The median selling price of homes in Auckland was $800,000 in January, down 7.3% compared to December and down 2.4% compared to January last year when the median in Auckland was $820,000, according to the latest figures from the Real Estate Institute of NZ.
The REINZ said Auckland's median price in January was the lowest it had been in any month since February 2016.
Within the Auckland region, price trends were mixed, with prices down compared to a year earlier in Rodney, North Shore and Papakura, while prices were up in Central Auckland, Waitakere and Manukau.
Sales numbers were also down in Auckland, with 1152 homes sold in the region in January, down 2.8% compared to January last year.
Prices were also weaker in Canterbury, where January's median price of $431,900 was down 0.7% compared to January last year.
But prices tended to be firmer around the rest of the country, with all regions except Auckland and Canterbury posting annual increases in January compared to a year earlier and five regions - Waikato, Manawatu/Whanganui, Marlborough, Otago and Southland - posting record median prices last month.
However January's median prices were lower compared to December last year in in seven regions, Auckland, Bay of Plenty, Gisborne, Hawke's Bay, Wellington, West Coast and Canterbury, and higher compared to December in all other regions.
And the median price across all regions except Auckland was down 1.4% in January compared to December while January's national median price $550,000 was down 1.8% compared to December.
Across the entire country 4372 residential properties were sold in January, down 2.5% compared to a year earlier.
Across all regions excluding Auckland, sales volumes in January were down 2.4% compared to January last year.
"January has pointed to a two-tier market continuing around the country, with Auckland and Canterbury experiencing a slow down in price, but the rest of the country has seen strong price growth," REINZ Chief Executive Bindi Norwell said.
The interactive charts below track changes in the median selling prices and in median price growth, in all regions of the country.
Median price - REINZ
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Median house price growth
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131 Comments
Reserve Bank warns: 'It's not our job to protect you from the housing market' https://www.stuff.co.nz/business/99408539/reserve-bank-warns-its-not-ou…
Market forces are now flatlining the expectations of rearview mirror obsessed speculators....
He's unable to login right now but he did send me this text:
Once again "The Man" is right and the COL is wrong!!!
In Chch up means down so prices are actually very healthy!!!!
Property is the best way to get ahead!! Especially in provincial towns ravaged by earthquakes!!!!
Properties in the high end of the market are beginning to pile up, while a lot of low-mid point properties were withdrawn from market prior to Christmas - possibly being placed on the rental market as prices were not achieved. A lot of rubbish stock around at the moment which looks as if investors are trying to get rid of properties. Houses that are in excellent condition are still selling, as are properties that are keenly priced. Otherwise, they're simply just sitting there for months.
Another really weird thing I am seeing is a lot of properties that sold within the last 12-18 months are back on the market. Does this suggest mortgagee sales from overstretched buyers, or naive investors that can't fund the negative yields? Whatever the reason, its very odd.
Consider an owner occupier who bought in March 2017.
1) At March 2017, the median house price in Auckland was $905,000.
2) The current median house price in Auckland is $800,000, so that is a 12% decline.
Then consider that they had a deposit of 20% ($181,000) and borrowed the remaining $724,000 to purchase the house in March 2017.
Assuming an interest only loan, that equity is now valued at $76,000 (house value $800,000 less mortgage balance of $724,000). That is a decline of 58% from their initial deposit.
Now how long did that owner occupier household take to save that $181,000 initial deposit?
The owner- occupier is fine if they can continue to meet the debt payments. If there is a recession and an income earner from the household becomes unemployed, the household may be unable to continue the debt payments and be forced to downsize.
If the house price falls a further 10%, then the house value is below the mortgage and if the household experiences a job loss under these house market conditions, and forced to sell, they will effectively lose all of their initial deposit. They could conceivably go into negative equity if house prices fall further than 10% and still be left with debt outstanding to the bank after the house sale.
North shore city -5.3% YoY on the HPI.
Rodney district -3.8% in 3 months, (-2.2 YoY) ie, its a big fall, but recently.
The HPI graphs show a definite fall, not the wandering back and forth in the noise band like they have been for the last two years..
All the auckland districts have fallen at least 2.2% in the last 3 months on the HPI, with North shore -4.9% and Rodney -3.8%, the others in the -2.2% to - 2.6% range.
Just pull the blanket a bit further over your head, you'll be right.
At which point prices will be rising again, it'll no longer be a "buyers market", and you'll be back to saying that only a fool would get into the market now as this isn't sustainable. Mark my words. And if you're waiting for a 10% drop you're going to have to wait for a GFC.
-7.3% since December 2018. So down 7% in a month. Not sure if that's apples to apples or just skewed due to lower quality stock being sold.
The house price index is supposed to adjust for the quality/type of the dwelling and that's down "-2.1% year-on-year" on a same house same street basis. So there is no way the spruikers can spin this positively.
Source: https://www.reinz.co.nz/Media/Default/Statistic%20Documents/2019/Reside…
The January Auckland median is lower than the January median of 2018 , lower than January 2017. The last time Auckland medians reached this level was February 2016. Auckland median is now 100000 K below peak .So the housing shortage according to Bindi is not in Auckland but almost everywhere else, where prices are actually increasing.
Foreign buys are going to have a massive effect on the market, but only at the top end because how many Kiwi's are in the $2.5M bracket ? Expect the sub $1M market to keep going strong, buyers have to live somewhere. Big falls at the top end is going to skew the median figures big time.
don't want to burst your bubble here sharetrader, but we are looking at median?
there is a massive emphasis on affordable homes now. this will be having a significant impact on median price. as an example I know of one builder that was building high-end houses 12 months ago. They are now exclusively building kb, and have 100+ units on the go.
It is astounding the similarities between the NZ market and Australia, with several months lag. Sydney hit a period of stagnant prices, followed by small falls, at which point everyone claimed strong fundamental (high immigration, low rates, high employment) would result ensure that any falls would be minimal.
Fast forward to today and the rate of declines in Sydney continue to accelerate with predictions now reaching 20-25% peak to trough falls. It started with Sydney but is now spreading across the rest of the regions in Australia.
Prices gains in both countries weren't based purely on "fundamentals". They were amplified heavily by the desire for tax free capital gains. Remove those capital gains and the demand picture will look very different.
I really hope that FHB take note of what has occurred in Australia and sit out over the next couple of years, or they risk seeing any equity they put in evaporating.
Yes, I agree. Seems to be about a year lag with Sydney this time but closer to Melbourne. It’s down about -10% in Sydney (some places in west Sydney over -20%). Even though the RBNZ gov is saying publicly that it’s likely Auckland and NZ overall will be different, does he reallllly think that? Mind you, the RBA is STILL also saying publicly that everything’s fine in Australia...
The ideal situation the RBNZ would like to steer the market towards is several years of stagnant prices to return prices to more affordable levels.
Its very hard to manage this after such a short period of sharp price appreciation. Lots of investors are on thin returns that only make financial sense with capital appreciation - falling prices make the investment feel far less appealing. Lots of FHB rushed in as they were scared of being "locked out" of the market. Lots of boomers holding on to oversized family homes as they kept appreciating in value.
Stagnant/falling prices will impact the demand from all these groups. If the RBNZ can navigate a slow inflation adjusted deflation of prices it will be quite an achievement.
It certainly would be an achievement. Has a soft landing ever been achieved from the heights of 9 times price to income? That’s higher than Ireland was before their bust, and interest rates are already very, very low. If the market starts dropping quickly, I guess it’ll be a further drop in rates and a massive round of quantitative easing.
Stagnant prices will not return housing to affordable levels, unless incomes rise dramatically to close the gap. And in our low wage, low productivity economy (thanks to the relentless importation of third world labour) that will never happen. We need a 30-40% reduction in prices to even bring NZ housing close to the realm of affordable - probably more considering NZ is the second most unaffordable housing market in the world.
Down 12.7% in Sydney now, with forecasts of 25-30% drops. Melbourne not far behind with 9.2% falls. Brisbane starting to roll over now as well.
https://www.macrobusiness.com.au/wp-content/uploads/2019/02/Capture-202…
Not just Kiwis - Australians (especially recent migrants) might head across the ditch to look for work. After all, we have a Govt funded house building programme, whereas the Australian development market is drying up. I lay odds on that "builder shortage" won't last very long.
I personally think it won’t be more than 30% in Sydney as I can see policy makers pulling out all the stops to ensure it doesn’t turn into a complete meltdown.
For NZ I’d say we will see less severe drops, but still within the 15-25% range in the most over valued markets.
Some FHBs are waiting in the wings (like me), but the data has shown a increase in lending to FHBs in the last 6 months which is worrying. Overall I blame the entire situation on growing up with little to none formal finance training in schools. As a society I think we are not that financially literate...
Why would the owners of the country want the population to figure out they're being milked day in day out on a mortgage farm. Stick to the important subjects like mandatory Maori language lessons and social studies.
The politicians love poor people so much they want to create more of them.
It seems Banks are still willing to lend at high LVR, and there are still people being tempted to enter the market. If price falls start accelerating FHB won't be able to enter the market (unless they have large deposits) as Banks will stop lending at high LVRs very quickly.
Schooling prepares you for a job, self education prepares you for life.
Lots of essential life skills are not formally taught at schools. If you choose to go and learn them yourself - you'll be much better off to make informed and higher quality life decisions.
Others passively choose to remain uninformed - as a result seen many people make poor quality life decisions due to being uninformed. If they had been informed, it is possible that they would have avoided getting themselves into a bad position where the only choices at that point were miserable or less miserable.
Here's a pretty simple book which covers a lot of areas to avoid -
https://www.amazon.com/How-Ruin-Your-Life-Anthology-ebook/dp/B005MIDDQ8…
To be fair, the Christchurch city data is pretty stable. I may be biased now as I'm in the process of buying a house there. Nicer house than we are renting at the moment, mortgage payments will be less than current rent. Not expecting the value to increase in the next couple of years.
Looked to me like prices are very similar to 2016 RVs still, we are buying ours at a slight discount to RV. Plenty of activity at open homes and quite a few quick offers made on places we were interested in.
Indeed, Christchurch is a working example of what throwing restrictive land-use policy under the proverbial bus can do for Supply. And the insurance helicopter munny meant that the rebuild was not all bank-financed. But not, unfortunately, a circumstance that can be transplanted to - say - Orcland.
yes, and I've noticed Christchurch house prices, for houses that are approx 4 to 6 years new, are selling at prices that equate to today's replacement price, ie cost equals value, which leaves very little margin for builders unless they strip more value from the house. Indeed many of these older new homes have have features that are absent from the same m2 homes built today.
Been looking for a family member currently in Christchurch, to find quality construction (to avoid EQ historical issues) plus good location in Christchurch is so hard ...limited quality stock to consider..compromise and still pay a premium is the current situation. So stats don't tell the whole story...
And no not everyone considers a new subdivision with water table issues issue further out a decent location...
When you look at the data it all points in the same direction - the Auckland market is falling. Prices are down, volumes sold are down, inventory is up, days to sell is up. It’s just a question now how far and how fast the market falls. I’m inclined to agree with the small decline/plateau crowd but there is a case for a bigger decline. It is just lucky (or unlucky) that interest rates are so low. If mortgage rates were 2% higher we would be talking about a 20%+ fall.
You were warned by me over year ago that the market in Auckland would be flat or falling and so it has come to pass.
Prices rising in small towns or in other areas is of little significance. Auckland relentlessly drives the whole market and it is foolish to think otherwise. Those other areas will also slowly flatten out and then fall under the gravitational pull of Auckland and the Australian/NZ banking system.
Get out of residential while you can and be happy with a smaller profit, or risk losing it all.
Many on this site have been warning and it's blindingly obvious this is only the start. NZ'ers need to understand that MSM commentary comes from vested interests..their opinions are nothing more than short burst of advertising - and so many have bet the house on this published rubbish. The real news is on this site and sites like DFA.
A rush for the exits will begin very soon....and the 30% drop won't seem very far fetched (oh except for Palmy and Chch i'm sure)
There is an issue across Senior Mgt in both Govt and Public. They earn well and are very happy with their lot. Further down the food chain joe middle class sees all sorts of issues (including inefficiently and dopey policy). But try and get something done and there seems to be zero motivation from above.....no one in these senior roles seems to give a hoot - "don't rock the boat baby I'm riding out time in my cushy position and want to keep it that way until retirement". Their lack of concern for the greater good is a disgrace.
ZS, from your viewpoint (a speculators perspective), wouldn't this be a good time to buy on the North Shore whilst prices are falling? Do you now also think this is just the beginning of something much bigger whereas no area (except Auckland City - Waitakere) escapes the knife?
House prices are falling and there is no recession. Growth is slowing in all economies and no ammunition for economic downturn. Imagine if we had a recession and people started loosing their jobs how will they service their absurdly high mortgage. Even if RBNZ reduce rates it won't bolster the housing market as joblessness will rise during a downturn.
Expect further falls in house prices this year...
"China has introduced jail terms for operators of "underground banks" illegally helping tens of thousands of its citizens transfer money out of the country to buy property overseas, in a move developers warn is a big blow to Australia's real estate market.
China's Supreme Court quietly introduced stiff penalties for illegal currency exchanges at the start of the month, in a further effort to stop capital from leaving the country. China's leaders want to prop up the slowing economy, stimulate the local property market and prevent a further sell-off in the domestic stockmarket.
The move, which imposes jail terms of five years or more for offenders, would target the operators of so-called "underground banks" which facilitate illegal foreign exchange and cross-border trading. Tens of thousands of middle class Chinese use the services to funnel billions of dollars out of the country to buy property in Australia, New Zealand, Canada, the United Kingdom and other countries."
https://www.afr.com/news/world/asia/further-hit-to-australian-property-…
Unless of course the gov't has a hand in it.....I doubt very much any factory can have any autonomy in a communist country.
I think pricing in the regions will be very sticky on the way down. If Auckland corrects big time and reverts to some sense of normality, those “refugees” who bought in the regions may see Auckland being viable again and look to sell up and move but will end up asking too much/being stranded with a house they struggle to sell.
Rest of NZ lagged Auckland on the way up, because early doors Auckland restricted land supply more than anywhere and increased rate of capital gain. And then late-2016 Auckland opened up a massive over supply of land and price started to decline, a decline even whilst high price growth is the norm across NZ. The lags did not occur due to mysterious forces.
Couldn’t reply until now as I have been at 2 different auction in-house venues.
Did bid on 4 different properties and didn’t get any!!!
Doesn’t worry The Man one iota, as if I can not buy well under value then I don’t bother!
Actually have got one of our properties under offer this week, as not the best area, but did buy very well and have made a very good profit.
First house sold for a long time.
Don’t give a rats about Canterbury prices as our rentals are in CHRISTCHURCH!
The auctions today were very interesting with quite a few passed in but the ones that sold were achieving very good prices.
An old weatherboard home approx. 100m2 in an average area of Christchurch achieved over 600k so it does show that prices are holding up very well.
Property Bears can say and hope what they like, preach doom and gloom to property investors but at the end of the day, returns are very good and we are providing a necessary service to NZ!
Even for Canterbury being down $3000 over the last year is hardly devastating when they have gone up by plenty and if you are positively geared Rental wise, then what is the problem?
Nothing!
Below mentions that is 35 months low
https://www.landlords.co.nz/article/976514341/auckland-prices-at-35-mon…
So the process has started and it is a wait for that that push to accelerate the fall...when it will happen to wait and watch... ..
Well, if we are to believe TradeMe there’s been another 100 Auckland listings added in less than 24 hours.
It may be that for the first time in a long while the key driver may not be interest rates, employment numbers, immigration, and economic strength etc etc – but instead, simply “supply”.
Dusting off Economics 101 – supply>demand =
REINZ statistics are among the best we have but they are still pretty terrible really. Unfortunately they are telling a story on the surface that will create a self-perpetuating downturn. The headline says 'falling house prices', people lose confidence, then it becomes the loss of confidence itself that depresses prices.
Seems obvious but median price doesn't fall only because last year's median house is now worth less than it was, but in this case it's more likely due to a lot of new, cheaper properties being introduced to the market. In my experience, established dwellings are holding up very well, but when a suburb is flooded with new units and townhouses that is naturally going to reduce the median price.
If last year's median house was nicer than this year's median house, then a fall in the median price is not really symptomatic of 'weaker' market conditions but rather of the fact that the makeup of dwellings has changed. IMO this is what's actually happening right now.
Auckland's market is nothing like Sydney. People who bang on about how it is, and that similarity must extend to a housing 'crash', are either being ignorant or have an agenda. Beware.
Auckland may be about to undergo a transformation towards apartment and townhouse living that Sydney experienced in the 1960s and 1970s. Market statistics there are now broken down between homes and units for the simple reason that they are different markets and a single median price, like the one REINZ produces, can be very deceptive.
Our 'downturn' here, at least to date, seems to me to be more about introduction of cheaper properties than existing properties losing value. Yes, I see the evidence of it every day.
I live in the old Rodney district. Prices for existing properties are not dropping anything like what is implied by Auckland wide figures. What is happening, however, is a flood of cheap sections going in at Milldale, Upper Orewa, Red Beach and elsewhere - hundreds and thousands of sections going for $375k-$500k. Do you think that might have a little something to do with a fall in the median price where existing dwellings usually start at around $800k?
That isn't to say it won't become a fully fledged downturn for existing homes, but if it does my bet is that it will be due to a large extent to people misunderstanding what is actually going on right now and then acting based on that misinterpretation.
Well said am_fek, we are up in Puhoi and its business as usual. Nothing has changed really, you still need a good job and the ability to repay the mortgage. There has never been a bad time to buy in NZ if your in it for the long haul, 15 years later your always ahead in the game.
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