People who listed a home for sale and fail to sell it in the early summer trade before Christmas, will have to make some difficult decisions over the Christmas break.
One of the more interesting figures to come out of the latest housing market sales data is the number of properties being withdrawn from sale.
Interest.co.nz's calculations show the number of properties being withdrawn from sale has declined steadily over the last six months, from 3981 in May to 2251 in November. The first graph below shows the monthly trend.
Taken in isolation, those figures might suggest the surplus supply of properties from vendors relative to demand from buyers which has plagued the market over the last few months, particularly in the critical Auckland market, may be starting to subside. If that is the case it would be good news for vendors.
But the fly in the ointment of that theory is the total stock of properties for sale at the end of each month has steadily increased over the last three months. Based on Realestate.co.nz figures, it's up from 29,579 in August to 33,984 in November.
The November figures are particularly telling, because stock levels continued to increase in November. That's even though new listings received in November declined compared to October, while November's sales were up 3.2% compared to October.
The explanation for those apparent contradictions lies in the withdrawal figures.
Stock has been increasing because more vendors have been leaving their properties languishing on the market when they don't sell, rather than biting the bullet on price to achieve a sale or removing them from the market if they don't.
That's not surprising at this time of year because next week the market will head into hibernation for the next month. So many vendors have decided to leave the property on the market for the time being and re-evaluate their options over the Christmas break.
Many are likely hoping another round of interest rate cuts in the New Year will stimulate buyer activity and deliver them a sale at the price they think they deserve.
However, there are a couple of things that could trip them up if that is their plan for next year.
The first is the flow through from any cuts to the Official Cash Rate to lower mortgage rates may not be as great as many are hoping for, limiting their impact on affordability.
And even if mortgage rate cuts are significant, banks are likely to remain very cautious in their lending criteria given the state of the economy.
The second is that anecdotal reports from real estate agencies suggest there is a very healthy supply of new listings building up, ready to come on to the market in the New Year.
So properties that have already been on the market for two or three months will be looking decidedly stale compared to all the fresh new stock.
76 Comments
I have a glycol based solar heating for water cylinder (450L and 58kL pool). works just fine pool sitting at 28C today any hotter and its not really enjoyable, the solar pump is only like 50w.... for 6 months of the year hot water is free. In fact we have to be careful as water can easily get to 80C for hot water.
They will need to make much deeper cutbacks at central and local gov of fluffy jobs, and focus on maintenance of existing infrastructure....
2025 will also see Trump come in and cut out all the crap Biden and Wokers where doing, you will see a global recession in 2025.
China is in no position to even save itself here, USA just needs to build some credibility regarding its debt, I see cuts coming not fiscal stimulus. Trumps tarriffs will act as a push to rehome some manufacturing.
Its all deglobalisation and rising rates
It is instructive to all readers of comments on this excellent forum that right-wing commentators comment most on anything related to residential housing investment.
Methinks there is a strong link between limited financial acumen and right-wing voting. It is almost a form of overt entitlement to riches based, not upon skill, but by the ability to to purchase a sub-returning asset while expecting the government to reward them for voting their way.
The correlation has resulted in the National Party to be known by another name: The Landlord Party.
Iceman, you should come take a look at the 500k of horse truck I have parked in my truck shed....
You can be negative on property prices short term and still have made buckets from property.
You can make money right now, you just need more of it to make subdivision work.
I posted a couple of years ago that simply not enough property was available for sale in NZ, and calculated (based on time-to-sell vs length-of-ownership vs number of dwellings) that for our market to be healthy we should have approximately 100k houses on the market at any given point in time.
There is huge latent demand for property, but over the last 30 years the reduction in affordable properties for sale (e.g. the first home buyers who move on to their second property but hold the first for rent instead of selling it) both pushed property prices higher and reduced the number of readily-able purchasers. This is a bubble, and was always going to break one day when enough property holders decide it's time to cash out - and once the cashing-out starts it avalanches.
"There is huge latent demand for property, but over the last 30 years the reduction in affordable properties for sale (e.g. the first home buyers who move on to their second property but hold the first for rent instead of selling it) both pushed property prices higher and reduced the number of readily-able purchasers."
There are a number of non owner occupier residential property syndicates operating to combine their financial resources to increase their buying power (and borrowing power) to outbid owner occupier buyers in the existing residential real estate market. (Remember, non owner occupier buyers are able to borrow up to 7x DTI vs 6x DTI for an owner occupier buyer)
To maximise the cashflow from the non owner occupier residential property, it has got to the point where these non owner occupiers are:
1) renting out residential dwellings on a room by room basis (rather than the entire dwelling to one tenant such as a family) in order to maximise the cashflow
2) renting out on Airbnb / Book a bach - though some changes on the Airbnb platform may now have reduced revenues and made this less financially attractive than renting out in the long term rental market.
3) adding rooms to rent out
4) adding other dwellings on the property to rent out.
This is been the impact of re-introduction of interest deductibility for non owner occupiers in the EXISTING residential dwelling market. Some non owner occupier owners are willing to go into negative cashflow for the potential untaxed long term capital gains (i.e after 2 year brightline test which was reduced from 10 years)
The buying advantages of non owner occupiers over owner occupier buyers in the EXISTING residential real estate market:
1) 100% financed purchases of residential real estate (due to equity release / deposit recycling techniques)
2) interest only financing
3) interest deductibility
4) combined buying power of residential property buying syndicates
5) 7x DTI vs 6x DTI for an owner occupier buyer
Owner occupier buyers (especially first home buyers in Auckland without assistance from or access to the bank of mum and dad, and an inability to take on "boarders") are unable to compete with those buying advantages given to non owner occupier buyers.
Here is a non owner occupier buyer engaging in mortgage fraud (enabled by their mortgage broker) to obtain financing to purchase another non owner occupied residential dwelling (and potentially outbid an owner occupier buyer).
https://fscl.org.nz/case-studies/the-non-existent-gift/
Mortgage brokers find "financing solutions" for their clients so that they get paid their commission.
Zwifter: "but what is guaranteed is that within a 10 year span it goes nuts at some point."
So speaks a fool that has no idea how DTIs work. (Other readers, if you don't know how DTIs & LVRs work, for god's sake learn!)
Zwifter, are you just really old, mathematically challenged, or are you a real estate agent?
"but what is guaranteed is that within a 10 year span it goes nuts at some point."
I wonder if residential property buyers in say 1994 (i.e. 3 years after peak house prices like the current situation in NZ) were thinking the same way in Japan?
I wonder how many years it took before those property owners began to lose their belief and confidence that house prices would continue to rise at the same rate as in the long term past?
https://fred.stlouisfed.org/series/QJPN628BIS
A recent interview with Ashley Church indicates he is questioning his previously commonly repeated mantra of house prices doubling every 10 years.
https://youtu.be/CWpflvEYhJE?t=496
The current market conditions for 2 BDRM townhouses in Christchurch. K.W highlighted this issue earlier.
Market price is currently -25% from Vendor's purchase price 2 years ago. Is this likely to be below a developer's current sales price for a newly completed comparable property?
“I’m appraising quite a few where people would have bought them two years ago for $800,000 and are now reselling for under $600,000.”
https://www.oneroof.co.nz/news/some-of-them-will-be-selling-at-a-loss-m…
You cannot loose with pooperty, and new builds had interest deductability back then vs everything now, but older has more development potential... its an easy game property investment.
but you can't lose until you sell it... no such thing as mark to market in Spruiker world.
So hold it until you die.
You won't ever loose. ... So let's not talk about opportunity cost ... No. We must never talk about that. /sarc
"Christchurch is strong"
https://youtu.be/G2Ob_458ctU?t=141
"I'm such an optimist"
https://youtu.be/G2Ob_458ctU?t=282
What happens if buyers choose to buy in the existing dwelling market (as they are cheaper than new build prices) rather than from developers / builders (and the impact on sales and cashflow to the developers and builders)?
Owner occupier buyers: CAVEAT EMPTOR
Great timing following the recent article about increase sales volumes and all the DGMs talking about how many properties are being delisted.
by starrider | 17th Dec 24, 10:26am
The most dependable, consistent, stats through all of 2024 was record high new listings, record high listings and record high withdrawn listings
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