The housing market looks likely to favour buyers even more strongly this year, with a surge of listings on Trade Me Property and asking prices heading south.
The website had around 39,000 residential listings in January, which was up 17% compared to January last year and the most for the month of January in five years.
"It seems that a lot of vendors have come back from the break and are ready to make a move in 2025, which is great news for buyers, who now have more properties and more choice," Trade Me Property Customer Director Gavin Lloyd said.
The biggest increase in properties for sale was in the Wellington region where listings in January were up 28% compared to January last year, while Canterbury listings were up 23% and Auckland listings were up 17% on a year ago.
However, while the number of properties coming on to the market was up strongly in January, asking prices headed in the opposite direction.
The national average asking price on the website was $842,900 in January, -0.8% compared to December last year.
In Auckland, the average asking price also declined by -0.8% for the month, while the biggest decline in asking prices was in Otago at -2.9% - see the chart below for the full regional figures.
The combination of a surge in stock on to an already oversupplied market and reduced asking prices suggests the market remains very much in buyers' favour heading into the busiest time of year for residential real estate.
136 Comments
🥂 lower prices equals more FHBers qualifying....
Many will ask but how much lower?
The lower bound could well be defined as the point that a rental becomes cash flow positive with the required 30% deposit and that current 2year mortgage rate at that point. Sure some may try to front run the market and may pay more on the basis that they will be able to derive more by developing or subdividing etc etc.
FHBers the investors out there will be using the numbers below, they are your underbidder.
Investor Calcs
if you have an Auckland rental providing $660 a week = 34,320 and rates of lets say 3,000 insurance of 2,000 that gives you 29320
current 2year and 30 year term 5.29 from ASB you can borrow $440k plus the other 30%
you can pay max $628k you have to put in 188k
all sites have unique benefits.. your millage may vary
if rates fall to 4% for 2 year you can borrow 512k plus deposit of 219k
you can pay max $731k you have to put in 219k
on both cases you will have a tax bill, unless you get creative.
My 2c worth.
In my observations over the years, in previous cycles we have seen more buyer interest at this stage of the rate cut cycle. Which tells us other macro and socioeconomic factors are having a larger bearing on sentiment.
Intuitively that is plausible, we are exporting buyers and importing renters at a rate of knots unseen at any time. Just imagine how dire things would be without the interest deductibility and capital gains changes.
its the same as the valuation of a startup problem.... while you are making no money the startup could be a unicorn, as soon as you make any the velocity of earnings values your entire startup. The blow off top has no rationale re valuation its 100% FOMO.
- First rentals had positive cashflow and capital gains where icing on top, though it used to be double every 10 years.
- then positive cashflow disappeared but by structuring in an LAQC you could still win on personal tax deductions
- then the ring fenced that tax loss transfer
- then they bought in capital gains taxes
- then they outlawed interest deductability
- there is a pattern here if you cannot pick it up.....
All the while prices went up, now they are so high , how do you realistically price a rental on any known economic valuation method...
You have to go back to yield as capital gains are fairy tales now... its a hell of a long way down.
And buyers are in wait and see mode due tot he huge numbers of listings, perhaps if so many people where not lining up to get out buyers would have more confidence...
The masses entering the IP game late are oblivious to the changing incentives, just following the herd, strengthening conviction as savvy investors as money got cheaper.
Don't hear enough about the ring-fencing change but I believe that to be the tipping point, and the deductibility an encouraging firm nudge for those who didn't get the hint.
But still plenty looking at the historical gains (or espousing them) without consideration of the settings that made IP such an attractive investment in days past.
Deductibility may be back but ring-fencing did the damage and is unlikely to be undone.
A key takeout for me is that its only at the very bottom of the market that property even presents as possible buy for investors, as you move up into 1-1.5 mil the site either has to have a lot of land or be something unique that represents a development opportunity.
Though there are so many bag holders with these properties now, and no developer activity, and developers are ruthless bastards when making offers. (many bought these at 800k so there is little stress re mortgage payments, but there is also very little action re being able to sell at 1.5), I see clearance for these as a long and drawn out affair, but importantly they can fall a long way and still not be a loss. watercare will not help as developers will not touch until they have clarity
Most of the movement above quartile 1 will be upsizing, downsizing, death and divorce. only 1 of these will result in a bigger mortgage
it would be interesting to know the average number of days on market for each quartile would it not?
From a Property Investor group forum posted today (the bold emphasis is mine). Note $400 per week is $20,800 per year.
"Seeking feedback. Purchased townhouse in Auckland 2021 (fail, we know). $800k pp, rental income of $600 pw. Tenancy up April. Deciding if we cut our losses (topping up $400pw), possibly could sell for $700k.
1. Tenants want to stay on, so could either fix for 6 months, then sell (betting on market going up)
2. or sell in April taking a massive loss but ability to purchase better.
Help please!"
It's been a while since I've been there, but the general consensus in that group forum is this:
- Put the rent up to $1000 per week.
- Whatever you don't recover, take a note of every bit of minor wear and tear you can think of and claw back their bond.
- Tenants are scumbags.
Whatever you don't recover, take a note of every bit of minor wear and tear you can think of and claw back their bond.
Ah, so that's why our landlord tried that on us (tried to claim wear and tear is deliberate damage that landlords should not be responsible for - and not just ours, but the previous decades!).
We simply said no. We didn't need our bond to pay for the next one, but I feel for those who do. Several months later, the TT agreed with us.
I'm under the impression the cost of the loan interest only + rates + insurance should be what is compared to rent, since the principle is going to principle and buying the asset. Please don't confuse this with paying an interest only loan, that's not what i'm referring to.
how does this look when comparing renting vs owning.
Loan = $520K ($650K house w/20% deposit)
Interest payments = $27.5k (5.29%)
Rates = $3k
Insurance = $2k
Total = $31.5k
That's about the same as $600/week in rent.
so owning a $650k house is about the same as paying $600/week in rent. (or a house that yields around 4.8%)
in almost all cases renting is cheaper then paying a mortgages, especially at current settings.
You need to earn $1000 pre tax a week down here to pay the average rent on a house.
I am glad you see how ridiculous the current situation is.
so that's about $1 million on term deposit ?
A relief I have from moving from ownership to rent is not worrying about R&M and what the weekend 'chore' will be. I was always conscious of an ageing asset, many seem to ignore this, but I spent a good deal of time staying on top of it.
But the biggest relief by far is only being a spectator to the inevitable house price collapse. Sure I'd be worried on a rising housing market, but in my mind (which is what matters) it's all down hill from here.
Agreed, just replaced a sink mixer in one of our bathrooms, threaded rods holding to the vanity had rusted away. $100 and ~1 hour later it was sorted. 18 months ago we dropped $30k on a new roof, and we're about to spend about the same on a new kitchen.
But I personally don't mind the R&M chores/expenses, as there are so many other plusses/positive attributes in our home that completely outweigh the negatives.
Its why lifestyle blocks are often run down, the owners run out of ability to either maintain themselves or pay for maintenance.... your LSF IMHO needs a decent cashflow to present as a home and income to the next buyer, either a side business, 2nd minor dwelling (hell $500 per week rent would add about 600k to value at current lunacy) but what ever its worth thats $500 a week could be spend on maintenance etc.
the online world doesn't seem to take you seriously. If you felt deep down they did, you'd be committed to posting here after 01-March.
So you're saying you're doing the world a favor by subscribing to interest?
Maybe I'm mistaken, i was under the impression peoples egos relaxed as they age.
Actually RP you are correct, nobody ever took me seriously and in fact most people thought I was a bit of an idiot to be honest despite my qualifications and certificates hanging on the wall, still I'm not too worried about it now, made the right decisions in life when it mattered and definitely got the last laugh.
I only laugh at your love of term deposits , which are just such a low returning investment for anyone with your level of education.
No one I who could be considered financially astute ever mentions them as a prudent financial strategy , they all talk managed funds...
All part of the plan to be honest, just not greedy I have all the money I need and just enjoy my hobbies these days. I stay away from people that all they can talk about is how much money they have made this week, not interested I have other sorts of personal challenges.
Homeowners with a mortgage still pay rent - it just happens to be they are renting money instead of the house. Stop paying that rent and see how long you keep the house (the action will come, even if it takes longer than the TT).
The security has been given to the bank.
Amen to that - feel you might of forgotten one more - Tim the naughty lying Property Broker https://comcom.govt.nz/news-and-media/media-releases/2017/property-brokers-manawatu-and-director-fined-$1.5m-in-price-fixing-case
Homeowners effectively pay a "rent" equal to the interest accrued from their mortgage, plus the opportunity loss of repaying the capital (eg sticking that money into an investment fund), plus other home ownership costs that are covered under rental fees (insurance, rates, maintenance, etc). And usually home ownership costs more than straight renting, the hope is that capital gains is worth the extra cost plus loss in opportunity.
ttp...I've cashed in my cap gain, however my reference was in respect of saver/non homeowners - and in real time, not yesteryear.
The decline in house values is transferred to savers as a tax free cap gain on the buying power of their savings.
It's their turn now.
Too soon to call, too.
Last time hard times came around for property the Reserve Bank spent circa $10 billion of taxpayer money on welfare handouts to property and banking (FLP) in case prices might fall.
MPs are heavily invested in property. What chance we might see more attempts at welfarism for property, beyond borrowing to fund tax cuts for landlords?
You cannot stop the falls, but you can plan to have ambulances at the bottom of the cliff.
Lower FHBer houses are a very good thing. Lower boomer house prices equals lower quality retirements (if they only have this equity for retirement.). You cannot eat the house, though Cam Bagrie will let you lend against it to eat. Equity Withdrawal is going to be a growth business, he has positioned himself very well.
If its only Ranui type shit boxes that get lower, our young people will keep leaving.
This is my suspicion. Auction clearance at 55% over the weekend with pretty strong prices I thought. Listed rentals have climbed quite a bit over the 5 months I have been monitoring. Sucks as I am an FHB looking in this region and I can't quite tell who is buying.
There isn't one homogenous housing market in New Zealand.You can see from the property price index at the bottom of the article that there are variations in supply and demand, particularly with people wanting to live by the better beaches.
When people can get a mortgage rate between 4-5% then there will be some reasonable price increases in areas like the Bay of Plenty.
There was, until recently, a guy here who would never cease harping on about a property he was developing in riverhead and how he wad going to make a lot of money on it, encouraging anyone and everyone to buy into riverhead, borrow a million and make a fortune. His choices aren't ageing well currently, possibly why he isn't posting here any longer.
The truth of the matter is that I promote ChCh because it is the best city in NZ for property investment and lifestyle.
The people going on about prices dropping or going to drop has been going on here for the last decade.
I do not deal in the North Island property market but it has seemed to be overpriced and not good value for a long time
The ChCh market is where the successful property investors operate.
Christchurch is set to take off, affordable accomodation , IT businesses expanding , manufacturing expanding, look at Hamilton Jet. Not only is Christchurch holding its own , but the holiday home market of Akaroa and Kaikoura keeps trundling along behind. Wolfbrook have just built a block in Kaikoura. Biluders still busy in Christchurch
Perspective? Alright, here’s some. House prices in New Zealand shot up over 40% during COVID, then dropped about 19% from the 2021 peak. A 0.8% dip might not sound like much, but it’s movement in the right direction. For years, first-home buyers have been priced out while investors raked in the profits. If prices keep softening, maybe - just maybe -housing can become something people live in again, not just an asset class for the wealthy.
The world of the 20 something FHB looks very different now.
- unstable unemployment ( government employees need to be very worried)
- unstable global world order.
- AI, climate change, wars and so on driven unexpected changes
House prices, job security, rents, inflation, world event and incomes need to be stable to motivate young people to buy houses. All are messy. Safer to rent and keep savings in the bank for unexpected events (redundancy or a move overseas)
Investors are unlikely to expand housing portfolios vs diversifying. Especially those individuals/boomers now approaching retirement. Better to hedge now.
Expect rents and house prices to continue to fall for a few years yet. Sound investment is in areas to be positively impacted by AI, climate and military tech.
" If prices keep softening, maybe - just maybe -housing can become something people live in again"
For owner occupier buyers to be aware of:
Former prime minister Sir Bill English is optimistic that New Zealand’s house prices are going to trend downwards, in real terms at least.
“Our housing is too expensive,” English told delegates to the INFINZ (Institute of Finance Professionals New Zealand Inc) conference at Auckland’s Cordis Hotel on Monday.
“If we successfully deal with housing affordability, your house prices are not going to go up for the next 15 years, much.”
https://www.waikatotimes.co.nz/business/350451961/get-used-it-sir-bill-…
An real life example of first home buyers in Wellington who bought at the peak. They're in negative equity (i.e loss of over 100% of their equity deposit, which could be their entire life time of savings). Bolded words are my highlights for emphasis.
"I met a couple recently who bought their first home in Wellington at the end of 2021 and are now feeling – quite frankly - scared.
She works in the public sector, and he’s in the construction industry. The headlines suggest their local council rates will soon go up, despite the valuation of their home having fallen 25% (or more).
Their hard-fought deposit, which they scraped together using their KiwiSaver and years of savings, was 20% of that 2021 purchase price – so on paper that entire deposit has been wiped out. If they sold at today’s valuation, they would have no savings and still owe money to the bank.
She has so far survived two rounds of redundancies – but they’re scared about what the future holds. Didn’t they do everything right? They played by the apparent rules of the game – work hard, save hard, buy a house. That’s the conveyor belt to security that society sold them. Instead, they feel like they have been financially punched in the face."
https://www.stuff.co.nz/business/360582273/katie-wesney-ready-anything-…
Owner occupier buyers: CAVEAT EMPTOR
"The exact situation there were a few commentators on here warning about around the time of their purchase"
Exactly.
"- to which we were abused as doom gloom merchants by those who benefit from ever rising house prices. "
These were attempts to discredit people like you (who were warning the general public about elevated house price risks) by those with their undisclosed vested selfish financial interests.
After all, those with the vested interests need to put food on their table and pay for their accommodation costs (most likely a mortgage).
This guy might have been very disappointed at the time of being refused a sufficiently large mortgage to purchase a residential real estate dwelling, but being rejected from the bank was actually a blessing in disguise. Being rejected was better than getting approved to overpay for a house, be stuck in negative equity (and a loss of his entire life time of savings) in 2025. He can be a buyer today with a lower mortgage.
https://www.newshub.co.nz/home/money/2021/11/first-home-buyer-not-very-…
Or say from high maintenance Remuera older homes to Stonefields low maintenance.
Vendors keep seeing a few decent sales figures so are holding out. but there are not enough buyers for them all..
Its musical chairs, which is fun with 5 year olds, but may cause hip problems with 80 year olds.
Erica is the Minister of Immigration and Education. The gold plating (TBA) on the visa will be the ability for your children to study as domestic students in our tertiary institutes. Scrape together 5 mil to put in a managed fund (you get the money back in 3 years + interest) The right to buy a nice house (TBA) for the wife and kids to live in while you carry on doing whatever you do wherever you do it. Meanwhile, your kids can study for an internationally recognised/transportable professional degree sponsored by the New Zealand taxpayer.
This is a thinly veiled scam to inject liquidity into the property market. We have seen this movie before, and the ending was a bit stink. Australia ended screenings. It turns out the ticket price doesn't cover the cost of putting on the show.
I have been looking in the Wellington region and noticing a clear trend of auctions/deadline sales failing and then moving to enquiries over $X, followed by price drops later on. Open homes seem busy but are not translating into sales. Anecdotally, I am hearing people unable to fill rooms in flats when trying to leave other regions or go overseas for other job opportunities, sometimes having to wait until the lease ends. Students flats also being harder to fill, especially ones with 6+ rooms. It seems like the Wellington market is circling the drain. Anyone else with observations who monitor this area?
It has been the same since the downturn started and people stopped buying in aggregate. Tenders, auctions died for a long time, offers over, delist then relist under different title, followed by price by negotiation, followed by delist and relist again 6months later. It is a cycle - the key is to track how many times places get listed, any price changes and then you can offer accordingly, knowing the pace you may want has been relisted a couple times under a couple of agents for over 6 months and the vendors are therefore more likely to be starting to consider reality.
The five stages of grief
- Denial: A defense mechanism that helps people protect themselves from shock. People may refuse to accept the reality of the loss.
- Anger: People face the pain of their loss as reality sets in.
- Bargaining: People dwell on what they could've done to prevent the loss.
- Depression: People face the inevitability of the loss and may feel intense sadness and despair.
- Acceptance: People come to terms with the loss.
we are not yet in Anger, when it comes , and its starting too, Luxy is going to cop it
I find it extraordinary that you haven't. Another family member says her staff are bordering on a work to rule. New management is having half and hour wasted very morning as they 'pray' to an imaginary friend. This is in health. But its prolific in all public services. Seen DOC release a bird lately or open a walk? New road...you name it. And all on your dime old chap...it's not done for free.
Yeah, I’ve been seeing the same pattern in a few other regions too. Feels like a waiting game—buyers holding off, and sellers adjusting slowly. I came across this breakdown of what’s happening in different markets, thought it was a solid overview: https://www.opespartners.co.nz/property-markets. Be interesting to see if things shift again later in the year.
And so it begins...
https://www.nzherald.co.nz/nz/kumeu-flooding-crisis-leaders-push-for-to…
All foreshadowed first in the USA. Extreme weather events, Insurance increases, denial and attempt to rebuild, finally acceptance. But remember climate change is definitely a hoax.
Before we left NZ, we were [quite seriously] talking to an RE about a flooding swamp to put a houseboat on.
In hindsight, ablutions might've been a problem though, no one wants a flooded septic tank.
We determined the asking price to be 3x what we thought it was worth, so left it alone.
Can apply this framework provided (courtesy of IT Guy), to those affected property owners.
The five stages of grief:
1) Denial: A defense mechanism that helps people protect themselves from shock. People may refuse to accept the reality of the loss.
2) Anger: People face the pain of their loss as reality sets in.
3) Bargaining: People dwell on what they could've done to prevent the loss.
4) Depression: People face the inevitability of the loss and may feel intense sadness and despair.
5) Acceptance: People come to terms with the loss
Natural disaster forces owner to sell dwelling and accept price offered by local government. The only buyer of the dwelling is local government.
Local government buys damaged house in flood zone from residential dwelling owner and the amount paid is below the outstanding mortgage amount. Forced into negative equity due to natural disaster and price offered by only buyer.
Refer 3:09 of the audio
https://www.rnz.co.nz/national/programmes/morningreport/audio/201897224…
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