House prices continued falling in July with the national median price declining 2.2% to $753,000 from $770,000 in June. It was also down by the same amount compared to July last year, according to the Real Estate Institute of New Zealand (REINZ).
However the fall in Auckland was much greater, with Auckland's median price declining $80,000, or 7.8%, to $950,000 in July from $1,030,000 in June.
The biggest monthly drop in Auckland was in its central suburbs, which includes suburbs such as Herne Bay, Ponsonby, Grey Lynn, the CBD, Parnell, St Heliers, Epsom, Remuera, Mt Eden and Mt Albert, where the median price declined by $182,000 between June and July, dropping from $1,250,000 in June to $1,068,000 in July (-14.6%).
That suggests the biggest falls in prices have been at the top end of the market.
Wellington's median price declined by $28,000 in July and the Canterbury median declined by $36,000.
See the interactive graph below for the full regional median price trends.
The REINZ's House Price Index, which is adjusted to account for changes in the mix of properties sold each month, declined by -0.3% nationally in July compared to June and was down by -1.9% over the three months to June.
The table below shows the change in the HPI in the main urban districts around the country over the year to June.
The ongoing decline in prices follows falls in vendors' asking prices, as reflected in the most recent reports by property websites Realestate.co.nz and Trade Me Property.
However the decline in asking prices appears to have been to the benefit of buyers, encouraging more of them to commit to a purchase.
A total of 5806 residential properties were sold throughout the country in July, up 19.7% compared to June and up 14.5% compared to July last year.
In Auckland, the effect lower asking prices had on sales was even more evident, with 1805 residential sales in July, up 21.5% compared to June and up 5.5% compared to July last year.
See the second interactive graph below for the full regional sales volume trends.
The jump in sales in July pushed down the total stock of residential properties on the market from 31,745 in June to 30,556 in July, but that was still up by a whopping 32% (+7466) compared to July last year, suggesting buyers will continue to have plenty of stock to choose from and will still have the upper hand when it comes to negotiating a price.
Median price - REINZ
Select chart tabs
Volumes sold - REINZ
Select chart tabs
NZ House Price Index - July 2024
•You can have articles like this delivered directly to your inbox via our free Property Newsletter. We send it out 3-5 times a week with all of our property-related news, including auction results, interest rate movements and market commentary and analysis. To start receiving them, register here (it's free) and when approved you can select any of our free email newsletters.
127 Comments
Damn. Imagine house prices fall a lot further... smart kiwi kids start to stay to rais ea family and become teachers and police and start productive businesses.. our economy shifts to productive business we all have more money to spend and the rich poor divide narrows.
Vs the few get richer, society starts to break down and all the smart kids leave.
Who is the DGM? Lol
It's always best to look at these Ponzi data sets emotion-free. What's quite interesting with this data set is comparing the magnitude of change between the 3 month vs 12 months - near-term falls are directionally larger than longer term falls. Make of it what you will but subjectively any notion of a symbiotic relationship between house price, the wealth effect, and general economic vitality measures seems to be in effect.
Problem is that if people start believing their net worth is falling $17K per month, it's not good psychologically for consumption. And we need those wallets to be open. Because if they're not, the Ponzi starts to cannibalize itself - like an animal eating its own limbs.
"It's always best to look at these Ponzi data sets emotion-free"
So you're into comedy now J.C. that's a good one 😂.
Good post of course, but it will fly way over the heads of the masses who cheer for a collapse of house prices, like they cheer for their favorite sports team.
So you're into comedy now J.C. that's a good one
Nothing funny about it Dr Y. Dispassionate might be a more apt adjective than 'emotion free', but it's definitely not amusing. I don't think anyone should underestimate the destructive effects that emotion and psychological impacts can have on our economy. The problem is that I think we have been to led to believe our own BS, so when things don't work like we've been told by the ruling elite, media, influencers, and our peers at the water cooler, people start to get nervous.
Or not funny if you're Yvil's neighbour in St Mary's Bay and you have an empty home you can't sell
https://www.trademe.co.nz/a/property/residential/sale/auckland/auckland…
Paid $2.35m in 2015
CV. $4.05m
Asking $2.85m
Bet's on what it will sell for?
"Bet's on what it will sell for?"
Depends on whether the vendor is willing to meet the market. The property has been listed since April 2024.
There is a property of a property trader who has listed their owner occupied property for sale in Jan 2023 - 20 months ago. They have dropped their price to a fixed price and still unwilling to meet the market, so it continues to remain unsold.
"I don't think anyone should underestimate the destructive effects that emotion and psychological impacts can have on our economy"
The bigger the party, the bigger the hangover.
Remember, the extreme debt risks were preventable back in 2016 when the then Finance Minister did not give the RBNZ the tools they requested to address macroprudential risks. Remember that there was lobbying by those with their vested financial self interests to not implement the debt to income measures. It may also have become a political issue with the upcoming elections at the time and may have cost potential votes for the incumbent government at the time - this policy would have adversely impacted property investors, and most owner occupier buyers (including first home buyers) - a potentially large voting constituency. At the time many with their vested financial interests were arguing that the debt to income restrictions would restrict first home buyers from buying (what they didn't say was that it would also protect first home buyers from taking on too much debt because that would not support their case and vested financial interests)
The RBNZ can only operate with the tools available. If the necessary tools are unavailable, then there are consequences of having inadequate resources.
https://www.interest.co.nz/property/85201/reserve-bank-confirms-meeting…
The RBNZ governor stated in 2021, that the choice by the government to allow or not allow DTI's was a political one:
But he has suggested that the Government's decision around giving the central bank debt-to-income (DTI) restriction powers is a political one, as it might adversely impact first home buyers.
"It comes down to a political decision around whether they [the Government] are willing, or not, to provide those tools and accept some of the challenges that may bring," Orr told media this morning.
https://www.nzherald.co.nz/nz/reserve-bank-boss-adrian-orr-warns-mps-of…
If you assume it would have taken 30 months, then the DTI framework may have been ready to go sometime in in 2019. This would have been before interest rates reached their record low levels in mid 2021.
If a debt to income ratio of 5 was imposed back in 2019, then a significant amount of lending would not have been made (and debt to income levels would have been less likely to have reached their record levels). Many first home buyers would have been rejected for large unaffordable mortgages like this guy (https://www.newshub.co.nz/home/money/2021/11/first-home-buyer-not-very-….) He was disappointed at the time of his loan rejection, but in hindsight he is likely to be thankful that the bank refused to give him a large mortgage that he applied for and hence avoided cashflow stress and a large loss in his equity (and potentially negative equity).
As a result of that single policy decision back in 2016, this will result in potentially thousands of highly leveraged owner occupiers who purchased in 2020 - 2022 being collateral damage, including those first home buyers that you refer to. This will cause cashflow stress, mental stress and unfortunately, some will resort to self harm.
This will likely also lead to an increase in demand for social housing.
There has been a lot of speculation in residential dwellings in many other countries also - look at Japan in 1990's, Ireland in 2007, USA in 2006-2007. There were many owner occupiers that became collateral damage.
Here is an example of owner occupier collateral damage from falling house prices elsewhere around the world:
1) https://www.investorschronicle.co.uk/2012/09/20/your-money/property/ove…
2) https://youtu.be/iKPG_l1P7lk
3) https://youtu.be/ugBKnP2FKDM
4) https://youtu.be/fiCXsu_4BoA
5) https://youtu.be/1hi7gV9uyK8?t=2297
it's not good psychologically for consumption. And we need those wallets to be open.
True, but to what end JC?
Maybe we have to face the reality that most of the recent decades have been debt fueled consumption 'growth' and that if opening the wallets is just more of the same it's only ever going to end one way (an almighty crash when the can finally disintegrates from being kicked too many times).
While I very much want lower housing costs (rent and purchase prices), I take no joy from these reported decreases because they aren't from deliberate corrective measures to fix the cost of shelter. Another spin of the wheel so to speak and nothing that more population growth and lower interest rates couldn't reverse.
TTP's certified qualifications are more along the lines of price fixing.
"Problem is that if people start believing their net worth is falling $17K per month, it's not good psychologically for consumption. And we need those wallets to be open."
From the peak, the collective fall in wealth in housing is NZ$295bn in nominal terms. This is approximately 72% of GDP.
In inflation adjusted terms, from the peak, it has been a 26.5% fall in purchasing power.
a few more OCR drops will see that happen next year
Wouldn't get your hopes up. For that to happen we'd need major Govt intervention in the market, again. Job losses, business closures. OCR cuts got us looking like we're slipping down a muddy bank grasping at green shoots to try and stop us sliding.
I don't believe so, things changed post Covid and the regions are now more desirable than ever. Auckland is now pretty much buggered with traffic congestion and its never going to improve. The market will turn pretty fast, lets come back here are Christmas, only a few months to wait.
Indeed, there is still hope in the form of lower interest rates and population growth. We haven't reformed taxation so that owning more property than you need to live in is a poor long investment. Only when the masses believe there is no chance of owing multiple houses being a road to riches, will we see capitulation. As such, there is a chance we never will with current settings (tax, immigration, interest rates via inflation midpoint target of 2%).
Patient FHB's who ignored the call to buy in August 2023 will have done well adding interest to their deposits as opposed to paying it! Look at what's happening now. The flawed August 2023 bottom call is hanging on by a wafer 0.2% margin. If adjusted for inflation, that's equating to quite some fall on a pa basis - Nice!
Retired Poppy
"Patient FHB's who ignored the call to buy in August 2023 will have done well"
Yeah, and those FHB who listened to your call throughout 2017, 2018 and 2019 are now finding properties 30 to 35% more expensive.
And don't blame Covid; your advice was poor throughout 2017-19 as house prices continued to rise. The only Covid effect for them was that they missed out on the opportunity to pay their mortgage down at 2.5% as your favoured advice of term deposits got next to nothing.
While I reluctantly agree with you (with hindsight) on the 2017, 2018 and 2019 statement. It is hardly something to crow about as a known fact in the same way I wouldn't claim someone was alive and well until the life support machine was removed.
It was a gamble on whether or not Orr would cut at the start of 2019. After the first cut in 2019 though, I would say the chances that they would continue to prop up property to save the economy became more likely as we weren't even in recession. While I wasn't commenting back then, I don't think anyone was predicting interest rates going as low as they did nor as fast as they did. Personally, I wouldn't have taken long term pain for short term gain, but I guess I'm a contrarian for a reason.
Exactly and that the government would intervene and employ the entire country and prevent any business failure while simultaneously creating a ‘cost of living crisis’ by flooding the country with cheap money and massive deficient spending while doing nothing to increase the quantity of goods/services produced (ie creating massive aggregate demand to keep asset , goods and service prices high to avoid deflation at all costs).
We can’t do that every time a recession rocks up on our door - at some point real productivity is the only thing that counts - not printed money.
I also called August 2023 as the bottom, albeit a fair bit after you Zwifter. I think we may prove to be off by 0.5% by the HPI standard. Im sure RP will be leaping around on the various threads with his usual passive aggressive lol's if that happens. In the meantime he will keep quiet about himself predicting house price crashes on this site since 2015. Or hinting that he wouldn't be surprised if we bottom out at 2012 prices.
I'm looking at the HPI report, the 0.2% gain in the year, the upward trend through August 2023, the downward trend through August 2024.
Mate. Come on, now... the HPI "first bottom", remember last year, March, when all the banks were bleating on about how the bottom is in, buy now! Then the election sugar rush. Where is all that sentiment now? There are a save few who are promoting property across everything investment related I see. FB IP page is a great place to start for sentiment, and it ain't nice.
Printer8, now that you're once again triggered (as are others here), let it be known that I've already owned my wrong call so there's little point in you prattling on. I think it's time we celebrate as a collective that house prices are falling - that's all. It's a given there will always be the selfish holdouts wanting to pull the rungs on the next generation for their own ends. These folk lead really sad lives unable to show empathy for others.
This is a time for celebration!
Posted this yesterday night but thought it was worth reposting
Neighbour selling up. Deceased estate.
Premium suburb. Solid listing. Way lower than 2017 prices.
Looks like it's listed for double the 2005 price. What was the spruiker catch-phrase again? Houses double every 7 or 10 years. How about every 20 years? Doesn't sound quite as good does it?
Comparing to peak homes.co.nz price, lol. And almost every deceased estate I've viewed is a run down mess, if you're lucky they just need everything inside refreshed, but quite often they are in need of structural remediation. People in their twilight years don't tend to be on top of maintenance, nor redecorating.
Its possible that the 7.8% Auckland drop was influenced by "dungers" but statistically unlikely, and REINZ where crowing about a 20% increase in actual sales.
Maybe every "dunger" in Central Auckland sold hence the 14% fall in median price, alternately and worthy of scientific consideration, is that this is the capitulation many saw coming.
No green shoots in the July HPI, feels like the most scorhced earth report I HAVE EVER SEEN, we never had Auckland rise 7.8% in boom times. IMHO its no wonder it was delayed, they would have wanted to make 100% sure this data was correct. I don't see a conspiracy there, its peoples biggest asset and they had a duty to report the truth.
People will make decisions on this data and set reserves etc, it has to be right.
its this one
https://www.trademe.co.nz/a/property/residential/sale/auckland/north-sh…
the flow smells bad and narrow house good location location location
Here's another one close by that sold for under a million. CV $2.2M
Not everything is selling 50% below RV. But there are enough now that it seems like a trend. Those paying more are still in the mas delusion phase.
https://homes.co.nz/address/auckland/devonport/4-garden-terrace/norYM
The whole suburb is on 293m2 sites. They were selling at over $2M a while ago.
Nothing has changed except that now there are increasingly lots selling at 2017 CV and below. Not all. Some are still paying silly money but it's a prestige suburb that attracts Uber wealthy from NZ and abroad. Money is not really a barrier to many and they will happily pay just to get settled quickly.
Ignore it if you want but from what a I'm seeing there is an increasing number selling well below CV. The property algorithms don't pick them up because the agents hold off posting prices for as long as possible. I believe (and it is a belief) that the only thing still holding up prices in the suburb is a concerted effort by the real estate agents to hide low price sales supported by people in the suburb that don't want their properties to decrease in value. Unfortunately for them more lower priced houses are becoming known and people are getting nervous.
A few years ago, all the conversation revolved around was how much houses were going up. Now the conversation is only with trusted friends and there is quite a bit of concern about both the economy and people's ability to pay for the mortgage following the big reno's.
It feels the same as Ireland and Spain when the bubble deflated.
3 bed houses in our street have sold recently for $200k less. And we are certainly no Devonport by any means. Even townhouses are selling here for $800k. I wonder if the contagion will spread; if you can buy in Devonport for $1.2 mil, what does that make a house in a bad area of Manurewa worth, $400k? Or is it all about rental yield these days?
I must admit I am a bit gobsmacked by that!
The family need the money to pay off their own debt, if any paper loss is taken it will be shared across family members and will still pay off the 6.85% debt the family members have, enabling a better quality of life.
Out she goes, on the market and NOW SELLING screams the auctioneer
They tried auction and negotiation. Now has an asking price. I posted 2 others in close proximity to this one a few months ago and there were all sorts of excuses for why they were selling so low (one sold for $1M under $2.1M CV) e.g. must have been selling to a family member, it was tax dodge, it must have been renoed, etc... They are selling so low because there are no buyers.
I wonder if Chris Bishop will front the cameras today? "Look. It's a good start we've made, but it's only a start. As I said recently, we need lower house prices to benefit the wider New Zealand"
Perfect time to do so. Mortgage rates look set to fall, so those imprisoned with their holdings can hang on a bit longer. But I suspect he'll be 'busy' on other things - for some time to come.
Just my two cents:
One thing to note about the median price chart in the article is that in the late 2010’s before prices shot up dramatically, housing was already overpriced.
Historians have argued that every financial bubble eventually pops.
If our housing bubble continues to deflate and correct according to historical measures, then there’s a long, long way down to go yet.
We often forget because it's no longer in living memory, that it was called a housing affordability crisis in 2007 when National were seeking to be elected. When the Auckland average house price was $493k.
https://www.rnz.co.nz/news/political/308084/housing-'challenge'-still-n…'
Yip it isn’t being mentioned by anyone here or in the media, but there is the possibility that prices drop another 25% in nominal terms from here.
Not a prediction just a possibility that people should consider if buying/selling. Speculative markets have the tendency to over extend in both directions and as it stands a lot of people are simply expecting a return to normal still everyday now, but not realising the normal we’ve been accustomed to in recent decades is highly unusual in terms of upside price growth in housing above the general rate of inflation.
"...the normal we’ve been accustomed to in recent decades is highly unusual in terms of upside price growth..."
Quite right.
But arguably the thing that been unusual is the sheer amount of Debt the World has created in that timeframe. And as we all know, money has to find a home somewhere. And Assets of all kind have been it. Once it becomes embedded, it's nigh on impossible to remove. And that's what those who create it know and rely on. At the first sign of trouble, what do they do? (1) Lower the Price of Debt (%), then (2) Create even more of it, so the new Debt pays off the Old Debt, leaving asset prices (the collateral) intact - or so they hope.
That's a $5,870 drop PER DAY.... be a great NZ Herald headline that you will never see.
The biggest monthly drop in Auckland was in its central suburbs, which includes suburbs such as Herne Bay, Ponsonby, Grey Lynn, the CBD, Parnell, St Heliers, Epsom and Remuera, where the median price declined by $182,000 between June and July, dropping from $1,250,000 in June to $1,068,000 in July (-14.6%).
I thought the median price in those areas was much higher. If we consider them 'blue chip' suburbs, those median prices are quite reasonable compared to other major cities in the Anglosphere. Even the lower socio-economic districts of Sydney seem to have median prices around AUD1-1.2 million.
Mind you, in many ways, Aussie is a economic basket case run by a never-ending revolving door of incompetents.
When I stepped off the plane and straight into the path of the Real Estate agent, (I reckon they must have spotters at the arrivals gate! ) I asked him "How long will it take me to find a suitable place?" His reply, " I reckon we'll get you something you like at your price by 2:00pm today!". Cool! My next question, "And if I want to sell it, how long might that take?" Reply? "Oh, probably about 18 months".
Queenstown. A viper nest of vested interests today, and worse tomorrow.
Will take at least another 1% in mortgage rate reductions before we see this market start to turn around. Foreign offshore buyers banned, First Home Buyer Grant cancelled, DTI commencing etc. Council rates and house insurance have seen huge increases and the recessionary environment with job losses, hours cut back etc resulting in very stretched household budgets. Auckland house market being hit hard and usually it’s a ripple effect - when Auckland tanks its spreads to the smaller cities and provincial areas so expect it to be no different this time. No wonder REINZ delayed this release by 5 days later than usual eh!
For those who don't know, haven't been told, or unable to see it, new lows from their peak REINZ House Price Index:
1) Auckland region: -23.4% nominal; -32.5% inflation adjusted
2) Waitakere: -25.7% nominal; -36.0% inflation adjusted
3) Napier: -21.6% nominal; -31.1% inflation adjusted
4) Carterton: -20.9% nominal; -29.7% inflation adjusted
5) Horowhenua: -22.2% nominal; -31.9% inflation adjusted
6) Kaipara; -17.5% nominal; -26.6% inflation adjusted
7) South Wairarapa; -23.4% nominal; -31.8% inflation adjusted
Remember this is before the impact of leverage. For a 80% LVR buyer at the peak in the above areas, the owner would be in NEGATIVE EQUITY (except for Kaipara) - assuming that the owner has been able to maintain ownership and not under cashflow stress. Would an owner in that situation likely be happy that their equity (and likely lifetime savings) has evaporated in under 3 years?
Also something to note - remember the common, widely held conventional belief that house prices rise in line with inflation?
We traded up at peak 2021 in Masterton. Have lost 20% equity in our current place (according to ANZ/Valocity) and for once homes.co valuation is in line with this valuation (after they dropped it by 35%).
Same with our previous home, an overnight homes.co revaluation downwards of 35% in May this year. Which suggests homes.co (as we all probably know) have been applying at least a 10 - 15% adder to property values.
Something looks very 'massaged' about this month's HPI values. Auckland City HPI in June (last months release) was 3111, this month it is 3006: a -3.38% monthly decrease, not a -2.7% decrease as shown in this months summary table in this article.
We welcome your comments below. If you are not already registered, please register to comment.
Remember we welcome robust, respectful and insightful debate. We don't welcome abusive or defamatory comments and will de-register those repeatedly making such comments. Our current comment policy is here.