actions are no longer going to make life changing money for a very small percentage of society, like yourself?
Yes - that one claims the moral high ground by race, but has no discernible code of ethics otherwise.
Interesting mix - fatally flawed in the long run, methinks.
When the facts change, some of us change our opinions. What do you do?
Have you sold the rental/s then or just going to accept the drop in capital position for an unknown period of time?
BLSH probably. For us its BL and never sell
I won't be selling the rental. AirBnB going well. If long term becomes better, then it will be a long term renter. Not a problem.
He’s swung from one bullish ‘I reckon’ to one very bearish ‘I reckon’
If people can't pay rent, that is going to put even more downward pressure on house prices. If tenants can't cover the landlords costs, as you suggest, how long will the banks allow them to suffer losses before they step in?
Who's celebrating?
We are getting to the stage we'll have to lament the destructive effects of speculators' regulatory capture upon multiple generations of New Zealanders. Too much false prosperity built on shoveling ever more debt onto following generations, now having its effects. Aroha...
Ireland still down 21% on 2007
Housing prices rose almost 8% in 2021, Daft finds
https://www.irishtimes.com/business/economy/2021/12/29/housing-prices-r…
Why the obsession from some on here with the Irish property crash? not really a comparable scenario in my view.
For the record, Irish residential property prices are back to every bit of their 2007 peak -
https://www.cso.ie/en/releasesandpublications/ep/p-rppi/residentialprop…
What property crash would you compare New Zealand's direction to?
Maybe you don't, and just treat things as specific instances.
Ireland's Price-to-income ratio is about 5.7 (Ref: https://www.housingagency.ie/data-hub/house-price-income-ratio)
NZ's Price-to-income is about 8.3
We need a 30% per cent price reduction from current levels to be comparable to Ireland
Behold, the resilience!!
Or possibly a more interesting perspective headline...
Biggest drop in the accuracy of economists predictions over the last 2-3 years since all records began.
Seriously how do these guys get paid for the garbage they produce..?!
They tell two sides to every story, one for the public and one for their inner circles.
Down down down. It's not pretty anywhere but wgtn looks like a bloodbath.
I'm a little surprised that the spring listings haven't kicked off yet. I was expecting a big surge. Maybe it's still coming but it hasn't hit yet, at least in Auckland.
Soooo prices are back to circa early 2021? But going down 70% according to the DGMs 😉 Auckland, Sydney, Melbourne are all crashing to “Ireland” levels - spread the panic I say!
Yes, they're back to circa early 2021. And now the falls will stop dead in their tracks, because they're only driven by some underlying urge to revert just to circa 2021 prices.
@nzdan talk to me in 12-18 months.
Are you expecting 12/18 months more of fall or a plateau in the next X months before recovery? If the former then that's a lot bigger price reduction to come.
Still not that impressive after the average +43% of the past two years. Nothing to celebrate if we "only" go back to 2019 prices to me.
Well, technically a 43% fall will unwind a 49% rise.
? I get 0.43/0.57 = ~0.75, or a 75% increase is wiped out by a 43% fall.
Classic commentary mate, cracked me up.
I've seen sales and asking prices back to 2019 prices :D
You should definitely buy now Iceman. Go all in and show us how it's done.
@brock landers someone’s got the feed the “ponzi” right
You should buy this one. A true kiwi lifestyle opportunity. Gems like this are the reason I moved to Auckland.
https://www.barfoot.co.nz/property/residential/waitakere-city/henderson…
At only $800k - $900k it's an absolute steal.
Good view from top floor but no trees to cut down
There goes that plan to make an easy million.
Get the view but also more motorway fumes and noise :)
That's grim. Almost a better housing decision to commit a crime and move into the grammar zone.
Greed. Pricing our next gen out of property - see them move across the ditch where the $$ is
Damn. A dystopian nightmare.
“I’ve only fallen past two rungs. So what? I was here a few seconds ago.” - says man in free-fall from ladder.
I rented a two bedroom apartment in Kingsfords/Kensington in inner Sydney. We moved in late 2019, the landlord re-mortgaged and it was valued at 980k.
It was sold few weeks ago for 740K, he paid 650K back in 2015. Not much of a gain after all expenses.. Bet he's kicking himself for not selling in late last year, he would have got over 1 mil for it.
Maybe the bloodbath in Wellington is fear of National getting rid of the jobs created by this government.
That and the quakes
Yeh wgtn is bad, I almost feel bad for the agents when I go to open homes to kick the tires.
The Wellington market was ridiculous, I’m delighted to see it correcting.
Everywhere else will follow. That’s bubbles, they don’t inflate or deflate evenly on the same timescale.
This really is now turning into a bloodbath. Given that there is little chance of an interest rate cut for the next 9-12 months (the only thing that would possibly stem the bleeding), it seems another 20% fall from here is nailed on? So a 30% or so fall (which would take out the equivalent of about a 42% rise - always remember % falls take down absolute values quicker than % rises).
Given the magnitude of the housing market upswing since the GFC, we are now seeing a timely and well-managed correction. The market crash/carnage foreseen by some contributors here has failed to manifest.
There is increasing comment that the market will find a footing in the not-too-distant future - perhaps as soon as early/mid 2023.
Those who anticipate a recovery this spring will likely be disappointed. But those who buy into the market now will reap rewards more quickly than many here dare contemplate.
Resilience, as ever, remains a hallmark of the NZ property market.
TTP
@ttp but…. “This time it’s different” 😏
Severe housing corrections generally take years to play out, and it would be no different in NZ.
Here is our current correction (to date) put into context of several overseas housing bubbles:
*edit * updated US data with Case shiller seasonally adjusted HPI
Took 27 months from peak for Ireland to fall 30%.
I guessed we'd have a 30% fall from peak by December 2022.
As our peak was November 2021, I might be a couple of months out.
The thing about these correction statistics is that they are based on actual sales - which presently are record-settingly low. With very little selling it is quite difficult to really know what the drop is/would be if the market were clearing at anywhere near the previous rate.
Is NZ stickier than Ireland? We can only wait and see.
Kate our 4yr old house is already down 32% going by QV.
Do you mean a new house built 4 years ago (I assume it was given a value at that stage based on pretty close to cost to build + section value)?
That would be a whole lot worse than I'd have thought. That's one of the ridiculous method of valuation in NZ - the older a property, the lower the value of improvements should be (i.e., built dwellings depreciate). But, the way QV works here is, they usually load the land value up-and-up until that 3-year increase looks ridiculous - so then they add value to the improvements just to get to the 'market rate' relative to some place down the road that someone paid too much for.
It's a crazy valuation technique. I blame this technique used in reviewing RVs for a lot of the blame associated with our high house prices.
Have previously pitched using a numerical (not dollar value) method to set rateable valuations - the numbers based on GIS characteristics (such as distance to a main centre, section size, reticulated services provided to the property, distance to a regional hospital, etc. etc.). RVs might be then represented on a 1-200 scale. Nothing to do with dollars.
That way, we'd have to go back to a proper registered valuation being needed on an individual basis for every house purchase. Dumps with no insulation and 50 year old wiring/plumbing would be valued as the dumps that they are.
Kate yes a new house 4ys old. QV price base on there estimate from peak 1250000 to last week 830000.
interesting Kate, of course houses should decrease in value as they get older. That would mean council rates lower the older the building gets, rising land value might compensate for some of the fall in rates but in theory I believe you are right.
Councils will be be scrambling for more money. I guess they would then have targeted rates for service upgrades in older areas. Would certainly help older residents with low incomes caught up in price rises due to nearby developments.
Great graph, thanks for sharing. Compulsory viewing for people who think property market crashes look like share market crashes.
What dataset are you using for the US there Miguel?
Was using monthly HPI series, but actually just updated it now with Case/Shiller seasonably adjusted monthly dataset.
Great - yes Case/Shiller was going to be the suggestion (and the chart now looks more representative of what I experienced in the US back then).
great work!
Wasn't Japan's fall greater than what is shown on the graph?
The graph only shows few years. Japans house prices fell for 20 years.
but that was the point the graph makes - housing bubbles can take a long time to unwind
Cool. I thought they had a bigger earlier dip, before a gradual decline, but I am sure you are right.
Nice graph. Would be even better if you could plot where it will go from here. Cheers :)
Any chance of putting Aus on there too... im one of the ones packing their bags at the moment
Thank you so much for sharing with us, Miguel. I'm sure this is the most interesting graph on the NZ housing market that are around at the moment
Whatever he's smoking or injecting, I want some!
... mainlining GIB ...
Dr Feelgood's biggest customer
This is entirely consistent with a market crash. This is what the start of a crash looks like.
Nobody knows how far down we will go, and perhaps we are close to the bottom, but the direction and speed of travel are looking nasty.
Increasing comments that the market will find a footing...
by whom ? Real estate agents ? REINZ ? Property Investors' Association ? LOL.
You're not Russian by any chance?
What percentage fall meets your criteria for a crash?
Well managed? Does this refer to the constant spruiking by the church of Oneroof and the independent sponsored-by-the-property-industry economist Tony Alexander?
A 21.6% fall in six months in Wellington is the very definition of a crash. Actually, it's an epic crash. Very few times in modern history anywhere in the world have house prices fallen so quickly. This is far from done and it's a about to fundamentally change the psychology of the NZ housing market for a very long time.
The crash is happening and now accelerating as rates continue climbing and inflation way above target levels. Over leveraged investors and speculators will not be able to B/s themselves out of this, everyone is becoming aware this crash is going to continue for a few years then level of at a place where average wage couples can purchase a good house.
Onya
You're a fountain of examples of https://en.wikipedia.org/wiki/Weasel_word :
A weasel word, or anonymous authority, is an informal term for words and phrases aimed at creating an impression that something specific and meaningful has been said, when in fact only a vague or ambiguous claim has been communicated. Examples include the phrases "some people say", "it is thought", and "researchers believe". Using weasel words may allow one to later deny any specific meaning if the statement is challenged, because the statement was never specific in the first place. Weasel words can be a form of tergiversation and may be used in advertising, (popular) science, opinion pieces and political statements to mislead or disguise a biased view or unsubstantiated claim.
This crash almost certainly has a long way to go yet. The psychology of inflation and the wealth effect in reverse won’t have fully kicked in yet.
There’s some people here complacent about the regions. Well the carnage that has whacked Wellington and Auckland has started in a number of regional centres now.
Thats how it always plays out.
more please,
Yours,
FHB
Yes please,
Yours,
Home Owner and more.
Deja vu on the HPI, another month of prices grinding lower by a percent or two.
Except Wellington - those overachievers are in free fall.
https://www.reinz.co.nz/Media/Default/Monthly%20Press%20Release%20Asset…
Those graphs are really starting to tell a story
I am still picking 35% falls from peak
Thanks for the link. Wow Wellington HPI is down by 17.1% year on year... feel sorry for people who bought houses there last year...
All of New Zealand:
- 1 year -5.8%
- 3 months -4.7%
If the 3 month falls continue at this rate, we're looking at 18% down in 9 months time.
Weaker than expected - what were they expecting?? All the free pandemic money that morphed into fake house prices has to disappear with prices resembling (still overpriced) 2019 levels before there’s any chance of finding the floor. Still at least -25% to go.
It seems that the 'profitless boom' is finally over..
I think the next 2 months will show some real big price falls as a lot of Vendors now have to accept a much lower price to sell. My parents are a good example of this in the Waikato. Priced $680-$700k late last year now sold for $520k a few weeks ago. No other recent sales in the area for months so they've moved and I expect a ton more will meet the market just like they have.
Auckland down about 20% while Wellington is down a whopping 25% from peak.
*Soft* landing.
It’s definitely a crash.
Tony Alexander said in January that prices would increase by 5% in 2023. Lol. What an abysmal piece of economic forecasting. Up there with Hickey’s forecast of 30% falls back in 08/09.
He reminds me of Rhys Darby these days with his mannerisms. Comedy gold.
(which I think stems from him being very uncertain now whether what he is saying is true or not).
Uncle Tony says the riskiest move a FHB can make right now is holding off
https://www.oneroof.co.nz/news/tony-alexander-the-riskiest-move-a-first…
WTF... FFS... seriously, is this guy for real?!
When there is a Royal Commission into how this train smash of a housing market happened in a few years time one of the first places they should look is at the vested interest parties posing as independent commentators in mainstream media.
NONE of them are buying property right now. Put your money where your mouth is or STFU.
I no longer click on OneRoof trash. I did it for a while for a laugh but no longer wish to give them the benefit of a click.
Tony is just sounding more and more pathetic and desperate.
Remind us again how you would describe someone who thought house prices wouldn't move much this year...
....crickets
I have a hazy memory of a finance lecture at uni where we went through the fairly strict rules that govern when you can and can't offer financial advice, and the duties and liabilities you assume when you do so. I have always wondered how these clowns that write articles like that don't fall afoul of those rules. Garbage like this has to butting right up against the limits, if not over it.
Should you try and be clever and hold out for the final 5% of price declines? ... if you have a misplaced focus on getting your first housing asset at the bottom of the price cycle rather than your first owned home, then the clock is ticking against you.
I wish someone with some legal brains would challenge him on this,,, he's blatantly offering (poor) financial advice and he's not a registered financial adviser. Who would you complain to? The FMA?
Does anyone know where TA and AC live? think its time they were put to sleep!
This comment right here, officer.
Goes to show that no one really knows with an exact science, including all of us.... Pure speculation on the way up and certainly speculation on the way down.
And as for my pure piece of speculation we may see pricing stabilise end of Summer and I'm expecting slight increase in Autumn. Deflation is happening with a number a key sectors already. The Fed may have to ease it's stance on interest rate hikes sooner than expected... DYOR.
The 2020 black swan event turned out a golden goose laying golden eggs. Some of those eggs turned out to be fakes but still just remember the govt 3x3 without a RC has made some places developable where they previously were not.
There is hope for our son in Wellington finally. He and a friend are looking at going 50:50 in a 2 flat doer upper hovel. Lucky his mate is a builder and our boy became a tradesman painter after uni until he settled into facilities management.
Great to hear.
This crash is great news for aspiring FHBs.
It’s only bad news for speculators and FHBs who bought mid to late last year.
I have no sympathy for the former but plenty for the latter.
Has been an interesting exercise discussing the legal side of shared equity with him. Trying to cover all eventualities such as how long until the property is sold if one party wants to sell up. Can make the situation more precarious for those wanting longer security of occupation.
My experience with these shared anything arrangements is to have a third party involved as an agreed decision assister if two cannot agree
so never a 50:50 but maybe a 49:49 plus 2% with an agreement as to when the 2% steps in
also useful if one party suddenly cannot make a decision (accident etc etc) can avoid costly legal stalemates which are unintended
But good luck - great way to get started
Wellington market showing largest decline as market realises Labour is out at the next election and all those plum cushy ineffectual jobs start to be peeled back by the next government.
Uh huh. Wishful thinking much?
I do not know if it is actually going to happen, but I do hope that the ineffectual, utterly wasteful, inflation producing, out-of-control spending by this useless government will at least be significantly reduced by the next one.
FWIW, over the past many years renting out a property in Wellington I've seen no correlation between which party is in government and the number of prospective tenants. However, when National are in government I've certainly had more high-income contractors applying.
You love to see it.
Interesting across the Tasman;
https://www.smh.com.au/property/news/property-investors-hit-by-land-tax…
Excerpt:
The Queensland government plans to charge land tax on property investors in the state who own more than $600,000 in landholdings across the country and $350,000 for companies.
If an individual investor owns land in Queensland with a taxable value of $745,000 then they will only be charged $1950 in land tax this year regardless of other interstate investment properties they own.
But from July 2023, the same hypothetical investor, who also owns property in Victoria or NSW valued at $1,565,000, will be charged a higher rate of land tax to account for the total value of their landholdings of $2.31 million.
Their land tax bill will jump to $8422.
The Qld government is showing the way : Land taxes work ...
.... it's the treasure trove our leaders should look at taxing , the $ Trillions of land value in NZ ... even a modest 1 % LT will bring in $ 10 Billion or so annually for Robbo to play with ...
Bollocks GBH - that is reverse annuity, by any other measure.
It has a use-by date as a strategy - not the only thing which does....
Wow. Targeted specifically at property investors who own property in Queensland. According to the article some are selling interstate and in Qld. Comments from those neutral sya it is about rebalancing the playing field for owner occupiers to offest the taxation advantages that investors enjoy. Surely that is all we should ask for. An even playing field for those buying their own home versus those investing in housing for profit.
Labour could never get that across the line, possibly National with a reduction in income tax / gst?
National..bring in a land tax?...tell him he's dreaming.
Call me a sceptic, but in my experience when a new tax is the answer, you've been asking the wrong question.
Yes, my question is "How quickly can we abolish monetary policy?".
its very roger douglassey to rebalance tax system, maybe ACT? it does need a rebalance
7-house Luxon bring that in. Yeah, right. On the contrary he's promised to wind back Labour's policies designed to level the field.
Forget level the field policies - just regulate the rental market and end the accommodation supplement madness;
30% is still to high. maybe in Auckland? but the rest of the country it should be only 20-25%
I hear what you are saying I think the formula approach handles those income (and house price) differences between regions. Here's a calculation I did for both Kaitaia and Taupō using the formula - you can see how much lower the weekly rent maximum is for Kaitaia;
Taupō
Median (individual) income = 30,300, so double for median household income = 60,600 - therefore 30% of 60.600 = 18,180, or weekly maximum rent target = $350.00/week (rounded)
Median property value (Waikato District) = 788,550
(788,550/1000) - x% = 350/week
x = 58
For a property with RV = (600,000/1000) - 58% = $252 weekly rent maximum
Kaitaia
Median (individual) income = 19,700, so double for median household income = 39,400 - therefore 30% of 39,400 = 11,820, or weekly maximum rent target = $230/week (rounded)
Median property value (Northland) = 725,000
(725,000/1000) - x% = 230/week
x = 68
For a property with an RV of $600,000 = (600,000/1000) - 68% = $192/week
.
Thanks. More ammo. Another tax question to pose to Labour in 2023. Arden is going to the spend the whole year saying yes or no to endless tax questions.
... it was a fantastic party ... but , after decades of sucking at the punchbowl , the hangover has begun ! ...
Fricking great news for Kiwi friends & families ... regular folk who need a house ...
... not so good for investors , landbankers , speculators : Boo hoo ! ...
Hutt Valley Market 12th Sept
Is it a price rout – or a slow grind to the bottom.
On Thursday the 8th Sept an article was published in Stuff for a Lower Hutt house where the owners took 300K off the property price. I have through my listings been able to trace the house in question and shed some light on the actual circumstances of the sale.
https://www.stuff.co.nz/stuff-nation/assignments/contribution/129812558…
The house in question was bought in 2016 for $385K. the house at the time was a 3 and 1 100sqm property on a 700 sqm block. The suburb was an average Lower Hutt suburb – ie not one of the premium areas like Petone, Waiwhetu or Woburn that attract premium prices.
It’s RV in Sept 2019 was 500K – in line with similar 3 and 1 properties.
In late 2020 the block was split into 3 with the house in question at the front now on a 277 sqm block and 2 new properties built at the back, one a 3 and 2 and the other a 4 and 2. The 3 and 2 is currently valued at 755K and the 4 and 2 at $840K.
At the same time the front house was renovated and turned into a 4 and 2 property, albeit from the looks of the plans with a very small combined lounge/kitchen.
The front house was put on the market at $1.085M in Feb 2020 – double its RV and almost 3 times what the owners paid for it 5 years previously. The property sold on the 6th Sept for $785K – a 300K price reduction on the original listing, but double what the owners paid and $285K above RV.
Whilst that sounds like a low price for a 4 and 2 property. Keep in mind this is now a property that whilst previously had been large is now the size of a townhouse on a townhouse size block. It would be attractive to a limited group of people, primarily investors or FHB’s – the average family looking for a 4 and 2 is likely to be looking at a block at least 400 sqm.
The price received for this property is a fair price and the original listed price even in a hot market was overly ambitious for what was a townhouse.
Now – why explore this- well the implication suggests Lower Hutt is falling rapidly in price- my data certainly shows prices have fallen quite significantly this year (I believe the market is down around 10-15% but I cant accurately pinpoint the exact percentage fall and it does vary from suburb to suburb) , however of the 1000 listings made so far in 2021 – only 10 have lowered their prices by more than 300K – all but this one have been listed at a price above $1.2M.
Most of those who have had to lower their prices by 200K or more have often listed at unrealistic prices for the property they have for sale or have listed at a price that wont attract the target market.
In other words while the market is down we are not seeing wholesale massive falls – it’s a slow grind and we are probably some months if not 12 months away from the bottom of the market.
It’s important to have perspective on whats happening and where we are – hopefully I can continue to bring that each week.
Current Market Listings
535 houses on the market- Down 2 on last week .
Average number of houses sold each week 25. This is well down on last year where 40 houses were selling a week and at the peak in March 2021 50 houses a week were selling.
535 houses on the market with 25 a week selling means there is 21.5 weeks stock on the market.
House Price Reductions
269 houses have a listed price
66% of the houses listed with a price have reduced their price since listing
The average markdown has fallen this week from 109K to $103K. the fall is due to a number of houses who had discounted heavily coming off the market- lowering the average decline. It should also be noted that a number of houses that listed in June and July are yet to lower their prices, this may indicate this is the lowest they are willing to go on their price
Of those that have listed prices (pool 269) -63 have reduced their prices by 100K
23 have reduced their prices by over 200K, 7 have reduced their prices by 300K and 2 now have reduced their price by 400K with the biggest reduction been 455K.
The data continues to show the majority of houses listed are under 900K. The Median house price for all 537 listings is $795K this month.
Market Valuations
The latest QV valuations (valuations by QV which are updated every month and give an approximation of a houses value) have now dropped $200K since Jan for the Hutt.
Keep in mind new RV ratings for the Hutt Valley are due to be calculated in Sept and released in Nov. A number of people who bought in the last 12 months are going to find their house is worth a lot less than what they paid for it.
Homes is showing prices dropped roughly 2.5% in August alone – with most suburbs recording a drop of 25-35K for the month.
The latest round of updates that have come through this week show the following
- Woburn (the hutts most expensive suburb) – average house price dropped 120K in value in July and is down 310K from $1.66M (in Feb 22) to $1.35M, this is a 6% drop YOY and a 35K drop from Aug
- Petone – dropped 65K in value in June and is down $220K from $1.19M in Feb to $970K This is a 13% drop YOY and a 25K drop from Aug
- Wainuiomata (the huts cheapest suburb and attractive to investors and FHB’s) – dropped 50K in value in July and is down $175K from $870K in Feb to $695K. this is a 13% drop YOY and a 25K drop from Aug.
Houses sold vs houses removed
My records show 304 houses listed with a Price have sold YTD
I have records of a further 268 houses that have been removed from the market unsold YTD.
28 of those houses removed from the market have been listed on the rental market.
Length of time on the Market
- 408 houses have been on the market for over 30 days - 76% (last week it was 411)
- 322 houses have been on the market for over 60 days - 59% (last week it was 318)
- 207 houses have been on the market for over 90 days – 41% (last week was 222)
- 160 houses have been on the market for over 120 days - 29% (last week was 156)
- 115 of the houses have been on the market for over 150 days - 21%
- 72 of the houses have been on the market for over 180 days (6 months) – 13%
The number of houses on the market over 60 days is now over 58%. This has risen from 32% of houses in mid March (one in three), 1 in 3 houses have now been on the market more than 3 months , 1 in 4 have been on the market over 4 months and 1 in 10 have been on the market over 6 months.
Rental Market
This week the rental market has 181 properties for rent (up 7 on last week) up 71 on this time last year, – when just 110 houses were for rent.
The lower number of rentals is not translating into higher rental prices as the percentage of properties listed at $650 is at 37%. This is the 8th week in a row where the percentage of rentals over $650 has been less than 40%.
Median Rental price for the Hutt valley is $585 a week (this is slightly up from the previous $580 a week midpoint)
Average rental price reduction is $53 a week. The number of new build listings has continued to slow but there are still some great rental prices in this space with a couple going for $680 a week for a 3 and 2 new builds.
Oooops - are you sure you are in the right forum? Facts and figures count for little here. You need to be a caricaturised DGM or spruiker to get an audience.
ikimpaul is a widely acknowledged treasure of the comments section here.
Those vendors who have had their property on the market for 6 months will be kicking themselves for (apparently) holding out for a big price. Hindsight is 20:20, but if they've held on this long, how much more equity will they lose holding on for that magic price?
There is no other industry in NZ that we taxpayers subsidise to the tune of $2billion/annum. End the madness.
Median Rental price for the Hutt valley is $585 a week (this is slightly up from the previous $580 a week midpoint)
Median household income in Lower Hutt is $70,000 (rounded up to nearest 1000, from stats 2018). So let's be generous and call it $75,000 in 2022.
Hence, if we apply an affordability metric of rent/mortgage outgoings being no more than 30% of net household income - the median rent in Lower Hutt ought to be $432/week.
So, the $585/week as you state is 26% above that affordability metric for the median rental price (assuming the median rent price equates to rent on the median RV property).
So, based on my proposed weekly rent maximum formula - the calculation for the Hutt might be:
(RV/1000) - 26% = weekly rent maximum
Interesting in that the maximum accommodation supplement for a household with children is $192 - you can clearly see how our taxpayer subsidy is making up the difference in order to make renting affordable. Let's get rid of the accommodation supplement;
As I've been commenting on here for years Kate, that if the accommodation supplement were removed, it would be the landlords who would whinge more about it than those who are struggling to get by....
Then at the same time, those landlords would have the audacity to look down upon 'beneficiaries' as being lazy or having made the wrong decisions in life....not realising that the property industry is/are the biggest beneficiaries in the country!
It does now look a lot like the SMP scheme that sheep farmers said they couldnt do without - and then most survived when it was removed overnight
Yes, exactly. A very good analogy.
It would initially cause a bit of chaos as immediate recipients no longer have the money to spend on rent, so they're turfed out, but then the next prospective tenant that comes along was also a WFF recipient.
Not sure what you mean. All rents get re-set immediately. No advantage to a landlord of tossing one person out when the weekly rent maximum is the exact same for the next person in.
I think the accommodation supplement has been a major factor in the growth in auckland house prices. Effectively, the rental subsidy for a (say) $500 per week home was $100 more a week than for the same rental (but less desirable) home in provincial New Zealand. Effectively the Government subsidising poor homes in auckland over better homes in the provinces.
The subsidy effectively means industry has relocated there because they can pay their workers the same wage, but have less other costs. The result has been a massive subsidy of industrial employment in Auckland - which is now starting to unwind. To be blunt - that is why Rotorua has motels full of people who can't afford to compete with wage earners in that city
Also people on modest incomes will rent a nicer home that cost $100/w more as they only pay half the extra.
I don't think such a regulation would deliver what you intend. Best thing is to let the market determine rental rates and remove any subsidies (including tax) that skew the pitch.
For instance, if there was a rental cap based on median income, what incentive does a house owner have to improve the value of their property? I think you'd find only crappy houses would be available for rent. It would tend to keep suburbs with poor quality housing stock that way and create inconsistencies between similar houses close to each other which otherwise fall within different post codes.
True, remove welfare and tax policy subsidising of property speculation. Remove restrictive zoning (as the bipartisan approach is trying to do). Things would look a wee bit different.
Well, yes to remove all subsidies. But, you have to regulate to bring rent prices down in order to do that. Landlords will either sell or accept the new maximum (if indeed they are over the maximum at the time).
Healthy homes legislation more or less addresses the 'crappy' home issue (if it were enforced that is).
I suspect these numbers still underestimate the extent of the fall in Wellington. Incidentally, you can be sure you're getting accurate property values on Homes (before recent sale prices have been made public) when you see graphs like these:
From 35% fall from peak: https://homes.co.nz/address/wellington/mount-victoria/40-austin-street/…
to nearly 50%:
https://homes.co.nz/address/wellington/karori/71-sunshine-avenue/o0Qn4
https://homes.co.nz/address/wellington/wilton/208-pembroke-road/LDNwN
The 50% are interesting but only as anecdotes about the way price estimations get it wrong and can be a trap for the unlucky buyer.
Wilton sale is at best a mid-level home for Wilton suburb, flat section and big floorspace but completely unmodernized. So homes was never right to have it rated far above the suburb.
Karori sale appears to be a 2-bed slumlord offering awaiting demolition (yet not standalone so that's unlikely?) so its value is perhaps only in land-banking and waiting?
Maybe Wellington was just one of the regions with more chaotic pricing - well loved homes can share the same street with damp dark rentals whose roof and retaining walls are ready to slide off the hillside. The true 2022 values will completely differ to 2021 RV's if buyers actually have the time to house hunt and carefully consider their offers.
REINZ need Alexander & Church to work harder, clearly they're not having enough impact to stoke FOMO. Maybe it's time get some new experts on board... I guess the covid experts are now free - Baker want to join OneRoof? how about Bloomfield, he might have some influence on the masses?
Haha
The problem with FOMO is even if you have that fear, it’s now very hard to act on it, given banks are stress testing at rates of close to 8%.
Yes and if you have experienced an asset bubble before, you know that the FOMO on the way up is matched in equal quantity/intensity as the FOGO on the way back down.
I hear a lot of people ripping into TA. But he gives a very clear argument as to his predictions.
If you disagree with him, why not say specifically why you think his points are wrong?
Who pays TA's bills? It's clear his views are influenced by this. It's ridiculous he and others claims he's an 'independent economists'
Neither he or anyone else here is actually offering financial advice. You make up your own mind and run with it and accept the outcome. We now live in a society where everyone just loves to blame someone else for their troubles, build a bridge and get over it.
Yes but a lot of people are quite naive and gullible. They make decisions on the base of Tony's advice, not realising he's paid by the property industry, and any who've done so in the last 18 months could end up in dire straights. He could easily end up being the cause of bankruptcies, divorces or suicides.
Much more to come, the interest rate changes haven't fully impacted yet.
Some people will be ignorant of the pain to come
Some will have thought about it and put their head in the sand
Some are in denial and keeping up by using short term credit
Eventually many will realise that selling is the only way to survive, some will go willingly, some will be forced.
meanwhile...
FHB discussions have changed from complaining they can't afford a house to being glad they didn't buy and looking forward to ever lower prices.
Covid refugees from around the world are leaving because they know elsewhere there are better opportunities for people willing to work.
All the spec houses that are partially built will be finished.
This takes years to play out and the last 6 months is just the start.
I used to flat few doors away from this place. It's now a whopping 900K below GV. One of the best address in Wellington and literally four minutes walk to Lambton Quay.
https://www.tommys.co.nz/property/86-bolton-street-kelburn-6012/
incredible location
I wonder about that "a whopping 900K below GV" as being marketed as "enquiries over" $2,395,000 when viewed in homes.co however the agent seems to have it at that price. The property RV went from 1.84M in 2018 to 3.19M in 2021. It did appear to sell for more than RV back in 2007 though.
That RV of $3,190,000 has to be a nod-nod-wink-wink one.
I bet it gets taken off the market or sells below $1.9m
When this house first came on to TM, they optimistically put "not indicative of market value" next to the RV. A year ago, of course, this meant that the buyer should expect to pay more than RV, not less. Not that it mattered in this case: like any realistic seller they realized they had better put a price on the house.
Another heritage-type from an architectural master being advertised under RV;
https://www.realestate.co.nz/42173209/residential/sale/19-torwood-road-khandallah
But no off street parking. And you'd have to be lucky to get anything on the tiny access road - so can't see the little bedsit being much of an 'income' spinner. Gorgeous wee house, though I think the price will have to come down further still.
Land owned by households as a % of GDP at the end of 2021.
-Japan 130% (peaked at 325% in 1990)
-Australia 330%
-New Zealand 520%
Hard landing underway....
If this does turn to hell in a handbasket, it will be very difficult to say 'well it was impossible to see that this was coming'.
I am sure our politicians and economists will find it very easy to say. Thats about all they do is 'say' useless stuff.
The #1 excuse will be that 'everyone else was doing the same stuff as us'.
No , wait! It will be due to COVID, no, wait! The war in Ukraine, oh...wait....government is out of scapegoats and the emperor definitely has no clothes.
Land owned by households as a % of GDP at the end of 2021.
Yep. I think this is a telling ratio. Also, if you look at h'hold debt to GDP, Japan has barely budged since their bubble crash. Flat.
NZ's h'hold debt to GDP ratio has increased 2x over the same time period.
If this is a soft landing, I would hate to see a hard landing.....
I suggest it is a soft landing but on water ... soon we will see who sinks, swims and is skinny-dipping
Reserve Bank governor's tone turns hawkish
https://www.nzherald.co.nz/business/reserve-bank-governors-tone-turns-h…
Is that both hands Dr?
I cant read the story due to the paywall... but we can all guess the general gist.
He is only about 2 years behind everyone else in NZ in noticing that things might be a bit worse than very bad for quite a while.... but great that he looks pretty chuffed with himself for working it eventually :)
The annualised figures are going to look very ugly in 2 or 3 months, >20% falls in the main centres if we keep going at this rate. There will be no hiding from it.
exactly shorething
and there isn't any financial reason for them to stop at 20% falls....those nationwide median rents of $530 a week would not support investment properties until they have fallen another 50% at least
its all been one almighty con job
i think we are in for one almighty economic shakeout.once the job losses start its all over rover.Im picking a 65% fall, failing companies on our stockmarket and seven years of rebalancing our economy. if we have to deal with our balance of payments figures things will be tougher again.
and there isn't any financial reason for them to stop at 20% falls
I would think there is a very good reason for them to accelerate from there. Up until basically now the spruikers have been able to write articles reporting an ever smaller annual "increase" in prices, thanks largely to the spike in Nov/Dec 21. A decent portion of the population still thinks everything is basically fine but the market is a bit slow because of this. Now, the annual "increase" is a negative number, and that number is going to get very big in a short space of time as that peak value becomes the value the annual change is measured against. The average punter is going to freak out when a headline says "Auckland house prices fall -21%, inventory and days to sell at all-time highs" or similar. Market sentiment is what got us into this mess, and that sentiment is going to take a pummelling over summer the likes of which we've never seen.
Who knows? The NZ Property Investors Federation might send out a members newsletter declaring war on falling house prices. Everyone will pile in for one last heroic "heave ho", sending their borrowed dollars out into the market to hoover up the stagnating inventory and saving the real estate agents from misery.
The Charge of the Property Brigade. Into the valley of debt rode the six hundred. 😄
Heard of bitcoin ? At least property exists, and has a use. Both are falling in value, one will go to zero, and bitcoin is the bigger con job. The losers that support that are still going on about how soon it will go high sky in value. Sorry to tell you folks, the end game is zero, zip, nada.
Fair comment, we all have opinions. Just no crying about CBDCs later on when the money printers get copy & paste happy an debase the economy
I've compared it to the recent crashes in Ireland and the USA here: https://i.imgur.com/Xj8kScU.png
Who can afford the greed of sellers expectations, reinforced by the delusions of the RE community. Banks being forced to behave and the overseas debt masters realised there is a serious global inflation problem. Those that can afford to buy are just building their vulture funds. Patience is a virtue.
I agree that 50% off peak stupidity is about reality. Banks will have no choice but to tighten the screws.
Kaaaaark.
I wonder if our resident spruikers will ever have the humility to acknowledge that us DGMs were right.
I doubt it.
Nov 21 I told everyone the market had peaked and was about to crash. People loved it :) Now i'm saying the crash is almost done (also true) and i'm the party pooper :(
‘The crash is almost done (also true)’
No it’s not true because it can’t yet be confirmed. It might be proven true in time.
I think the crash will continue until next winter. Potentially with some ebb and flow.
I think interest rate rises are already fully priced in. You want the crash to continue until next winter? At the current rate?! Well only unemployment will do that. In any case, there won't be a housing recovery any time soon. We can all happily wait and see. No chance of 'missing out' till 2024.
I think the time is about 4.30 on the property cycle clock.
However, interest deductibility changes are not fully enacted yet, so there's more pain to come for that segment, even if interest rates stabilise (which I suspect isn't going to happen in the next 12 months). And you're not taking into account the extra 3-4% some are going to be asked to stump up by way of principal payments either.
Once those houses start coming onto the market, watch it enter free fall.
Also, I think a lot of landlords who were in it just for the capital gains will capitulate all at once.
The seminar excess leverage tax rinse model was always about capital gain. Now it's a formula for bank driven margin calls. Denial will continue until the Banks rachet up the pressure some more.
Looking increasingly like the banks will poke speculators in the eye first causing them to blink first.
What's your definition of a crash?
2 months ago we could have had the crash vs correction debate but we're well past that point now.
Well if you are right, then you are saying the market has crashed. So what is your definition of a crash?
A correction is when you buy at peak and later say 'oh well in a couple of months we'll make it back' A crash is when you buy at peak but say 'on no! we made a terrible decision!!'.
First they ignore you.
Then they ridicule you.
Then they fight you.....
Then they go silent.
When a view is based upon greed/self interest (rather than any other higher human virtue) - then to expect humility just isn't going to happen. Humility would be the juxtaposition of the spruikers entire life view.
Yep.
Mouse, weren’t you saying rates weren’t going to fall that much as inflation will decline… now you’re on the ‘I told you so’ brigade
Yep, not a day goes by where he doesn't come running up yapping "I told you all so", to try and gain some credibility I suppose. Several people have hinted to him to cut it out in the last few months.
He makes so many predictions that plenty of them turn out wrong, which is something he will jump all over someone else about. See him having a go at Te Kooti above, one of many he has tried to bully. And always rubbishing Tony Alexander's January prediction of a 5% increase in house prices this year as idiotic, yet his own predictions at that time "didn't rule small increases out".
Its been a good run, now many learning there is no liquidity when you want to get out of property.....
Not many buyers out there. Generally the economy seems to be slowing rather too rapidly for my liking. Be interesting to see what (if anything) Mr Orr has up his sleeve.
Personally, I'm very keen to see further substantial drops so I can finally buy into the market without feeling utterly ripped off and debt slaved for a not-particularly nice house and location.
...but so far this is still just the COVID period housing bubble froth disappearing.
If prices reduce to March 2020 levels then I'll get excited. But I'm not holding my breath...
Back up plan will be a nice house in rural France + beachside condo in Thailand....probably will work out about the same as a $1.2 mill house in NZ at current prices.
If there is a resolution in Ukraine and China sorts out its zero covid stance and supply and transport issues are resolved we could well see a return to normality which means house prices declines could stop and prices could even start to go up again. Especially if we continue to see low unemployment and interest rates dropping again.
Lots of ‘If’s’ there!!!
Unless "return to normality" means New Zealand dropping off the top of graphs like https://www.economist.com/sites/default/files/20210814_WOP224.jpg .
Yes and this is real house prices.
Wellington down 20% in nominal terms already....add in 12+ months of 7% inflation and in real terms they are already looking at a 30% drop in the true value of their wealth (if all their net worth is in property - which is true for quite a lot of Kiwis).
And leverage magnifies it.
If they are 50% leveraged, they are down 40% in nominal terms, then add inflation.
The unwealth effect.
Sitting in a quarantine hotel in HK atm. Local news here is the place is absolutely in meltdown- so many people leaving its now a case of who hasn't left.
China is worse than here as the lock downs are even more draconian. If you are waiting for a China to reverse Covid Zero you will be waiting for a very long time.
The pic atop is not quite what the reality of the article. Sadly, this is archetypal media. Yes, I know the pic says look out(!) this is where we're headed, but it is still OTT to the story's reality. From what I can read from the article, the worst case is minus 20 but the average is minus 10 - to date. Everyone's thrilled Wellington is minus 20 - it couldn't happen to a better lot. The NZ reality is minus 10 which in simple terms, is about minus 1% per month since peak, give or take. The pic shows/says minus 50 or even worse, totally cast adrift. Let's keep things in perspective people. Please.
Perhaps you could ask the author to add a caption, “not to scale”
I suppose it depends on whether you consider the house in the image to represent the value of the property, or the value of your equity in the property.
It represents a great investment with a valuable water feature that instils a sense of serenity, structure and savoir-faire. What are you waiting for?
But...We import much of what we consume and prices overseas are still going up, meaning we are importing inflation we can't control, and that overseas price growth looks set to continue for some time yet.
Won't the RBNZ just keep putting up rates to try and control demand for those increasingly expensive, imported products?
Yep, and unemployment is much too low which is inflationary if not "stagflationary". To keep the NZD strong we must raise rates even further while being undermined by the Federal Reserve and ECB raising their rates in a race to the moon. Holding my breath for US CPI release, 8.7% I'm guessing. Then will it be 75bps hike next week from the Fed? likely as many have priced that in already.
The rocket engines of speculation have run out of fuel. Freefall is now underway.
You can frame it however you want....
Anyone else looked at the Wellington specific chart and dragged it out to the full 30 year time scale? Its one of the more impressive I've seen in recent times.
People are so dumb. More toilet rolls, anyone?
So realistically all the FHBs in the past 12 months will have had their house price fall by roughly as much as their deposit. (Assuming 10 to 20% down).
Is nobody talking about the fact that when they refinance their mortgage the banks WILL charge them a premium for being effectively 100% mortgaged.
This is gonna put huge pressure on disposable income as the mortgage rates have already doubled from last year.
Its gonna be bloody horrible for these folks.
The Helen Clark Foundation did suggest a government lender be established for that specific reason - to shelter those FHBs who find themselves underwater, from predatory banks.
Nope. We can only ever talk about property prices falling as if it's an amazing thing with literally no downsides.
The commentary around 'directing investment into more productive enterprises' instead of houses ignores the fact that a significant number of people are going to be trying to get out from underwater and won't have much left over for things like businesses, let alone discretionary spend. This is going to fall squarely on a cohort which probably needs to start thinking about seriously saving for their retirement, given millennials are now 30 - 40 years old.
No doubt there are going to be more and more people like that. Here is one; someone bought it for $1.74 million seven months ago and is now trying to sell it for nearly $400k less than that (I doubt they'll get the BEO):
https://homes.co.nz/address/wellington/island-bay/54-severn-street/DLJkr
$689k -> $1,740k in actual sales in 2.5 years. Someone made a killing here, back down we go. Unfortunate for the current seller if they are forced to sell, could be much less than BEO
The same agent for all 3 sales, is it really ethical for things like this to happen?
Wow. Peak stupid. I can think of much more fun ways to set fire to $400k
We are in for another soft landing.
TTP
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