There was a significant jump in the number of homes sold throughout the country last month and the median house price hit a new high, according to the Real Estate Institute of New Zealand.
The latest REINZ figures show there were 7578 residential properties sold in May compared to 6368 in April (+19%) and 7482 in May last year (+1.3%).
The improvement in sales compared to April was evident in all regions of the country, however, compared to May last year, Auckland appeared more buoyant than the rest of New Zealand.
In Auckland there were 2331 residential properties sold in May, compared to 1898 in April (+23%) and 2211 in May last year (+5%).
There was also a big lift in sales in Canterbury where 1021 residential properties were sold in May, compared to 849 in April (+20%), although the May figure was virtually unchanged from May last year.
Sales in the Waikato also lifted strongly with 757 sales in May compared to 628 in April (+21%) although May's sales were down 5% compared to may last year.
However, sales throughout the country excluding Auckland were down 0.5% compared to May last year.
Prices were also firmer, with the national median house price hitting a new record high of $562,000 in May compared to $550,000 in April (+2%) but just $2000 above the previous record on $560,000 set in March.
In Auckland the median price increased to $852,000 from $850,000 in April but remained well below its record high of $900,000 set in March last year.
Within the Auckland region, median prices were up compared to April in Central Auckland, North Shore, Manukau and Papakura, but down in Franklin, Rodney and Waitakere.
Around the regions, median prices were up compared to April in Northland, Auckland, Waikato, Bay of Plenty, Wellington, Tasman, Marlborough, West Coast and Canterbury, and down in Gisborne, Taranaki, Nelson, Otago and Southland.
They were unchanged in Hawke's Bay and Manawatu/Whanganui.
However homes are also taking longer to sell.
The median number of days it took to sell a property increased from 36 in April to 38 in May, which was one day more than it took in May last year.
The figures also show that buyers in Auckland continue to have plenty to choose from, while listings may be a bit tighter around the rest of the country.
The total number of homes available for sale at the end of May was 24,229, up 1% compared to May last year.
But in Auckland, total inventory was up 4.6% in May compared to May last year, while in the rest of the country excluding Auckland it was down 1%.
Median price - REINZ
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Volumes sold - REINZ
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255 Comments
"Why would anyone take notice of these biased comments from a self-confessed anti-property person?" Why? Because such views are enormously more likely to be correct than the views of blindly biased NZ property addicts. Of course that is assuming you really believe such silly things. Some of you are surely trying to influence the insufficiently informed. That is looking for more fools.
Hahaha no I wouldn't miss the daily comic routine on interest.co. However your comments are over the line one-eyed and potentially giving others a bum steer. I say potentially because I don't think first home buyers are taking any notice. And the facts are proving you wrong but that still wont stop your verbage.
Houseworks - wrong. Its you thats biased towards giving advice to invest in property at the peak of a bubble. How stupid is that! Being a late arrival to the property party you're understably one of the last to accept that the Global investment climate is shifting towards another debt crisis. You bought a unit in Hamilton, 13 months ago wasn't it?
Eco Bird, as you already know, I have (thankfully) no investment properties. I cannot imagine my world having to need them. It's a great place to be. Yours and Houseworks recommendations to invest right at the height of a bubble are admissions you have zero comprehension of what comes next. The timing of these recommendation to buy now are totally suspicious.
Cool RP and that is ok .. BUT, stop talking about investors and what they do and what they are going to suffer and whatever you preach .. becasue , as you just admitted , You DONT know shitt from clay in this business and you are just pissing in the wind and fooling some naive people here who think you are an authority on the business ...
Go back to your TD and count your cents RP .. and stay away from bullshitting people with stuff you have no real knowledge off .
enjoy your evening.
You sure are a try hard, not to mention blow hard. Twisting facts is a specialty of yours, in this case saying that I am a late arrival. That is not true as you well know retired poppy. What is true is that your experience with property investment is zilch and as an investor of any kind is extremely limited so please don't paint yourself otherwise. By the way, we notice that you are constantly editing and changing your posts retired poppy, that shows you are not credible.
I think you're missing a key part of the picture of how I came to have my substantial principle to which I earn my "paltry" % return. I made wise decisions and choices and worked incredibly hard and didn't pay numerous six figures in interest. If you're struggling to comprehend what I am trying to tell you then more fool you. Its funny you running a down a person who has already succeeded in life. It speaks volumes.
Enjoy your evening!
BTW, I also edited this post too as I suck at grammar :-)
Hi Houseworks,
I'd say Retired-Poppy is as envious as hell of all those savvy people who have established their own property portfolios. He's admitted that his dosh is in the bank - so he'll be getting a paltry return right now and, of course, be none-too-pleased about it.
His religious attempt to talk down house prices is no doubt motivated by his personal desire to buy a property cheaply - and before his bank deposits are whittled away to nothing. But he's starting to get the message that there ain't going to be a crash - so like it or lump it, he's missed the boat.
TTP
Did it ever occur to any of you that Retired Poppy's decision not to become a landlord is a moral one? Frankly, I think what has become of the housing "market" is completely without morals as it requires people to be unable to purchase in order to maintain a supply of "clients". That is the reason that investors have been prepared to push the market beyond the reach of FHBs.
You should all hang your heads in shame. This is a sign that we are beginning to eat ourselves in the search for "growth" which in reality is probably over, but we can't seem to find the courage to face it square on.
Paltry return is all relative.
Happy life with a paid off house and retired, living off interest from investments doesn't sound like a bad life to me. RP sound like he/she's pretty intelligent so, obviously knows what they are doing.
As for paltry, if you compare what you have TTP and what Warren Buffet has yours is like a gnat on an elephant, or even your investments compared to someone that owns a global company in NZ.
Property is not the only game in town. Good on you for being comfortable in your investments, but likewise good on RP for being comfortable with his.
RPs view is that the Housing Market as it stands, is on quicksand, there are a few fundamentals that make buying a house at this point in time a risky investment. You can either ridicule a POV that uses facts or you can actually offer facts to say why this POV is wrong. Until you give facts TTP then its hard to listen to your Trump like ramblings of fake news.
Volumes are up and median prices are up, that's a good sign and I think shows that property as an investment is still solid and viable. For fhb, prices are high but it is still the best option over renting.
Take this example from a well-known person "I do love the family property I have lived in for 20 plus years and hopefully for many more happy memory filled years to come :)"
Depends where you're talking. Auckland and Christchurch have flatlined for about 2 years now and show no signs of taking off, so I wouldn't be too desperate to buy right now.
The owning vs renting maths is quite complex and depends heavily on your assumptions about future house price rises, rent rises and interest rates, so I find your attitude to it rather simplistic. My instinct is that in Christchurch owning is probably the better bet, in Auckland probably not, but when you're projecting 25 years into the future to claim to know anything is bold.
I also own a house, although I rent it out currently. Renting isn't as bad as it's often made out, and it certainly frees up a lot of time from maintaining and improving your property. I will buy again once I know I'm settled, the main decider for me would be psychological.
Fully admit that owning has the large benefit of forcing people who aren't good with money to save and build up some kind of asset base, but I've not found that renting has stopped me from building up my stash.
With respect, you are completely ignoring maintenance, rates, opportunity cost of the deposit, lack of flexibility and a whole array of other factors which muddy the waters. Like I say, buy a house for psychological reasons, not because it's a guaranteed financial winner unless it's the only way you can get yourself to save money.
I do own a house, I lived in it for several years before migrating to NZ. Now I rent it out. If I wanted to buy a house here in Chch, I would do, I could knock up a very useful deposit, but for now the flexibility suits me. I expect to buy in the next year or two if all goes to plan.
I did enjoy living in my hosue, but it's a real time and money sink. Renting gives you much more freedom, especially if you aren't sure you'll be living in the same city in 5 years time.
I'd love to sell it, past relationship issues. It's fully managed so not much input needed from me now. Financially, you can consider being a landlord quite beneficial, you get exposure to the asset class and any mortgage interest can be taken off your rent income. If you live in it, no such luck.
And that is what they have been doing.
I don't really know why these figures are such a surprise. The low value properties that the buy-to-debtors bought are no longer selling, in fact you can hardly give them away. It is almost impossible to sell an apartment in central Auckland at present.. Therefore sales are taking place on family homes that people need and those few first time buyers that can still move (have saved the deposit) are jumping up to middle market purchases - hence the median is raised.
You can find a stat somewhere to support the spruikers, the lenders and the real estate industry but the reality is that we are now in a compression faze.. The bottom is knackered, the top is knackered. The middle will follow soon enough because there aren't many buyers left that fit the banks criteria (Stupidly they used their powder too early).
Wouldn't want to own a flat at present and definitely wouldn't want to be over-geared on the family home. That's the next sector to go pop.
I hate to break it to you TTP but if the housing market is not going up the bears win because of inflation. Also, house prices are down so the bears definitely win. As people note, the smart investor money is getting out. The faux bulls are just propping up the narrative while they minimise their exposure. Same thing happens in every bubble.
Also, while Auckland is in a little bit of trouble, places like Rotorua are completed screwed. The correction in rural/small town locations will be brutal just like 2008/9. Auckland may have escaped that last correction with a 10% fall but the other places got spanked.
Yeah, I remember reading about the great capital gains being made in Rotorua, then when I was there I stood on the top of the skyline thing and saw the whole of Rotorua laid out before me, and I though “holy moly is that it....?!” It really did seems like a strange place to get struck by a property bubble....it’s like the plague had come to town
Although Rotorua does has an outstanding Szechuan restaurant, perhaps everyone wants to get a piece of that
Still going sideways while inflation eats away at it, seems like a good result.
Looking at the HPI data by Auckland district, it looks like the outskirts are the holding the citywide prices up, biggest gains in Rodney and Franklin while Waitakere and North Shore drop. Similar story in the median sales prices with Franklin and Papakura making up for Auckland City and North Shore falls over the last year. There seems to be a common narrative here that the best locations in the city centre are holding up the best, but I'm not sure the data agrees.
Hi Hardly & mfd,
Sorry - but you forget that it's not only about capital gains! (Retired-Poppy was caught out on this very point recently.)
Landlords also get a return on investment through rental income, which is not insignificant these days - especially in Auckland and Wellington.
Conversely, those who live in their house forgo the cost of rent.
Thus, your comments above are invalid.
My point is clear: following the massive gains in (Auckland) property investment over 2006-2016, the market continues to hold on well - especially when rental yield is factored in.
TTP
I wasn't discussing investment returns, but sure lets go ahead. Auckland gross rental yields are not high enough to pay for current mortgage interest rates, or high enough to compete even with a reasonable term deposit. Capital gains are absolutely required for investment returns to do anything more than tread water.
If you're heavily mortgaged, you are likely cashflow negative in Auckland after paying rates, reasonable provision for maintenance, insurance etc.
If you're not mortgaged or have held for a long time, your equity would be better off elsewhere if there are no capital gains to be had.
With Auckland prices and rents where they are now, decent rent raises and capital gains are absolutely essential for any investment case to add up and compensate for the hassle of directly owning property. Whether we see capital gains or losses over the next few years I don't know, but I wouldn't be betting my life savings on it working out.
Both Interest and Barfoot and Thompson give rental yield figures with different methodologies (I think the main difference is Interest account for rental properties tending to cost less by using lower quartile prices while Barfoot use a straight average price)
https://www.interest.co.nz/saving/rental-yield-indicator
https://www.barfoot.co.nz/market-reports/2018/may/suburb-report
Auckland regions have a gross yield somewhere around the 2-5% region. As you say, this is gross, so you're lucky to turn a profit after maintaining, insuring, paying rates and mortgage interest if you bought recently.
Sorry - but you forget that it's not only about capital gains! (Retired-Poppy was caught out on this very point recently.)
Please refer to the fundamental law of accounting:
Assets - Liabilities = Equity + (sum of income - sum of expenses)
If your expenses exceed your income then, all things being equal, your equity will be decreasing. My guess is there isnt a single recently purchased Auckland property for which rental income exceeds expenses at ~80% LVR. So RP is correct, it's all about capital gains boosting equity, in upper quartile Auckland anyway. No capital gains leads to this -> https://www.youtube.com/watch?v=M5QGkOGZubQ
Ah, but then you don't get the fun of talking to Real Estate Agents, arranging tenants, performing maintenance or paying contractors to do it for you, worrying about whether the tenants are trashing the joint. So dull, sitting back and being paid twice a year and maybe spending a few hours reading the company results.
I'd say it's excellent, compared to if you bought in Auckland in 2011 with a 10% deposit (45k) on a $450,000 median house, you would have only made an extra $400,000 plus all the money you would have saved on rent which would only have returned %1000. I wish people would learn that housing is a very, very bad investment, and you should only ever buy shares.
Or you could have borrowed a thousand dollars in the 1990s and invested it in Apple. The return on that investment is infinity percent. Because percentage return is (old price-new price)/initial investment. The initial investment is zero so the return is infinity.
This is why calculating returns using leverage is f*ing stupid if your point is to prove the superiority of an investment class.
You miss the point. I gave Genesis as an example of a safe, yield share to compare against a low-yield property. You could leverage into either. My point is that if you are not getting capital gains then you could get a low-risk return of nearly 6% after tax. If property can't beat this then why put your money there?
If you want capital gains, then you could go for a high-risk growth share like ATM - up 326% in the last 12m (without leverage!)
They are not missing the point, they are just poking fun.
You see Genesis is not 'safe', at least if risk is volatility it isnt. If you went big and geared up Genesis 5 to 1 youd already have faced two margin calls and likely bankrupted once all in its brief life of 4 years.
In property no such thing happens.
The general statement here is stocks outperform property but geared property outperforms geared stocks because you can gear property more than stocks due to its relative safety.
If you're happy with that kind of risk, then there's no reason you can't do the same with shares. ASB will let you buy Genesis shares with a 70% LVR, so pretty comparable to investment property.
Admittedly, the interest rates are a little higher, but they are likely to be tax deductible.
https://www.asb.co.nz/content/dam/asb/documents/asb-securities/2017/asb…
Yes, in just the same way as property. Obviously both have risks, especially if you leverage either. Personally I have roughly equal property and share holdings, and something like 25% LVR overall. I'm pretty conservative really, although I'm not averse to holding risky stocks.
Good luck finding a property at current valuation that provides a return on equity of 5% after expenses and tax. And remember that shares also appreciate in capital value - typically at a higher rate than housing as they relate to productive industries.
And yes, I tax-deductibly leverage into shares when I see a good opportunity and losses can be offset against personal income (property is losing this soon).
The property market has been crashing since 2008, just as the prophet Bernard Hickey PBUH, predicted. If you can't see that this is a crash you must be so blind, like the blindest man on earth. It's all about price, once the price goes up, a crash is always guaranteed, and it will be big, the biggest ever. It's even worse now because property inveculators have a minimum 40% deposits, and stand to lose 40% of the house price, when house prices crash to zero.
I heard that in the US if you don't want to py your mortgage, you don't have to, and the bank will even sell the house for you. When can we get some sensible laws like that in NZ. It will at least make a crash much less likely if people can easily walk away from a house that they never paid a deposit on, and haven't even been paying a mortgage on.
Our draconian laws in NZ virtually guarantee house prices will go negative.
Palmy Booming:
"GRAPH COMMENTARY
The median price trend is increasing strongly, with the volume trend staying consistent. The
days to sell trend has started to flatten. The House Price Index has had the strongest increase
over the past 3 months of all the regions (by quite some margin) with the twelve month
increase"
Actually the boom in Palmy is over already, thankfully. House prices are starting to decline so go look elsewhere. Too many new builds happening, both residential and commercial new builds as the banks start to tighten up and have cut funding. Smells like the start of a recession to me. Even ex-Aucklanders can't find a house to buy because of the strict new bank loan requirements.
The most up to date reinz stats disagree.
Record sales just last month with over 150 sold in PN.
Note listings currently around 170 on trademe so little more than 4 weeks of inventory, an extreme shortage which is seeing the strong price growth trend actually pick up speed
Perhaps another one of the unintended consequences?
"Foreigners are scooping up houses in New Zealand’s priciest areas while they still can"
https://qz.com/1299734/foreigners-are-rushing-to-buy-property-in-new-ze…
"A large Chinese real estate website has seen interest in New Zealand property jump by over a third as buyers rush to secure it ahead of a ban"
.https://www.radionz.co.nz/news/national/348861/realtors-report-spike-of…
If Auckland and Queenstown are the areas that have been attracting foreign buyers as has been widely reported, then the data doesn't support your suggestion.
Auckland up 0.2% month on month and -1.3%YOY.
Queenstown -13.7% MOM and -7.0% YOY.
Double digit growth in provincial regions: West Coast (25.7%) Manawatu, Hawkes Bay, Tasman and Otago. I don't think Hokitika and Denniston will be featuring to strongly in overseas buyers minds. :)
GN, have you got an insight into what’s happening in the London market? Attached from zerohedge, whom I always consume with a large grain of salt
https://www.zerohedge.com/news/2018-02-19/londons-property-crash-has-be…
Bobster, London prices have been dropping for at least 12 months. I have friends who have sold during that time. They did that stoopid move where the refused the early offers when the property first went on the market (because they considered them too low) and then a few months later ended up accepting offers even lower than that! They lost £75k
We want to sell our UK house pronto, but have tenants in situ so can't sell till Sept. Our property is in the South West, which is not in price decline yet, but certainly cooling. I have seen it myself but also had it confirmed by every Estate Agent i've spoken to. They're not in denial over there!
My opinion is that the whole market will continue to cool. This could result in anything between a stagnation and a massive crash.
It's the same everywhere in the world, sentiment is eventually contagious. London goes up, eventually so does the rest of the UK. London goes down...
However, this time *is* like no other. There's never been such a spree of foreign buyers in London before, there has never been such low interest rates and there has never been a Brexit! London was considered rock solid before Brexit, but with the risk of the city losing its financial passport in European markets, it might cease to be a major trading/financial hub. It won't happen overnight, but this could be the beginning of a major decline....currently no one knows what deal will be achieved and the UK gov are continuing to make a complete mess of the negotiations.
If somehow the UK pulls off a halfway decent deal with the EU, then that makes a period stagnation more likely. The UK does have a housing shortage, and the percentage of investors is no way near as high as NZ.
If the Brexit deal fails, I would expect house prices and the economy in free-fall for a few years. All types of investment has already halted across most industries in the UK, many major companies are already downsizing and catastrophe planning. No company can thrive or plan without having a clue as to what the future legal, trading, tax and economic landscape will be.
There will be opportunities in all situations for some plucky types, no doubt, but the uncertainty of Brexit is massively dragging on the economy. Prior to the referendum campaign, the UK economy was one of the strongest in Europe, and with growth on the horizon, might have been enjoying an even stronger economy moving by now.
The UK are years and years away from any substantive trade deals with anyone so, at least in the short term, it's hard to imagine good times for the London property market, or the wider UK unless some Brexit-deal miracle occurs.
Brits have a much longer history for their property market, so they have no problem believing that price declines can and do happen, there's no denial there, no religion of "housing always goes up".
There has been periods of foreign buyers and high immigration at various times over various decades and centuries. Booms and busts are an accepted phenomenon. Gordon Brown promised he'd ended them but he was epicly wrong!
The last time I would say that there was a denial/exuberance bubble in the UK it was the dotcom boom. And that was hugely about most investors not having any real grasp of what the internet could do or achieve and just getting totally drunk on the kool aid. Property investors in the UK never say the kind of blind-faith mantras that you get here, they always anticipate price cycles and are quick to cut and run if they don't think they will be able to see out the downturn.
TTP...NZ was spared from the ravishes of the last cycle down turn by the Christchurch rebuild and good trading relationships with countries that had better growth than much of the rest of the world, during the GFC.
If interest rates stay low in NZ, debt affordability remains the same, no further credit tightening occurs and no non-housing related economic shocks occur... then I am inclined to agree that the property market will simply stagnate over the next year or two....(excluding some minor monthly oscillations ;-) ) If Kiwi's have no reason to doubt the value of the property market and can hold on to property, they will. They're a tenacious bunch and they sure do love houses!
I just happen to think, at this point, all of those are pretty big ifs.
I actually think the principal reason we came though the GFC pretty well was that the Aussie banks had (up to then) been pretty well run and (more to the point) well regulated, and hadn’t feasted at the MBS and CDS troughs like most of their US and European counterparts. So they looked like a relatively good credit and could keep their international funding going. Plus Aussie was still riding the commodities wave driven principally by China. So our banking sector was kept in good shape.
Next time however, it’s going to be the Aussie banks (ie our banks) that blow up.
Rastus! It wouldn't be an option for me personally. We decided not to buy a house earlier this year and the money we would have put into a house has outperformed house capital gains. We calculated up mortgage, legal & moving costs + rates, maintenance and building insurance and renting vs buying and it was more or less neutral... plus the longer the property market plateaus the lower the opportunity cost it is for us to wait.
However, I do believe that many Kiwi's have an almost religious zeal for property. It's not necessarily based on logic or sound maths at all. The stagnation might go on long enough that the house "holders" are like frogs in the water being heated. At the moment though, whilst *some* cash is outperforming *some* property, there are still other factors (selling costs, tax liabilities, fixed mortgage penalties etc), so whilst things just bob along like there are, they wait. And underlying that, for many, is the belief that the market will rebound soon.
..nah not a poke at you.
Put yourself in the place of Mr Hubby. Against wifeys wisdom he went all in with property, geared himself up and now mums getting a bit p###ved that the family budget is getting screwed down.
Hubby was able to defend his great wisdom by reading the property rag headlines in Granny Herald to the dear wife each night...thus enabling him to reach peak excitement before turning off the light.
Now mother is getting really p###d. family budget is screwed with all that cash going out the door to pay the interst and fix the dog boxes he purchased. Hubby is getting worked up and takes most of it out on Interest.co.nz....despertely trying to talk up the market and get upticks.
But its not working...mums is getting grumpier by the day and the upticks are gettng less and less. He is getting tormented by retired poppy everytme he posts something.
He switches off the lights deflated...unable to reach any level of excitement.
Next say he lists.. ..
Yes, assuming he had not gone bust in the meantime. I think your analysis is subject to some survivorship bias
I mean, people who sold property in Ireland in 2010 and the US in 2009 (or upteen other places) didn’t do so cos they just “got sick of waiting”, they sold (or got sold) cos they couldn’t make debt service or the banks security was hopelessly out of the money. Your advice is, “hang in there you just can’t lose”. But you take no account of insolvency risk, which is surely the biggest risk for a leveraged investement?
I don't know why these poms think they know it all. Funny that they are not in their own country and choose to live in NZ. I'm not born in NZ but no way would I ever live in UK. I want my kids to grow up in a safe and friendly City. That's why we will keep getting immigrants who can afford to be in Auckland coming, like it or not. Only $10m to get in, it's loose change on a richness scale around the world especially Asia.
Was reading an article today about prices dropping in Melbourne. House sold for $20m in a central surburb, they were expecting $25m on 1200sqm land. We are no where near these prices and a much smaller geographic space. Still very cheap compared to Melbourne and Sydney.
Really makes it look ever more like a decision to allow foreign purchasing and to run immigration at twice the OECD norm is a calculated decision to sacrifice the chances of younger generations of Kiwis for one's own personal gain.
Hope young Kiwis don't forget how politicians have shafted them for profit.
Chessmaster why on earth do you always have to be so antagonistic all the time?
I'm not claiming superior knowledge, just describing cultural differences in investor behaviour. Would anyone dispute the different history between the UK and NZ housing markets? Not to mention the different tax and lending environment.
And as for why I live in NZ, I married a Kiwi. A Kiwi anglophile, who lived in the UK for 13 years in total. I have no parents so our kids only grandparents were in NZ. They had been visiting the UK for 2month holidays every year but a health scare meant they couldnt commit to keep making that journey. Plus for the kind of lifestyle we live, we actually get much more bang for our buck here than in the UK. I totally agree that NZ cities offer a safer environment for kids and we are absoluting loving the extra peace of mind we have now. But then I never commented on any of that, you just randomly inferred it during your keyboard mashing tantrum.
What has that got to do with investor behaviour? I was commenting on NZ vs UK property market behaviour not NZ vs UK quality of life.
You're so fighty Chessmaster. You need to step away from your keyboard and find some chill.
I think you hit the nail on the head when you said 'just describing cultural differences in investor behaviour.' Englisth to Kiwi to Indian to Chinese is all different.
I used to have a friend who was involved with bookmakers in the UK and his best performing outlets were always in areas where there was a high concentration of Chinese restaurants.. he said that it must have been the MSG's that made people walk out of the restaurants into his betting shops.
Chessmaster, I think this comment is completely out of line.
Gingerninja is a ‘pom’ and in my humble opinion she is one of the most informative, rational and entertaining commentators on this website.
Long may “poms” like her provide their valuable and insightful perspectives of NZers and the NZ housing market. People like her are giving us insular Kiwis the wake up call we so desperately need!
Is it unexpected for overseas buyers to have a last sprint in Auckland before the ban. If I was an overseas buyer wanting my bolt hole, laundering point, or free schooling and healthcare for kids in NZ I would get in now as well. Accordingly the glide slope is maintained with some late engine splutters before the engines are required to function on domestic activity alone.
Hoskings squawking on this issue recently seems out of balance with the "its only 3%" position.
TTP, since you were incapable of factually mitigating both internal and external risks posed in my previous questions, you cannot say it's safe for FHB's to commit hard saved 20% deposits on 30-year mortgages in the midst of this bubble.
You only have yourself to blame for having zero credibility.
The central bank rates of each respective country is influenced by inflation expectations in each country.
The inflation rate in the US was 2.8% in May 2018 and trending upwards. Whilst in NZ the inflation rate 1.1% in 1Q 2018 and trending downwards and at the lower end of the target 1-3% inflation target.
Mortgage interest rates are a function of cost of funds, and other factors such as a bank's desire for market share, loan growth, etc
Looks like a rather flat market in Auckland. Rather than taking a single months data and comparing, I recommend looking at a rolling three month average (if not longer) to reduce the odds of a conclusion that gets based on short term noise in the data. Mar-May 2017 had 6733 sales in total, averaging $872.6k. The same three months in 2018 had 6663 sales, averaging $860.7k. Declining sales numbers and declining prices is still the norm despite the one month upturn.
I'd wait a few months more before calling the market healthy and robust in Auckland. At best, the data indicates that the market is essentially flat with no real capital gains appreciation.
Bugger the market just won't follow the wishes of the doomster's maybe it will happen later right ?
Prudent investors expect a drop over this 3 year period, after 90% gains a drop just opens up more opportunities for a few more canny purchases......All the negative wishes for a collapse are just fanciful in an economy that is growing well, has positive imigration, low interest rates, stable Government etc etc
If you really want a collapse you need to wait for a bout of Foot and Mouth or Trump firing of a nuke or something equally massive that is outside of our control. That will rattle a few cages......
Prudent investors expect a drop over this 3 year period, after 90% gains a drop just opens up more opportunities for a few more canny purchases
"Prudent" and "canny". Those are emotionally sticky adjectives, but what do they actually mean? Would a "prudent investor" expect a property crash? Why or why not? Are you saying that "prudence" is based on "expectations"? But considering that most people have to little to no ability to predict the future, how are these "expectations" any different from "guesswork"?
How about I use the words Experienced or longterm or successful instead of 'Prudent' and as for 'Canny' we could use - smart or clever or opportunist ?? Looks like RP has stated a 5% YOY for Auckland could well happen within the next 2 years and that would be fine.
But considering that most people have to little to no ability to predict the future, how are these "expectations" any different from "guesswork"? My reply to that is I agree however there are cycles that economies and markets go through. When I've talked about cycles before RP thought I was talking about push bikes LOL. If you understand and live through cycles you can gain confidence to put you're money where you're mouth is and invest with expectation/confidence that cycles continue. It's not rocket science and Tony Alexander amoungst others economists often refer to them. I would define a cycle as the some of human reactions/emotions over a period of time that effects the price of an asset in property it's 9 years give or take 6 months. Within any of those periods there are always stuff like interest rate changes, droughts, immigration, political you name it but the outcome is very reliable time wise.
So to sum up I have expectations from experience and life investing since early 80's that gives me confidence having my money in property, along with tourism and forestry.
Guesswork is just that a decision that is just a guess..............
But considering that most people have to little to no ability to predict the future, how are these "expectations" any different from "guesswork"? My reply to that is I agree however there are cycles that economies and markets go through. When I've talked about cycles before RP thought I was talking about push bikes LOL. If you understand and live through cycles you can gain confidence to put you're money where you're mouth is and invest with expectation/confidence that cycles continue. It's not rocket science and Tony Alexander amoungst others economists often refer to them. I would define a cycle as the some of human reactions/emotions over a period of time that effects the price of an asset in property it's 9 years give or take 6 months. Within any of those periods there are always stuff like interest rate changes, droughts, immigration, political you name it but the outcome is very reliable time wise.
So to sum up I have expectations from experience and life investing since early 80's that gives me confidence having my money in property, along with tourism and forestry.
Guesswork is just that a decision that is just a guess..............
I see. So your future expectations are based on your past experience. Doesn't that contravene one of the first caveats of investing?
""Past performance is no guarantee of future results." You'll probably see the disclaimer on almost every financial brochure referring to how well products have performed.
And if you really want to model house prices based on past performance, a rule of thumb is that house prices have barely kept up with inflation over time.
C'mon JC.
That's a disclaimer...Something very different to an investment strategy.
I've been coding some neural investment models recently - as you may be aware, these are fast becoming the gold standard of passive investing strategy and are impossible to build without historical training data.
And if you really want to model house prices based on past performance, a rule of thumb is that house prices have barely kept up with inflation over time.
I actually do model house prices quite often for various clients and I can tell you that that statement is categorically incorrect. The RBNZ seems to think so, too.
https://www.rbnz.govt.nz/-/media/ReserveBank/Files/Publications/Bulleti…
That's a disclaimer.
That's right. A disclaimer to remove any responsibility. Effectively, a caveat.
I can tell you that that statement is categorically incorrect. The RBNZ seems to think so, too.
OK, I should have said "the relationship between increases in house prices and the CPI was similar until 1991". I'm sure that if the time series data were pushed even earlier than the 1960s, the relationship between house prices and inflation would be more stronger and more obvious.
But it does point to the fact that house prices in recent decades have little to do with the inflation construct, thereby understating the extent to which living costs have become worse over time for non-property owing classes, particularly those who have been born in the past 30 years.
Obviously you havnt read the Train crash series
https://www.interest.co.nz/opinion/94213/john-mauldin-continues-his-tra…
Exactly right Shoreman, I'm looking for the next opportunity to swoop on a bargain purchase. These guys waiting for crash will stay on sidelines for a long long time. Unfortunately the surburbs I look at have mostly buyers at the top end of the income scale. With my experience in Sydney and Melbourne, i know surburbs close to city do go up over longer periods and have much bigger jumps. They have had foreign buyer bans forever and hasn't affected their market much. It's those cities with jobs that keep attracting immigrants, shift from other cities and returning residents.
Retired-Poopy,
I'm after an update please. How confident are you of your predicted 5% drop by December YOY for Auckland?
If you are beginning to doubt yourself, don't worry - even a blind squirrel finds a nut eventually. At some point in the future there will be some short of global instability causing a fall. Who knows when or what, but fantasising about it will no doubt give you solace.
No doubt your confidence is based on a very tenuous grasp of housing market economics. Either that or just "feelings".
If a drop eventuates Retired-Poopy will be the blind squirrel that happened to find a nut. You can be the broken clock that is right twice a day.
Hmmm you seem a little salty.
Dont worry Im sure within a year you will be able to exercise half of your username and "BuyLow".
Is the problem that you are unable to "SellHigh" at the moment.
I can assure you my opinions are based on all the wide ranging facts, not just the ones you choose to acknowledge like many of your type around here.
I don’t normally share, but I’ll make an exception this time. I am ok if you also want to be DGZs #propertypornbuddy
Although I must insist that Gareth’s rules of romance apply
Well it’s the same postcode as me. Honestly, the number of times I have had to walk the neighbourhood wiping down the real estate agents sign...especially the ones with “sold” on them....doesn’t bear repeating. Mind you, in an area where the local shops close at 4 pm (a colostomy bag is only so big) I’m thankful for the exercise
My postcode is Auckland 1050.....you are being evasive, it’s really arousing my interest. What do you like....do you like.....townhouses...or you tell me, I want to know...I thought you lived close and we could...hook up..
I just want you to know....I have no preconceptions about who or what you are....when you are with me, I want U to be U....
But, you don’t live in manurewa, .do you?!
Dammit, I’ve done it again....too much, too soon...
BuyLowSellHigh, I'm bemused why the sudden obsession you've got with nuts. You might want to seek some help with that one. Anyway, as you well know there's always a possibility Auckland House prices could fall more than 5% by Christmas. If indeed they do, I dare say you'll spare no time in reminding me of how I suck at forecasting - right?
This is a real humdinger of a news story about house price alchemy.
Average homes in Australia may cost up to $6.3million in just 25 years , a bombshell study has revealed. Projections show median house prices will reach that figure in Sydney by 2043 - up from $1.03 million today.
Wow.
The surveyors made their predictions by analysing house price changes over the past 25 years and extrapolating.
This is a similar method of forecasting as demonstrated by our own venerable Ashley Church. It's like drawing a trend line through a set of time series data points.
Not really sure what this "news" is suggesting but if it is any indication of NZ's future, I have a feeling that NZ is going to be very strange with "average people" sitting around in houses that increase in price at a greater rate than the owners ability to generate income. A nation of Lotto winners.
http://www.dailymail.co.uk/news/article-5837525/Prices-average-homes-re…
Who knows cause we can't predict the future can we ? but we can have an expectation from experience. All I know is in 1970 the average house price in Auckland was $12k, by 1974 it was $24k, by the time I bought my first house in 1982 it was $60k now it's $840k ?
It's more likely to be correct than not so I'm more than happy to have some property in my portfolio......
Isn't the median just the one magic number in the middle. If the agency compiling the statistics didn't like that number. Could they not find "statistically valid reasons" to remove some sales to get that magic number to be what it needs to be? If the foxes aren't happy with the median weight of the hens in the hen house, Just kill a few skinny ones. Viola problem solved and the foxes can tell everyone that the hen business is going great guns.
There is a simple explanation for this upswing in price. Take example of a tennis ball being dropped from a great height, when it reached the ground it will bounce for a while and then gradually rolling off down the cliff. How much more house price is bouncing up and down is a mystery.
DMGs are eating their words and prediction and trying to spin the market data philosophically as thin as they can because they cannot believe that the market at large is picking up ... it's a pride thing and dreams gone bad after all the hopes from chasing Auction result and reading tea leaves.
Look for the trend from now till October and watch prices rise slowly folks. higher lows and higher highs ... even a school leaver knows what that means.
The only thing that could have halted this appreciation a bit longer was a serious attempt at KB ... but that proved to be dead in the water when everyone discovered that the ministries involved are run by noobs.
Now that KB is crystal clear, nothing will convince buyers to wait any longer like the fools did in 2010-2011 ...Market fundamentals cannot be replaced with wet dreams.
No hurry eh? ... time will tell .
Ecobird...I can only speak for myself (and I wouldn't considered myself a DGM), but if house prices start going up again, I will certainly hurry to buy. But house prices aren't going up again, and i'd be looking for a few months of reducing ToM and a bunch of other metrics before I feel that urgency.... whilst it's a cool market out there, I'll wait.
In the interests of full disclosure, nothing has come up to tempt me either, if it did, I still might buy.
However atm every month we wait at the moment is just more saving and savings are A. outpacing HPI by a rate of knots and B. providing a nice yield elsewhere. Surely you wouldn't suggest this is a foolish strategy while prices have basically flatlined? What do we have to lose by waiting at this stage?
Hi Gingerninja,
Therein lies the problem......
EVERYONE thinks they can tell when the market is going to turn - and then head off the rush. (It's part of gaming theory.)
BUT, in reality few can.
AND, by the time it's dawned on you that the market is moving again, everyone else is barrelling in as well - which explains why the housing market often gains ground rapidly.
INEVITABLY, plenty get left behind in the dust - wishing they'd got in "when the market was cool/quiet". (Competition makes it much tougher to find the "right" property.)
FINALLY, I will be relieved when you finally buy a property - and the sooner the better.
TTP
TTP, yeah, people are terrible at timing markets at the top or bottom. And i'm not trying to time the market to any exactitude either. I'm just saying that when the data shows the market is heating up again, I will be in more of a hurry to buy, than I am right now.
While the market is stagnant, I feel some breathing room to wait for the right place.
For me personally, there is ZERO chance of being left in the dust, I am watching every conceivable data point. There is no way that's going to run away from me. If a good opportunity comes along, i'm ready to pounce and I agree with TheMan2 when he says that there is good buying to be had at all stages of the cycle if you do your homework. As i've said several times, I don't believe that Wellington is over priced anyway so i'm not waiting for some amazing discount... I am waiting for the right opportunity.... and while the market is flat... I can take my time. I'm actually thinking about popping a few notes though some doors and see if anyone wants to sell any of the houses I like.
Hi Gingerninja,
I think popping notes under doors is an excellent, proactive, strategy. Avoid using REA's if you possibly can.
I hardly follow the Wellington market but I'm told there's a dearth of good family houses coming on - and that it's been like that for a very long time now. And there is a widespread view that Wellington's not particularly over-priced.
It seems that the city suburbs - like Kelburn and Brooklyn - are particularly sought-after and that you need to pay a premium to get in to them.
But as a cash-buyer and giving prospective vendors the chance of selling to you without having to pay a REA commission, I'm sure you'll score - and be delighted with your new home!
TTP
Your case is exceptional, you have invested money that is making more than what you are losing by waiting for the market until is comes your way. ... just like I am making multiples of my entire portfolio annual rents from investing a fraction of their value in the share market ...
If your investment is sound you can afford to wait for some time in Wellington , as per the latest property values in the city there... then no worries ... however you could risk overstepping the mark and could lose on properties you would have liked to own... houses are not just price as you know...
Ecobird. 100% agree and if the right place came along, I would compete for it within reason. I'm looking for a family home, not an investment cash cow.
As i've just said to TTP, I don't think Wellington is particularly overpriced anyway so am not waiting for a discount but rather an opportunity to create the dream home without crippling debt. I'm trying to buy into a premier suburb, and one that hasn't even gone up that much in price during the recent boom (compared to others). The old classic strategy of buying the worst house on the best street.... and in a coolish market, I may just get it for a good enough price to be able to spend more on the reno and less on mortgage payments ;-)
I don't think I would feel the same if I was buying in Auckland right now. We did look at buying in Titirangi in 2011, and back then, I wouldn't have had a second thought about buying. Prices looked good in 2011. Prime buying time. However, we stayed in the UK for another 5 years and bought there (also a great buying time).
Credit criteria tightening; interest rates to rise from here on in; Chinese buyers ban coming (oh, sorry "Overseas buyers") next month; negative gearing stop soon; economy slowing; construction activity declining; sales flat, prices flat in Auckland. Crashes are for drama queens. Whipsaw decline more likely and happening. Prices follow sales down. Auckland sales 25% below 2012. Prices will drop after overseas buyers ban comes in, probably by 10-15% in August-October period, compared to 2017. Expect owner occupation in Auckland to be below 50% when next census figures finally appear
Your last point is interesting, I'm waiting expectantly to see what number of empty homes we have around the country, it was 20 odd thousand registered as empty in Auckland at the last census,I wouldn't be surprised if that number has doubled (not sure how many empty nationally). I'd be doling out a dose of "please explain" to the previous incumbents, and that empty house tax that was mooted and rejected recently, that'd go straight back on the agenda.
It doesn’t matter one iota whether market median prices are going up or down if you are looking to buy.
What matters is what property you buy and how much you pay for it!
In every market there are heaps of opportunities to buy property at below true market value and you can even improve its value in several ways.
The negative posters on property were talking about huge price drops 8 to 10 years ago and we all know that those experts were totally wrong.
Yes if you live in Auckland I would be very wary but most of the country provides excellent opportunity to become financially independent thru property if you know what you are doing.
HO! When have I ever said that Auckland prices will continue to grow.
I have always said that they were overpriced.
Rental returns are negative so I wouldn’t touch them with a barge pole as an investor.
You make money when you buy so buying and relying on capital gains is not for “The Man”
Gordon, I understand CHCH prices are still rising despite it being so cold, all the shaking and no job opportunities.
Keep talking it down Gordon as I am aware you are starting to look for the opportunities!
Challenge still there for you Gordon, are you willing to take it up?
Na, because you know you will lose!
My goodness – what a carry on.
I still think the key drivers of this rather enthusiastic residential market have either been removed – or at least to some degree somewhat diluted.
Thus it would seem logical to me that in the short, or medium term – prices at best will remain static, or probably continue their softer tone.
As for a ten year time line – barring any black swans, inflation will probably see to markedly higher prices – and waves of regret by those who did not act.
I'm not sure if market is going up. It is more like people are cashing out. There are many who want to and are selling their houses without listing them. An agent has contacted me if I'm interested in buying a house with CV 1.85 million for somewhere between 1.3-1.4 million. This house in a very nice suburb. we are considering.
Cheers.
The most up to date reinz stats disagree.
Record sales just last month with over 150 sold in PN.
Note listing currently around 170 on trademe so little more than 4 weeks of inventory, an extreme shortage which is seeing the strong price growth trend actually pick up speed.
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