More people are selling their residential properties at a loss and the size of the capital gains being made by those who sell at a profit is declining, according to property data company CoreLogic's quarterly Pain and Gain Report.
Of all the residential properties sold throughout New Zealand in the second quarter of this year, 6.9% were sold for less than they had been purchased for, leaving their vendors with a loss.
That was up from 5.9% making a loss in the first quarter of this year.
The percentage of properties being sold at a loss has been steadily increasing since the fourth quarter (Q4) of 2021, when just 0.7% of properties were sold at a loss.
In the main centres the proportion of properties being sold at a loss is greatest in Auckland at 11.2% and Hamilton 10.7%, followed by Dunedin 5.9%, Wellington 5.4%, Tauranga 4.7% and Christchurch 4.9%.
The size of the losses in the main centres were also bigger in Auckland where the median loss on sales in the second quarter of this year was $95,000, followed by Wellington $82,000, Hamilton $52,500, Christchurch $52,000, Dunedin $48,000 and Tauranga $1499.
The amount of pain suffered by the vendors who sold at a loss would be magnified once additional selling costs such as real estate agents' commission and legal fees are taken into account.
Of course if 6.9% of the residential properties sold in the second quarter of this year were sold at loss, that left 93.1% that were sold for more than their purchase price, giving their vendors a capital gain.
However that was down from the peak of 99.3% of sales that made a capital gain for their vendors in Q4 2021.
Timing key
Looking the national figures, the most obvious determinant of whether a property sold for a gain or a loss was when it was purchased.
The median length of ownership for properties resold for more than their purchase price was 8.4 years, while the median length of ownership for those that sold at a loss was just 1.8 years.
"The large majority of property resellers in the second quarter of 2023 still got a price higher than what they originally paid, reflecting that most people have held their property for several years," CoreLogic NZ Chief Property Economist Kelvin Davidson said.
"What this report shows is the frequency of those gains has declined further, or in other words there's been a rise in the proportion of sellers seeing pain, especially if they've only owned the property for a short period of time."
"It's not surprising to see the frequency of resale gains decline further as national average property values are 13% below their peak and are now back down to mid-2021 levels," Davidson said.
"Anybody who bought a year or two ago and has sold more recently has seen market conditions change significantly."
"Presumably, many of these vendors had intended to hold for longer, but perhaps due to changed personal circumstances, they had to sell," said Davidson.
Davidson said the decline in the share of property resales being made for a profit and the fall in the size of those profits, was widespread across owner classification, property type and geography.
The median capital gain made by the vendors who sold at a profit in the second quarter of this year was $290,000, down from the peak of $440,000 in Q4 2021.
Davidson said he expected the proportion of sales being made at a loss to keep increasing for the next few quarters.
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171 Comments
Yippee.. the news gets better... we have been warning the day of reckoning is approaching.. but many greedy folks jumped in with the faith that houses are made of gold.. the chicken is coming home to roost
Whoever did what, did it because that's what they were encouraged to do by successive, ignorant Governments, and a distorted taxation and banking system. I don't blame the individuals, but the system that we set up.
If we don't continue the Change now, then when? What's coming is going to hurt a lot of people who don't deserve it. But let's hope we learn from this and don't do it again. Do it once; do it right. Over to you, Mr Orr, because Mr Luxon wants to go back to what caused all of this, and I'm not sure Mr Hipkins has it in him to make the necessary Changes.
If we don't continue the Change now, then when?
You make it sound like this is somehow a planned exercise in changing the nature of the housing market, when house prices are just collateral damage to central banks' attempts to curb inflation.
There's nothing to suggest central authorities are viewing what's going on now to be more of a blip. They want business as usual, not change.
As it stands, no political party is promoting to fix housing supply in any meaningful way.
Exactly and thank goodness. House prices will reach equilibrium and then inflate more or less in line with inflation. Houses are very inflation proof and have added value potential like few other investments. Of course they have some negatives too but the fundamentals will not change.
Been smoking the green shoots Zachary?
Have you got a counter argument? Do you have anything sensible to contribute?
There will be people making purchases this week who will not regret their decision.
purchased a rather tired and cosmetically shabby 3 bed in Waverly -- large subdividable section for 280K not a misprint -- rv 320 and one roof middle estimate 375 K -- after marraige split need a place to live not regretting it one little bit - not likely too either - some very nice options appearing if you want ot actually LIVE in a house
I keep watching the market in Dunedin. Think I'll buy next winter, my rent is significantly cheaper than owning and my deposit money is earning interest. It'd be nice to have security and freedom of ownership but at present the numbers don't add up. I've been watching two years and the quality of house in my price range just keeps improving 😁
tronic, a good sensible take on the market. Your comment reflects reality, wisdom and patience. It's unlikely you'll be disappointed.
Personally wouldn't wait for a whole year but that's up to you. The next pivotal event is the election here in October, there are a whole lot of additional unknowns after that if National/ACT get in.
Zwifter, the election could make things even worse - LOL! Nah, seriously, not trying to be a smart-arse but there's no shortage of unknowns and patience is key here. FOMO is for people driven by emotion. There is no hurry here.
Retired-Poppy just recently you referred to an informed commentator as a "smart-arse" and again here in reference to yourself. Its quite obviously, the use of emotive language, you're not fooling anyone.
Flying High, you're not making any sense. I suggest you Read comments more carefully before commenting and try not to over think simple back and forth comments and discussions which, in this instance, was exactly that.
Retired-Poppy just recently you referred to an informed commentator as a "smart-arse". And again here you used the term in reference to yourself. Its quite obviously an emotive label. You're not fooling anyone with your "dont be emotive" line
Edited to shorter sentences. To help your comprehension
by Flying high | 15th Jun 21, 11:22am - "My son aged 21 just bought first home. I was nearly ten years older than that when I bought my first home because I had more time to wait as prices were not going ballistic. A lot of demand is self created by FOMO"
DP
According to Mr A "For the first time since November 2021 FOMO exceeds FOOP, that is, more agents say buyers are worried about missing out than say they are worried about making a purchase then watching prices fall away."
My point was actually about your combat with, and labelling of other commentators and showing how you are guilty of the same behaviour.
Haere Ra
by Flying high | 15th Jun 21, 10:19am - We have bought residential properties but always just exclusive 'investor only' category.
Leverage alert!
There are quality homes in your price range, so I wouldn't wait another year, if I were you. I would agree with Zwifter's comment with regard to what may happen come October.
Are you both predicting prices will lift off if National wins yes/no?
Is that a rhetorical question ? House prices are going to rise under National but not significantly. Point is I don't see the continued falls, certainly not ones that are significant. There will be a bit of bouncing along the bottom until the election, people need certainty.
What is so uncertain now ? Landlords tax position ? Nationals tax back pedaling promises only benefit a small group of cloud yellers.
Nationals tax back pedaling promises only benefit a small group of cloud yellers
Only small group?? Treasury forecast it to be ~$500million tax deduction next year
Not that big then, less than .5% of total tax take. For all the people it doesn't affect it is meaningless.
They haven't even put a timeframe on when they will repeal them. Dreaming if you're relying on National getting in to pump property prices again. The credit has dried up, globally. FA National can do about it.
You cannot sit back and just ignore the market for 12 months then decide to suddenly buy a house. You need to be actively looking so you know a good deal when it finally comes up. Took me 12 months of actively seeking before I bought my current place. Its not like yeah I'm going to buy a house and 2 weeks later you find one. Reality is that buying a house is a minefield, its not really just all about the price at the end of the day. Its also better to buy in a depressed market, the second it turns the vendors attitude changes, if the longer they wait the higher the price you are chasing your tail.
Zwifter, I'm not suggesting FHB's ignore the market at all, in fact quite the opposite. FHB's should take time to study the housing market, comprehend the risks involved and the risks others have taken before them and the hefty price for poor advice they are suffering.
You make the process of blowing 10s of thousands more in principle and interest payments than one needs to sound so frighteningly logical and imminently profitable!
Again, timing is everything, no need for emotionally driven FOMO.
No point just studying the numbers on here, you need to physically visit open homes, its a lot of time and effort filled with a lot of frustration. Seem to be better at it these days although if you have the money for what it is you are happy to buy then its more fun.
House prices should track with GDP rather than inflation. In a stagflation environment, don't expect houses to keep up with inflation.
The people who have managed to sell property over last year have done well as next part of the crash will hit housing market at a accelerating pace, because inflation is well above target 2% this will make sure rates stay around this level for longer plus NZD still low putting pressure on inflation, also the fact that house prices are still well overvalued compared to incomes.
I see Westpac just updated their forecasts and don't see the OCR below 5% until June 2025.
"Our Economic Overview focuses on rebalancing and and how quickly it will occur. The economy remains overstretched and inflation far too high. Twin deficits are in play raising clear risks. The bias is towards slow adjustment, sticky inflation and higher interest rates"
https://twitter.com/kellyenz/status/1689351469936316416?s=20
It’s going to depend on how hard the construction sector slumps. If it slumps as much as I expect over the next 6 months, the OCR will be sub-5% by mid 2024.
If it is only a moderate slump then Westpac could well be right.
Construction is slumping but the government seem to have many projects on the boil and I would not be surprised if they start putting more money into building cheap rentals as housing affordability crisis is now more important. They will not lower rates until inflation is under control, so maybe end of next year just depends on NZD which is under huge pressure at the moment.
Immigration seems the economic plan for both parties.. likely without flooding the market with more houses.
7houseluxon knows keeping demand greater than supply will maintain the value and rental income for his portfolio during the dip... the time to build and buy is the start of next next upward boom...
Literally selling at a loss, if they're inflation proof they should be selling for at least 6% gain in the past year. How is that inflation proof?
It's the old story of "long term investment". I did write, "House prices will reach equilibrium and then inflate more or less in line with inflation".
Unlikely to be the same "type" of investment that is has been. Unless we can ratchet up the interest rates to 20% + and then send the female workforce home to look after the kids for a while.
The "investment" has stacked up because we've stretched things out, by lowering rates/extending loan terms and sending the stay at home wife to work full time.
The gnats said they will be incentivising councils to issue consents. They should remember that if supply increases, that we need a workforce to do the work.
If you made dwellings that are 80m2 you can build more of them with the same workforce.
Stop right there with the nonsense painter, the well off deserve their lavish homes and mcmansion baches. The rest can dream and not stop aspiring to an overly large 4 bedroom 3 bathrm home on 400 sqm, housing two adults
You think building modest houses rather than giant Mcmansions could help with our housing crisis, your crazy painter (sarc)
"when house prices are just collateral damage to central banks' attempts to curb inflation"
I think you're a bit confused. House prices in New Zealand are massively overpriced. Collateral damage implies that house prices are somehow being damaged by central banks attempt to curb inflation. They aren't. Their true value is slowly being revealed. This is a good thing. The damage was when banks were lending obscene amounts of money to people in New Zealand to outbid each other when as a nation we did not have this sort of money to be throwing around.
Collateral damage implies that house prices are somehow being damaged by central banks attempt to curb inflation. They aren't.
They definitely are.
Their true value is slowly being revealed.
What is true value? I know better than most on here what it costs to produce a building. That's not going to decrease in a meaningful way anytime soon. At best, there will just be less new building.
Then you'll know better than most that buildings are only worth what people are able to pay.
And that there's a deficit of houses to household formation, i.e. competition that leaves many in the cold, or 4 to a room.
It only works if there's a surplus of houses.
…in which case new building is about to stop, construction companies will go under, development credit dries up, labour goes offshore or into different trades, and we recreate the conditions of 2008-2012 that led to the supply imbalances that created this mess.
This mess was created long before 2008.
You only know what it costs to build a house in a restrictive system, not what is costs to build a house in less restrictive system, which other jurisdictions have, and NZ used to have.
If you split house/land costs into value added and non-valued added costs then it is easy to see NZ houses are still overvalued by at least 25 to 35%.
If no changes are made then after the present crash, then prices will rise again, but whether that is slowly or fast depends on many factors.
However if the right changes are made, then prices should not rise anymore than the rate of general inflation, ie no speculative increases. And thus over time most of the non-value added costs would disappear resulting in lower median multiple price ratios.
If you drop OCR to 0% and mortgage rates to 2% your "true value" claim will be gone overnight. House prices are linked to mortgage rates, higher rates mean lower house prices. RBNZ increasing OCR to fight inflation = increased mortgage rates = decrease in house prices.
While the prices are linked to purchase power, they're also linked to the how much pain the buyer is willing to endure
We are all assuming buyers will take on all the money they can to throw at a house, and that's the cap
It may well be true in NZ, but only because it was such a distorted market. Shatter the sentiment and buyers may become more cautious in leveraging themselves up to their necks
Hasn't happened, by far, but give it a couple more years of mass media "green shoots coming, we're currently in a bottom" paired with real life reversal to sane income multiples, and you'll see rationality magically reappearing. It's already being dubbed FOOP, so an inkling of that is already here
Amen, Agnostium
TOP!
Lets all vote TOP, just this time. Are you really going to vote for the other %^77*7s in wellington?
How to fix the world in one quick move....
Delete the word CHANGE and replade it with IMPROVE.
"Change" is meaningless. It is neither quantifiable or acçountable
it lets everbody off the hook.
people who use the word change are wastrel's
Bold, CAPITAL and Italic, impressive MF
Or curb fundamental demand from immigration.
Very true. Govt policies and bank lending caused this bubble.
But is it any affordable after all these falls ? No.
How far it has to fall ? I guess it has not even reached pre pandemic level.
Luxons housing policies will help landlords for sure. But I just hope banks change lending criteria so that the bubble doesn't become bigger
3 years ago, RBNZ published a document where it says '40% of mortgages are held by 8% people in NZ. And 80% of these people have in interest only mortgage.' I can't find the documents or the latest stats around this. Any idea?
Banks have been aggressively phasing out interest only mortgages for the past decade, I'd wager the figure is closer to 5% than 80%.
According to RBNZ C32 (data starts in July 2015), 40% of new lending by value was interest only. This tapered down to 24% in 2020. Currently tracking below 20% in 2023.
As a share of existing lending i.e. existing lending on interest only vs total existing lending, this was above 20% until December 2021.
There is less incentive for an interest only loan now as you can't write it off as a loss. Until National are re-elected that is...
I'd wager the figure is closer to 5% than 80%
I was asking about this document from RBNZ.
https://www.stuff.co.nz/business/money/104323467/reserve-bank-says-8-pe…
RBNZ doesn't have this stat in their website anymore
National's policies will just help landlords hold on for longer before capitulating. Unless these policies are going to stop global inflation caused by an excess of cheap debt.
Its more like a turkey to thanksgiving.
This is a bit spirious, but 6.9% is not entirely accurate because what you pay for your house is a lot more than the buy price if you consider interest paid.
100%
Yes, commission, legal fees, interest payments (and default costs) and expenses (and cap upgrades) omitted it seems.
Was checking finance company long term mortgage rates yesterday (for a reason) ... 9.8% - 10.8%. Add an extra 2% for short term.
Default rate 10% above contracted rate.
10% interest here we are.
Carnage ahead.
"10% interest here we are." Yes Indeed here we are.
How to Rapidly Raise Interest Rates, without been seen to raise interest rates.
The most Taboo Subject on this site.
https://www.stuff.co.nz/business/money/300941816/the-home-loan-borrower…
People with mortgages to 2nd tier lenders will be quite worried now. I wonder if there is much data on how many mortgages are on the books of such lenders?
On the positive side of things, Westpac are still dishing out mortgages with a 5.99% interest rate. I note that many people are reluctant to lock in for 5 years, but for those who intend to keep the house long-term, it seems to be a logical choice. Okay, so 2 year rates may be down to 5% in 3 years time, but at least you have certainty with your long term financial planning if you lock in for 3, 4 or 5 years at what are reasonable interest rates.
Lads and ladies, I give you Newton's 4th law...
"Inorder to have a winner one has to have a loser.. or 46."
Do losers make space for winners?
Or ..
Do winners dominate losers ?
Life's a shit sandwich. . Make sure you have lots of bread!
Greg, a very interesting article would be a graph showing how many properties would enter negative value when prices fall a certain amount
In other words, for how many people would their property be valued at less than what they've bought on the Y axis. And on the X axis percentage HPI fall from peak, with a vertical line marking where we are at the moment
What it would show is a potential gauge of market sentiment. The number of people seeing their house valued at less than what they purchased is a powerful indicator of market confidence. And the vice versa, of course
Note that I don't believe this would be a DGM scenario. On the contrary, I think there's a lot of properties on the safe side and even with the high 2012-2019 prices, the number of properties bought before prices were high might be the majority, so I expect most in the market are confident. But would be interesting to visualise what the situation is exactly
As implementation details, I know that it's impossible to have accurate data for the Y axis (how many houses are valued less than their purchase price when HPI is a certain amount). But can use a proxy. So the graph can practically be "total number of houses purchased when HPI was at least (the value on the X axis)". For the X axis would ideally use HPI, the most accurate one (don't know if that's REINZ or other, but you would). If the data doesn't go far enough, say at least 2013 or 2015, median price will do
Want to point out that selling a house for less than what one bought it does not necessarily mean the vendor made a bad financial decision
On one side we add any building improvements, legal fees, insurance, rates and interest paid to the loss
On the other we need to count either rent received (if investors) or rent saved (not payed) if owner occupier
To be completely fair we should probably deduct interest rate for a standard term deposit for whatever they paid cash as hypothetical loss. And, if it matters, on the principal which was repaid
Drawing the line may not be in the negative
Good points danicriss. I was talking with someone the other day who considered they had lost money selling a house even though they sold it for 300k more than they paid for it. They considered the interest they paid on the mortgage as a loss even though they got to live in the house while they had it.
Technically interest is a loss (or additional cost) on top of the purchase price, the interest payment should be offset by the amount you would have paid in rent for the equivalent property. ie if your paying $4000 a month in interest on a 750K mortgage - would you have been paying a $1000 a week in rent for the equivalent property. If the property rent would have actually been $700 a week - then you are paying $300 more in interest and this should be added to the cost of the property to determine the total cost of ownership (along with rates and insurance)
We actually did the above exercise when we brought our first house - back then we paid 260 a week in rent and 2200 in interest - so $1200 extra a month for owning a house- our aim was to get as much paid off as quickly as possible - so that the rent amount exceeded the interest- we were blessed that 4 years after buying our house the GFC came along and our interest payments plummented to $1000 a month.
If you borrow too much and the costs are excessive it's not the house's fault.
But it is if that succulent" indoor outdoor" flow made your "non male" partner buy it.😜
If we want to follow metrics, trying to determine a true loss or gain in such a manner as you've laid out would be impossible. So this rudimentary "bought for x, sold for y" is probably as good as you'll get.
As far as whether it's a good or bad financial decision, hard to say in the context of what's been going on. Someone opening a toilet paper manufacturing plant in 2019 made an average financial decision. In 2020, the benefit of hindsight says that's a fantastic decision. And now, probably average again.
And the first story pretty much sums up why our housing market is so fuc&ed…I have zero sympathy and suspect not many do.
https://i.stuff.co.nz/business/property/300947118/its-the-perfect-storm…
That's why the article is there. Disenchanted people are a large market.
Yup...no boo hoos given. Lost equity...in a speculative bubble it is only real equity when it's in the bank post settlement. Before that it's a risk margin and speculative leverage.
Paper becomes vapor.
From the article:
But those that sold for a loss were held for a median 1.8 years.
Right up until fairly recently this was the usual state of affairs. If you had to sell within a couple of years of purchase then a loss could be anticipated because you likely paid a little too much to beat the opposition and now you have commissions and selling costs to account for.
A lot of people saw no risk. There was a guy on here gloating about buying off plans and flipping for more at the height of the madness. The reality is, not everyone is financially literate, and BBQ advice is dubious at best.
Ouch. Sounds like they had an $85k initial deposit (equity leveraged?) if selling the $805k for $600k means they need to find $120k.
I can think of better things to spend $85k on than building a house for someone else to buy at a 20% discount.
The market is onLy Farked. Because of the GOVERNMENTS and RB continued over zealous killing off of every other opportuniity to imvest ones money in something with a decent return.
"The property has dropped in value, and the two investment properties they were using as equity in the deal have also dropped" - unless he bought 3 properties in 3 years he probably hasn't lost much overall. I have a lot of sympathy for the FHBs but none for the investors.
So the broad concept of a margin call has arrived for NZ property speculators, roughly 100 years after the idea became well known, better late than never I guess...
Oh dear. He's whinging about not being able to settle on his third investment property and he's going go make a loss on it - whilst being unwilling to sell the other two .. yet one of those at least is sitting at a profit because he said he will need to pay the bright-line tax on it - but he doesn't want to pay tax on the capital gains he leveraged into the third's deposit.
I wonder how many more are in this position, and how many less would be if we'd at least implemented capital gains tax on the realisation of increased equity (like, say, how we tax the increase of equity via PAYE for those otherwise saving their deposit)?
I can work out that 0.7% plus 99.3% equals 100% of sales. The heading is misleading, it applies to Auckland not NZ
Its like the author is hunting for numbers to write something about. Depending on the number of like for like sales, the margin or error could be 100% of 0.7%
What are the facts, what are the margins of error, what are the number of sales, what kinds of houses are being sold at a loss, how old are those houses. We have been through all this before, leaky houses sell at a loss, as is where is houses in christchurch used to sell at a loss, but no one did any correlation on that. Are we seeing as is where is houses in this data, they need to be pulled out, before the like for like numbers are done.
How many sales are of houses in places like Opotiki, where after a couple of floods, a house can't get insurance, and is sold for land value, this kind of information is not easy to find, but for a research article like this needs to be talked about.
DIY total bang on anyone can manipulate the figures to back their argument
I have seen data where a house on a quarter acre section is bought for one price, a section is carved off at the back, and its resold for $50k less six months later, I dont know how often this happens, and where, but it does happen, all these alternative reasons why a house sells at a lower price in the future to the past could be written into a disclaimer, which would be longer than the article
The rule is simple.
The greed will always result in pain later. If eat too much sugar today, you get diabetes tomorrow.
If buy at a stupid price which is not sustainable or affordable at the first place, it will be a loss at a later date.
Sheeple have been buying from each other at every increasing prices, it's not sustainable at all.
God save NZ
Karma doesn't work in such a binary way.
For instance, if you moan about greed and whatnot every day, you usually don't get amazingly happy one day. You just feed yourself enough negative energy to spur you on enough to keep doing it
True. I do have a miserable life and all the negative energy and dark matter in the universe is in my life only.
I wish you are very happy and you have an amazing life and you love everyone around you.
Does that make you happy. 😁😁😁😁🙏🙏🙏
If you said the second line to people more (or just went about your daily affairs along those lines), you'd get a far better return on investment than preaching thunderbolts and lightening. But that is your karma, not mine.
Wouldn't that be a lie?
There's a fairly strong correlation between the content of your thoughts and ones emotional state.
But that's only negative thoughts about property which at these unaffordable prices is logic, and could be beneficial to future generations, if enough of us complain, maybe prices reduce through government intervention, and our future generations can afford a home.
There could be positive thoughts about, job, children, fishing, sports, friends and list goes on. Think that's just human nature to have some negative thoughts.
Everyone has negative thoughts, you can see how people keep wanting when you see billionaires divorce for new woman or compete for new super yacht. Lots of people keep wanting and complaining no matter how successful they become. A lot of times the happiest people have less.
But that's only negative thoughts about property which at these unaffordable prices is logic, and could be beneficial to future generations, if enough of us complain, maybe prices reduce through government intervention, and our future generations can afford a home.
Complaining about the same thing day, after day, after day, usually just leads to more complaining.
There's a fairly strong correlation between the content of your thoughts and ones emotional state.
Wonderful quote ! I wish more people understood this.
You could equally say: There's a fairly strong correlation between the content of your thoughts and the direction of your life.
Up until the last couple of years house price inflation hasn't been particularly spectacular. Often 5-7% per annum. It exceeded inflation due to factors like Western global cities becoming more open to immigrants from the East. What happened just after COVID hit was an anomaly and something that was recognised at the time as dangerous. The government failed to take action to stop this from occurring and actually poured petrol on the flame with the unnecessary lowering of interest rates.
Things will return to normal at some stage.
It exceeded inflation largely because it wasn't measured in our inflation stats. Include the house price increases as appropriate, and interest rates would not have dropped like they did, and house prices would not have increased like they did.
Call me a cynic if you like, but this was done deliberately by those who stood to make the most out of it - who I suspect you will find have already sold up and are either watching from the sidelines or dead. Aided by the boffins at the RBNZ who saw a way to make their stats look better (always useful when your performance is measured by said metric).
I'm less inclined to believe it was as deliberate as that considering it occurred in the West in general.
However, if real estate keeps up with inflation while also generating a yield, whether that be rent or accommodation, then it represents a desirable investment class and will continue to do so.
The greedy people in all this is not the home owner.
Its the persons that make 3%+ on your gain or misery no matter whats going down... or up.
SELL PRIVATELY. - ITS ONLY A TRADEME AD AND A LAWYERS BIĹL ... ABOUT $2500 all up, ...
Specarus has been on such a drunken bender of greed over the last fifteen years, he failed to realise he had entered free fall after the wings of cheap cheap debt melted. The rushing noise of terminal velocity has woken some up, and they have hit the ejector handle. Just to close to the ground for the parachute to open fully.
Noise that Blackrock is exiting investments in the US citing them as overvalued and not supported by fundamentals. Sounds familiar.
Higher rates for longer. Next 18 months is looking very rough for those to blinded by greed to eject from their debt.
You said that 12 months ago
It does get tiring.
I spose there's only a downturn every decade or so for the right people to dine on.
The end is niiiiiiiiiiiiiiiiiiiiiiigggggggggghhhhhhhhhhh
Thanks for reading. You have been a daily endless ponzi preacher from day one. Imagine how tiring that gets in the face of the alternate reality to your faith that is unfolding.
I'm not advocating housing investment or anyone join any bandwagon. Just that many of the views espoused fall into the wishful thinking category than something you could reliably make plans around - you know, the core function of the site. Instead it's like a TOP afterparty.
I agree with your self-assessment although I suspect you are employed by the website to moderate comments by using common sense and intelligence to counter the inane and insane rantings so often encountered here.
NZ is operating at a loss. If it was a private business it would already be in liquidation or about to enact radical restructuring. Gst is already 5% higher than Straya, and higher earners (skilled and business owners) already pay most of the tax. Tax has to come from somewhere. Increasing the burden on the productive worker will just accelerate the departure to West Island.
TOP rightly targets the last untouched white elephant. The ponzi. Under their lead policy the largest community of mass tax avoiders, Property Investor's, could get taxed.
Oh the humanity.
They're going to depart to the west island regardless as they have been doing for decades.
It would seem like the fundamental issue for most younger workers is access to affordable housing. TOPs policies have already been shown not to work elsewhere, because the taxation system only influences behaviour, it doesn't control it. You can move taxation sliders all day long, you still need to provide physical buildings for people to live in.
Few (no?) developed economies have resolved this issue. Housing is generally unaffordable for new entrants in any established city. Largely because to do it to any meaningful degree is going to be horrendously unpopular politically.
Disagree. We have already seen the impact of extended brightline and removal of tax rinsing on the spec and fliperati. Suggesting an annual land tax would have no effect on speculation hilights your bias.
Promote working (less income tax) and disincent land speculation (land tax). For renters and non home owners, and the debt free wanting to be around their grand children or still working, this is a no brainer.
I'm not saying it'd have no effect, but if your prime aim was affordable houses, that's a very indirect (and ineffective) way of doing that.
Ireland followed your model, houses aren't cheap, and their productivity came in the form of becoming a tax haven - the average Irish is no better off (likely worse off).
Again disagree. If you want affordable housing lower the pricing to be inline with incomes. Remove the leveraged and tax rinse angles completely, allow investors some angle on new builds only to increase the stock levels, and current debt pricing will do the rest. One notes that TOP's equity requirement for investment property is the same as the purchase price, aka 100% equity. That will generate affordable housing and allow tax to be paid. Yes the over leveraged would be unhappy, but they are far an away the minority. Again a simple and effective policy.
Lets agree to disagree.
Property Brokers frantically advertising for new agents and Pa1nter frantically running to the rescue are one and the same thing.
The Vested Interest Brigade are in FULL PANIC MODE.
Again disagree
So housing got more affordable and plentiful in Ireland after making similar moves?
After the speculative debt reset, it sure did. Banks and spec crowd folded left and right. So the following decade after the GFC was fun for the leveraged. It has gone up again with the stupidity of 2% interest rates as everything has. Let me borrow or roll debt at 2%...oh wait...
The lower prices were due to an economic crash though, not due to the sorts of legislation you're championing. they had DTI rules and everything, but prices still went up.
And FHBs and renters, they're being serviced well also? Lots more new first home buyers than pre 2008, loads of affordable rentals?
I, for one, welcome our new capitalist overlords. I'd like to remind them that as a trusted online commentator, I can be helpful in rounding up others to toil in their cramped substandard rental accommodation. Crushing their hopes of any positive change while informing them it is their own fault they are upset about the situation.
As far as I am aware Ireland never implemented policies similar to what TOP is proposing. Happy to be proven wrong here but Ireland's problems seem to be due to a variety of factors that aren't identical to what we have here.
Fundamentally where all of them fall down is on one crucial element; they don't actually increase supply of new affordable housing. Unless you do that, the rest is bullshit and jellybeans.
Yeah well no shit we need to build more houses. I don't think anyone is arguing with that but I don’t see any reason why bringing in policies that incentivise construction would harm that. Ultimately land value tax won’t reduce the supply of affordable land, more likely it incentivises further development. If we combined that with less restrictive zoning that would remove a lot of hurdles that are restricting supply.
It’s pretty clear the current paradigm hasn’t worked to create more affordable housing, in fact, the current arrangement provides incentives to reduce the amount of housing available as it benefits current landowners.
People are wanting a surgical strike to eliminate landlords, the trouble is those steps usually detract from general house building altogether.
You have to implement new land usage and new forms of house building.
A land value tax isn’t a surgical strike on landlords, and TOP is also wanting bring back interest deductibility which would generally help some landlords. Ultimately we don’t need more landlords we need more houses, we probably also need more social housing like we had in the past and look at what works in countries that don’t have massive housing issues (Austria, Singapore, Japan, etc)
Part of the appeal behind a LVT is how broad it is and the fact it captures everyone, opposed to labours fiddling around the edges which basically crippled new landlords and leaves existing ones untouched. The whole concept of our tax system is supposed to be simple, broad based and low rate taxes. We even had a LVT in the past which worked fine, and after we got rid of it we have seen far more issues supplying housing (due to a variety of factors not just the removal of LVT).
Imagine all those foreign land bankers who own all that land just sitting outside of our major city boundaries and waiting for zoning changes to send prices to the moon.
TOP will tax them!
What's not to like?
Nat & Lab had their turn and continue to blow it.
Get real. Whre is this land and wouldnt they have capitalized in the recent boom?
Zoneing is a red herring. You can buy a zone change.
I wonder if the Auckland council will revalue CV’s down next round of reviews? I bet they‘ll hold them, no change. Need to keep rates high to pay their huge salaries. The usual Pigs at the trough mentality.
CV only has a relative bearing on your rates. If your homes cv is 500k lower at the next round, you wont pay less. Rates will only ever head north.
Exactly. Years of underinvestment or investment in unsustainable assets still has to be paid regardless of how much your house is now "worth"
Nope! They will drop big time. Rates are based on land value not overaĺl value.
Land value portion of your rates never drops
The multiplier against your land value will increase to compensate for any falls in value. Relative value is what determines your slice of the rates pie. If all properties halved then no change to your proportion of the rates bill. And it will still go up over time as costs are increasing.
New rates not due out for a couple more years here and looking at the current RV it will have recovered by then anyway. The RV's will not be going down.
Or their could be a fundamental swing away from houses (e.g. boomers cashing up their rentals, downsizing, resthoming, low immigration, high build rates, etc) and house prices could go down for a long time. In fact if we are close to peak population in NZ they could go down (in real value) forever...
Haya peak popn, politicians will keep the gates open until black swan or bipartisan population policy
From what I hear in my town for sales is unfortunately that they dont like each other anymore,or like someone else more.Whether thats a combo of financial pressure or just life remains to be seen.
Funny that not a single comment thus far mentions the profligate actions of the RBNZ in this mess.
Not only did they throw cheap money at the retail banks (ensuring the retail banks made billions through ramped up loan books and massive spreads between deposit and lending rates!) they also dropped the retail lending rates to absurdly low levels when supply chains were massively constrained, which, surprise, surprise, resulted in rampant inflation. Golly, Who'd have predicted that outcome ....
Above I mentioned the government pouring petrol on the fire by lowering interest rates!
The government doesn't set interest rates Zachary.
They heavily influence threm and the RBNZ
Well, they failed to intervene in any meaningful way. Also I used government with a small g and the RBNZ is part of the "government" when you think about it. You don't elect them but they do "govern". The governor of the RBNZ is appointed by the Finance Minister.
Relationship with Government: While central banks are independent, they often have a working relationship with the government. In some countries, the government may appoint central bank officials, and there can be regular communication between the two entities to discuss economic conditions, policy goals, and coordination.
Accountability: Although central banks are independent, they are still accountable for their actions. They often have reporting requirements to the government or the public, and they may be required to explain their policy decisions.
Jesus Christ. Just admit you were wrong.
I understand your frustration.
Now do the same sums and adjust for inflation or factor in interest payments.
I'm surprised its that high, to sell at a loss you need to have bought in the last 3 years or so. Pretty scary for some, great to see speculators get hurt but many will be FHBs.
re ... "bought in the last 3 years or so"
Ah. Averages again. No. They just needed to over-pay a lot.
I've seen many properties listed that were bought in 2017, and even earlier, where the recorded sale price beggars belief. Back in 2017 rates were much lower and "land banking" large sections (AUP2016!) meant many people got seriously carried away, particularly at auctions.
Willing to give Labour another term to get the house down to the right level.
If the Nat+Act get in, housing market will be prop up once again!
I think if Labour do win the election that listings will increase significantly.
If Labour get in the entire economy's going to tank. Wealthy people are already packing up and going to Oz, just in case. I'm sending money offshore because if they do win the NZD will crash.
Go now, why wait? You should head over to Coolaroo (Melbourne) or Mt Druitt (Sydney) or Logan (Brisbane) now, where you will find familiarities of NZ.
I might, the kids are already in Melbourne, earning more and enjoying themselves.
The really big question is whether the ones bailing out now are the smart ones. A little loss is better that a big loss after all. OCR review next week, and the international players (US and UK) are all raising theirs. Orr is trapped between a rock and a very hard place, do is job (raise) or bow to political pressure and do nothing and continue to underpin inflation.
The noise globally is rates higher for longer. See what happens...
A couple points worth remembering ...
1. The RBNZ started their tightening cycle much, much earlier than either the US or the UK.
2. The US housing market is totally different to NZ's and the UK's with 30 year fixed mortgages. Fed changes affect businesses rather than consumers, e.g. high rates slow down building starts.
3. The UK is way, way behind us in raising and their tax treatment of mortgage repayments is (was?) different. Further, their government - unlike ours - plays an active role in fighting inflation, reducing demand, e.g. they raised taxes on those most likely to be house buyers rather than renters.
It would be interesting to know how many of the houses that sold at a loss were mortgagee sales of the family home forced due to increasing interest rates. I'm not so interested in investors making a loss on their second (or eighth) house, but families that are down 100k and then forced to rent has significant social implications
AFAIK mortgagee sales are still pretty low
Banks are "pro-actively working with their customers" where they know they know the mortgagee will be in mortgage stress.
Or put another way - the bank phones the mortgagee, tells them the writing is on the wall, and encourages them to sell quickly before the inevitable happens. Many probably are if listings and last purchase dates are anything to go by. Or they're hitting family / friends with request for help either by lump sum payments to reduce the principle and/or monthly cash top ups to meet repayments until interest rates return to normal.
Some in the B&T auctions this week.
FHBs can lose their entire deposit and more without a mortgagee sale. Waiting for the bank to sell to whoever they can find is not a good strategy if it can be avoided.
AFAIK public mortgagee is pretty low. Banks are "motivating" the over leveraged to act. Otherwise people are just selling for a loss as their own decision...yeah right.
Here’s a house that sold for $948,000 in 2021, and it was on the market last week for offers above ~$795,000. It was just taken off the market today, so we’ll see if they received any bids. https://homes.co.nz/address/wellington/karori/6-swadel-way/K0ezk
Also, there’s a court ordered sale that popped up down the road. Over the past year, there certainly an seems to be an increase in distressed sales from the areas I’ve been looking at.
https://homes.co.nz/address/wellington/karori/10-burrows-avenue/W45VW/g…
Interesting thing about that first house is that it was purchased in 2016 for $366k; five years later owner paid $948k! That is insane and makes the Homes estimate ($730k) seem far-fetched. Have to wonder how many others are in this category.
Unkept houses in rather average suburbs that are appearing at the auctions as mortgagee sales are getting approximately 2016 prices.
Profits or losses occur in a business. Most homeowners are not in the business of trading – so they are not making ‘losses’. It’s the market stupid
Been reading Westpac's predictions ...
https://www.westpac.co.nz/assets/Business/tools-rates-fees/documents/ec…
They say: "We now expect prices across the country to rise by almost 8% over 2024 (up from our previous forecast for a rise of 2.5%)."
While at the same time saying there'll be another OCR rate rise soon after the election.
One reason for such bullishness in house prices implies Westpac believes the RBNZ is going to dramatically drop the OCR in 2024.
But they say the opposite: "This is why we see a further increase in the Official Cash Rate (OCR) later this year and only a slow path downwards in a year’s time." Their graph shows they expect an OCR at 5.25% Jan 2025.
Am I alone in finding such predictions extremely hard to reconcile?
(About the only way I can reconcile this is that there are significant numbers of people sitting on huge cash piles who are just getting heaps richer through their term deposits. If this is the case it is news to me. And probably the RB of NZ too. Or maybe the NACT intends to allow foreign investors to buy up residential property?)
Bank economists like RE agents are always going to be bullish on property prices going up. It’s how they are making those huge profits.
Waste of time listening to them, you know what they’ll say before they start moving their lips.
It’s going to be fine from here on, TA is starting to talk about FOMO again…..
I'm still trying to recover from all those articles TA wrote in 2021 listing a zillion and one reasons house prices will only ever increase in good ol' NZ.
Of all the residential properties sold throughout New Zealand in the second quarter of this year, 6.9% were sold for less than they had been purchased for
So to be clear, 93.1% of all properties sold in NZ sold for a gain (or a few at breakeven). That's astonishing given we're in the middle of the biggest house price crash in decades !
astonishing sure, but only if you are unaware of the immense size of the bubble.
But I though the drops had stopped and FOMO was now back in the market according to stories in the mainstream media?
Cmon guys we need to be more upbeat here, think of all that pent up demand at 7% interest rates! Luxon will Introduce discounted rates (2% for investors, 4% for FHBs) and our property values will be back to the moon in no time!
There's still plenty of money out there willing to bet on property, I bought into a lifestyle subdivision a few weeks ago on the outskirts of Auckland and they've all sold out. Not cheap either.
Indeed, life goes on, money goes around, the system is not going to be radically altered like some people are expecting or hoping. Commenters here are under the impression that this is some sort of soap box forum for social change hence the outbursts when anyone presents something contrary to their narrative.
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