Auckland's dominant realtor has reported its weakest month of sales transactions for four years in December 2022.
Just 527 properties were sold in their system in December, the least since the 474 sold in February 2019 (apart from the May 2020 lockdown month).
That caps a tough year for them. They sold just 8469 properties in 2022, their lowest full year total since 2010 (when they sold 7987 properties).
Half (51%) of all Barfoot transactions were in the $1 mln to $2 mln price bracket in December, and another third (32%) in the $750,000 to $1 mln price bracket. Sales over $2 mln accounted for just 37 of their 527 December sales or just 7%.
They report that "vendors have become cautious about accepting what they consider to be too low an offer". But they also reported they ended the year with 4664 properties on their books, more than 40 weeks of sales at the current sales rate. The last time they had that sort of overhang was in December 2018.
The fewer sales are to buyers willing to match seller price expectations. The median price remained at $1,067,500 in December, little-changed since September and only -4% lower than the 2022 average median of $1,117,000. Prices aren't shifting because transaction levels are so low.
As 2023 progresses, whether vendors who have to sell can hold on to 2022 price expectations will be interesting to watch. Prices are set at the margin, and if those who have to sell (via death, divorce, relocation, etc.) start to dominate the market when sales volumes are low, then the averages and medians could start to move.
Some investors who get their 2022 tax bills in 2023 after the limits on deducting interest costs start to bite may also reconsider their options. Rising interest rates will make the pressure tougher. (They can no longer deduct building depreciation either.)
There are about 600,000 dwellings in Auckland. REINZ reports that about 21,000 dwellings will change hands in Auckland in 2022. That means about 3.5% of houses sell in the year, and these transactions will tend to set the market price expectations for the other 96% that don't come up for sale.
Barfoot Auckland
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256 Comments
Must be loads of boomers with rentals wanting to cash up too. How long do you rent it out with all the hassles and a yield lower than what the bank will pay you! I don’t get why they haven’t already got out to be honest. I guess they think that if National win the election that prices may go up again, so maybe an exodus after the election if Labour win.
Through the entirety of 2022, many sellers faced a reality that they found very confronting. If the only person you listen to is a Property Spruiker, you'll wind up "talking to the hand" of a retreating buyer - No sale.
Some tears are going to be shed in 2023, that's for sure.
Getting $600 a week on your $1 mil house is 3.1%, that is assuming 100% occupancy and excluding costs like rates, insurance, etc. Realistically you would be lucky to get half of that over the long term after expenses and maintenance and the odd p lab and if you factor in your own time doing management.
The good news for current investors is that yield could double in just two years - once that same house is only worth 500k then the yield will be 6.2%
Some of these houses will have cost the boomer a few hundred grand. Some will probably do a current value analysis but I imagine many of them will be viewing it as a decent return they've been handling for years.
That said I'm sure there's other life issues for people that age that'll have them liquidating assets at some point.
Surely they know roughly what the place is currently worth (it’s printed on their rates bill for example). multiply that by 5.5% and that is how much the big banks will give them per year (for up to 5 years if they want). I’m sure that is much higher than the rent even before expenses / hard work / disasters/ maintenance.
What they bought the place for many moons ago is irrelevant to what they should do today.
Buying a house to live in is very different to an investment. But yes it is very tempting at the moment.
Maybe holding an investment house makes sense for younger generations, but for boomers when you are basically guaranteed more over the next 5 years at the bank?
I dont own a home yet, but I can tell you from the other end of the spectrum having seen my parents go through it, the process of trying to evict an unruly tenant can be a long, arduous and take months and months and months if they refuse to leave. The level of signoff, etc etc etc can simply be nuts. Don;t get me wrong there are some absolute greedy scumbag specuvestors out there who care nothing about the people in their properties, but this isn't all of them.
The inability to evict tenants is one of the reasons for there being fewer houses for rent and higher rents. When you realise than once you have a troublesome tenant you are stuck with them for some time, the house owner may think it is better for the house to remain empty rather than be damaged or in left a state of disrepair after a period where the tenant stops paying the rent anyhow.
If National gets back in and allows the eviction of troublesome tenants then the available housing stock for tenants will rise and rents may well go down.
That might be true for cash purchased rentals. But according to RBNZ C31 New Investor Lending:
- 2015 - 65,419 borrowers, average $335k
- 2016 - 62,832 borrowers, average $342k
- 2017 - 41,032 borrowers, average $331k
- 2018 - 40,605 borrowers, average $341k
- 2019 - 36,371 borrowers, average $350k
- 2020 - 42,347 borrowers, average $400k
- 2021 - 37,736 borrowers, average $494k
Keeping the rental property empty is "around the BBQ tales" for many I suspect. Especially given the amount of noise around mortgage deductibility.
A 5 year term deposit will last 5 years, a long time for a boomer as they move into retirement. I highly doubt the rent would produce more over the next 10 years even if interest rates decrease. So really they must still be thinking of capital gain, I’d say capital loss over the next ten years is almost as likely.
You can break a TD anytime with 1 months notice and the interest rate rolls back to what the shorter term was. Fact is its like 5% flat out from 1 year to 5year now so breaking it will see very little penalty in paying back the difference. You can even break just part of the TD so for many elderly the 5 year is a good option. The gamble is that TD rates will go even higher this year, I'm picking 6% at some point now.
Yeah I went to an open home recently and very early in my conversation with the agent they were saying that since National is probably going to get in that will provide support for the market given all of the policy reversals they want to do. So the potential for National's policies are already having some impact on the market with the agents talking like this.
Jeez thats ambitious. Considering it is no certain thing. In 2005 a lot of people made the same mistake. National are still polling lower than when Simon Bridges was leader. In most cases by 10 %.
It's also ambitious to think National will do anything they say they will. Given previous track records, all National want is power to then do nothing with it.
Protection for the ponzi is the one thing that is stopping National getting reelected. News flash, there are more elderly and unemployed getting hammered by ponzi driven inflation, and more renters getting screwed by the asset bubble owners than there are leveraged speculators.
Do the math.
There is already such an 'option', although it is best left to voters who find themselves in utter despair:
Was that this decade (the 2020s), last decade (2010s), or some kind of ancient history from one of the decades before that? Googling it appears to suggest it was labour who brought in gst, something about even drug dealers pay gst.
The more recent example that came up was Grant Robertson speaking too definitively.
Key increased GST to pay for his tax cuts.
https://www.stuff.co.nz/national/3311679/Key-no-GST-rise-video-emerges
Really? Seeing as we're all (really) passengers of the FED express unless Luxon/Ardern bends the knee (XXX) to Powell our OCR rate is on long term trajectory back to to the long term average, which is 3-4% higher (150-200% higher) than it has been over the last 7-8 years.
RE Agents need a dose of RE-ALITY. Unless employers across the country want to give everyone 50% pay rises no one is servicing those mortgages based on current / end 21 prices.
Funny - that's what my fellow DGM'ers here were telling me around this time last year (and pretty much every year before that). Clearly my interpretation of 'not long' is different from others'.
Otherwise exactly what we're finding - we see reports indicating significant price drops around the country, but they sure ain't affecting the market we're looking for a property in (ie: something we'd actually want to spend any time in - and other serious first-word problems).
Prophet or Blind Prophet. Newsflash: this from Corelogic
"CoreLogic’s House Price Index (HPI) shows property values fell -0.2% ..... December’s fall means values were down -5.0% nationally over the calendar year"
Smoke and mirrors perhaps BUT That is the result for 2022!
Possibly those who predicted a flat market were much much closer to being right than others were.
Corelogic is a little lagged, so still catches the tail end of the meteoric rises of 2021. They'll catch up with REINZ soon, even if prices are flat from here. REINZ HPI was down 13.7% in the year to November, will likely be very similar for the calendar year when it's released.
No smoke, no mirrors, just a time lag due to their methodology.
Bit of a tough year for sure, but that's a pretty mild downturn for stocks. Could easily get worse. I'll be a net buyer for at least a few more years, so cheaper prices would be welcome, although your holdings getting more expensive does make you feel all warm and fuzzy.
I'm not much of a chartist, but could imagine an upwards trend in there. Historically, a 12% downturn is not really much to get excited about - it's the 30-50% drops you expect every decade or so that you want to look out for. I'm not leveraged so all very survivable, and would be an opportunity to buy cheap with my regular purchases. I guess the Covid crash got pretty close but that was just a blip in the end, and I got a few bargains.
The 6/9 month question? I didn't answer because I don't really have an opinion on that. I don't think we can predict much about the general market mood that far in advance, nor do I think I would have any particular edge in doing so. I just go ahead and buy the stocks that look like a good price at the time, or that I think have good prospects, and occasionally sell when the market makes me an offer I can't refuse.
The only time recently when I've felt I had some kind of general edge was in Jan-Feb 2020 when the market was extremely slow to react to the obvious developing pandemic, and then briefly overreacted dramatically. For example, I sold some OCA in late Feb for $1.17 about bought back in March for 40-63 cents.
I respect your opinion, that is why I am re-posting this from Forbes magazine:
The Stock Market Is Forward-Looking
Here’s an important reminder to keep in mind when you think about the stock market: the market itself is approximately six months forward-looking.
What does this really mean? In the stock market, valuations are reflective expected future earnings. They’re a leading indicator for the economy in general. Markets are continually pricing in new information and expectations about the future, which can be difficult to conceptualize for investors.
Yep, I'm comfortable with the idea that the market is forward looking. That doesn't give me any kind of edge though, except when the market overreacts in one direction or another when emotion exaggerates those moves (for example the Gentailers fell about 25% in the Covid crash which made no sense to me).
In NZ, any desire to trade on this kind of speculation is also constrained by the tax laws - if you trade too much the IRD will be treating your capital gains as taxable income and your tax returns get a lot more complicated, if you tend to buy and hold this isn't an issue. Most of my dividends are even automatically uploaded to IRD now, very simple.
Data is here - quite a range. Auckland is close to 5% down but Wellington about 17% down for the year, Christchurch up a little (1%). As above, the data they report is a few months out of date by the time it is reported - Prices peaked in November 21 on the REINZ median series, and in April on the Corelogic HPI.
https://www.corelogic.co.nz/news-research/news/2022/corelogic-hpi-decre…
Things are starting to tip in Christchurch too. Houses I've been keeping an eye on have been sitting on the market for a while now, including one down the road from me that's been there since October. The agent is probably getting a bit tired, they stopped doing open homes in November after the first "deadline" date. The vendors bought in Nov 2021, and probably overpaid by 50-100k even then. Unfortunate timing.
Sounds suspiciously like an open home we popped into a couple of months ago - developers had bought and were selling with a loss as the sums didn't make sense any more - looks like it has sold now though.
I've also mentioned before there have been three properties bowled over in my street in the last few months, seems to be plenty more supply in the pipeline (assuming the developers can afford to get them over the line). Blocks of townhouses springing up everywhere at the moment.
I did not realize that Corelogic was 5 months late in their statistics. On the bright side, reluctant vendors/spruikers/TPP will keep watching Corelogic's figures and think "all is well, looks like we hit bottom, onwards and upwards from here" just like TA all of last year.
And my mortgage broker buddy who was convinced that, October 2022 was rock bottom and, the spring surge was about to start.
What continues to astound me - is most people are still in denial, that we are in the beginning of the largest housing market correction since the 1980's.
Well my 2022 prediction for Tauranga was single digit gains however it looks more like single digit losses. I think it looks worse than it really is as houses got pumped to sell prices way above reality by vendors. I could look at homes and my place is down 20%, however I suspect it was never up 20% in the first place. You still cannot buy a section in a half way decent suburb and build a new place down here for less than a million so that really becomes the yardstick.
The cost of building vs 'value' of properties feeds into 'how many are built' not what the existing stock is worth.
This is demonstrated by property prices dropping in the last year, as construction cost sky rocketed
To think otherwise demonstrates a lack of basic understanding of economics.
Assuming we are dealing with a typical market environment, then the ceiling for an existing house should be less than the cost of replacement. Conversely there is always a value to an existing dwelling that will get inflated as new replacement costs rise.
I'm not sure how to rebuke what you're saying because your evidence rests on what's going on in a bearish market.
Its not a problem there. Even in the big cities like Melbourne you can always find something affordable in the outer suburbs. There are currently over 2500 properties for sale under $500k in Melbourne, like this 3 bed, 2 bath townhouse for $410k https://www.realestate.com.au/property-townhouse-vic-werribee-140902084
Tauranga house price’s will continue to fall, higher rates are just kicking in, the downward trend will start to pick up speed as year continues and people with new builds will find themselves losing money very quickly. The prices seen at end of 2021 will not be seen again for years and if the world downturn deteriorates faster than expected it will be decades before you see 2021 house price’s again.
Have a parent contemplating to sell up in Blenheim, I told him to hurry up as prices will fall. He said the RE agents told him most buyers are from out of town, and they are happy to pay the new (inflated) Blenheim prices because its still cheaper than what they sold in Auckland or Wellington. So long as the regions remain cheaper than Auckland/Wellington then the regional prices may be maintained, and it will be the amount of disposable cash the buyer has left that will shrink. However, if properties are not selling in Auckland/Wellington then nobody will be buying in Blenheim, and I'm already seeing properties sitting on the market for months still waiting for a buyer. So back to the marginal seller setting prices again - how many sellers are desperate enough to cut prices to attract a local buyer rather than an out of town one?
Correct, Tauranga is a destination for cashed up Aucklanders looking for better weather and less traffic and everything 20 minutes away or less. While house prices here have closed up on Auckland you still get way more for the money and you can get what is simply unobtanium in Auckland like a rural aspect 10 minutes from the CBD.
Even presold could turn into an issue.
Bound to be people who've bought off the plans 18m ago who would have had no issue securing finance then, who will struggle to get the bank to say yes when building is complete. Valuations not as expected, interest rates are wildly different etc...
The media, the agencies, the RE theives, the valuation companies all are a cartel which have created this imbalance in the market.
The prices sellers are asking is just unimaginable greed brought in by the financial system created by a few which wants excess profits every quarter. This is totally unsustainable model.
The generation after the world War has created a very bad model for the future generations.
Sellers are greedylocks. Made two offers in mid Dec. Both sellers holding out for a 2% debt based number. I did offer to meet ask on the last one, but only if the seller was prepared to vendor finance at 2% to support their stupidity.
I left before they gave a reply.
Heaven forbid you're a mortgage holder working in an industry that relies on disposable income. Good news is the unemployment rate is low and employers are screaming out for Labour (although they predominately want imported Labour for some reason), however when whole industries go through declines and layoffs it'll be a stampede for the remaining jobs in other sectors. Something I'd dread to ever be a part of.
Only a third of us have mortgages and lets not forget that a whole lot of us are now receiving some interest on our deposits.
I won't be surprised if the media and the ruling elite start describing NZ as a 'savings culture' and using the simple frame like you express here as an illustration of how resilient h'holds are to any interruptions to the property ponzi.
Don't take this personally but the concerns of people trying to keep a roof over their head and raise families, often with very little support from taxpayers, should probably take priority over the people who have huge amounts of spare cash looking to make a few extra dollars from passive investment through no extra effort on their part.
No, I want to keep interest rates at a reasonable level so that people and families who are having to dig deep to pay mortgages on houses don't end up losing them.
Note, this cuts both ways. If interest rates hadn't dropped to an unreasonable level, then this wouldn't be an issue, but it did happen and it is an issue. So, in balancing the interests of younger Kiwis and families stretching to meet mortgages or people sitting around on lots of cash, it's a pretty simple call as to which should get the rub of the green here.
I'll also throw in that there seems to be an aversion to the idea that people should actually spend their retirement corpus, rather than eternally saving it and being able to live off the interest or dividends it generates. You can push that as an argument, but it's a zero sum game. The idea that you should be able to do that is being underwritten by current workers and taxpayers, with no certainty as to their own retirement or benefits. That gets pretty hard to justify as things get harder for younger people to access housing at affordable levels.
What's the solution? Targeted support? Tanking the whole bloody thing and giving owner occupier write-offs? I don't really know. But eternally trying to pick winners to the constant benefit of a certain cohort doesn't seem to be working out too well for younger Kiwis, who are ultimately finding that sometimes the grass really is greener somewhere else.
It depends how many borrowed amounts they should have not due to the low rates. Around where I live I have the feeling many borrowed excessively to buy a Tesla and a trip for the family to Europe.
The trouble with very low rates people will dump their bonds and TD's an go out and buy rentals as has happened.
Maybe you are correct.. Targeted support, tax write offs for first home buyers.
It's hard to know, really. A proper correction is now at least seven years overdue - that's the length of a full economic cycle in non-insane times. If you'd sat on the sidelines waiting to be right, you would be a long way behind now. Unfortunately certain things like biological clocks, health and other life factors don't wait for anyone, and you have to get on with things at some point.
If someone has to take the pain, then I'd rather it be the investors who were flooding the market when LVRs were stupidly removed than FHBs and owner-occupiers. But they'll be able to sell-down and make the pain worse for actual home owners trying to provide stable accommodation for their families.
Can I rephrase that for you? "It depends how many banks lent amounts they should have not due to the low rates".
Remember, it was the banks setting the stress test rates, not the borrower. It's the banks that have access to a myriad of statistical data, not so much the borrowers. It's the banks that derive a healthy profit from lending, much like electricians and plumbers for their services, because they are expected to provide a level of expertise that protects the customer from risk.
No sour grapes here, I'm doing very well for myself.
I can also see past my successes at the economic mess the Boomers have left us. I'd rather see that $16b old person's BENEFIT wound right back to just those who need it, and the savings put towards other people in society who need it. Won't change a thing for me as a net taxpayer, but will change many other people's lives.
That's exactly what it is. I'm not denying it. And if I'm wrong feel free to argue the point, not flail arms about how it's "mean to talk about it".
It's not any different to Boomer's generalized bs comments where they share memes about how kids these days don't have bare metal slides or drink from the hose or don't play outside, spend too much time on the "xbox" etc.
You really have a chip on your shoulder don't you? I have never seen those memes, but if they were funny I would share them, just as I would share funny memes about Boomers. Your initial comment talked about "the generation". You imply the entire generation. You are wrong, that is not the case.
Also it would be such a cruel irony, if these FHB that have borrowed massive sums to buy their modest first home are now expected to pay higher mortgage rates, while those screaming out for higher interest rates on their huge amounts of spare cash were the vendors of said FHB.
- "Here, give me $1.2 million dollars for the house surplus to our needs. Don't worry, mortgage rates are low."
- "Goooood, now that's done....."
- *angry fists in the air*
- "Us hard working savers are being punished for record low interest rates!!!!!"
As long as everyone can put their lives on hold*
Relocations, pregnancies, redundancies, career set-backs, illnesses and all the other circumstances people deal with literally all the time?
I mean if you just ignore all the ways in which it could go wrong, then yea, everything is fine.
Getting a property to market, takes time, energy and money which reflects a baseline motivation to sell.
For some there is a more pressing need.
The market is stickier on the way down but all it takes is time and pressure. The February OCR announcement will push vendors harder to meet the market.
And still the level of denial is bewildering isn't it? People still spending, moving jobs to offset inflation, overseas trips a plenty now travel is somewhat more reliable. One friend of mine was adamant that immigration will see house prices stabilise this year as demand increases, also claimed a ton of builders leavin to AUS due to the downturn happening in NZ which will put pressure on those still halfway thrugh builds. Shake your magiv 8 ball folks and grab the popcorn. Some know when to hold' em and some know when to fold em' but it appears many vendors are clinging to hope and feel that late 2023 everything will be just fine.
How do we pay off past Debt with Inflation - the current rationale for what we see today?
We increase Income and keep the established Debt constant. If Debt expands in tandem with Income, then it becomes a self-defeating, repetitive cycle, one we've had for decades past. One we have to break.
There are a number of ways of stalling Debt assumption, the 2 most obvious being the Cost of Debt (interest rates) and the Amount of Debt (LVR's, DTI's etc). Both those have been in evidence here in the last +12 months, and until the objective of rebalancing the current outstanding Private Debt amount against whatever present Income is, then except both initiatives to continue. i.e. less new Private Debt available at increasingly higher Real Interest Rates.
There seems to be a portion of the population who want to think that paying people more will lead to price inflation, even though wage demands are a response to prices that have risen already. They seem to have an increasingly loud voice in this debate despite this, and don't seem to have any answers beyond insisting workers having their real income drop even further is the answer.
That's a bad deal and a crap argument. It seems employers want to hoard margins when times are good and claim things are too tight for meaningful pay increases when times are bad. It is nothing less than an attempt to have it both ways.
Depends a bit on the business. But in general, really good workers are a rare commodity, and anyone of sound business mind wants to retain and appreciate good employees. Regardless of the industry, the best firms I deal with pay their staff over the odds.
That said, a business can and will try and pass on increased labour costs in this environment in their charges, this can only really be inflationary no matter how you slice it.
Wage demands today are the result of inflation that has already happened. That's the timing bit that is so key in understanding how NZ workers ended falling further and further behind real living costs.
In that sense may people don't get pay increases. Their real wages drop across a 12 month period until they get a kind-of square up. They're just less behind the curve in terms of the costs they've already been paying for up to 12 months.
Some of the inflation we have had in NZ will be off the back of constrained labour supply. It is pretty much from every angle.
Employers can chose to absorb costs, there will be increases anywhere between 0 or 100%, maybe even more if the business doesn't routinely revise their pricing.
Although a wage increase does not translate into a 100% increase in the cost of goods or service.
If wages tripled overnight, and prices were adjusted strictly on a labour cost basis only, then wage earners should in theory be better off?
- $70 labour, $10 other costs, 20% GP, price = $100.
- Wage = 70% of product.
- $210 Labour, $10 other costs, 20% GP, new price = $275
- Wage = 76% of product.
Okay I have reworked the numbers. Assume that 70% of "other costs" is also subject to a tripling of wages. So $7 x 3 = $21. + $3 = $24.
- $70 labour, $10 other costs, 20% GP, price = $100.
- Wage = 70% of product.
- $210 Labour, $24 other costs, 20% GP, new price = $292.50
- Wage = 71.8% of product.
But not every step of the supply chain will have a heavy 70% Labour cost ratio. It might be 70% Labour in the Lithium mine, but how much Labour goes into retailing a cell phone?
Employers are not paying extra anymore. They are looking at cheaper options offshore.
The companies just want more and more every quarter. They will not be able to do that if they pay their employees.
The hHuman resources department in the company's should be renamed Robot resources as they are not human or look at humans. They lool after the inhuman parts of the company.
One man company now mate. My salary is going down as I have to do more work. Can't afford a good engineer at the salary they want. I don't blame them, they need to live too. I tell them mate, if you need that much money look to foreign locations.
I am going to hire someone remote in a cheap location. Half the salary and no ACC, work safe, EHS etc BS.
A sign of the times. I have a mate who installs gates and after years has just given up trying to hire someone to help him (eg. digging holes).
At least our shitboxes are worth a million, even if we have rigged the game to disincentivise actual work. I'm sure that is a sustainable and winning formula, not.
The median period of time to hold on to a house in NZ is 7.8 years according to CoreLogic. So there's some mad greed going on (huge capital gains in that time even though prices have recently dipped) or sales are all from recent purchasers who don't want to realise a loss.
Most sellers need a price that enables them to buy something else, usually an upgrade as people move up the ladder from starter homes. That's why things are not shifting at the moment and nobody is budging on price. I cant sell my home for less than $1M if the vendor of the house I want to buy is holding out for $1.2M (and the banks have only approved a $200k increase in my mortgage). I'm unable to accept $800k for my house until the vendor of the other house agrees to accept $1M. So its a stalemate.
The new year turning paper equity to vapor.
Further inflation, higher OCR and rates, ever declining tax rinse, more new rental stock, lots of 2% specu debt rolling to 7%, banks forced to lend prudently. Do the math.
Picking a lot of agents and agencies entering financial starvation due to speculative greed.
But they also reported they ended the year with 4664 properties on their books, more than 40 weeks of sales at the current sales rate.
David or anyone, how can they say the average time to sell is 40 odd days when there are 40 odd weeks of inventory...... numbers do not add up?
The housing market will continue to tank over next few years. Now rates are higher many will have to sell or default million dollar mortgage is now 1500 per week instead of 950 good luck keeping a 3 bedroom box in Auckland for next 30 years. The wheel’s have come off and the people who are over leveraged and believed emergency low rates were here for good are now going to be paying the price banks will make sure they are on winning side of the ledger.
Banks do not set interest rates DTRH its RBNZ and the swap curve based international funding opportunities they use. Banks need to make sure that then can return Grandma's term deposit money etc. Please do not blame banks for human greed, its just like bottle store owners are not the sole cause of alcoholism.
The Ponzi feels like Wile E. Coyote has run off the cliff, is looking at the camera and is feeling for the ground with his foot...
Bank provide mortgages to make money that is their business you can’t blame banks, people who borrowed when rates we at emergency levels when time comes to refinance are the ones who will pay a lot more mortgage. Banks will make sure they don’t lose as they should the one thing you can be sure of is governments will not be bailing banks again like in 2008.
If a bank fails your eftpos card would.... cease to work, any democracy is 9 missed meals away from anarchy. Rest assured that the government will rescue a failed bank in NZ, by OBR, BS11 or stat management then equity dilution.... I am sorry but you fail to understand the situation everyone is in.
B&T and agent's need to understand they don,t control the market banks do.
Although they have been part of the problem.
Let the big correction begin this is going to be fun.
40% down by the end of 2023 and most people who use homes to live in don,t care.
The people are taking action at last very, very good news for the younger generations.
Maybe not that ridiculous. Considering that it costs more than double to borrow the same amount as it did at the peak then 40% from peak is not that ridiculous.
Good new for young people not such bad news for existing home owners unless you plan to move countries.
However bad news for investors and the realestate industry.
Here's a reason why it's a rediculous statement...
A new poll shows just 7 per cent of homeowners want house prices to seriously fall.
A further 18 per cent want them to drop “a little” while a massive 62 per cent don’t want them to drop.
https://i.stuff.co.nz/national/politics/300517990/housing-crisis-poll-s…
People are selfish, no home owner really wants house prices falls. Some home owners may say they won't mind, until it actually impacts them eg. Boomer trying to sell to purchase a retirement home.
Remember what Jacinda said in 2020/2021...
Jacinda Ardern says 'sustained moderation' remains the Government's goal when it comes to house prices, as people 'expect' the value of their most valuable asset to keep rising
https://www.interest.co.nz/property/108301/pm-jacinda-ardern-says-susta…
The pressure is mounting on the govt, home owners collectively aren't happy...
IT GUY in 2023 please read comments properly before replying and respond to what was said... it may help us all.
After that - have a think on this - the majority of home owners who are a large portion of voters don't want home prices decreases... Election year coming up, what would you do with policy if you're a politician trying to get in/back to Govt? What have we seen in the past, why has property got to where it has over the years?
Nifty - I have thought about it. Low interest rates since QE started have caused the majority of the NZ property market gains since 2008. It was also the tax free capital gains in NZ.
https://americandeposits.com/history-quantitative-easing-united-states/
Now QE is finished. QT is here along with higher rates.
RIP NZ Property prices. What people want to happen has no effect on investment markets. It's called Wishful Thinking.
Here’s an example from the investors fb page to show what’s happening..
“Please be gentle, brand new landlady and not by choice (brought first home at the wrong time of the bloody market and can't sell as in negative equity - have rented house out to try to keep afloat until I can get my mortgage down from its peak).
I will be finding a property accountant in Wellington soon (any recommendations of any taking on new clients appreciated) but need a little clarity as I try to prepare for tax i need to pay end of financial year as will likely have to get a loan to do so.
Property purchased as OO December 2020.
Refinanced property to buy out vendor finance as OO December 2021.
Property was under my name on title from first transaction, with vendors trust as interested party.
Vendors trust was removed from title upon refinancing December 2021.
I believe because I refinanced the property after March 2021 I will not be able to deduct 75% of my mortgage interest this year as the phase out begins.
It only became a rental property September 2022.
I understand an accountant will help me with all of this but I'm desperate to get an idea as to how bad it's going to be.
Will I be looking at paying tax this year on my full rental income less expenses?
Or will I be able to deduct 75% of my interest as an expense?
Side note, my rental income doesn't cover the mortgage yet, or any expenses. Working my backside off with 3 jobs to try and turn it around as fast as I can.
Appreciate the input. Very nervous in amongst seasoned investors but we all have to start somewhere and these are the cards I've been dealt.
50-60 age group we have seen both side and we want change for younger people.
Lol that age group has largely caused these problems through excessive greed... what's more, they're in charge.
Take Key for example - 61 years of age, yeah he really cared for younger people aye. 7 house Luxon 53, looking promising too.
Those not voting for the Party of Bank based property speculation before all others...aka National. Those moving to Aussie to generate tax over there (que lots of our medical staff). Those not paying the specuvestor ponzi tax (fhb'rs). Those pissed off with asset driven inflation (most retired and low wage).
Those that add up to a majority vote.
Saw a brand new house that sold for 800k in 2021, recently sell for 560k ish. It was being used as a rental. Had been on the market for months with tender and then offers, and it eventually had BEO $620k. The thing is you couldn't buy the land and build it for the price it was sold for. The cost to build is only going up with inflation. So some people are getting very good deals, and there are already people who are desperate to sell. The mainstream media are very quiet on the topic now prices have dropped.
Am assuming it was a brand new townhouse in 2021? One of the many two-story, row houses that popped up everywhere these last two years. If they bought against a 2021 valuation - it is entirely possible.
Here's an example, revalued Sept 2021 at $1.34m - now offered for sale at BEO $795K.
https://www.realestate.co.nz/42279086/residential/sale/28a-lyall-parade…
How's this for you -
Purchased Dec 2021 for $2.08m. First listed by negotiation last year. Then, put a price on it, BEO $1.85m. Still did not sell and withdrawn on 24/12.
Estimate (realestate.co.nz) for it is now $1.66m.
The new house was listed in 2021, here's the YouTube from October 2021 when the new house went for sale. It was then sold again this year.
https://www.youtube.com/watch?v=EZDFNTjYXQo
The house on the corner which actually faces the other road sub-divided its back yard. It has a corresponding N/A sale on 11 Feb (The $114k sale). So not sure where the earlier $567,500 sale comes into play
The first $567k sale looks like it was an off the plan sale https://www.realestate.co.nz/3846818/residential/sale/4-kummer-crescent….
The $114k sale appears to be the transfer of the land parcel from the other property to the new address. The property could have been resold for $800k far above market value for money laundering purposes (ie. fake price, overseas buyer etc) then eventually sold for market value to release clean funds. So yes, IRD and OIO should probably take a look at that one.
Another theory could be that someone genuinely did pay $800k for it, and the $567k was a mortgagee sale by the bank.
It's not the best street, even though it's right near St Matthew's and does have a bit of leafy street appeal on that portion.
Probably got sick of bogans doing skids and riding dirt bikes up and down the footpath. Can frequently hear them from our place a few blocks away.
....wakes up from a deep slumber .....must be 2023 ...what were those last 3 years all about ??? ....told a mate of mine who has been working overseas and has to come back and live in NZ for the next 4 years to be eligible for a NZ pension, not to even bother .....as no kids etc, to buy 2 units as close to the sea as possible, suggested Sunshine Coast - rent one out and live in the other....I hear you all scream "what about his NZ pension?" ...doesn't matter ! as his assets would be too high to even qualify for an Aussie pension anyway - even if he was a dinky di Aussie !......while the rent would cover his expenses .....plus he can easily work remotely.
The amount of time, money and resources that is put into residential real estate in this country is just ridiculous - and I'll say it again, we don't have one of the lowest productivity levels in the developed world for nothing !
I hear you all scream "what about his NZ pension?" ...doesn't matter ! as his assets would be too high to even qualify for an Aussie pension anyway
Maybe not so much screams more "what are you talking about?", because you still get NZ super regardless of your assets.
But yes this person can go to Aussie and landlord there, and not cost the NZ taxpayer any more. Everyone wins. Except maybe Aussie.
fully aware he would get his NZ pension (if he stays here for the next 4 years and have you thought what for ? and he may not want to? ) ....btw I think the pension should be means tested mate, like Aussie anyway - you PI's have sponged off the taxpayer with your tax breaks, Accom. Supplement, etc etc for at least a decade now - time to put something back into the economy for the greater good of the country .....btw I am a Libertarian and firmly believe let the "free market" decide the rents ! ...if that person can't afford the rent, so be it.
PS I wouldn't worry at all about this guy mate - he wouldn't be renting or buying off someone like you (unless it was a mortgagee sale :) )
PPS Aussie won't lose mate - all that capital he has accumulated here in NZ when he sold in 2015 will head over the Tasman, to enrich the Aussie property market etc etc - while the rents will stay in the aussie economy. So really overall NZ is the one that loses - less money circulating in the economy to pay your accommodation supplements !
No one asked you to comment Pa1nter - with all due respect, my little story must of touched a few nerves ?
Have a nice day and continue living in your "world" - don't forget to adjust your rose coloured glasses from time to time and realise that everyone does not desire or want to be a NZ multiple property owning investor.
Your little story was hard to make sense of. You're both promoting your mate to be a property investor, whilst also decrying property investment, overlapping NZ Super and Aussie pensions, it's all over the map.
But now I know you're a Libertarian so everything's coming into better focus.
Pa1nter ...my "little story" was designed to illustrate the effect of people of your ilk have on the NZ general economy and mental well being of it's citizens.....either they end up being a "mortgage serf" indefinitely or a "renter for life" as economic conditions in this country mean your disposable income after your rent or mortgage payments are forever decreasing, while that house deposit keeps on climbing - while costs continue to rise. Then I hear those landlords say "mate, we'll just raise the rent" ....well, whose actually "paying" ? Ever wondered why NZ has a lower economic standard of living to Australia ???
You are so determined for things not to change in NZ on the property front, you can't see the wood for the trees and all the changes that are happening around you, especially in the last 12 months - and when you hear about that friend of mine, who is thinking "ahead of the pack" and weighing up options, I say good on him, as you have been "playing the options" for years now and don't like to see those "options" ie potential buyer or renter not being within your grasp, and heading overseas.
Ever wondered why NZ has a lower economic standard of living to Australia ???
Yeah, it's called mineral wealth. Without that, they have an even less diverse economy than NZ.
People can come, go, buy, sell or rent, doesn't make much difference to me. I'm not a property investor.
Goodonya mate ....I'm not a PI now either, BUT I want the market to settle back to some "normality" in this country, where house prices are relative to incomes and rents are what a tenant can afford, not subsidised by the taxpayer.
Leave you with this thought - have you ever thought for most people with one house only in NZ, it doesn't matter whether they go up or down, as you are still living in the same house....while buying & selling in the same market is just that - and the price is immaterial.
I currently have 3 properties on my 'watch list' and they will remain that way until they are priced. I'm tired of driving for hours to view properties, only to discover that they need a LOT of work or the owners want a LOT more than RV. As far as I'm concerned, properties are not for sale unless they have a price tag.
This is what we did when we bought in 2017, but one step further we built a rapport with the agents. Swapped business cards at open homes, called them once a week/fortnight for any new listing updates.
You'll be their first go to sale either because it's an easy match, or because they want you to bugger off! We ended up with a shadow listing from a distressed "accidental" landlord looking for a quick sale. Difficult tenant dictating stupid times for viewings. Made for a decent lowball offer.
Living in ChCh and looking anywhere from Dunedin to Nelson. After two trips of going to view (what appeared to be great places online), I'm cautious as 1 place had woodrot and another was - trying to be polite - incredibly well photoshopped. I always ask for a range, but I find realtors are just playing games as one range was $800k apart. I just want realistic photos and a price.
True EdwardD ....I argued with a mate of mine many years ago, for a decade, in that a property is only worth what someone has entered on a countersigned sales and purchase agreement ....the vendor can have 101 reasons why their property is worth "X" $ amount - let them have their reasons and they'll have the stress of searching for a willing purchaser at "their" price.
Some properties on my watch list had prices, they where obviously so stupid that they are now Price by neg as they must have been getting bugger all bites. This one was asking 1.15mil they bought it in 2018 for 600k nothing added...... here it is
https://www.oneroof.co.nz/estimate/8-parati-place-motuoapa-taup-waikato…
ITG just for you:
Wall Street higher as FTSE 100 closes in positive territory amid global rally
https://finance.yahoo.com/news/ftse-100-european-stocks-continue-new-ye…
London’s top flight consolidated the big gains seen on Tuesday.
What did they say... Global rally
Just for you Houseworks, as one of our last remaining boomer spruikers, a post from the Facebook PI Chat Group the likes of which are becoming more and more common. But nothing to see here according to you eh....how many people jumped on the gravy train with absolutely no idea like this - I'd hazard a guess s**t tonnes..
2 days ago
Hey all, how does one know when to sell a place vs hold? Our rates up for renewal and with rates at 6.49 the place makes a 15k loss on Interest Only. With market flatlining are we best to get out now and then get back in when things start moving again?
Today
Hey the other day you all answered questions re should we sell or not re a 400 weekly loss. We now have an updated sale price from one agent (getting more), but this is now 75k below homes and means a 50k loss... would you sell? This now back to middle 2020 prices
As above, the stats speak louder than false claims. Furthermore would you hope that I will provide financial advice which you then relay back for whatever motive you have
As for being "one of our last boomer spruikers". 1. Why did you insert boomer into that, aren't younger investors allowed to talk about market positives And 2. What makes you think I am a boomer. This is an anonymous forum don't you know.
What some people think is nuts others will think is a bargain. Much better pictures on homes.co.nz its been modernised. Tons of parking and enough for a motor home or boat as well That's a million dollar house any day of the week these days the new RV is bang on 1 million. That's a $100K view like mine for starters.
You're correct. But will a minimum wage of $21.20 per hour or the price of a mince and cheese pie prevent house prices reverting to the mean? Or, heaven forbid, overshooting that mark?
Some people think minimum wage earners shouldn't be buying houses. Maybe the only people willing and able to buy a house will be minimum wage earners, because everyone else is either already loaded up on debt, or looking to sell. So the market will find a way.
Housing stock will just build up, if people are not earning enough to buy million dollar properties with rates at 7% eventually the market will crash to a place where the population can afford a home. I would say 520k for a good 3 bedroom house is a affordable price for average wage couples this would be around 4 x income so would mean they still had funds to live
The cost to build would be higher than that plus land cost. An old uninsulated single glazed house maybe, but then thousands needs spending on it to get it up to modern standards. The thing is people today want things now and want all the latest stuff. A new house is is 3-4k a sqm these days so that is half a million to build a new small house. Materials are only going up and still a shortage of builders
If people cannot afford to buy at 4 x income this just tell us house price’s are way over valued and eventually a huge crash is needed this will happen over next few years and hopefully the government and loss of huge amount of capital will keep speculators from pushing up price’s again.
Anyone else notice the flat spot in house prices in the B&T graph between 2016 and 2020 (clumsy NZRB actions!)
I've mentioned this before and I attribute it to the new Unitary Plan introduced in 2016 that allowed considerable intensification. If you use the REINZ data from here - https://www.interest.co.nz/charts/real-estate/median-house-price-growth - you can see this doesn't happen anywhere else in NZ except Auckland.
Why is this important? Because Central Govt make the rest of the country like Auckland through the Housing Supply Bill. And the NPS/UD adds further intensification!
Outcome? Methinks house prices have much further to fall and then there'll be long, long period of little to no real house price growth. Prove me wrong [evil grin].
The very large number of comments on this topic certainly shows just how obsessed New Zealanders are with residential property. This obsession is one of the main reasons why we are such a poor nation compared with those nations that are doing better than us. It’s just as well we have a reasonable lifestyle in New Zealand to make up for our weak financial position. For those who can afford to buy good housing and food that is.
That lifestyle is just backed by selling houses to each other, with new entrants to the economy (FHB) borrowing greater sums to make up the difference.
The economy is no different than taking out a $20k CC, spending $5k/mth on living well while only earning $4k salary. The CC company loves it so much, they drop the rate from 15% to 12% and increase limit by $5k = the same in interest dollars. Rinse and repeat. Now I have a $100k credit limit with a 3% rate, and rates start going up.
there are three types of people who comment here ..
1. Property owners (mortgage low/ free) who love the housing market. And want a boom bust market to make oodles of money.
2 property owners ( mortgage high) who love watching the market rise more than fall
3. Idiots who bummed around, never got good careers, earn crap wages ( due to thier own decisions/ choices and nobody else's actions!!!!) or are just lazy minded. They don't own a home and are jealous of 1. & 2. Above. They also justify their renting with bullshite excuses.
And anybody who says housing speculation is easy is a dreamer!...
1. You have to be brave to spend large sums in a tricky market where you could lose big or gain big .
2. You have to do a lot of analysis to get your timing right
3. You need to know a good price v bad price in the time frames of the market highs and lows etc.
4. Blah blah blah...
But, my experience has been very pleasing fo 16 years Compared to the previous 30 working my arse off " for the man" just for all the profits to head offshore.
sooo .. housing speculation is a great NZ INCOME THAT DOES MORE FOR NZ THAN ...THE BANKS, GOOGLE, AND MOST LARGE CORPORATES.
ALSO, BUYING AND SELLING PROPERTY HAS LIFTED THE VALUES OF HOUSES IN POOR AREAS THUS LIFTING THE WEALTH OF THE POORER PEOPLE WHO BUSTED ASS BUYING PROPERTY 5, 10 ,25 YEARS AGO.
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