Early signs are emerging the glut of homes for sale that has dominated the housing market for the last 12 months may finally be moving back to a position where supply and demand are better balanced.
The much anticipated spring surge in sales finally materialised in October, with the Real Estate Institute of NZ recording 6681 residential sales for the month. That was up 10% compared to September, and up 20% compared to October last year.
Perhaps more importantly, two key indicators of the long-term movements in supply and demand have been showing signs the big oversupply of properties that has created a strong buyer's market, are starting to shrink.
The first is the overhang of unsold properties at the end of each month. While still at a relatively high level, it has been steadily declining for the last four months, from 27,727 at the end of June, to 23,347 at the end of October.
That's a decline of 16% over the last four months. While the overhang is still high - up 31% compared to October last year, at least it's now moving in a more promising direction. See the first graph below for the trend.
The second set of numbers that's looking promising is related to the first, and that's the number of properties being withdrawn from sale each month.
This peaked at 3981 in May and then steadily declined to 2580 in October. However, it still remains elevated. See the second graph below for the trend.
So two of the most important recent trends for picking the direction of the market have been fewer unsold properties at the end of each month, and fewer unsatisfied vendors taking down their for sale signs.
But hold the champagne, those signs are still very tentative and there is one set of figures that has the potential to disrupt those trends. That's the number of new listings coming on to the market.
According to Realestate.co.nz, new listings surged to 11,572 in October, up 21% compared to October last year. That pushed the total stock of properties advertised for sale on the website to a 10-year high.
Which means there will need to be particularly strong levels of sales in November and December for supply and demand to keep moving closer to being in balance.
Otherwise the market is likely to move even further in buyers' favour.
And there is only another month to go before the market shuts shop for the Christmas/new year break, which means crunch time draws nigh for both vendors and buyers to make decisions on a sale and purchase.
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92 Comments
One day Tim gets restless when "DGM" make too many posts, the next not enough. I suggest it's more a case of recurrent separation anxiety.
A sustainable floor may be near, a sustainable rise in prices is something else altogether. As the article suggests, it's too early to break the champers.
Trumpy person will have his final say on OCR in Jan 2025!
It's OK to say Trumpy. Or Trumpty Dumpty and The Orange. He won't care.
But referring to Jacinda Ardern as C _ _ _ _ y is misogyny and something to do with living rent free in your head.
It's a funny old world.
Please can you provide the share of FHB, upgraders and Investors who bought in October.
Would be interesting to see where the "uptick" has come from.
I suspect investors are jumping back in on the back of lower i.rates and a housing frenzy focused government in national. Get in before DTI's get pushed through.
RBNZ C31 might provide some clues. From Jan 2022 to June 2024 the average monthly loan commitments to investors was $945m. July, August, September 2024 was $1.35b per month.
https://www.rbnz.govt.nz/statistics/series/lending-and-monetary/new-res…
"I suspect investors are jumping back in on the back of lower i.rates and a housing frenzy focused government in national. Get in before DTI's get pushed through. "
This property in the existing dwelling market was purchased in the last couple of weeks by a non owner occupier and listed for rent. A first home buyer on a single income (a single mother) was outbid by the non owner occupier buyer.
https://www.realestate.co.nz/property/21-dampier-avenue-awapuni-palmers…
21 Dampier Ave, Awapuni, Palmerston North. Listed for rent at a 6.7% gross rental yield.
https://www.trademe.co.nz/property/residential-property-to-rent/auction…
This is the potential unintended consequences of the reintroduction of interest deductibility by the current government. If there was a zero interest deductibility policy that would have been phased in under the previous policy,
1. would the non owner occupier buyer have bought (and provided a public service as they claim)
2. would the single mother have been less likely to have been outbid?
Who cares? Its a good thing. People who can afford to buy houses can afford to rent houses. Taxpayers have to worry about the people who cant afford to rent houses, because they are the ones who end up in emergency accommodation, and on the public housing waitlist. So now a family can move out of a motel and into a $620 a week four bedroom home instead of paying $690 a week for the new build 3 bedroom home. Saving themselves $70 a week so they can now afford to feed their kids breakfast and provide a school lunch. #winning.
And what happens to the single Mum who was hoping to buy it? Does she move into the motel that has now been left vacant? Or does she stay in her current rental? Given that an investor buying the Dampier Ave house doesn't change the overall amount of accommodation, wouldn't it have been better if the single Mum bought it and the motel family moved into her current rental? Because taxpayers also have to worry about people who get to pension age and don't own their home, because they almost definitely can't afford to rent anywhere on the pension alone and either require accommodation supplement or social housing.
"Because taxpayers also have to worry about people who get to pension age and don't own their home, because they almost definitely can't afford to rent anywhere on the pension alone and either require accommodation supplement or social housing. "
The fiscal cost to the government of reintroducing interest deductibilty for non owner occupiers is estimated to be $2.92 billion until 2027/2028 tax year (conversely, this is the benefit to non owner occupier owners in the existing residential dwelling market given by government and tax payers)
https://www.taxpolicy.ird.govt.nz/-/media/4f742049bc7b437a9a8b98520a582…
What could the government do with this money instead?
Improve existing infrastructure, invest in new infrastructure, improve health system, build more social housing. Make lives better for all New Zealanders rather than a small proportion of New Zealanders.
One Roof reporting this today:
The latest CoreLogic Buyer Classification data showed that first-home buyers remain a strong presence in the market, growing their share of purchases from a touch less than 27% in Q3 to almost 28% in October – a new record high.
Meanwhile, the gradual re-emergence of purchasing by mortgaged multiple property owners (i.e. investors) continued in October, with a 23% share of activity, up from a lull of less than 21% back around April.
Certainly, property owners/sellers will break out Champagne.
Buyers have had a decent chance during the market downswing of the past 3 years....... Those who seized the opportunity are already benefiting from lower interest rates and avoiding rent - as well as enjoying a more secure existence.
TTP
Honest question, why would property owners break out the champagne? If they aren't planning on selling, they aren't actually making anything, right?
I generally never comment here, I just enjoy the fighting amongst commentators, but this one has me genuinely curious.
I'm going to a BBQ this weekend with some friends. On the Friday before such event I'll typically log in to my banking app and check the Valocity valuation. If it's gone up considerably then it becomes a solid talking point on the day.
It's a great way to flex my foresight and intelligence for buying a house that in the very short term has increased in value, even if I've lost 20% since purchasing 3 years ago.
"Honest question, why would property owners break out the champagne? If they aren't planning on selling, they aren't actually making anything, right?"
Possibly the original commenter commented from their own perspective, and speaking from their own perspective as a commission earning real estate agent and celebrating the commission?
Hi TTP,
For the last year I have been renting a c. $2m house paying $950 p/w (c. $50k per year) and earning interest from having my savings in TDs. How much rent would I have saved if I bought this house with a $1.5m mortgage instead of renting it (excluding rates, insurance, maintenance, etc.)?
"For the last year I have been renting a c. $2m house paying $950 p/w (c. $50k per year) and earning interest from having my savings in TDs. How much rent would I have saved if I bought this house with a $1.5m mortgage instead of renting it (excluding rates, insurance, maintenance, etc.)?"
That is the point missed by many people who are financially illiterate. Here are the numbers for an owner occupier owner vs renter:
A) annual payments difference
1) P&I payments of $108,973 per year - $1,500,000 mortgage at 6.00% p.a mortgage interest rate on 30 year term
2) rates and insurance potentially another $8,000 -$10,000 per year
3) maintenance costs - say another $2,000 per year
Total cost for owner occupier: $118,973 - $120,973 per year
Total cost for renter: $49,400 per year ($950 per week x 52 weeks)
Net Annual savings by Renter: $69,573 - $71,573 for current year.
B) interest income deposit
Interest income on deposit of $500,000 ($2mn house less $1.5mn mortgage above):
1) Deposited at big 4 bank in 1 year time deposit at 4.8% p.a - interest income of $24,800
2) Less Tax at 33% rate: $7,920
3) net interest income on deposit $16,616
Total bank deposit after one year: $516,616
Net annual savings by renter: $69,573 - $71,573
plus interest income after tax: $16,616
Total cashflow benefit to renter vs owner occupier: $86,189 - $88,189 in current year
Conversely owner occupier pays $86,189 - $88,189 more than renter for the same use of the house.
C) Amount to use as a deposit in one year:
So after year 1 for a renter:
1) Total savings from renting: $69,573 - $71,573
2) Total deposit: $516,616
Total bank deposit (that can be used to purchase a residential dwelling in future): $586,189 - $588,189
Beware as the previous commenter has a potential undisclosed vested financial self interest, so they have a different motivation by telling people to buy.
CAVEAT EMPTOR
"You conveniently left out that the property would increase in value on average 5.3% per year, quite an important factor in this situation"
That is pure speculation on future capital gains. Remember at Nov 2021 when the high profile property promoters were espousing the house prices double every 10 years (i.e average 7.2% p.a)? People were willing to bet 500% - 1,000% of their net worth / life time savings on this scenario. (i.e 80 - 90% LVR mortgage)
People forget the warning given on investments: Past performance is no guarantee of future returns.
People are free to choose their expected house price growth rates, however people are not free from the consequences of their choice. Look at the buyers of 2020 - 2023 period who bought in Wellington and Auckland, especially those using high levels of leverage.
Compared to Oct last year (as the stock is also seasonal) we are still looking very heavy on listings.
The fall over the last few months is primarily through withdrawal, not sale. The thing is withdrawn properties have to go somewhere...
"Coincidentally" Auckland and Wellington now have historically high stock on the rental market. And guess what, renting out a house is increasingly difficult and rents are now falling.
I'd wager the overhang will flatten out or even grow in November as rentals go back to the "for sale" column.
This country's obsession with house price increases is quite frankly disgusting, and will be its destruction. There are a number of small-minded, self-centred individuals who post prominently on this site that cheer for any and all news regarding price increases. Little do they realise how decimated the tax-paying base is getting for the future and how this will impact them. There is no such thing as private acute healthcare - they will rot in the same run-down, understaffed hospitals as the rest of the country. They will be the victims of criminality as increasing wealth inequity pushes people to desperation. They will need to use the same potholled roads. They will be exposed to the rising numbers of drug-abusers and homeless. Auckland will look like San Francisco or Toronto over the next decade. Any New Zealander with an in demand qualification, with future high earnings potential and subsequently high tax-generation potential is jumping ship. There will be no money for anything (and there already isn't as per our revenue minister a couple of days ago).
This isn't sour grapes - my partner and I do not own a house. We easily could as we are both doctors, but have decided that the NZ ponzi scheme isn't for us, and will take our skills (and heavily government subsidised educations) to Australia as we finish our training over the next couple of years.
Be careful what you wish for.
Yip and anyone who desires a more even playing field for FHBs and a reduction on systemic financial risk (caused by a highly leveraged/expensive market) is belittled by these people as ‘doom gloom merchants’ who are just ‘envious of others success’.
Get real is all I can offer these types of views. Our housing market (like many across the world) has turned ugly - it isn’t something to cheer about but more something we should be ashamed of.
Look at the extremely low fertility rates across the world and especially in places where housing has become extremely expensive - if the sign of success is the local population failing to procreate because they don’t think they can afford to then you are living in lala land. It’s a sign of a species/society in decline - not good news at all. The success of those calling others ‘doom merchants’ is the real doom and gloom.
This is a consequence of the current policy settings.
This property in the existing dwelling market was purchased in the last couple of weeks by a non owner occupier and listed for rent. A first home buyer on a single income (a single mother) was outbid by the non owner occupier buyer.
https://www.realestate.co.nz/property/21-dampier-avenue-awapuni-palmers…
21 Dampier Ave, Awapuni, Palmerston North. Listed for rent at a 6.7% gross rental yield.
https://www.trademe.co.nz/property/residential-property-to-rent/auction…
This is the potential unintended consequences of the reintroduction of interest deductibility. If there was a zero interest deductibility policy that would have been phased in under the previous policy,
1. would the non owner occupier buyer have bought (and provided a public service as they claim)
2. would the single mother have been less likely to have been outbid?
Agreed, and thank you for (before you're off) contributing to ease the current pressures in the medical system to the best of your abilities. I wouldn't want to be a doctor at present given the sate of healthcare and especially mental health in NZ, add in the the lack of credence given to doctors capabilities by a growing percentage of the public. Keep up the good work :-)
I got asked at HR why Australia and not the US (where HQ was)?
1. Requirement for sponsored H1B, which the company weren't offering.
2. I've seen the 'at will' contracts the US staff have, and a whole department let go overnight. No thanks.
(Reason for moving was wife's instant full registration vs the onerous ever-changing NZ reqs which had kept her provisionally registered for 8 years, and seen a number of friends and family quit entirely).
Everything is better in Australia (except in Melbourne, which is pretty dire at present). Even driving for hours is a pleasure - no potholed roads, no speed humps, no stupidly low speed limits, no bad drivers. Compared to a drive up the south island recently - almost took my axle out on a pothole and got a chip in my windscreen from a rock.
People (may just be Queenslanders) are more friendly, the weather is fantastic, the beaches are beautiful, and council rates are a third of what they are in NZ.
Better working conditions (because they have a good tax base that can actually fund healthcare properly). Also better pay - means that we can buy something nicer and have it take up a lower proportion of our income, instead of spending 1.2 mil on a rundown 70s bungalow in an average part of the North Shore and paying that off for the next 30 years.
Yes you have described the reality of our likely future well. I have spoken along similar lines on numerous occasions only to get shut down and labeled a DGM. It seems many are more than happy to simply take the money and then live in their gated compounds with security 24/7, private health care, private schools etc.
It is a real shame we are losing the likes of you and your partner, along with many of our best and brightest however it seems that is the price many are willing to pay simply for personal financial gains.
Now, now, you listen here Jumbo. Where do you get off talking like that.
I have paid taxes all my life. We didn't have participation trophies. We didn't job-hop, we stuck at the same employer for 40 years because we knew of loyalty, respect and were committed to hard work. I have darn well bloody earned my Super so hands off.
The 2 - 3,000 year old scrolls say it is better to be poor and to live with integrity.
So western civilisation, that is founded upon the truths of these scrolls, would argue against your position and say that ethics and morality are highly intertwined with our financial decisions. If we make bad financial decisions collectively our society gets worse..if we collectively make good decisions the quality of our society improves.
My argument/opinion/view is that we haven’t been making our financial decisions with integrity (which requires good ethics and morality) hence why our housing market and society have become such a shambles (and this feeds into issues with mental health, inequality and social instability/lack of cohesion).
Just because you don’t want to see something does not mean that it is not true (ie you think financial decisions are only about making money - but that is because you wish to ignore the consequences that have occurred as a result of these previous decisions and the second order effects of them).
"you have no idea how poor proterty investors are at the moment"
Is that due to a combination of the following factors:
1) non owner occupiers paying too much for the property? (due to their continued expectation of tax free capital gains and a willingness to have negative cashflow property in the short term?)
2) taking on too much debt to finance their overpriced purchase?
That would be called investment risk.
Most cash buyers in the 2020 - 2023 years would not be under any cashflow stress.
If buying up houses during a housing affordability crisis is walking in your path of righteousness then good for you. Just don’t looking for anyone’s pity if you claim you’re poor financial (if not morally). Those same houses could still be on the market or owned by a FHB and you wouldn’t have the debt, nor claim to be poor.
The scrolls (the proverbs) will save you from your suffering when you are ready.
. Height of properties being withdrawn was mid year. Many will have been put into the rental pool leaving them unlisted for sale for another perhaps 6months+ waiting on the hope that the market picks up. It'll be interesting to see if there's another uptick in listings early 2025 from those withdrawn mid-2024.
Selective memory happening yet again Jimbo?
Refer my comments on 20 August, and the rubbishing they got from IT Guy 😂 Near the bottom of the thread. And I said it on several occasions
https://www.interest.co.nz/property/129287/house-prices-continued-tumbl…
Yeah wait and see. I don’t see much in this article or anywhere else that suggests house prices are going to start rising quickly again, and I hope they don’t. I’ve got three well educated kids in professional jobs and I would like them to be able to have kids and stay in this country so I can enjoy my grandchildren. I want to see a general reduction in living costs and an increase in standard of living and I can’t see either of those things happening if self centred arseholes are hellbent on exchanging ever increasing amounts of money with each other for non productive assets.
I think we can make the call now we were both right.
by Zwifter | 20th Aug 24, 9:24am
Tauranga pretty much stable. Expecting a rise from here. Probably a bit late now to see my predicted 3 to 4% gains this year but a few more OCR drops will see that happen next year.
by JimboJones | 13th Aug 24, 8:39am
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.
https://www.stuff.co.nz/nz-news/360487972/developer-argues-660-affordab…
take a look at the flood photos, this is such a stupid idea, how and who will insure these sites?
In Auckland
https://www.rnz.co.nz/news/national/531808/catastrophe-in-the-making-fa…
Potential future financial risk for council (and future rate payers).
"Hills said the council was currently buying out 900 homes damaged in the storms and deemed to pose an "intolerable risk" to human life."
I have chosen to simplify the numbers so people can work out if there is a recovery or not:
30 houses for sale at the start of Sep
+9 new listings
-6 were sold
-3 didn't sell and were withdrawn
= still 30 houses listed for sale at the end of the month
Add (000) to the above and thats the NZ market!
Oct will be similar
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