First home buyers have deserted the market in droves, according to the latest BNZ-REINZ Residential Market Survey.
And the overall mood in the market has swung so much that for the first time in a year and-a-half real estate agents are now calling this a "buyer's market".
Among the fairly low number of agent respondents - 250 - to the latest survey, a net 78% reported seeing fewer home buyers than in the previous month.
Last month the result was that a net 41% were seeing fewer first home buyers, while in September - before new "speed limits" on high loan-to-value lending were introduced - a net 24% of agents reporter they were seeing MORE first home buyers.
"This result supports data from other sources showing first home buyers giving up hope of making a property purchase in the near future," BNZ chief economist Tony Alexander said.
In terms of this now being a buyer's market for the first time in 18 months, Alexander said a net 17% of agents now say that it is a buyer’s market whereas last month a net 11% said it was a seller’s market.
"In September a net 30% said that, and the average reading is a net 7% saying a seller’s market dominates.
"...Our survey results this month show that the residential real estate market in New Zealand is taking quite a hit from the introduction of credit controls, but that it is aspiring first home buyers wanting to place roots down in New Zealand who are suffering. A net 6% of responding agents still say that they seeing an increase in investors looking to make a purchase."
Likewise, there's still a perception in the marketplace that prices will keep rising - though the support for this notion is not as strong as it has been.
A net 23% of agents feel that house prices are rising compared with 41% in October and 51% in September.
"More tellingly, a net 17% of agents now feel that it is a buyer’s market with sellers more motivated to transact than buyers. Last month a net 11% felt it was a seller’s market and in September a net 30% felt that way," Alexander said.
A record net 45% of agents this month said that they are seeing fewer people going through Open Homes. That figure has dramatically turned around from a net 24% of agents seeing more people through homes just two months ago.
"Consistent with fewer people going to open homes has been a sharp decline in agents’ experiences of people completing the sales process. A net 12% this month reported that they are seeing fewer written sales go through to being completed. Buyers have backed out of deals," Alexander said.
A net 28% of agents reported that auction clearance rates have declined, "another sign of weakness", he said.
But while buyers have backed off potential vendors appear to have not much changed their stance. A net 8% of agents report that they are seeing more requests for property appraisals, though this is down form a net 20% two months ago.
A net 6% of agents report that they are seeing more investors in the market. This is down from 9% in October and 26% in September, but only just under the average outcome of a net 16% positive.
"This is a far smaller decline and movement to a below average setting than for first home buyers and possibly tells us that funding of investment property purchases in New Zealand may not be as debt-dependent as many had been thinking," Alexander said.
A net 23% of agents feel that house prices are rising.
"Thus while first home buyers may have deserted the market in droves, upward pressure on prices persists," Alexander said.
"The latest reading is however down from a net 51% two months earlier in September and below the average outcome of a net 32%."
64 Comments
Hmmmm- who owns 92% of the property? - let me guess - the under rewarded new OBR bank reconstruction equity partner - previously called a depositor - but recently redefined as an investor/risk taker. Or is it that collateralised foreign wholesale lender recyclying central bank printed credit? Whatever, the former bears the risk courtesy of the unelected bureaucracy known as the RBNZ.
Well it's down to 85% now but, anyway, - what's your point? And yes I do understand what your are (circuitously) trying to say.
Put your money under a mattress if you prefer, or invest in a non Mortgage Lending bank / financial Institution, say Rabobank, although they will fund in offshore markets which you dispprove of (money printing).
But yes, I am happy to be a beneficiary of other savers, just as I was happy funding other mortgages during my long slog to save the deposit.
Wow, so I'm a loser with no money now I am? Man you gents know how to treat a gal. it's kind of pathetic that you have to use insults to get your point across really.
And you can wish all you like about savers pulling their money at the same time, you know flying pigs and all. Not going to happen.
I think things are going work out for me just fine thank you, I'm very good at financial planning. Plus I didn't buy in Auckland.
Then don't put your money where it can and will be used for mortgages. Because guess who is paying your interest, me.
I'm guessing you would prefer a system where people have to come grovelling on thier knees and begging for money, and you'll only grant loans that suits you purpose. Tell you what, set up your own bank doing just that.
See how that works out for you....
Precisely dtcarter, lending credit has always been the primary way money has been created, though there have lways been those to have been in a fortunate position of having surplus spending power and thereby have been able to save whether in gold or in today's world in the form of digits on a bank's balance sheet.
Credit accounting essentially formed the basis for the invention of the ancient world's mathematical and writing systems.
Well I completely agree with you.
Of course there would be no lending without saving. Just as savers would get no interest without borrowers (although the Sharia Finance market has some very "intriguing" ways around not earning interest, you still need borrows though).
But at the end of the day, you get to decide where to put your investments, if you don't want to fund mortgages, then a deposit in a bank is certainly not the best place.
Sharia observant investors have in the past through insitutions I have worked for or those with which I had a correspondent relationship utilised the gold contango - buy spot, sell forward.
I no longer lend to banks at current deposit rates since in principle unsecured depositors are the equity in waiting bank recapitalisation agents. Government debt is my preferred alternative.
“It seems more investors are buying the entry level properties instead of first home buyers.”
“First home buyers have dried up. Investors are starting to appear now.”
“Only affecting first home buyers. Overseas buyers are still in the market and buying at good prices unconditionally. Baby boomers are still downsizing at the same rate and investors have taken up the slack by first home buyers. Not much impact at all.”
“Has been implemented to slow the market in Auckland and Christchurch but unfortunately has slowed the Provincial Real Estate market that was only just starting to show signs of recovery”
Unintended consequences. This survey really needs to better differentiate between Auckland and the provinces.
"Property investors do not drive market prices" - Zanyzane
So when a first home buyer goes to auction against a baby boomer property investor with 5 properties already, aquired on the back of the last 30 years gains, you're saying they are not driving up prices? You sir, are a muppet. Agree with your statement of emotion being a price driver, thats why auction is a large proportion of ways of selling, to drive some FOMO and potential GOMO.
supply and demand drive prices. It doesn't matter if a buyer is FHB or investor, if there are more buyers prices go up, if there are less they do down. (supply being held equal)
It's nut to think that one buyer drives prices up while the other buyer they are competing against does not . If the other buyer wasn't there the first buyer would be paying less.
Zanyzane, I was once a lanlord (not by choice). We were in a scenario where we borrowed almost 100% to buy a house using the equity in our other home. Had RBNZ imposed the LVR on investment property we wouldn't be able to do it and that property could go to a 1st home buyer.
except it couldn't go to a first home buyer, unless somehow they stumped up the extra instant cash to get past said LVR hurdle. The house would have gone into an existing portfolio where a property pool already existed - either at bargin (low competition) or higher (validated competition).
Either way your 1sthomer would have to outbid the "house".
I have noticed plenty of houses to rent signs and For Sale signs...Westmere, and Grey Lynn. If you have to place a sign out on your front door to rent a house shows a slow market? I dont think those renting are having a problem finding places to live, especially as the exodos of students leave for Xmas.
Just what I have been noticing frazz ...and as an ex-property manager, I never had to put a sign out in 2 years, as was all done and dusted with a trade me ad.
I have just rented out my place after nearly 3 years and REALLY noticed a huge downturn in enquiries ....
So where all the punters on here, get the idea that Auckland rents will just keep going higher and higher, I just don't know ....delusional perhaps ......keep drinkin' the koolaid is all I can say !!
Who says auckland rents will just keep going up and up? The stats show they are barely rising. Not surprising with the amount of investment properties in auckland desperate for a tenant.
http://www.nbr.co.nz/article/auckland-house-prices-shoot-ahead-rents-ck-146753
dtcarter ....get with the program !! ...haven't you heard rents are going to catch up and pass the growth in Auckland house prices, so to double !! the demand is just so great !! ... just ask Olly Newland aka Big Daddy, SK, happy123 et al ...their words are the truth ....... cue Tui ad..... :)
Rewind 2 years, Crazy Horse, Raegun, steven, (and more) all claiming the Auckland market is about to crash, bubble BUBBLE they cry. Then the market starts double digit year on year growth, the Tui add has already been written and your the punch line. Your inability to pick market trends is embarrassing.
Happy123 .... while you adjust your rose tinted glasses, reread my post - it applies to the RENTAL market in Auckland only....so where in your opinion, has the rental market increased along with the rate of residential property price increases in AKL in the last 2 years ??? .... now we can really cue the Tui ad !! :)
A good clip on MacroBusiness..... "Counting the cost of expensive housing"
http://www.macrobusiness.com.au/2013/11/counting-the-cost-of-expensive-…
Well, between them as wot said LVR's had no teeth, and them who claimed that Armageddon would break out all over, there's clearly a middle line in terms of immediate effects.
- Being a typical central-planning exercise, there are differential effects already emerging: provinces versus main centres etc.
- Being a limited exercise (no Tobin-tax stuff like a stamp duty to introduce gentle friction, no Oz-style edicts re residency or citizenship, etc) there is still plenty of wiggle room for further policy
- Being very early in the piece, and at a strange time of the year property-wise (students, holidays, etc) it's impossible to get any handle on averaged effects
As Chou En-lai said of the French Revolution, it's just too soon to tell.....
There is a time-lag in all these things.
People are still sitting buying on 5% deposit pre-approved mortgages, these have another month or so till they are all out of the system.
Less buyers = less sales. We are seeing this already in the October stats, sales down 2%, but there is more to come with the annecdotal evidence from agents of reduced numbers through open homes, and reduced auction clearance rates.
Initially sellers will hold out and wait for the price they were expecting. It will take a month or two of sales not eventuating until frustrated sellers reduce their price expectations to meet the market.
No shortage of money in Europe, especially if you need a smoking gun to back it up.
What is a mere billion between friends and foe alike, when they need a roof over their heads to plot things.
No smoke without being able to fire, to clear your debt to society.
http://www.huffingtonpost.com/2013/11/13/nato-builds-1-billion-hq_n_4267529.html
Maybe it is a sign of things to come, Defence de fumer por chinoise.
Cough, Cough. Chinese whispers. They all want to become, westernised.
Certainly no need to put signs up to rent out a home, rented several out in the last few months no trouble et al!
Present the home as I would like to live in it, I'm sure that seals the deal!
Half the signs up are lazy property managers getting a cheap plug in advertisment for their business.
Everywhere I go it's nothing but grey- and white-haired people smugly plotting their next property acquisitions.
If you listen to the conversations around you (it's hardly eavesdropping, as they always speak so loud it's as if they *want* people to listen) no matter where you are the topic is always property.
Buying, selling, renovating and, of course, "investing."
Are the chortling members of this grandparent Land Baron class going to ease up some and share with their offspring? Not a f***ing chance.
Kids are nothing more than prey to these people. Even their own kids and grandkids.
There's been a major shift of late.
You'd have heard quite a few young younger people talking house, and just as smugly as the smug oldies around them, but not anymore.
Now it's just the old, and boy, they're even more smug than ever.
The sense of Divine Entitlement runs deep, with the Land Baron class.
Entitled to high incomes until death; entitled to a lavish lifestyle; entitled to a bigger, better house than their friends and enemies; entitled to milk the generations that came before and the ones that follow; and entitled to let the world know how much it owes the Land Baron generation, and how lucky it is to have them.
Just sit and listen, you'll hear it.
The gleeful smugness of your Masters.
Malarkey... I hope u were as generous with ur colorful ,poetic comments when a whole bunch of these " grey and white Haired people"... got dealt to with the domino failure of all those Finance companies...... some of them got totally munted..
Of course... shame on all those other "grey haired " people for learning a lesson and shifting their investments to Real Estate.
Maybe they are doing this to look after their offspring..?? and if not
Do u think these "grey haired" ones are going to take it all with them when they die.??
There was a stampede of oldies into the Share Market in the 1980s.
Why?
Because, as with finance companies, those oldies believed it was a licence to print money and they couldn't lose.
The problem was they had no clue what they were doing.
They had no understanding of the market.
Their decisions were based upon the thickness and glossiness of a prospectus and the recommendations of half-cut brothers-in-law around the barbie..
X Corp this and Y Corp that, and it was all champagne and caviar and a lot of self-satisfied chortling.
When the inevitable occurred in 1987 and they lost their money, what did they do and say?
They got together en masse and demanded their money back.
Imagine arguing with the girl behind the glass in the local TAB because your horse came in last.
It's the same thing, because what those oldies were doing in 1987 was nothing more than gambling.
So they got burned and wept like babies, then vowed never to "invest" in anything ever again unless it had wallpaper and a lawn.
That was 30 years ago but their kids learned well, because it's they who are trying to rule the property market at the expense of their children and grandkids.
I was one of those... :)
I was 26 and lost everything....
I'm not sure that anyone was so ignorant... as to demand their money back...????
A great learning experience... which set me on the path of learning..
And now... in 2013 ... if my kids asked me where they should invest their savings... I would tell them to invest in Real Estate... ( but to be aware of the business cycle )
It is the best place ( without specialist knowledge) to protect ones savings/wealth from the rampantly declining purchasing power of money.
The greatest thing I have learnt over all those yrs, in helping me navigate the economic ups and downs, ... has been an understanding the nature of "Fiat Monetary Systems"...
If u want to find an underlying cause of the transfer of wealth into fewer and fewer hands , just look at the nature of money.... Monetary systems... and how new money and money substitutes (credit) are created..
Money is supposed to be .."a store of Value".
If u increase Money supply from $45 billion to $256 billion ...what do u think happens..?????
It just so happens that real Estate is a great "store of value"... and that Real Estate prices pretty much reflect the declining purchasing power of money.... ( CPI does not measure this )
Our Political leaders...economists... and the Public Sector. ( local bodies).... are probably far more culpable for our current problems .... than are the "grey haired ones"..
Here's the bottom line result of 1987: People who thought they couldn't lose, lost.
So now they "invest" in the least productive commodity there is: property.
But, as with the sharemarket, they have no real understanding of the fundamentals.
Yes, they say they do and may even believe it, but the truth is they're just as clueless about property investment as they and their parents were about the sharemarket.
It's why we hear the same old crap being said over and over again by the same old people. (cough*Ollie*cough): ""Ya can't lose!"
The New Zealand economy is based on essentially nothing but residential property investment.
The relatively pitiful earnings of agriculture* and other industries will not offset the inevitable property market "correction."
But still the dopey You Owe Me types strut around, bragging about their property portfolios, even as their kids and grandkids generation give up on the forlorn dream of ever owning a home of their own.
The You Owe Me types are the people who will be gathering in community halls, shouting that "This bluddy guvm'nt gotta do something about it!"
Just as they and their parents did in October 1987.
*Agriculture earned ~NZ$15b and employed ~200,000 people In 2009. IBM Global earned ~US$100b and employed 350,000 that same year. One company. And not even the biggest or wealthiest. Think Apple, Microsoft, Google, Intel, etc etc..
Malarkey: That is the most stupid, biased, prejudiced and inaccurate comment seen for some time. The lemmings who were doing the stampeding into the sharemarket in the lead-up to the 1987 crash were not the "grey-hairs", it was the young, those in their 20's 30's and early 40's
"hose in their 20's 30's and early 40's" Rinse and repeat for housing today.
BTW what was the recent finance company debacle but a gooden oldie bugger up? "Oh look Finance company A has a sports guy upfronting and gives 0.5% more than a bank, must be safe" "Diversify, oh I'll spread teh risk amongst 5 finance companies"
So age is no barrier to greed, incompetance and wailing.
I mean just listen to wailing around the OBR by the OAPs, now the sillys see their money isnt (well maybe not) "guaranteed" by the tax payer.
regards
Snod·grass Throg·morton
[snod-grass throg-morton]
noun ignorant
Old fat git who inherited three houses and was given a free education and leg-up jobs by rellies. Claims to be a "self-made man" when obviously he is not. Believes the whole world owes him a debt of gratitude for something yet to be defined. His nerves are exposed and raw, causing him great agony whenever the unpleasant truth is spoken. Is a prime example of the class of people who somehow manage to be abject losers despite having had so much gifted to them on a silver platter.
LOL
The impact will take a few months to show but the LVR lending will definitely regulates the property bubbles and ease the heat. NZ is not the only country to implement this. Look to other countries who has 20% mortgage restrictions in place...the impact on property prices is sure but certain...and will span 10+ years. In the long run the property prices will reflect true values - this is good for first home buyers as well. Astute investors are quietly putting their properties in the market (thus the recent increase in listings) : they know that prices will drop - not a question of ifs, but when (how soon).
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