House prices in central Auckland have declined by almost $400,000 from their market peak in November 2021, with other parts of the city not far behind.
According to the Real Estate Institute of NZ's February sales report, the median selling price in Auckland's central suburbs in February was $1,142,800. That's down $397,200 from the market peak in November 2021.
That suggests properties in those suburbs could have lost just over a quarter of their value (25.8%) in the last 15 months.
Central Auckland contains all of the suburbs that previously fell within the boundaries of the former Auckland City Council and includes some of the city's most desirable locations, such as Ponsonby, Herne Bay, Parnell, Remuera, Epsom and St Heliers.
However the plunge in prices has not been limited to Auckland's most expensive suburbs, with the median selling price in Papakura in the south of Auckland dropping to $770,000 in February, down by $360,000 compared to the November 2021 peak.
That means prices in Papakura are now down by almost a third (-31.9%) compared to 15 months ago.
The median price has declined substantially from the market peak in all of Auckland, with Rodney and Franklin the only districts where the decline is less than $200,000.
The Wellington region has also experienced substantial falls in median prices since the market peak, with declines of more than $200,000 in Porirua and Upper Hutt, and Lower Hutt not far behind at -$195,000.
Other regions to show substantial declines in their median prices since the market peak were Gisborne -$110,000 and Hawke's Bay -$159,000.
The big run-up in house prices during 2020 and 2021 came with the Official Cash Rate at a record low of 0.25% and bank mortgage rates at historic lows. On top of this a government wage subsidy scheme maintained job security as the Covid-19 pandemic raged. In February 2020, just prior to the initial Covid-19 lockdown and ramping up of Reserve Bank and government responses, REINZ had the national median price at $640,000 and Auckland's median at $885,000. The respective February 2023 national and Auckland median prices, at $762,000 and $1.009 million, remain above where they were pre-Covid.
The tables below show the regional movement in the REINZ's median price and House Price Index since the market peaked in November 2021.
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REINZ House Price Index - February 2023
Median price - REINZ
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155 Comments
I wonder who will be the first journo to use the dreaded 'C' word in mainstream press
My guess is it will happen in the next 3-4 months
It also means there have been many sales with over a 25% drop which is consistent with what I have seen in these areas.
Notably there have been very very few new listings in these areas over the last 2 months. Almost none in the last weeks and evidence of distressed sales in the listings with some selling at a loss.
Once RE agencies run out of money to pay for advertising on the MSM platforms, journos will be free to say what they want about our housing market. I expect the C word will start making an appearance about the same time as property ads start to disappear.
Will those journos have a job without the revenue?
Good point.
Will those journos have a job without the revenue?
Possibly not. RE ad spend will be an important revenue source in the NZ / Aussie MSM. Central govt may have to step up.
Lets hope a National ban on all public dept advertising without prior cabinet approval, purely a temporary measure of course 2-3 years should be enough for the desired effect!!
Hopefully their property journos (starting at the top) are the first to go. They shamelessly pumped the bubble up with non-objective and highly biased coverage. A journalistic disgrace.
Maybe if the toothless Media Council don’t get them, the property crash might.
Re Agencies don’t pay for their advertising, their clients do. RE agents take no risks.
Haha! Exactly what I was thinking! The positive superlatives are always quick to come when prices are going the other way. Such a strange quirk of kiwi journalists...
It's really about time, right? I'd like to say the journos have only been fooling themselves but it would appear from a lot of the asking prices I've seen, some vendors are still in la la land and taking the tenuous observation of "soft-landing" as gospel.
Elsewhere in the world, they've been referring to it as a crash since at least 6 months ago:
A housing crash in Canada, Australia, and New Zealand? It sure looks like it | Fortune
New Zealand House Price Crash | NZ Housing Market Analysis (capital.com)
I remember hearing one property expert in the media a few years ago saying that he considers a crash to be over 20%, and that historically it hasn't happened in NZs history and he didn't think it could occur. When adjusted for inflation, which is very high, it may prevent it occurring:/ But I heard one expert on the radio saying that they expected interest rates to start to drop near the end of this year and house prices to stabalise. It sounds more like wishful thinking.
Be quick!
Flipped the median and HPI article order this month?
400k a year, that buys a lot of beer.....
HW2 what you going to say as Auckland passes through 30% off peak?
Man the life boats
Edit: posted in error. that was meant for the climate article
That means prices in Papakura are now down by almost a third (-31.9%) compared to 15 months ago.
Will you offer anyone support or just the usual cheering from the sidelines
I do not offer people support when sharemarkets fall either....
I think your tone is more and more narcissistic. Over to you
Did you offer support to anyone negatively impacted by the surge in prices in the Covid period?
Targeting homeowners on Struggle Street in papakura, gleefully dancing on their graves ?
This Houseworks guy who has been gleefully dancing on the graves of those without for how long and now a comment like this? Get a life.
Total bovine excrement
Encouraging for years now, the buying of ones own home. You wouldn't need landlords. Saying that is literally putting myself out of business.
As someone who is neither a developer nor buying single homes I dont profit from the sale of houses to people, nor competing against owner occupiers who are buying a house.
I said elsewhere that short term thinking is killing us.
Wellington has bottomed.
yeahrightmate
yeah pretty sure Wellington has bottomed - a colleague bought a house at a bargain price and during the conditional period the agent got three more offers. The nervousness around Jan/Feb has reduced and the sale rate is close to previous years. For instance Wellington had 453 sales in Feb compared to 546 in last year and 763 in 2021. In comparison Auckland had 1049 sales compared to 1789 in Feb 22 and 2912 in Feb 21. I believe Auckland will fall further than Wellington by the end of the year
Yes, it has hit the bottom of 20%. Give it a few months and it'll hit the bottom of 30%.
I need to a crystal ball to know it for sure, but I think you are taking a wish for reality.
Wellington falls hard this time because it jumped too much during the boom. however, no matter how hard it drops, it will find bottom eventually.
No the boldest of predictions, but I agree... it will find a bottom... eventually.
Prices will be rising by the end of the year...
Most sales and listings in Welly appear to be upper tier homes, which can skew the price data. I’ve seen an uptick in seemingly distressed sells (at least 3 out of 70 listings in my search area) that purchased in the last 1-2 years and with a list price $100k-$200k below purchase price. I imagine there are more to come.
I would doubt it.
Just wait until people figure out that the RMA (Enabling Housing Supply and Other Matters) Amendment Act 2021 and the NPS-UD have just released significant amounts of brown-field and some green-field land to significant intensification and the 'dwelling' prices will continue to tumble.
Some dwellings with larger, developable sections in the right areas might buck the trend.
Do you have that on Grant Grunters authority? Asking for a friend of course.
TA has told me that inflation has peaked and Propellor have told me (several hundred times a day) that house prices double every 7 years, so anything to the contrary is obviously just lies!!!
He just doesn't give up does he! Fresh this morning:
https://www.oneroof.co.nz/news/tony-alexander-why-collapse-of-silicon-v…
He's such a dishonest grifter. Being a "property expert" I'm sure he understands the seasonality of the NZ market where you always see a slight uptick in Feb prices every year, relative to surrounding months, due to it being peak season. He must also know the HPI is not seasonally adjusted.
But he attempts to use a 0.1% rise in the HPI as "evidence" the market is picking up. Yawn
Wow, he totally misses/omits the further downside risk factors, home loans rolling onto higher interest rates, inflation still high, council rates bills due, tax bills due, huge increase in supply from construction of townhouses everywhere, the animal spirits are changing.
Whatever else he may say, one thing he was consistently saying when interest rates were low was that FHBs and other long term (non flipper) buyers should fix for 4-5 years to give certainty. Unlike many mortgage brokers who talked newbies into 1 year terms ( cos they got to clip the ticket again on the next year finance?)
TA should face criminal charges based on his reckless spruiking and deliberate attempts to corrupt people into debt stress. He’s a criminal in my opinion.
Imagine if a doctor went around on social media or news sites claiming that cigarettes are not carcinogenic. Yet a property expert can make all sorts of claims that are proven wrong with the passage of time, resulting in people losing thousands of dollars, and it's an "opinion piece".
And as I have said before, I think OneRoof / NZ Herald are even worse. We all know he’s a shameless spruiker. By comparison, NZ Herald are supposed to have some journalistic integrity. They commission the guy for his articles. And it might *kind of* be OK if they also offered some ‘bearish’ commentary to balance his spruikerism. But they don’t/ they haven’t, at least not beyond tokenism. In fact they went the other way by offering ‘Double Spruiking’ care of both The Comb and The Church.
Pathetic.
Another negative aspect of this well crafted and promoted Ponzi is the waste of time and energy that goes along with the situation. Now everyone has to try and inform themselves about finance, the economy, Central Bank behaviour and interest rates etc, or be screwed because they only read the Herald. I'd much rather people (including me) could ignore this stuff if it doesn't interest them and put the time into whatever does, without the risk of inadvertently slipping into a financial nightmare.
TA the Toerag.
He has lead many to financial ruin and should be investigated by the FMA for his constant applauding and encouraging all to borrow as much as humanly possible, buy now and make more great gains in this market. Pied piper on steroids! As bodies tip over, into the river. Yet he is free and paid!!! - to encourage more over the obvious ponzi cliff!
It must be criminal?
IMHO - the banks in NZ have made many bad, bad loans and this will come home to roost here soon, many now underwater, in our crashing property market.
With falls from peak now well over 20% in some suburbs, I wonder how much negative equity there is is Auckland at the moment?
Be aware tho that these properties are effectively off the market in most cases...
unless you are prepaered to pay over the odds for them...
as most will keep paying the mortgage.
I heard on the radio yesterday , ASB mentioned that
"The sell off has been orderly... so far."
Many of us who have studied overseas crashes know whats coming next.
The disorderly bit.
Yes, I am no expert (like TA) but my view is that things are going to get very messy very quickly. Driving around town I see more ‘For Sale’ signs going up everyday but very little is selling. Cost of living increases are becoming crippling, soon vendors will start to panic and prices will continue down.
No worries grants got your back with Adrian holding the 12 inch knife for him.
REINZ had the national median price at $640,000 and Auckland's median at $885,000. The respective February 2023 national and Auckland median prices, at $762,000 and $1.009 million, remain above where they were pre-Covid.
So still at least another 20% to go to get us back to Extremely Overpriced. But I guess that will be a good starting point on the way down to Fair Value.
I assume these are not inflation adjusted figures
One property near me that was listed for 2.85 million in April 2022 (central auckland). Recently sold for 1.92 million. That's 930k down from the initial asking price or 32.5%. The worst part is if they has listed at 2.5 million in April 2022, I think they could have got that.
Meanwhile, median rent increases 60% in the last 5 years (an EXTRA $9kpa)
The results of Labour’s war on landlords | Kiwiblog
What a hoot that blog is!
Just gave it the cursory view as you'd gone to the trouble of linking it, and to me, it tells me that a lot of people are going to lose a lot of money; like the one who has 20 properties and could lose it all. At some stage they are going to have to approach their lenders to roll over their commitments, and I wonder what they will say when the collateral has fallen 40% and the Regulatory Environment has been tightened further? (Something like " Your loan has matured, and we require you to repay it in full" seems possible. That's the thing about contracts, like a mortgage loan, they have a finite end date, and no requirement to extend them when it's reached)
They did it to themselves. Leverage in reverse is simple math.
Leverage in reverse is egarevel.
It took me about 30 seconds of frustration to get that.
Please consider NOT posting stuff like this in future, for the sake of people like me.
Thx.
Nothing to do with that. Decades of pro popn policy and p## poor planning by both Nat and Lab - aided and abetted by blissfully ignorant kiwi voters.
Do you believe this information? Have you looked into it yourself?
Looking at the B&T Rental Reports from November 2017, and comparing with last month's (so, more than 5 years apart), these were the average rents in Auckland based on the number of bedrooms:
1 bedroom: $365 --> $417 (14% increase)
2 bedroom: $456 --> $535 (17% increase)
3 bedroom: $548 --> $639 (16.6% increase)
4 bedroom: $687 --> $772 (12.4% increase)
5 bedroom: $849 --> $943 (11.1% increase)
None of this takes inflation into account, which makes the real increases even smaller. I acknowledge that this is B&T, Auckland-specific data, but I would find it extremely hard to believe that things are so much worse everywhere else that the average rents are up 60%.
P.S. don't bother pointing out that median and average aren't the same, my point very clearly stands.
Great post CrispyK... well done for digging that data out... very clear and simple analysis that was worth sharing
still only back to Feb '21 levels
And to get back to Feb 2020, the national average needs to retreat to $640k (Auckland to $885k)
Quite a bit further to go yet
Inflation adjusted we are almost there.
Except inflation itself is a bubble also, it will revert to mean in time. Victim of the same liquidity oversupply as all asset classes plus supply chain distruption on top.
Except inflation doesn't burst - you rarely see rapid disinflation, just a slowdown of inflation.
They were already over priced in feb 2020. So the question is what is a fair price for a not very well built property in a tiny country at the end of the world that mainly farms sheep, cows and trees. Thats where it will likely bottom out. For aucks i reckon 500k for a wooden 3 bedder on a average garďen
So $350k for a crap terrace box ?
Personally i think they should all be knocked down before they become slums. But i guess they could bè used as quarantine flats or by winz (motivate people to move on).
Why - when NZ must be a similar land size to england with less than 1/10 the people - do we need to build terrace crap terrace boxes? Its just a matter to be more creative with transport etc.
After years of one way traffic its about time. The realistic used the last five years of cheap debt to clear their mortgages, and don't care that they are no longer worth what specu driven website said they were in 2021. Those that doubled down on debt stupidity are free falling into a really bad place. The kaaarrrkkkk moment is approaching.
The essence of popcorn.
The realistic used the last five years of cheap debt to clear their mortgages, and don't care that they are no longer worth what specu driven website said they were in 2021
You might need to rethink the idea that cheap debt has only been around for 5 years. 20 years is a good starting point.
Had a surge of emails in the past two weeks of developers slashing prices.
The crash is well underway.
And still at least 10% too high.
For example a 3 bedroom shitbox in Glen Eden, with no carpark, at 825k.
10% too high?!??!!
More like 30%
Drop it 55% and I finally would see some value and sniff at a purchase, based on its income.
At circa 600k you would get a gross yield of circa 6%
You would need to be getting an 8% yield, to just lose small or stagnant on costs.
No scatch that, 8% is a confirmed loss, as mortgage, water, rates and insurances are all about to go nuts!
You need to consider that once house prices meet the bottom the investment will at least keep up with inflation and likely beat inflation. This would make a 6% return on a house much better than a 6% term deposit.
HM are you still holding 2H 23 recovery of prices?
I originally said potentially late ‘23 / early ‘24. And a very slight recovery.
I now favour that being late ‘24/ early ‘25. Inflation is more persistent than I thought it would be, and the construction crash slightly more delayed than I expected. So the surge in unemployment that could influence a cut in the OCR will also be delayed.
So I think OCR cuts will now occur later. And multiple OCR cuts will be required for there to be any uptick in prices.
Bank crashes in the US will make the Fed Reserve halt its interest rises. Our bank will follow. Definitely will be a pause very soon.
Q4 prices rising....
So then inflation stays high for longer just as current OCR..
I suspect you underestimate their fear (based on their memories) of what it will take to get inflation back down if they take their foots off the throat of it.
Construction co liquidations in Aussie gathering pace, the turbo will kick in shortly.
This has been a long time coming.
interest rates have been falling since the 1980s from very high levels to historic lows (+ high immigration + stringent RMA + lack of social housing) so asset prices, especially houses (land price mainly) have been rising in price as they have become a financial asset rather than somewhere to live.
All we are seeing now is a return of interest rates to more normal levels and asset prices are correcting.
Successive gutless NZ governments have failed to put in place capital gains, land and wealth taxes so the financialisation of houses became extreme as money chased low risk low taxed returns.
We reap what we sow.
House prices are falling but are still nowhere near median multiples of 3 which is considered affordable. Eg Auckland circa 11, Christchurch 6 so we have some way to go.
With lower immigration, more supply through the RMA changes and higher interest rates the only way is down.
HouseMouse - I am hearing from developer that David Parkers RMA changes will make development MORE expensive...... You hearing anything?
Of course, it will.
Everyone knows that any intervention by a command and control style Govt. results in more costs and time delays, which get either directly added to what needs to be recovered, and causes supply shortages which just allow those that do get a house to market, a less competitive environment.
If this legislation goes ahead and immigration continues on an uptrend look forward to tents and rubbish etc on the streets like LA as long as its confined to Parliaments lawn and certain streets in Sandringham for starters I will need Popcorn and Beer .
Hmmm
it’s a bit of a shambles. Making the public notification ‘tests’ for applications much simpler and ‘black and white’ is key to de-risking development, but what is in the Bill is horrific - even more ambiguous than in the RMA.
On the other hand, the actual impacts will be quite dependent on what sits in the ‘National Planning Framework’ that is developed under the legislation. And we don’t know exactly what that looks like right now, so devil is in the detail.
What if you've spent the last decade saving and earning nothing in interest, watching in despair at that family size home with at least 6m2 grass disappear over the affordable horizon. With life savings in the bank you eventually realise it's just pixels. Would you buy anything now just to have something and provide stability for your kids and schooling.... or wait to find out who the least losers are?.
Property markets move slowly, I would wait until the 3 month moving avergae or 6 month moving average price is positive...... remember overpaying is dead money, and with auckland central down 400k in 15months its clearly a better strategy at the moment to wait and see, you in a great position, buy once it flatlines.
Wait and your money continues to loose value through inflation...
Worst case - used to be unlikely... wait for a bank run and see your money disappear...
If your deposit is earmarked for property, the CPI doesn't really matter. The change in house prices is what matters. At the moment, the buying power of the deposit is growing (especially when you add a few % in interest)
If your deposit is earmarked for property, the CPI doesn't really matter
People have a hard time understanding this, and end up doing weird things like subtracting CPI from the TD rate they're getting, and coming to the conclusion that they're "losing money".
Maybe if you were planning to spend your $100k TD on eggs and petrol...
Sorry can you explain that in even plainer language?
Say I had a 200k deposit 12 months ago. If I was planning to spend this money on normal goods and services, it's now worth less than it was then as inflation has been high. Maybe I could afford 25,000 boxes of eggs back then but now I can only afford 20,000 boxes of eggs. Terrible.
If the money is for a deposit on a Wellington house, median price for a house was almost $1 million, so I had a 20% deposit back then. Now, the median price is more like $800,000 so all of a sudden I have a 25% deposit. My money goes further on houses as they are cheaper, but less far on eggs (and other components of the CPI index).
If the argument is that money saved as a deposit is losing value against CPI inflation, then real house prices make up the balance.
If house prices are 80% what they were, but that 80% is only worth 90% of what it was, then waiting to at least see the bottom makes a whole lot of sense. Of course CPI has little relevance in this context as the waiting and saving is attributed towards a house.
It's like saying that waiting for the price of an apple to be cheaper tomorrow is silly because the price of a banana will be higher tomorrow. We all know the price of housing will bottom out at some point followed by a fairly tame rise, so why would anybody rush? The more your money loses value against inflation, the lower nominal house prices will go and even lower real house prices will go.
None of the REINZ HPI numbers are inflation adjusted, so you can add at least 8% onto the HPI loses. So, the prices of houses are falling far faster than your $ is losing value in a term deposit. So, if the intention for some money in the bank is to buy a house in the future, you are currently winning.
But only if you get payrises that exceed inflation.
Nope. Whether you get a payrise has got nothing to do with the argument above.
My god Nifty/HW2 this may be the all time most desperate spruiker comments,
Worst case - used to be unlikely... wait for a bank run and see your money disappear...
let me see I had 500k last year as a deposit and houses cost 1.5mil now I have a deposit of 503k ( assume I had in term deposit) and now houses in central Auckland are 1.1 mil. wow I am really worried about Inflation.... and my deposit being eaton away.....
It's a plausible scenario IT GUY...and with no Government guarantee on deposits just yet it should cause more concern. You desperately want a housing market crash & badly want the RBNZ to keep cranking the OCR up but ignore the possible ramifications of it...
People like you would never buy property or invest outside of TDs... so inflation will hammer you & your weak $.
NZ Banks are very safe and they will only become unsafe if anything you say about housing is not true and there is a total collapse, so what is it?
Do you and HW2 think you may be wrong here after all and both Housing and then banks collapse?
you really should be buying a bit of gold and crypto
Anything can happen IT GUY, hence talking about different scenarios holding cash/TDs... Seems to be appropriate given the panic we see in USA - sure all their banks are 'safe' too...
Holding Crypto/Gold isn't a bad idea, diversification is a wise thing to do...
You wouldn't want to get caught with all your rotten eggs/TDs in one basket IT GUY.
Good thing we have a government guarantee on equity.. oh wait... There are about as many guarantees to your money as there are points in having to have this conversation, none.
Agreed. Thinly veiled spruik. Assets are the most overpriced in relation to income in a lifetime, and your only spin on this by implication is "buy now". If the NZ Govt has to do a bail out it will be for bank deposits, not bank debtors.
Where is the down vote button.
Bailouts will only devalue cash further...what happened last time the money printer got going...how'd we get such a spike in asset prices?
Bank run contagion risk has just increased with Credit Suisse evolving potential debacle I wonder if Deutsche Bank/Evergrande and other EU / Chinese entities will be early dominoes to fall??
NZ in recession, the damage caused mismanagement of the economy by this government and the amateurs at the RB is astonishing and will get worse from here. It will take years to fix if we ever get any adults in charge of the country again.
I think you'll find its years of successive govts supporting ridiculous growth in house prices that has lead us to this point. The carnage hasnt even started yet. The current crowd are holding the baby.
Which party are adults ? They are all beige and lifeless.
Yep, remember JK telling us that high house prices were a good thing. Can't just blame one party.
Correct. They are both equally complicit.
The difference is that National want house prices to go back up asap and reverse Labour's excellent policies to try to achieve that.
Labour deliberately allowed them to increase this term prior to pandemic response. The fact they are no longer supporting house price growth shouldn't absolve them of the fact that they knew we had a problem and chose not to act. In fairness though, they told us their plan and we still voted them in. Who's to say they won't swing back post election
It's all fun and game until a real offer came in!
That suggests properties in those suburbs could have lost just over a quarter of their value
Correction - "paper value" or "theoretical price"
If it has a mortgage over it which gets renewed on a more recent valuation... then it's a real thing for the lender and owner.
HW2 - this "Timing the market for NZ real estate market game" is too easy, find me another Cube.
I will give you a hint at the games answer....
The market may have found a bottom and there maybe an opportunity to buy at the bottom, when the 6 month moving averge of house prices turns positive in your local market.....
Its not hard this game.
Interest.co.nz needs to include the median multiple graph in their articles as another comparison, rather than going to their property tab.
Median multiple reflects not only how much prices are moving up or down, but also what that is relative to income.
So with prices falling and income increasing the median ratio will fall faster than if only one of those variables was in play.
The editor doesn’t rate median multiple.
And yet has a page for them.
Which is fair enough as house prices are quite obviously affected by interest rates, probably even more so than by income.
30% off house price’s in 15 months is more than a crash. The 50% mark will happen in next year many people are going to get slammed when they have to refinance million dollar mortgage goes up to 1500 per week from 950 per week. Just a matter of time before people who purchased rentals on the back of their main home will be selling at a loss just to keep heads above water. The retirement fund gone and will be lucky to avoid huge financial difficulties.
Bring. It. On. Don't forget to pay your tax on the way out as well.
Sadly I know family in this position....
Unfortunately, people will first have to gut every other part of their lifestyle, from the luxuries, KiwiSaver, health, education, food, have multiple extra jobs, to keep clear of any mortgage debt they might be left with if they were forced to sell.
So where every this falls to will always give a false impression of how much property was supported and prevented from falling to, if these other assets and needs/wants hadn't been sold to support it.
A neighbour of mine decided to play developer, long settlement on another property, now at the stage where needs to sell current property. This is an 8 month long game, none of the figures make any sense anymore. I cant see how they escape without a fire sale. Unfortunately losing the lot is the only way out in instances like this.
Well, I still reckon the Ponzi blackhole will eat everything before the final implosion. If I'm right there will be every kind of bailout and temporary rescue, eg. Govts prodding banks to give loan holidays so they can just hold out until things turn around "next year" (ie. transferring some of the loss to bank shareholders).
And of course taxpayers and future taxpayers will be on the hook paying subsidies to people in hardship, so they too can hold out paying the mortgage.
What else? Pillaging Kiwisaver?
We are far from down to scraps yet - it is all on the table.
This will go on for years.
Be assured young friend, that there is a great deal of ruin in a nation’ - Adam Smith
The problem is mortgages are now a huge amount of money 10 x income in some cases this was always going to end badly the people who were encouraging people to stretch budgets to this point should be ashamed.
Living in Dunedin, it would be educational if Queenstown Lakes (Queenstown, Wanaka, Cromwell, Alexandra) could be broken out of the data, the way the Kapiti coast is for Wellington. QL is a much wealthier area and a hugely different market to anywhere else around Otago.
I try to avoid vanity usually.... but I was so right :D
by lucenera | 14th Apr 22, 11:36am
The top of the market was when you could get a mortgage for 2.5% for 30y
Let's pretend you could afford 1M, which means that you could afford to pay 911 per week circa
In no time a new mortgage will be about 7% for 30y
That means that a new prospective buyer that can pay 911 per week will be able to affor a mortgate of 594k
1000000 - 594000 = 406000
yep, -40.6% of mortgage availability
take out some deposit and some other side effects you will have a -37% circa of the cost of the same house.
That is my bet, not a simple opinion, I have reasons to think that.
You might think of "external interventions", and I will say that we had plenty of them already, and I will also say that I compute for the data that I have today.
When/if there will be new data I will review my prediction.
for now:
-37% from the peak by mid 2023
Being right in trading only counts towards you profit and loss account if you acted on it.
Some fo the best human spot FX traders I know are right about 60% of the time. Cut your losses quickly, let your profits run with a tight stoploss
well... in this case inaction is action :D.
Anyways, yes, I went short on 2 real estate leveraged etfs (small amount, just for fun) and made a little money.
But yeah, you right, I just wanted to brag (usually I prefer to don't do it, but I was told I was crazy, so I felt it right)
Can you do the same analysis on the way up? I'm curious to compare how your pure arithmetic stacks against what happened. Say, 2012 compared to peak, Nov 2021. Using your logic would've been x% increase; reality showed y%. Take the y/x ratio, call it 'animal spirits factor' or whatevers, and apply it to your 37%. The result may be surprising ;)
it might be a very interesting excercise actually... I wonder when/if that will kick now in the other direction
Not too bad then?
Still very expensive. If buy a house in Auckland, then got to starve rest of the life by paying huge amounts in mortgage interest.
Better eat then but a house there
This is so true you have to eat, have holidays, have and rasie kids, get sick, buy cars after unforseen issues. blah blah blah....
you need a buffer.
A life devoid of anything but a house is a sad life, and is not a recipe for good mental health.
Its a lot more expensive now (in terms of mortgage repayments) than it was at the peak. Which is why house prices still have a long way to fall.
Yes, and if you end up starving to afford the interest, there is still the rates, insurance and maintenance to pay, and the principal. And at the moment your deposit is making money rather than spent on an asset losing value.
The premium on owning is huge.
"the median selling price in Papakura in the south of Auckland dropping to $770,000 in February, down by $360,000 compared to the November 2021 peak."
$770k for Papakura still seems like a crazy amount, $1130k was moronic.
Crime is a regular occurrence in this area not great for families people living in cars all over the place shit will hit the fan very soon.
I would hazard an educated guess that the high (definitely moronic) median price was to a very significant extent created by all the dumb, greedy, third division developers competing with each other for ‘development sites’. Many of those who bought are going to be in all sorts of strife.
A very strong cultural thing at play there. As well as good old fashioned greed which transcends cultures.
Auckland median prices would have to drop to $825,000 just to return us to the pre-COVID-19 ultra-low interest and free money good times that triggered the recent bubble.
We're still deflating the bubble.
yep it was a stunning lack of sanity
Sheep are so dumb
Yet some people were still passing in some good bids at the auctions this week.
I've always held the view that a doubling of interest rate equals halving of house prices. Given incomes are rising due to inflation I would suggest that becomes 40% drop.
The 2nd view is that to break inflation, the official cash rate needs to be the same as inflation rate.... Aka 7%.
Thirdly, government policies to increase benefits, pension and minimum wage will all be spent and effectively counter reserve bank rate rises and keep inflation higher for longer. Infact these policies will be inflationary as every dollar will be spent and spend again if you think about the economic multiplier of spending which is economics 1.01.
I think rbnz will surprise and rate 50bp, 25bp and then panic and raise 50bp in the next 3 meetings pushing a cash rate to 6% by July2023
The recession should hit by election day and job losses and distressed mortgage selling by June2024
Whoever wins the election will be in for a nasty 3yrs economically.
It's a good point about the election. The screaming to do something for mortgagors will be deafening. If the polls stay close Labour will need to point the money hoses at them for a few months before the election to win the middle.
Quite a battle ahead between Monetary Policy and Fiscal Policy.
That would piss off renters, and they will probably decide to vote even more left or don't vote at all if they don't feel represented.
Can you imagint a TOP-Green-Maori govt, with labour as a minority?
Thats worse than a Nightmare on Elm St.
Auckland on target for my forecast of 35% drop peak to trough, made over a year ago.
I recall much derision when I constantly maintained this position and forecast, when price values were rising in 2021.
Bottom of market is still far off. March to May 24
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