A rising tide of red has swept over housing values during the autumn and winter months, pushing property values down substantially in most parts of the country.
According to property data company CoreLogic's House Price Index, which tracks property values throughout the country, the average value of New Zealand homes declined from $1,043,261 in March to $977,158 in September, a drop of $66,103, or 6%, in that six month period.
The biggest declines were in Auckland and Wellington where average values in most districts declined by more than $100,000, with substantial declines of more than $50,000 also recorded in Tauranga, Napier, Hastings, Palmerston North, Masterton, Nelson and Dunedin.
The biggest drop in values occurred in some of Auckland's most expensive districts, with the average residential property value of Auckland's central-eastern district, which includes high-priced suburbs such as St Heliers Bay and Kohimarama, declining by $216,887.
That was followed by a decline of $196,351 for Auckland's gulf islands, which is essentially the Waiheke Island market.
Values in Manukau's eastern suburbs, which includes upmarket areas such as Howick and Bucklands Beach, also suffered, with the average value across the district dropping by $172,219.
The table below shows the average dwelling value in all urban districts throughout NZ in September and how much they have changed since March.
CoreLogic NZ's Head of Research Nick Goodall said the national average dwelling value declined by 4.1% in the three months to September which was one of the biggest falls on record since the Global Financial Crisis in 2008.
He expected the downward pressure on house prices to continue.
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| CoreLogic House Price Index | |||
| Change in Average Residential Property Values | |||
| March 2022 - September 2022 | |||
| Average Residential Property Value | |||
| District | March 2022 | September 2022 | 6 month change |
| Auckland Region | $1,520,341 | $1,387,767 | -$132,574 |
| Wellington Region | $1,185,036 | $984,640 | -$200,396 |
| Main Urban Areas | $1,128,708 | $1,088,197 | -$40,511 |
| All of Aotearoa | $1,043,261 | $977,158 | -$66,103 |
| Far North | $698,321 | $714,342 | $16,021 |
| Whangarei | $839,480 | $800,136 | -$39,344 |
| Kaipara | $877,714 | $881,352 | $3,638 |
| Auckland - Rodney | $1,420,588 | $1,354,206 | -$66,382 |
| Rodney - Hibiscus Coast | $1,320,398 | $1,266,603 | -$53,795 |
| Rodney - North | $1,508,791 | $1,429,758 | -$79,033 |
| Auckland - North Shore | $1,676,550 | $1,542,769 | -$133,781 |
| North Shore - Coastal | $1,908,991 | $1,761,469 | -$147,522 |
| North Shore - North Harbour | $1,608,449 | $1,491,230 | -$117,219 |
| North Shore - Onewa | $1,365,261 | $1,242,095 | -$123,166 |
| Auckland - Waitakere | $1,226,326 | $1,103,143 | -$123,183 |
| Auckland - City | $1,765,043 | $1,600,394 | -$164,649 |
| Auckland City - Central | $1,494,429 | $1,359,152 | -$135,277 |
| Auckland City - Islands | $1,919,391 | $1,723,040 | -$196,351 |
| Auckland City - South | $1,588,207 | $1,450,112 | -$138,095 |
| Auckland_City - East | $2,205,282 | $1,988,395 | -$216,887 |
| Auckland - Manukau | $1,370,259 | $1,239,933 | -$130,326 |
| Manukau - Central | $1,062,299 | $967,571 | -$94,728 |
| Manukau - East | $1,704,202 | $1,531,983 | -$172,219 |
| Manukau - North West | $1,185,542 | $1,084,432 | -$101,110 |
| Auckland - Papakura | $1,084,641 | $1,024,967 | -$59,674 |
| Auckland - Franklin | $1,045,704 | $994,054 | -$51,650 |
| Thames Coromandel | $1,159,754 | $1,258,176 | $98,422 |
| Hauraki | $695,665 | $671,106 | -$24,559 |
| Waikato | $773,472 | $789,210 | $15,738 |
| Matamata Piako | $741,685 | $737,256 | -$4,429 |
| Hamilton | $891,884 | $856,829 | -$35,055 |
| Hamilton - Central & North West | $821,597 | $795,471 | -$26,126 |
| Hamilton - North East | $1,113,445 | $1,060,828 | -$52,617 |
| Hamilton - South East | $823,451 | $789,569 | -$33,882 |
| Hamilton - South West | $789,254 | $757,860 | -$31,394 |
| Waipa | $912,488 | $893,784 | -$18,704 |
| South Waikato | $478,088 | $472,654 | -$5,434 |
| Waitomo | $386,142 | $410,810 | $24,668 |
| Taupo | $882,732 | $878,587 | -$4,145 |
| Western BOP | $1,060,921 | $1,010,032 | -$50,889 |
| Tauranga | $1,185,907 | $1,104,155 | -$81,752 |
| Rotorua | $725,385 | $692,512 | -$32,873 |
| Whakatane | $782,692 | $745,504 | -$37,188 |
| Kawerau | $427,556 | $425,633 | -$1,923 |
| Gisborne | $659,477 | $629,650 | -$29,827 |
| Wairoa | $412,186 | $398,798 | -$13,388 |
| Hastings | $903,004 | $814,537 | -$88,467 |
| Napier | $895,290 | $804,837 | -$90,453 |
| Central Hawkes Bay | $661,956 | $618,844 | -$43,112 |
| New Plymouth | $728,891 | $731,884 | $2,993 |
| Stratford | $486,143 | $488,823 | $2,680 |
| South Taranaki | $434,768 | $461,358 | $26,590 |
| Ruapehu | $409,340 | $393,086 | -$16,254 |
| Whanganui | $572,865 | $530,029 | -$42,836 |
| Rangitikei | $495,263 | $466,832 | -$28,431 |
| Manawatu | $673,150 | $636,065 | -$37,085 |
| Palmerston North | $748,529 | $689,609 | -$58,920 |
| Tararua | $465,093 | $454,253 | -$10,840 |
| Horowhenua | $662,887 | $607,983 | -$54,904 |
| Kapiti Coast | $977,568 | $913,322 | -$64,246 |
| Porirua | $1,010,455 | $878,982 | -$131,473 |
| Upper Hutt | $931,727 | $804,216 | -$127,511 |
| Hutt | $985,062 | $848,336 | -$136,726 |
| Wellington City | $1,274,691 | $1,120,909 | -$153,782 |
| Wellington - Central & South | $1,199,083 | $1,074,287 | -$124,796 |
| Wellington - East | $1,407,446 | $1,234,043 | -$173,403 |
| Wellington - North | $1,210,878 | $1,056,374 | -$154,504 |
| Wellington - West | $1,470,774 | $1,274,535 | -$196,239 |
| Masterton | $682,675 | $616,212 | -$66,463 |
| Carterton | $731,839 | $693,541 | -$38,298 |
| South Wairarapa | $901,792 | $862,834 | -$38,958 |
| Tasman | $856,447 | $824,017 | -$32,430 |
| Nelson | $865,695 | $812,967 | -$52,728 |
| Marlborough | $739,433 | $722,863 | -$16,570 |
| Kaikoura | $598,853 | $651,467 | $52,614 |
| Grey | $328,982 | $348,251 | $19,269 |
| Hurunui | $592,393 | $606,815 | $14,422 |
| Waimakariri | $690,646 | $719,862 | $29,216 |
| Christchurch | $757,902 | $756,695 | -$1,207 |
| Christchurch - Banks Peninsula | $803,553 | $799,711 | -$3,842 |
| Christchurch - Central & North | $867,766 | $867,084 | -$682 |
| Christchurch - East | $577,465 | $586,821 | $9,356 |
| Christchurch - Hills | $1,043,650 | $1,044,551 | $901 |
| Christchurch - Southwest | $733,297 | $720,919 | -$12,378 |
| Selwyn | $868,673 | $850,179 | -$18,494 |
| Ashburton | $507,618 | $529,852 | $22,234 |
| Timaru | $503,717 | $514,635 | $10,918 |
| MacKenzie | $658,722 | $718,848 | $60,126 |
| Waimate | $404,842 | $424,081 | $19,239 |
| Waitaki | $493,647 | $485,216 | -$8,431 |
| Central Otago | $775,681 | $777,265 | $1,584 |
| Queenstown Lakes | $1,684,142 | $1,681,735 | -$2,407 |
| Dunedin | $698,879 | $645,376 | -$53,503 |
| Dunedin - Central & North | $722,376 | $664,571 | -$57,805 |
| Dunedin - Peninsular & Coastal | $662,771 | $592,577 | -$70,194 |
| Dunedin - South | $659,979 | $612,585 | -$47,394 |
| Dunedin - Taieri | $723,196 | $675,311 | -$47,885 |
| Clutha | $414,742 | $399,743 | -$14,999 |
| Southland | $477,292 | $485,887 | $8,595 |
| Gore | $374,982 | $400,089 | $25,107 |
| Invercargill | $481,586 | $462,319 | -$19,267 |
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167 Comments
So straight away, there goes your hard earned deposit. A deposit that was in fact 'real cash' either saved over many years, or borrowed from mum and dad. On the other hand, the $700,000 that the bank lent you, is just a number on their balance sheet that doesn't even really exist as hard cash. What a sad state of affairs...
I’m in sales so I talk to a lot of people. The ‘smart’ investors that apparently don’t need to work but still work, are in complete denial for the most part. One investor was telling me how his $5million portfolio will be worth $10million in 10 years time and will dwarf his $2.5million mortgage debt.
I felt like pointing out that his portfolio might only be worth $4 million now and I’d be nervous about the $2.5million debt…but I’m not a ‘smart’ investor
Odds on he will be right.
It all comes down to demographics and immigration IMO. The equation changes significantly if the shortage of houses turns into a glut. When the boomers all move into rest homes or the afterlife, and if construction keeps booming, its possible we will have a glut. It could all change from what people can afford to pay (largely dictated by interest rates) to a proper supply and demand market.
Governments can always mitigate gluts with their immigration spigots. The problem I see with 'smart' investors is they don't understand the time frames for downturns. It can take 18 months for the true value of declines to show up in a property markets as rates rise. Prices will still be falling when rates pivot due to the extent of wealth destruction during the inflation and rate hike cycle. Competition from FHB, M&D and other small investors disappear for quite some time. !0 years is incredibly optimistic. I would say 'smart' investors will have to hodl for significantly longer to see capital values reach and surpass the recent peak, if at all depending on the global economy. If the American hegemony see's it's destruction this decade, significant wealth will leave the West and transition to BRICS allied nations. The assumptions of 'smart' investors overlook this likelihood.
NZ zoning/building rules and geography mean it will not ever be a pure supply/demand situation. Very few people want to live cheek and jowl with the neighbours in a high density development (not helped by the crap quaity of most of them), so there will always be a desire for more/larger bits of land, which will simply not be able to be supplied at a decent price.
How can you say it comes down to what people can afford to pay. I thought it's all about hope and the magic of doubling onto infinity and beyond.
It's also about how the market is manipulated, over and above more 'fundamental' aspects such as affordability. To date we've had favourable tax treatment, welfare subsidies for prices and rental yields, and restrictive zoning that prevents supply. As Michael Reddell is wont to point out, house prices are generally far more affordable in places that don't use policy to push them artificially high.
We need to erode the entitlement mentality to free wealth from capital gains, that's been embodied by our speculating MPs over the last decade plus.
He will survive, if have deep pockets and able to hold and service the mortage by own but how many can and survive when domino effect hits the market.
Hi Carlos
you might be right. Personally I feel their is one word missing from some investors psyc and it’s the word ‘enough’. Ultimately we are all investing in something. Whether it be property or term deposits etc. It’s about mitigating risk and when you can’t say ‘enough’, the exposure to risk is greater. And these for me are the fools.
That's enough
Btw tom you did not update us on the Credit Suisse collapse.... or was it another rumour you were going hard and early with
Flying High
not sure my man. Little icon at the bottom of your phone screen.. looks a bit like a compass. Press it, thing will pop up with Google written on it. Go hard.
Quickly back-peddling. You were all over it
Hard at the grindstone for you
Are you one of these people that gets obsessed with certain commentators? It’s lovely and flattering but to answer your original question..no I haven’t heard anymore about the bank collapse. It was second hand info I got from my partner who is in banking. Trying to help…thought that was the point of this platform??
Two comments and you start to squirm. Feeling the heat are you?
😅🤣😂
HW2… my 13 year old daughter told me that only sad old men use laughy emoji faces these days. Just passing on the advice mate
That's funny I'm old and I use laughing emoji. 🤣🤣. Oh well old and getting bailed out by 13 year Olds but it's worse my daughter is 7 and says the same.
HW2 trademe still over 12000 in Auckland telling porkys you said it was under 12000. Lots of red ink on these charts hope you got sorted with financial advisor.
Really is that right, I better check again... but just to make sure you are not telling porkys hehe. Do you think its those desperate boomers jumping off while they still can. Or maybe just maybe you listed a few extra properties so that you could claim the bragging rights.
Maybe, maybe not.
Other examples of major corrections show that it could take 10 years just to come back to current price to income levels.
If all that one has experienced is constant exponential asset inflation, its not hard to see how one would not place much likely-hood in that not being true in the future.
Though its very unwise not to consider and be comfortable with alternatives.
I know people in the UK that where in negative equity for 7-8 year post GFC. Everyone knows what happened to IRE... I'm not even sure if they ever got back to previous inflation adjusted levels? And all that was kicked off due to raising interest rates...
Prices in NZ will follow the cost of debt servicing. And that cost of debt servicing is driven by global forces that do not give the slightest care for some backwater over priced housing market.
Anything is possible... plan accordingly.
No matter the level of housing market activity/prices, the underlying interest in the market always fluctuates between "very high" and "extreme".
This blog bears testimony to that. If you come here regularly, you'd think that buying houses was all that mattered in people's lives.
TTP
The master of hypocrisy eh Tim considering the only articles you comment on here are housing articles and the fact your livelihood revolves around housing as a commodity.
You can't fault the logic, though.
For example, we all know stories about gruesome murders make good news stories and get lots of clicks. This is clearly because most NZers are big murder fans and just waiting for the opportunity to commit one of their own.
So true I'm into fantasy, comics, sci-fi it's just like the property market in New zealand, it's like a car crash novel.
Interest in buying has seriously dropped off in my local area
Not sure about that. No disrespect to the site, but as a casual observer it seems to me that 80% of the comments here are made by about 20 people…not many in a pool of 5m. But yes, I agree that NZers have a ridiculous and unhealthy obsession with house prices quite unlike anything I’ve seen anywhere else.
Alas, for quite a few people, that's exactly the case. Housing is just a commodity to be bought, held and sold like stocks and shares. Shame on the governments of the many countries in the western world, who allowed this to happen. 50 years on from the 1970s, it's hard to disagree that it's been and remains the overwhelming driver of inequality of wealth, with no end in sight.
Timing The Property-mkt... TTP-m
Pity you didn't talk to a smart investor ten years Ago in 2012. Your smart investor didn't just buy his properties in 2021, some have already doubled and he may have started with zilch and now has millions in equity.
You could have done what he did but sold up last year and not have to keep slaving to bring in a few pesos
Need to put the 6 percent fall into context. Prices have risen different amounts around the country over the last 3 year's, but probably at least 30 percent in Auckland so they are probably way ahead. Agree prices are likely to double in 10 years. I would be far more worried if we weren't carrying debt.
I am worried about engineering works in this country if your maths is representative.
A 20% fall, which is what we are close to in Auckland, nearly cancels out the 30% gain. So it's definitely not 'way ahead'...
Have to wonder about his/her ability of "critical thought" or risk analysis.
If this structural engineer looked at a 6 month old building with 60mm of subsidence on one side, would he still green sticker the building on the basis that, "when put into context", the foundation is 600mm deep so it's only ~10% and it shouldn't fall much more.
A serious recession is expected which means high unemployment followed by many empty rentals; The cash flow formular that the Ponzi scheme is built on will collapses like a house of cards.
Because of inflation the days of cheap and easy credit that drove house price bubble up as much as 3 times in 20 years and created the Tsunami of debt will correct to real income levels and only rise in many years considering the global economic outlook and when NZ becomes productive again with export goods and services that bring money into the country.
Due to new rules, high cost of living, unemployment and the risk of another pandemic and being thrown out, immigrants won't be coming back to pre Covid levels anytime soon.
Government will make sure new builds will continue, to meet the affordability demand of the next generation entering the system.
Inexperienced speculator/investors conditioned by those unregulated property wealth courses; industry spruking; those so called independent valuations and mortgage brokers, will go into denial while their asset go negative and start costing them until they go broke.
"when NZ becomes productive again with export goods and services that bring money into the country."
This.
We are a country on arse end of world we need to export services, online business, biotechnology anything that requires high level of education where we dont bring in mass immigration and have highly educated people.
Ripping off kiwis with property and bringing in millions of fuel attendants is not a great strategy to grow a small country with limited resources.
Well, you couldn't expect New Zealanders en masse to get rich by building a valuable business and adding value, surely?? It's their god-given right to be rich by passing debt to following generations to pay. And policy has and should enable that.
Can't believe anyone would expect entrepreneurship and creation of value!
Yep what a thought new entrepreneurial business bringing in billions from online businesses, technology with limited amount of infrastructure required and costs as opposed to the majority of NZers indebted and future NZers struggling to afford a basic necessity of shelter, not to mention billions spent on infrastructure to support the thousands of immigrants we don't really need if we had some sort of clear direction that didn't include property.
Tbh that's not leveraged up so much
But house prices don’t go down. There must be an issue with the data.
... fake news ! ...
Sad!
resiliance. soft landing. turning point. blah blah blah.
Yeah, nah. Retail rates are going higher in the short term. The only potential mitigating factor I see is that the usual spring surge in listings hasn't (yet) arrived. Stock is still very high, but hasn't yet started to go higher. Will it arrive after the school holidays?
But TA said yesterday that fixed mortgage rates topped out in June??
"Where we stand now is that I still feel fixed mortgage rates for all bar the one-year term peaked in June."
I saw that. It's hard to fathom how you could look at the swaps and the RBNZ statement and think that retail rates have peaked.
.. the spruikers will reset their timing from a " spring rally " to a " New Year rebound " ...
Waiting for their dead cat to bounce ...
The cost of this "not a crash" is mounting. From an investment perspective, paying ever increasing interest costs on an imploding asset will be making most Speculators and Property Brokers go flaccid indeed 💙
.. at the moment , their holy priest St. Ashley of the Property Church , is keeping their spirits up ...
But ... they can only maintain their faith for just so long ... then its flaccidity time ...
They only have to survive until the National led government reinstates interest deductibility and reduces the top tax rate.
The Nats are selling this speculation stimulus package as a means to bring relief to renters - yeah sure.
Reminds me of Judith Collins voicing her angst with ComCom's supermarket study touting that compressed margins could adversely affect pay in the retail sector. Her idea of high-paid workers appears to be warehouse labour and checkout operators.
This is the stale truth behind Luxon's fresh, outsider's perspective to politics.
It would sell a lot better to the marginal voters if Luxon was not personally invested in residential property. There will need to be a lot of ‘holding one’s nose’ next year for the faithful when voting next year.
There is no possibility of me voting for Luxon unless he sells his property portfolio and drops the plans to prop up the property market.
He stinks of self-interest at the moment.
I couldn't agree more.
One of Labours points was that renting residential property is not a business so on this basis it is a non taxable activity. if its taxable then its a business and the same rules on expenditure deductability must apply otherwise Govt is deliberately discriminating against one section of the community which is a precedent that Cindy and her clowns will hopefully regret when it is applied to them, say a future right wing govt decided that in the National interest left leaning parties would not be allowed to raise electioneering funds or be allowed to debate on public media.
I don't remember them arguing that rental properties shouldn't be taxable. Quite the opposite - landlords are paying more tax than ever now they can claim less interest cost against the income.
Yes, it does make a little uneasy to treat this particular venture differently to all others. There are other levers I would have pulled first to bring down house prices, but it's just so refreshing to see a political party pulling any of those levers at all to try to make housing more affordable. I think cheaper housing makes the country a better place.
You may be aware that the policy was first enacted in the UK by the Conservative government there. It doesn't seem to be a pure left-wing issue. I suspect that even National have more moral backbone than you fear and they will continue our democratic traditions. This is not America.
More than ever but at a far lower rate than earned income from productive work. It's the nudge-wink allowing of investing for capital gains without paying capital gains tax that has been the problem in New Zealand. Investing for capital gains while pretending for tax purposes not to have done so.
It's been far too easy to just park money in welfare-subsidised and tax-favoured land speculation than in building a productive business.
How about you vote on policy then and not just vote based on the one person you see in the news in relation to a political party. People need to wake up and vote for what a party stands for and what they will do, not based on a person within that party. Neither National or Labour appeal, we need to think laterally and get some new players, or bulk out some smaller players in parliament to ensure we get fairly represented. The last thing we ever wish to see again is a majority party slamming legislation through under our noses like snakes, and delivering on absolutely nothing promised.
They should lower the 5% threshold to get into parliament. It seems too hard for a new party to get there and people don't like to waste their vote on parties that aren't going to make it over the threshold.
It might be a hard sell at next year's election if rents have gone up less than inflation for the first time in living memory.
Listening to them is like hearing Putin trying to convince us the invasion of Ukraine as a 'special military operation'. There is no Crash!
The gubmint (thats us) also pays more when their bonds roll over. They have hundreds of billions owed and probably why the kiwi peso is not healthy.
Crash Crusader (aka Retired-Poppy) is so crooked and twisted that if he swallowed a nail he’d shit a corkscrew.
TTP
Hahahahaha excellent
Is that a truism
Tim↘️, I have to admit that's a pretty good comeback 😆
Aside from the high and still rising deposit rates↗️, you also made my afternoon.
Must admit, that's very good.
Meet at the Cloverlea Tavern and I'll buy you a beer!
Wellington hit really hard, priced the same as Tauranga to start with and the arse fell out of it down there.
More pain to come for Wellington homeowners looking to sell with new supply hitting the market in the capital city's Northern suburbs as well as Hutt and Porirua over the next 12-18 months.
Not sure about Tauranga but the city had one of the worst median price-to-income ratio in the country (except QT). Surely recent buyers there are up to their eyeballs in debt and Infometrics says the largest sector in the city by employment is construction - not a good combination in today's economy.
Not really its the cashed up Aucklanders capital of New Zealand. The poor income to median price should tell you that, people that move here don't have a mortgage. You simply sell that overpriced Auckland shitbox and buy a way better near new house and pocket the difference and do a bit of part time work, preferably from home so those days of getting stuck in traffic are over.
Tauranga is weird. It is a big retirement place for those from many other cities. But it also has a lot of crime. A weird mix.
We are in the 'cashed out of Auckland and moved down' boat. It seems every other person has done the same lifestyle move and it is propping the market up a little more than the main cities. Id argue that there has been a large influx of people our age (30s) in recent times down here. We have sat on the sidelines waiting for the market to roll back. It is doing so, but at snails pace.
Tauranga has the same problem Auckland had. Too many old Aucklanders.
At least the Aucklanders are better drivers
Tauranga is God’s waiting room for NZ. Nice place to visit for a few days
Nice place to visit for a few days? There’s zilch to do!
Mt Maunganui is a nice beach, and that’s about it.
Depends what you’re into I guess. I live to surf, fish and spend time with my kids and wife. The priorities a bit different down here. But hey not everyone’s cup of tea!
Nice. I get it, if you live there. But visit for those things when you can get them in most places in NZ?
Yea you’re not wrong. I guess it is the compromise to being more relaxed than Auckland but still having the city aspect to it (I know you may think that’s a joke). Sure I’ve had to give up a bit of salary But I can honestly say we are much happier and more relaxed down here. People move down here for that and you can definitely feel it in the vibe. It’s small and not much to do as you say but I think that’s what attracted us to a degree. Different strokes for different folk as they say!
If you 'live to surf' then what the heck are you doing in Tga?!
Ha I was waiting for this one! Little bit of compromise required with the other half. I would be in Gisborne if I had it my way.
Traffic is pretty bad in Tauranga.
Two massively different markets. My antictdotal evidence is that people were selling in Auckland and buying Tauranga, pocketing the difference. Welly is dominated by first home buyers, and upgraders who are much more exposed to the winds of mortgage rate change. My bet would be where Wellington and Auckland go, the rest of the country will follow
Correct, exactly what I did but Tauranga will not face the same level of house price correction as Auckland and Wellington. Covid changed a lot of things.
Yes it will Carlos...
Tauranga correction will be greater.
Just couldn't resist the old "not in TGA" could ya.
Good luck with that.
Surely if residential construction is such a big employer in Tauranga then the housing market is vulnerable there if the sector struggles?
FHB here, I'm currently based in Wellington and moving out in a few months time. Many in my age group are doing the same with working from home opportunities and being able to negotiate a Wellington job with either permanent WFH contract, or only having to come to Wellington once per month for work. The houses aren't worth it still, the CBD is slowly dying with people moving away or further out for lifestyle and house prices, who wouldn't want a decent City income living in a more affordable area of the country.
Hence I bought my first home in Masterton 2017. Currently WFH 3 days a week and school holidays, train in to Wellington for work the rest of the time. Just upgraded to a 200sqm 4 bedroom 2 bathroom on 1/4 acre with a <$500k mortgage. Train station is 300m walk, primary school across the road, 2km from Countdown/Pak N Save.
Better weather in the Wairarapa too.
Wellington’s climate is garbage.
The only set of traffic lights in all of Wairarapa is at Carterton kids playground.
Know both the Tauranga market and the Wellington city and regional market of late well. We sold a very good property in Tauranga and have been trying to find the same down in Wairarapa. Bar the numerous homes with monolithic cladding in Tauranga, the homes there are generally of much higher quality for the same money. Newer homes with well developed sections. Down in Wairarapa/Wellington very rare to have a formed driveway (Wairarapa) or even a drive on section (Wellington). Even if homes have been renovated many are still in very poor repair mostly because of their age. So was very surprising to see the massive rise in price down here….. not so surprising it’s correcting. I don’t know the Auckland market, so perhaps Wellington market was following Aucklands very inflated prices
Some Monclad from hell suburbs down here in Tauranga like Bethlehem but in general far more brick and tile and linear etc. so they are easy to avoid. Some areas down here are overpriced but pretty much everything is 10min to the CDB. Personally I'm in an area you wouldn't want to live in if you were racist and whites only folk like to stick to Papamoa.
10mins? it took alot longer for me to drive to work in Tauranga than it is to drive from Upper Hutt to wellington. Tauranga/Mount Maunganui traffic is a nightmare, the worst drivers. The people are rude and angry, I much prefer living in Auckland and Wellington.
Hamilton by the Sea with Auckland-style Traffic
HPI due next week. Core Logic is waaaay behind the curve. It'll be fascinating to see it up tick in auction activity in Auckland is secondary to price drops meeting the market or more buyer demand with prices holding.
The people out there must have already priced in another 50bps rise November. I see house prices flatlining now, the real question is what will happen in February as the RBNZ have not committed to or signaled anything at this point so there is still a possibility all hell will break loose. If inflation shows no sign of falling, then anything is possible.
Carlos67 - the largest influence over what happens here is the US. The NZD will keep our OCR higher for longer than is required by our domestic data and property is most vulnerable to that fallout.
I see falls for at least another 3 months, I am betting flatline in 6-9 months.
Just playing the devils advocate...
The majority of mortgage holders are still sitting on rates from what, 1-2 years ago? So one could argue that the rate rises so far have still not been fully priced in to peoples budgets & therefore purchasing capacity.
And all expectations/data indicate that we are still not yet topped out on rate rises.
I suspect this will take longer to play out that what many people assume.
Also something else that is not really talked about -> DTI tools. What's to stop the RBNZ waiting for the floor (deliberately deflating the market) and then wacking on DTI ratio's to prevent another cycle of rampant inflation?
They are now responsible for ensuring stability (or considering the impact on housing). What if that means DTIs no greater than 4x... etc
Extremely unlikely. The RBNZ consultation paper suggested x6 or x7, if implemented.
No flatlining. Either they go up fast or they go down fast.
I've been looking at charts for most of my career and the only ones that flatline is where trading is suspended due to a bankruptcy, de-listing, or takeover, and when a government takes over a market and pegs a rate at their pleasure. That already happened with interest rates, but that period has ended - the spigot has been knocked off the barrel for housing, it'll keep draining cash now, down to the dregs.
And further drops to come
Dear moderators, why are all ikimpauls commetns being removed? You are removing the most valuable contribution to comments here?? I suspect maybe an automation of some sort based on length of comment - can't imagine it's someone taking that action intentionally??
We have invited ikimpaul to contact us to discuss his commenting but he/she has failed to do so.
If we can resolve certain issues satisfactorily the comments may be able to resume.
this is not correct - i have not received any info on this
Check your email.
... you're missed around here ! .... Come home 😊
Not that I really care less what happens in the Hutt valley, but it looks bad form to delete this and all subsequent comments, after all he/she has been contributing on the same subject for months without a problem.
orr and robertson are living proof 2 halfwits don't make a full wit. Sooner we get some adults in charge in Wellington the better off we'll all be.
.. maybe it's time we contracted out the running of our country to independent outsiders ... imagine how NZ would look in a decades time if the Singaporean government had made up all our rules for us ...
Love a hawker centre ...
Maybe an algorithm could do it? We could create an App to manage fiscal and monetary policy and sell it to the world for trillions.
But to be fair, at least Orr did not chicken out this time. Like they did in Oz.
It is pretty clear that we are going to end up with values settling as they were prior to Covid. However, as happens frequently we could be in for a nasty overshoot as property values were overvalued then too.
I was seriously considering buying a nice section for a holiday home toward the end of last year. My bank manager told me not to because in his words (the market is about to crash, and interest rates are going up like hell (his words)). However, he approved the cash I needed and I attended the auction. It was interesting, the section went for way more than I expected (close to 700k). I had the money but decided it was way too expensive for what it was. The section is probably now worth less than 500K.
I hold a lot of shares. More than property. Obviously, they have gone down a lot. It doesn't affect me as they are quality shares, they pay good dividends, and I am not leveraged, and have little other debt. Debt is the big factor here, people have heaps of it, and the ability to pay is diminishing over time. My share portfolio will come back, no problem, but people will be saddled with this debt for ages and that will affect behavior in the property market.
I would not expect the property market to be buoyant again for many years to come. Higher interest rates and credit rules are going to also hold it back over time. People are going to have to find another way of making quick money.
I tend to think lower than pre covid. I bought Nov-19 on 3.35%, now moved to 5.4%. Quite a difference, can’t see people would line up to pay what I paid. (Welly & Not bothered either way).
Fall as of now has been bad but many have been able to adjust with a pinch and some compromise but any further house price fall from here on will be a DISASTER.
A person (Specially not knowing swimming) may not drown in five feet water but any further rise even by an inch could be fatal and even people who can swim can hold for certain time before been swept away by tide.
Wait and Watch.
Look at those average values, wow so affordable after the price drops...
I agree that the affordability is still in sci-fi territory.
I am surprised, like a lot... , that there is anybody at all still buying houses for 20 times average salary.
I am not sure how a firefighter, a cop, a nurse, a teacher, a checkout operator, etc can even dream to make a life in those places.
What will be the endgame?
Houses will go back to be affordable or necessary people will abandon hope and sail away?
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%
RBNZ need to keep lifting otherwise risk an imploding NZD and a new inflation surge - Starting to get ugly for property market.
Wow
If we did not treat houses as investment and proper controls are put in place by the governments and councils, then this will never happen. If i buy a house to live and not investment, what benefits do I get? Really nothing. In some places, the buyer only pays the rates on the value of house they paid for the house when they bought it. So that should also be implemented and the let's see if this buying and selling ponzi keeps on going in NZ. There is no benefit governments have given to people to keep living in their house rather than creating the ponzi by selling it to each other at a increased value on every transaction. So a house with no added value increases in value because its on sold.
You realise that the proportion of rates you pay only increase if the value of your house rises more than the average house.
However, the rates do increase because the council wants more money overall every year. And that has been way higher than inflation up until this year. Plus in Ak they continue to increase residential house rates and reduce business rates so that makes the residential increases even higher.
Plus the Councils are borrowing as much as they possibly can. In fact in Ak they have fudged the rules so that they can go even higher (temporarily...) can you believe it! Plus they accepted the advance govt 3 waters bribe. And of course there are new "targeted" rates coming thick and fast.
The Ak Council is completely out of control.
Been thinking about this for a few days. It seems in the 1980s the property ladder made a lot of sense. There were no capital gains to speak of, building equity in your property involved a decent amount of hard work, that's hard work directly contributed to the value of the house and in a few years you could change up, having left the house in better nick than you found it.
But these days it makes no sense. Any renovation you do will easily be eaten up by house price changes. Just for example last year I bid on a house, someone beat me by paying 125k more. They replaced the roof and relisted this year in March, it still hasn't sold. Now they're trying to sell at much less than they paid. If they sell today they'll probably have lost 100k. Point is, it was likely they never planned to rely solely on their home improvement to add value to the house, they were relying on the market rising to provide the profit. In this example they lost that bet badly.
I think that's become widespread, people stopped relying on their own hard work to build equity and started relying on the market ever increasing to do it for them. That's consistent with a ponzi scheme.
Did the property ladder narrative even exist in the 80's? Equity was built by paying off the mortgage which freed up income and price to income was way more sensible.
People used to work to make wealth, not bank on running up big debts and passing them to others to pay.
Did the 'making' wealth narrative exist to the extent it does now? People were able to pay off mortgages quicker despite high interest and with many household's on a single income. The idea was to be freehold to enable savings to build up savings/security for the future. I don't recall it even being called wealth. People lived more moderately/frugally based on the conditions they'd been raised in, and the consumer industry didn't really exist. Most were able to grow a lot of their own fruit and vegetables as well. They knew their neighbours and had a different form of wealth in supporting each other through childcare and sharing and connecting. There wasn't much difference between the 'classes'. An extra property was usually a holiday bach and this was a communal gathering place for family and friends. I was only a child of those times but it does seem to me that with all the so called progress we've eroded real values.
I don't think economists and their theories have ever considered that the 70's and 80's was the 1st creation of 2 income household's. Not saying times were perfect but all in all I'd suggest quality of living was better when not trying to meet a standard of living.
Absolutely agree. Family life is easier when parents aren't under so much financial stress just to get the roof over the head.
Good point about home renovations not being necessary to build equity.
Actually that right there is a great argument for it being a bubble. Equity is built by paying off the mortgage, yet new home buyers must sign up for ever larger mortgages making it more impossible to build equity unless more and more people buy into the market, to shrink their mortgage and build equity not by paying it off, but relatively by house price increases.
This way, the earlier buyers fare much better than the later and it becomes a race to secure your property as soon as you can, the earlier the better. Classically 'buy earlier' means buy in your twenties so you have time to pay off the house but it's been twisted so 'buy earlier' means buy before everyone else buys before you do, don't miss out stocks are limited.
The real fun comes when people recognise that prices are no longer going to go up on their own like they used to, and so must resort to the classic way of building equity, and that is to pay off their mortgage. That's when the panic selling begins, when they get that sense of how over their heads they are. I don't think we're at that point yet. Some people seem to be hoping inflation will solve that issue for them.
Property is cyclical. I have seen property values in Queenstown lakes crash 5 times, and each time it recovers to higher levels than where it fell from.
Time to settle down people and remember what property is used for, your home and holiday house etc.
Property is cyclical. I have seen property values in Queenstown lakes crash 5 times, and each time it recovers to higher levels than where it fell from.
Like the ol' rat poision
> remember what property is used for
I'd say that is precisely the rub. For too many property has been a speculative vehicle, not a home (or even a holiday house).
"Property is cyclical".
True - though in addition to the typical 10 year cycles we're all familiar with, history points to the existence of much larger 50-year economic cycles (e.g. the late 70s inflation shock), and 100 year cycles (e.g. the Great Depression).
Which one is this? I don't know, but writing anything off at this point seems like a bad idea.
Bang on. People talk like crazy here, but the reality is, those are the people who keep missing out and don't have money to buy avo+toast.
-7
Most of Auckland's house prices have declined by 100k or more, except for the Northern (Rodney) and Southern parts of Auckland (Papakura & Franklin). What is this down to....increased development with housing and infrastructure???
Not all properties have fallen in value because not all properties are the same...
Off the top of my head:
1. lower prices to start with for comparable sized homes further out
2. price changes flow from the centre out
3. the ones that went highest first have further to fall and do so sooner.
Our son is starting out on the well trodden home ownership journey in NZ with 50/50 equity. Buy a dunga, do it up, subdivide, build a second house, sell that, sell the original house, increase your equity and buy another dunga with development potential. Eventually there is enough equity to buy a keeper which you own 100% Hopefully with a small or no mortgage. Then what? Start buying rentals? What else is there to invest in in NZ that is minimum to no risk? We seem wedded as a nation to property investment due to the lack of any other suitable investments.
There's nothing worth investing in that is minimum to no risk. Plenty of risky things to invest in, which is where decent rewards are possible.
I certainly wouldn't call leveraged rental property minimum to low risk - quite possible to lose your entire investment in a variety of different ways.
The rules for intensification allow more than one extra, sometimes up to 10. The problem is the build cost. If you can solve that you can solve the affordability issues
It sounds like he might start to incur some capital gains tax there, since he is purchasing each property with the intention of developing it and on-selling. I hope he has budgeted that in.
What a great opportunity to bring in a capital gains tax. NZ badly needs it to re-direct savings into productive investment, not property - if only there was the political gumption to implement it
TOP's land value tax would work even better than a CGT, it's more if NZ voters are willing to vote for a fresh party with new (or technically, rather old) ideas.
The property gains have already occurred. As they going to pay back tax when house prices fall. I know someone who had to sell their house for a 10% loss on what they paid for it in 2021 but they had to sell.This is pulling values down with the higher interest rates.
As they going to pay back tax when house prices fall.
No, doesn't seem necessary.
It is in place. 10 years is effectively a capital gains tax.
Carlos, have a gander at the HPI for Thames Coromandel. Sit down first.
Not an area I would want to live in but great childhood memories of holidays down there in a place with no power or hot water, had to boil it up in a big copper pot over the fire and run to the shower with hot water in a bucket, stick the hose in it and foot pump it to the shower head. Used to wizz up and down the beach on a Massey Ferguson tractor, good times. Thames is now flood and storm prone, lost count of the number of times its been smashed over the years.
Road to Tairua gets closed regularly.
Are you still allowed to drive a tractor like that. These days the greenies would cringe at the thought.
You can ignore the greenies, its the safety Karens that would call the police about no seatbelt, kids riding on the tractor that would be the issue.
Yep Dad was driving and my brother and I were hanging on for dear life, cannot imagine that happening today I actually feel sorry for kids these days, take the phone off them and they complain there is nothing to do.
Oh how sad, no longer able to destroy the environment for fun, boo hoo.
As for safety, back in the day you refer to either had numerous kids so that if one accidentally ended up squished under the tractor tyre, there were still plenty more to carry on, or they were the next generation having fewer kids but not yet caught up with the fact that you haven't any to spare. That is why people are more protective of kids nowadays.
A lag in the price reductions in the Regions.
Following the same patterns are previous downturns in the market
Fake news!! The home I am currently renting was purchased for $383k in 2007. It now has a 'value' of $785k.
Resilient I tell thee!
Love, TTP.
The whole stupid Covid cheap debt speculation surge will be retrenched. And probably then some with the herd in panic, and charging for the gate. How much deeper it will go after that is a "best guess" exercise. Many speculators are banking on National reversing the picture with re-enabling tax rinsing, and flooding the market with cheap workers/renters. Accordingly next years election will be important and this type of thinking/ behaviour underlines why property needs to carry a great share of the tax burden than it does now.
See the TOP tax policy.
Tops tax policy would lead to even greater swings up and down in the property market. When it's going up the increased take home pay will allow even greater borrowing and therefore bidding house prices even higher. The 0.75%pa tax is insignificant when prices are rising 10%pa.
Some Top supporter please refute this..
Just look to mainstream economic analyses for that refutation.
Fantastic this is what young Kiwi,s need and best for the whole nation.
The foundations for NZ going forward is having people living in there own homes.
We need to stop treating a homes as a commodity.
I heard one property expert who was talking about house prices last year on newstalk zb, say that a price fall of 20% or more is considered a crash. In some parts that has occurred. He seemed to think that would never happen and it would mean far bigger economic problems if it did. So did we have a property price bubble? I recall some people disputing it was a bubble.
Yup - It's a bubble. It's not acknowledged in the mainstream as such is there are so many who are vested to say it isn't.
Yup - I remember a few saying last year the the RBNZ would never let property fall by 20% etc as it would wreck the economy etc. They were talking their own book.
If you stand back and look at it from an international perspective or as someone without the vested interest of being a property owner of some kind in NZ, then this is a property crash with no sign of stabilising.
The only way the vested merchants can spin a positive from the current position is saying prices are about to bounce. It's all BS, unless interest rates are about to dive back to 2%.
It's always about the cost of debt, and right now it's finally getting back to more normal levels.
Property crashes happen like this, slow and steady until they finally stablise - and no one knows when this will happen.
But what you can easily calculate without speculation is your cost of debt as you get hammered with a statement on it every month.
They question we need to ask, is why was it allowed to happen. Bubbles only ever end with one outcome.
Time to change immigration policy and open the flood gates for everyone who wants to come to join! Great opportunity to buy a piece of land/property for rich investors who want a piece of this island! Fast track residency for all!
This will get the property market revving again!
-7
and hopefully lower wages and more pressure on our health system
Excellent idea.......you absolute tool.
Had to happen sooner or later, would have been better if it was sooner
Not sure why commentary say Kaikoura dropped, when the numbers show the opposite. Kaikoura is a small market and a few big sales might cause a distortion, but its also not expensive, so a big drop would be unusual right now as international tourism picks up again.
Thanks for spotting the error DIYman. It has now been corrected.
Greg, is the Wellington Region drop of $200,396 also an error? I don't see how that is possible when looking at the figures for all the localities.
Can anyone explain the Wellington Region figure? I don't see how it can be such a large drop (200k) on average when no individual location in the Wellington Region has dropped that much. It seems wrong to me but happy to be enlightened.
No suprise Wellington has suffered the biggest drop. With the permanent change to working from home for many IT workers for three or more days a week coupled with transmission gully improving access people are leaving and moving further out to get more house for their dollar, or the same style house with little mortgage..
The universities bi=modal approach has also seen many students leaving wellington and studying from home causing a glut on the student rental market.
Ouch!!
The slow, but quickly acelerating creep of Agenda 2030 and other political abuses.
Yesterday, some folk were writing about how it was in days gone by, e.g.,the 1980's. After all these years, we tend to overlook the impact of deregulating the banking system - not that I am at all critical of that step. But some may recall how, acting on the constraints imposed by the govt of the day, restrictive banks were as regards the deployment of loan funds. It would not have been possible in those days for so many people to a mass property portfolios - even leaving aside the more egalitarian position with regard to jobs (mop the 'unemployed' up in the Railways, P.O., etc.,) and pay levels.
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