Asking prices for residential properties are sinking like stones, as vendors bite the bullet and become more realistic in their price expectations.
The average asking price on property website Realestate.co.nz has fallen for five consecutive months, to $816,797 in July from $927,312 in February .
That's a decline of $110,515, or 11.9%, over the last five months.
In the Auckland region, which is by far the largest real estate market in the country, the average asking price has dropped $142,857, or 12.8%, over the same period, falling to $976,928 in July from $1,119,785 in February.
July marked the first time since August 2020 the average asking price in Auckland has been below $1 million.
This suggests vendors are finally starting to realise the inflated valuations prevalent during the last brief boom in 2021/22 are no longer relevant, and they need to adjust their price expectations significantly downwards if they are to make a sale in the current subdued market.
However falling asking prices aren't the only thing in buyers' favour at the moment.
New listings and the total stock available for sale on Realestate.co.nz are both running at unusually high levels at what should be the quietest time of the year for the real estate market outside of the Christmas/New Year break.
The total number of homes for sale on the website in July was up 32.3% compared to July last year, while new listings received in July rose 31.3% for the same period.
So there is still a flood of properties coming onto the market.
"Buyers have ample choice and time to decide," Realestate.co.nz CEO Sarah Wood said.
"But this will be a competitive market for many sellers - they should research local market trends and be prepared to negotiate to meet the market," she said.
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141 Comments
by Nifty1 | 25th Jul 24, 5:49pm
I think you'll find what I've said is facts on what's happening - due to role out 31/07/24 that will impact bank lending. I've mentioned previously the other changes the Govt and RBNZ are implementing this month which will have an impact in the coming months.
Why do you keep editing your original comment? Next you'll be accusing others of misinterpreting?
Some might call it back-peddling.
Nice can you find my quote of the other changes that took place in July...
I still can't see a reference to banks 'unleashing a tide of cheap money to all and sundry' nor that it would immediately impact asking prices...
It was an observation that Government & RBNZ are once again doing what they can to support the property market when it is down and it will have an impact going forward... a hard concept for some to understand or simply DGM wanting to dismiss it.
Almost none of the (very few) property investors on here are spuikers, that's just an intellectually lazy slur and I really don't care what you or others do with your money, it's none of my business. Most detractors come from a moral point of view rather than performance. There are spivs in the property industry no different to stock market, crypto etc etc. Property goes in cycles like every asset class amd will be back. I still prefer it over all other asset classes through the cycle due to the leverage and tax benefits.
Property remains a top longer-term investment, as I’ve mentioned here many times.
The name of the game now is “pick the trough”. Those who adopt a countercyclical approach stand to do well from the current market conditions - reaping gains from rental yield as well as capital appreciation.
Nice for some - and even nicer for them in the future……
TTP
Developer puts up all 5 properties for sale at the same time in this development.
https://www.oneroof.co.nz/news/latest-news/south-auckland-developer-put…
Are they under time pressure from their lender?
I've heard the AirBnB market in Qtown is dead. Which is surprising, as while its well known the AirBnB market is gone dead NZ wide, I would have thought Qtown would be more resilient. Especially since its ski season. But I guess even the top end of town is feeling the pinch. The problem though is that a lot of places down there were built as Home & Incomes, especially in places like Jacks Point, with a wee 1-2 bedroom attached flat that the owners depended on being able to rent out in order to pay their million dollar mortgages. No AirBnB = forced sale.
Those flats cant be rented out to long term tenants either, as Labour banned the renting of granny flats unless they were legally seperate dwellings, and most of them are not. If National wanted to fix the rental market overnight, simply undoing that ban would be extremely helpful. That would release a flood of small flats on to the market overnight.
Toye .....had a conversation with someone yesterday about that ...they were pissed !!!
I can see a movement brewing where the Auckland Mayor is going to be absolutely inundated with howls and screams of disgusted ratepayers ...and it's going to be way too much for him and the Council to handle .....wonder what he will say to all this, when he has been banging on about Council and all and sundry cutting back on costs !
I have always said this country lives way beyond its means ....
I just got my Christchurch rates assessment. $9,280. That amount would get me 5* resort facilities in a luxury apartment building on the Gold Coast.
(For those that think I must live in some Fendalton mansion, I don't. This gets you a 2016 built 4 bedroom home on a 500 sqm section in a decent suburb with a median sale price of $725,000).
My -10% Dec 23 to Dec 24 is starting to look like a TAB Unders / Overs bet, there could be some really big price movements as this overhanging stock clears in summer. If the clearance rate does not lift the market is in very serious trouble.
I thought it was way overpriced before Covid came along
The current prices paid are a reflection of vendors not dropping price, hence so little is actually selling. There will be a step down to the current offer level over summer. We could easily see a -3% or -4% month soon. Nothing will have changed except the vendors finally taking current offers. Buyers are tryers and will lower offers as well, like all markets at each level the weak hands have to be shaken out. Its only once weak hands , retiring ,downsizing vendors are meet in equal number by new buyers will we see the final valley shaped bottom, it will feel dead for ages.
FHB with plenty of time to waste on here right now, buying power for us is rapidly increasing. So I'll keep an eye on things, and see when the drops taper off, all the while saving a larger deposit.
Thanks to intrest.co.nz for a place where I can get clear, factual, figures backed information without the spin.
See it in my area of Auckland!!
Property down the street sold late 2023........now they are 150K down the Karzi, if they resold it today.
These current and future losses will, will without doubt be financial WMDs for the NZ economy. Banks stable???
We are amidst massive losses being racked up currently and this will continue downwards for at least another 2+years as the economy deteriorates further.......forced liquidations will see eyewatering pain.
Bag holders will not just burn their hands, we are talking hands being blown to pieces and a financial abomination!
These current and future losses will, will without doubt be financial WMDs for the NZ economy. Banks stable??
According to the central bank, the commercial banks are stable as. But that doesn't really matter anyway. Taxpayer is backstopping them.
Remember that the Funding for Lending program was there supposedly as an "investment in NZ", not for the banks to issue debt on existing housing stock as if no price is too high.
Nobody holds the ruling elite to account. The sheeple are left to their own devices during these periods of extreme exuberance.
by Averageman | 2nd Aug 24, 10:07am
Spec leverage looking like it turning into phosphorus exposed to atmosphere. Burn baby burn, white hot.
Must admit I am feeling the heat cashflow is a real problem - anyway lets see. This message is keeping me motivated - if interest rates come back to 5.5 by March i will survive if not there goes the family house. I feel by DGM standards here I am a specuvester - I will comment in MARCH again - for the moment I am working to keep head above water
Incredibly an advert appeared on my social media last night from what appears to be a reasonably popular female REA on the Northshore. She was telling her followers that her and her husband had just purchased yet another rental and that because rates are dropping that she was certain now is a good time to buy.
The apprehension on her face is real (even if she isn’t aware of it). She might be right (and I could be wrong) but it is also possible that now is a terrible time to buy and that waiting 6-12 months could reward you by 10’s or 100’s of $000 - just by being patient.
Periods of rising unemployment while yield curves are inverted or normalising from an inversion are almost always a terrible time to buy assets (other than gold etc) - but I imagine this isn’t a point of discussion at the RE agency.
Over leveraged speculation is akin to gambling. It is quite different to true investment with a risk balanced return/yield. Banks lending practice and central bank actions have rewarded the gambling option for so long people thinks it normal. It is not. In the US you can send the keys back to the bank via no recourse lending. The opposite applies in NZ. We are more aligned with its original definition under French Law used during in the Middle Ages meaning "death pledge". A rate change of 5.5% would be a big drop from today's 6 month rates of more or less 7%.
Do you mind discussing your thinking here, eg carefully weighed analysis or other etc...?
One of my friends came here as a backpacker just after graduating. He didn't pay his speeding fines. They passed on the fines to a debt collection agency who tracked him to Scotland 2 years later and made him pay plus interest.
Leaving the country is not a guarantee you get to leave your debts (a lot will depend on which country you're going back to)
I had an Australian friend who also racked up thousands in speeding fines. She also had a NZ passport. She flew to NZ, changed her name by deed poll, got a new passport, and re-entered Australia as a different person.
I'd also suggest that its much easier to track someone down in Scotland than it is in India or China. Especially if they didnt immediately just apply for another visa to a different country, and headed off again to Australia or Canada to start over.
But why did they sell it at all?
"Because they think prices are going higher from here!" isn't one answer.
And in all likelihood; as our esteemed Prime Minister is doing now, selling investment property off before prices recalibrate looks like a mighty fine idea; as long as you can find someone who CAN pay an asking price. I wonder if the IRD will ask him some pertinent questions - and they can, regardless of how long the property has been held.
https://www.thepress.co.nz/politics/350362509/christopher-luxon-puts-in…
Won't be the last one. I admit I am surprised by how long this has taken though. Investors should have acted months ago, if for no other reason than to not give the Clarke's time to siphon funds out of the company and in to personal offshore bank accounts. Currently owners of certain other development companies are busy selling assets too, there is going to be nothing left for their investors either.
Wellington will continue to see huge increases to the housing stock.
The Public Sector job loses aren't one clean cut, they're a constant monthly stream that looks to continue over the next year (and their could be further cuts in outyears).
The short/medium term contractor market has also dried up. This this is reducing market short to medium rentals so their is also a glut of rental properties on the market (particularly central city apartments).
This is also impacting retail and hospitality significantly, driving more people form the city.
Yep. Those job losses are being felt in probably every industry right across the lower North island. My cousin is a builder there and he said work has dried up pretty much. A lot of people have jobs because of the public sector, and contracts are getting cancelled left right and centre. It's a dark day for this country. I don't think I've ever seen it in such a dire state.
Could be.
But if they fall 30%, a lot of owners of 'investment' property are going to the wall. And as we all know about DEBT - it's nominal, and not only can it take all your current assets, but those that you are yet to earn.
That's the wonderful thing about speculation - it goes both ways. And often against the holder of assets at the most inconvenient, unexpected of times.
(That's why Crashes happen. Black Swans and all of that.)
"Time to buy, next year we might see 5-10% jump in house prices "
Here is one for you to buy:
https://www.oneroof.co.nz/news/latest-news/pm-selling-1m-investment-pro…
Which indicates that the developers are building to meet future demand - town houses. So those caught with other product, e.g.: the old 4/5 bedroom stand-alone, are in for a challenging time. Even worse. Those caught on a 10 acre life-sentence block away from Countdown; the doctors and the public transport (the older we all get, the less chance that we keep our driving license etc)
You mean those people wanting to buy a decent 3 bedroom house on a stand alone section will find it challenging to be able to afford it ? Kind of my point, the price of these could be going up while all the rest of the market is being dragged down due to cheaper townhouses.
Do you know why jewellers are selling so many lab grown diamonds these days? Because the natural stones are so much more expensive (say, your 3 bedroom stand alone). And as more lab growns are bought, the price of the natural stones FALLS to try to attract buyers back to their product.
The same will happen to stand-alone properties. The alternative product will force them to fall if they want to be competitive.
Those townhouses are only fit for housing people who just got off a plane with a suitcase. They are not suitable for families (too small, no storage, pathetic kitchens), people over 50 (who don't want multi-level), people with pets (no backyard), or anyone with a car (they'll soon get sick of getting their car windows smashed in).
If I were an investor right now, I'd be looking at those standalone houses, as those are the things you can add value to by renovating, subdividing, or adding a second dwelling to. Now that interest deductibility is restored, investors are back buying existing dwellings which have much higher yields, than those crappy townhouses that are hugely cashflow negative. (As a comparison, the yield on a new build townhouse in my area is 3.8% compared to 5.7% on an existing 2 bedroom unit. Which would you pick?)
It all comes down to the specific house, you cannot generalise. A decent quality build house on a large elevated section with views is only going to go up in value, its that simple. A townhouse over time will simply not keep pace and it will at some point take a massive dive in value. Those Townhouses suck, the whole place can hear a single domestic, parking is shit, too many are rented with shitty tenants, the list goes on.
Those townhouses are only fit for housing people who just got off a plane with a suitcase. They are not suitable for families (too small, no storage, pathetic kitchens), people over 50 (who don't want multi-level), people with pets (no backyard), or anyone with a car (they'll soon get sick of getting their car windows smashed in).
While not preferable, there are plenty of tenement apartments and flats in many cities of the world where families grow up. I have friends in the UK who are included in this.
Drove past a Duval development in Mangere today. Looks close to completion. A standing army of trades working on site. 180 units next to the motorway. Starting price from 800k. Even if you could pay all cash. Why would you? Lucky to get to 4% yield and within a few months the development having the "lived in" look they will depreciate faster than a European car.
800K is still well short of the average Auckland "House" price, hence the market is being dragged down by places that are in no way comparable to a decent 3 bedroom on a stand alone section. Anyone who has lived in a variety of places knows full well the difference between the two.
Yeah many have noted that AKL averages before Covid was reasonably flat due to this effect, even though large 800 sq m sites where going nuts. You have to understand the market suburbs and potential buyer of a site, developers pushed prices up 20-30% now they are gone.
Tale of two property markets. I've maintained two Christchurch TradeMe searches for years now. The first is for properties at the higher end of the market, and listings for those are pretty light at present. About what you would expect for this time of year. The other is for <$700k properties, and those are running high, and I expect the arrival of spring stock will push it to the highest level in years. Its the tidal wave of new build townhouses that are piling up.
Which brings me to the other article on shoebox apartments. The problem is that, like with townhouses, developers will start building them en masse, only to find out that there arent enough buyers in that niche market, and then none of them can sell, even with massive discounting. Then they go broke. So perhaps the Council should put a limit on the number of shoeboxes that can be built, so we don't end up like the townhouse situation where half of all builds are properties that only temporary residents want to live in.
B&T auction today had 10 properties and all passed in with just one attracting bids that got no higher than the 2016 price. Earlier in the week a property sold for almost 450k less than what it sold for in 2021. Owners had bought so hopefully they got a good price on the new property.
I know someone who bought the site next to them for $2.38 mil a few years back, where going to bowl both and put units in.... not so much now, was passing in at auction last month now asking $2.45 mil
Its going to really sting, to move that on. Bedrooms too small, not a problem if you going to bowl it, big problem come sale time, maybe $1.85...
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