At first glance the housing market appeared to have a reasonable spring in its step in October but a closer look suggests it may not be as strong as it looks.
The Real Estate Institute of NZ reported 6681 residential sales throughout the country in October, up 10% compared to September.
Additionally the REINZ's national median selling price increased to $795,000 in October, which was up 1.9% compared to September.
Both of those figures suggest the market had a reasonable spring tailwind as it gears up for the busy summer months.
However there were also numbers that suggested the market may not be as strong as it seems.
First, although the actual sales numbers were up on September, the seasonally adjusted sales figure was down 2.6% for the month.
One possible reason for that may have been that there were five Saturdays in October this year but only four in October last year, which could have affected sales patterns.
And although the median selling price increased by 1.9% in October, the REINZ's House Price Index, which adjusts for differences in the mix of properties sold each month and is considered the more reliable indicator of house price movements, increased by just 0.5% for the month suggesting price movements, while positive, remain fairly subdued.
What all that suggests is a market that's warming over spring, as it usually does, but is not running away in leaps and bunds.
Perhaps that's because the biggest changes to the market figures in October were for the number of new listings coming on to the market and its flow on effect on total stock levels, which were up 7.7% in October compared to September.
"Local salespeople note that some buyers remain cautious about overpaying for properties due to relatively high interest rates," REINZ Chief Executive Jen Baird said .
"This environment encourages buyers to be more strategic in their approach, making them feel confident in negotiating with vendors to reach an agreeable price.
The increase in available properties provides buyers with the opportunity to explore a diverse range of options that better align with their individual needs and preferences, allowing them to take their time shopping around," she said.
REINZ House Price Index - October 2024
Volumes sold - REINZ
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86 Comments
The NZ real estate market has failed to fire up after the most recent interest rate reductions.
Suspect it won’t kick off until we see a 12 month fixed rate of 4.5% and that could be a while off yet.
In Auckland it’s difficult to find a rental investment that stacks up and investors are holding back. First home buyers also seem to have gone off the boil.
Will be interesting to see how the summer selling market goes.
And although the median selling price increased by 1.9% in October, the REINZ's House Price Index, which adjusts for differences in the mix of properties sold each month and is considered the more reliable indicator of house price movements, increased by just 0.5% for the month suggesting price movements, while positive, remain fairly subdued.
The bottom has been reached, look out for summer and early 2025 where the progress will continue.
This appears to be the best of it. Being a buyers market, there's certainly no need to panic. No need to rush out and buy before it's too late.
It's all very top heavy. I think it's reasonable that the still bloating inventory needs to be cleared first before a sustainable floor can be called.
"He's is basing that of recent statistics, seems like a logical way to make decisions."
There are many "statistics" used to make decisions. People can choose which have a higher relevance for their purposes. For many people in the property industry, the question might be which statistic or set of statistics has a higher probability on the future direction on future house prices? Some common statistics / data points that people have chosen to look at and prioritise over other statistics:
1) Historial house price change - 1 month, 3 month, 6 months, 10 year, 20 year, 50 year, etc
2) housing inventory
3) population changes - 1 month, 3 month, 6 months, etc
4) affordability
5) underlying housing shortage
6) construction costs
7) other
People are prioritising different "statistics" to arrive at their future house price growth expectations.
Some others may however have a unrecognised and undisclosed bias due to their situation, & select the statistic that supports their bias ("confirmation bias")
Some others may have an undisclosed financial vested self interest. CAVEAT EMPTOR.
The costs of property ownership are increasing before our very eyes. It's not just the cost of any Debt (which if anything has Bottomed, mortgage rates have?) and Council rates. eg: Last year, our Home & Contents insurance rose by 14.6%. Today's invoice for the coming year increases that by another 17.4%.
For every Buyer, there is a Seller. And no matter what the price of the transaction; be that willing participants or mortgagee sale, the price is Current Market Price. There is no 'lower than...." or higher than....." Market Price. Just Market Price. And only one Party will be 'right' in the light of future resale prices. But there is one big difference between the Buyer and the Seller of any deal - that being Future Risk. The Seller has been subject to Past Risk, now a known amount, and that ceased upon Sale. But Buyer is subject to Future Risk - an unknown amount.
And as one opinion suggests, that Risk has not been higher for generations:
"We're not going to be "saved" by interest rates going (lower): higher for longer is the future, as bond yield / interest rates cycles are multi-decade affairs. Zero interest rate policy (ZIRP) was delightful in the moment but the full consequences of that stupendous error have yet to play out."
https://www.oftwominds.com/blognov24/advice-for-leaders11-24.html
Just wait for more and more climate models to cause insurance rates to skyrocket further, thus nullifying any 'average' increase in certain areas. Who cares if the price across town is up if you have to pay 40% higher insurance costs over again in 4 years time? One would be asking for a significant discount on the sale price to counter this for it to be financially viable for many.
Quarterly figures now showing the true picture.
Auckland up 3%, annualized= 12%
On a fairly standard Akl portfolio value of say 5mill that is a wealth increase of 600k.
Rates and insurance pale in comparison.
Excellent news, almost had to fly economy a few times this year!
🥂
to be more accurate its +2.4% over 3 months which is + 9.6%
or -10.8% for the next year if your chosen narrative is based on the monthly Auckland figure of -0.9% (in one of the peak selling times) and extrapolate that to -10.8% for the year. Certainly a disappointing result for Oct
Auckland up 3%, annualized= 12%
On a fairly standard Akl portfolio value of say 5mill that is a wealth increase of 600k.
Why waste your time in residential property?
A share price of a listed company was +92.75% in just one day. For an investment of only $1, this becomes $1 billion in 32 trading days (just in time for this New Years Eve). FYI, the annualized rate is a number that 10 to the power of 71.
This morning, Commonwealth Bank (ASB) forecasted Trump's tariff plan would keep global inflation and interest rates high. It had already sent the sharemarket soaring and the bonds market falling.. So winter might have sprung back into action.
It will be "sell now" instead of "buy now", FONS..
"FONS"
What does that acronym / abbreviation that stand for?
http://m.acronymsandslang.com/FONS-meaning.html
The people are out looking at the Open Homes in Christchurch and homes are selling well.
I do believe that many are waiting for the next .5% drop in interest rates before they buy and there will be many doing this in ChCh.
Auckland market is going to be flat for quite awhile and only increased due to overseas immigration.
I do know that there are heaps of people who have lived in Auckland all their lives now coming down south and are telling us that Auckland has gone downhill and are pleased they have moved south for several reasons.
A few people ? LOL it got rubbished by the 20+ DGM's on this site. It would appear the bottom has already gone. The big unknown now is not interest rate drops in November but what Trump is going to try and pull out of the bag in January. Lets be real here, all the stars never align there is always some reason DGM's don't want to buy now.
Probably not going to get my 3 to 4% gains either for Tauranga, will have to wait for reliable figures released in 2025. Could still be close enough not to worry about it, most people will settle for no losses in 2024. Big potential changes still on the horizon this month on the 27th.
The excitement a few have had with the narrative shift post Trumps W that his policies will keep rates high has been interesting…the very same commentators who all said bank economists had no bloody clue when the economist's were talking about slashing rates recently are now quoting these same bank economists if they are talking about rate increases…I love how they swing so fast when it starts to fit their preferred narrative 😂😂
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