The tide has turned on the Auckland and Christchurch housing markets, with average dwelling values in the regions now lower than they were 12 months ago.
According to the QV House Price Index the average value of Auckland homes was $1,038,722 in October, down 0.6% compared to October last year.
Of the 19 Auckland sub-districts that the Index measures, average values were down in 10 of them compared to a year ago.
But perhaps more importantly, average values were down in 14 of the 19 sub-districts compared to three months ago (see table below).
This suggests the rising tide of Auckland house values that has been a feature of the Auckland market for several years has now peaked and is starting to turn.
The only sub-districts of the Auckland region where average values are continuing to rise on both an annual and three month basis are the gulf islands (where the market is dominated by Waiheke Island), and Papakura and Franklin on Auckland’s southern rump.
Perhaps significantly, average values were also down compared to three months ago in Kaipara (-3.2%) to the north of Auckland and Hauraki (-2.8%), which is south of the city.
QV Auckland senior consultant James Steele said although there was still strong competition for well presented and located homes, more properties were being marketed with asking prices and potential buyers had more time to carry out building inspections and arrange valuations.
And some developers were having to drop their prices for new homes and sections.
“Some developers who need to sell sections and homes in larger scale, green field developments are having to drop their prices to achieve sales,” he said.
“Examples of this are being seen in Flat Bush where prices for vacant, fully-serviced sections that were selling in the high $700,000s last year are now selling in the in the early $600,000s.
“This drop in land value in the area has also seen sales prices of completed new homes drop back and these new homes are also taking longer to sell,” he said.
The other main centre where housing values are falling is Christchurch, where the average value of $490,429 is down 1.6% compared to a year ago, and average values are down in all sub-districts of the city except Banks Peninsula, where the average value is up 1.6% compared to a year ago.
“There is more than enough supply of new on the market and it’s become harder to find buyers for them,” QV Christchurch senior consultant Daryl Taggart said.
“It’s been quiet with not a lot of activity and we haven’t seen the usual spring upturn in the market as yet,” he said.
Outside of Auckland and Christchurch, average values are continuing to rise, with the QV House Price Index up 3.9% for the whole of NZ compared to a year ago.
However, the rate of growth is slowing and is now the slowest it has been on an annual basis since June 2012.
That suggests average values may be edging closer to their peaks throughout the country.
Although the tide of rising housing values has not yet started to turn in most areas outside of Auckland and Christchurch, it is starting to look like it’s getting near the high water mark.
| QV House Price Index - Three Months to October 2017 | |||
| Territorial authority | Average current value $ | 12 month change % | 3 month change % |
| Auckland Region | 1,038,722 | -0.6% | -0.5% |
| Wellington Region | 610,579 | 9.2% | 0.6% |
| Main Urban Areas | 759,526 | 1.6% | 0.8% |
| Total New Zealand - Nationwide | 646,807 | 3.9% | 0.9% |
| Far North | 421,696 | 17.2% | 3.9% |
| Whangarei | 495,464 | 9.6% | 0.3% |
| Kaipara | 505,010 | 15.8% | -3.2% |
| Auckland - Rodney | 933,909 | 1.6% | -1.7% |
| Rodney - Hibiscus Coast | 913,845 | 1.9% | -1.5% |
| Rodney - North | 954,769 | 1.5% | -1.8% |
| Auckland - North Shore | 1,201,452 | -1.6% | -0.1% |
| North Shore - Coastal | 1,362,746 | -2.0% | -1.3% |
| North Shore - Onewa | 981,196 | -0.9% | 3.0% |
| North Shore - North Harbour | 1,168,764 | -0.9% | -1.0% |
| Auckland - Waitakere | 818,706 | -2.2% | -0.1% |
| Auckland - City | 1,223,913 | 1.2% | -0.9% |
| Auckland City - Central | 1,079,721 | 3.8% | -0.3% |
| Auckland_City - East | 1,534,549 | 2.5% | -0.7% |
| Auckland City - South | 1,090,843 | -2.0% | -1.4% |
| Auckland City - Islands | 1,114,609 | 7.9% | 0.8% |
| Auckland - Manukau | 893,580 | -1.4% | -0.5% |
| Manukau - East | 1,151,198 | -1.9% | -1.3% |
| Manukau - Central | 690,284 | -1.2% | 0.5% |
| Manukau - North West | 764,261 | -0.6% | -0.4% |
| Auckland - Papakura | 684,268 | 0.2% | 1.3% |
| Auckland - Franklin | 665,843 | 3.8% | 1.1% |
| Thames Coromandel | 733,369 | 17.6% | 3.1% |
| Hauraki | 385,249 | 18.7% | -2.8% |
| Waikato | 457,448 | 8.7% | 1.7% |
| Matamata Piako | 428,139 | 16.4% | 1.2% |
| Hamilton | 543,046 | 1.1% | 0.4% |
| Hamilton - North East | 688,533 | 0.2% | 0.9% |
| Hamilton - Central & North West | 498,729 | -0.3% | -1.0% |
| Hamilton - South East | 493,095 | 0.7% | 0.7% |
| Hamilton - South West | 483,984 | 3.5% | 0.5% |
| Waipa | 534,468 | 14.7% | 3.2% |
| Otorohanga | 304,346 | 25.3% | 9.5% |
| South Waikato | 212,671 | 21.8% | 2.3% |
| Waitomo | 196,499 | 19.4% | 2.5% |
| Taupo | 447,342 | 8.3% | 0.5% |
| Western BOP | 627,634 | 5.2% | 1.6% |
| Tauranga | 687,241 | 5.4% | -0.6% |
| Rotorua | 404,304 | 11.5% | 1.3% |
| Whakatane | 410,176 | 9.7% | 1.6% |
| Kawerau | 189,499 | 24.7% | 4.5% |
| Opotiki | 271,226 | 4.3% | -5.1% |
| Gisborne | 293,667 | 14.5% | 0.4% |
| Wairoa | N/A | N/A | N/A |
| Hastings | 436,467 | 19.2% | 3.0% |
| Napier | 467,330 | 18.0% | 3.9% |
| Central Hawkes Bay | 284,632 | 22.3% | -0.6% |
| New Plymouth | 429,953 | 6.8% | 1.3% |
| Stratford | 257,745 | 11.9% | 9.3% |
| South Taranaki | 210,575 | 4.4% | 5.5% |
| Ruapehu | 172,616 | 14.2% | 6.1% |
| Whanganui | 228,292 | 11.6% | -0.4% |
| Rangitikei | 186,712 | 17.4% | -1.5% |
| Manawatu | 320,089 | 15.4% | 4.5% |
| Palmerston North | 370,174 | 10.5% | 3.0% |
| Tararua | 181,557 | 11.7% | 4.6% |
| Horowhenua | 290,144 | 20.5% | 2.8% |
| Kapiti Coast | 527,730 | 15.2% | 2.7% |
| Porirua | 527,553 | 12.2% | 2.7% |
| Upper Hutt | 465,199 | 14.7% | 3.6% |
| Hutt | 520,264 | 13.0% | 1.5% |
| Wellington | 738,742 | 10.0% | 2.0% |
| Wellington - Central & South | 728,840 | 8.2% | 0.8% |
| Wellington - East | 808,640 | 12.0% | 2.5% |
| Wellington - North | 657,822 | 10.6% | 2.2% |
| Wellington - West | 863,993 | 10.0% | 3.5% |
| Masterton | 320,823 | 21.8% | 3.5% |
| Carterton | 351,004 | 14.4% | 0.9% |
| South Wairarapa | 447,544 | 29.8% | 6.3% |
| Tasman | 546,808 | 12.6% | 2.4% |
| Nelson | 551,342 | 13.9% | 3.7% |
| Marlborough | 437,689 | 6.6% | -0.1% |
| Kaikoura | 386,625 | -0.3% | -2.6% |
| Buller | 185,849 | -1.5% | 2.1% |
| Grey | 200,361 | -2.0% | -3.2% |
| Westland | 247,001 | 6.5% | -0.7% |
| Hurunui | 379,697 | 4.0% | 1.9% |
| Waimakariri | 437,914 | 1.8% | 0.6% |
| Christchurch | 490,429 | -1.6% | -0.9% |
| Christchurch - East | 369,652 | -1.9% | -0.3% |
| Christchurch - Hills | 648,850 | -4.7% | -2.3% |
| Christchurch - Central & North | 578,963 | -1.4% | -0.9% |
| Christchurch - Southwest | 469,907 | -0.2% | -1.0% |
| Christchurch - Banks Peninsula | 515,635 | 1.6% | 1.2% |
| Selwyn | 543,681 | 0.4% | -0.4% |
| Ashburton | 345,879 | -1.4% | -0.1% |
| Timaru | 353,069 | 5.9% | 0.7% |
| MacKenzie | 485,228 | 26.4% | 3.2% |
| Waimate | 223,575 | 1.9% | 1.9% |
| Waitaki | 284,244 | 12.6% | 0.1% |
| Central Otago | 469,842 | 14.9% | 3.1% |
| Queenstown Lakes | 1,092,736 | 12.1% | 0.0% |
| Dunedin | 382,402 | 12.0% | 2.3% |
| Dunedin - Central & North | 397,643 | 12.2% | 2.7% |
| Dunedin - Peninsular & Coastal | 348,171 | 14.0% | 3.3% |
| Dunedin - South | 365,713 | 11.9% | 3.7% |
| Dunedin - Taieri | 395,359 | 11.5% | 0.4% |
| Clutha | 201,172 | 9.5% | 2.6% |
| Southland | 259,216 | 17.5% | 3.7% |
| Gore | 217,088 | 8.8% | 1.4% |
| Invercargill | 247,823 | 8.1% | 2.1% |
| Notes on the above data: | |||||
| 1. The information included in the above table is based on the monthly property value index. This index is calculated based on the sales data entered into CoreLogic's system in the previous 3 month period. For example, information for the period ending June will be calculated based on sales entered between April 1 and June 30. | |||||
| 2. The average current value is the average (mean) value of all developed residential properties in the area based on the latest index. It is not an average or median sales price, as both of those only measure what happens to have sold in the period. | |||||
| 3. The percentage change over three months, twelve months and since the 2007 market peak are based on the change in the property value index between that time and the current. | |||||
| 4. Any of the statistical data shown in italics are calculated based on a sample set of data that is less than the recommended minimum. These results should be used with caution. Those showing N/A had too few sales to generate an index | |||||
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202 Comments
You say no-one in their right mind will be going near Auckland housing.
I'm of sound mind and purchased our first home in August .. most likely at the peak. Whats the saying? Don't try and time the market? I agree that investors / speculators would be mad to be purchasing more property right now, but there's only so long a FHB can wait before the benefits of owning outweigh the cons of renting.
P.S - We now live in a warm, dry home, own a dog and have a quality of life we wouldn't ever get in one of the shitty rental stock while paying $28k per year to a landlord which now goes towards the mortgage.
Not everythings about capital gains.
Yours is a commendable and brave viewpoint. I hope that the financial cost does not prove to be too hard. A lot of the anti-spruiker sentiment in these pages is primarily to allow persons such as you to NOT have the immense hurdles you probably have had to overcome to be where you now are. I suspect we all wish you the very best.
I think Brock's comments are geared towards investors / speculators, not necessarily FHBs. If you're a first home buyer looking to stay in your house for the long term, there is no right or wrong time to buy. You can't put a price on warmth and security of owning your own home. The downturn will not affect you as you will still pay the same amount that you have agreed upon with the bank.
Good on you, Muter! We need more FHBs like you, and less spruikers like ______.
Good on you and all my best wishes. Observing my children's generation; their life stalls until they are able to purchase a home. Marriages, children are delayed, maturity and development is slowed. Having ones own home to move on with the next phase of life is a fundamental and visceral milestone in life. At a gut level it is right thing to do at this point in life. Those who carry on without their own home do so under a cloud. They lack the living security that underpins a marriage and optimal environment in which to raise children. The lack of permanence and security of renting threatens the whole family.
The National parties handling of housing has cynically undermined the foundations of our society to pander to the pure greed of a handful.
If the whole Auckland thing comes crashing down, I hope that the government is able to salvage enough from the ashes to make sure that the young FH Buyers (and depositors) are compensated. The bank shareholders and property investors can take their chances with what is left.
Hi Brock Landers,
You write, "Nobody in their right mind would be going anywhere near Auckland housing now."
What nonsense! A soft market can be an excellent time to buy. And plenty of people still are buying - including a couple of investment analysts I know.
Suggest you do an introductory course in economic history.
Don't buy now, you can rent dry safe homes here in New Zealand. Get out the popcorn and wait as the market goes backwards fast. You will be able to save more money by waiting and not buying than compared to buying and losing all that borrowed money. Simple stuff. The more you wait, the more you save.
Sounds like BH's advice around 2009-2010. That worked out well...
These comments are amazing. The thread is almost entirely taken up by doomsters patting yourselves on the back because the market has done what markets do. Well done for realising there is a property cycle. Prices go up. Prices come down. In the long term they track up. It is the long term trend real investors are concerned with.
I own Auckland investment property. I sold a poor performer a couple of years ago but otherwise it's set and forget. Cash flow is good, actually just improved due to fixing better interest rates. Equity is excellent after many years of high gains. I expect my equity to decrease somewhat over the next while before tracking up again. When I am of retirement age in 30 years I'm fairly confident my investment portfolio will be worth quite a bit more than today and most importantly I am enjoying the income from it today, which increases yoy! Things are so good I'm taking next year off work to study, travel, spend time with the kids.
I know people are hurting and struggling to get into housing. That's a key reason why I'm quietly relieved prices have stopped rocketing up.
Don;t fool yourselves though people. Most investors, like me, are doing just fine. We expected this day to come. It seems only the doomsters are surprised by it!
BH was not alone with his view in 2009-2010
He was not to know Ben Shalom Bernanke would buckle at the knees and blink in response to the enormous pressure imposed upon him by the Brotherhood
His first attempt was a $500 cash payment to every adult in America which was intended to see the GFC through for 6 months when everything should have settled down and asset values recovering. But it was not to be. Asset prices did not recover so he implemented his second salvo TARP which was to remove a lot of troubled assets from the open market. Still prices did not recover. With his credibility under pressure he proceeded with QE1. That didnt work. Then QE2. That didnt work. So QE3. And it worked. Look at the NY stock exchange. Has now hit 23500. The Brotherhood and the Bankers are happy. Anyone else? Now the FED has to unwind all that propping up. That'll take a few years. $4 trillion of unwinding to come
I blame those Flat Bush sections for spoiling my prediction. They shouldn't be included in my opinion! They have dropped more than 150k!. Auckland Central still up 3.8% for the year so the central redoubt still holds strong.
Interesting that NZ is up almost 1% for last 3 months. The -0.3% change over three months for Auckland Central which was particularly high in July/August is pretty insignificant. Still almost 4% up for the year which is pretty good. I predict optimism will return now spring seems finally to have arrived!
I predict optimism will return now spring seems finally to have arrived!
I'd say your forecasting capabilities are right up there with the Hosk. I'd also bet your fundamental quant skills would be worse than a diligent high school student with a bend for maths. Therefore to say that you "predict" is as good as saying "stand on 17".
Zachary the only reason why central Auckland looks to be holding out is the fact that nothing much is selling there for now. But wait until that Foreign Buyers restriction kicks in and I'm sure they'll be further Goverment measures to free up empy homes bought by Speculators. Then they'll be even more properties flooding the Auckland market.
Same headlines across the ditch this morning too!!
https://www.businessinsider.com.au/australia-housing-boom-officially-ov…
Good property is still selling. Harcourts sold 3/3 under the hammer at their Mt Eden auctions last night, albeit after the vendors all dropped their reserves in the auction pause.
Expect to see a flood of listings in the coming weeks as people try and bail out of their over valued rot boxes before Christmas in the hope that some desperate foreigners want to get in before the ban.
Agree with you Yvil - H O's comment is completely unjustified and inappropriate.
It adds nothing meaningful or worthwhile to the debate. As you note, it reflects the crudeness of H O.
Would appreciate if the adjudicators/editors would remove the comment promptly - and censure H O.
TTP
Hi Zachary,
You note, "That's not very fair as this website is a haven for doomsters, social justice warriors and Marxists."
And bullsh_t merchants too.
Actually, most of them aren't cerebral enough to be genuine Marxists. (I do enjoy a discussion with a bona fide Marxist.)
Cerebral enough to see you slowly shifting your argument as the evidence slowly hems you in. First it was property never goes down, then property (in good suburbs only) never goes down, now it's property (that's in good suburbs but also not apartments) never goes down. That's fine and you may be proven right but at this point you are talking about a set of property that most people aren't interested in. The multi million dollar villas can stay as a ridiculous money sink for people with tonnes of money, all the "doomsters and Marxists" want is for median values to come down to make them more accessible to the everyday working family. I'm not sure why you wouldn't like to see the same.
You deride people as moaners and lazy for not being able to afford 500k+ mortgages (you have a comment to this effect in this comment thread). This is why you get so much flack, it's not what you fundamentally are saying is always wrong (although I disagree with a lot of it) but the way you present your argument.
Oh trust me, everything tothepoint says is wrong. I wonder if this is all deliberate, or we actually have people happy to play the villain?
He started off in this site posing as a potential buyer looking to get into the property ladder, but not even a few weeks in and you can see his true colours showing. All his comments completely contradict what someone who should be excited for houses to be affordable would say.
Obviously tothepoint has a vested interest in the market thus all the spruiking and deriding people as moaners (when he should have been really one of the people?). The question to really ask - is tothepoint a Real Estate Agent, a speculator, or both?
The other option is that he's just a particularly dedicated troll having a laugh at the rest of our expense. He certainly knows how to press a lot of people's buttons, although the condescending, holier than thou, never actually provide and answers to direct questions approach is starting to wear thin. Hmmm, on consideration he's a politician?
Hi Risky,
Regarding me, you write, "First it was property never goes down, then property (in good suburbs only) never goes down, now it's property (that's in good suburbs but also not apartments) never goes down."
That's misleading and deceptive nonsense. As we all know, property constantly goes up/down - as do other markets. What I have said is that a crash is most unlikely.
You're well named, "Risky". And your biggest risk is to your own reputation.
You're a seasoned BS artist.
TTP
I'm not sure what your sudden fascination with reputation is, if it eases your concern this screen name means nothing to me so the "risk" is minimal. So just to be clear are you pro house price inflation because you have an interest in it going up (fair enough I won't begrudge you that) or because at this point you just don't want to be wrong? It's kinda funny because I'd say I'm actually quite risk averse, but you tend to be when you're putting together a deposit.
Hi Risky,
You write, "I'm not sure what your sudden fascination with reputation is, if it eases your concern this screen name means nothing to me so the "risk" is minimal."
I have no "sudden fascination with reputation": reputation has always been paramount to me.
But you seem to be indicating that you don't give a toss about your reputation. I will remember that when I read any future posts from you.
TTP
lets invoke Godwin's Law - you forgot to include the Nazi's
Buffalo lips on toast, smiling.
new by Zachary Smith | Thu, 02/11/2017 - 06:52
up5
That's not very fair as this website is a haven for doomsters, social justice warriors and Marxists
Well balanced by all the specuvestors & REA dreamers hoping the this is just a nightmare,that they will wake up and Chong Kee is still in charge,the 3%foreign cash is still piling in,Indian & Chinese business degree students(aka Maccas & retail assistants) at 3rd level training institutions are still buying property as residents with their dirty laundered money....
Wellington numbers are very interesting. A near 10% climb year on year but that growth has been stopped dead in its tracks over the last three months.
At least Wellington is a stable market and with the likely influx of civil servants demand will remain high. Also we all know Auckland is the engine room of the economy so any drop will be minor. Christchurch on the other hand... who would want to move there? This is just the start and a big drop is surely likely to happen in 2018.
Hi JJS,
"At least Wellington is a stable market and with the likely influx of civil servants demand will remain high. Also we all know Auckland is the engine room of the economy so any drop will be minor."
You're right on the money with that comment.
As for ChCh, yes, and it's a pity. The geophysical issues are a huge detriment. Despite that, it's a lovely city!
Well why would you? Better employment opportunities in the North Island, and if you wanted the South Island lifestyle you’d live in Marlborough or Central Otago.
If for some reason you did want to move to Christchurch, the thought of another quake would surely be enough to put most people off. Let alone the lack of progress with the rebuild being a constant reminder that another big one could strike.
JJS, have you been in CHCH recently??
The quakes are a Nothing now as if you are still here after all that we have had then you would have no fears!
CHCH is probably safer than anywhere in NZ now
the bigger worry is the Alpine Fault that would take out Wellington.
Everyone likes different places, some like Auckland even though it has not got the great quality of life that CHCH offers.
"CHCH is probably safer than anywhere in NZ now"
That might be true - but people (and the market) don't necessarily perceive it that way.
Personally, I love Christchurch. If I had the opportunity to live there, I'd take it.
For me, Auckland also has a great quality of life - particularly the wider Ponsonby area. All those cafes and boutique shops that I can't afford to visit!
Yep Coromandels, waiheke sucks, up North sucks, to warm up there and the beaches with all that white sand and beautiful water for fishing, surfing and windsurfing who needs it. Not to mention the BBQ on the beaches.
Even in winter the temp is mild enough to go out on the water. Yeah hate it.
Hate driving to the Mount or Taupo, just a pain to get to these nice places a whole 2-3 hours. Not sure how we can survive.
My job has better opportunities in Christchurch, I'd be on the same pay in Wellington or Auckland with higher housing expenses. My only other option in the south island is Dunedin, which I don't fancy. Chch is a pretty handy size, I can bike to work and bike to some amazing single track in the port hills both ~10 minute from my house, skiing is an hour away, the beach 15 minutes, the rebuild is exciting, house prices reasonable. Makes perfect sense for me to be here.
Wellington City has been sitting between 450-500 listings for months, since spring it has been between 550-600 and as this months data highlights, properties are just sitting, they are not being cleared like they were this time last year. It's a small market but that's a big percentage increase. Some people commentating here are just telling porkies.
Last 3 houses that went to auction in Wellington were passed in. So DO NOT believe the Wellington property spruikers on here either. Wellington market has cooled and that may continue.
One thing lacking here is "Patience" - :-) ... Maybe it is wise not to cheer up too soon .. but by all means, keep up hoping that prices will come down !!
The author says: "The information included in the above table is based on the monthly property value index. This index is calculated based on the sales data entered into CoreLogic's system in the previous 3 month period" ...i.e. these are averages of sales of Aug/Sept/Oct the lowest and slowest months of this year ( with all the pre and post election effects baked in )... However, Watch for the next trend ... this Gov has just started dishing out all the "Good News" which will gitter the markets !! - Next stop will be January 2018 when the 100 day honeymoon is over. Market actions this summer will show us the way for next year.
BTW, everyone knows that ± 5% in house prices is just a normal correction ( not a crash) and happens all the time ... and it would be highly unlikely that an Auckland buyer who cannot afford $1m home today would be able to afford a $950 home if a downside correction happens tomorrow. House buying has become much more complicated than ever and the Price is the least of the worries ATM, try sorting out ( update) the finance first !!
Keep in mind my Call for the bottom of this market in July/August 2017 ...
Indeed. The Auckland buyer who cannot afford 1m today, cannot afford 950k next year (even though the difference is an entire year or two worth of savings for an Auckland professional).
Just goes to show how much potential downside this mother has before it slams into reality. Bring it.
Mark Richardson, on TV this morning:
"It's timing, and time in the market" - (he is a property investor, apparently)
Quite right Mark!
Ask anyone who bought property or shares in Japan in 1988. They're both still 40% odd below the prices 30 years ago, and I promise you no one who bought back then thought that price of either was going to fall.....
Palmerston North remains a good bet.
Prices there are very modest in Palmy to say the least.
$350,000 still buys a good 3 beddie, garage, sun, flat/decent sized section in a good suburb.
Those who can't afford Wgtn and Auckland might do worse than head to Palmerston North. University city with good labour market opportunities, sport/recreation facilities and pleasant surroundings.
15 year ago, 2002, $150,000 bought similar in Christchurch. Can't you see how distorted the property market in New Zealand has become? You see $350,000 'as nothing'. It is! The last decade has been 'do as you are told ( by The System), leverage up and buy!" and it's worked, but at what cost to the country? At some stage, the game ends, they all do....And PN ?! Sure, if you work at the Ohakia airbase, I guess....
Hi bw,
Agree with what you say.
$350,000 is a mountain of money for me. But you need about 5 times that amount to buy a half-decent 3 beddie in Ponsonby - without off-street parking.
And sure, Ohakea Airbase is a significant employer. And so is Linton Military Camp. Not to mention all the supermarkets......
I agree completely with your comments especially relating to Palmy North. I bought in 1994, paid $86,000 with only 15% deposit on a single income with a Debt to Income Ratio (DTI) of 32% on a 25 year term loan. The maximum the banks would lend at that time was 3.5 your annual salary. Now they push 6-9 times your double income as the "new normal". I paid the house off as quick as I could because my salary was increasing quite alot each year, but these days that isn't happenng, so when interest rates start returning to more normal historic rates (which they need to, to get growth back into the economy), we will see how many are caught out swimming naked when the tide goes back out. Palmy is not a city for capital gains, however it is great for easy lifestyle with secure jobs and security of tenure. It takes 3 decades to triple the value from the original price but right now there aren't many houses on the market due to a shortage of available properties and an 18-24 month wait just to talk to a builder!
Just relax everyone,
THIS time it's different....(that previous documented 800 years of boom bust market cycles doesn't apply cause it's a house...)
So average homes in Auckland 2 mill.
How will people be able to afford this and what will average incomes be. At current rates of increase, incomes will pretty much be the same as now.
That makes no sense.
Whats the point of a house being so expensive if everything suppose to be relative to incomes. The only ones that win from this are people who have houses now and bought earlier. This is not good for NZ as a whole. Cant see banks lending to people more then 10 * DTI's.
The data is based on Foreign buyers only and does not take into account Non Resident buyers which should be much higher than the so called Foreign buyers.
How come the experts are not realizing it and raising it unless the 3% foreign buyer data included Non Resident buyers as well.
What data? The government never kept stats on foreign buyers because they "believed from their own sources" that it was only 3%. So if they never tracked statistical information on foreign buyers where did they get the 3% figure? They pulled it out of their fat ars*'s. Porkies for dinner tonight anyone?
This house price decline is a good start but it’s not yet a big enough slide to make we doomsters start feeling a little better about ourselves. Auckland homeowners need to lose a lot more equity before we feel truly whole so why don’t we introduce a ban on foreign buyers to really send the market into a free fall? Would be lots of fun watching all the pain.
TothePoint. Not with the worlds 13th most powerful woman in charge of the country. I tell you, a revolution is underway and it will all happen quickly. Collapsed housing market, State designed and built mass produced but affordable housing, cheap Venezuelan oil bartered for milk powder and low cost Cuban cigars for the common man to celebrate the new workers paradise.
Conflating Labour/NZF/Green policies with Cuba and Venezuela is a bit much, isn't it? You think Labour are that different to National? Just a slightly different flavour of the same thing, slightly more willing to act on the issues which even National agreed were present.
Mfd. I grant you, a little hyperbole to make a point but disagree with your ‘slightly different’ description of the coalitions direction. The upheaval of industrial labour policy, the bribe to first year students, Winston Peters astonishing U turn on law and order by supporting the dumping of three strikes are just three examples of radical change.
I don't think middleman would really loose any sleep over falling house prices. I am pretty sure he already owns a home with little debt and would prefer not to dip into his retirement savings to fund the kids in an over-priced market! If the market corrects, the kids can buy their own house without parental help and middleman gets to keep his retirement savings for himself. It is a win/win situation.
Herd mentality : When price is going up all jump in to buy and find reasons to justify and same thing happens when price fall - their will be many who will panic (Who does not have holding capacity) and will have chain reaction.
It happens in all, be it stock market or property market. Besides fundamental it works on sentiment.
Wait and Watch but those who are planing to buy for long term (FHB and people with deep pockets to hold) need not worry and rest will have tough time ahead.
I'm confused by some commentators
I don't think I have ever stated that house prices will continue on towards infinity and beyond. I think a lot of the arguments here are as a result of too much imagination. People will read a comment and assume a lack of empathy or a deliberate attempt at spruiking. Most comments are just stating facts and occasionally stepping out and making predictions about what is going to happen based on observation. I believe the fundamentals underpinning the market are solid however people disagree, sometimes, vehemently, with my interpretation. One thing leads to another and things get a bit out of control. I remember it all started with me awhile ago when I noted that instead of prices dropping like everyone was claiming they were in fact continuing to go up. I turned out to be right on that occasion as it was back in 2015.
My claim that English language, British culture, global hub cities, high immigration levels and established ethnic infrastructure constitute fundamentals for house price appreciation seem to be especially triggering. Essentially I claim that desirable locations have expanded to encompass entire cities and prices have increased way out of proportion to income fundamentals because of globalism especially in the new lands of the ex British colonies of Australia, Canada and NZ and in many cities in the US. I think this is a more plausible explanation than tulip mania.
I don't think it has anything to do with if you vote right or left. It is more about people not being able to keep up with political change fast enough and realise that with every change in policy, without the ability to change your way of thinking quickly and adapt to the new, people who are slow learners and stay with their old way of thinking will get caught out. This happens on both sides of the political viewpoints. The key is to learn how to adapt fast and change with it, before you get caught with your pants down. This new government is all about changing the status quo, so there will be alot of pain for many.
So a young couple with a joint income of $100k (take home pay 79,570 after tax and Kiwisaver) has the following options.
Auckland
Deposit - $207,744 (2.6 years income)
Mortgage - $830,978 (10.4 times income), yearly payment $53,530 (67% of income)
Wellington
Deposit - $147,748 (1.9 years income)
Mortgage - $590,994 (7.4 time income), yearly payment $38,071 (48% income)
Christchurch
Deposit - $98,086 (1.2 times income)
Mortgage - $392,343 (4.9 times income), yearly payment $25,274 (35% income)
So Auckland is a non-starter, Wellington is difficult and Chch is doable. Even if you took a pay cut to move to Chch, you would be significantly better off
I would suggest joint income of $100k in Auckland would be in the low income no qualification bracket.
Joint incomes where both have tertiary education or trades are more likely to be in the $150k range for joint income. A roofer straight out of training is allegedly making $80k in Auckland.
By Interest's figures, and your assumptions, that would mean that over half of Auckland households are low income.
I love it when blind assertions like this are made.
https://www.interest.co.nz/property/house-price-income-multiples
Alternatively you could become self employed, work from home globally thanks to technology and even fly Jetstar to anywhere in New Zealand for less than $100 a day and it would still be cheaper than trying to slave away for salary in an over-priced main city in NZ. We need to start thinking outside the square, as so many other Aucklanders have done when they moved out and established their own marketing strategies from the comfort of their own homes. Some have even done it from a bach in no mans land and still manage to have weekly meetings in Auckland for a fraction of the price.
TOTHEPOINT Since when has housing affordability been a Marxist philosophy? I'm pretty sure owning land at all in Marxist philosophy, was considered capitalist. The Marxist idea would be that noone owned anything and everything would be owned collectively.
Famously, Margaret Thatcher, was a huge proponent of working class Brits OWNING THEIR OWN HOMES and was a huge devotee of Adam Smith Neo-Liberalist philosophy and economics....heaven forfend!!! She instigated a massive programme to facilitate the highest levels of home ownership.
Can you imagine??!?!? Thatcher must have been some secret Marxist nut according to your narrative......people on lower wages getting jumped up notions of ever owning their own homes!?!! What a pile of socialist marxist hogwash right? Those lazy low income earners should remain rent and wage slaves forever... being lazy and useless and how dare they even expect home ownership???
Honestly TTP, the things you come out with. I don't know how you can bring yourself to type them. People here aren't jealous, doom sayers or necessarily even remotely socialist. Your constant reliance on Logical Fallacies is very silly to the point of predictability.
TTP every other comment on this thread is from you. Are you going for some sort of record today?
For someone who is so so soooooooo confident about the housing market, you sure are very heavy on your keyboard time. Usually it's only people who lack genuine confidence that have that subconscious drive to over compensate... but far be it from me to generalise based on your obsessive commenting here. Maybe you're super normal in real life?
I'm off out now, living an actual life, but you enjoy yourself on your one-man-spruik-mission. Certainly no one can doubt your commitment.
TTP. Sure. My bad, you didn't say Marxist, Zachary did, but you do happen to grovel about agreeing with everything he and other bulls say, and as aforementioned, your comments on this thread have been prolific. So it's something of a much of a muchness frankly. You have gone to great lengths to show that you care nothing about the plight of the under 40's who are either crippled by debt or locked out of home ownership, in a society of ever increasing mental health, poverty, falling living standards and substance abuse.
As for my reputation... zero f#*$% given. None. Not a one. This is a anonymous commenting platform, the very notion of "reputation" is ridiculous. But even so, almost anyone on here gets more up-votes than you, so perhaps that's why you keep harping on about "reputation".
Well everyone, here we have it in writing. Gingerninja has admitted it: she doesn't care squidly dot about her reputation/credibility.
Keep that in mind for any future post of hers (plus all her previous posts).
My view is that the majority of people here do care about reputation - but, inevitably, there are a few black sheep like Gingerninja.
Back when I bought my then house in Pakuranga, Auckland, it was a staggering $36.500 and I needed a small second mortgage. The first two years were tight but the then higher inflation rate alongside government regulated wage rises, rapidly reduced my principle in relation to the then swiftly increasing house prices. Within a few years I was paying about 20% interest but by then my principal was vastly reduced, so I survived while the value of my home continued to rocket upwards. I became mortgage free within about ten years. If one paid too much initially for a property it was of little concern. Inflation quickly changed that. Currently things are very different so you FHBuyers be very careful.
EXACTLY! You made a well thought out statement. I vaguely remember those times where everyone needed a second mortgage, sometimes even a third, just to purchase. But yes inflation quickly eroded the debt levels through high increases to wages which happened about every 6 months in the 1980's. By the time I bought, second mortgages were a thing of the past and the building societies were prepared to lend you the entire loan amount. How times change.
"Examples of this are being seen in Flat Bush where prices for vacant, fully-serviced sections that were selling in the high $700,000s last year are now selling in the in the early $600,000s"
So let's say the "high 700's" are around 770k, and the low 600, are around 630k. That means sections at Flat Bush have fallen about 18%!
I would suggest that's pretty much where most of Auckland property will go. This has only just begun.
The Biggest Ponzi in Human History
Here’s the story in a nutshell: Ultra low interest rates mark a shift away from people’s wealth residing in their savings and pension plans, and into to so-called wealth residing in their homes, which are bought with ever growing levels of debt. When interest rates rise, they will lose that so-called wealth.
It is grand theft auto on an unparalleled scale, and it’s a piece of genius, because while people are getting robbed in plain daylight, they actually think they’re winning. But as I wrote back in March of this year, home sales, and bubbles, are the only thing that keeps our economies humming.
We haven’t learned a thing since March, and we haven’t learned a thing for many years. People need a place to live, and they fall for the scheme hook line and sinker. Which in a way is a good thing because the economy would have been dead without that ignorance, but at the same time it’s not because it’s a temporary relief only and the end result will be all the more painful for it.
What we have invented to keep big banks afloat for a while longer is ultra low interest rates, NIRP, ZIRP etc. They create the illusion of not only growth, but also of wealth. They make people think a home they couldn’t have dreamt of buying not long ago now fits in their ‘budget’. That is how we get them to sign up for ever bigger mortgages. And those in turn keep our banks from falling over.
Record low interest rates have become the only way that private banks can create new money, and stay alive (because at higher rates hardly anybody can afford a mortgage). It’s of course not just the banks that are kept alive, it’s the entire economy. Without the ZIRP rates, the mortgages they lure people into, and the housing bubbles this creates, the amount of money circulating in our economies would shrink so much and so fast the whole shebang would fall to bits.
That’s right: the survival of our economies today depends one on one on the existence of housing bubbles. No bubble means no money creation means no functioning economy.
http://www.zerohedge.com/news/2017-11-01/biggest-ponzi-human-history
If this is the only game in town, then better every one learn how to play it, right ?
There will be winners and losers in a capitalistic society, has been always.
Central Banks have lost control of all monetary and fiscal policies/measures, it is the main street bankers calling the shot nowadays.
We better start teaching kids to speculate from Intermediate school onwards, ditch all science, history, lessons.
Just Languages and Speculation as curriculum should do ?
"WINNNG" for now, until the massive personal debt levels strangles the entire economy because salary earners are only just managing to keep the roof over their heads while businesses are collapsing and laying their indebted home owner staff off thanks to low sales. Why do people not understand the cause and effect as the bigger picture of these debt cycles and the implications to the wider economy? Most people only think short term and only how it affects them right now.
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