There was a dramatic slowdown in activity at Barfoot & Thompson's latest auctions.
Auckland's biggest real estate agency offered 127 residential properties at its auctions over the week from 26 November to 2 December, down from 155 the previous week.
However the bigger change was in the sales rate, with just 11 of the properties offered at the latest auctions selling under the hammer, down from 35 the previous week.
That pushed the overall sales rate at the latest auctions down to 9%.
The sales rate had previously been sitting at around 25% for several weeks.
The drop off in sales was across the board, with Rodney and the North Shore the only districts where the sales rate made it into double digits, after 2 of the 10 Rodney properties auctioned sold under the hammer.
The big auctions on the North Shore and in the central suburbs had sales rates of 15% and 7%.respectively. The table below gives the full district-by-district breakdown.
The surprisingly low level of sales at the latest auctions is not a good sign for how the market may finish up this year. With just a few weeks until the Christmas break it could end on a much quieter note than had previously been expected.
Details of the individual properties offered at all of the auctions monitored by interest.co.nz, including the selling prices of the properties that sold, are available on our Residential Auction Results page.
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157 Comments
Might be time for more listings to have 'ono' values attached to them ,this might help condition sellers to where the market is trending. Likewise it will paint a clearer picture of expectations to potential purchasers . Time the Auction fog was lifted and transparency returned to the market...Not sure about others here but I get the feeling the industry cannot shelter behind 'auction only' anymore... It is the realtors task to condition the seller to the market even in a declining market , the hard sell begins and such will sort out the skilled from the pretenders. Ticket clippers will struggle.
Auctions are a waste of peoples time in this market. If you want to sell, the market is 10 to 15 % below last years hot air prices.
Put an old fashioned fixed price on the dam house. All this BEO, by negotiation,tender and auction is a waste of time in a falling market. Put a realistic price on it and then take off a further 20 to 30k and do a private ad on trademe. If you want to sell let people know the price.
You forgot Property Brokers favourite - deadline sale......
Absolutely agree. A while back some realtors were sending ne links to property. I told them to stop sending anything with the word auction in it. If a realtor doesn't know their market by giving it a price I dont want to waste my time with them. Give me a price or at least an indication and I'll look.
Otherwise take a hike bozo.
Does anybody know how many were passed in without bids this will help show if it's a lack of buyers or if vendors expectations are too high.
A quick perusal of the results for this week show that 111 properties were passed in. 29 received some sort of bid while 82 got no bid at all.
So close to 75% of properties that get passed in do not get any bids.
Any evidence of post auction negotiating?
I will generally only follow up on houses that got what I consider are good bids. I'm interested to see if turning down a good bid was the right decision or not. Most go on the market with a price or for sale by negotiation. I have seen the odd one go to auction again.
Why do homes get no bids? Genuine question. Is it because house prices are to high and people are not turning up, or no buyers out there. Is it because people can't get loans. Sounds weird, why would you have Auctions if are lot are no bids.
I remember the day when houses had prices, wonder when that antiquated and transparent system will come back.
You would think most homes would get a bid, a silly bid hunting for that desperate seller. However auctions are often just the beginning of the journey with properties going on to be marketed in the normal way. It's not a disaster, generally, if you don't sell at auction.
What you absolutely shouldn't do now is buy a house if you need to sell your existing one. Bridging loans in this environment doesn't bear thinking about.
You are right about bridging loans. But without them the whole buyer-seller-buyer transaction chain starts to get sticky and break down. Maybe this is one of the feedback loops that brings a market to near standstill. Bridging loans were kind of like the grease that kept the property transaction machine turning over smoothly.
And when the machine gets too hot the grease melts away until all that is left goes up in flames.
How many of the bids on the passed in properties were genuine? 30 percent? Less?
Too close to Christmas now, its dead until the New Year. Merry Christmas. It will peak over summer then die again, its election time again.
Dead until school starts up, not much happens over the summer break.
The housing market is dead. A year, 2... we'll know when it resurrects..
As Carlos reminds us..house prices will peak and then die much like BTC and it's election time. Xmas is very close..
They are going to zero.
Hopefully that means summer will last a few years.
Agree with you Carlos.
Housing market will remain very quiet until late-January. The recent Covid surge won’t be helping.
By mid-2023 market could be recovering - but not before a few businesses and over-mortgaged property owners feel pain from their over-zealousness.
Certainly, a Tory win in the 2023 General Election could provide a significant stimulus to the housing market - but my vote will be going to Labour.
TTP
I sold a house in Lockdown in late November, Covid seemed to help the prices from memory? Or was it the record LOW interest rates, its all a blur...... you had to be Real Quick to get the top.
Labour - Best Low Interest Rates Ever
As Richard Prebble recently hinted - There are going to be some really curly mines hidden for the incoming team, its pretty clear that a lot of money needs to be spent on Health and Justice.
I fail to see National trying to blow the housing bubble back up, when they have so many issues that will be more important to most NZers? And they will want a second term......
I think 7 house Luxon and 5 house Clark will agree, it's not the priority.
Layber 😆
Winter is coming. It is likely to be a long one for the housing market, one that spans years.
Doesn't look good for property spruikers.
A member here was commenting about the appearance of green shoots. He wasn't happy when I reminded him that we hadn't seen the downturn yet...
well the asparagus is certainly shooting out of the earth
Dp
(Chuckle) - HW2, either you're an STMS Traffic Controller 🚙 or a Horticulturalist 🥬
Am I right?
by malamah | 3rd Dec 22, 1:18pm
Please just stop bickering. Switch over to YouTube comments if you want to relieve yourself all over the keyboard.
Green shoots when the roots are damaged?
Dp
Please just stop bickering. Switch over to YouTube comments if you want to relieve yourself all over the keyboard.
You might want to get some help there house works. Spruikers and other self interested ‘people’ have had their time. Now it’s time for a dose of reality.
You might want to get some help there house works. Spruikers and other self interested ‘people’ have had their time. Now it’s time for a dose of reality.
Gee, it seems you have no one else left to tease
Surprisingly, house price are still holding at lower level. Most vendors are holding and not selling, still a way to go before house price tumble to see real correction
People will only hold on for so long, At today’s still lofty prices, many Mum and Dad Landlords, owner occupiers, either in or nearing retirement, can still bank vast amounts of equity. Many have paid peanuts for property to start with but heavy discounting still seems a sour pill to swallow. Some will be understandably anxious “brick and mortar” as a retirement nest egg is threatened. While they can still sell at a discount to the Nov-21 peak and come out okay – a viable opportunity exists to sell, profit and bank. Enter the offspring to which they installed visions of great wealth and helped financially into first homes who are now under water or soon will be. Unfortunately, the sad reality is that despite prices declines, there still persists a glut of expensive homes for sale and the process of actually banking any equity involves having to pursue a more discerning and retreating buyer. When the collective confidence of a quick recovery or at the very least an imminent floor in prices is fading fast, investing in property becomes sleep depriving and more and more tilted towards collective “it will only be cheaper tomorrow” narrative. Many now bear witness as to how houses (as retirement nest eggs) can be notoriously illiquid as an investment despite still plummeting prices. I think demographics will play a major part here. I think some serious selling has a way to run yet.
For these obvious reasons, for retirees and those saving for their first home, term deposits are now firmly back in favor. They are certainly much less hassle.
I imagine quite a few property owners can sell now and still have a reasonably good outcome. Those that bought prior to 2020. The spectacular gains of the last two years were an anomaly. This realisation could push the market down further. Increasing mortgage rates will have eliminated the return on many rental properties so it could well be a good business decision.
Yes most of the properties I did research on this week had been owned a long time and even though the sales where a discount to cv, good profits from 2007 etc. We all put up with a personal hammering of negative comments this week from the last of the spruikers. WRT to why do people not make low ball bids at auction, many of us believe that prices are so far out of whack we would be laughed at if we tossed a bid in. Even the properties selling at cv - 13% I shake my head at.
Watching some auctions online during the week I found myself shouting, "stop, just stop bidding!". The auction would pause for negotiation after the third and final call and then keep going without the house going on the market still. Once they have a bidder they try and reel them in like a game fish.
"reel them in like a game fish"
The lower the "on the market price" - fresher be the bait 🎣
And bigger catch...
With the way interest rates have gone up and still will go up further and sell falling below 10%, market should have crashed by now but has not yet, only confirms the amount of cheap and easy money still floating in the system despite OCR going up 17 times from 0.25% to 4.25%.
The magnitude of damage done by RBNZ will not go without bloodshed.
I fear you are right taimaiakka01. Financial stress could well result in more suicides and domestic violence.
RBNZ and Current democratic system of vote bank politics has failed.
Unfortunately they all get away without......
To be fair - the absolutely mental property market in NZ over the last few years has contributed massively to social unrest, suicide, violence etc more so than what the readjustment we are hopefully seeing ever will.
There are still people with money around. The property next door for us sold for an astonishing amount at tender, the people who bought it had wanted it for years so put in a really high offer to make sure they got it. They didn't care, cash buyers with plenty to spend.
That's one of the problems - some people have excessive amounts of money while another large part of society don't have enough.
Our inequality levels in the western world are at a similar level to what they were just before the 1929 share market crash and then depression.
Well that’s ok, stupid people with too much money spending too much is fine - as the house value drops some of their money is taken out of the system. Better that than young people who are just starting out.
Be quick!!!!!!
It goes without saying - abysmal results.
To me the most telling is the 77 passed in no bids, I am sure people went to open homes, so this means that the price guide from the agent did not excite anyone to "put their best foot forward' (what a crock), please any foot? The buyers see prices falling 1% a month, if you want 20% off just wait 12 months then offer 8 below, easier as less resistance from sellers and agents.
"My idea of shooting fish in a barrel is to drain the barrel first"
- Charlie Munger.
Something many are hoping for... the scary part would be watching those over invested speculators fighting for oxygen/bank empathy
And new residential construction has stopped almost dead. Deals and jobs being cancelled, tradies turned away from sites. This has happened so many times in history, its still astonishing that people go all in.
Too many immigrants on here, they didn't see the carnage in the late 80's crash. Short memories too.
Yes that and short memories. Or no memories as people weren’t here or were too young. Almost exactly as I predicted residential construction is starting to turn really ugly.
Probably 6 months to run yet. Been chatting with my engineering support, they are not historically part of construction but have played the game. Steel beams & lintels mostly. In a hot spot though.
Was told one developer closed up a couple of weeks ago, 300 staff affected.
I won’t ask for developer’s name but can I ask where they are based?
North Auckland
Almost exactly as I predicted
NostradaMouse in da house.
Yo-yo Keepin’ it real yo with some old school Nostra dope shit for the dopey Spruika heads
Yes HM short memories There will be a lot of near new utes on the market.It happens every time and i have been in housing since the early 1970s.
The housing market is entirely driven by availability of credit. Somehow every forgets this, & the ramifications of that.
Credit is leverage, 40 years of it starting to unwind.
How far can prices fall? Check prices from 40 years ago.
Scarfie, thats a little to bit extreme DGM, I cannot match that..... You are completely right re the credit, I have worked in "That Industry" my entire life. Its crazy to me that you can walk into a branch and a 20 yo can load up your mortgage application, but try to loan money for a internet startup, or a packaging or small cheese factory etc .... I do not think we go back 40 years though, I think we will go back to a DTI of 3.5-4.5 perhaps banks will be limited to lending only 25% in the 4+ band etc.... Every OCR lift knocks the bid of FHBers further away from the current market.
So what happens to DTI when 33% of people are unemployed as happened at the end of last great credit cycle? I guess being a cynic the official average income would only count those employed, false accounting won't help asset prices though.
It's a credit cycle. People have confused peaks & troughs in the trend as the cycle. The cycle is, in the industrial age, 50-80 years long. This long because average minds can't think on that scale.
The fourth turning is always messy. I have been somewhat of a convert of the long wave. The Kondratiev cycle is documented here..... https://en.wikipedia.org/wiki/Kondratiev_wave
At the end of this long cycle crazy things happen, I think we have discussed this over beers, their is not enough (cheap enough) energy (oil/gas) to allow the economy to pay the interest on the credit thats been extended, for a while more credit pays the interest. Some clown this cycle suggested MMT.
Wars start, often over small things but they quickly escalate into energy grabs.... (Hint watch the middle east......) maybe this time wars over the rare earth elements needed for semiconductors and solar panels etc, also lithium.
It is no surprise to me that Aussie is going nuclear subs here with the USA's help, Aussie has a lot of these elements.
Some people made a huge amount of money during the great depression, while others lost everything. The issue for most in NZ, just like on black monday 1987, is that they are not only fully invested in property here, they have used a tonne of leverage on top of that. There are simply not many of us in a good position to buy at the bottom.
Those of us who realise what is happening are watching auctions, not attending them.
Did you get around to brewing a few beers for xmas? still time to get a Timothy Taylors Landlord down, Have turned these around in a week before. they go real quick and the best yeast harvest is to just scoop off the top on day 3 into the next batch. If you come past in a week I can harvest some for you.
Enjoying this thread - it pretty much aligns to the book by Dalio (Changing World Order) and 'The Fourth Turning' (Strauss/Howe).
Those two books compliment one another quite well to understand the big picture dynamics that are driving the world and society at present.
And if correct, we are at a cross-road both within the communities we live in as well as globally between the major world powers.
If you feel like the world is going mad, you are probably right - but based on historical trends, everything has been pointing towards this period being messy.
Strauss/Howe think the Fourth Turning could be complete by 2028 so only another 5-6 years before millennials rule society as boomers head off into retirement (and the afterlife).
Inflation adjust it is quite possible.
It is heartbreaking to see this happening to homeowners who may be struggling with high mortgage payments and unable to sell.
But it is so sweet to see this happening to the people farmers, the lords of the land, the house hoarders. All those greedy ghouls who hoarded houses during a housing crisis, who kept putting up the rents and putting up the rents, who treated tenants like some lower form of human being that existed just to be bled for rent. The ones who said "you can't go wrong with property mate" and "we will just keep putting the rent up to cover costs". The ones who charged top dollar for run-down old houses with crappy carpets. The ones who went on expensive overseas holidays and drove expensive flashy cars while their tenants lived in run down and degraded squalor. The ones who made windfall capital gains, but STILL raised the rents, and still spent no money on maintaining their rentals.
This is the reckoning that the people farmers needed to have. The vigorous kick up the butt from Karma. And to them, we say Bahahahaha-hahahaha! How you liking that people farming now?
Well said
Fitz, such Landlords are as much a social service as a Brothel. Neither are essential for the good of society. On occasions, while they might need each other, society doesn't need them. Be suspicious of a Landlord that comments they charge "below market rent". Their service might be below the current legislated standard. It might be more about the service they don't provide....
Have you ever heard a landlord say they charge market or above market rent...
No. That's when uncertified Property Managers come into the equation :) They're great things you can hide behind....
edit
I'm no apologist for residential property investors but that is a known tactic for success.
Well worth sacrificing a bit in rent to get a really good tenant.
Concerning brothels, they were legalised some years ago - for very strong social reasons.
TTP
It wont be instant. But Karma is going to kick them right in the face.
I think this shows the impact RBNZ Orr had with his statements & the media pumping out doom headlines...bugger if your auction was close to the MPS...
Mr Orr has definitely focused the mind (as once murmured by a hanging judge). As for the MSM they are a mirror of the populations current thinking, they cannot afford to be too far ahead or behind or they will be ignored. As the wall of interest rate resets go off next year we are going to see real stress.
Maybe it's good that Kiwis are waking up and putting an end to this unhealthy obsession with property being a risk free investment.
Repricing of risk must occur.
Why are some of you surprised by these auction results some of us have painted the picture for you all over last couple of years. The house price falls will continue with larger price reductions over coming years. 50% off from top of market last year is looking on the cards and could get even worse if world downturn hits us hard.
Still who are these 10% buying in auctions?
The watch dog of the corruption should look into the accounts of these 10% transactions and the real estate agents dealing in these transactions. I am sure they will find irregularities in how this money is earned or obtained. Money laundering is main underlying factor when something is bought at a price which didn't make sense.
In short prices are so out of touch of the reality that no hard working honest family can buy and still enjoy their life.
I've seen 3 FHB families buy in the last 3 months : stable long term employment, paid multiples of median income, big deposits that were growing.
They're happy with their purchases - I know at least one offered 20% below the listed price and was pleasantly suprised when it was accepted.
They're content.
But the point of this is that not all purchasers are dodgy - there will be genuine buyers (even investors and speculators who mistime the market!) all the way down.
That’s the sad part, most of them are hard working, honest people buying modest homes for exorbitant prices which they’ll pay double the sale price for over the next 20-30 years. No wonder we’re getting less productive as a country.
Worst time to buy a house when sellers are aplenty. It's better to wait until there are more buyer buddies and hunt in packs. You will be much more likely to get a deal.
/sarc
</sarc> Yes this worked in the GFC, In the US they would run bus tours around the mortgagee sales , thats a great idea HW2 Best idea you have had this year <sarc>
No that is the truest thing I have heard you say. As crazy horse said this week, that was his experience. Buy Low and sell high, if sell. Of course you prefer to do the opposite because why?
Where is Buy High Sell Low? AMEN...
Reincarnated as "Flying High"
.
The buyers still ingrained in FOMO will run out, and as rates increase they'll offer little competition to those on higher incomes. Let the weak hands play out first I say. The only thing I'm not looking forward to is paying around 100k pa interest, but that's only for a couple of years hopefully.
Can someone enlighten us.... If a house costs say $900k to build, and yet you can only sell it for $750k, then construction stops. If construction stops, but the population grows, then sooner or later we're short of houses. Then supply / demand means house prices rise back to $900k (plus cost inflation) to trigger construction starting again? So it's simply a matter of when prices come back up? Probably 2024?
population growth =/= demand.
Credit growth = demand. Unless you think everyone is buying with cash.
When demand dwindles the construction costs will eventually come down.
Demand works both ways. Why would construction costs stay elevated with no demand?
900k new home includes sale tax (gst) of 120k and local govt contribution charges amounting to multi tens of thousands. In Auckland a simple water connection costs around 20k
Question: will the social engineering of local govt for co-gov and 16yo voting reduce or increase costs.?
The basic question should to be to ask is why would a house cost 900k to build?
This is the greed of few making life miserable for many.
And add in the worst policies of consecutive governments in terms of how growth is maintained and managed, and wallah we get the country called New Zealand.
Just 5 years ago house would only cost 250k to build. Greed Greed and Greed all the way.
Yes its a cycle , you buy at the bottom and sell at the top. Well actually you subdivide and develope and make a fortune at the top. then you don't get greedy , you go fishing etc and wait for the bottom, rinse repeat, its the NZ way
Especially when the quality of NZ homes is shockingly poor. Some are no better than glorified sheds, and they want 900K.
The quality disparity is even evident between the South and North Island.
the value does not equal the costs.
When I first came onto interest.co I was at Architecture School, so I've been saying that since the outset. Keep saying it, it is true.
Feedback loop of inflation is why it costs $900k… business still tries to maintain margins
When the land that every house is built on is appreciating at 7-8% p.a. for the last 30 years and it is excluded from the CPI (when we started inflation targeting and when our property market appears to have started to depart from the trend lines of the previous 100 years), and we don't think we have any price inflation in the economy because the CPI comes out at 2% by importing cheap consumers goods from China (i.e. using foreign labor for the goods we buy as opposed to using local manufacturing and labor costs).
So central bankers drove interest rates to zero to keep (consumer) 'price inflation' up/stable while we imported deflation from cheap foreign labor, while land/property, share, bond i.e. asset prices went to the moon by applying lower and lower discount rates to the future cash flows associated to those assets.
Now that process appears to be reversing.
Who knows what the real price of a house is when cheap money is removed from the market. And if local labor costs need to be used for the goods we buy and are measured in the consumer price index as globalisation reverses course. It could be a long way south.
In inflation adjusted terms, I think it is about 50% below where we are now.
(and that inflation adjusted estimate also brings house prices back to 4-5x household incomes i.e a DTI of approx 4-5 which historically has been a good measure - the moral of the story is that you can only live in lala land for so long with falling interest rates and rising asset prices - sooner or later that time ends and its best to not be positioned in the wrong way when the change comes).
Hmmmmm yes and no.
If construction slumps as I have been predicting since early mid last year, a lot of jobs will disappear. Not just in construction.
With jobs disappearing, there will be less immigration.
it is instructive to look at what happened back in 07-08. Construction slumped as did immigration. Property prices dropped circa 10% and it took 3-4 years to start rising again, but slowly.
Your right if people can afford the $900k at the time of population growth. Think of this wild scenario. If banks stopped lending all together, forever, what would happen? Construction stops, people pile into existing houses, quality and price of building drops then eventually some people can build a $50k tiny house on a $50k section in mission bay lol.
Friend recently completed his new house here in Napier. He's a builder and built it himself. Cost of all materials was a bit over $2,000 sq/m. The house is about 230 sq/m so there's $460,000. The section cost $345,000. I don't know what he paid to the architect and for all the council fees. I'd throw a dart and come up with $25,000 (night be a long way off, I know). So, that's $830,000 NOT INCLUDING the builder's labour. That has got to be another $75,000 at least, I would have thought. So you're over 900K to build a house - and this is in the provinces, not Auckland. I'm sure there is stuff I have not factored in like the cost of credit and various other things.
Of course, land prices can come down and houses can get smaller which would reduce the total price. Will the cost of labour drop at some point? So while there is some talk of prices plummeting by 50%, I am not sure I can see it. There has to be a price floor at some point, based on the reality that you simply cannot build a house for less than $xxx,xxx (whatever that figure may be).
Build it himself and still $2000 / sqm really?
He probably needs to do something else because i do not think he is going to flourish in building business. The only other reason I can think of is that he really put in very high quality imported materials in his build.
I think the floor is where ever the general population can afford for that level of quality (existing and new). Not many can afford $900k now so construction slows, not many on average wage can afford $700k so the existing houses are now trying to sell at $580k etc. To me the floor feels another 20% off from today. Thats when yields, buyer ability and so on start to stack up again. Would still be hard for people though, even another 20% down we are talking $600 a week loan payments alone for people just over minimum wage
Much easier as a couple to buy a first home than it is single person. 600pw is not a stretch for a couple on min wage with no kids
Believe it or not it actually is hard for them right now, not saying it should be but it is. The $600 is the loan payment, then add $200 for rates, insurance, maintenance. Then add petrol to there min wage job ages away, then car maintenance then heaven forbid these people have kids then its $300pw day care etc etc. $600 is a stretch but we agree its possible. That supports a $400k loan at the moment and thats why house prices will continue to slide, which is also ok, wages rise then we start over again. Just not anytime soon.
Some people are certainly not in touch with reality. It costs money to eat, live in an home and get to work. And why should people have to put off having kids as preceding generations and their greed have made houses expensive.
100% agree.
For a start - 230sqm house is a pretty big house - far larger than the average family needs (but still nice!).
And how big was the plot?
You're not pointing to an average build here.
Plot is big, over 650 sq/m. The house itself is very nice - 2.7m stud throughout, very bright and a very high ceiling in the main entranceway / main lounge - must be 3.5 metres or more. There's very nice outdoor patio and decking, HRV system throughout. Bathrooms are fully tiled. I haven't seen the completed kitchen but he is really proud of it. It's nicer than most of the recent builds I have seen.
Riddle me this: How can you buy a brand new 208 sqm house on an 850 sqm section in Missouri for $550k NZD? Does it take less labour hours to build a house over there? This house has a pretty big basement too, something we don't build over here.
https://www.zillow.com/homedetails/20013-E-24th-Terrace-Ct-S-Independen…
130sqm house in Houston for $280k NZD (80% built)
https://www.zillow.com/homedetails/8010-Attwater-St-Houston-TX-77028/20…
Economies of Scale.
Doesn't seem to cost $900k to build a house in other countries. Funny that 🤔🤔🤔
Most countries don't have big earthquakes.
KeithW
Low sales are increasingly a result of vendor greed.
People just cant meet the price peak of the last two years of financial stupidity. This period will be viewed as an extremely abnormal one. Central banks massively overreacted, globally, and buyers acted irrationally.
Meanwhile.... watch paper equity vaporize.
Popcorn anyone...?
Yes exactly.
What constantly astounds me - although not really - is how oblivious more than 90% of people seem to be. And I include within that some quite clever people I know.
confirmation bias is a very powerful thing.
Couple that with a profound ignorance amongst most people as to how markets work.
The thing with confirmation bias is that people want to be the best in the herd, even if the herd is wrong. So they look to the recent past to see what it is that has made people to be perceived to be the best in the herd and try to out do other members of the herd using those tactics. They often never consider if it is an intelligent thing to do, they just do it because it is what other people were doing and they want to be better than other people.
Daniel Kahneman is an expert in this field and I can definitely recommend 'Thinking Fast and Slow' to anyone who wants to better understand the vulnerabilities of human decision making and behaviour. Reading it I concluded that we are very flawed creatures.
Also if you read this book you will likely view this comment section in a very different light as it becomes often quite obvious as to who is stuck in recency and confirmation bias - i.e. who is a closed book and who is not.
If you are only going to read one book in your life, then Thinking Fast & Slow is probably it ...
Yes brilliant book
Yep.
To be fair - and to not show confirmation bias! - I think there are plenty of ‘DGMs’ on this website who demonstrate a lot of confirmation bias, as well as the spruikers.
Polarised mindsets and thinking are very problematic.
Yes agree. Although it is like someone saying with 100% certainty (and repeatedly) that a certain outcome will happen - i.e. house prices double every 7 years (without exception) or house prices will drop 40% this year (guaranteed) with certainty then this isn't good/rational thinking.
It is a matter of possibilities and probabilities with a series of unknown factors that will determine what is correct.
The key is to not be fooled by randomness and assume the logic you have been applying previously is rational reasoning going forward (which is the case I appear to hit up against with most perma-bulls).
That was you recently. You stated you believe HP will fall 50 percent in real terms.
The above comment is much more qualified.
Though I caution you thinking the real world operates exactly as per the classroom lessons. That's the trouble you operate from the textbooks and forget there are many factors that go in the mix. Including market psychology.
by HW2 | 3rd Dec 22, 12:48pm 1670024917
That was you recently. You stated you believe HP will fall 50 percent in real terms.
The above comment is much more qualified.
Though I caution you thinking the real world operates exactly as per the classroom lessons. That's the trouble you operate from the textbooks and forget there are many factors that go in the mix. Including market psychology.
Lol - is that why I've been reading books by Akerlof, Shiller and Kahneman, because I haven't been taking into account market psychology? Even though the books I just recommended above are 'Animal Spirits - How Human Psychology Drives Global Capitalism' and 'Thinking Fast and Slow'?
Books completely dedicated to market psychology!
Ah you're a confused and lost soul there HW2.
I've also been trying to pass on lessons on market psychology from my real world experience living through the property bubble in the US during the GFC - and yet you also attack me for that.
You should also note I generally use the caveat 'could fall by 50% in real terms' in the vast majority of my posts (perhaps I get lazy and sometimes don't use the could) - but I generally do use the 'could' because I don't have a crystal ball and it is a matter of probabilities. The higher our property market has gone up, the more confident I am however that we could see 50% falls in house prices in real terms...
I had this argument with P8 about the using the 'could'. He would say that I was saying that I was wrong because the market hadn't fallen 50% yet...when I was saying it could! And it could! I just don't know the timing but we have all of the conditions required for such a correction to take place.
A 30% drop in nominal prices from here and 2-3 years of 5% + wage growth. And the 'could' becomes an actual outcome. It isn't a certainty though.
People who are over extended to the property market however can't stand that position because they like to think they know for certain what is going to happen - why? because their financial well-being depends upon it!
Market psychology is critical but it works both ways. It can be a major factor in both booms and busts. Right now the market psychology is bad and worsening by the day.
I'd would argue that the psychology is improving by the day as people wake up from delusion into reality.
Speculative bubbles aren't fueled by rationality - they are fueled by irrationality. The irrational believe they are wise and intelligent and gifted during the boom phase and then become silent (or throw angry tantrums) during the bust.
The rational appear risk adverse and foolish during the final stages of the boom and often get attacked by those whose minds are no longer rational - but have been hijacked by greed and financial self-interest.
It’s the clever people that get me too. Those who are very intelligent and acutely aware of global factors, savvy investors… bought at the peak. The rot runs so deep in the NZ housing fable that almost everyone has been fooled
Yes exactly. Amazing how so, so powerful the ‘animal spirits’ of humans are. Those animal spirits usually win over calm, sober, objective, rational thought…
Can definitely recommend this book to make some sense of the phenomeon you mention:
Animal Spirits: How Human Psychology Drives the Economy, and Why It Matters for Global Capitalism (Akerlof and Shiller)
The global financial crisis has made it painfully clear that powerful psychological forces are imperiling the wealth of nations today. From blind faith in ever-rising housing prices to plummeting confidence in capital markets, "animal spirits" are driving financial events worldwide. In this book, acclaimed economists George Akerlof and Robert Shiller challenge the economic wisdom that got us into this mess, and put forward a bold new vision that will transform economics and restore prosperity.
Yes another classic
https://www.youtube.com/watch?v=TpCb3xjh-Kk
BOOM!
These auctionnumbers represent an almost complete collapse in the NZ property market as of now. Feel free everybody to change Bear Sterns into any name you wish. Somebody on here ( cant remember who) was using "kaboom" several months ago.
I now consider this to be timely.
Those who drive the motorway at peak hour will be stuck going nowhere and cursing other motorists.
BUT of course there are others who get in early and whizz along. They get to where they are going all relaxed and ready for the next part of their day.
The late comers arrive at their destination late and steamed up. That is if they get there at all.
(ITGuy and IO because you need everything spelled out - the above is an analogy)
Those who drive the motorway at peak hour will be stuck going nowhere and cursing other motorists.
BUT of course there are others who get in early and whizz along. They get to where they are going all relaxed and ready for the next part of their day.
The late comers arrive at their destination late and steamed up. That is if they get there at all.
(ITGuy and IO because you need everything spelled out - the above is an analogy)
Peak hour was those who purchased in 2020-2021 during the rush - stuck going nowhere now (like your children) because they find themselves in negative equity with rising interest rate costs they can't afford.
I think those that see a recovery before we’ve even had the downturn are truly gifted Precogs. Before its even happened, they can somehow quantify the true social and economic cost of bringing inflation sustainably back within the 1-2%. As soon as mid 2023, minimal collateral damage will have occurred and property will shine once again.
Maybe when they're burnt, will they then learn.
Smart drivers keep an eye on the cars 12 ahead and have plenty of time to respond. The dummies just tailgate, and react to what's immediately in their face. Its more likely to be someone's towbar. But then they can't understand why they are where they are.
I like that comment because the lack of safe driving distance often demonstrated by Auckland drivers infuriates me. Taxi and Uber drivers are amongst the worst, and it’s one of several reasons why I almost never use their services.
Yeah, we are always one FED Pivot away from universal prosperity.
Lol - yes a fools paradise.
Only productivity can improve living standards in the long run. Money printing and debt in the end cripple the country and with it, its once very good living standards.
I once did a boat trip on D e N i l e
Beware the property developer who speaks with forked tongue
I think that’s a good analogy HW2.
TTP
Its maybe a little ambiguous but you understand the point. Thanks v much TTP
This is not going to be pretty.
Hold onto your hats on the down ward run.
May to October 2023 will ba a disaster.
Any body seen TTP?
Hi Black and White,
Look behind you.
TTP
Where I live two recently built very nice lifestyle properties have sold very quickly. My wife liked them both and she is fussy. Both would be $2 to $2.5m. Nothing that is average is selling. That’s 99 per cent of the market. People do not want to be renovating older homes not maintained. Expensive and stress is guaranteed. The market will only get worse as borrowing rates rise.
Mum and pop owners are not keen to sell their family homes for a cut price if they will be left unable to afford a retirement unit, and have some money left over. Or they think that they won't have enough to pass on to the next generations.
In any market thats falling the first stop loss is the cheapest.
They get more expensive after that.
Since the Royal Commission into banking in Australia, the banks have become very averse to the prospect of kicking a family out into the street for being late on Mortgage payments.
The Banks have no such qualms about forcing an investor to sell if payments are missed. We will likely see the most carnage in the investor fleet, especially the ones who used to review their equity each year, and ride the bank limits hard so they could borrow to the max believing property would never fall.
Seasoned buyers of the dip, like me and HW2, know this as we have been around the market for a long time.......
We both know that there will be opportunities in this space, much like sharks turn on each other when they hunt in packs.
HW2 knows deep inside that this could be the greatest buying opportunity for him, and his kids, that he has ever seen. We are ready if properties fall by 50% to get twice as much as we could last nov....
He would have told them them they cannot lose with property and that they should buy as soon as they can. Now they will be realising he is not as clever as he thinks and hopefully he will help them when their payments increase dramatically. Those who have some financial knowledge knew rates would rise eventually as we were on emergency rates that made people over confident. No one including myself knew that they would rise so fast and so high this year. With more rises to come those children who listened to their parents and bought houses last year will be ruing their decisions as their outgoings continue to rise. Parents will need to help them financially.
Absolutely. Therefore the cashed out money flowing into regional/holiday locations is at best "in significant retreat".
As an investor, long term, don't you find these falling prices exciting HW2... The cheaper you buy the bigger the yield and potential capital gains one day?
You must be buzzing.
It's a shame there's misleading numbers in this article that hide how well the market is doing...
North Shore Sold 4 & Total 26 =7% Sold???
Clearly it should be double the % sold...
with Rodney the only district where the sales rate made it into double digits
You just spoiled the narrative
I miss Ikimpaul market updates of the Hutt Valley in the comments.
Same, he was right on top of the epi-centre of the crash, did he get banned by any chance? Powerful players don't seem to like powerful data analysis.
interest need to follow this story - its massive..... Nothing even close has happened in NZ...... I am sure savers would be interested
https://www.nzherald.co.nz/business/former-rabobank-nz-ceo-warned-board…
we have had whistle blowers before but never a registered bank CEO...... The Audit commitee and international audit commitee , would report to the board, but by going direct the CEO has lost faith in this mechanism.....
“Actual authority vested in the CEO New Zealand role is minimal and there are no New Zealand-specific committees with decision-making authority. I am doubtful that the Reserve Bank would be satisfied that their requirements are being properly met if they were aware of the reality of reporting arrangements and authority levels,” Johnson wrote in his 2017 letter.
The whistleblower’s concerns were investigated by David Flacks. The Herald asked the Reserve Bank for information on the outcome of that review, but the bank declined to comment. The final report of the investigation has never been released. The whistleblower was not given a copy, even in redacted form – they were only given a “debrief” on its finding.
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