Bayleys' Hamilton office went to the top of the auction class this week, with a small but perfectly proportioned menu of eight properties on offer to discerning buyers. Six changed hands, giving a sales clearance rate of 75%.
Highlights included a couple of houses on small lifestyle blocks at Ngaruawahia that sold for under $550,000 each, an 8000 square metre lifestyle block at Waerenga that fetched $340,000, and an investment portfolio of five separate houses on a single 2352 square metre section in Hamilton East that sold for $1.768 million, giving its new owner a gross rental yield of 6.4%.
Sales were pretty good at the Auckland auctions as well, with 15 properties on offer and sales achieved on nine of them, giving a clearance rate of 60%.
Among the sales were a three bedroom townhouse at West Harbour that fetched $685,000, a two bedroom home unit at Kohimarama that went for $975,000 and a 1940s-era, two bedroom brick and tile house in Onehunga that sold for $820,000.
The most expensive sale was a three bedroom/two bathroom character home on two levels with a basement garage in Herne Bay that went for $1.81 million.
The fulls results, with photos of all properties including those that didn't sell and the prices of those that did, are available on our Auction Results page.
You can receive all of our property articles automatically by subscribing to our free email Property Newsletter. This will deliver all of our property-related articles, including auction results and interest rate updates, directly to your in-box 3-5 times a week. We don't share your details with third parties and you can unsubscribe at any time. To subscribe just click on this link, scroll down to "Property email newsletter"and enter your email address.
102 Comments
The two bedroom brick and tile house in Onehunga that sold for $820,000 looks like a good buy - CV 640k.
About the "money launders", well behind every great fortune lies a great crime they say. A problem not unique to the Auckland property market. A lot of wealth must have been generated by immoral activity. The money paid for a house in Auckland could conceivably be traced back to the crimes of the Chinese revolution or even crimes committed during the Opium wars if it was a British buyer.
Yes indeed it might be best for some people to sell up and buy in cheaper areas especially if they've over leveraged on their mortgages. I've noticed that property in your area isn't selling too well. Most of those really expensive properties in the more central areas are still stuck unsold on the listings.
Remember even Boomers are subject to the three motivation D's (Death, Divorce & Distance).
He he, And I wouldn't expect much in the way of wealthy British buyer being able to afford to buy in your neck of the woods, not after the recent election since the Pound has just plummeted again.
Here's a few examples of passed in at auction homes still on Trademe:-
46 Mountain Road, Epsom
http://www.trademe.co.nz/property/residential-property-for-sale/auction…
25 Ngaroma Road, Epsom
http://www.trademe.co.nz/property/residential-property-for-sale/auction…
9 Epsom Avenue, Epsom
http://www.trademe.co.nz/property/residential-property-for-sale/auction…
1/17 Gardner Road, Epsom
http://www.trademe.co.nz/property/residential-property-for-sale/auction…
614C Manukau Road, Epsom
http://www.trademe.co.nz/property/residential-property-for-sale/auction…
1/34 Pah Road, Epsom
http://www.trademe.co.nz/property/residential-property-for-sale/auction…
1/213 St Andrews Road
http://www.trademe.co.nz/property/residential-property-for-sale/auction…
253 St Andrews Road, Epsom
http://www.trademe.co.nz/property/residential-property-for-sale/auction…
16 Golf Road, Epsom
http://www.trademe.co.nz/property/residential-property-for-sale/auction…
599 Manukau Road, Epsom
http://www.trademe.co.nz/property/residential-property-for-sale/auction…
192 Gillies Avenue, Epsom
http://www.trademe.co.nz/property/residential-property-for-sale/auction…
And the property listing are starting to increase again for Auckland (TradeMe 10617 residential listings) just wait until we hit Spring in a few months time then we'll be saturated with property.
Don't forget the age only principle of Supply and demand. If there's too much supply then prices need to drop especially in your area.
Actually only 14 for sale in my area while it is usually around 23. I think you will find there is not much that is "affordable" in the DGZ.
But yes supply in other areas is good. That is a good thing and indicates that there is no need to take special measures. Things will sort themselves out.
Offshore buyers tend to use this time to come to New Zealand and seek property in advance of migrating at Christmas. Browsing the websites this morning, I note that there are only 91 listings for sale in Remuera on TradeMe. Generally the numbers sit around 150. With approximately 9,000+ homes scattered from Newmarket to the Meadowbank boundary, there is definitely a shortage of stock in the suburb of Remuera.
CJ099
Your view of supply is a little myopic..
House prices have a stickability to the downside.. and it is generally an economic/financial shock that forces people to sell, in a dramatic way.
While listings are high ( and this is meaningful ) and maybe climbing , this does not necessarily represent
supply at a clearing price...
It may mean that these are the houses which will sell at yesterdays price. ( people asking too much ) ie.. these people are not serious sellers.
In my experience, ...people will hang on , for as long as it takes, to sell at a profit or breakeven... this makes housing a kinda unique mkt , in regards to "human behaviour "
Houses that have been on the mkt for x months dont really represent "supply" as the vendors are not realistic sellers.
no different to the bid/ask price ladder we have on screen when trading shares.. the volume of shares for sale at higher prices dont represent supply and the volume of demand for shares at lower prices dont represent demand...
We have no idea of how many buyers will step in at lower prices and how many people will be prepared to sell at lower prices...
Check out Vancouver ... It is NOT the crash u have been predicting for the last yr or so.
If you truly want to know and understand the supply/demand dynamic you will have to research FUNDAMENTALS...and NOT Trademe listings
check this out for a considered, fundamental view of the Auck property mkt.... page 5
http://www.prendos.co.nz/wp-content/uploads/2017/06/Property-Talk-Winte…
This is just my view...
Ok so the main point of your post is clearly wrong. The supply curve is made up of sellers at all price levels, you don't just discard that fact because you don't "feel" like it or you "think" these people are not "really' serious. People don't list houses unless there is some willing to sell therefore there is supply, but more to the point listing are at least +30% higher than this time last year therefore there is strong supply market (that is listing everywhere not just trademe)
What I'm saying is that the supply curve is dynamic and forever changing, and that a price ladder that shows supply at higher prices is simply "potential" supply. (It can be withdrawn in an instant, for whatever reason).
over the yrs, Iv'e known of plenty of people who have had their house on the mkt for yrs,... waiting to get their asking price.
There seems to be a massive "stickability" in residential house prices , to the downside, and I think the psychology of that is understandable.
The point I'm trying to make is that the 30% increase in listings does not equal a Crash.. Sure prices have stopped going up and are going down a little BUT that increase in listings does not imply a severe price correction., in itself.
We will see how it unfolds over the next yr.. Your and CJs' listings = supply perspective implies some kind of severe price decline.
My view says that number of listings is meaningful but only in the context of other fundamental information.. and keeping in mind the "stickability" of house prices.
( the increase in listings may tell us that the buyers now have the negotiating power and prices will soften, but beyond that one needs alot more information ie. fundamentals etc. )
ie.... at what point would you consider a house no longer " on the mkt".. after it has been listed for 15 weeks..??30 weeks..?? 50 weeks?? 80 weeks..??
You're misfiring again.
1) I never said we were in a crash, as you pointed out but a slow down in price within a massive jump in listings... we might have one.
2) What you said is that the number of listing is no reflection on the supply curve (which you have gone back on now)
And to answer your question. You would never consider someone who is willing to sell a house no longer in the market regardless of time. It's ALL still part of the supply curve.
I'm really beginning to doubt your understand of supply and demand.
1/ Ok .. you said slow down .
2/ I didnt say listings had no reflection on supply.. .. I said it is not as meaningful as you might think , in regards to the degree of price movement that high level of listings might imply.... ie.. it does not represent supply at a clearing price.
Also... in a historical sense , listings are not at extreme highs... ( If I recall ..??)
In my experience even Real estate agents no longer consider a house as being on the mkt if the vendors expectations are far away from the mkt price and time has gone by.. They no longer actively spend money or effort to market it. , and just leave it sitting on the books.
You are probably wise to doubt me.
Whatever limited knowledge of supply/demand I have , has kept me alive in the mkts... and I'm always learning.
I'm simply sharing my view , which is in contrast to CJ009 s' view.
Fair enough Roelof, I like that there is a mix of comments from different sides here. I am always worried about being in an echo chamber without knowing it.
As for you learning comment. I think we are all learning new things now. I personally don't believe anyone has a proper handle on what is going on or even if the old rules still apply. Only time will tell.
You really aren't seeing the bigger picture Roelof. The reason why Vancouver house prices haven't dropped that much yet, is there has been a lot from the US moving to that city due to escaping Trump. You're the myopic one, can you not see that?
See if you knew a bit more about the world you would understand that Vancouver is British Columbia and therefore doesn't have the language requirements that the other popular Canadian cities have, can you even work out what that extra language requirement is?
Well said Roelof
An example of what you are describing is where I live now where many vendors have no intention of selling unless they get their price. If there's no financial stress on the vendor it leaves a lot of room to sit and wait time wise. Not everyone needs to sell and you are right it is when pressures like an unaffordable mortgage come into play or economic downturn we see truly horrible consequences.
Exactly the same happened after the 87 crash, people refused to budge on prices and often waited up to year, sometimes more and then got themselves into a position of having to sell at a much reduced priced after having serviced a mortgage all that time thinking they could get a higher price, so they lost out doubly, in sale price and coughed up mortgage payments.
Yes they would be even more beautiful if they were affordable to the non money launderers. It's going to be really interesting to see what happens when the so call Anti Money Laundering scheme's second phase kicks in and whether it has an impact on prices or not?
According to an earlier article on this site: "Fewer than 70 out of 11,645 New Zealand foreign trusts have reregistered under tougher new disclosure requirements with only three weeks left to go before the final deadline, the Green Party said today".
A week ago I gave some basic stats on terms used on Trade me. This week. Price reduced 167 (159), mortgagee 9 (10), desperate 14 (12 ), must sell 225 (207), urgent 169 (169), reluctant 17 (18) and 1 still divorcing.As Zach stated last week , they could be RE simply advertising to get footfall and are very fluid. The interesting stat for Auckland are the listed rentals , up to 4135 from 3955.
Hi Cowpat, Yes you're right about the Auckland rental market listing increasing that means a lot more competition for Landlords. There's probably two reasons for this increase. 1) Increased prices putting of renters.
2) Which I think is more likely reason; Home owners who have to relocate are renting out their property rather than selling and becoming Reluctant Landlords, since people recognize that it's becoming harder to sell their property for the price they want. Which is how I first became a Landlord during the UK 2008 crash.
The downside for Landlords is that this is that it pushes down rental income with a saturated market, this one of the reasons why I decided to sell my rental property late last year since that the capital flight restrictions of Foreign Buyers who a have huge impact on Auckland's property prices in the long term.
I'm really pleased that prices are reducing even with still being an Auckland home owner. Once you decouple property prices from wages, pushing out resident FTB's then your on very shaky ground economically, so we really need prices to come down.
Though I was quite disgusted to hear recently that National were trying to claim it was their doing that the Auckland market was price reducing due to them not build much in the was of homes ('Yes that dog doesn't hunt' as the Americans say).
Yes Nick Smith made a recent statement in the Parliamentary questioning regarding house building in NZ. Saying that they (National) had it all under control with supply and demand (even with their large shortfall in new homes). Based off the recent static and reducing house prices for Auckland and other areas.
So nothing to see as usual for National. High time for them to go, if they can't even fathom out what is really happening with the housing market.
So are they admitting they do have responsability for controlling house prices?
If one says 'look how we've brought house prices down' would be an admission of responsibility (or at least the ability to control/influence) would it not?
By such logic they should be claiming responsibility for run-away house prices over the last 9 years - but they are not. So which is it - you are responsible for controlling house prices, or you are not. It's the 'free market' at play...(but it's not really).
Yes I agree with you that they seem to be admitting that they have too take responsibility for housing and to reduce pricing to more affordable levels but only in a very political tip toeing around the problem.
Still it's being done in a manner that National will always favor the top 1% and very wealthy. Even if it's at the expense of the whole economy as we've been experiencing in recent years.
National are quite happy to drive the bus over the cliff by sitting back arms folded behind their heads. What we really need is the Foreign Buyers Tax and to better manage immigration numbers.
I went through some of those listings.
What I did was find the ones saying 'urgent' and 'must sell' and look at the last sale price. In many cases the last sale was say 3-4 years ago for say, $450k, and now they're in need of an urgent sale at $720k.
So they 'urgently' need to sell at a way higher price than they paid a few years ago.
So no real urgency at all as far as I can tell. Just marketing speak at this stage.
Yes it is crazy for house prices to jump so rapidly and unrealistic of any Seller to expect property prices to double every 4 to 5 years it's just not feasible. But we can all see now how Foreign Buyers had such a huge impact on NZ.
Just think of all the untapped revenue that could have been generated from a Foreign Buyers Tax that could have been fed back in to housing development and level the playing field for residents, it's such a 'No Brainer' a very very easy way to make money for the economy but no National decided to punish Kiwi Investors instead by upping the LVR rates. The China spending spree may be over for now but it or something else could be back in a few years so that's why I'll back any political party that have the good sense to apply a Foreign Buyers Tax, which we know has to be cranked to the appropriate value to deter them since they budget to include the tax value. Vancouver is already talking about upping its Foreign Buyers Tax to 30%.
But for us, the China property spending party looks to be largely over now for NZ. I think that's because we're lacking a solid infrastructure for them to invest in for their future generations, no point investing in a dead end.
Better dwelling article: China’s Massive International Real Estate Buying Spree Is Officially Dead
https://betterdwelling.com/chinas-massive-international-real-estate-buy…
Quote: Impact On Global Real Estate Markets
Real estate markets that saw locals scramble to cash in on foreign buyers are now noticeably cooler. Toronto is seeing new listings hit an all-time high, coupled with a massive dip in sales.
New Zealanders that were complaining about a “flood” of Mainland Chinese buyers, are now complaining about the market cooling faster than expected.
Australia’s leading property analyst is now telling people to prepare for a 10% drop in prices soon.
The one place that’s bucking the trend is Vancouver, where locals are still convinced that Mainland buyers are somehow buying – but not showing up in any significant statistics. Good luck with that Vancouver!
Davo36 not necessarily. I am seeing similar in my suburb in Wellington and some of those houses have come back on as mortgagee sales. That makes no sense unless you understand that huge numbers of people have extracted equity on that increased value from their homes to either buy additional properties or to buy cars, holidays etc. This would make sense of the rapidly escalating debt to household income figures we are seeing.
People don't understand how much leeway banks give people, especially when prices are going up. Anyone who's struggling to or not meeting their obligations will be put under increasing pressure. A lot of people posting here will be used to not taking on unnecessary debts and not spending more than they earn, however the majority of people aren't that responsible.
What's being confirmed now is that people have taken on extra debts and have been using their house as an ATM. The fallout from this and the contraction of credit still hasn't occurred on a significant scale. Household debt as reported by RBNZ is still climbing. I suspect the effects are already kicking in but people are carrying on as if nothing has changed.
Given the approaching General Election, winter and the long upswing of 2014-2016, the housing market in Auckland is holding on remarkably well.
A few months ago (Jan/Feb), many here were predicting a market in the doldrums by mid-2017. Instead, we are witnessing a market which is showing more-than-reasonable levels of activity.
Yeah wait for Spring, Oh about the same time as the election. ;) Haven't you learned anything tothepoint, can you not see my earlier post which highlights how those really expensive areas are NOT SELLING even after their auction negotiations. Are you so blinded by your own BS.
"Yeah wait for Spring"
Spring? Of which year?
The current fortitude in the housing market is due to structural (not cyclical) factors. Structural includes environmental, geopolitical (stability), demographic, relative security, climatic etc. Globally, NZ is improving its ranking and becoming increasingly sought-after by investors.
This YEAR you fool! And like I said you have to provide evidence as I have, not this constant property spunking BS with NO evidence that prices are going to rise again. Send me the links to prove it as you have no inside knowledge as you claim not to be an Investor or and RE, so what do you know?????
Quite frankly 'tothepoint' since you lack experience of the NZ property industry, I find your comments totally invalid!
Yeah lets see, even you can't ignore that the market is in decline that's why I call you an utter fool! What you are doing is very damaging to FTB's and very irresponsible and deplorable. Encouraging people to buy in a falling market is just down right evil.
Even the National Party has admitted that the housing market is in decline.
Those people who sit on their hands waiting for a major downward correction ("crash") in property prices are likely to go unrewarded and become increasingly forlorn.
Successful property ownership/investment requires a far more pro-active, astute strategy than that - including a long-term vision.
If you find the house that suits your needs, then the best time to buy is NOW. Otherwise, the regrets only build up as the years roll by - and prices increase.
If house prices crashed in the next year or so, I'd happily go out and buy another property or two (and, of course, so would thousands of other people). It would be bliss! But I'm not fooling myself (or other people) that it's going to happen - and neither should you.
Really WHO do you expect to afford multi million dollar homes now the that China spending spree is over, tell me that? Who is going to afford them considering that the average Auckland salary is around $60k, they can't even afford a $600k home!
So Who is going to buy these multi million inner city homes as they're quite clearly just siting there and SHOW evidence in your reply as I'm not listening to your BS any more!
I'm not looking for a crash, I'm looking for affordability and a correction of the Auckland property market.
You're dreaming DGZ/Zachary. They're in limited supply and Auckland high end earner are in short supply, I know because I am one! Also everyone else including highly leveraged Auckland business owners are also in short supply. I'm sure everyone in Epsom can look forward to having All Black star neighbors, say hi from me. :P
April 2006 The Taoiseach has said he does not see a great problem with the levels of borrowing. Mr Ahern
said there had been predictions of a large downturn in 2005. He added the bad advice given by many resulted in some people making mistakes when they should have bought property last year.
July 2007 'Sitting on the sidelines , cribbing and moaning is a lost opportunity . I don't know how people who engage in that don't commit suicide because frankly the only thing that motivates me is being able to actively change things'
September 2008. ' Bank of Ireland shares are 3.80 euro. Now if I met you here next year, or the year after, do you seriously think the Bank of Ireland shares will be 3.80 euro. I would go out and buy Bank of Ireland shares....thats what I would do '
Auckland Central is up 1.2% since March 2017 according to QV.
https://www.qv.co.nz/property-trends/residential-house-values
Auckland Central is a fantastic place to live (and own property).
Ponsonby and Freemans Bay (in particular) buzz all day and night. Can certainly understand their increasing popularity. Would like to live there myself!
Not at all surprised to know that Auckland Central is proving resilient to the quieter market of 2017.
Zach according to your QV data if you have brought an Auckland home in the past 6 months ,, the market has flatlined. If you were offloading an Auckland home ,using the May figures 4-6 percent loss with the exception of Waiheke island.We all know that QV figures are the least contemporaneous. Auckland Central is down 0.4 percent since April.
Tothepoint you are correct that NZ presently is seen as a nice place to park money
The Brexit The Trumpet & The Hung UK Parliament along with extremely low oil prices which rule out larger safe havens like the CA$ are all reasons
I think it unwise to believe a country of 5 mill at the end of the earth won't experience pain financially again though when funds are shifted out of NZ as they surely will again at some stage of the financial cycle.
I'm waiting to see what the voters and MMP deliver & what reaction to the result.
We will see but NZ is indeed viewed upon favourably even though the world knows its housing ponzi exists
All these Double GZ homes in Epsin How could this be ?
Don't Auckland house prices in BubbleGZ Only go UP ?
What is happening down there at the end of the earth ?
I'm sure Nation Neal will open the taps for another 70,000 new arrivals to make it all better & pump the ponzi
Zach my friend is selling his Grey Lynn bungalow and he reckons it will go for around $3.5m. What do you think? http://www.trademe.co.nz/property/residential-property-for-sale/auction…
Double-GZ I would have to say that does seem a tad optimistic. That would be around 90% above CV. I'm not all that familiar with houses in this area, they almost seem like being in another country being so close to one another but if I had 3.5m I would buy in Epsom or Remuera and get a bit of land around me. Will be interesting to see how it goes.
Yes I'm totally unfamiliar with the market there myself but I think they're not too dissimilar to Epsom/Remmers DGZ due to the proximity to the CBD. However I am like you, I like to have a bit of land to potter around in. I am thinking Grey Lynn is more for the younger professionals with no kids i.e. the DINKs :-)
You know the more I think about it NZ is viewed so well by the rest of the planet it should be seeing 250,000 new migrants per year arriving. It's climate is excellent , you can grow food in its great soil & there's lots of rainfall. Every single person I meet up here raves about NZ and loves the place.
Auckland top 30 suburbs based on QV median value as at 1st May 2017:
1 Herne Bay $2,464,750.00
2 St Marys Bay $2,228,900.00
3 Remuera $2,052,300.00
4 Stanley Point $1,950,850.00
5 Campbells Bay $1,903,300.00
6 Westmere $1,862,150.00
7 Epsom $1,854,150.00
8 Mission Bay $1,786,050.00
9 Kohimarama $1,759,250.00
10 Orakei $1,758,200.00
11 St Heliers $1,725,700.00
12 Ponsonby $1,710,050.00
13 Takapuna $1,661,650.00
14 Devonport $1,656,700.00
15 Glendowie $1,648,150.00
16 Mellons Bay $1,625,050.00
17 Castor Bay $1,623,650.00
18 Parnell $1,609,700.00
19 Narrow Neck $1,517,600.00
20 Murrays Bay $1,496,350.00
21 Greenlane $1,488,300.00
22 Dannemora $1,480,800.00
23 Mairangi Bay $1,457,800.00
24 Mt Eden $1,451,800.00
25 Greenhithe $1,441,100.00
26 Pt Chev $1,416,950.00
27 Milford $1,414,250.00
28 Bayswater $1,397,100.00
29 Rothesay Bay $1,388,400.00
30 Grey Lynn $1,387,550.00
counting chooks every day / month is a bit useless really ? -- this discussion is endless, let us wait for some milestones like Election, Interest rate change, DTI ..etc --- medians and averages prices from QV and others are just indicators and confuse the argument ... it just provides fuel to those who are hoping that Remuera or Epsom properties will Half then complain that they dont even have a fraction of the deposit for it ....
it is sad to see some here live on false hope and believe that the Crash is coming...!!
Hi Eco Bird,
"it just provides fuel to those who are hoping that Remuera or Epsom properties will half then complain that they don't even have a fraction of the deposit for it ...."
And there are plenty in that category who worship at this parish.
I do have a great deal of empathy for the first home buyers among them, as well as those older people wanting to own their own homes.
Some of the others, however, I suspect are just plain selfish, jealous and greedy....... Without them pushing up demand, house prices actually might fall a bit.
Hi,
Unfortunately, FHBs are being used as a political football to push certain agendas - I have nothing against FHBs either, I actually have two of them in my family and we endeavour to help them out with sound advice and practical steps instead of calming them with false hopes.
Most of us who had interest in the property market and lived through its ups and downs in the last 15-20 years know well enough that the current cycle is no different from previous ones and that most, if not all, the variable dynamics influencing house prices today are pointing towards a probable slight increase in the near future rather than a decrease ... however, this remains purely a matter of personal opinion based on information and experience.
We are confidant that no major CRASH will take place if the market was left alone to correct itself .... however, if major changes or manipulation was forced upon this market ( by the way of change in gov direction, or other financial restrictions) then it is possible to see some change to the downside. These wrinkles will iron out in a short time as the market always tends to recorrect itself in both directions ...
I am actually sick of people who are selfish, jealous and greedy who get mental in defending what they Hope / Wish to happen. These people think that by following few numbers, articles, or o/seas examples they have found the holy grail and can predict how OUR market will respond to a change in this or that event !!
I did not like people calling others names, or use low level language in evaluating their opinion or line of thinking - that reflects badly on them in the first place and exposes the shallowness of the adversary.
Encouraging hatred, hostility, and tension between old and young generations, those who have and those who dont have enough, is unhealthy - it goes beyond the expression of opinion (which always needs to be reasonable and responsible) to something more destructive to the fabric of society !!
Interesting comment Eco Bird. I agree with some of the aspirational elements. You lost me though when you expressed your opinion as to the future of the market and then described people with opinions other than yours using negative adjectives while bemoaning the usage of name calling.
It is important to have a diversity of opinion and a healthy and robust conversation. Insulting dissenting opinions is not healthy and robust discussion.
As to the future direction of the market, time will tell. It will be interesting to see which set of fundamental data will have been useful in the prediction of the future. I've my views as do you. I'm rather confident that we have divergent views and that we are not going to persuade each other using facts, data, or an emotional plea. What is important is that people coming to this site looking for knowledge are allowed to get knowledge with a full spectrum, rather than a one sided subset of opinion.
Funny how he/she looks to use the last 15-20 years as the 'norm' to apply to the future. But I think if you look back at the history of the NZ housing market, you might find the last 15 years is a rather large anomoly (that is where I was going with David Chaston to put together a full history, inflation adjusted home price index for NZ).....So what Eco Bird believes to be very sound analyis, perhaps couldn't be further from reality. Shillers index for the US makes their housing bubble stick out for a sore thumb and show an annual real return of only 1-2% for housing. If you start getting 5,10,15 or 20% year on year and the price/rent ratio is so out of wack - its a strong indicator that you're in for bad returns over the following period of years (or even decade/s). What Eco Bird appears to be doing is interpreting a period of anomoly only and considering it to be the 'norm', then applying that to the future. Its not a very sound approach in my point of view, and could get you into a lot of trouble financially if you expect the same returns in the future (from a highly leveaged asset).
Yes because their idiots. It's like Zachary claiming that Auckland house prices aren't falling because they're comparing the earlier 2016 data when prices were at their height to the now new reducing stats, naturally this makes property prices to appear either static or slow growth.
Actually the rental market is becoming over saturated in Auckland, because when people can't get their over inflated property price that they want and they have to relocate, they switch to renting it out rather than selling. This is why the number of rental listings in Auckland has increased recently.
Once the rental market becomes over saturated that makes for more competitive rental pricing and they start to fall along with the property price.
Been there, done that! See it all before mate in 2008.
I find you quite patronising Eco Bird telling people they are selfish. I find you selfish. Most people on here provide reasons for increase and decrease. But you, TTP plus the two Ronnies have agendas and never show reasons why marke wont have a correction. People like me want to see affordable housing, so the average NZer, not old money, minted celebrities, wannabees, or cashed up millionaires buy property. Which is laughable as its a very small subset of society. I suggest people look outside their bubble.
Im in th UK with my house in the UK, Im able to work anywhere and I have a business so I will always be fine. So not jealous at all. Im trying to get my startup working, have been to incubators and met people who sell companies for hundreds of millions. These are aspirational and nothing to be jealous of. It makes me work harder. I may never get there, but you have to take chances sometimes.
But the people I worry about are people like teachers, nurses, average income earners etc the fabric of NZ society that are struggling and this worries me. This has a knock on impact to their children and impacts how they live life. This all impacts NZ. If that is selfish then thats me.
Eco bird 15 to 20 yrs in the past property market ?
Never has there been a time in history of the world where so much debt has been hanging over the world economy and those that live in it. The last time I checked world debt was running over 40% higher than just before the collapse of GFC.
I enjoy reading this blog as much for historical reasons to sample the naive natures that appear here which never adapt to what's happening and believe the past will dictate their futures
I have issues with people making negative assumptions about motives and position. I have the view that the Auckland property market has overshot real value for quite a few reasons. None of which is driven by false hope or envy. I bought my first home over thirty years ago and owned it for twenty years. Back in 2006 I sold, and rented for 10 years as that was the most financially prudent thing to do in the locations where I lived. I am back to being a homeowner once again.
I've participated in the property market, and timed my first home sale almost perfectly. I'm also rather happy with the timing of my most recent purchase. That said, I do not ascribe to the idea that one should use property as a primary means of wealth generation. IMO there are other avenues available that have less risk and more reward.
My personal view is that there will be a correction in the Auckland market, whether it is by price or by time. It may be that the market flatlines for a decade or so before returning to gains. It may be that the correction happens more quickly. There are cogent arguments for both cases. I tend to go with the latter, but I may be using too much of my history in predicting the future. I've experienced two property declines one was a serious crash, one a 20% decline, as well as a decade of flat prices after the 20% decline.
It may not be envy that provides impetus to a conclusion, but instead, experience. My career is of a technical engineer, and I value data far more than I value emotional argument.
Morning all!
I have to agree with the various bulls that if the fundamentals remain the same house prices will not reduce significantly. I suspect, in that scenario they might flatten for awhile or reduce to single digit growth for a sustained period. I would still rather buy in that sort of market than a very frothy boom market with RE agents all puffed up. If the market slows/stagnates, inflation would mean a slight drop in prices when adjusted.
However, there is also every reason to expect the fundamentals could change. Change is pretty much the only constant in life after all and clouds are gathering on the horizon. If there is a hard landing in China this will push Australia and NZ into recession, this could possibly provoke negative net migration or positive net migration disappear, changing the fundamentals.
If there is a cluster f$%k global recession triggered by some, as yet, unknown black swan event, that causes a global credit crunch, that would halt the NZ housing market because of insufficient local banking deposits to facilitate lending, that would change the fundamentals. It's also true that the world is in a worse position now than it was in 2008 to weather another GFC.
If there is a change in political sentiment (unexpected General Election results) or some knee jerk populist behaviour by politicians, this could drastically impact the fundamentals (DTI's at x5 for instance).
And it's not that any of these possibilities are definite. They are certainly not. But the last 12 months have made all of the above 3 scenarios more likely. If NZ-ers weren't so personally heavily indebted, even this storm clouds wouldn't necessarily prompt a housing crash, unfortunately, productive industry has decreased in NZ as household debt has increased. NZ households are in a precarious position to face a recession should one occur.
It's true that I would like to by a family home and am currently not doing so. My finances are neutral because my capital is working hard elsewhere and I have a very nice rental. I have nothing to lose by waiting. Although I accept that others do. I trust market cycles. Whether the end of the cycle will be a crash or a stagnation, it's worth a punt on waiting for me.
Hi Gingerninja - once again a great summary of the true reality of the market. I to have learned to trust cycles and live with them over 36 years, thats 4 cycles that has paid me great dividends over that time. This year along with 2018/19 are certainly the slow/down years with a pick up in 2020. I would encourage you to wait and buy mid to late 2019. There is unlikely to be much up side if any perhaps a drop till then, from 2020 to 2025 there will be good growth in capital values. For all naysayers mark these times down and only history will prove this to be correct but I personally put my house ( houses on it ) on it !
Yeah, it's amazing and funny how people come out of the woodworks and identify themselves as the jealous, greedy and ill informed without being named or anyone asking them to do that !!... If only we could put Experience, Wisdom, and Knowledge in a PILL so everyone could become a genius at the drop of a hat -- wouldn't that be great? then we could all agree to agree ...
I will say it again, everyone here is free to express his /her own opinion reflecting his/her knowledge, wisdom, and experience - be it positive or negative - wise people would look at that , digest it and compare with their own logic and info - it is OK to disagree with me just like it is OK if I disagree with others without abandoning good manners and common sense ... we are not here to prove a point, its an open forum for discussion - so relax, and dont get mad!! -- using PC correctness as a counter argument is really sad !!
As I said , some of the commentators get too carried away at times in trying to force the issue using obscene vocabulary which only reflects negatively on them and the whole debate.
I will close by directing everyone to any Bank lending calculator online like ASB and see the affordability of the FHB couples on slightly better that average wage in Auckland and see what they can buy !! most will be able to borrow over $600K and there are lots of these houses in Auckland ATM, .... sorry not in Remuera or Epsom !! but could find a starter elsewhere. Oh and yes, they have to give away some of their daily latte, lunch and few holidays to be able to afford a roof - that will not change with any Gov holding power.
As I said , I know all this because my own FHBs are on their way to purchasing their own first homes after learning the discipline of home ownership first... Whether you decide to buy yours this year, 2018, or 2019 its up to your judgement - My advise to my FHBs was As Soon As you can !!. cheers
Message to ALL First Time Buyers! Do NOT Buy Now! The Auckland market is falling, feel free to take a look at the latest auction results which are quite bad with very small sales volumes.
Prices are dropping due to lack of Foreign Buyers that massively over inflated the Auckland market over the last few years and decoupled it from wages. If you were to purchase a home for around $600k you would be a very high risk of negative equity due to the falling market as other commenters and I have pointed out.
Lots of Real Estate Agents (RE's) will try to persuade you that now is the right time to buy that's because they're desperate since the top end buyers are gone.
You would do far better to wait for property prices to bottom out.
Here's an article to provide you with further evidence: China’s Massive International Real Estate Buying Spree Is Officially Dead
https://betterdwelling.com/chinas-massive-international-real-estate-buy…
Quote: Impact On Global Real Estate Markets
Real estate markets that saw locals scramble to cash in on foreign buyers are now noticeably cooler. Toronto is seeing new listings hit an all-time high, coupled with a massive dip in sales. New Zealanders that were complaining about a “flood” of Mainland Chinese buyers, are now complaining about the market cooling faster than expected.
Eco Bird - history tells me to avoid the advice of those who claim to be 'wise', for many who have claimed to be wise have failed to predict and prevent some minor financial issues in 1929, 1987, 2000, 2008.
Something to do with ego or attachment means they don't want to align themselves with reality...they no longer appear to be able to form impartial opinions on complex issues because they have too much skin in the game.
But I think its pretty dangerous advice to tell young people its fine to jump in and take our a $600K mortgage right now. That is a significant amount of debt....But hey, thats just my opinion.
Firstly; You're over way over estimating on the average combined Auckland couples income even for DINK's (Double Income No Kids) and secondly; are you expecting them to never have children? That's not going to work out for the maintaining those NZ pensions now is it.
Very flawed plan skudiv. You sound like a National MP. :P
A childless life so you can buy property at hugely inflated prices GREAT! What happens if you mortgage yourself up to the eyeballs, and then want kids and you need to live on a single income. Tough!!!
I had kids after the age of forty, best thing to happen to me. I loved my life before kids, but now I have them, I didnt know what I was missing. Do we want property to be unaffordable for people, on single incomes, what kind of world is this.
There are a lot more business opportunities out there, why do people only see property as the be all and end all. Whats wrong with single people wanting a house, and being able to afford a house. Why do people want inflated prices of housing, it makes no sense unless its your only way to earn an income.
Um, a) no it isnt hard to think about, there will be a) price drops and negative equity, b) loss of homes and loss of asset value. Personally I dont think we'll ever see 7%+ mortgages (again for long). the entire globe's financial and economic system is now too weak to sustain growth and will actually contract for the next 40+ years, that isnt high interest rate territory. Now there could well be fits of madness thrown into the works but I hope not as a Second Greater Depression is the last thing we need.
That is part of it, initially. The other part is with significant negative equity the banks "asset" base which is a lot of houses is eroded (hello OBR?). So the same ppl who get squashed the hardest also cause the most collateral damage when they fold. The knock on effects are quite insidious, as the consumer economy caves, shops dont see the income so close, that leaves commercial property naked in turn (PS dont these commercial property deals cover the interest only? not sure) In turn Importers suffer, manufacturers suffer most of these use commercial property also? Then there is the DIY market which is pretty big, rinse and repeat. I just dont think that the entire system is resilient enough, everything is cut right to the margin, all optimised for short term profit.
This just strikes me as a negative feeback loop just waiting to happen. What worries me is the RB's around the world are quick to try and increase rates and way too slow to drop them, I wonder if they will again be too slow and fail to stop it when it really gets going again.
On the upside the banks are carrying out an orderly sell off and writing off bad debts. Better than the EU where they are sweeping the problems under the rug and holding 30% of their loan book that will never pay even though they are bad debts.
I think the increase in interest rates is going to be slower than what we've seen in the initial phase that we're in now. Of course the Fed is only going to care about the US and not any other global effects so we could end up caught out here. The result here will either be much higher interest rates or a credit tightening.
We welcome your comments below. If you are not already registered, please register to comment.
Remember we welcome robust, respectful and insightful debate. We don't welcome abusive or defamatory comments and will de-register those repeatedly making such comments. Our current comment policy is here.