The national median days to sell hit 50 in August, the highest it has been in an August month since 2008, the Real Estate Institute of New Zealand (REINZ) says.
Meanwhile, the national inventory level surged 30% year-on-year in August, reaching 29,579 properties on the market. This was, however, down 977 from 30,556 in July.
REINZ says the national median price dropped $5,000 to $765,000 in August year-on-year, but rose $12,000 from $753,000 in July.
The total number of properties sold fell by 40 to 5,685 in August year-on-year, and by 307, or 5%, from July.
The REINZ's House Price Index, which is adjusted to account for changes in the mix of properties sold each month, weighed in at 3,563 in August, down 0.8% year-on-year, and unchanged from July. The HPI is 16.7% below the market peak reached in 2021.
In terms of the national median days to sell, it's the first time this has reached 50 since 2008 when it came in at 57. Interest.co.nz records show there've only been two other August months since 1992 when it has reached 50 or more.
At 50, it was up eight days from 42 in August 2023, and up one day since July.
'It would be an overstatement to say that we are at a turning point in the market'
"We continue to see an increase in the average number of properties listed. Although the inventory is down slightly compared to last month, the volume of properties for sale continues to provide a lot of choice for buyers," says REINZ Chief Executive Jen Baird.
"This month [August], we saw further signs of a change in market sentiment, with local agents reporting increased confidence in vendors and purchasers, the return of investors, and increased activity, particularly at open homes over the last two weeks of August. They attribute this change to the decline in interest rates. However, it would be an overstatement to say that we are at a turning point in the market - we merely have our indicators on. While there is a rise in optimism and confidence, we are hopeful that better times are still ahead," Baird says.
In Auckland the median price rose $10,000 to $960,000 in August from July, but was down $50,000 year-on-year. At 1,801, Auckland sales volumes were down four from 1,805 in July, and down 18 from 1,819 in August 2023. Median days to sell came in at 51 in Auckland, up 10 year-on-year, the highest in the city since 2001, and well above the 10-year average of 39.
REINZ says August standouts include Northland's 23% year-on-year increase in sales volumes to 173 sales, 13 regions recording an increase in new listings year-on-year, with Gisborne's increase at 69%, Marlborough's at 41% and Manawatu-Whanganui up 40%. Just six of 16 regions had a median price increase year-on-year, with Otago up 7% to $640,000, and the West Coast up 7% to $357,000.
Days to sell - REINZ
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*The map and table below come from the REINZ.
50 Comments
Saw a post about a property asking for $550k with a rent appraisal of $870 per week (dual unit). Net cashflow deficit of $15k if 100% leveraged.
Basically, the price would need to either drop to $320k or interest rates fall to 3.5% to make it stack up investment wise. RV in 2017 was $230k for reference.
Are you sure you calculated that right? 550k * 5.89% / 52 = $622.98 a week in interest. Or do you mean the amount you have to put in to pay the principal, if so that is not exactly a loss.
There are a lot of investors who would be prepared to accept a deficit in anticipation of interest rate decreases and eventual rent increases.
Those who have been in property for many years/decades aren’t phased about the current downswing in the cycle.
After the longest upswing in living memory, a sustained period of falling property values was inevitable. The road to recovery was bound to have its twists, turns and gradients - but the underlying enthusiasm for property remains unabated…… One only has to consider the numbers coming here each day - in their relentless pursuit of property ownership and the long-term prosperity it brings.
TTP
So property investment as the hero's journey basically
@Three Veg - I would not say "hero Journey" however it worked for me - bought my first house @2011.
Today Gross = $3.25 Million & Net 1.2 Million (equity) Cashflow - $60k per annum on interest of 6.89 when interest drop to 5.5 Cashflow will get to -$12k.
Now if property prices grow at a modest 3 - 5 % per annum for the next 10 years well who knows that might be heroes journey? I am not spruiking just saying it does work. IF you know how to make Net 1.2 million in 13 year lettuce know.
bought my first house @2011
The key question is will the owner occupier buyers of today purchasing at today's prices experience the same level of house price growth and returns as the buyer in 2011 experienced?
The highly leveraged buyers of the 2020 - 2022 period expected that they would experience similar house price growth rates and returns of highly leveraged buyers in preceding 50 years.
For those that are unable to see the mathematics between the Peaker and the Trougher.
For owner occupier buyers: CAVEAT EMPTOR. Beware of those with their vested financial self interests.
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") - Aug 2024
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 3 years the savings would have been about $20,000 annually. So a Buyer Today would have an amount of $340,233 to use as a deposit.
The current median house price for Auckland is around $950,000
Equity deposit of $340,233
The mortgage at this purchase price would be $609,767 (an LVR of 64%)
The Peaker has a mortgage which is higher by $430,233 (mortgage of $1,040,000 for Peaker vs $609,767 for BT). BT's mortgage is 41% lower than Peaker's mortgage.
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 $1,232,229 more over the 30 years than BT (This is due to higher borrowing amount of $430,233, and total interest on this of $801,996 over 30 years). BT is mortgage free by the year 2037, whilst Peaker continues to pay their mortgage until 2051 (14 years later) - so after the year 2037, 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 total $1,232,229 in payments that Peaker is paying. If BT invests the annual P&I payments that Peaker continues to pay after the year 2037 at 4.0% p.a, then in 2051 this amount will grow to $1,401,500.
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 $1,232,229 extra to buy the exact same house for Peaker compared to a Buyer Today.
The most false confidence I’m seeing is from desperate agents and the highly leveraged who need sales and increasing prices again for their own self interest.
The yield curve is just starting to normalise from an inversion that is comparable in depth and duration as to just prior to the 1929 crash and subsequent depression. To be highly confident about the future given this would be delusional ( in my opinion) - but those who are highly confident right now probably don’t even know this inversion has occurred, nor what it could mean for how the economy functions of the next 12-24 months - and the impact it could potentially have on asset prices in the near future.
The history of yield inversions and comparisons to today might make for a highly educational article on here interest.co.Nz editors. Increase the financial knowledge of your readers who haven’t been educated in this area.
Not all yield curve inversions resulted in a recession.
https://wolfstreet.com/2024/09/08/the-yield-curves-steep-inversion-now-…
Carnage is coming. I see some of those areas with massive increases in inventory are areas with loads of holiday homes. This indicates mortgage stress of primary residences so the Bach needs to be offloaded before the bank sells it. We also have loads Homes just being completed off plan, that are worth 25% less than the owner signed up for in 2020-2021. This is probably going to get very ugly……and it’s just starting.
A fool and his money are lucky to ever be in the same post code...
People do stupid things with their money all the time, which is why the majority of people are not rich. The degree of leverage determins the outcome of the stupdity in terms of long lasting consequences.
There are also a lot of properties bought as AirBnBs - either wholly, or used partially to fund the holiday home use. Adding 15% GST on to the price has killed the AirBnB market, and they are too cashflow negative to be converted to long term rentals or the owners dont want to continue holding it if they cant use it as a holiday home. So they are being sold.
It won’t make any difference. You have loads of people coming off low fixed rates in the 3-4 range, under water, who cannot afford even 5-6%. The situation is getting worse and interest rates will not go low enough to save them. There will be people coming off these low rates for a few more years, myself included. I have a 3% rate until the end of 2026. Between now and then loads of over leveraged under water property owners are going to face what is coming.
Best thing I did was cash out of the Auckland market in 2020 and get into Queenstown market - good quality houses are always selling in good time frames, the cheap stock on the fringes does ok due to high rental yields, there is always opportunities in the market regardless of conditions of the day - interest rate swaps trend averages indicate at least a 2% drop by Q425, I am picking a sharp 3.99% rate for 1 Year this time next year to spark the next cycle of recovery, until then steady as we go.
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