We'd very much like to see that fall in prices, but the problem with your prediction is that the likes of REINZ are continuing to perpetuate the reality distortion field, so buyers still believe in these grossly inflated property prices. The mexican standoff between buyers and sellers rages on.

We've been watching the housing market since September 2007 when we arrived back in NZ cashed up after selling our house back in the UK. We were lucky enough to have fought the urge to purchase at the November peak and have been looking ever since waiting for the right time to strike. At least with figures like this QV we may see seller expectations fall with each new report and hopefully prices along with. In the meanwhile, we'll just keep putting in those low offers to take your predictions into account and hope for the best.

Allen,

My original forecast was for a 30% fall in the next two to three years. The maximum envelope for that forecast is by the end of 2011. Let's see. What do you think prices will do by the end of 2011?
cheers
Bernard

Allen: So are you saying it will never happen, or the timing?

circa 2015~2016 crude oil supply/production looks way down on where the demand will be triggering a second huge global recession....or maybe just a second freefall if we have never recovered from this one....I base this on the last two spikes where oil / energy purchasing got to 6~8% GDP both triggered recessions...it will happen again...

this is the interesting piece,

http://www.youtube.com/watch?v=jzsEf6UVgUM

Going forward the financially stability and prosperity our parents enjoyed will be a thing of the past....

The QV figures also lag the REINZ figures because QV report on settled transactions, whereas REINZ report on unconditional transactions. Settlement can be weeks after going unconditional so QV will be around 30 days behind REINZ.

http://www.stuff.co.nz/4841326a13.html?source=RSStopstories_20090208

If these figurs are correct, the real value is being hearld up by more above ave houses been sold

"The median price in solidly working-class Glenfield slid 20.9% and in low-income Manurewa in South Auckland it dropped 9.1%."
Manurewa has a highly varied mix of values, and when these figures are broken down, once again there is like comparisons in the link about, the same 20% ball park drop in actual selling prices

BH:
"when" in your estimates is not all that important in such a unstable stituation, what is important is how far real values will go....your premise is basically on the mark 30%
Yes looks like we are already 2/3 s of the way to the 30%
Though in my calculations the earlier the drop compared to the last 30 odd yr ave climb, it now looks it will be a little over the 30%.

As I have stated before The ave/mean stats are not showing the full practical reality of the decline, and it is not showing the true reality in the affordabity forumla
Affordabity is far better than the stats as is real value is far lower than the stats show.

Manurewa as an area broken down, has traditionally over the last 20yr+ been representive of national values and trends in different sale prices ranges, types of homes and continues to do so.
Over the last 16 months sale prices in Manurewa vairy between $162.000 to $615.00
A House that would have sold for 425.000 in OCt 2007 will now sell for about $320,000
The Ave back then was about $430,000
Now it is also in the low 300,000s

Steps - I doesn't matter what the house in Manurewa would have sold for in Oct 07, what counts is what they actually did sell for. So to really know where things stand at the moment you need to compare prices for houses that were sold then and then sold again recently. You also need to take into account improvements or any others factors that affect that individual property but not the market as a whole.
Then you need to factor in things that affect the Manurewa market but not the national market. The place has had awful press for the last 12 months.
With sales volume so low only same house sales give a worthwhile comparison.
There probably are plenty of houses there you could currently buy for 20% less than their Oct '07 sale price but there is always a reason pertaining to that individual property as well as overall market influences.
My guess is that Bernards 30% will happen, and sooner rather than later. But relativley few sales will take place at that level and by the time it is being heralded in the media that ship of bargain buys will have well and truly sailed.

Historically, housing prices have always lagged behind North American house trends by 16 months. The fall is happening and will continue to move downward until housing reaches pre-bubble levels. As far as housing prices have fallen in the US, they have yet to find a bottom. http://www.nytimes.com/2009/02/08/us/08lehigh.html?_r=1&th&emc=th

I especially liked Janet's post about her boss trying to break his mortgage. Barfoot and the rest of marketplace can sell houses back and forth between them as much as they want to keep prices inflated, but it can't last. And buyers aren't falling for auctions where other agents pace the back of the room talking with "Zombie Bidders" into cellphones.

Housing prices will ultimately adjust to reality, what cannot be adjusted away are bank balance sheets, listing derivative assets that are worth 80% less than book. If ASB is any indication; 60% of their assets are in mortgage backed securities. Banks are hoarding all the cash they can, but it will take decades before this mess is cleaned up.

Pete
I dont understand why you think house prices will recover after a %30 fall. If you look at incomes and has been stated on this site before,in parts of Auckland average house prices where $560k, average income 56k,this implies more of a correction in prices due to having lifted too far above incomes.I think we need to get used to lower priced houses and for a long time. Part of my thinking behind this is a political move to try and keep houses affordable, at the same time we awake to the reality of way to much debt in unproductive assets and the long slog to pay this debt off. Im thinking of higher falls than %30 in the short term and then settling at constant levels due to tax implications and higher interest rates.
im not happy being lumped in with people who have over committed themselves to housing and then expecting savers like me to help them out. I want my children to grow up in a country where house prices are realistic compared to income,is this too much to ask.

Andrew - My projection of future prices is based on my analysis of future supply and demand. The "houses should sell for 3x income" (or whatever) mantra because once upon a time they did is the biggest load of bollocks I've ever heard. If you think 3x income is a realistic price get a section, build a nice code compliant house on it and I'll give you a cheque for 3x the average income of the likely tenant. You couldn't and you wouldn't. You would sell it for the best price you could get. And those areas where the houses average 560K you will find the individual average income is 56k, but the household income is more like 80-90k.
As for your "savers like me helping out over committed house owners". I see buying a house as a courageous act. It is the hard work of those mortgagors that is paying a significant part of the interest on your savings. Where do you think it comes from? They take the risk, and will suffer the loss or reap the rewards.
And let me know if you find the country where the fishing and lifestyle is as good as NZ and the houses sell for 3-4 times income. Wouldn't mind checking it out.

Pete - Denver has got pretty good outdoor lifestyle on its doorsteps and the houses sell for less than 4 times income. Ottawa is less than 4X too, nice city and lifestyle, although the winters are a bit to cold

MD, I made 3 "dodgy" offers in last 4 months, all turned down. One property has been sold since, one withdrawn from market. Looks like people are no more desperate to sell, maybe will have to wait for more redundancies to kick in. Iam not in rush to buy, but getting a bit nervous now.

Pete, I'd jump at moving to Denver if I could secure a job and green cards for the whole family which is next to impossible!!!
Its a big city with just as much if not more cool urban things as Auckland but with amazing skiing etc on its doorstep.
And that 3.7 x ratio there is great compared to here

All assets prices are going down until at earliest the Deleveraging ends. From the 1:20 to 1:10 to 1:5, where can you find the money. Right, you can print it, but the currency gets crushed ..... The only county in the world can print the money at will is the mighty US of A. It has the POWER.

Pete - I think the answer is that the long term average is around 3X - 4X

But that doesn't fully answer your question because things change and what was perceived to be the norm once upon a time does not always remain so

Rather than looking at the long term averages, I prefer to look at it like this...
naturally there will come a point where mathematically the ratio just can't go any higher and will correct, as is happening ie. there comes a time when its just not possible for incomes to service house prices 6 or 7X

For example, I earn 110K, and that is considered a relatively high income. Yet I have not been able to afford even the median house in Auckland (I will soon). There is no way in the world thart someone on a high income shouldn't be able to afford even an average house

I personally think one of the key reasons the ratios have ballooned way above 4X is demographics. Conversely I think demographics will also be a reason why prices in Auckland will drop another 5-10% then remain flat for a very long time. Its quite simple really. Lots of the baby boomers will migrate out of auckland to rural areas or coastal places, or over to Aus to be with their young families in a place where benefits for pensioners are much better. Of course some immigration will plug some of the gap
but it will only be stabilisation. Some population replacement of the boomers will come via Polynesians (high birth rates), yet they will be generally low income and unable to afford the houses which the boomers vacate

Pete
I don't see wages going up in NZ in fact I can see wages falling. We built our housing boom on cheap credit it may not be cheap much longer.Overseas the credit crisis is getting worse
http://www.telegraph.co.uk/finance/comment/ambroseevans_pritchard/456090...

We as a country need to return to a production, export based economy but I don't see how that is possible with our present high cost structure.So we rely on high wages that mostly come form State payed jobs, that looking at our deficit we can no longer afford. Taxes will have to rise if we wish to maintain the current level of state spending.
In Agriculture we have reached a stage where high costs have forced us into some form of Systemic failure.Farming wont bail us out can you tell me what will? Immigration will be hard to sustain without job growth,as our standard of living falls we will get cheaper houses for the masses,while the rich live in their gated communities.

Pete Says:
February 9th, 2009 at 3:34 pm
"Steps - I doesn't matter what the house in Manurewa would have sold for in Oct 07, what counts is what they actually did sell for. So to really know where things stand at the moment you need to compare prices for houses that were sold then and then sold again recently. "
My appologies with my gammer above, but I did assume since I do quote actual figures for Manurewa then to do so I must have all the actual sales figures...and their addresses to and a history of following national and local trends for the last 37 yrs.

emcd
which real estate company do you work for?

So why would you buy on a falling market. You are expecting a V shaped recovery? I think this amount of debt will create a U or L shaped recession. House prices rose due to the multiple effects of, high foreign investment, high immigration,cheap money in real terms,banks willingness to lend to anybody,the Japanese carry trade,no capital gain tax,increase in money supply compounding at %15 a year,govt and local body regulation stifling new housing and increasing costs.
The chances of all the stars lining up again are slim. Id wait I see no reason for confidence, a bad decision can be very costly as I have learnt from bitter experience.
Yes I think immigration will plummet as the job market contracts, look at whats happening in Spain where immigration is being held up as one of the causes of the present situation.

THE HOUSES ON THE MARGIN WILL SET THE PRICE FOR ALL HOUSES.

Tauranga District Councils rating database provides rates (government valuation) history for each property - and gives what I consider to be a pretty good historical view of our bubble in New Zealand. Here's a house we bought in 2003;

2002/04 $130,000

2005/07 $165,000 27% increase over 3 years

2008/09 $246,000 49% increase over 3 years

If we agree that the period of loose credit began around 2004 - a 30% drop in asset value is a very, very safe bet given the increase in asset values over that period as illustrated above.

So a 30% reduction from the ridiculous prices being paid at the peak of this market would mean we are back at about 2004/2005 prices?

Patience is the key here if you are a buyer everybody is quite right there will be no sudden spike upwards of prices any time soon.......
a. who is going to fund it?
b.if this drop hasnt burnt a few fingers then we will never learn our lesson.

Andrewj:
Why would you buy a house now? I have. I'm not an agent or connected with any, and have no axe to grind at all. And I expect a long l-shaped recession-if-we're-lucky. A 30 to 40% fall in house prices over the next few years. But if inflation kicks in to Muldoon-era levels I don't know if any of it will hold true. And that could well happen if we go belly-up like Iceland.

So why did I buy: 1) I found a bargain. A real bargain. Good suburb and possie, cheap house. Perfectly liveable, good feel, room to add value relatively cheaply.
2) Sold well in October. Picked when and how to market then had blind good luck too.
3) My post-sale tenancy was coming to an end and I was specifically looking in a difficult-to-rent-in and pricey-to-buy small suburb to be close to a particular school.
4) Mortgage rates are sliding.
5) And I'm just too much of a girl. I missed having a patch of dirt to park my dog and my family.

I guess what I'm saying is that I (and others) need somewhere to live; the seller needed to sell (dead) and the price is amazing (even if values drop 40%). And emotion played some part. So the same old drivers in the market are still there. But what's not in the market now is the get-rich-quick-and-flick-investment mentality, or the let's-fund-our own-super-plan of the middle-aged middle classes.

Is this a bad thing for our children? Part of NZ's appeal has been the "property democracy' where most people, if they put their mind to it, could afford to buy a house. The social divisions that arise when large sections of the population feel shut out are plain in most other countries. 4 x annual income seems a good generic formula to me.

Which leads me on to the alluring tax breaks an employed 39% taxpayer gets when they buy and rent out a second property...that couldn't be a contributor to the bubble too could it?

Hi
To satisfy some people if not all, I will predict the house market (not from my heart) say the house market will drop another 65% in 3 years.
So please don;t buy your first home or upgrade to a desired ares now and wait for another 5 years at least.
I am stupid and buying my house now simply because I stupidly thought no one knows where the market going and mortgage rates re low but actually many people here know not only where the property market going but also know the interest and you incomes.
Stupid as stupid does, I will safe fro next 5 years.

So andrew, you agree it is not a bad time to buy a house?
I don't agree people buy more houses by greedy, but I do say it is a great time to upgrade yourself to a better ares or street.

emcd,
its better buying than in 2007. But there is a better time to buy a house coming.

Unemployment is going to rise. And fairly soon. When that happens, house prices are going to drop.

Don't see wages/salaries/other income going up in the short to medium term. So don't see any inflation in the next year or two.

If you want to understand what an L shaped downturn is then the Great Depression would be a good place to start. Or Japan's economy from the early 1990s

Dr Housing Bubble has a couple of good articles about his view on the current US Scenario with respect to whether its a Depression or not.

http://www.doctorhousingbubble.com/finance-economy-part-time-employment-...

http://www.doctorhousingbubble.com/the-world-in-depression-lessons-from-...

Seems like everyone who experienced an L shaped recession has to die before the cultural memory of debt bubbles fades enough to allow another massive bubble in debt to build up.

Now is the time that debt will be wrung out of the system. Either through default, repudiation or inflation. Any which way, there will be winners and losers.

For high inflation to allow higher asset prices there needs to be higher incomes. And better credit availability than the present situation. I don't see that in the near to mid-term. I see reduced incomes either by cutting hours, cutting salaries or unemployment. And if Bollard drops interest rates again, then the outflow of foreign funds will continue, and make it harder for the NZ banks to expand the debt bubble again.

Hi emcd, well done for noticing the window.

Ruru,
no idea about what the rating agencies will do. They've been asleep at the wheel. If they wake up and actually start doing their job then I agree that NZ may end up getting a downgrade.

You are describing an Iceland scenario. Look to Iceland to see whether there is a hole in this scenario.

for Iceland's latest interest rates see http://www.sedlabanki.is/?PageID=224

Only 40% of the usual home sales volume is occurring right now. Does this not clearly tell the story? House prices must drop dramatically to get back to normal level of sales.

RE spin fooled many financially illiterate public who are facing negative equity or huge mortgage break fee right now. Cautious buyers, who waited thus far, won't be fooled by the lowering interest rate, and they know they can win in the waiting game.

Ruru Im interest in your comment of a long I shaped recession if we're lucky. Without time going backwards what is worse than a I shaped recession?

I had an interesting discussion at work today. One person said he felt sorry for first house buyers having to find 20% deposits. I said I felt sorry for first house buyers who were about to lose their 20% deposits. Can't say I had many people agreeing with me but Im still convinced Im going to be proved right.

allenh
"This correction is the best thing that could have happened to the building industry"
So right and more. It's the best thing that could happen to the whole planet and everyone on it. This time we will learn the lesson. Will be bitter medicine but without it the patient would have died.

emcd,
I'm content with waiting. On balance I believe that prices will continue to drop.

I continue to look at property each weekend. I've been half expecting a bull trap / dead cat bounce over the next few months as people who think the drop in interest rates may restart the bubble, and who fear missing out, get into the market.

To see where in the state of play a bull trap is, see this link:
http://latimesblogs.latimes.com/laland/images/2007/06/26/bubblepsycholog...

When, not if, unemployment increases, there will be further house price drops. I've seen enough information, anecdotal and otherwise, over the past 3 months to get the same feel I had in Australia in the early 1990's. There will be job losses. Unemployment will grow. But this time the amount of debt means that lots of people are operating on a very low buffer and are going to throw in the towel and capitulate early. And given the size of the debt bubble, its going to take some time for the debt bubble to unwind. I don't expect the banks to be able to restart lending at 95% or 100% LVR in large numbers anytime soon.

By focusing on the rates side you are saying to yourself. "Based on my current income what is the biggest loan I can fund". I am focusing on "Based on where we are in the cycle, when is the best time to buy going to be". I'd rather avoid taking on an extra 100K of debt when I don't have to, thanks very much.

I'm picking anytime from 3 to 6 months from now buying is going to start to get a lot better than it is today. Not a little better. A Lot Better. And I'm prepared to wait for the right property.

I think you've missed some points from your list

5) If I'm buying a home, I've done my sums and I'm comfortable, then go for it.
6) Can I afford to be without an income for 3 months, 6 months? If not then how do I plan for being able to afford a drop in income. Borrow a little more and stash in a "rainy day" account perhaps.?
7) What happens if interest rates increase by 2% and increase my mortgage repayments by 33%? (assuming around 6% interest rates for Fixed Term)
8 ) What happens if interest rates increase by 4% and increase my mortgage payments by 66%.
9) What happens if we do go the Iceland scenario and I finish my 5 year mortgage with 18% interest rates? Am I happy taking on that 100K of extra debt now? Especially as in an Iceland Scenario house prices will likely be a *lot* lower than they are now. Will I be comfortable with negative equity?

Well said Gibber.

It is safer to buy right now only under the following assumptions:

1. Possess enough equity so that the mortgage will be fully paid in 5 years time (the term of the current fixed mortgage contract).

2. The current level of income is guaranteed for the next 5 years.

3. There will not be any need to sell the house after 5 years and the income level will not go very low from the current level.

There are not many who can fulfil all the above. So it is not safe to buy right now.

Bullitt - another word that seems to be being used is ¨regression¨. From what I understand this appears to be a worse than an L shaped recession, try tilting the L by 15 degrees and you will get the drift.

No doubt Bill English returned from the US after meeting with S&P. They will want New Zealand to drop their OCR lower still. I believe Mortgage rates will drop another point before March.

I also believe housing has another 25% to fall. True; our situation does not mirror the US with alt-A and subprime, but we were in a bubble non-the-less and that means value must drop and adjust.

That having been said, if EMCD or others out there find a property that is perfect for them and are well set up for a purchase then knock yourself out. If housing falls another 20% then that is your equity being affected, and it will recover... given time.

Kate
you are being overly optimistic.
I would love your prediction of a couple of weeks to be correct, however there is not one single thing that points in that direction.
Firms do not lay off staff if they see a short term downturn. But they will lay off staff if they think the downturn will kast more than 12 months. And staff are being laid off.
And what would the following scenario do to the NZ economy.
If commodity prices dont rise sharply very shortly I believe we will see within 18 months the biggest gavt bailout in the corporate sector in NZ history. Anyone that has to raise $800m to pay their suppliers as they cant sell their product is on a slippery slope.
Maybe not probable but it is possible

Kate: Just look at the hard realities. NZ runs an 8% current account deficit. It has run continuous deficits every year since the early '70s. Our net national debt is about 90% of GDP.

Worse that that - only about 1/2 of our annual deficit is for trade. The other 1/2 is for paying interest on existing debt, profits paid to the Ozzy owners of our big banks and companies. This is a huge structural problem that cannot be imagined or wished or magicked away. That is, even some amazing improvement in our currently trading position (very unlikely considering the state of the world economy) would fail to reverse our ongoing haemorrhaging.

In this situation, Kiwis are going to have to learn to live within much more constrained means, for the foreseeable future. And since their biggest area of spending is housing, this has to be the prime casualty. Plus SUVs, but that is another story.

The only thing that could save housing, on the surface at least, is an outbreak of inflation. In the late 70s, house prices went down 30-40% in real terms, but stayed flat in dollar terms - because of 15% inflation. This is the scariest scenario for someone like myself, keeping my cash war chest strategically out of the housing market. In the late 70s, with interest rates only about 5%, & stock markets flat, all asset classes can suffer & we get wealth destruction with no winners. Oh, in the late 70s gold did increase dramatically - so keeping all assets in gold would have been a winner. But it then crashed to earth for decades, so it would have taken an iron will & temperament to have held all assets in gold for that period, & then the wisdom of Solomon to cash out of it at exactly the right moment.

We live in interesting times.

PS I sold out before the housing crash, have my "house money" sitting in Rabobank & selected bonds. At an 8% decrease in house prices over the last year, the $400k house I might have been looking at has now dropped about $30k, so I have made that much money tax-free. Not a bad start, but hoping to do better than that.

You all sound like you are buyers to me. Waiting to get into the inflated houses you are all keen to buy at bargain prices. Very interesting your comments but I get so depressed reading them I only do so once a week.! Then it takes ages. I am about to buy 5 houses this week. 100% borrowings using existing equity in other property. Insane eh?

I'd be delighted if Kate (the second) was right - as defensive strategies are generally boring, and I feel quite selfish clinging onto liquidity and waiting for the crisis to do its worst.

More power to you Jim for going on a buying spree - as perhaps it is folks like you who might drive the recession toward that V type of recovery. Certainly you are responding in the manner most Western leaders would like you to.

I'm an ex-pat living in London planning to come home at the end of the year. I have an investment property which I bought back in 2004 and am close to having paid it off. So I've been looking at property online a lot & following the new about falling prices and interest rates as when I get back I'd like to buy my first home to live in. But doesn't look like house prices in Ponsonby and Herne Bay (where I want to buy) are falling much, nothing there for under $700,000! It seems like only the areas fulll of first home buyers and investors are suffering. I don't think desirable suburbs are going to drop by 30% - the sorts of people who can afford them will always be able to afford them.

Mortgage interest rates down 36%
12 months ago fixed mortgages for two years were around 9.2% compared with say a 5.89% two year fixed rate now available. For every $100,000 borrowed you will now pay $3,310 less per year. If mortgage interest rates go down to say 4.5% then that will be 51% less than a year ago and save you $4,700 per year. So it is no wonder that home affordability is heading down towards 2003 levels.

2. more.....
Combine these interest rate savings with the fact that house prices have reduced only 8% according to Quotable Value's 2008 Housing Market Review and you are winning on both fronts if buying a house now. It now costs $17,839 to service the interest on an 80% mortgage on the average $378,605 NZ house compared with $27,865 12 months ago - a HUGE $10,026 saving! Buyers who have been waiting for house prices to drop 20% or 30% may now be disappointed as it is now very obvious that rental investors are stepping back into the market and snapping up homes and securing a low interest rate and people who had money on term deposits at very low rates are now looking for the security of bricks and mortar. Let's face it a term deposit interest rate of say 3.5% which is eroded by tax and inflation is not exactly worthwhile when for every $100,000 invested most people would only receive $2,500 after tax.

more...
I read yesterday that there is now $6 billion invested in government guaranteed finance companies and $85 billion in mainstream banks. As the government guarantee period gets ever closer more people will invest in property and buyers will have to compete for a smaller pool of homes as there are not enough being built to keep up with demand and many existing home owners will stay put and enjoy low interest rates. Supply and demand is moving back in favour of the seller - the current buyers market is likely to be short lived so now is the time to pounce on a house which can be purchased for around 8% less than it was worth a year ago and at the same time securing a mortgage that will result in interest payments somewhere between 36% and 51% lower than last year depending on how long you float before fixing the rate.

Hello. This is may first post, but I have been reading for a long time. I like hearing both sides of the arguments. Although I do feel many posts are overly negative.

I beleive house prices will fall. But I also beleive that if you shop around you could probably get most of the fall right now.

I am 26 and in a position to buy my first home on a single income. I have been approved and can already afford a house I would be happy to live in. But I am chosing to wait. I do think prices will drop but if they don't its not really a problem. I think it is about managing risk and at the moment it is riskier to own a house than pay rent with money in the bank. But risk comes with reward, some are willing to risk more. I'm not. I don't find renting that bad, but I am younger and do not have my own family. I just moved house to a new rental and have saved 15% on rent and I'm in a nicer house. Some people say rent is wasted money, but it is alot cheaper and most of the money paid on a mortgage is actually on interest.

With 20% minimum deposit I don't see mass of people instantly coming up with the money to kick start sales back to sustainable levels. As long as banks keep minimum deposit levels up I feel safe prices will not quickly increase.

Im not looking for a bargin and I'm not hoping to get rich from property. I just want to pay a fair price and sell in years to come at at least the purchase price plus inflation. At QV and REINZ prices I don't see this at possible.

As a summary. I think buying is not such a bad choice as long as you get a good price now, you have lots of deposit, job security and room in your income for interest rate raises in the future. But for most people it is just safer to wait until the road ahead is clearer.

hahaha ...go hard , paul.
you're frightening the kids...cut it out ???
ha ha....

Pete, that's only way for me. I just hope Bill English will keep it's promise about 8% unemployment. That's extra 50000 people of the work, if half of them are home owners it might work out well for me. Might even buy two or three if Iam lucky.

Dont know how much further to go down in house price. Surely it's not bottoming out until the number of comments goes down. Way too much interests in housing.

A quick response to Emma's comments further up this thread - you should check out www.zoodle.co.nz, one of the better new websites that have sprung up recently.

It gives you some interesting insights when it comes to looking at sale-price medians on a much more localized, suburban basis. Note - they disclose both SALE and ASKING price information, which are not always the same thing! If you want data on a specific house, they'll sell you a report. It's good stuff if you're serious about making an offer. And no, I don't have any affiliation with the site, I've just found it handy.

Anyway, my point was this:

Herne Bay - Median Sales Price down 20.7%, New Listings down 41.2%
Ponsonby - Median Sales Price up 3%, New Listings down 63.6%
Parnell - Median Sales Price down 35.2%, New Listings down 35.9%
Devonport - Median Sales Price down 10.6%, New Listings down 37.1%

So actually, despite the fact that average prices in these areas are still high (Herne Bay's average Sales Price is currently just under $1.1 million, Ponsonby is down to $675K though), they're suffering and probably have further to fall. Don't ever expect these areas to come down to 4 times the average salary though.

These are not "average" suburbs - most household incomes in these suburbs would be between $200K and $400K per annum, making $700K for a (beautiful) 3 bedroom house zoned for New Zealand's best public (and therefore free) schools actually quite "affordable" for the high-earning 1%.

As I said, they'll still come down and there will be some bargains to be had later this year, but those areas will probably remain "a cut above the rest" and demand a premium for the foreseeable future.

Shame I can't afford to live there!

Yep well in our area, we are finding a real change in the mentality of purchasers at the open home. Everyone is more interested in why others are looking, and what their purchasing situation is. We seem to end up having a good chat and talking the market down some more, and get real critical on the particular house that we are veiwing. Some agents find this very stressful, it is the opposite to a few years ago when other purchasers were considered the competition.

I think, for our area anyway prices have dropped 30% off peak, with not alot of support at that.

Prices here 18 months ago were 10% over GV now selling for 20% under GV, its a gross generalisation, but the stats are starting to show it.

Paul. As you rightly point out, there are "lies, damned lies and statistics". You can drop the condescending tone though buddy, I'm not an idiot. Seeing as you're comfortable dishing it out however...

Wow, golly gosh. Thanks for pointing out that only a small number of houses are selling each month, in these small, expensive suburbs. Really? What an amazing insight.

And that causes distortion of figures? Wow, you're a genius. And perhaps a slightly resentful home-owner to boot?

Distortion of localised statistics is the reason that you have to look at these figures in the context of surrounding suburbs, then the overall market, before taking a look at what is happening in both the local and global economies. The more data you can analyse, the clearer the picture becomes.

When you do this, you see that economic, employment and market trends are all still heading downwards, hence my comments. You can't just look at local trends in isolation, just as you shouldn't look at nationwide or global statistics in isolation.

Of course, before you can look at anything, you have to pull your head out of your ass.

Page 3 of today's The Northern Age quotes Managing Director Peter Thompson. of Barfoot & Thompson as saying: "House prices in the Auckland market stabilised last month... that prices are only down 1 - 3% on average... that the current market sentiment would hold for the next 2 - 3 months."

Doug, Real Estate Agents have been telling us for the last 7 years that there is no better time to buy than NOW!

No sorry, not then, but NOW!

Hang on, actually, it's NOW!

Did you not buy anything yet? Good because the time to buy is NOW!

Oh my god, if you thought it was a good time to buy THEN, just wait till you get a load of NOW!

Don't put blind faith in what the Real Estate Industry tells you - if everything is fine and dandy and things are about to turn a corner, why are they laying so many people off right now?

You HAVE to do your own research, which means investing your own time and money.

Ha! No vitriol Mitch, just engaging in a bit of verbal sparring with Paul. Opinion threads often turn into vigourous debates (no mass debating in here though please), no harm in that.

I think I'm right, but I'm open to alternative viewpoints - so I'm sharing my thoughts and the basis of my reasoning. I'm keen to get other people's views.

On reflection, I'm not actually sure what Paul's views are (although he seems to disagree with me) because he hasn't told us yet.

I did like his satirical comment on savers above though, that was good!

Don't worry, it's all in good spirits.

Mandy, thanks for your comments and figures, very interesting - to a degree I now feel vindicated in my earlier reasoning, although I'd feel more comfortable if the economy and market were performing as normal.

These are worrying times.

Mandy,

Great info. How did you find it? Was it cherry picked? This sort of info (same house sales) is a way better indicator of current trends than any median sales report.

Matt S - sorry I was not aware that Ponsonby sales data had been posted before and only put it up due to the comment from the UK resident above who seemed to think Ponsonby prices were holding up when in fact it is one of the worst affected areas.

Have you lost value on a Ponsonby home Matt or do you own in Vermont St.

Geografree it's hard to find "same house sales" data but as I have a strong interest in the area and follow whats going on it wasnt too hard to find through www.qv.co.nz

An index of "same house sales" data would be very interesting and maybe someone like QV could put one together.

There was no cherry picking these were the only examples I could find in the last 12 months. What you can conclude though is that anyone who purchased at peak has lost a lot of equity on paper. Unless someone can post "same house sales" in Ponsonby that show a profit between 2007 and 2009 - good luck!

The Summer St drop was small as it happened before the s?#* hit the fan - today that one has probably dropped another 10% or 16% total.

Bernard, you might have some credibility issues :

1. We've predicted a 30% fall in the average house price between November 2007 and the end of 2009. We're still on track for that
BH Wednesday, September 17th, 2008
2.We at interest.co.nz forecast back in FEBRUARY that median house prices were likely to fall 30% over the next couple of years from their November 2007 peaks. This was a very pessimistic forecast at the time and was widely ridiculed. We are sticking with this forecast.
BH november 2008
3.We forecast a 30% fall in the nominal median house price between November 2007 and November 2009.
BH 04/12/08
Iam pretty sure I heard you saying it on TV as well....

"I WANT to buy a home "¦"¦.its not investment - its a home."

Why not do what we did in the 90s downturn

We had an agent that every so often would give us an address to drive past, and if looked like potential of what we wanted, we would follow up
take your time, if you see a home you like, put an offer in between 25% and 30% below...
Some time they would just laugh, other times negotiation proceeded, but wewould not budge above 25%....and did not get into "we love this home we want it" and prepare to walk away each time.
Eventually after about 9 months, we found a home, section etc that was just right, well built. $107000 put in an offer of 72000...
Ended up Purchasing at $86000, 6 months rent to buy, 100% of rent goes on deposit.. so nett price was about 82000.
We still live here, or children grew up and now left home

Change you thinking from " WANT" to "like" and just go out and enjoy doing so, and no matter how much you like the house, just take the attitude "oh well never mind" and shrug the shoulders and walk away...and leave your number but not the offer open.

Fisher & Paykel said there is a big hole on its book, since it cannot issue notes, wants money from shareholders. Guess what, the drop of OCR is not going to help many as you may think.

Maz Says:
"One of the problems I've seen now is that there still seems to be some in particular younger people who have never been through a recessionary period of time, out there who will happily pay more than what a property is worth. Do they not read? Don't they think or plan ahead?"

LMAO my grandfather said that about my dad, my das said that about me, and I have said that about my children....We called it "growing up" today the call it "life experiance"

Daveyboy, the RE dream merchant, the charm stopped working about an year ago. Hahaha.

Great to see your blog is finally working with my new Blackberry (pearl) browser! Before it's messed up.