Residential property values are declining slowly but steadily in most parts of the country, according to the latest figures from Quotable Value (QV).
According to the QV House Price Index, the average value of New Zealand dwellings was $909,517 at the end of July, down 1.9% over the previous three months.
However average values are falling much faster at the top of the North Island, with the biggest decline of 3.9% occurring in Whangarei, followed by Auckland at 3.4%.
The average dwelling value in Auckland has now declined for six consecutive months and was almost $53,000 lower at the end of July than it was at the end of January.
That means average values in Auckland have been declining at an average rate of almost $9000 a month, or $2120 a week.
The only major urban districts that did not post a decline in average values in July were Marlborough, Queenstown-Lakes and Invercargill.
"Residential property values are slowly shrinking across all price brackets in almost every part of Aotearoa," QV Operations Manager James Wilson said.
"This is to be expected given the current challenging economic conditions, with a rising sense of job insecurity and persistently high interest rates leaving both buyers and sellers between a rock and a hard place.
"We're also seeing a pretty major imbalance between the number of properties available for sale on the market this winter and a shallow pool of buyers who are willing and able to make a purchase.
"This is helping to maintain downward pressure on prices overall, with sellers having to adjust their expectations, pull their listings, or play the waiting game until conditions eventually improve," Wilson said.
The table below shows the average dwelling values and quarterly change for all main urban districts around the country.
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84 Comments
There it is. AUCKLAND BACK A WHOPPING -3.4% ON THE QTR!
Make the Irish crash look like a kindy crash.
Told ya spruikers that the property market is only mid crash.
2024 set to be down more than -10%.
PEAK TO TOUGH MARKET SLIDE WILL BE BACK A REAL -40 TO -60%, ONCE MARLET BOTTOM IS HIT IN 2026/2027.
Mike Hosking and ole Winge - er, will be absolutely spitting tacks, with their recent, wistfully hopefull, market propping jawbone flapping, falling ĺike a lead balloon.
-10% Dec 2023 to Dec 2024
Do we get HPI today?
Lowering interest rates will ride to the rescue, house prices rising again this year
Chocolate Fish for the Spooky Spruiker
Are you sure he’s incorrect? There seems to be a pretty good correlation between house prices and interest rates to me.
yes with an 18-24 month lag
I don’t think there was a big lag last time Orr lowered rates. There are plenty of investors and FHBs ready to jump in and get a “bargain” once they feel the bottom has been reached.
I am not making any predictions as I’ve been wrong many times in the past on house prices (normally too pessimistic!), but I certainly wouldn’t bet against this being close to the bottom assuming interest rates drop. It will probably take a while to clear the inventory this time.
During the GFC, the entire world slashed rates, including Ireland, prices crashed.
Its a widely believed myth that low rates are needed to make the Ponzi work, but they are not.
Capital gains are needed. Without prices rising you cannot make the investment work.
Capital gains need lower rates for sure, but they also need faith and animal spirits to believe that someone else will buy your bag, Once this belief is gone you are nothing but a bag holder.
Agree, but I don't think that belief has gone just yet. What you are saying is quite possible, maybe even probable; but I also think there is a good probability that interest rates will drop and people will slowly come back to the housing market making this pretty much the bottom. Or they may even rush back and house prices could go nuts again, crazier things have happened.
Yes, quite possible. A couple of things to add into the mix - 1st how much will interest rates fall? I very much doubt that we'll see sub 3% mortgages any time soon but even a small reduction might spur confidence at least in the short term. 2nd - what impact will DTIs have? I'm hopeful that they will at least put a cap on the excesses that we've seen in recent years.
When interest rates fall, the landed gentry can watch the prophets-of-doom collapse into a tsunami of fear....... 🌊 🥺
TTP
I have correctly prophetized the collapse so far, thus I am well positioned and fear not the future, prey tell how you feel, given you have been Spruiking your guts out most of the way down, and have only recently tried to change your tone.
Tim, since at least August last year, in anticipation of interest rates falling and a National election win, Spruikers said watch this ( ) for a sustainable recovery and house prices have resumed falling. Even bank initiated cuts to date have failed to ignite any sustainable support. Tim, in Sept 21 you predicted prices would continue rising on a sustainable trajectory long term and look at what's happening now. Shame on you for not owning this.
Like others, I have already admitted my pre-COVID predictions of imminent declines were totally wrong. In saying that, no-one foresaw a pandemic, let alone the monetary response and the resulting froth.
Retired-Poppy,
Your short-term thinking/mentality is largely responsible for your calamitous track-record of forecasts here. You couldn't tie your analytical bootlaces. 🤭
Property is a long-term game - as the wise, educated and successful well know.
Without doubt, property prices will continue to rise on a long-term sustainable trajectory. Property remains an excellent long-term investment - through rental yield (which you never acknowledge) as well as capital appreciation.
Beyond these financial benefits come a whole range of non-financial benefits (such as security/stability and pride of ownership) which are significant for nearly all home owners.
TTP (Edit: 1)
🤢🤮
Tim, given your well documented history of dishonesty online, this response is hardly surprising. Like I said, shame on you.
https://comcom.govt.nz/case-register/case-register-entries/property-bro…
By the time house prices climb back up to highs many people on here will be retired some will be eating jelly and more worried about how to get socks on, I think to crash is going to continue for a few years then hopefully bounce along bottom giving future generations hope of getting a home for family.
House prices are already bouncing along the bottom in the provinces. It is Auckland that is overpriced and is in need of a price correction. Mortgages are at 5.99% currently, which is stimulating investors to come back into the market (note that investor numbers are increasing every month). Don't get me wrong, I'm not advocating for people to purchase an investment property.
"(note that investor numbers are increasing every month)"
How much of that investor demand is due to the increase in LVR's from 65% to 70% in July?
How many of the investors are capital gain oriented rather that income oriented?
Investor interest probably coming from a drop in prices ie houses are becoming more affordable.
I don't know how many are capital gains oriented. With no guarantees of any capital gain over the next 5-10 years, the sensible investor would look at a good income in the region of 6-8%. Those properties are scarce, but there are some around if you look hard enough.
TTP, are you officially admitting that you are Tim?
I recall some years ago one of his posts being signed off with his full name followed by the letters ONZM. It was quickly removed. Others saw it too.
It pays not to get forum posts confused with sending emails on Outlook.
"Property is a long term game" is a distraction by property promoters so that buyers will buy and miss seeing the real picture when residential real estate price risks are high.
Here is what the property promoters don't tell you or want you to know. Here is what most owner occupier buyers don't see or know.
Buying residential real estate for own use is the largest purchase for most households. It is also the main source of funds by most retirees to finance their retirement (via downsizing, or sale to move to retirement housing, etc).
Here are some financial calculations for owner occupier buyers to think about. The Peaker and Buyer Today.
Let's compare a Peaker and a Buyer Today (BT) in NZ? (Assuming that the Peaker can hold on and is not under cashflow stress to sell.)
1) Peaker
The median house price at the peak for Auckland was $1,300,000
With an 80% LVR, this is a mortgage of $1,040,000
The 20% equity is $260,000
2) Buyer Today ("BT")
In 2021, the buyer who waited, deposited the same $260,000 equity into a bank deposit earning interest. Also BT would rent an equivalent house and have still saved money due to the rental being below the monthly P&I mortgage payments of Peaker - in 2 years the savings would have been about $20,000 annually. So a Buyer Today would have an amount of $319,349 to use as a deposit.
The current median house price for Auckland is around $1,040,000
Equity deposit of $319,349
The mortgage at this purchase price would be $720,651 (an LVR of 69%)
The Peaker has a mortgage which is higher by $319,349 (mortgage of $1,040,000 for Peaker vs $720,651 for BT)
Assuming BT, pays the same exact dollar amount each year that Peaker pays for their mortgage, as a result of that additional borrowing, Peaker is paying $856,632 more over the 30 years than BT (This is due to higher borrowing amount of $319,349, and total interest on this of $537,283 over 30 years). BT is mortgage free by the year 2042, whilst Peaker continues to pay their mortgage until 2051 (9 years later) - so after the year 2042, BT can save all that money that Peaker continues to pay on the P&I mortgage.
Assuming same incomes, and same living costs (food, travel, etc except mortgage) , BT can save the $856,632 in payments that Peaker is paying.
Remember that at the end of 30 years, the house price will be EXACTLY THE SAME for Peaker and BT.
BT will have more money available for retirement than Peaker. Conversely, Peaker will have less money than BT at retirement.
That single decision to buy in November 2021 would have cost $856,632 extra to buy the exact same house for Peaker compared to a Buyer Today.
CAVEAT EMPTOR
And looking at the evidence for Auckland - the Buyer Tomorrow will be even better off than the Buyer Today
Even better still, the rent is cheap today and the homes even much, much cheaper come 2026/2027.
If needing to making offers today, in the "falling knife" market: Buyers should only offer -30% below current asking.
Don't get sucked into any BS that the real estate agent says. (yes every word they utter is a lie)
If they drop rates before the FED watch the NZD tumble already down 12% over last couple of years, with the downward trend in house prices I will stick with my predictions of 40% to 50% from highs and then stay there for sometime until average wage couples can afford to get a home
A reduction in interest rates is a form of saving, and in repeating this for the 100th time, 'any saving in a restricted system is captured by the most restrictive part of the system.'
In the case of houses, it is mainly the restrictive cost of land, followed by council bureaucracy. That is why normally if interest rates fall, house prices go up.
BUT remove the restrictions, then the falling interest rates have minimal effect on the housing price as supply can now keep pace with the increased demand.
But if you are into correlations, here are a few others. Spurious Correlations (tylervigen.com)
I completely agree. I am no economics expert, but when supply does not meet demand for an essential good, people will pay whatever they can afford. In terms of housing, what they can afford is dictated by interest rates. If we increased supply to exceed demand, the whole dynamic will change and house prices would go backwards in a real hurry. But I doubt that would happen as the government would just turn the immigration tap on harder.
Yet in jurisdictions like Texas which also have very high immigration, this does not affect house prices for the same reasons.
But one of the main attractions of the NZ immigration system is Aussies and Singaporeans can buy property as a passive investment eg holiday homes in Qtn and make money by doing nothing.
It has been easier to make money holding land/housing from the market, causing a further restriction in the market, and then flicking it on, than doing any real work.
That is why we have such a low productivity rate. Why work when you can make more money by adding no value-added value?
The only reason to invest in NZ is because you can make a super profit here (of the backs of ordinary NZers), that you can't in any other country.
Texas properties are affordable because they tax property rather than incomes. It's pretty smart when you think about it. Incentivise working and trade. Disincentivise inefficient and unproductive landholdings. They could do even better if they switched from property taxes to land taxes only.
Texas has no state property tax, but local authorities like Municipal Utility Districts (MUDs) which are like Body Corporates but on a suburb-to-city scale do. The money of which is spent locally on schools, community management etc.
Most economists do not understand land economics. You only have to listen to them to understand that.
And the key to changing the dynamics is NOT for supply to exceed or be less than demand, as this would be part of the restrictive boom/bust cycle (our normal), BUT TO EQUAL DEMAND.
I think the big difference between your view and mine is that the land also needs to have services and amenities - water, sewerage, power, transport, parks, playgrounds, shops, etc. Its very hard to see how they can flood the market with land that has access to those services and amenities. Even the current planned approach is doing a bad job, with many of the new developments lacking anything within walking distance, the American dream I guess.
It's easy to supply all that you mention when the market is stable as it is far easier (less risky) for developers to plan for these things.
The reason for the difference of view is maybe because I have many years of developing in both types of systems and know which one works best.
Developers will add an extra lane to the motorway, a new train line, a new sewer main, a new treatment plant, etc?
Indeed...we know how many subdivisions stall due to lack of infrastructure.
Yes to all your points to a degree.
You already pay for roads via income tax and road user and petrol tax, but still, under the less restrictive systems, developers naturally have more money available to spend on real value-added amenities because it hasn't been wasted by being gouged in non-value-added fees and roots. Trains are heavily subsidized as it is, as the model is wrong.
And it is far easier, cheaper, and more environmentally friendly for the developer to put in their own wastewater systems in 90% of greenfield subdivisions.
You need to look past the present failed system, to what they should be doing.
"If we increased supply to exceed demand, the whole dynamic will change and house prices would go backwards in a real hurry."
Isn't there is a large number of listings for sale currently? (aka supply).
Listings for sale are at a 10 year high - "The latest figures from Trade Me Property paint a pretty grim picture of the current housing market, with average asking prices tumbling and the number of listings on the site climbing to a 10-year high." - https://www.interest.co.nz/property/129178/asking-prices-trade-me-prope…
There is demand for residential dwellings - just not at current price levels.
There is a shortage of AFFORDABLE housing. Developers could build as many multi million dollar mansions as they wanted but that doesn't solve the issue of a lack of AFFORDABLE housing.
Haha if this is worse than the Irish crash, what were they complaining about? The odd mortgagee sale?
We must have some good safety systems in place if we’ve had this massive crash and only scraped the bumper.
Are we there yet Shrek?
No Donkey, the end is far far away!
OK so its not the Irish crash (yet), but you guys predict it will be. You may well be right, but its a bit too early to call that IMO. Many on here were predicting a major worldwide crash last week because the Nikkei went down a bit! And not that long ago the entire US banking system was going to implode because some small stupid banks went under - every week we heard it will happen any time soon, and now those voices have faded away.
NZ house prices are still up 100k in the last 4 years.
Keep rolling back that comparison year every few months Jimbo and you can continue to use this argument for a few years yet.
Are you talking real terms or nominal terms? Prices approaching 2017 levels and I'm sure we haven't had any inflation since then right?
I'm talking about using terms like worse crash than the Irish. It seems like hyperbole to me. It may become true I guess.
Personally I think a long period of stable house prices (reductions in real terms) would be a good outcome from here. I wouldn't call that a worse crash than the Irish, even though it could result in a similar level of real decline.
Hi JJ, I see us on track to besting the Irish crash, but hey, I may just be optimistic:
Or will we beat it in Real terms?? as inflation was not a great concern in the 2006 to 2012 property crash.
Anyone have an update on this chart?
Here is the most up to date version I could locate: https://imgur.com/RPlCniI
Thanks. This downsnake has more tales to tell, over the next 2 to 3 years.
Well done mate.. knowledge trumps stupidity.. hopefully the spruikers will learn going forward
"hopefully the spruikers will learn going forward "
The property promoters have learnt their ABC in order to earn their income to
1) keep their job
2) earn income for their employer
3) earn income for themselves so that they can continue to pay for their living costs and investments (this may include a portfolio of negative cashflow residential properties or a property development project)
Remember they will act in their vested financial self interest.
CAVEAT EMPTOR
For those who don't know, here is the property promoter's ABC:
Opes Partners questions the unsubstantiated claims made by other property promoters here:
To owner occupier buyers: CAVEAT EMPTOR
Nice try NZGrinch its Christmas Eve for home owners.
Yep. More to come. Oh the humanity, how will the over leveraged survive if cap gains becomes extended cap losses. Ring ring...hi it's the bank, find some equity please, oh it's only your family home, oh well sell that before we do.
Ring ring…hi, it’s don’t be a dick…mate, zero sympathy for those greedy idiots who watched a few YouTube webinars from so called “experts” and tried to make a quick buck out of property and got bit in the ass as a result…but jeez you seem to be enjoying the idea families will lose their home as a result and that is a wee bit morbid 😳
Unfortunately that was the model the seminars sold them. Max debt, different banks to hide the leverage, and stack to the moon for capital gain. Lack of empathy...this model has "bleeped" NZ and turned NZ into a giant endless mouse wheel making money for the global banks system, at the expense of renters, FHB'ers and their employers. Then there's the inflation it fuels which "bleeps" everyone.
So yes. Zero empathy for this cancer to NZ.
Absolutely
House price hyperinflation has led and fed wage, services and goods inflation.
A cancer that eats at the threads of social cohesion.
That’s a sweet rant…what’s the fix…you’ve said DTI for rentals to 3X…so on the back of that would we have less rentals available…or just more super wealthy landlords as they’re the only ones who could afford to buy?
How about a compulsory super, use that to fund a heap of basic homes that are warm, dry and have rent to own opportunities for the occupants, I’m not trying to root for the property investors but also I’m not keen on killing the economy just to kill the “ponzi”, but wow the hate for property is strong in a lot you fellas…can picture you all standing around in a post apocalyptic NZ saying “we did it, we killed the ponzi” 😂😂
You could argue people have to lose a lot so they learn the lesson and are more willing to support better policies in the future.
The majority of voters want more affordable houses, and i suspect the majority now want CGT (equality). Even Luxon sees the writing on the wall (he is starting selling up his portfolio). Watch the rest of the Nats MPs exit the market quietly too.....
The government knows they cant control the OCR and have lost the ability boost the ponzi ... the more they try the less affordable NZ becomes and public services suffer.... so the faster young kiwis leave NZ. And who do we replace them with now we have had to stop letting in every immigrants entire (poor) family to stop the infrastructure decline? So - the game is surely up.
We should keep track of how many MPs are selling over the next year. I reckon the Nats will now go from trying to appeal to the boomer landlords (who will be whining continuously as they watch their residential housing retirement funds dwindle and become insufferable) to trying to appeal to the majority - to stay in power. Whatever RBNZ do will have no impact on the situation nymore.... every option they table a major downside especially trying to lower credit cost to stoke the economy...
Bold call, would be ace to see them get property prices to plateau over a longer period and let the affordability come with a mix of prices holding (DTI/LVR), lending being more affordable (OCR at NIR) and incomes rising. If prices continue to slide majorly then that would surely suggest the economy is sliding with it, can’t see how prices would continue collapsing in an economy firing on all cylinders, and then those young families are no better off at all, either out of work or stuck with stagnant wage growth.
I also love how people say they want lower house prices…until they buy a house, then, do they don’t really want prices to go lower, do they? 😉😂
"they don’t really want prices to go lower, do they?"
The lower they go, the better it is for their next home, and everyone else except those who have a leveraged property portfolio. (less Private Debt, that currently absorbs far too much disposable income, is what we actually need to revitalise the economy. And it's not the % that matters as much as the size of the Principal involved) What is it that Real estate Agents past always touted? "It doesn't matter what the price is, if you buy and sell in the same market".
eg: 2 houses available today - 1 @ $1m the other at @ $2m. You buy the $1m one and prices halve, but you want to move to the currently $2m one that then costs $1m. You sell and 'lose' $500k on the first but 'save' $1m on the second. And trust me, doing that won't stop your lender from swapping your loan from one to the other. It's all the same to them.
The trouble, is the owner at the top of the currently existing pyramid; the one with the $100m property that no one will buy doesn't want to see it fall to $50m to find a buyer, and it's they that control The System and make sure the rest of us keep the Debt Machine going.
Just make DTi 3x for all rentals. Let spec land use tax paid equity. Perhaps a higher rate for new builds to drive that.
We live in hope for this. If someone has a mortgage free property or two then they have capital to free up via reverse mortgage and the like for funding their retirement thanks to their diligence in paying it off. More so if they own more than one property, and more will likely do this if the values of their properties keep declining, so who really 'loses' form lower property prices? Ok, so many won't be able to leverage their houses 'future gains' to start businesses etc, however this brings about the realisation of how much the country and economy relies on the expectation of never-ending growth a.k.a never-ending increases in the amount of debt which of course is a fallacy.
"Watch the rest of the Nats MPs exit the market quietly too....."
LOL. Spat coffee everywhere.
Methinks you credit them with far more intelligence and financial nous than they actually possess.
Big donor from property lobby approaches Luxon.
BD: The market is dead, we need you to provide some support, it's time you paid back out donation with some results
CL: we just rolled back all the property initiatives Labour put in place to restrict house prices what more do you want
BD: we need you to send a stronger signal that people need to sell at much lower prices than they think they can get.
CL: How the fuck am I supposed to do that?
BD: Sell one of your properties at much lower price than the peak. And let people know about it. Pour encourager les autres.
CL: Fuck off, I'm a hold till you die, you can never lose with property type
BD: Do it or we're pulling out party donations
CL: Fine.
Financial self-interest aside, it makes perfect political sense if you are the Nats to "appeal to the majority" (as you describe it) via more affordable housing.
The boomer landlord types will - despite their complaining - continue to vote National. What is their alternative? Maybe some might go to ACT, but they're not going to suddenly start voting for the left parties ... particularly when you have the specter of Greens for example with more "extreme" wealth taxation policies.
I have it on good authority that places like Riverhead/Coatesville are bucking the trend.
Large land holdings in particular I hear
and pieces of dirt
Apparently the great swamps of Riverhead is really sought after by the native stilts........and they will pay squllions, to get their feet donkey deep in its mud......
Pretty sure Buffet exited a whole bunch of tech positions so he could get enough cash to start buying a sliver of Riverhead, he's priced out of Coatesville next door so has to settle for next best thing.
The stilts are slowly adapting to feed on the floating fecal matter after each rain event. Riverhead receives most of Coastesville's rainwater run off, and this excess water infiltrates the sewer network resulting in overflows.
Legend has it the prophet's next scroll is buried there.
Coatesville - NZ's most expensive suburb. Up 40% in 3 years...that's not too bad is it?
Who wants to be a millionaire? Hahahaha
https://www.oneroof.co.nz/news/coatesville-overtakes-herne-bay-as-nzs-m…
"play the waiting game until conditions eventually improve," = discounting lag effects of rate hikes (increase in bankruptcies + unemployment "balance sheet recession")
"The average dwelling value in Auckland has now declined for six consecutive months and was almost $53,000 lower at the end of July than it was at the end of January."
The pendulum is swinging the other way -> a house could lose more in a year than many earn in salary.
I had dinner with a family friend last Friday who happens to be a real estate agent and she is saying house prices are selling 20-30% below land value in Mangere Bridge/Onehunga which she services, with a few exceptions.
"house prices are selling 20-30% below land value "
What is the land value number being referred to above?
1) current market value of recent comparable transactions paid by developers?
2) land value on the most recent council valuations?
3) other - please provide more details?
Thank you in advance.
Land value on most recent CV
The inflationary environment will dictate interest rates and therefore asset prices.
The inflationary environment will dictate asset prices....interest rates will dictate the level of defaults (and subsequent deflation/disinflation)
Thank God. I thought the article was about New Zealand
Ouch, Auckland prices going backwards at -$300 per day!
Interest rates on the way down, your chance to drive a hard bargain and pick up a real estate steal while they're cheap.
In a few years time you'll all be wishing you'd taken that punt, but you sat on the fence.
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