Median house prices rose slightly in August, sales volumes well down- REINZ

Property

Housing market continues its roller coaster ride with prices up and sales volumes down

15th Sep 17, 9:38am by Greg Ninness

The housing market roller coaster continues with the number of homes being sold remaining well down on last year, but median prices rising slightly in August.

The Real Estate Institute of NZ said the number of homes sold in August was down compared to the same time last year in every region of the country, something that has only occurred three times in the last seven years.

"Overall, the number of properties sold across the country fell by 20% during August, a reduction of 1472 properties when compared to the same time last year," REINZ said.

"This is equivalent to 47 less properties being sold each day in August 2017 when compared to August 2016."

The biggest reductions were in Southland -37.3%, Northland -29.4%, Taranaki -25.9%, Waikato -25% and Auckland -21.5% (see chart below).

However the REINZ's national median selling price rose slightly to $530,000 in August, up from $525,000 in July and up 8.2% compared to a year ago, but it was still below the peak of $542,500 reached in March.

In the critical Auckland market the median price rose $10,000 to $840,000 in August from $830,000 in July.

But that is still well down from its peak of $905,000 reached in March and below the August 2016 median of $850,000, suggesting that at best, prices have flattened in Auckland.

In the Waikato the median price dropped to $480,000 in August from $489,000 in July. In the Bay of Plenty the median rose to $538,000 compared to $490,000 in July, but remained below its June peak of $557,500.

In the Wellington region the median rose by $10,000 to $500,000, but remained below its April peak of $540,100. In Canterbury it rose to $427,000 in August from $420,000 in July, but remained below its March peak of $450,000.

The REINZ's House Price Index, which accounts for differences in the composition of sales, showed Auckland prices were down 2.9% in August compared to a year earlier, while prices in the rest of the country, exlcuding Auckland, were still up 7% compared to a year ago.

It is also taking longer to sell properties, with the median number of days required to sell up to 37 in August compared to 30 in August last year.

There has also been a big decline in auction sales, with 799 properties being sold at auction in August, down 55% compared to August last year.

In Auckland the number of auction sales was down by 61% compared to a year ago.

Here is the REINZ's full regional report for August:

Median price - REINZ

Select chart tabs

Source: REINZ

Volumes sold - REINZ

Select chart tabs

Source: REINZ

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135 Comments

by Smalltown | 15th Sep 17, 9:52am 1505425923

Herald more negative - front page headline shouts "Property Bubble bursts"

Then when you go to the site

"House sales slump by 20 per cent in August, Auckland prices dip"

And I thought they were cheerleaders??

by gingerninja | 15th Sep 17, 9:55am 1505426105

NZ Herald = 65% attention whore 35% pandering directly to sponsors/advertising sales.

The attention whoring is ultimately more lucrative to advertising as it creates more traffic anyway, so will trump direct pandering.

by BigDaddy | 15th Sep 17, 9:54am 1505426050

Hang on.
Harcourt's say that their average price was down $20,000 nationally and $60,000 for Auckland last month.
Even if you allow the difference between median and average it still doesn't make sense.
More fake news?

by gingerninja | 15th Sep 17, 10:25am 1505427931

That's very easy to explain. Some of the other RE agents had some high value sales. If Harcourts didn't have as many big ticket sales their data will look worse.

by BadRobot | 15th Sep 17, 10:05am 1505426723

Harcourt's are reporting their sales , REINZ are reporting on a different set of sales data.

by O4 normal | 15th Sep 17, 11:15am 1505430947

Gingerninja. Yes it's so easy to get different averages. You could have all prices go down which is what's happening but in one month get high sales in the $800k to $1.5 million bracket and the next month get high sales in the $1 million to $2 million bracket. But at the end of the day it's perfectly clear the direction of the market and demand is extremely low and a mile from today's prices

by mja | 15th Sep 17, 10:10am 1505427025

REINZ stratified index adjusts for mix of properties sold, so is the most accurate index. Harcourts/ B and T dependent on mix of sales for that month. At the end of the day REINZ is the index I would use.
REINZ also uses data from when contract goes unconditional rather that settlement, so is also more up to date.

by gingerninja | 15th Sep 17, 11:41am 1505432460

You can display this data in numerous different ways. Median is up 10k YoY but down from its peak in March. If the peak was March, then only March 2018 YoY data is going to show a true reflection of where we are in the property cycle.
Property market data always looks like a roller coaster once the peak has been passed or when there is a wobble.
I own a property in the UK and the media and data is pinging about all over the place at the moment. London looks to be crashing (for obvious reasons) and that skews the national data too. My property value has gone in every direction since Brexit and if I needed to sell, i'm pretty sure i'd be sweating, but ultimately, I wouldn't know what the market actually did for months and months yet.

by mja | 15th Sep 17, 12:20pm 1505434835

Data can be displayed in a variety of ways, but REINZ appears to be most accurate as adjusts for inventory sold ie townhouses/ apartments/ houses and sizes of properties and compares to expected sale price versus previous period. Also as at time contract goes unconditional, so is up to date.
All in all, national median up 8.2% and Auckland only down 1.2% versus 12 months previously, shows an incredibly resilient market. If 12 months previously you had said that with a nationwide 40% LVR on investment properties and a neck and neck election Auckland would only be down 1.2% and nationwide excluding Auckland the median is up over 10%, people would have thought you were dreaming.
The market is resilient because of supply and demand, minimal supply and high demand. Many on interest.co.nz are bearish on NZ, but at the end of the day being a small peaceful country with clean air well away from North Korea, terrorism in Europe/ UK and the ructions in the USA is very desirable. Hence property prices are plateauing rather than declining.

by gingerninja | 15th Sep 17, 2:25pm 1505442336

I agree on REINZ figures in general but what I am suggesting is that I think it's too soon to make any pronouncements on the market and its resilience. Prices only peaked March this year and peak to trough can take years. I wouldn't expect a sudden disintegration of prices this early, even in a crash, and this might not even be a crash. It's too soon to say.

by mja | 15th Sep 17, 3:37pm 1505446637

A lot of people are hoping for a crash/ deep correction. But with an increasing population, and the high cost of construction it is difficult to see this outside Auckland and the other associated bubbly areas with poor employment prospects eg Northland, Tauranga, Rotorua, rural Waikato.

by skudiv | 15th Sep 17, 5:14pm 1505452491

If prices are only down 1.2% yoy it pretty obviously not a crash unless you are a blinkered idiot. If you had bought at the heights before the last "crash" you would have already doubled your money and more if it was a rental giving a fat dividend every month. Even a family home would have saved the cost of renting which at $40k a year is a saving that far outweighs any short term downward movement in price.

by Double-GZ | 15th Sep 17, 10:00am 1505426401

Regardless what they are reporting, house prices should be 3-5 times the household incomes. Since Auckland house prices have sky-rocketed up between 90% and 100% since the last peak in 2007, I am all for it to come down to around 40%-50% since 2007. A lot of home owners are still better off if they bought pre-2007, and this makes it fairer for average Kiwis to buy their own homes going forward.

by JimboJones | 15th Sep 17, 10:40am 1505428823

What have you done with the real Double-GZ?

by MisterB | 15th Sep 17, 12:10pm 1505434230

Either he has been hacked, or finally seeing 'the light'. Or, perhaps more likely, playing trolling sacastiphile number 5.

by theglc | 15th Sep 17, 6:55pm 1505458504

Logged into the wrong account i suspect

by Laminar | 15th Sep 17, 12:41pm 1505436111

Thats ridiculous, property prices should not exceed 3 times income, we need to get property prices down to 2001 levels before there will be any REAL (i.e. non Chinese sounding) demand, there is a LONG way to go from the already Hindenburg levels of destruction going on with prices. This bubble was 16 years in the making and it will be crashing for the next 8-16 years. Good luck with those fundamentals you greedy speculators!

by Independent_Observer | 15th Sep 17, 12:45pm 1505436342

Three times income might be a measure of the past given QE and low interest rates of the last decade....might be more like 5 now (but who knows..)....either way 10 times certainly seems like bubble material....

by O4 normal | 15th Sep 17, 2:19pm 1505441961

I think 5 fear and where demand will find its area

by skudiv | 15th Sep 17, 5:17pm 1505452674

Yep I am waiting for houses to crash to $200k then I am going buy, meanwhile I am paying $40k a year in rent because I can see that house are so overpriced and I would lose a lot of money buy buying 1.

by Leverageup | 15th Sep 17, 10:07am 1505426866

Vote Double GZ 2017

by tothepoint - d… | 15th Sep 17, 10:12am 1505427161

DGZ for Prime Minister and Minister of Housing.

Yeah yeah yeah!

Vote early and vote twice!

by Ex Expat | 15th Sep 17, 10:43am 1505428980

I can form part of his policy working group. How about a tax on unused bedrooms?

by Eco Bird | 15th Sep 17, 11:19am 1505431155

lol, good idea !!

by Ex Expat | 15th Sep 17, 11:41am 1505432505

There's more where that came from. The rules are easy. It has to sound plausible, and you need to tax someone that has less public sympathy or social media profile than the people who will vote for it. The best bit is that you don't have to think of consequences as the voters either don't care or cant comprehend them anyway.

by Eco Bird | 15th Sep 17, 12:10pm 1505434232

The possibility of a huge backfire is growing by the day ... my pick is that we will see spinning about failure starting as soon as Xmas.

by tothepoint - d… | 15th Sep 17, 1:00pm 1505437254

Clearly, what's going on in the current soft housing market is that people are holding off from selling. That's a rational enough strategy - unless you're forced into selling. (And I note that there aren't too many mortgagee sales occurring right now.)

So, there's a reduced supply of listings and, as the latest data shows, prices have risen a little.

This effect has been very noticeable in certain areas - such as for houses (not apartments) in Auckland Central. There are very few house listings there at present. It's slim pickings. (Just ask anyone who's trying to buy there.) The issue is the same in Wellington Central - a real scarcity of houses on the market.

If National gets in on 23 September, prices might well rise further. But if Labour gets in, prices will likely rise even more.

If Labour gets in holding hands with NZ First and/or The Greens, then there's a considerable risk of political (and economic) instability. It's anyone's guess what that might do to the housing market.......

by Eco Bird | 15th Sep 17, 11:24am 1505431448

I agree , that is a good assessment TTP, I might add that the Banks are choking the market and making it difficult to borrow, so the market is left for capable FHBs and big and cashed investors ... the mood is not right to move or do business ATM ...
I still think that prices will rise either way after the elections albeit for very different reasons depending who is in power.

by MisterB | 15th Sep 17, 12:13pm 1505434428

Banks are choking the market and making it difficult to borrow

I presume you meant to say 'banks are meeting responsibility under the Responsible lending legislation, which is a condition of their banking licenses, and not allowing borrowers to commit to more debt that they can reasonably service throughout the property cycle'

by mja | 15th Sep 17, 12:31pm 1505435502

Banks are making it difficult to borrow they are factoring interest rates of 7.5% into servicing calculations.

by Eco Bird | 15th Sep 17, 1:49pm 1505440151

My bank is factoring 7.89% --- they just don't want to lend really on any new loan, even after fixing the old existing ones on 4.29% ... maybe other than the FHB with Gov guarantee .. things will change when business dries up and they will come cap in hand and beg for business and offer cash backs ...

by mja | 15th Sep 17, 3:45pm 1505447159

The major bank I conduct most of my banking with was starting to get intrusive, eg saying things like kids are at University this will cost etc. Despite the fact I have banked with them since 15 years of age (almost 30 years) the investment portfolio is cashflow positive with approx 50-60% LVR and no personal debt. So I have sold a section, a motel and am about to sell a freehold house. They now want me to borrow more, but I'm happier having minimal debt and a large cash balance for deals. Basically now in position where I can bypass bank and pay cash for deals, have organised with lawyer so I can settle 3 business days post signing contract. So I will leave them with their precarious debtors, now they have driven off a long term client who has never fudged an income form/ statement of position, missed a repayment or lost money on a deal.

by bw | 15th Sep 17, 3:59pm 1505447986

20 years ago ( I'd have been about your age now!) I was reminded of a philosophy passed on to me by one of my larger clients - "NEVER give the bank back its money!". He preferred to pay even double-interest if he was asked to repay his loans, just to keep them. It seemed crazy at the time but as time passes, you realize that the older saying of "Banks, give you an umbrella on a fine day and ask for it back when it rains!" is true. So whilst you may have repaid your loans to your lenders - you could have done that at any time. You may or may not find that when you want 'the money back' you won't get it. That's what a liquidity squeeze does, and the more liquidity you have, the wider your choices in a revalued market.

by Eco Bird | 15th Sep 17, 8:13pm 1505463234

That was a wise advice indeed ... Very easy to take the loan back and very difficult to lend ( unless they are desperate for business) ... especially when the security is a real estate which they will make you sign that they have the first right for ...
It is true that they are digging into all sorts of silly details of your life and looking for every cents that you spend - and that applies to all new loans ... I was shocked to learn that they would apply that even to Lending Margin loan where it is secured by existing share portfolio ...
I dont see that changing any soon - until perhaps, if the market stalls and and they fail to make their budgets for next year ... they will then come running with pants down. .. seen that before!

by MisterB | 15th Sep 17, 8:46pm 1505465200

You'll find that bank loan servicing requirements are actually a direct result of legislation (APRA / RBNZ / Responsible Lending Code) and not about not wanting the new business.

People often whinge when they were "allowed" to borrow so much and cant afford to pay, but also whinge if they cant.

by O4 normal | 15th Sep 17, 2:25pm 1505442319

Yeah America's favourite saying after the GFC for years was banks won't lend . The people become a big risk and banks couldn't take those risks anymore . It's pretty hard to borrow money to someone when you have house prices dropping

by Independent_Observer | 15th Sep 17, 1:06pm 1505437580

Eco Bird - where's the money coming from for house prices to keep going up?

by Eco Bird | 15th Sep 17, 1:22pm 1505438531

There is plenty of money around - more than the dollars and cent that you are counting ( or maybe assuming that the only buyers are FHB or on a benefit?) !!

by Independent_Observer | 15th Sep 17, 2:34pm 1505442879

That's a crap answer - wheres the money coming from? China? NZ investors? FHBs? I don't think so....

by gingerninja | 15th Sep 17, 2:46pm 1505443574

Ecobird
Or if the question was phrased differently, with wage growth stagnant, banks tightening on lending and in the absence of foreign buyers... who is left to fuel house price growth? FHB can only afford what they have managed to save in deposit terms and against affordability criteria. Those downsizing and upsizing will be selling in the same market, so not necessarily causing an upwards or downwards pressure on prices.

Without any other factors, and in consideration of the alleged lack of supply, I would think, at the very least we will see the market stagnate in the absence of other factors.

by skudiv | 15th Sep 17, 5:23pm 1505452986

Smart people who work hard and have good jobs can easily afford to buy, do nothing monkey brains can only moan about how unfair it is.

by swapacrate | 15th Sep 17, 8:04pm 1505462693

A few people on here have said there combined income is over 200K, and they are not buying at the moment. Are they "do nothing monkey brains" who dont work. Name calling is pretty poor in fairness, when people make solid judgements on what they are comfortable with, and how they feel the market is moving.

They may be a good representation of what are obviously intelligent people. Just because you may disagree doesnt mean their opinion holds less weight then yours.

by O4 normal | 15th Sep 17, 8:39pm 1505464793

Skudiv. I brought property over the 2010 to 2012 period. I sore property that had dropped in prices. I sold some over the last 2 year. Some to early but I'm happy enough. I'm not happy at all the way this boom , bubble has been made with the help of overseas investors and low interest rates and how fast and high this market has gone. Myself I think someone would be absolutely mad buying now and not selling if they couldn't withstand some hiccups. Everyone to there own but there was no way I was willing to have anything at all with this bubble except selling a bit to get some cash. Don't ask me how peoples brains work. Why didn't most focks buy over the 2009 to 2013 period. Prices start going mad and people get scared they'll miss out. Or they can chat over a BBQ about there latest buy. Keep up with the joneses. Bank or RE made me haha . This hole boom feels bad but that's just my point of view. Be save make money but more important try and keep what you already have

by Double-GZ | 15th Sep 17, 2:48pm 1505443733

At the end of the day it is all so out of whack and a correction is inevitable!! JUST LISTEN TO ME!!

by gingerninja | 15th Sep 17, 3:03pm 1505444609

I agree with you DGZ, the market is definitely out of whack, all domestic affordability criteria shows that.

But markets can be as irrational as anything else and as yet we don't have sufficient data to say with certainty if there is a severe correction or are plateau.
I am certainly seeing asking prices coming down in my suburb (Brooklyn, Wellington). But how long that downturn is not known.

by Laminar | 15th Sep 17, 5:17pm 1505452673

Well thats not true:
https://www.macrobusiness.com.au/2017/03/nzs-housing-affordability-trou…
Income to debt ratios and affordability are different qualities.

by Independent_Observer | 15th Sep 17, 3:04pm 1505444649

Double-GZ - have you ever watched that Jim Carrey movie called 'Me, Myself and Irene'?

by Solidname | 15th Sep 17, 3:21pm 1505445713

Double-Personality-GZ, DPGZ for short

by two otherguys | 15th Sep 17, 3:46pm 1505447173

Try Split-Personality

MPD multiple personality disorder

by Eco Bird | 15th Sep 17, 8:36pm 1505464561

@ IO, Ask a cray question and you get the answer it deserves ...
sorry if your knowledge of the money market is limited .... go and ask or do some research ... There is lots of money around from all sorts of sources ... once stability and certainty are back after the elections the market will go back to work again without waiting for 3 -5 X income BS some are trying to convince themselves that that will happen any time soon ... If AUS major cities go down from 9 -11 X to something like 6-8X then there will be hope.
Else, don't be too disappointed if nothing much changes come Aug next year Under Labour / Green
https://www.macrobusiness.com.au/2017/03/nzs-housing-affordability-trou…

by delboy | 15th Sep 17, 10:19am 1505427579

A couple of RE friends I've spoken to report increased interest from overseas buyers wanting to get in before a foreign buyer ban comes into place.
A change of government here and relaxing of capital outflow rules by the Chinese Govt could see a frenzy of overseas buyers over the next 6 months getting in before the door closes.
I guess this is called unintended consequences.

by diy-guy | 15th Sep 17, 10:26am 1505427994

A number of new startup's also seems to be entering this space: http://prosell.co.nz/

by tgcam4 | 15th Sep 17, 1:20pm 1505438444

I guess that means hold off buying for a time after those 6 months , or sell near the end of that period.

by Wildcard | 15th Sep 17, 2:04pm 1505441082

I saw a sign in Christchurch today: "Wanted: Existing houses. Cash buyers" and it had a cellphone number after it.

by RickStrauss | 15th Sep 17, 2:31pm 1505442702

"Must have big laundry with plenty of room for notes in small denominations"

by PocketAces | 15th Sep 17, 3:43pm 1505447038

And unmarked

by Kate | 15th Sep 17, 2:59pm 1505444363

A gang newly established here in PN had a similar sign outside their new HQ :-). I bet they did it as a joke, given the local paper had just run an article with a picture of their new house - making the point that it was in one of the priciest neighbourhoods.

by O4 normal | 15th Sep 17, 2:30pm 1505442605

Dellboy. They'll never move the needle. The needle take a bloody lot to move

by diy-guy | 15th Sep 17, 10:25am 1505427915

Interesting times just a week out from the election.

Certain regions are absolutely buzzing with buyer-activity e.g Hawkes Bay, Nelson, Otago.

Are we seeing cashed up baby boomers moving to all the nice "lifetstyle" areas and driving up the price? Or is it simply the regions moving into "catch up mode" ?

by JimboJones | 15th Sep 17, 10:41am 1505428919

Or is it investors putting their money where they can afford the 40% deposit?

by PaulO | 15th Sep 17, 3:13pm 1505445192

Hawkes Bay is crazy at the moment with real estate agents bunging their flyers in our letter box every other day. They are VERY keen to get listings and stock in Napier is very low, with between 100 - 120 properties for sale on TradeMe at any given time. We're averaging three different flyers a week from agents offering a "free property appraisal with no obligation to sell". When properties in areas with lots of new-builds likes of Parklands and Te Awa are listed they are often sold in just a few days.

by Yvil | 15th Sep 17, 10:31am 1505428311

Just like the election polls, data over housing varies widely. Harcouts reported just today that its house prices were well down in August. Still REINZ is the more complete & up-to-data data

by BadRobot | 15th Sep 17, 11:06am 1505430403

Harcourt's are reporting just THEIR sales stats.

by Yvil | 15th Sep 17, 1:29pm 1505438967

Yep, that's why I wrote "Harcourts reported ITS house prices are well down for August"

by Fritz | 15th Sep 17, 10:54am 1505429644

Kim has fired another missile over Japan.
As I said couple of weeks again, this will end in war. This has gone far beyond his usual games.
Trump's patience is going to break
Then wait for the economic consequence

by Solidname | 15th Sep 17, 10:58am 1505429915

Just saw that, the chubster has a death wish. I understand there's a big push for huge sanctions from Trump, I don't know if they've been agreed yet though, maybe that will be the first recourse? It may end up having unintended consequences mind, where NK has nothing to lose - aside from its whole country of course.

by Fritz | 15th Sep 17, 11:07am 1505430476

Sanctions aren't working, and won't. America will not tolerate the advancement of Kim's programme.
What I have read is that war is not America's preference, but that it is a strong option.
they know the pros and cons of war, but bigger picture they will see the pros of war outweighing the cons.

by ham n eggs | 15th Sep 17, 11:10am 1505430646

War is always Americas preferred option. They need resources. All they need is a narrative.

by Fritz | 15th Sep 17, 11:14am 1505430872

Well, it boosts both the economic war machine, and the President's popularity too.
But the clincher is that Kim is getting closer to hitting the USA with an ICBM - that is surely not tolerable for the USA.

by Solidname | 15th Sep 17, 11:18am 1505431129

I'm not saying that it won't be full on war, as you mentioned in your above comment, it's a sure fire way to boost popularity for US presidents, also to grease the wheels of Haliburton, Lockheed Martin etc etc. But have they actually put the full sanctions in play, genuine question, I thought they were just threatening at the moment?

by rastus1 | 15th Sep 17, 12:07pm 1505434052

Whose the one playing games..the US or Korea? Jimmy Carter has some views ...

"In June 1994, I met with Kim Il Sung in a time of crisis, when he agreed to put all their nuclear programs under strict supervision of the International Atomic Energy Agency and to seek mutual agreement with the United States on a permanent peace treaty, to have summit talks with the president of South Korea, to expedite the recovery of the remains of American service personnel buried in his country, and to take other steps to ease tension on the peninsula. Kim Il Sung died shortly after my visit, and his successor, Kim Jong Il, notified me and leaders in Washington that he would honor the promises made by his father. These obligations were later confirmed officially in negotiations in Geneva by Robert Gallucci and other representatives of the Clinton administration"

https://www.cartercenter.org/news/pr/north-korea-081017.html

by O4 normal | 15th Sep 17, 2:34pm 1505442891

FritzIt'll be over in a day. Maybe only 4 or 5 buttons to push

by RickStrauss | 15th Sep 17, 11:04am 1505430244

Headline on the NZ Herald homepage article feed:

Property bubble bursts: House sales slump

Headline on the actual article is slightly less scary: "House sales slump by 20 per cent in August, Auckland prices dip"

by Smalltown | 15th Sep 17, 11:15am 1505430909

Herald is going real negative on the Nats. Here' s another on Dr Death.

http://www.nzherald.co.nz/nz/news/article.cfm?c_id=1&objectid=11922533

Met him once - thought initially he was a real estate salesman.

Then realised he was a Nat Minister and was really, really a real estate salesman.

Kiwis need to remember what makes them kiwis - people are homeless, people are dying.

by RickStrauss | 15th Sep 17, 11:13am 1505430817

Some stunning info in that article:

The DHB was damning of the health minister and said Waikato Hospital had a funding shortfall to the tune of $32.5 million, and it was a life-threatening situation.

And the DHB described a culture of spin coming from the ministry and the minister, and said everyone was under pressure to talk positively about a situation that was anything but. That pressure, the DHB said, comes from the top.

So we spent much of yesterday requesting an interview with Jonathan Coleman.
What did he make of these criticisms? He was entitled to a right of reply and we offered that to him. In the end, a text came back from his press team. It said "thanks, but we're declining."

That's the response from your health minister. He's paid by you, the taxpayer to serve the public, but he won't front on this issue. Again, the arrogance of the minister is blind-siding.

And

"A member of my family was a specialist at Waikato. He said the situation is dire and people are lucky to come out alive. He was constantly worried that someone would die on his watch. It was, he said, a nightmare."

This is the hospital that earlier in the year was forced to treat people outside in ambulances because there were no beds.

Yesterday, another tragic story. A baby who died at Waikato after the mother's caesarean section was bumped. There was only one theatre and an acute case took priority. And on Tuesday, you may remember, Waikato Hospital was forced to again cancel all elective surgery.

But "What about my $20 tax cut?", some clamour and whine.

by Solidname | 15th Sep 17, 11:15am 1505430915

I know people who work in this area, no full disclosure from me here sorry, but the amount of money that is being asked to be budgeted out is staggering. It's an absolute disgrace.

by RickStrauss | 15th Sep 17, 11:17am 1505431049

What do you mean "budgeted out"? As in, reducing the budget?

by Solidname | 15th Sep 17, 11:19am 1505431186

Cost cutting.

by RickStrauss | 15th Sep 17, 11:23am 1505431382

Strewth... :(

Massively increase the population on one hand, while pressuring health budgets down on the other hand. No wonder we're getting terrible outcomes.

by nymad | 15th Sep 17, 11:27am 1505431650

Everything is fine.

We just need to keep subsidising the farmers and property sector and it will all work out.

Trust us.

by Hardly | 15th Sep 17, 3:11pm 1505445100

We are on the cusp of something special...

by two otherguys | 15th Sep 17, 11:45am 1505432756

No, no, didn't you know, we are getting wonderful surpluses instead

by RickStrauss | 15th Sep 17, 11:46am 1505432780

True - National has delivered a wonderful surplus of patients unable to get the care they need.

by Independent_Observer | 15th Sep 17, 2:41pm 1505443264

Been having a bit of a discussion with Kate around what the meaning of a democracy is on another thread....is it about wealth or well-being (or are they the same thing)......clearly according to National its about wealth (delivering a surplus 'and a strong, stable economy' is more important than funding healthcare properly and other critical services...)

by two otherguys | 15th Sep 17, 11:47am 1505432830

Nice terminology - how clever - budgeted out

by Averageman | 15th Sep 17, 2:20pm 1505442018

ADHB were told a year or two ago they were told to reduce their department operating budget by 25%, all the while, being expected to work longer hours, for no more pay, take more risks with less support from ADHB, and basically just deliver more and more babies. Nat Womans now has less beds than they had at the old Greenlane site as well, great planning for the proposed doubling of population in the next 20 years.

PS WDHB was de registere

by Solidname | 15th Sep 17, 11:13am 1505430818

Maybe they've finally sensed the way the wind is blowing?

by mikekirk29 | 15th Sep 17, 11:33am 1505431988

Simple problem but 33 years in the making: non political segment of electorate (including twerps, makes up 50%) regard tax as TAKEN from them and their perception is (because not told different from cowardly Left) that they get nothing for it, in collective provision . And Labour proposes to take the tax cut off them, poor dears, and they do not understand what it is THEY will get in return (redistributed benefits to lower half of population from slightly progressive taxation system.) What tax is needed for and spent on, is not transmitted by media or politicians, even in Labour Party. Population's hearing and mindset, therefore, is that tax is bad and government should not help with housing or free each or education for over 18s. You will also hear zip about wealth inequality from all this housing speculation, as it is disguised by image projected of "mums and pops" renting an apartment for their retirement. Perhaps if wages were better then they would be able to save instead of having to take punt on renting. Renting will just keep on increasing I am afraid, as a proportion of housing market. Labour idea of affordable does not include rented sector and at $440,000 is not for the bottom 40%.

by Kate | 15th Sep 17, 11:42am 1505432555

Very good points. I suppose it is because political media reporting focuses on the communication of 'what's in it for you' from this or that party.

I cringe every time I hear any politician say that "affordable" homes in Auckland = $400,000 - $600,000.

by Yvil | 15th Sep 17, 1:34pm 1505439249

mike, Could you translate that into English please

by Ex Expat | 15th Sep 17, 1:47pm 1505440036

Tax is good. People need to be paid more. Houses should be cheaper.

by Alter Ego | 15th Sep 17, 11:39am 1505432398

I suppose the Fat Cats can all go private...It is amazing what a sitting Houses of Parliament practitioner can afford.

Health care, for New Zealanders...no.....

Do they care about New Zealanders no.

Just sitting on their a--e....talking heaps...doing NOWT.

If only we had had a New Zealand Party, that was not wasting money on the wrong things, not the right things...

Money is not everything...cannot take it with you to the grave...

by MisterB | 15th Sep 17, 12:07pm 1505434077

"The Real Estate Institute of NZ said the number of homes sold in August was down compared to the same time last year in every region of the country, something that has only occurred three times in the last three years."

Actually, it's only occurred three times in the last seven years.

Interesting the CEO also comments that they expect it to pick up post election, but all parties are on record saying they want house prices 'flat' for foreseeable future.

Big call out is that backing the figures out, looks like half a billion dollars less real estate transactions year on year... that's a reasonable chunk of commission and advertising change (perhaps $20m?)

by skudiv | 15th Sep 17, 5:49pm 1505454576

Well if it happens every other year, it must mean something dreadful is about to happen.

by O4 normal | 15th Sep 17, 1:53pm 1505440422

Sellers I've been reading some comments here. Fair enough waiting to after the elections if for some reason you think you'll get more money if national get in without maybe peters. Or however you're thinking. But remember the market needs a very high demand of buyers to keep prices lifting or even level. Demand like overseas and immigrants large amounts of money and flippers and mum and dad investors are gone. FHBers looking for lower prices are all that's left. The small % of people that brought houses at high prices over the last 3 years is tinny compared to the % that brought cheap before 2012. There's very few buyers with time to pick up houses off sellers that will pop up because people sell for millions of reasons. Be very careful in a year or 2 you aren't saying I wish I had sold earlier when the prices were better. People do buy on the way down seeing a reasonable deal. I've seen this before and normally the young with this stupid idea in there heads. "The market never goes down". " it'll turn soon and pop back up" . Be careful and specially if you have taken on to much risk. Do some figures. Could I handle a small drop in rent or small lift in my mortgage. Can I pay interest only for a number of years. If I was to take a guess I'd say the next 6 months you could still get a reasonable amount for a sale if you price right. Don't chase it down tho. Sometimes you need to leap past the masses

by gingerninja | 15th Sep 17, 3:17pm 1505445429

I was crunching long term data recently on the two housing markets that interest me (NZ and UK) and the annual median house price growth in NZ (adjusted for inflation) was 1.94% growth per year (since 1965). Whereas the UK over the same period was 2.9%

So much fuss about the NZ housing market with its **amazing** long term Capital Gains is total nonsense. Plenty of other investments categories compete with 1.94% and with waaaaaaaaay less hassle than property.

If you get a good rental yield, good tenants, decent mortgage rates, solid property with no huge maintenance expenditure needed, then long term, sure property is a steady investment. But Capital Gains are flaky AF once adjusted for inflation. They are up and down all over the place on a long term measure. Property investment has to be about the yield and paying off the mortgage otherwise you are just playing with lady luck as to whether you make a decent return.

http://www.interest.co.nz/property/87961/adjusting-inflation-gains-hous…

I had a good look about for the media reports during the last NZ bubble (noughties) and shortly after the crash and loads of the previous property spruikers and specuvestors had fallen on very hard times. In a downturn, if you don't have cash reserves or a decent yield to see you through, you unravel very quickly. How do you survive a downturn if you are negatively geared? What if you can't increase you rent? Muppets.

https://www.odt.co.nz/news/dunedin/property-guru-protester

by O4 normal | 15th Sep 17, 3:40pm 1505446803

How much of those gains from 1965 to 2017 were mainly from 2002 to 2007 . 5 years and 2014 to 2017. 3 years. I bet those other 44 years were terrible compared to these most recent 8 years. Maybe the way we think about housing should be rethought. Cheap housing. More money in your pocket. Maybe just pump up your KiwiSaver. Make a law one person one tenant haha

by Double-GZ | 15th Sep 17, 3:32pm 1505446363

A lot of home owners will be in negative equity if the house prices fall to pre-2002. Hopefully that won't happen as I don't want to see our suicide rate goes up.

by gingerninja | 15th Sep 17, 4:22pm 1505449327

Exactly 04normal, so unless you were in the market precisely during those times, and captured your gains towards the end of those booms, the returns would be far less.

by Independent_Observer | 15th Sep 17, 3:40pm 1505446850

Gingerninja - not sure if you've read any of Robert Shillers books but he put together an inflation adjusted housing index. Their bubble stands out:

https://caldaro.files.wordpress.com/2011/01/case-shiller-updated.png

David and the team put together an adjusted chart for NZ....but our 'bubble' (or growth or whatever you want to call it) didn't stand out that much....I contacted Shiller and he suggested we needed to adjust the data for the floor area of houses to determine real value and the actual appreciation that's been taking place).....

But in terms of returns - Shillers research found that housing was the worse investment class by a reasonably margin (in the US of course - different localised factors to take account in NZ - like our governments stance on property speculators and making them gods that can't be touched - or darklords as I put it..)

by RickStrauss | 15th Sep 17, 3:38pm 1505446682

Whoops...that is crazy.

by Independent_Observer | 15th Sep 17, 3:43pm 1505446983

It is crazy - and I think if we produced the same data set, that our 'bubble' might be more pronounced than the US - showing just how out of wack our market is - and how much risk the leveraged are taking right now...

by O4 normal | 15th Sep 17, 3:52pm 1505447552

Here here , about time. Some sensible information that stacks up and makes sense. Thank you independent _Observer ya

by mja | 15th Sep 17, 4:16pm 1505448994

Shiller's data on sharemarket did not account for suvivorship bias.
Studies have shown very difficult to achieve theoretical sharemarket returns, as easy to sell, so often shares are bought late in cycle and sold at troughs. People also exit mutual funds exit during recessions. Whereas, property is more sticky so people are able to compound.

You have to add inflation to returns as is a leveraged investment, unable to leverage shares beyond 50%. Even if property only appreciated at rate of inflation with time you will become very wealthy, as do derive rent, and rent will also rise with inflation. Rent tends to rise with the median wage tends to be inflation plus 1-2% (due to productivity gains).
So at present say inflation 2% add 1% for productivity gain (less than the 1.94% + inflation rate from historical studies). So rent and property price all things being equal should increase 3% per annum so rent and property value will double over 24 years. Key is first 2-5 years in general negative cashflow but eventually rental increases make property positive cashflow and the property pays itself off as it continues to increase in value.

I remember an interview with Frank Guistra made money out of gold market late 70s early 80s, sold out at top then set up film company Lionsgate then got back into gold near bottom arround 2002. He said even a small amount of inflation, makes the wealthy even wealthier as they can access debt and have the patience to let assets compound while the debt principal is static/ slowly paid down.

by gingerninja | 15th Sep 17, 4:36pm 1505450162

MJA yeah, so if you have a decent yield, good tenants, solid property, not requiring lots spent on it etc, as per my comment, over time property doesn't look to shabby. But in reality, that must be a bit hard to come by in the current market.
My UK property is currently giving me a 7.8% yield and that will undoubtedly rise in time. I don't plan to invest in any other property beyond buying a family home in NZ when the time is right though. I bought the property some years ago (and it was our family home at the time). Since then, government legislation has hardened against landlords, which is another factor that housing investors often overlook. Taxes and laws around housing investment change over time.

I hear what you are saying about shares, people do dip in and out irrationally. The more reliable returns are in longevity not hysteria. Best of both worlds would be to have your old reliables and your fun money that you can chase possible high returns and market timings with.

by gingerninja | 15th Sep 17, 4:43pm 1505450637

Independent_observer, I've not read any of his books, but plenty of commentaries etc. Nice chart! Wowzers!

by swapacrate | 15th Sep 17, 8:47pm 1505465244

Shillers just jealous. NZ is the best thing since sliced bread, we have palm trees and angels singing with harps. Property can only increase.

by O4 normal | 15th Sep 17, 3:47pm 1505447222

Anyone that owns any property that only payed a 20% deposit will be in negative equity shortly. Definitely if prices went back to the last QVs , the ones that could afford 40% deposit will be better off depending on where they pinched the deposit from

by Double-GZ | 15th Sep 17, 4:12pm 1505448743

What is 'payed'? What if you bought the property in 1990 but only 'paid' 20% deposit...how can it be negative equity?

by O4 normal | 15th Sep 17, 4:28pm 1505449699

Who's talking 1990. If someone brought a house in 1990 wouldn't it be paid off

by MisterB | 15th Sep 17, 10:20pm 1505470809

You'd hope. But, with rising values comes the perceived wealth effect and they may well have kept borrowing to fuel that. I know a number in that situation.

by Carlos67 | 15th Sep 17, 3:53pm 1505447628

Thats never going to happen, house prices have NEVER been 3 times my income and I'm now 50. Current prices are the norm, they are not even the new normal prices have been going in one direction since 1974 what has happened is simply wages have not kept pace, the population has increased and the rest of the world would move here and buy a house in a heartbeat if you let them all in. Anyone who now has a house within 30Km of the Auckland CBD has nothing to worry about in terms of the price of their house. We are where we are for a number of reasons, too late to fix it now the situation is irreversible short of mass exodus and our population decreasing as as fast as it has been increasing for the last 10 years.

by RickStrauss | 15th Sep 17, 3:53pm 1505447626

The other major thing that has changed is that governments have stopped the efforts that previously spanned the 20th century, around fostering a supply of affordable housing. The likes of Fletchers were involved in earlier public-private partnerships to increase supply, we had the Housing Corp, cheap govt. leasehold land, direct government builds etc.

Supply of housing has been slow in recent times, but supply of affordable smaller housing much, much slower again after the abandonment of such earlier policies. Now it's back to large houses where more profit can be made.

I think people (e.g. our new ideologue politicians) either forgot NZ's history or decided they didn't want to contribute to carrying it on.

by O4 normal | 15th Sep 17, 3:57pm 1505447859

I'm 57. Didn't house prices drop for 6 years from 1974 to 1980

by mja | 15th Sep 17, 4:20pm 1505449209

House prices rose in price from 1974-1980 they may have gone up less than the rate of inflation, but if you loaded up in 1974 you were a wealthy man/ woman in 1980.

by gingerninja | 15th Sep 17, 4:38pm 1505450291

It's still a strategy that mostly depends on luck and what ifs.

by mja | 15th Sep 17, 5:29pm 1505453399

As long as there is inflation to push up wages and rents, property will always be a good long term bet.

by MisterB | 15th Sep 17, 10:22pm 1505470936

That's the issue. Wages and Rents have absolutely not kept pace with price growth, so there's only one of two ways out, and hard to see wage increases in a world of automation....

by rastus1 | 10th Oct 17, 3:04pm 1507601071

Take a look at wages in India, Pakistan, China, Vietnam...and on it goes. Many of their workers would leave ours for dead.

So why do you think wages will rise with inflation?

by NZXY | 17th Sep 17, 2:05pm 1505613959

I think we have to question this assumption: 'the rest of the world would move here and buy a house in a heartbeat if you let them all in'. Certainly that is true of some people - but the rest of the world?

by gingerninja | 15th Sep 17, 4:50pm 1505451032

House price growth in NZ adjusted for inflation;
it's all in the minus
1975 - 4.9%
1976 - 9.1%
1977 - 6.6%
1978 - 9.1%
1979 -6.2%
1980 -7.7%

But if you loaded up during the previous boom, you'd need a lot longer to get to that same level of wealth. Hence there are a lot of what ifs and kisses to lady luck!!!

If you had taken that same amount of money in 75 and invested in a an investment that beat inflation and then you would also have been wealthy. So there was an opportunity cost dependent on when you bought into the housing.

by O4 normal | 15th Sep 17, 5:35pm 1505453729

I agree gingerninja. People are only really fired up because lately housing has gone up x4 in the last 12 years or so. Is that a good thing . Will it last. Can it carry on. We'll know over the next year or two. Me. I think affordability at these prices is a mile off and I can't see demand Picking up till prices drop back to around 2014 CV and thats being kind. And it's a real shame nz can't build cheaper new homes. Jobs in building is going to be hit badly . Ps I'm quite a bull on long team property. I like it. Just 2 things tho. We DO have cycles and corrections . I don't get attached to a property. I try to buy low sell high but some property are greater than others. If ones a bit Sh-ty it's gone. I have seen property say in 2006. And brought it cheaper in say 2010. Iv sold property with sheared driveways that I didn't like in 2015 and 2016 and I bet I'll find a cheaper better property to replace them soon. Just be careful with risk. And prices do drop. Although over booms specially big ones houses are done up and new homes built so the stock is normally more expensive . Like for like. The SAME house in 2006 without anything done to it was a good 30% cheaper in 2010. The figures get twisted. Like for like

by skudiv | 15th Sep 17, 6:00pm 1505455200

So you are a property speculator, I hope you have been paying your taxcindas.

by mja | 15th Sep 17, 5:39pm 1505453986

From 1974 to 1980 property prices rose in nominal terms, this inflation adjusted return does not make sense. If you bought for 10K in 1974 and sold for 20K 1980, you would not care if the property did not keep up with inflation.If I buy a house for 500K and sell it for 600K I don't care if it did not keep pace with inflation, as I take the proceeds clear the debt and pocket the differnce. And in the meantime I have been collecting rent.

by Double-GZ | 15th Sep 17, 5:43pm 1505454227

Is it still possible that house prices will fall back to 1974 level?

by Independent_Observer | 15th Sep 17, 5:59pm 1505455187

In real terms yes...

by Eco Bird | 15th Sep 17, 8:56pm 1505465781

lol .... Jesus !!

by mja | 15th Sep 17, 5:50pm 1505454632

From 1974 to 1980 the NZ median house price rose, from 23K to 30K. So you could have sat around talking about houses prices falling in "inflation adjusted" terms, but if you held off buying until 1980 you would be paying 30% more for the same property. Unfortunately for the bears we live in the real world, not the inflation adjusted world.

by Independent_Observer | 15th Sep 17, 5:57pm 1505455037

Whats the opportunity cost? How much debt were you paying? How much did you spend on rates, insurance, maintenance....(interest)....

Inflation adjusted world is the real world isn't it? - that's why they call it 'real prices' not 'nominal'...

by gingerninja | 15th Sep 17, 6:26pm 1505456819

There's also the opportunity cost of having not invested in something else and that something else might have outperformed housing in REAL terms (rather than nominal)

by mja | 15th Sep 17, 7:31pm 1505460665

The opportunity cost of your 20% deposit say $4600 in 1974. Sharemarkets did nothing from 1973 to 1980, bonds fell in value as interest rates rose. To make money would have to have invested in gold or silver. Those who bought houses avoided the opportunity to lose their $4600 in a finance company failure or investing in an emu farm or whatever fad came along. Also did not have the opportunity in a moment of weakness to blow the deposit on a new car. I guess you sit in the Eaqub 2012 don't buy property invest in shares camp. If in 2012 if you used 100K to buy a 500K house you would have done a lot better than 100K in share market or 200K if using margin and probably would have slept a lot better.

Now I trade shares and have for more than 20 years, and shares are in general a poor investment choice for the masses, due to human nature. What happens in ivory towers does not apply to real world. In ivory tower study world, growth stocks portfolios outperform dividend orientated portfolios. But in the real world those who invest in dividend orientated mutual funds outperform over the long term, despite studies saying their strategy is not optimal. The reason is those receiving dividend checks are less likely to look up share prices or pay attention to indices, they just want their quarterly dividend check. Whereas those in growth portfolios are more likely to check indices and sell at the worst possible time. I think for this same reason/ investment psychology property is the best bet long term for the average person.

by O4 normal | 15th Sep 17, 8:02pm 1505462537

Great . But the only reason I'm on this site is to say the GFC was nothing for many reasons this bubble could hurt a lot of people, FHBers buying to early and people with to much risk be careful. We've discussed all the issues from what started this boom to the dept, interest rates, where the money's come from, affordability, to who's left standing. I'm sure in 10 years the market will be off again but from what point who knows. Just get there in good health and keep your property if you can. Try not to loss any. Over the next 6 months it going to be very important times for investors but for FHBers I'd wait if you can

by MisterB | 15th Sep 17, 10:12pm 1505470366

I think for this same reason/ investment psychology property is the best bet long term for the average person

Except the 'average person' doesn't buy property to invest, they buy it to live in. There actually aren't a lot (percentage wise) of multiple property owners according to many data points. Many of those new to that train actually fall for the same danger you describe above - they look to the value of the property all the time, treating it as easy ATM (precisely for things like new cars - it's no coincidence that new car sales peak while property values are high) and wishing for future capital gains. That's certainly the way of the Auckland 'investment' market in the last 2-4 years.

Yields are poor and in this scenario it's the same as passing up dividend cheques for 'growth' stock.

Also, don't forget, because they are leveraged (heavily) while the reward could be high, so is the risk.

by NZXY | 17th Sep 17, 2:09pm 1505614158

And the big boys are hard wired into the stock exchanges and hire maths geniuses to write their trading Al Gore Rhythms

by O4 normal | 15th Sep 17, 4:58pm 1505451520

If you "load up" in 1910 you'd be a wealthy man. If you brought apple shares 20 years ago you'd be a wealthy man. But we have cycles during every decade and house prices push back if dept goes to far and wages fall behind. Also we've had to massive increases in housing prices. 2002 to 2008 and 2014 to 2017. We can bring a million millionaires into our country if you like. Take interest rates to 1% . But at the end of the day is the government and or the RB here to help the larger amount of the nz people or the ones 30 km to the Auckland CBD haha . If the locals can't afford it that's that. Ether make housing affordable or put income up and the country needs to be careful there or we'll never export anything. Foreign money and local greed coursed these high prices and I would say a lot on this site won't believe that to they actually see demand die right off and prices drop off a lot . Incomes supply and demand. And if Auckland can't supply people will keep leaving