The rate at which housing values are declining sped up in February after relatively modest falls in December and January.
According to the CoreLogic House Price Index, the average value of New Zealand homes was $944,077 at the end of February, down 1.0% from the end of January. That follows relatively minor falls of just 0.2% in January and 0.3% in December.
That means the average NZ dwelling value has now declined by $99,184 (-9.5%) since it peaked at $1,043,261 in March last year.
The biggest decline has occurred in the Wellington Region where the average dwelling value is down $215,130 (-19.1%) from its March peak.
In the Auckland Region the average dwelling value has declined by $185,869 (-12.2%) from its March peak.
The table below shows the average dwelling values in all major urban districts throughout the country at the end of February, and their percentage changes over three and 12 months.
The biggest decline over the three months of summer (December - February) was in Wellington City's western suburbs, where the average dwelling value declined by 6.9%.
The biggest decline in the Auckland region was in Franklin on the city's southern flank where the average value was down 6.4% over summer.
CoreLogic NZ Chief Property Economist Kelvin Davidson said the larger decline in average values in February was unsurprising and continued the weakening trend of the last 12 to 15 months.
"Despite mortgage interest rates being at or close to a peak, the Reserve Bank's grim outlook for inflation and the economy more broadly was always going to weigh further on property values," he said.
"February's 50 basis point hike in the Official Cash Rate is also likely to restrain demand," he said.
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| CoreLogic House Price Index | |||||
| February 2023 | |||||
| Territorial authority | Average current value | 3 month change % | 12 month change % | ||
| Far North | $709,578 | -0.2% | -0.2% | ||
| Whangarei | $779,593 | -2.8% | -6.1% | ||
| Kaipara | $861,796 | 0.6% | -3.5% | ||
| Auckland - Rodney | $1,299,522 | -2.0% | -6.5% | ||
| Rodney - Hibiscus Coast | $1,205,647 | -2.8% | -9.5% | ||
| Rodney - North | $1,378,049 | -1.5% | -4.3% | ||
| Auckland - North Shore | $1,493,845 | -0.8% | -10.6% | ||
| North Shore - Coastal | $1,712,421 | -0.7% | -9.8% | ||
| North Shore - North Harbour | $1,426,441 | -1.9% | -11.6% | ||
| North Shore - Onewa | $1,210,154 | 0.4% | -11.2% | ||
| Auckland - Waitakere | $1,050,831 | -3.0% | -13.3% | ||
| Auckland City | $1,557,495 | -0.8% | -9.5% | ||
| Auckland City - Central | $1,328,642 | 0.7% | -6.2% | ||
| Auckland City - Islands | $1,645,778 | -2.6% | -12.3% | ||
| Auckland City - South | $1,437,940 | 1.8% | -8.6% | ||
| Auckland_City - East | $1,913,517 | -2.9% | -11.1% | ||
| Auckland - Manukau | $1,179,769 | -2.9% | -14.2% | ||
| Manukau - Central | $904,532 | -3.9% | -15.6% | ||
| Manukau - East | $1,476,598 | -1.7% | -14.6% | ||
| Manukau - North West | $1,026,324 | -3.4% | -12.3% | ||
| Auckland - Papakura | $939,655 | -4.7% | -13.2% | ||
| Auckland - Franklin | $914,424 | -6.4% | -13.3% | ||
| Thames Coromandel | $1,176,287 | -4.6% | 1.6% | ||
| Hauraki | $670,231 | 1.8% | -2.8% | ||
| Waikato | $783,547 | 1.2% | -6.2% | ||
| Matamata Piako | $714,633 | -1.8% | -1.3% | ||
| Hamilton | $827,095 | -1.3% | -8.1% | ||
| Hamilton - Central & North West | $775,328 | -0.3% | -7.5% | ||
| Hamilton - North East | $1,014,778 | -2.7% | -9.7% | ||
| Hamilton - South East | $759,023 | -1.8% | -8.7% | ||
| Hamilton - South West | $741,016 | 0.9% | -6.0% | ||
| Waipa | $872,856 | 0.6% | -4.2% | ||
| Otorohanga | $564,534 | -4.9% | -0.7% | ||
| South Waikato | $463,456 | 2.2% | -2.6% | ||
| Waitomo | $376,856 | -6.3% | 5.7% | ||
| Taupo | $837,601 | -4.1% | -0.7% | ||
| Western BOP | $1,010,789 | 2.4% | -5.3% | ||
| Tauranga | $1,070,622 | -0.3% | -9.2% | ||
| Rotorua | $659,351 | -3.2% | -11.0% | ||
| Whakatane | $719,557 | 0.3% | 0.3% | ||
| Kawerau | $436,725 | 6.9% | 6.7% | ||
| Opotiki | $546,869 | -4.5% | 0.2% | ||
| Gisborne | $621,322 | -1.1% | -2.6% | ||
| Wairoa | $412,852 | 2.9% | -7.2% | ||
| Hastings | $791,220 | -2.5% | -12.7% | ||
| Napier | $789,167 | 0.5% | -11.8% | ||
| Central Hawkes Bay | $591,431 | -2.8% | -9.0% | ||
| New Plymouth | $728,120 | -0.8% | 0.3% | ||
| Stratford | $498,206 | 4.5% | 6.4% | ||
| South Taranaki | $439,466 | -1.1% | -0.1% | ||
| Ruapehu | $422,661 | 9.2% | 3.8% | ||
| Whanganui | $503,397 | -2.3% | -10.8% | ||
| Rangitikei | $444,084 | -1.9% | -8.2% | ||
| Manawatu | $609,047 | -4.4% | -12.3% | ||
| Palmerston North | $653,384 | -2.3% | -13.2% | ||
| Tararua | $424,338 | -4.6% | -10.6% | ||
| Horowhenua | $583,873 | -0.2% | -13.1% | ||
| Kapiti Coast | $848,654 | -3.1% | -13.3% | ||
| Porirua | $825,097 | -0.2% | -18.3% | ||
| Upper Hutt | $758,615 | -1.1% | -20.2% | ||
| Hutt | $785,830 | -2.2% | -20.3% | ||
| Wellington City | $1,035,942 | -3.4% | -19.6% | ||
| Wellington - Central & South | $971,385 | -3.0% | -19.0% | ||
| Wellington - East | $1,162,463 | -3.4% | -18.6% | ||
| Wellington - North | $994,200 | -2.3% | -19.7% | ||
| Wellington - West | $1,153,343 | -6.9% | -22.7% | ||
| Masterton | $577,227 | -4.3% | -16.1% | ||
| Carterton | $666,366 | 0.8% | -9.2% | ||
| South Wairarapa | $867,520 | 5.5% | -4.9% | ||
| Tasman | $824,566 | 0.8% | -3.7% | ||
| Nelson | $812,030 | 0.0% | -5.9% | ||
| Marlborough | $717,009 | -0.2% | -1.6% | ||
| Kaikoura | $642,243 | 3.2% | 9.1% | ||
| Buller | $334,392 | 7.4% | 43.3% | ||
| Grey | $355,086 | -0.8% | 8.3% | ||
| Westland | $395,566 | 2.1% | 12.5% | ||
| Hurunui | $600,374 | -4.1% | -2.3% | ||
| Waimakariri | $705,856 | -1.4% | -0.1% | ||
| Christchurch | $746,562 | -1.1% | -1.7% | ||
| Christchurch - Banks Peninsula | $821,773 | 3.1% | 5.7% | ||
| Christchurch - Central & North | $852,017 | -2.1% | -2.7% | ||
| Christchurch - East | $587,759 | 0.6% | 0.7% | ||
| Christchurch - Hills | $1,046,695 | -0.7% | 3.3% | ||
| Christchurch - Southwest | $701,533 | -1.6% | -4.7% | ||
| Selwyn | $827,942 | -0.9% | -4.3% | ||
| Ashburton | $528,873 | -0.1% | 4.6% | ||
| Timaru | $523,383 | 3.0% | 4.7% | ||
| MacKenzie | $719,971 | -1.8% | 6.1% | ||
| Waimate | $427,062 | 0.2% | 8.2% | ||
| Waitaki | $479,715 | -2.8% | -2.5% | ||
| Central Otago | $773,406 | -0.9% | -1.1% | ||
| Queenstown Lakes | $1,668,331 | -1.2% | 10.2% | ||
| Dunedin | $633,333 | -2.2% | -10.5% | ||
| Dunedin - Central & North | $646,945 | -2.5% | -11.9% | ||
| Dunedin - Peninsular & Coastal | $602,759 | -2.4% | -6.0% | ||
| Dunedin - South | $592,433 | -3.1% | -13.0% | ||
| Dunedin - Taieri | $668,581 | -0.9% | -8.3% | ||
| Clutha | $393,575 | 1.0% | -6.3% | ||
| Southland | $482,140 | -2.9% | 1.3% | ||
| Gore | $424,156 | 7.6% | 9.3% | ||
| Invercargill | $464,774 | 1.9% | -3.6% | ||
| Auckland Region | $1,334,472 | -1.8% | -11.0% | ||
| Wellington Region | $913,578 | -2.6% | -19.7% | ||
| Main Urban Areas | $1,048,001 | -1.6% | -11.1% | ||
| All of Aotearoa | $944,077 | -1.5% | -8.9% | ||
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146 Comments
Fantastic long may it continue.
It was only driven by greedy banks and realestate agents to get where it got too.
Good to see their Ponzi falling apart.
Maybe we can get back to the old NZ that wasn't driven by greed.
B&W
I see the banks and real estate agents are your whipping boys.
Can't see them being particularly concerned about - or suffering - from "their ponzi falling apart". The reality is that the real estate agents have banked their commissions, and the banks have considerably larger loan books (and currently at increasing interest rates).
As housing values fall, the only ones who will be really suffering are those who purchased homes over the last couple of years especially FHB. Nothing to be joyous about that . . . yes falling house prices are good news for future FHB.
While the banks and real estate agents were complacent, I suggest you look a little deeper as to why we have the current situation and as to who is negatively affected. Simply, a pretty emotive post really.
"Good to see their Ponzi falling apart"...nothing emotive about that Printer..just fact - deal with it.
Baywatch
No problem dealing with house prices currently falling - RBNZ see further fall and not bottoming out until 2024, and ANZ yesterday in their monthly report also seeing further falls - so yes, I see further contraction of house prices and have said for two years prices were not sustainable.
Interesting, last time I visited this site all the banks were predicting a 10% drop, I thought they would be calling a bottom now that the target is hit. I guess they are just guessing - same as everyone else.
I'm sure HW2 will be along shortly to tell you that the bottom is here and it's all unicorns and rainbows from here on
Spruikers gotta spruik
P8 and Baywatch - the sniping is unbecoming. I find I agree with the crux of both comments. It is good to see the ponzi collapse, but as P8 indicates the REAs have banked their commissions, and the banks are raking it in still. And yes the FHB's from probably the last two or so years will be sweating big time, and I feel some commiserations for them.
But we should look deeper into why the current situation occurred. The REAs and the banks were party to it, but so was the government.
It was very convenient for past governments that much of their richer voter base made "wealth" from the house market appreciating. Sure 7 houses Luxon is in the game but so was 5 houses Helon when she declared her interests back in the day. Its been an all consuming ponzi made even worse by the 1987 share crash and a distrust by many of sharemarket investing in NZ.
The Motto became Safe as Houses.
What started out as a market for shelter morphed into an internationally accessable property investment opportunity for most of the world. Along the way the yields fell further and further, until basically the only logical reason to enter the ponzi was capital gain.
So we must return to what people (FHBers) can afford and investors will only return if they can actually make yield based returns. Its pretty clear none of this can occur at current OCR levels unless a VERY serious further drop takes place in house values.
David Hisco warned us all in 2016, but the party continued....
'Property markets can and do go backwards' | interest.co.nz
I totally agree IT. I have repeatedly argued that the cheaper houses are - everybody wins. I personally am in favour of the 3x median wage multiple area for an average home, but not sure this is realistic.
The problem longer term is;
Those trapped in homes with negitive equity.
The massive wealth disparity between those who have cashed out of the ponzi and those stuck in it.
The loss of retirement quality for those who leveraged up the equity in their own house to become ma pa landlords at the top.
No arguments, but again at least some of those with "negative equity" will have bought against advice. And plenty of people made a lot of money from this ponzi. And when they made money someone else lost out. I don't have a lot of sympathy for those who leveraged out to by rentals except where they are charging affordable rents (are there anyone who does that these days, or are they all 'market' rents?).
You will never see 3x median wage. Possibly 3x median household income of property owning households (exclude median household income of renting households). But, even this will be unlikely given the cost of construction, and higher build standards, insulation levels were raised again this year. A house built 2023. is not your 1980s 80sqm Lockwood or Keith Hay Home.
Murray
Yes, but probably the biggest influence on asset prices has been the RBNZ through OCR and QE although the Government’s fiscal actions also significantly contributed.
As well as banks and REA, vendors and purchases were also party to the situation.
P.S. Not sure how you see my comment as “sniping” especially as your comment then go on to largely support my post. B&W’s comment was emotive and oblivious of the actual cause - my response was appropriate unless you feel comments where “debate is welcomed” goes unchallenged.
I agree buyers are a party to this as well, as they must agree to pay an exorbitant price. Despite the RBNZ supposedly being "independent" I still see them as being part of the "Government", but to be fair I have to admit that Orr did not need to go to the government to seek permission on actions taken by the bank. Or did he....?
Yes it all started with Nationals John Key and all the dirty lauder money they let in from 2010.
Huge price to pay now.
The reality is that the real estate agents have banked their commissions
You sure about that? Most RE agents I know spend like drunken sailors under the guise "You have to be seen to be successful in this game".
I agree. look at the cars most of them drive!
Plus I would imagine that like developers, the only thing they "know" is property. So their whole focus would be on it. Not just professionally but privately as well. So I would imagine that most real estate agents would live in nice houses with very significant mortgages.
My impression is that many real estate agents lack knowledge about property - and have little interest in purchasers or vendors……
Their major focus is the commission - about which they seem particularly well versed.
TTP
My impression TTP is that we have the most distorted, greedy, "government sponsored", bank profit driven, real estate industry in the western world.
We’re not special or unique
https://amp.theguardian.com/money/2023/feb/25/house-prices-falls-uk-us-…
That's very true TTP.. I heard some geezer in Hawkes Bay called Tim, he's one of those!
Yes cheap European cars coming up.
Take your non-gloating, rational response elsewhere. This is interest.co, not NBR.
The bankers are controling the market.
Why is the leadership in this country not calling them out.
They are now just milking us we are there heard.
The real estate agents are the problem in the middle
The leadership of NZ sometimes ends up on the boards of the banks.
Why is the leadership in this country not calling them out.
Because there is no leadership, plain and simple.
It's not about when you purchased - it's how much debt you have
You may have bought 15 years ago, then a rental 3 years ago after listening to all the vested spruikers
Too many were conned into thinking the best way to 'get ahead' was load up on debt, or refinance equity into a rental
Now we have over 100,000 households with more than $1m of debt
They're not worried about banks or RE agents
They just trying to work out how the hell they got into this mess and where they are going to find the equivalent of circa $100k gross income per annum to service their mortgage debt, pay rates, insurance, and essential maintenance etc
True, but you have to use leverage to get ahead, or even save for retirement. If you factor in wage growth over the last 20 years from stats nz then you can project what a basic income will be in another 20 years given the same growth….guess what….nothing else works. KiwiSaver is a joke, real interest rates are negative, and not even dividend paying shares will do the trick.
I would replace "have to", with forced to. Have just doesn't convey the damage done to non property asset owners during the bubble and asset owners with debt now the bust gathers momentum.
Yes, you need leverage to buy your first home, but it’s still understanding the right time to use it.
Right now it’s better to rent than buy - there is no real debate, only myths to bust. Even Fluff says so:
https://www.stuff.co.nz/business/money/300815526/renting-v-owning-your-…
But the bigger myth is that a leveraged property portfolio is the best way for Kiwis to get ahead - it has only worked in an environment of ever-decreasing cost of debt, that’s now being wickedly repriced. And it's going to break many an 'investor'.
The risk-free and guaranteed long-term way to ‘get ahead’ is to live within your means and save a good percentage of your income to pay off your mortgage as fast as possible.
Use a revolving credit facility and pay every spare $ a week you can afford to reduce your mortgage term. Compounded, you can halve your mortgage term to 15 years or less.
At the same time work hard to better your career and climb that ladder instead to improve your personal income and self-confidence.
You will be amazed at how high you can get, and how much you can earn if you double down on what you are good at, rather than speculating in any market you can’t control using debt.
I know many who were only average at school who just applied themselves moderately in an occupation, moved to bigger roles every two or three years and became highly paid Senior Management or CEOs, simply by sticking around long enough.
If we had more of a society that wanted to improve their career daily, rather than learn how to refinance and acquire 'leveraged assets’ we’d be in a lot better shape to weather inevitable economic cycles.
And if KiwiSaver was introduced 20 years earlier (say after the 87 crash) rather than in 2007, we’d have a couple of generations that would have helped build productive industries and a better nest egg for retirement.
Instead, we’ve basically got the illusion of a successful economy that is, in reality, one big construction company with some milk, trees, and tourism tacked on.
Unbelievable amount of sense in one comment, DDDDebt.
The way houses have been 'earning' more than workers in some of the recent years was an unmitigated disaster for NZ in terms of productivity and growth and came at a devastating cost to NZ society.
Or the investors who a) had higher DTIs and b) outnumbered, FHBs for most of the last decade. No pity for them, I'm afraid.
Also, Kelvin Davidson: "Despite mortgage interest rates being at or close to a peak..." - I see the indefinite article there!
The only way you'll remove people's desire to get ahead is by outlawing it.
The ladder this time only has steps leading down.. hopes for prices going up in the near future is visionary
visionary
Delusionary?
visionary = "relating to or having the ability to see visions in a dream or trance"
“The old NZ”
More rosy retrospection. Human nature doesn’t change. The greed has always been evident.
Hey all ye Spruikers, are we there yet? ↘️
They hope so
They all say that yes, we are. 🤣
The cracks are widening
https://businessdesk.co.nz/article/property/investors-queue-up-ahead-of…
Williams Corp has also paused all payments to investors for their 10% p.a. ponzi. All of these companies are living on borrowed time.
Agreed. Will it be the next Bluechip or Money Managers. But step right up and signup for that tax rinse funded rental for your retirement. Next couple of years will determine weather its a retirement fund, or a retirement millstone....
No surprises here, when it is too good to be true, it usually is. Hope not too many got sucked into this marketing campaign.
I remember it was 10% "guaranteed". Unless....?
Unless its not.
From the article there's an investor who invested >500k and <$1m who wanted his money out last year after 8 months of investment. His payment has been delayed while there is a liquidity problem. Understandable as his $ went into bricks and mortar. I suspect he and others will be waiting a long time for a payout, the amount which may not be what he invested.
No doubt he was an astute wealthy investor who only invested say 10% of his total funds at most so can afford to loose a substantial sum.
Would like an accurate, thorough definition on what a 'LIQUIDITY EVENT' is...
It reminds me of how many serious crimes/issues these days are now referred to in the media as an 'INCIDENT'
It's just investor code for settlement on the investment asset. If your investment is in constructing a block of apartments, then the "liquidity event" is when the project finishes and the purchasers pay the money to take possession.
.
I still regularly see Stuff articles with click bait headlines stating huge increases in property prices, but having to push the timeline further and further back to achieve such figures. Desperation is a stinky cologne.
Ironic isn’t it, for a media outlet that has self proclaimed its social consciousness, it sure as heck spruiks the ponzi.
Another virtue signalling fraud of a thing.
Stuff.co.nz is short of money (sold for $1, remember) so they need clicks. They have a team of headline writers separate from the journos whose job is to figure out how to game the headline to get the most eyeballs on an article.
However I am always surprised at how bad the English is and how frequently spelling mistakes get through!
Sometime I have to re-read the headline two or maybe 3 times to attempt to understand what they are getting at. When I finally do, I very often decide not to click on that article anyway.
Stuff is no better, more trustworthy or more reliable a source of information than any random hobby blog or website that exists to make money from selling in-your-face digital advertisements. It's just that Stuff likes to hide behind its "shield of righteousness" claiming to be a bastion of trustworthy and ethical journalism.
Whenever I read stuff, all i see is feminist propoganda with some sport and a small motoring column.
Down down down in Ponzo town...more to come as the mess of speculative debt unfolds. Lower sales price set lower expectations.
430,000 - The number of people behind on their payments at the end of January.
18,400 - The 430,000 figure includes people who are behind in repayments on 18,400 mortgage accounts. That’s up 22% on last year.
https://www.stuff.co.nz/business/money/131360625/by-the-numbers-how-430…
Yeah, and here’s the thing, lots of people hurting, lots of jobs in danger, and not many new businesses starting. People like McClaughlin are as good as any to offer insight into where things are and where they are heading. None of that smart ass gloss that you get from the banks.
Don't worry they will up the minimum wage again to fix this...opps that didn't work , what to do now.
Minimum wage increase = the government effectively milking more tax from businesses to help pay for their hopeless spending record
MSD's annual funding has jumped by $16 billion since Labour took office in 2017 (~41 billion in 2022/23). Interestingly, MSD's spending on superannuation as a % of total funding dropped from 52% to 44% in the same period.
Someone has to pay for this massive welfare expansion, so bracket creep and minimum wage increases are the way to go!
I sincerely disagree that teenagers in a part time job need $22/hr to 'live'. Bring back the youth wage to encourage the youth to be employed and learn the value of money. Currently we are seeing a generation who think life is a breeze as they enter the workforce with more money than they need, and henceforth don't learn the value of hard work and delayed gratification. All of this coupled with the impulsivity and shortening of attention spans that social media have brought upon us, will lead to a further sense of entitlement for the youth of today, as if there wasn;t enough around already.
I earned $14 an hour on my dishwashing first job .circa 1984. You seriously think $22 an hour minimum wage is too much taking into account inflation and current COL?
😅
Yes, and it sounds like you were earning too much washing dishes in 1984 too (Minimum wage was $2.50/hr back then. Even 13 years later in 1997 it was only $7 for adults or $4.20 for youth).
as they enter the workforce with more money than they need
More money than they need for what? To help support their families, as plenty of young people have done over Covid? To save up for their education?
It's a pity we didn't knock Negative Gearing on the head entirely when we had a chance - when % rate were at rock bottom and so the NG claims were minimal. Now we'll face the same dilemma as the Aussies. If we have any sense we'll attack Negative Gearing with gusto and avoid the longer term consequences. Better late than never, and all of that.
Landlord tax breaks to exceed $100b. Landlord tax breaks will be the fastest-growing source of lost revenue over the next four years, as rising interest rates push more real estate speculators to make use of negative gearing. (AFR)
(NB: If being a speculator is a Business, which is the usual rationalisation of NG, then feel free to pay Business Rates of % when doing the financing, and not the Owner Occupier Mortgage Rates)
Values have collapsed yippee
House prices still expensive
Am gonna wait for collapse 2.0, 3.0, 4.0
Strategic!
Parasitic, more like. The lives of everyday New Zealanders facing financial ruin as a result of this are just collateral damage to some.
We can all agree that house prices are still too high relative to incomes. But don't flog yourself into thinking that it won't come with a real cost for families just trying to keep a roof over their head.
HW2 .... if you were one of those "astute" property investors, we heard so much about in the 2010's, why would you worry if house prices kept falling ? ...you would of bought well built properties in good locations, with well above average rents, while always having a steady stream of available tenants .....so why your concerns ?
Or perhaps one has borrowed way too much, on those damp, crappy houses in not so good areas ? .....as really you should be salivating at the prospect of prices falling (with rents currently good vs people's income) as you will be able to pick up a bargain, with all that capital you have accumulated over the years ?
Perhaps you can enlighten us ......
by HW2 | 1st Mar 23, 8:30am; Values have collapsed yippee, House prices still expensive, Am gonna wait for collapse 2.0, 3.0, 4.0 - Strategic! -
Pointless post - HW2 has clearly capitulated.
Are you sensing that I have come over to the dark side
Yes - you're among friends who see the world for what it is. You can now remove your sunglasses.
Many do not like the reality of the red pill, they want to take the blue pill and return to January 2020
Ha-ha :) yeah true that!
It was a price bubble. And bubbles pop.
There is potential yet for them to go a long way down from here.
Absolutely. Without the economic fundamentals to support high housing costs, the pain seems inevitable. Our productivity now lags behind Lithuania and Poland, current account deficit at its widest ever and our global competitiveness continues to slide.
Consider this a nudge (or a push off a cliff) for a nation that forgot houses are meant to be places where people take shelter in after a long day of productive work (or work from home).
This will continue while we have a tax base focussed purely on taxing productivity and ignoring land/housing speculation
Truth be told , what we've just witnessed wasnt any ordinary price bubble : it was the greatest of all time mother of all housing bubbles ...
... bubbles come & go ... but this one was a doozy ... a speculative mania to top them all ... a frenzy of unprecedented greed & avarice ...
Perhaps we'll all sober up soon , and get back to remembering what houses actually are for ; places where friends & families live ...
I mentioned this in an earlier comment but I hear from an RA agent I know that it is very uneven at the moment. Buyer and seller expectations can vary very widely but an increasing number are converging. Surprisingly it appears that one figure used to navigate, for setting both buyer and seller expectations, are the 2017 CVs. I have validated this by looking at several sales in the areas I'm interested in over the last 4 months and there are a number of sales occurring on or below the 2017 figure. Although some properties are definitely outliers on both ends of that. Some high end houses still selling above CV but also some very good houses falling dramatically (one I can think of immediately had a CV of 2.65 and sold for 1.7 in January of this year).
That makes a little sense: prices largely stagnated from 2017 to 2019. It took Orr dropping the OCR in August 2019 to get them moving again, then Covid added the froth on top.
However, even in 2017 the OCR at 1.75% was half the 3.5% of 2015. I would surmise suggesting only reverting to 2017 prices is optimistic - as other have noted elsewhere, it is only the cashed up, high income FHBs purchasing atm. There's only a finite supply of those, so expect to see prices continue to fall as the average income of those enter the market slides down towards your average income family.
But wages are up a lot since then.
House prices cant rise if inflation and interest rates are high.
Ahem. Wrong!
Outlying cases suggest that is correct. However what we are seeing in the main in this high interest, high inflation, environment, is that house prices are falling. There is no one rule for all cases.
You're not a child of the seventies or eighties then
Auckland prices floated up 15 times original price over as many years, in fits and starts.
or maybe it was by 14 times who knows.... Easter is coming up, you can crucify me then
And interest rates were up to 22% in this period after a extended period of wage and price spiral. If we don't get interest rates ahead of inflation we have a serious risk of the same thing happening.
Did not match the returns available to someone who had a twenty percent deposit though did it.
20 percent equity on 9k $1800 floated up to almost 100 percent the 1987 value of 130k
Do the sums and put me right
Which 70s are you talking about? In real terms house prices in Auckland dropped 40% through the 70's and didn't recover to the peak until about 1994...https://www.greaterauckland.org.nz/2016/07/11/remember-the-last-time-house-prices-crashed-40/
You sound like someone who was a regular but no longer posting here.
whereas you sound increasingly desperate & unhinged
Previously quoted as "garden variety landlord"
Can't win em all
Bugger it. I've bought and sold. All unconditional. Swapping a starter home for a family home big enough for a family for years to come, in a better area, close to better schools.
Realistically we are going to have some frugal years ahead of us. But we have a plan and a goal that we can work towards. No one can take the amenities away from us where we've bought and it's time to put our heads down for a few years and get what needs to be done out of the way.
Glad to hear you and your family have made a positive future-proofed move! 🙂
You can either grab life by the short and curlies and get on with it or be a passenger while other people make off with the loot at your expense and look to keep stacking the deck in their favour. By the time the ball is back in your court, you might have missed out on something important, forever.
~Edited for a less graphic turn of phrase.
Impressive use of idioms there, I wonder if Chat GPT could figure that one out...
I hope it all works out well.
In this environment of crashing property prices, others should be careful that they don't overreach due to FOMO and buy a dud.
**** Edited to remove childish elements ****
These particular comments are starting to get a bit childish. Mind your manners please, I don't want to have to start deleting comments.
GV
Happy for you that you are comfortable with your decision.
RBNZ (and bank economists) view that house prices are likely to fall and interest rates rise in the short term (a year or slightly more).
However your comment clearly indicates that you see both a long term view and that a home being more than simply being a financial asset.
Your only concern is mortgage interest rises in the short term.
Congratulations.
Likewise we upgraded in late 2021 to our forever family home. It would have made financial sense to stay where we were with a mortgage 1 x household income on a poxy 80sqm starter home, but there's more to life than chasing dollars or generating an investment prospectus for every decision you make.
Kids don't care if you're making extra coin when you cram them and their toys into a single bedroom, or spend an hour a day driving them to and from school.
This won't be forever for us, but it will be a leg-up and gives us more flexibility for things like growing our family and being able to make use of community facility with fewer safety concerns. We could have extended and gone for 'forever' but the servicing costs I'd be incurring to make that happen would be at the direct expense of being able to get ahead for the equivalent amount, so we have to compromise a little on some things we wanted.
Hopefully someone is supplying new builds with six car garages into the market down the line when it's time to move on.
We have gone conditional on our place. We are also of the same opinion and see it as a good opportunity to get a better house in a nicer area at a better cost delta.
When you have kids and a tiny backyard, you do view things and $'s a little differently.
Well done
nothing to worry about we have Robertson and Orr in charge of the economy.
Barfoot said the first three months are make or breal for the Auckland real estate industry, its break time. I can see a lot of redundancies coming up. Revenues will not be covering Expenses for many license holders.
Its ok. The license holders have banked in big time in the last ten years, they will support their staff through this tinsy wee gully, they will support their suppliers, they will keep up their flash car payments, they will support their tax rinse portfolios as they increasingly have to pay tax on the rental income and not put the rent up.
Yeah right...
Redundancies? Re agents are commission based. If you're not making money you're likely to quit.
HELLO
IF THERE ARE TWO OTHER COLUMNS 'CHANGE FROM PEAK NOV 21' AND ALSO SAY 'DEC 2019' WILL HELP US TO GET BETTER COMPARATIVE PICTURE.
Inside voices please.
While house values are falling its not its ticket price that measures the total cost of purchase. A $1million property at 3% interest needs to fall to about $740k at 6 % for roughly the same total cost. High inflation also helps to ease the payment load over time and it reduces the relative value of the loan. There comes a point when a purchase looks a better long term proposition compared to renting, particularly if rents are rising as they tend to do in a high inflation environment. At that point the values will stop falling as buyers start to see the opportunity. Its my opinion its better to buy in a high interest rate / high inflation scenario as the ticket price is relatively lower, the deposit is lower, inflation eats a bigger portion of your loan early on and inflation reduces the relative size of your payments as time goes by. Picking the turning point is critical to maximise the benefit but rent is lost money so the longer you wait the more you stand to lose. A $740k property at 20 % deposit and 6 % interest will cost ~ $1.2 million total over the life of the loan. Less 25 years rent you didn't pay (say $750k) means that house only really cost you $450k. Those with big mortgages at higher interest rates just need to hang in there and keep building equity.
inflation eats a bigger portion of your loan early on and inflation reduces the relative size of your payments as time goes by.
This is wrong headed. Inflation does not 'eat' your loan. That is what you have been told and it is a con. If your income is rising at a rate equal to greater than inflation, you may have an argument. But there is scant evidence of this. Trust me. It is not the 1970s.
Can you please explain how inflation doesn't 'eat' your mortgage? As inflation rises the real value of your loan decreases. For example, a $1 million dollar loan today would be worth roughly $970,000 in 3 years with 8% annual inflation with no extra repayments made. This then compounds significantly over time (for example a 25 year mortgage) depending on inflation levels. If that can't be described as 'eating' or 'eroding' the value of your mortgage I don't know what can.
It doesn't matter what CPI does, it matters what your income does. If your income rises inline with CPI then your math is correct.
J.C. is implying that incomes are rising less than CPI. I mostly disagree with that, except for a few occupations.
I explained quite clearly. Income growth has been lagging CPI (which is only a construct) and asset price growth over the long term. What does that mean? It means your ability to generate income to repay is constrained.
Even if you do not accept what I say, your thinking is that money supply expansion reduces the debt burden. That only works in a closed box world. You're pissing in the wind if you believe inflation eats your debt.
Perhaps income growth is lagging CPI but it certainly is still growing thus giving the effect of inflation devaluing or 'eating' debt. Do you inversely believe that inflation is boosting the value of your savings? If so, it is you who is pissing into the wind.
Strawman. I am 100% correct. F'more, if you really believe money supply expansion extinguishes debt, then obviously price deterioration should not be this dire. Global debt to GDP is now approx 4x. Where is this income growth coming from?
Since about 2000 wages and salaries in NZ have roughly doubled (wage inflation) https://www.stats.govt.nz/information-releases/labour-market-statistics… . This in a generally falling interest environment rate too. Wage growth generally track CPI in NZ and can be higher or lower for some periods but recently its lower. Short term aberration ? Certainly has happened before. The data shows the value of a loan has reduced by approximately 1/2 over the last 20 years for salary and wage earners in NZ. Will it continue? I don't know, but historically wages have grown by about 1 - 6 % per year with the biggest growth last year to June 22 of 6.8 %.
Since about 2000 wages and salaries in NZ have roughly doubled (wage inflation) https://www.stats.govt.nz/information-releases/labour-market-statistics… . This in a generally falling interest environment rate too. Wage growth generally track CPI in NZ and can be higher or lower for some periods but recently its lower. Short term aberration ?
The CPI is not 'inflation'. Until we get past that, there is little to be gained arguing the point.
How is that relevant? The point is that wage growth is positive so an unaltered home loan becomes smaller relative to income over time.
How is that relevant? The point is that wage growth is positive so an unaltered home loan becomes smaller relative to income over time.
All things remaining equal. Which is Fantasy Land. "Inflation" is growing at 4% pa is meaningless if income growth is lower and actual h'hold costs are greater. People tend to believe that everything is impacted by constants.
As others have stated, inflation doesn't reduce your mortgage because we don't pay down mortgage debt with a basket of CPI goods.
It may make your debt smaller, relative to a block of cheese, but that matters not if your disposable income isn't rising at a rate above inflation.
Inflation is actually eating the money people are trying to live off after the tax and mortgage is paid..
Even if you're renting that rent is probably around the interest you're going to pay anyways. Waiting means you'll have alot less principal and interest to pay later.
Yes, in a falling market it pays to wait and save your would be principal payments and keep paying the rent as long as possible. But at some point the proposition to the buyer turns in their favour. If it didn't then people would continue to wait until the price drops to zero. But how low is low enough. Your not competing with sellers demands (price) your competing against what others are prepared to accept as a good deal and their ability to pay it.
At the moment gross rental yields are something like 1% - 1.5% below term deposit rates, which should take most investors out of the second hand property market. FHB are constrained by affordability with rising interest rates, and probably a degree of waiting on the sidelines as their saved deposits are getting them farther each month as prices fall. Owner-occupiers are least affected. When yields look favourable again, investors will come back to the market and price falls will slow or stop. The question becomes, what does a favourable yield look like? What compensation above a risk-free return do you want to receive for the risk that the value of your asset continues to decline? Or, are you confident that there will be a rebound, and accept a lower yield? It's going to be interesting to see what the herd thinks.
Reasonable yield. Surely 4-5% above deposit rates to cover vacancy, rates, maintenance, and now tax. In the 80s it was a 10% return.
So if we say 9.50% is an acceptable yield to you, then compared with yields recently around 3.8% that would imply a 60% fall in price with no changes to rents in order to get to that yield. If rents increase then that fall is less large.
If I were to take a stab at it, I would say a 5Y TD is likely to reach a high water mark of just shy of 7% by the end of this year, and maybe decline to 6.5% end of next year. I would think that investors would be motivated by a premium on the 5Y TD of 0.50% to 1.5%, but that probably depends on whether interest deductibility is reinstated. Therefore conservatively if yields got to 7.5% by the end of the year, or 7% by the end of next, I think that would be where the price stops falling. I will also assume rents increase 5% each year to soften the impact of yield increase on house prices. That would mean a fall of about 39% from peak to end of next year, or a fall of 32% from peak to end of year after.
In Dec 1986 TD's peaked at 16.32 %, Yields were about 8 - 9 % from memory. Inflation peaked at 18 % that same year. Mortgage 22.5%. I was getting typical 10 - 15 % pay rise each year. One year (1989) with a promotion I got 35% and a company car. Redundant in 91.
I don't think its just about yield. Value movements have to be included as well. Long term average YoY price gain has been about 5 % since 1992. There are periods of negative growth but on the whole its been positive. https://www.globalpropertyguide.com/Pacific/New-Zealand/Home-Price-Tren… scroll down to the second graph for YoY movements. Bad periods were post 2000, 2008, 2011 and now. Also its about equity and interest on the balance.
Indeed. Equity which many of the interest only tax rinse brigade are in short supply. Add in fast declining equity in a ever decreasing market you have todays mess.
To all the gloaters, unwinding property ponzis are not a good thing, despite lower prices. You people have not been studying diligently. Burst bubbles affect 'everyone', not just those who actively participate. You don't understand the damage caused by the wealth effect. I do. At least I think I do.
To the puppets (you know who you are), chin up. But I'm afraid to say that any expectation of things turning on a dime is fanciful. You will read media telling you how banks are in great shape but that's like driving from the rear view mirror in no doubt the biggest bubble activity in history. I'm afraid you have been sold on the ol' NZ exceptionalism. Unsophisticated but understandable. Do I know when the pain will stop? No I don't. I know certain events like tradeable inflation and the cyclones haven't helped. But the ol' 'couldn't see it coming' defense mechanism is fruitless. I have the feeling we're heading well into the denial stage.
Powerdown and Scarfie (please let him back in...) would add to that,
Most of our infrastructure was designed and built back when energy costs where a lot lower and our debt service costs more affordable. We are probably at the point where we cannot effectively maintain what we already have. It feels that way in health, roading, public transport, and for much of NZ 3 waters.
We head into a deep credit crunch induced recession, with crumbling infrastructure and services.
It feels as if we are at war politically, the poor and working class (who pay very little tax as a % of earnings) vs the middle class (who pay the most tax as a % of earnings). the super rich pay the most tax in $$ but not as a %of earnings (thats left to middle class paye suckers)
The rich only have one vote and there is waht 1-2% so not really game changing.
Many working class voted Labour last election, their vote this time will steer NZ, will they vote for more tax to fix things or hollow promises ?
Labour is too scared of their own shadow to suggest higher taxes, but its whats needed. Especially since they just blew 14bil on what? hard to think they wont blow more tax on more pr and comms.
The tax system has got to get fairer IMHO, and the Gouvernments of the day have to STOP WASTING MONEY.
The rich only have one vote and there is waht 1-2% so not really game changing.
Except it's not "one person, one vote" anymore. It's "one dollar, one vote".
The middle class get to choose which colour they like best every 4 years, but the direction government takes is determined by money. That 1-2% hold more sway over things than the middle class do.
https://www.nzherald.co.nz/nz/politics/national-raises-unprecedented-23…
NZ has doubled down on serfdom to keep on giving forever and a day. Anything else is horse trading. And I don't believe it can last without serious socio-economic decay (which is baked in).
Wow, a few really good posts today :)
Whats missing is ACCOUNTABILITY.
The RBNZ oversaw the train wreck that is the housing market. And not happy with over seeing house prices of $1m plus, now think the “solution” is ordinary people paying 6 - 7% on their over sized mortgages?
When will they be sacked for their gross incompetence?
Contender for ‘comment of the year’. Pinpoints the fallacy of both sides of the spectrum.
All those recently flooded will be heartened to see Westport prices have bucked the national trend and have gone up 43% in the last 12 months. Last I heard they hadn't made any progress on stopbanks to prevent the next flood. Weird.
Humans are funny and flawed beings.
I bet you a large chunk of the country will have consigned the floods to deep storage within their memory banks, within 2-3 years.
All the nonsense will start all over again. Rinse and repeat.
One of the 4 houses in Westport had their deck converted into a kitchen.
Westport was late to the boom and will be late to the bust.
Visiting NZ after 6 years away in the US I’m flabbergasted at the insane house prices here. No matter what metric I use they are grossly overvalued unless of course NZ wants to be the new Singapore or Hong Kong in the South Pacific, then they are a bargain.
I remember a time when many companies and government departments had company housing to attract and retain employees.
It’s a sign of our success apparently
How interesting that no one points finger at the Federal Reserve of the US.
Aren't they the prime culprit?
The article by Brian Easton on this site was enlightened. I had always wondered what happened in 2003 when house prices really took off. Apparently it was G W Bush realising a tonne of US dollars into the system.
For years renters and first home buyers (me included), watched as house prices spiralled up and up and got further out of reach. Finally, they now have all the time in the world. I’m now 33 and own a house in Petone, Lower Hutt with my husband, bought in 2019 for 700k which I thought was expensive at the time... i would have kept waiting but we irresponsibly decided get a dog, which lo and behold basically forced us to buy a house as dog friendly rentals were non existent. We had saved a good deposit up in KiwiSaver and had decent savings by the time we met so we had the option but it’s taken everything we have. Growing up I never imagined owning a house would be so hard (in fact one of the most difficult things you can choose to do in your adult life) - I thought it was just something everyone did. Most of our friends in their early 20s and 30s are still flatting but wanting to buy. The only others I know who own have had parental help.
What’s tragic is that my mum (who was a cleaner), and dad who worked in a glass factory as a machinist - were able to raise a family on one income and buy in Auckland, as well as pay off a house in less than ten years. They paid 60k for their property which was recently valued at 2 mil. Although I’m glad they could do it, it’s sad to see someone in a similar situation to them wouldn’t have a hope in hell of home ownership in today’s reality. You both need to be on six figures to comfortably service a ‘modest’ mortgage and have any kind of fun in your life (e.g. holidays).
Also very long time lurker (and appreciator of interest.co.nz and the considered thoughtful members (who have to be some of the wittiest, most astute people in NZ). Thanks for the many hours scrolling.
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