Median house prices dropped significantly in most parts of the country in January, according to the latest figures from the Real Estate Institute of New Zealand.
The national median selling price for all residential properties sold in January was $520,000, down from $550,000 in December.
That was the lowest it has been since July last year, but remains above the January 2017 median of $485,000.
Of the 16 regions around the country, median prices were down compared to December in nine - Northland, Auckland, Waikato, Bay of Plenty, Gisborne, Wellington, Nelson, West Coast, and Southland, up in five regions, Hawkes Bay, Manawatu-Whanganui, Taranaki, Marlborough and Otago, and unchanged in two - Tasman and Canterbury.
In Auckland the median price was $820,000 in January down from $861,000 in December and a tad below the January 2017 median of $830,000
The median price in Auckland has now fallen back considerably from its March 2017 peak of $905,000.
In the Waikato the median dropped back from its December 2017 record of $523,000 to $490,000 and in the Bay of Plenty it also dropped back from its December 2017 peak, from $598,000 to $535,000.
A similar trend was evident in Wellington where the median price hit a record $560,000 in December last year but dropped back to $500,000 last month.
In Canterbury the median price was unchanged from December at $435,000 but in Otago it was up strongly, rising from $400,000 in December last year to set a new record of $475,000 (see the interactive graph below for price trends in all regions).
However sales volumes held up a little better than prices, with the REINZ recording 4366 sales in January, up 2.7% compared to January last year.
However the only region to record a significant lift in sales compared to a year ago was Canterbury, where sales rose from 514 in January last year to 607 in many regions the increases were in single digits compared to a year earlier.
In Auckland 1157 properties were sold in January compared to 1147 in January 2017 and 1444 in January 2016, well below the months of January in 2013, 2014 and 2015, which all had sales well above 1600.
The overall pattern of a fall in median prices and sales volumes that were largely flat suggests many vendors may have accepted that the market had cooled when they put their property on the market in the New Year, and adjusted their price expectations accordingly.
But those who were hoping for an early uplift in prices in 2018 are likely to have been disappointed.
However vendors should expect their homes to take longer to sell, with the median days required to achieve a sale rising in all parts of the country except Northland last month compared to a year earlier.
In Auckland the median days to sell increased to 44 (from 41 in January), which is the longest it has been since 2011.
Here's the REINZ's full regional report for January:
REINZ Monthly Property Report - January 2018.pdf
Median price - REINZ
Select chart tabs
160 Comments
Mr Alexander has a history of wrong predictions
My plumber & taxi driver made better predictions of the market last time I was in Kiwiland
I thought the leafy central Auckland & Coastal North Shore suburbs were immune to price decline ?
17 dead at school in Florida another tragic day in US.
Nite NZ
No its not, look at that graph its only heading in one direction. Its "Happening" when we get a long term trend that shows it going down at the same rate its currently still going up.
The shit is ONLY going to hit the fan if interest rates start taking off and the over leveraged cannot afford the repayments.Until that happens we can go back to drinking our Champagne.
Hurry up I want to buy some bargains
10yrTreasury yield hit 2.904% for 1st X in 4 yrs
Wait until Trumps massive overspend drives it above 3%
This is not like 4 yrs ago when it last happened this is a new paradigm in 2018
Interest rates will rise that’s a given.
By the way the VIX is being manipulated by algorithms too You cannot trust anything here
Exactly its the same every year and you need to look at the long term trend. We need 6 months or even a year of nothing but downward movement before its worth worrying about. Those with their mortgage already paid off don't care either way if your selling and buying in the same market it makes no difference up or down. Don't get me wrong I see a housing correction on the horizon but increasing interest rates are good for me as a saver.
Technically speaking this is a trend change result with prices making a lower high and then a lower low; although the value of the lower low is 820K vs 821K so will probably be viewed as a 'test' of the lows, so confirmation from next months result will likely be used to discern trend and then the March data will also be important as it gives us our first year on year check to the high.
If February is materially below $820K and if March is below the interim low at $830K then the ambiguity will be gone and this will be recognized as a correction. If March is above $830K but below $880K/$905K it will remain ambiguous and if March is above $905K its still a rising market.
Need to read this in conjunction with other reports such as realestate.co which indicate an increase in supply also. It is easy to wait to pick a winner after the race has been run so time will confirm the trend but if I was looking to sell (e.g. a rental property or was moving out of town and not rebuying) then I don't think I would have the luxury of looking at the trend in six months time; rather I would be looking at some urgency to sell.
RickStrauss, days to sell - historical context for you - https://www.interest.co.nz/charts/real-estate/days-sell
OMG, who would have thought... "In Auckland the median price was $820,000 in January down from $861,000 in December and a tad below the January 2017 median of $830,000"
this would never have been possible if the national led government was still in power.. the speculators would never have let this happen...
National leader Bill English: “The voters have spoken and now we have the responsibility of working to give New Zealand a strong and stable government.”
Bill delivered on his promise.
Also in the link below I've never seen someone so happy to lose their job.
https://www.youtube.com/watch?v=TWdLQI_RtHc
Is that real estate agent maths? My calculator says its only 7.21%
I can't speak for others, but for me only the cost of housing in Auckland matters.
What brings much hope to us long suffering younger folk is that prices have now reverted back to what they were 23 months ago and seem likely to fall further over the coming months and years.
That's a 9.4% drop from peak and counting, it must be an awfully nervous time to be highly leveraged on Auckland property right now watching this equity bonfire, or to be a poor sod who makes a living flogging them off second hand.
The emotional response is quite normal.
Right now we might have a chance of a soft landing. I'm more concerned with the US Government saturating the debt market pushing up interest rates, and then add the fears of high inflation in the US which will push up interest rates more.
Let's hope for a calm sentiment.
That is massive, almost 2 years ago.
I wonder if January can be volatile being in the holiday season, be interesting to see if February follows suite.
I have noticed a number of houses in central suburbs on trade me that have been on the market for months with "vendor doesn't want 2 properties", "vendor says sell", "vender has already bought" Etc. Sooner or later they have to meet the market.
Affordable and getting more affordable by the day The Boy. You can smell the fear and frustration on your breath. Why did you not diversify and buy some investments in Dunedin and The Lakes. I recall challenging you to do that but of course in your arrogant and ignorant manner you knew better. You need to sit down with someone who really knows what they are doing as they could help you to think outside the square. You owe it to your family to get some financial advice as you are missing out on so many opportunities outside of poor old Christchurch.
tell him hes dreamin
It’s true. The people there will have more money, because they aren’t lumbered by massive mortgages, and they will be able to spend that money in the local economy. There will be less social issues because people can afford homes. Lower house prices is a massive comparative advantage. If I was setting up a business I’d do it in Christchurch.
I hope you're right about that Christchurch boom but I suspect not. It must still be Christmas in Christchurch because when I look around all I see is For Lease Navidad. Vacant offices = no jobs = no more easy money for you. Sections are now taking months to sell.
I'm just gonna leave this here...
http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=117…
Think of a hot air balloon, rising at full speed with the gas fully on. Starts running out of gas, what happens?
I've never been in that situation, but I'd assume at first a gentle descent until the hot air in the balloon dissipates and you enter free fall to the ground.
The housing market is the balloon, the ground is the long term average ratio. The only way it would be a gentle decline is if you had more gas available to control the descent. Gas in this case would be foreign money because there's no way local wages can keep it afloat.
If someone can tell me where this foreign money will come from given we are at peak QE then i'm all ears. Is there a back up gas canister that will keep this balloon going?
Except FHBers who paid top dollar in the last few years stand to lose 10'sofK. Imagine even with a gentle decline buying a house at $600k and 25 years from now its worth 500k before you consider inflation at say 2% and you have paid about 6% interest in that as well.
The same report and same announcement in the link below. Can you spot the difference?? - will it change your mood ?? , As usual, the devil is in the details...But,
I thought professional journalism and reporting should be impartial and comprehensive rather than incomplete and selective !! ... Why does sharechat.co.nz tell the story as it is and others don't ?? ... Please read the link below and compare for yourselves ...
http://www.sharechat.co.nz/article/3513e8b7/nz-house-sales-rise-in-janu…
Are we reading the same thing? Bindi's release doesn't look that positive overall either, apart from a couple of the introductory statements.
In Auckland, the number of properties sold increased 0.9 percent year-on-year to 1,157.
Canterbury had a decent increase in volume, pleasing HE MAN.
The median number of days it took to sell a property - a gauge of underlying demand - increased to 46 from 41 days in January 2017, the highest median number of days it's taken to sell a property since February 2012.
Devil in the detail.
Auckland's house price index increased 0.1 percent versus January 2017.
Small demon in the detail.
Auckland’s median price decreased by 1.2 percent to $820,000 down from $830,000 at the same time last year.
Bigger demon, but missing any reference to Auckland's peak median - which Interest has provided.
The number of properties available for sale nationally increased by 7 percent to 25,503 versus the prior January. Excluding Auckland, the number of properties available for sale increased by 1.1 percent to 16,824.
Balrog in the detail. If there's not much increase once you take Auckland out, most of the increase is in Auckland.
Otago’s record price for January was driven by a strong increase in Clutha and the Central Otago District – up 53.4 percent and 39.4 percent respectively,” says Norwell.
Aucklanders who have cashed up already and bought lifestyle blocks?
Actually median house price rose from $485 to $520k = 8% over the last 12 months.. It's in the report above (it's just not that obvious as this article is more focused on the showing the market is going down).
STILL MEDIAN HOUSE PRICES UP 8% FROM $485k to $520k OVER THE LAST 12 MONTHS
RP, look at the graph, it shows January prices have dropped EVERY year over the preceeding December. Have a good look. Its like saying Hooray cause the March prices will be higher than the January prices are now, it happens EVERY year. The only meaningful measure is a comparison with the same month
Yvil, if you read ALL the article ;-)
When these price stats are combined with increased days to sell then they mean more than just the usual January blip. Auckland has the highest days to sell since 2011. It's clearly reported that vendors are being more realistic with their asking prices and this might have helped prop up volumes a bit.
Soon the spruikers "explanations well" will runneth dry. It won't be long before house prices on a nationwide basis are in negative territory year on year.
Like i've said before, FHB should wait because time is firmly on their side.
There you go R P, you should be able to understand this, courtesy of mfd:
.
Here are the figures demonstrating the statistical January effect, of reduced median prices for January versus December one month earlier. Preceeding 5 years, 3 had a larger percentage decline and 2 had a smaller decline. Upshot is you cannot read anything into these figures as even during rabid boom, typically Jan median >5% lower than previous month.
2018 -5.5%
2017 -6.6%
2016 -3.3%
2015 -6.4%
2014 -6.2%
2013 -5.1%
Yvil - clearly this is in the weeds type stuff. Have you noticed the inverse correlation between declining interest rates since the 1980's and ever increasing house prices?
Have you also noticed that many think interest rates have turned and we're starting a new cycle as inflation rises?
https://www.interest.co.nz/bonds/91688/roger-j-kerr-says-us-inflation-a…
You can guess what risks this might have on house prices? The system is all linked together. Sure if managed poorly and we go into recession again interest rates might fall - but if managed well - we may slowly see interest rates rise - for years or decades...who knows...house prices could take a real thrashing as they simply won't be affordable at current prices against increasing lending rates...
But it's important we all know house prices dip in Jan of course because that's what they've done for the last 5 years.
Just a minor slip. Wait till you see how it slides and be amazed. The end of the cliff is near.
When sovereign funds backs off property and debt investments due to increasing risks, playing with OCR is like having a match for light in a cyclone. And it's already happening, though there's a lag before the full on effect.
Finally the end times are upon us! I for one am looking heavenward, ready to divest myself of this mortal coil and ascend into the heavens where I shall have a range of options on some not quite insubstantial mansions in a gated community with a venerable Saint providing 24/7 security and vetting.
But..but ..but... Granny Herald is saying houses are on the way up??
http://www.nzherald.co.nz/property/news/article.cfm?c_id=8&objectid=119…
Is some one telling porkies?
A couple of observations in central east akl. A jump in listings last 2 weeks, almost all auctions and some are relists from last year. Opportunities out there but why buy now? The foreign buyer ban will leave a big price hole that cant be filled by residents, what then.
If our government successfully starts a massive house building boom perhaps with government guarantees. Would this not keep our banks solvent due to the need for ever new mortgages as conversely property prices of our current stock start to relate to what our own citizens can afford. Of course some would be financially hurt in the process but by far the greater majority of our citizens and businesses must benefit from a saved economy. Such a program might even save a perhaps (part?) nationalised Fletcher Building from serious financial problems. Of course such a program would frighten the **** out of our property spruikers.
Furthermore, as our workers had more spending power due to paying much lower rents or mortgages then surely our economy would boom. Residential land prices could also reduce without causing an economic collapse. Government subsidies such as accomodation supplements would no longer be needed.
The problem with these reports is there is no visibility of the types of dwellings being bought and sold. One month could see several $3M+ estates being sold, the next could see several $400k townhouses being sold, skewing that month one way or the other. House prices coming down is only a good thing if you're paying less for the same quality.
Here are the figures demonstrating the statistical January effect, of reduced median prices for January versus December one month earlier. Preceeding 5 years, 3 had a larger percentage decline and 2 had a smaller decline. Upshot is you cannot read anything into these figures as even during rabid boom, typically Jan median >5% lower than previous month.
2018 -5.5%
2017 -6.6%
2016 -3.3%
2015 -6.4%
2014 -6.2%
2013 -5.1%
Yvil, salivating over January blips being a regular occurrence is just foolish. This weakness has been playing out for some time now. It's just the beginning of a long overdue adjustment that hopefully does not morph into a crash.
Focus on the increased days to sell. Finding confident buyers (or bigger fools) in this soft market for the other 11 months of this year will prove to be as equally frustrating for vendors.
Could that be that the masses are on Xmas/NY/School holiday/AKL Ann holiday weekends and people would rather go to the beach and have a holiday with their family than sit and crunch numbers and buy property whilst taking up holiday time to go to open homes? Seriously, lets look at a longer trend when it happens and get a better picture. Some are fixated on the daily articles too much...have they speculated or something?
Carlos, people,that have no mortgage owing are not utilising their equity in their home.
Interest rates are going to be around this level for ever and we should be borrowing against our home to provide asset producing income.
You don’t get ahead working for wages or sitting on an unencumbered home.
Speculate to accumulate as they say is dead right.
THE MAN 2, you are incorrect. Having paid no more than $5K in interest my entire life, paid cash for my house and built significant savings, I have been able to retire early by choice and am still building up my kiwisaver. I also have the capital to own my own rental portfolio, if I was that way inclined ;-)
I suggest your version of speculating to accumulate while using other people's money, is an opportunists way of playing for quick gains for minimal work involved. As a property speculator, do you have the financial resilience to ride the big falls as easily as the recent rises?
Don't get me wrong, there is nothing wrong whatsoever with borrowing to invest. Its when greed becomes the overriding factor - I have an issue with it. Especially when it involves unproductive assets like houses and not factories.
Those FHB who knuckle down and save, wait for this long term correction to play out, won't regret it.
Yvil, yikes, I can sense the venom in your comment. Why are you so against FHB waiting, saving up hard?
I do own my home outright, my wife and I saved up and paid cash for it so your dead wrong on that count. Overheads are low. Unlike yourself, leveraged up with interest only loans, I haven't paid more than $5K interest in my entire life. I know, it sounds boring but my family prospered because of it.
Might be time for you to start paying some principle, accumulate equity the hard way now that capital gains are over ;-)
I seem to recall Yvil is a RE agent, so he may be relying on commissions to top up the payments on his poor yeilds from the rentals. Or maybe he's seen the light and is trying to quit a few rentals before the downturn proper and is just waiting to find a bigger fool.
Most people who have taken out interest only loans since 2012 won't be able to pay principle and interest when it comes time to pay the banking piper. Most interest only terms are for 5 years maximum, depending on how real estate prices are stacking up when it comes to the end of the "interest only period". There will be many poor sods who will find out that reading the fine print before signing their loan docs might have saved them from their own financial demise. But hindsight is a virtue and reality is a bitch. The interest only period might last 5 years but after that, principle and interest payments kick into line and keep within the original length of the term loan. So after 5 years of paying interest only, there is a huge sudden increase in the monthly repayment figure to ensure that the original loan is still paid off in full by the time of the original maturity date. This is when the average person realises how big the hole is that they have dug out for themselves.
TainuiBabe, regarding the payment shock that some borrowers will face in Australia -
1) http://www.abc.net.au/news/2018-02-06/interest-only-loan-crackdown-coul…
2) http://www.afr.com/real-estate/interestonly-borrowers-brace-for-mortgag…
Multi-choice question. You don't need to worry about house prices dropping when which of the following events are occuring?
a) Its Chinese New Year.
b) There's an election coming up.
c) Its January
d) Foreign buyers leave the market.
e) Interest rates are at all time lows.
f) All of the above.
Multi-choice question 2. You do need to worry about house prices droping when which of the followin events are occuring?
a) Inflation might be back and interest rates could rise.
b) Debt levels are at all time highs.
c) Propellor Property Investment radio adverts tell you that now is a good time to make money in the housing market.
d) You've just made $500,000 in capital gains in 5 years on your rental in Manukau.
e) All of the above.
Every time a property report comes out there’s foaming from both sides i.e. bears and bulls. None of it seems to come from actual buyers or sellers so they are likely trying to read noise. The local agent told me he sold 20 plus properties in 1071 over the last year, only one of which was to a foreigner. He has two new listings in Kohi and said he’ll sell them easily. I’ll watch those carefully, just because I know I can get more info.
Never Fear DGZ Is Here!
QV Feb 2018 MEDIAN Values (Top 20)
1 Herne Bay $2,620,100.00
2 St Marys Bay $2,284,500.00
3 Remuera $2,112,050.00
4 Stanley Point $2,012,050.00
5 Campbells Bay $1,986,400.00
6 Orakei $1,913,700.00
7 Epsom $1,902,550.00
8 Westmere $1,890,850.00
9 Mission Bay $1,871,850.00
10 St Heliers $1,769,450.00
11 Ponsonby $1,766,300.00
12 Kohimarama $1,751,250.00
13 Takapuna $1,747,400.00
14 Devonport $1,723,300.00
15 Glendowie $1,713,700.00
16 Parnell $1,645,500.00
17 Mellons Bay $1,637,850.00
18 Castor Bay $1,618,100.00
19 Narrow Neck $1,568,400.00
20 Murrays Bay $1,520,400.00
Yes I certainly do. Here's the comparison Feb 2017 / Feb 2018 / Percentage +/-
1 Herne Bay $2,468,000.00 $2,620,100.00 6.16%
2 St Marys Bay $2,271,550.00 $2,284,500.00 0.57%
3 Remuera $2,019,550.00 $2,112,050.00 4.58%
4 Stanley Point $2,018,950.00 $2,012,050.00 -0.34%
5 Campbells Bay $1,872,900.00 $1,986,400.00 6.06%
6 Orakei $1,761,150.00 $1,913,700.00 8.66%
7 Westmere $1,842,100.00 $1,890,850.00 2.65%
8 Epsom $1,865,300.00 $1,902,550.00 2.00%
9 Mission Bay $1,763,050.00 $1,871,850.00 6.17%
10 Ponsonby $1,743,400.00 $1,766,300.00 1.31%
11 St Heliers $1,701,700.00 $1,769,450.00 3.98%
12 Kohimarama $1,724,700.00 $1,751,250.00 1.54%
13 Takapuna $1,700,000.00 $1,747,400.00 2.79%
14 Devonport $1,676,700.00 $1,723,300.00 2.78%
15 Glendowie $1,649,900.00 $1,713,700.00 3.87%
16 Parnell $1,562,300.00 $1,645,500.00 5.33%
17 Castor Bay $1,621,950.00 $1,618,100.00 -0.24%
18 Mellons Bay $1,620,150.00 $1,637,850.00 1.09%
19 Narrow Neck $1,531,850.00 $1,568,400.00 2.39%
20 Murrays Bay $1,491,750.00 $1,520,400.00 1.92%
How can that spoil things, Im concerned with average NZers, fixing up homelessness, reducing hospital ques, reducing immigration, educating our youth, setting up training schemes for young.
Those areas are not your average Auckland properties, it means nothing in context of things, but the median does, Aucklands median is coming down. If the rich get poorer by selling inflated properties to each other knock yourself out, all your doing is making your houses more expensive for each other, as long as the median comes down and FHB can get on the ladder then thats great.
It seems to me that the US inflation rate is increasing and they are talking about increasing interest rates, wonder if this will have an impact on interest rates in NZ as the cost of funding may increase, not to mention foreign buyers being frozen out of the market, time will tell what will happen in the future. Its not looking that great at the moment considering the high rate of growth in the last couple of years has come to a grinding halt.
It gets more interesting by the day.
"If the rich get poorer by selling inflated properties to each other knock yourself out, all your doing is making your houses more expensive for each other"
well said @swapacrate!
they are living in their own little bubble which has little relevance to the bigger Auckland picture
Fat pat, all should be revealed in the next month. I know of two elevated North facing properties, one of which has sea views with no issues coming on the market in the $2 million plus range. I’ll follow up with the agent to see exactly what the demand is and what prices are achieved.
Go easy on him, he's not been his normal self so far this year. maybe he's had some of the wind knocked out of his sails.
I almost disagree with everything TTP posts but find it quite entertaining to read his tripe and trying to visualize what type of person he must be.
Indeed, those slurs a bit passe, (except for the lefty agenda bit, which to be frank is a poor low blow and not entirely necessary nor applicable to the point you're making, you're better than that Ex-Expat) Sheryl Offner has done a remarkable job turning it around - latest results put it on a par with Westlake and the DGZ schools, a friend of mine's child is at EGGs and absolutely despises it -bullying, cliques, drugs, alcohol - whereas my daughter is throughly enjoying Selwyn.
Im surprised that you left your house, that must have been uncomfortable for you
PKchew, what's comical about DGZ, Zachary, TTP, The Man 2 and Yvil is that if house prices crashed they would be arguing it out with the growing number of "Doomsters" that prices were still up on what they were 10 years ago - lol!
Cold comfort to first home buyers with underwater mortgages!
We welcome your comments below. If you are not already registered, please register to comment.
Remember we welcome robust, respectful and insightful debate. We don't welcome abusive or defamatory comments and will de-register those repeatedly making such comments. Our current comment policy is here.