I am surprised (well perhaps not that surprised) to see that this article is ignoring the apparently dramatic turn-around in inventory which has been taking place in the last few weeks, which may well render the conclusions made above redundant.
Inventory (as measured by houses for sale on realenz.co.nz - I do not include lifestyle in this analysis) dropped more or less consistently from February onwards, but the rate of decline slowed markedly coming into June, and by about June 18th the decline had levelled off.
An overall low in listings appears to have been hit on Wednesday 24th June at 42,150.
Since that point listings have literally shot up - a week later they now stand at 44,517 (they rose 360 overnight), which is a substantial 5% jump in a week. It appears inventory is bouncing in a dramatic manner.
If we discount the fact that the data set has been corrupted in some way then one of 3 things has happened - new listings have flooded on the market, buyers have disappeared or both things have happened simultaneously. At any rate a new inflection point may well be upon us.
This is also being manifested in the number of houses for sale under mortgagee terms - inventory here also appears to be jumping, and it looks as though a new high will be set for this metric in the next few weeks (it is worth noting that Alistair Helm called the top in this metric some time ago - this call looks to have been premature).

The first few days of this bounce have been caught here:
http://www.interest.co.nz/charts/gallery12-60.asp

Andy,

I a delighted to see the attentive manner in which people are analysing the statistics of the website, however I need to provide some clear explanation to the numbers.

We have experienced a technical problem in terms of the dynamic reporting of listings on the site which has occurred over the past few days. This is showing a higher number of listings than there are actually on the market due to duplication.

This has been caused by a corrupt data load file which we are fixing at this time. I therefore can say that the raw number of listings being featured by real estate offices has not seen a significant change in the past week.

The report for June as in all the reports from the realestate.co.nz are sourced from data in the data warehouse which is not affected by this issue as this issue is caused in the front end application of the website.

This is certainly the case in Wellington.

People are still paying up to 10 percent above 2007 valuation prices for places. I know so because I am an active buyer in the lower to modest price range and I am simply not prepared to pay these prices unlike some people who obviously still are.

This is just crazy and IMO a straight reflection in the complete dearth in good stock at reasonable prices and many first home buyers sick of renting and knowing the government and the media is doing all it can to add fuel to the property fire. Plus the investor vultures are still circling everywhere, which is just wrong. They need somehwere else to invest. But why would you pump your savings into super or bank deposit funds when you are being taxed heavily to do so when you can buy another flat or two and its tax free. I don't blame them, I'd be doing the same.

Easy answer, Harry! Jack up interest rates to nose bleed ( i just love that expression!) levels, and give the vultures somewhere else to get a good return.

Hey, look at Tony Alexander!

http://www.stuff.co.nz/business/opinion/2553184/Housing-shortage-looms

.... "we have seen our expectations play out with average house prices in New Zealand down only 9% in the past year and monthly numbers showing a surge in turnover since March with renewed interest from investors and also some first home buyers coming back into the market. It looks like prices have stabilised.

... taking into account the upturn in the housing market, we have now passed the point where people need to pay a lot of attention to what us economists say about the housing market. The housing market has done its decline and now we are simply looking at an environment over the next few years where prices rise relatively gradually under pressure from above-average population growth, below average interest rates for the next 12 to 18 months, and a shortage of dwellings.

The opportunity for investors to pick up an absolute bargain has by and large passed .... our recommendation for first home buyers to sit on their hands has also passed its use by date now that prices have stabilised.

... the interesting part of New Zealand's housing cycle has now been and gone. Over the next 2 to 5 years our housing market commentary is going to be along the lines of how wonderful it is that New Zealand escaped the price crashes overseas, how house prices are still overvalued, how price gains will be present but limited, and one other thing which is soon likely to dominate housing policy."

You just have to admire his chutzpah!!!

The regular economic experts on this blog have one only solutions to every problem, Hike the interest rate or add more taxes. No wonder NZ is in a financial mess. as per this site the NZ public is stupid, perhaps the time for reflection is due now.

Harry I agree with you, as a potential buyer of my second home the lack of choice out there is stunning. Some will just be desperate to get hold of their first property and with all the media hype that it's a "buyers market", talk of interest rates rising and lack of listings possibly pushing up prices it's probably not surprising. In my opinion it IS NOT a buyers market until there are a flood of new listings at much lower prices and houses sit idly not selling for months.
If the FHB keep their powder dry I believe the landscape will change. Some properties in Dndn not even investors are touching and they'll pretty much buy anything and rent it out. Or they did. Now rents are dropping or stabilising.

as i keep harping on - if the market has dropped 10% while int rates are at a record low and unemployment is still mild, whats going to happen when the inevitable happens and int rates are > 8% and unemployment is close to or into double figures????????? You can only dress up mutton as lamb for so long. Mortgagee rates have quadrupled, despite the economic environment for housing still being relatively benign (actually more benign than during the boom years as int rates are artificially low). Wake up - property is a shite investment unless you can get 8-10% yields. ANything less and you will lose money.

If there are problems with the stats, then this is really a non story.

I'm in the same boat as Harry and Matt. Every few weeks I have a look at a property or two with the view to buy as a home, but get put off by what's available in my price range. I have enough depost to stretch a bit higher, but the repayments at current interest rates (let alone higher interest rates) make me choke. Over 50% of our household income would be taken up just repaying a mortgage. At that point I say "sorry, life is for living, not for being a slave to a mortgage".......meanwhile I'll continue to save the difference between what we pay in rent and would pay in mortgage/rates/insurance etc. Oh, and I get to have a life too!

Rob,

To answer your question - there is no problem with the stats in this report. The issue is a display script on the site in the past few days. The team at interest.co.nz have been recording these from the numbers shown on the realestate.co.nz website and this is what Andy had been refering to.

The data warehouse and the website database are two very discrete environments. I would not release these reports and share them as I do with economists if I had the slightest hesitation with the statistics.

The latest thread reads NZ=EASTERN EUROPE hmm so after reading the whole article and comparing eggs with eggs/all the above theories could be QUASHED if one wants to compare the USA housing market and its death dive,so 2 more years will be when the chickens settle .Bernard whats your gut feeling on your latest heading above.

And, by the way, jimmy, I actually agree with your sentiments. I had hoped that for just once in our history we had elected a 'leader' that was self sufficient enough to make the hard decisions for our collective good. I can only assume that in the absence of his using this job as a stepping stone to the future, that upon taking office he realised that things were so God awful that he has been blinded by the headlights of doom coming towards him.
Cheers.

I think rising costs of living will tip many struggling to pay their rent on low incomes or benefits over the edge. This will cause landlords to have to start drastically reducing rent as they have started to do in some areas. More properties will come on the market as distressed landlords cannot meet mortgage payments. At least that's what I'm hoping, in NZ landlords have been a cartel for long enough.

Limits on the supply of housing to the market will only place upward pressure on prices if demand is strong
I suspect that there was a surge in demand in the first few months of the year, but that demand will tail off a bit now, especially as unemployment continues to rise.
At the same time, I think supply will increase a bit as mortgagee sales rise and spring comes around
So I think on balance prices will remain flat if not drop a little further

Janet: I think there are already better places for "vultures" to get good returns....hedge funds etc pay way over 20% per annum....

Mind you,

"Between 2003 and mid-2007, Quotable Value's house price index jumped 74 per cent." thats an insane amount in 3.5~4 years......

Janet: Raising rates to make noses bleeds would effect "real" households and not just landlords and cause increasing defaults of some of those "real" households.....My home is where I live and not where I make money by sleeping on it, its a place for my family....Anyway if you raise interest rates significantly, the lenders who are the speculators/hedge funds move in and reap those returns, while families struggle with food and heating bills, sorry thats plain loony IMHO. I do think (or I am coming round to think) that a house sales tax/land tax of some sort is starting to make sense. If you want to nail the "investors" and make them go elsewhere I think its at this point of the cycle you need to strike....at the end of the day I (and others) want somewhere to live so making it un-economic to speculate in the housing market hence keeping its prices out of a bubble does not effect a home owner in fact it probably means more home ownership for families....Also we need a serious clean up the financial sector, Gareth Morgan etc goes on about how opaque it is, in fact border line fraudulent....and hence risky....the finance sector disaster, the ANZ CDS debacle, that should never have happened....until the Govn fixes that sort of behaviour ppl are going to see houses as safer investments....and I cant blame them.....if you want productive investment, make it safe from the sharks so all you are doing is exposing your capital to the true risk....and you can price that yourself.

regards

Thing

@Sharonv: I've caught your missives previously and appreciated your view from a distance. I do live here, and having just spent a few minutes trolling through some of the post on this site from last night, I can only depair.

House prices have nothing to do with investors - biggest capital gains have always been in areas with 0% investors. The overlap between properties investors want and properties owner/occupiers want is too small to have effect.

House prices have everything to do with town planning. Auckland City is committed to a low density city of freestanding houses (being controlled by people who grew up in Auckland when it was a provincial town who want to keep it that way). This directly leads to higher prices. Auckland City introduced PC2 and additional levies that stipulated the cheapest 2 bedroom CBD apartment must be $500,000. This year PC 196 stipulated 20% of Newmarket apartments must sell for $900,000. These prices are set by Council's Plan, not by 'property investors' or developers.

Please get past these pointless (and dangerous) witchhunts.

There is still a lot to play out in the 'real' world and while house prices appear to have stablised, its just a mirage before the downward trend starts again.

Unemployment is still rising and debt defaults are starting to hit home. This is already having an impact and there is no escaping the flow on effect.

http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=1058...

How many of these businesses would have their home as security?