Median house prices are starting to fall throughout the country as the residential property market shows increasing signs of cooling.
According to the Real Estate Institute of NZ, the national median selling price was $490,000 in January. That's down from $516,000 in December, and down from its peak of $520,000 in November last year.
In Auckland the regional median price declined to $805,000 from $840,000 in December and $851,944 in November.
One of the biggest declines was on the North Shore where the median also declined for the second month in a row to $965,000, down from $1.105 million in November.
In Central Auckland, the areas contained within the old boundaries of the former Auckland City Council, the median price was down from $1 million in November to $845,500 in January.
In Waitakere the median has dropped from $780,500 In November to $761,500 in January. In Manukau the median dropped form $845,000 in November to $815,000 in January.
Going against the trend median prices are continuing to rise in Rodney, up from $860,000 in November and to $897,500 in January, and in Papakura/Franklin, where it has risen form $700,000 in November to $715,000 in January, after dropping back to $679,000 in December.
However the price declines weren't confined to Auckland. In Hamilton the median price dropped for the second month in a row, from $527,000 in November to $495,000 in January, while in Tauranga the median took a huge plunge, dropping from $600,000 in December to $540,000 in November.
There was also a big price decline in the Wellington region where the median price dropped from $530,175 in December to $460,000 in November, and there was a smaller fall in Christchurch where the median declined form $455,710 in December to $442,500 in January.
A tough summer?
The latest figures suggest residential property market could be in for a tough summer, with the volume of homes sold in January also down sharply compared to a year ago.
Nationally there were 4307 homessold in January, down from 5048 in January 2016 and the lowest number of sales in a January month since 2012.
In Auckland 1247 homes were sold in January, down 18.3% compared to January last year, and it was the lowest number of sales in the month of January since 2011.
Other cities that recorded declines in the number of homes sold in January compared to January 2016 were Whangarei -30.7%, Hamilton -29.2%, Tauranga -43.5%, Rotorua -43.1%, Hastings -29.2%, Wellington Region -9.9%, Nelson -18.1%, Christchurch -15.9%, Timaru -45.3%, Queenstown -12.5% and Dunedin -20%.
The decline in prices and slump in the numbers of homes being sold looks particularly ominous for the Auckland market because the REINZ reports that the number of homes coming on to the market for sale there is increasing, with the total number of homes available for sale through REINZ members in Auckland at the end of January up 17% compared to January last year.
In a First Impressions note on the REINZ figures, Westpac Acting Chief Economist Michael Gordon said they showed a marked downturn in the market over January.
"While January is typically the quietest part of the year anyway, seasonally adjusted figures point to a renewed downturn after some signs of stabilisatioin at the end of 2016," he said.
"Our research has long pointed to interest rates as the dominant driver of house prices.
"Mortgage rates have been heading higher since November, ending a steady downward trend over the previous couple of years.
"Our view remains that higher borrowing costs will have a more sustained impact on house prices than eany kind of lending restrictions."
See the interactive charts below which track median house price movements in all regions, or click on the link below to read the REINZ's full regional reports:
Median price - REINZ
Select chart tabs
223 Comments
Interesting Tauranga has taken a big drop. Much more property being listed around here with prices than auction and a lot of building is starting come online from the various developments around the place.
More interesting is the stats on Mt Maunganui and Papamoa which many people would regard as Tauranga have increased rather than declined. The beach it seems is still a popular place.
Yes, so about the same price drops as every other January... the volumes are definitely lower though, but the question is, is it a turning point in a free market or are they artificially low due to LVR rules etc... no doubt Feb/Mar will show the usual bounce back, although I'm picking price rises will be fairly sluggish after that compared to previous years ;)
That would be very brave. Prices will continue to decline albeit slowly throughout the year. People will adjust to the concept that capital gains aren't available and will continue to put properties on the market hoping to sell for what they bought it for two years ago. From 2018 the significant supply that is currently being developed will then start to appear in the market.
I hear real estate agents talking about 'only 10%' increase this year - dreamworld. The impact of a 10% price increase would move affordability from 10 times average salary to 11 times.
That would be very brave. Prices will continue to decline albeit slowly throughout the year. People will adjust to the concept that capital gains aren't available and will continue to put properties on the market hoping to sell for what they bought it for two years ago. From 2018 the significant supply that is currently being developed will then start to appear in the market.
I hear real estate agents talking about 'only 10%' increase this year - dreamworld. The impact of a 10% price increase would move affordability from 10 times average salary to 11 times.
Based on the above chart, prices will need to go up by $97000 in Auckland before march for there to be a 10% increase yoy (from march). 12% in 2 months.... It's happened before, but in this environment of increasing inventory and increasing interest rates? 10% is out of the question IMO.
Sounds like the banks are looking to mitigate their existing high risks by managing their loan portfolio
its about time, but also points to the banks planning for a big fall in house prices and continued increase in interest rates which will make it hard for them to get paid
Sounds like the banks are looking to mitigate their existing high risks by managing their loan portfolio
its about time, but also points to the banks planning for a big fall in house prices and continued increase in interest rates which will make it hard for them to get paid
For the real data I'm waiting for the RBNZ S8 figures that will be released on 28 February. So far it's just what people are experiencing. On Harmoney (P2P lending platform) there are more people borrowing for renovations etc. - just my experience).
There was a minor slow down in the increase in mortgage lending between November and December last year. The number is statistically insignificant though. So no hard evidence at this time.
That's what you "thought" coz you have zero understanding of the Chinese culture. During CNY all the Chinese have gone back to their home towns/countries to celebrate the lunar new year, not buying properties. The increase in house prices normally happens in the following 2-3 months. Talking about ignorance...
It was boiund to come, but a one month drop does not necessarily mean that it's all over Rover.
However if January and February follow the same trend then there could well be a stampede for the door.
Read the actual report here and judge for yourself:
https://www.reinz.co.nz/Media/Default/Statistic%20Documents/2017/Reside…
Does this perspective help ?
http://www.interest.co.nz/images/akl-sales-shifts.jpg
I think the low end is still a bit wonky and the high end is just returning from international family holiday and that's what we are seeing here. Now private schools and corporate work are full time the top end will pick up again skewing data in an almost permanent fashion and once again at some time the lower end of the market will return once eyes aren't looking and money flows freely or the Governor of RBNZ drops the LVR's a notch or two.
President of Property
The problem is money is unlikely to flow freely with the banks lending appetite disappearing as we have heard again from anecdotal evidence on this thread, and Chinese government coming down hard on capital outflows. A market steaming ahead as it has been needs many willing and able buyers, not just a few
So the past = future.
Awesome -where can I buy Enron shares? or maybe some kodak or a condo in Florida cause they did great at some stage?
Maybe it will?
But that's a flawed logic to deduce it from.
All the other parameters surrounding RE are changing and fast.
The irrational exuberance and "this time its different" mentality keeps on keeping on.
Wiseguy,
I think that just might be the stupidest statement I have come across recently-though Zachary's unqualified support of Trump is tough to beat.
What happened to all the civilisations that once dominated the world? To name just a few;the Akkadians,Egyptians,Greece,Rome,Spain,the UK. What happened to technologies that were once ubiquitous? The horse and plough,sail power,the abacus,barter. How did the GFC happen? How did the era of high inflation morph into the era of low inflation?
To educate yourself,I suggest you read The Drunkard's Walk,how randomness rules our lives,by Leonard Mlodinov. Here is one short quote from the introduction; "Random processes are fundamental in nature and are ubiquitous in our everyday lives,yet most people do not understand them".
Plus, in no particular order... Persian Empire, Ottoman Empire, Huns, Mughal, Hittite, Amorite, Babylonian, Assyrian, Minoan, Indus, Qing, Han, Byzantine, Romanov, Visigoth, Portuguese, Aztec, Inca , Norman, Maya, French, Dutch, Sassanid, Gupta, Tang, Ming, Manchu, Shogun, Communist, German (briefly followed by the Nazis) and more recently an American cultural empire with imperialistic behaviour.
Let us also hang our heads for the fallen, cassette players, VHS, flint axes, fax machines, telegrams, the written letter, gas lamps, fil-o-fax, bronze swords, ice houses, coal power, steam power, papyrus, shillings, farthings, halfpennies, hearing trumpets, hunting and gathering.
I just find it so amusing to hear people so wedded to the status quo. The only thing history has ever shown is that change is inevitable. Sometimes it comes slowly, sometimes quickly. Sometimes it's welcome, sometimes it's unwelcome. But whenever it comes, there are always curmudgeonly denigraters clinging on to the past for all they are worth.
You should not compare shares and housing. 2 main differences: 1) shares are extremely liquid and can be sold immediately at the click of a button, houses take weeks and months to sell 2) In a downturn house owners generally stay in their houses riding out the downturn (that's why sale volumes have started dropping) whereas share owners sell as their shares have no other purpose than making/losing money (you can't live in your shares). That's why shares are a lot more volatile (big rise & drop in value) than houses
Lol. On what basis?! If you look at the chart above:
Jan 2014, down 25k, March back up 38k.
Jan 2015, down 30k, March back up 49k
Jan 2016, down 36k, March back up 45k
Jan 2017, down 30k, March back up ??
Only IF this March breaks that cycle, and IF Jan 2018 is lower than 2017 ($490k), will you be able to say we're into the other side of the cycle... ;)
That's some sweet correlation http://twentytwowords.com/funny-graphs-show-correlation-between-complet…
And the for sale stock keeps building - now 1192 houses and rising on north shore of Auckland...up 32 from yesterday. Also rental stock consistent at around 500 houses on the North Shore....
So where is the shortage......?
Me thinks the shortage was caused by the "expert" mum and dad specvestors who may just be getting nervous about now?
Time will tell...
Im pretty sure you are right. The 1000 plus a week rentals in AK city are rolling through at 6 or so a day right now. We pay just under 700 a week where we are, 3 doors up they are trying to get 1050 a week in a place that sold for 1.42 M 15 months ago... good luck.
Look at that - another 5 listings since this morning.... now 1197 and counting... lots and lots of stock, banks tightening their lending criteria and raising interest rates irrespective of what the Reserve Bank is doing....
Don't know about anyone else but even though I'm in the market for a new house I'm holding onto my money - North Shore of Auckland getting very interesting...haven't seen it like this for years....
Pricing is almost irrelevant , as sales volumes slide, down 15.7 percent in Auckland past 4 months. Credit growth falling with lower sales and pricing, in an economy so tied to granite benchtops. Banks will need to reverse course on interest rates soon , as everything looks over cliff edge.
I agree with you Dictator but there will come a level where loan defaults due to interest rate increase will outweigh the banks interest margin profits. Where this level is, is hard to know but personally, I don't believe banks can raise interest rates by 2% without causing too many loan defaults that will hurt them. We are much more indebted now than 4 years ago
But that's the thing, if a bank is faced with a 2% higher cost of funds it has to pass on most of that to the borrower. Australia hasn't even lost the AAA rating yet, but it will happen in 2017.
It's nice to think that there are decisions that the banks or even the Government can make that will stop the market turning to custard - but the reality is the decisions have already been made over the past 3+ years.
Now we get to slide down the other side of NZ's little debt super cycle.
That can be the case while things are still under the control of the banks. However many banks have found things can spiral out of control and end up in trouble. The vulnerability of our banks is the need for foreign loans to meet capital requirements. Domestic deposits would be safer for our banks but they've already made their decisions.
The banks have not got rich on the basis of changing interest rates, but on the creation of credit, 230 billion of it attached to housing in New Zealand alone. The banks will simply shoot themselves in the feet if they do not start to put out sweeteners for the remaining gullible to come on board.
The Auckland index was slaughtered in January....biggest monthly drop ever?
https://www.reinz.co.nz/Media/Default/Statistic%20Documents/Public%20HP…
Still, February - April will be the real test. I suspect there is not going to be anywhere near enough credit out there to mop up the current stock of listings.
I agree fully.
If you were to ignore the warning signs right now, you would be crazy. Buying now would be the most riskiest thing you could do.
Even the REINZ report makes for grim reading. A perfect storm of tightening credit, increasing stock levels, capital inflows gone, Unitary Plan progressing, etc.
As you say, April will be the real test. You would have to be crazy to be buying right now. If you were in a liquid market, you'd be shorting like crazy.
In a city like Auckland which is one of the most expensive cities in the world to live in, with asset prices high living cost high, migration high and rising, why would properties dramatically fall? because of some light restrictions? or that properties are unfordable for us kiwis?
At the end of it all, the the RBNZ and the country as a whole can not afford a dramatic decrease in property, as it will cripple the economy, too much depends on it, so there for they will never let the market collapse, they are only trying stabilizing the market because that's the best they can do due to current situation.
It doesn't matter. Either there will be a substantial short term correction or long term the return will suffer as capital value stagnates to catch up to long term equilibrium levels.
The fact of the matter is that there is too much misallocated capital and a now relatively poor populace. The credit is not there to buy property and new stock will start to significantly ramp up due to the unitary plan. Import as many low skilled immigrants as you like - they won't sustain the capital value of the properties.
Be as wishful as you like, in the end economic logic always prevails.
Wouldn't even count the unitary plan, its way behind, has anyone thought the new stock could be due to population growth? Import of immigrants will further fuel the market, sure the sales volumes are slower this time of year as expected but transactions are still taking place and that will increase as months go on.
http://www.nzherald.co.nz/residential-property/news/article.cfm?c_id=76…
Potential supply shock to Auckland is unlikely to be internal. Almost every place has been having a building boom for the last 6 years (including Auckland). However everywhere has been building much faster than Auckland. Auckland has spent the boom building at a mere 30-50% of the construction rate of contemporary cities.
6 years of very poor planning and here we are. Auckland is being swamped by new supply growing in other places. The future is rosy for everyone.
Yes - houses being built everywhere. Some places unbelievable.
Went to some open homes in Silverdale on the weekend to get some ideas for a reno. Ended up on Spyglass Rd. This area is next to a development that was probably built about 10 years ago. At the end of the road there are new 1.6 million dollar houses for sale. Some distant sea views through trees but right next to the houses (within 15m of one ) was a massive cellular tower and on the other was the main Orewa road. I can't see kiwis buying them.
For the first time ever, I heard a journalist challenge an MP on their housing spin. This Interview of Nick Smith by Guyon Espiner is brilliant... what concerns me, is Nick Smith never even flinched when caught out telling outright lies...
Listen - http://www.radionz.co.nz/national/programmes/morningreport/audio/201833…
Yes Espiner seems to be worth listening to. His interview highlights that National are not on top of things and any figures Smith, English and the like spout need to be taken with a pinch of salt.
Sounds like the Nats economic plan going fwd remains immigrants building houses for immigrants building houses........to infinite - well at least until it all crashes as all good ponzis must.
Pity these results aren't stratified. We seem to say this everyear.. but I'm convinced we'll have an idea of how things are going to end up by Feb / March. Either way, looks like a great time to move to Nelson - where the sun always shines and the new capital gains hub of NZ.
40% LVR's are now showing to hinder the quality of life to homeowners and renters alike, as I forewarned six months ago, when you hit investors in the pocket then the tenants will suffer as renovations can not be approved by the bank...my own experiences and anecdotal evidence from this website would support that.
The irony of course is that those most affected (investors) tend to be those motivated individuals that risk their capital to improve housing stock and increase supply by buying houses! Now this group are stuffed for credit hence won't be able to indirectly afford those on lower income wages to employ in their businesses, hence indirectly there will be less 1st home buyers as less money and jobs in the economy. Less credit is a bad thing
Buying houses doesn't increase supply, building houses does. Do you really think that investors put more money into renovating than people living in their own homes? I'd be fascinated to see your data for this, as my impression is that owner occupied houses are generally kept to a much higher standard than rentals.
17 thumbs up to you sir...in my experience I buy houses that need a little TLC and then do them up to put in tenants...e.g. a $400k place unrenovated gets $300 a week but put $20k into it and then you can try and jam $375 a week...that' s a 20%+ return on your $20k...investors with happy tenants tend to invest more in their properties and then you find you dont miss 1 day of rent and get to have top notch pay on-time tenants...like any business if you have a good product and customer services then you can charge more and get better customers. p.s. "buying houses doesn't increase supply?" sorry but you lost me there...how does it help if you knock out 40% of the market with high LVR's and then in the same breath say that wont have an effect on housing supply...of course LVR's have totally stuffed new builds as investors buy new builds as well.
because they are improving margins and tightening up on lending,
http://www.interest.co.nz/news/81953/anz-tightens-lending-criteria-rent…
Let's not forget that this data is median house sale prices, ie what is the midpoint of all sales ranked from lowest to highest. It's not directly related to whether the value of individual or all properties has changed, for that you need to study the QV index data which compares the ratio of the sale price to the QV.
Keywest has a point.
Recently I got a quote for $150K to renovate a central city 5 bedroom apartment which would add $350K to the value to the rest of the building ( 3 commercial 1 residential) according to the valuers report.
The LVR would still be at 39% max but still the bank turned it down.
Reason: Bank was short of cash.
There's a very simple reason why this years sales and prices falls are so significantly and it's one that we absolutely NO control over!
If you look at the data the main driving factor for Auckland has been Foreign Buyers; we've know this for a long while which NZ has been dependent on for far too long to increase our GDP.
Auckland's house prices have been falling mostly since November when the China's Capital Flight restrictions started to kick in. You're likely to see prices drop even further as China further increase its restrictions, they're cracking down even more, here's some latest news for you:-
FT Article: Major Chinese bitcoin exchanges halt withdrawals after crackdown
Virtual currency under fire as central bank tries to stem capital flight : https://www.ft.com/content/415bf86c-ef67-11e6-930f-061b01e23655
Watch the Auckland housing market take another dive.
Don't you "astute Awklund property investoors" worry your pretty little heads .....REINZ has come out today and saved the day !!
http://www.nzherald.co.nz/property/news/article.cfm?c_id=8&objectid=118…
Things are changing right in front of their noses and what was REINZ's comment ......:"too early to tell" ....the BS and SPIN goes on ....and on .....and on ....and on ....and on.
Good on Guyon Espiner for having the guts to take it to Nick Smith that Auckland is the most 4th expensive city in the world !! ....see Mandalay above @ 11.56
Yes and there needs to be a logical explanation as to why prices and sales are falling. Interest rates have only increased a little and only very recently, that shouldn't be enough to cause such a high volumes of property being put on to the market. It look very much that Investors are ditching their rental stock. Particularly Overseas Investors who are most likely having problems getting hold of funding.
@Yvil ...... not being sarcastic at all, just tired of the media in nuzullin' talking to RE agents, bankers et al and publishing it as "News" ???
BTW ...not insecure at all, got out of the Auckland market March 2016 ..... gone to a place where my net return is 6% ...plus steady (not crazy) capital growth.
"Investors" might all in a rush decide to get out of being landlords even if there is not a property price crash. Imagine owning a cruddy house in a zombie suburb in South Auckland. You have cashflow neither negative or positive. The plan is to cash in big on the capital gain.
Then while the price is not going down, you find it is not going up either. Why would you stay there?
Everyone has these panics and speculations of the bubble etc they had them last year and the year before that, year on year where are we now?
Oh its different this time they say, due to the articles we read? have a look on Trademe, yes there is more listings, but not a slight bit of change in prices, prices are higher then ever before and they are still selling despite the slow down we are so wishful about
What's your source for that? As far as I can see Trademe have only published data from December which reported Auckland was cooling. Are you reporting data or anecdote?
http://www.trademe.co.nz/property/price-index/for-sale/
Regardless, much as I'd love to see more reasonable house prices it seems a little to early to tell whether we're in a full blown correction here. Next couple of months will be interesting.
Lets not beat about the bush; there has been great capital gains over he past five years when every man and his dog in Auckland no matter how financially savvy could make plenty on capital gains. It is pretty obvious that capital gains of 20% or 10% were not gong to be sustainable indefinitely.
A number of drivers have changed in the past six months (e.g. a shift from historically low interest rates) and from many of the comments it is clear that some are either desperately (emphasis on desperately) hopeful that the property party is not over or are in total denial.
P.S. As a observation, I bought my first (an entry level) home in 1982 for $60,000 which was three times my salary; today I note that it now has a value of over $700,000 (yes, I should have kept it as a rental) which is twelve times the salary for the same position/step today.
'82? You probably didn't have the option of keeping it as a rental! Pre deregulation of the financial market in '85 if you wanted to buy another house, the bank's 'expected' you to sell the one you had. You pretty much had to have a spare 100% looking for a home if you wanted to be an amateur landlord back then....
The roller coaster of Auckland property, its been a great while it lasted. To quote a previous post, "A blind fez wearing monkey could have made money". Leveraging off the rising capital position as prices were driven relentlessly higher by Chinese money has been easy money. The "Smart" investors cashed up their gains in the last eighteen months.
Ever been on a roller coaster when it starts to go over the peak....that feeling in your stomach. Low equity specuvestors...time to stock up on some gaviscon.
An even keel summary:
Yes, house values drop every January (see graph) and this is not a sign of a collapsing market.
Decreasing sales volume and increasing stock over Jan 2016 is a concern on the other hand and point toward a slowing market.
March figures will be telling as in previous years values rebounded strongly in March, if they don't in 2017, we can definitely talk about the market having turned.
Finally, on a personal note, I believe volumes will stay low after March because of the upcoming election, people generally sit on their hands until a new government has been formed, this won't help the market.
To quote Alan Greenspan .......... But how do we know when irrational exuberance has unduly escalated asset values ?
He highlighted this without the benefit of hindsight , and then we blamed him for the GFC ........... talk about shooting the man with the warning flag !
Well we know house prices in Auckland have done , from a combination of in-plain-site and a bit of common sense :-
Where prices escalated to the point that high earning professionals could not afford a house in a blue-collar suburb.
Where high-school dropouts that became chippies on building sites are charging more than young Doctors could earn
Where yields on properties bought by speculators were close to zero
Where there is a serious disconnect between the intrinsic value of a property and what it sold for
Where inward migration at a record rate in relative terms even higher than post WW2 created unsustainable demand not being either planned for or being met with sustainable supply
Where interest rates are the lowest in living memory
Where the city fathers drew a ring around the city , and would not allow for expansion to accommodate the migrants numbers .
And market participants who believe it is a one-way-bet
It all adds up to a market without limits and a huge headache for Government and planners
It's easy to hold up a warning flag when you've created the problem.
I believe that shooting Alan Greenspan would have been best for the entire world, although I don't support shooting him. The reason why is because he admitted that his entire 18 year career as the chairman of the Fed was a mistake. It takes a big person to admit that scale of mistake.
You might find this article quite interesting about Alan Greenspan's rise and fall (Did you know that he use to be a Jazz musician).
There are a few for sale signs in my street. No longer do they state "Auction" and usually by the time you even see a sign it has sold on it. Things have slowed down but you cannot really say there is a housing shortage without clarifying that statement to, there is a shortage of low cost housing. Plenty in our street for sale if you have $1.5M, in fact there is four new ones in a row the same.Still I think its better to see what the next couple of months are like before a trend emerges.
Come to all banks near us?
Macquarie Bank property borrowers will have to disclose their spending on everything from footy to fashion under tough new credit rules about to be introduced. Borrowers seeking a loan will be asked for details on their spending in 12 separate categories covering household and discretionary spending to assess eligibility for a loan. Several lenders, including industry giants like Commonwealth Bank of Australia, are increasingly willing to sacrifice housing market share to lower risk...
http://www.afr.com/real-estate/macquarie-bank-plans-new-crackdown-on-pr…
This makes me wonder if banks will be quite happy if people refinance with other lenders if they don't like their terms and conditions - it shifts the risk to someone else. Having said that it assumes that someone else will lend people money. The rules seem to have changed and I wouldn't be surprised if it will be introduced here.
It certainly looks like prices peaked in Auckland around mid last year. People were warned but most did not take heed as greed takes over during bull runs. Now the listings are coming on the market thick and fast which means vendors in Auckland will have to be more realistic than they were last year. As for Christchurch. The facts say it all. Interest rates rising, rents falling, a glut of rentals and many unoccupied,listings rising and numbers selling falling. You can lead a fool to water but you cannot make him drink it.
This is not merely a local issue and it is worse than you think.
6 years ago Auckland went from normal land supply to an artificially constricted supply and thus our property became the investment of the decade. Our property prices soared higher and faster than everybody's (thanks to Len Brown and Penny Hulse), property owners became rich.
As a result of our property prices becoming very high, it was costly to buy Auckland land to build on. Much more expensive than everywhere. So people who wanted to build stuff did not buy in Auckland. Not much has been built in Auckland over the last 6 years.
Now at the same time as Auckland has been behaving in its unique way the rest of the world has been getting on with what the world does during a property boom. The rest of the world has been building lots of houses and new office space.
There will be a global oversupply of housing and new office space occurring with in 12 - 18 months. But in Auckland there will be undersupply.
What happens then, I think, is that every young person in Auckland will leave.
No you were gloating plain and simple. "Even if they fall a $100k they are still expensive and a lot of people cannot afford to buy a home still. " That is a cruel statement to make and one you should be ashamed of. Do you not feel any compassion at all for those currently entering the work force for example?
We need to be realistic, if it ever falls100k and below what sort of effect will it have on the economy?
Putting such dramatic effect on the market I would wonder if will even have our jobs.
Everyone wants the property market to crash so they can own their own property, all good and well but they don't stop to think about the out come if such thing happens, you wont be keeping that property.
It will be incredibly harmful, and those who haven't contributed to this bubble (working renters) will be burnt by job losses etc. but the fact is, the harm was already done once prices separated from fundamentals, and the only solution is the medium term pain of a crash. The higher the price the bigger the fall, it was always going to happen. Markets will always return to fundamentals, the question is how long before they do, and whether the fundamentals increase to reach the price or the price reduces to meet fundamentals. I don't see rents increasing to where they will give a reasonable return on an $800,000 house anytime soon.
Yes totally agree with you tgcam4, It's getting harder and harder for Auckland business in the CBD to recruit staff due to rapidly increasing living costs! And then there's the over inflated kiwi dollar that boosted by the over inflated housing market that in turn kills vital export industries. FALSE ECONOMY!! Thanks National!
This guy suddenly isn't looking too hot https://www.trademe.co.nz/property/insights/address/Papakura/Papakura/V…
What about this guy? He stands to make over $1.5m in just 2.5 years time ;-)
https://www.trademe.co.nz/property/insights/address/Auckland/Remuera/Lu…
Everyone knows that Auckland prices are too high and that they would retreat for awhile.
However it isn't the interest rates at all that will be affecting the market at all.
They are still lower than 2 years ago.
It is the ridiculous LVRs that they have brought in.
Doesn't affect everyone but most people.
The seasoned investors will have more opportunities now than they did have previously.
I also believe that it is becoming harder to get money out of China which will also affect things.
Interesting times but far safer than gambling on equities.
Nonsense the Boy. Any seasoned investor with an ounce of nouse will already have sold the odd property or two and taken some debt of the table. They would have sold the house in the least attractive location, the one that has a tendency to be vacant more often than the others. Maybe you should have sold that home that is currently unoccupied. What is going to be hard for seasoned investors in Auckland and Christchurch is when to grab the falling knife. In other words when will the current downturn in both cities stop and the markets stabilise at most. Nothing is worse than buying an asset and its price drops after you buy it with borrowed funds. That is always the problem with property versus shares. Easy to buy but harder to sell in a soggy market. And the costs to sell are prohibitive in NZ.
Yep the road into an asset bubble is a wide motorway. The road out is a goat track.....
I am not completely convinced Auckland's property bubble is all bubble. Some of it is deliberate policy settings. For years opposition parties have been saying the government needs to cut back on demand to allow more affordable housing to be built - cut immigration, cut foreign buyers, change tax settings, don't do KiwiStart grants it is a waste of money as it just pushes prices up higher..... and boost supply -start government house building programmes, remove urban growth boundaries, fund infrastructure better etc.
The government because it is led by arrogant numpties who actually like house price rises because they and people like them, were benefiting from the rises in prices -so for a long time they didn't see the problem -hence all their housing policy initiatives were too little too late ....
So in part house prices are what they are because of stupid policy settings.
Then of course because people aren't stupid -investors saw what was happening and they piled into the property market, so in part the Auckland housing bubble is real. Now people are nervous because the bubble got big and might crash on its own accord or depending on the outcome of the next election, genuine housing policy change might be coming from a group of politician which actually have the political will to reform housing.
My guess is that nervousness will cause the property market to soften until the election, as the speculators will play a 'wait and see' game.
If National win the election the property market will take off again.
Interesting times!
If National wins again the brain drain will accelerate.
It makes zero sense for young Kiwi professionals to stay in NZ and pay rent and an unneeded pension to their landlords for years, or buy into a market ridiculously separated from incomes. Especially when they can live cheaper and make more money in Melbourne or Brisbane as the new 200,000 apartments start coming to market.
Some people are cashing up to retire or move to somewhere were house are half of Auckland,ie downgrading,others are buying and selling in the same market and maybe upgrading.The bottom end of the market will drop out more as some investors quit.As for Fhb best to wait till winter-election at the earliest. If prices drop I guess the new CV in July will make rates slightly cheaper than than could have been.
Some people are cashing up to retire or move to somewhere where house are half of Auckland,ie downgrading,others are buying and selling in the same market and maybe upgrading.The bottom end of the market will drop out more as some investors quit.As for Fhb best to wait till winter-election at the earliest. If prices drop I guess the new CV in July will make rates slightly cheaper than they could have been.
The people moving to Tauranga or Hamilton are going to places with a much higher rate of building growth than Auckland. It used to be that Auckland grew much faster than the rest of the country, but not anymore. It might be those leaving buyers making the upgrade and those buying in the Auckland market making a downgrade.
I wouldn't bank on it :P
https://www.youtube.com/watch?v=RDrfE9I8_hs
Gordon still plenty of people wanting to move to desireable Chch.
Rented all properties now and had multiple applications as well.
Must admit though that some of the applicants if they are checked out properly will never get a rental as they have many issues.
Luckily we do the proper checks otherwise we would have problems.
You can rent anything but u don't want substandard tenants and would rather leave empty than have that.
A desperate response made at 2.30am on your phone with fat fingers. You bulls all sound so stressed . 198 comments to date and many trying to row against the tide. Yes we believe everything you say. You have many rentals and people line up to rent them off you. Funny that. A declining city, swamped with empty rentals and rents declining. Oh and house values declining by the month.
Gordon made at 9.30 pm as was at Perth airport.
Enjoy travelling and fortunate to be able to do it .
Never desperate and sleep very well knowing that property is really the way to go financially in chch
We are professional investors Gordon and that offer is still on the table.
You should smile more as you always appear like an unhappy bitter man.
Currently on iPhone at Sydney airport.
I was personally hoping for the market to stabilise a bit. However, it seems to have picked up at-least within a few of the Auckland central suburbs (usual areas I drive through or interested in). I am judging this based on my observation of Sold stickers and the time it took for the Sold stickers to appear.
Nothing scientific. about my observation so this is off course a perception until we see the actual data next month.
Also worth mentioning that the stats have surprised me lately. Houses / areas I was looking at have sold extremely well in Jan and Dec too. One of the few examples I am aware of is: 14 Rangipawa Road in One Tree Hill, GV 660K - sold in Dec for 1085K. (3 bed 1 bath)
It's interesting to reflect on open home experiences over the last few weekends with 6-7 months ago. The atmosphere is now one where there's clearly much less of a sense of urgency among buyers. Eternally upbeat real estate agents are beginning to look a bit anxious. Comments such as "Auckland house prices will go up at least 10 percent this year" seem rather less convincing. But the great barometer is, of course, the number of pairs of shoes in the front porch. By and large, the count has now dropped off significantly. At a couple of open homes I attended last weekend, there was only one pair to be seen - my own...... It's always dangerous to make predictions (especially those about the future!) but for what it's worth I think we might see the return of "Cash is King" in 2017. Advice to cash buyers: bide your time.
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