A chill wind's blowing through the auction rooms, and perhaps a few tumbleweeds as well.
There were 157 residential properties on offer at the latest auctions monitored by interest.co.nz (15-21 July), down from 171 the previous week and up over 200 a week prior to that.
And of the properties on offer, fewer were selling under the hammer.
Fifty eight properties sold under the hammer compared to 80 the previous week and 91 the week before that.
That pushed the sales rate down to 37% at the latest auctions, from 47% the previous week and 43% the week before that.
It was significant that both auction activity and sales continued to trend down at the latest auctions, even though the previous week was a short one in the lead up to the Matatriki long weekend.
Details of the individual properties offered at all of the auctions monitored by interest.co.nz, including the selling prices and rating valuations of those that sold, are available on our Residential Auction Results page.
The comment stream on this story is now closed.
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147 Comments
Nice pic to depict the situation.
I wonder what picture will be used next week when numbers dip lower.
Though spring is not far and it rains a lot, so it will be a washout I guess?
Though spring is not far and it rains a lot
I don't think the season matters much anymore, it just rains a lot.
Try not to make it rain on the inside so much. Spread some cheer or goodwill or something.
I live in Auckland and I've only had to use my heaters for a few days this winter. I guess that's a good thing.
If it weren't for the elevated risk of extreme weather events there would be some upside to NZ getting warmer; reduced energy use for heating and extended agricultural growing seasons (and more crop types become available).
But I digress. How bout that housing market kids
Pa1nter, I don't think this is about rain making. From a financial perspective and given your understanding of the current financial environment, do you think it makes sense for FHB's to take out a large loan right now? There are no doubt many families that would prefer to own rather than rent, but right now, to you, does paying colossal amounts in dead money, combined with rates and insurance on a declining asset seem the wise thing to do? Would you do it?
Instead for being contrary for the sake of it, perhaps some constructive advice to FHB's like "start making lowball offers from early 2024" or at least something along those lines:)
Most advice I'd find useful to impart is of a much more generic variety, applicable most of the time. I don't tend to find timing things a very reliable strategy.
So instead of "2024 is the time to make lowball offers", I'd be offering something more like "understand the local market. Location often trumps appearance. Can that house grow as you grow. Avoid a heated multi offer environment if you can. Dig out older listings". So on and so forth.
Much more boring than "witches cauldron and fire brimstone, there be some suffering ahead for ye to make good tidings" I know. If you really want an example of more topical advice, it'd be something like "be very wary of buying a property that's an incomplete build, or one that was part completed by a bankrupt builder, and completed by someone else".
Its not about Witches, Fire and Brimstone either. Would you have given the same advice in Nov-21? Would you have bought then?
More then ever before, it IS about timing.
That's sort of like asking someone "would you recommend people travel by air?", and when they reply "yes", asking them "ah, so you'd have told someone to take flight MH370".
All I can really say is that through that mid 2020-21 period, people were spending silly money on all sorts of things, housing and otherwise, in spite of there being a pandemic that resulted in several periods of almost total economic shutdown. That's a sub-optimal, mania-like market to try and secure a property in.
As I said earlier, if you're on the border financially, you might want to express caution. If you're relatively secure, do what you want and get on with the rest of your life, because it's much shorter than most realise.
Those who are financially secure have freedom and luxury of choice - sure. But, considering the many who bought in the last few years are now over the border financially today, your advice to hold off (express caution) therefore applies now too. For some its a lot of $$ at stake when there's little margin of error.
Well, that's the fundamental juxtaposition of the human experience. Feeling the fear, and doing it anyway.
If your central debate is "hey let's guess exact turning points in the market", I'm not going to be that good a participant.
I was trying to find out is what advice you would give your kids. Try not to over think it Pa1nter.
If that were the case you could've just asked that directly.
Give more than you receive.
Find people you can trust over time and foster strong relationships with them.
Know yourself.
Get moving, while at the same time not being in a rush.
More waffle....
Most parental advice is usually fairly waffley. Usually major life lessons are something a kid experiences and works through themselves, and it's less what you're telling them, and more what they see you doing.
Oh well, it's unfortunate I'm not very good at jumping through the rather specific hoops you expect people to. "Answer this really narrow question, NOW!"
Something’s up here, you two are far too chummy with each other today 😂
Jesus RP, you seem to be hell-bent on provoking a squabble this morning.
Painter has provided multiple, decent replies (and sound advice) to your questions. Time to stop badgering and move on?
by Retired-Poppy | 22nd Jul 23, 9:48am
More waffle....
I actually thought the advice was pretty good. Still, since you disagree, please answer your own question, and tell us what advice you would give your own kids?
What advice would I give my own kids? If you're wanting sound advice on when to buy a house, don't waist time reading Pa1nters comments. Its time you'll never get back.
Again, start making lowball offers from early 2024.
So you've been waxing lyrical about not buying since 2017. By early 2024
Prices likely above 2017 prices...
And the cost to borrow is double or nearly triple 2017 costs...
And the kids have spent another 7 years paying rent...
My kids would've stopped listening long before your advice bore fruit. Likely to their benefit
Others might be romanced by someone who can't talk straight - but not me. Oh and the lifetime of rent narrative again - yawn. You missed the bit about the lifetime of dead money interest. For the disciplined saver this has turned into a lucrative long term break. In fact 6.15% for 15-months for starters. I accept your compliments for a forecast I shouldered a lot of flack for and is now coming to fruition.
Patience is key. House prices are still falling and even Yvil is on record here saying things are going to get a lot worse.
Now, Pa1nter show some balls and post a forecast or two yourself. Put that professional market knowledge of yours on display for all to see. Its so easy being a critic from the sidelines. Try to enjoy the rest of your weekend :)
Wow your advice is so bad its just not even funny. Are you deliberately trying to screw your kids future or just everyone's on here ? I have been in TD's now for over 5 years and the returns up until very recently have been pretty terrible. Even several years ago it was only 4.8% and it only went DOWN from that point.
Oh - how convenient. Now Zwifter says he has TD's. Here you go Zwifter, the following will compensate you for your losses;
"10% Interest Rates This Year, Guaranteed!"
Enjoy :)
Best comment ever !
Did you mean to say Tim ?
"Almost half the small business owners surveyed by Xero, and 60% of sole traders, were not paying themselves, so they could keep their businesses running."
https://www.stuff.co.nz/business/prosper/132521789/new-data-shows-signi…
Any discussion with the owner of Property Brokers is going to be a Predictable Answer !!!
Hey, make sure to put petrol in your gas tank, not sugar. No kids, I'm not a mechanic........
Huh? - so far on this housing related thread you've covered rain, Witches, Fire and Brimstone, Flight MH370, petrol, sugar, eggs and now Game of Thrones. Subject to further non housing related topics as they come to hand today, this post may need to be edited - lol!
Some of my generic advice about property is going to mimic that also offered by someone who is involved in the property industry professionally.
But me telling you not to stick your tiddlers in a light socket doesn't mean I'm a sparky.
.....now light sockets. Nearly there 😂 In your case giving "generic advice" is about playing safe more than professionalism.
Hah, says the guy who's talking about housing but cryptically really wants to know what sort of parental advice I give. Then doesn't like the answer.
LOL, then re-edits their posts 4 times, while trying to establish the other person is all over the map. Either have some conviction with your instincts, or deploy more thought before smashing another brain fart on the keyboard.
What's cryptic about the next generation (our kids) expecting succinct advice (minus the waffle)?
Now you're making stuff up - that's a little desperate.
So what advice would you give your own kids, RP?
Advice on when to buy a house? Read my comments.
Advice from someone with old think isn't necessarily the best.
It's not time to make a change
Just relax, take it easy
You're still young, that's your fault
There's so much you have to know…
Geeez Pa1nter, you're still going hard at it. So, 57 is the new "old" now is it? :)
It's not you age that makes you "old" RP, it's your thinking!
Painters met his match... Retired P you are the best and smartest commenter. Good interchange
(Sarc)
Hi Retired Poppy.
My honest advice is yes now is the right time. Especially if you are looking in Auckland, as Auckland always shifts first.
Before the election is what I would aim for, but certainly look for a good deal.
If you wait for things to start showing obvious signs of rising. Then you chances of finding a really good deal drop fast.
Well, that's your take on things. I mean, FHB's can and will make up their own minds from what they read on here. Buying a first home is meant to be a positive life changing experience. For a growing number who followed poor advice and bought in the last few years, its turned out to be a financial nightmare,
Its no longer about timing the next doubling in prices, its about timing the depths of the slump now.
I have said for some time that it’s potentially a good time to buy, but on the basis of lowballing and haggling - which of course is no guarantee, but potentially worth a go.
Also, this is assuming it is possible to get finance - a major obstacle for many right now.
The only good price to make an offer at is in the 2014 value ranges or lower than a DTI of 4-6x earnings.
Offering anything more, with market confidence now goneburger, you could lose all your deposit money and still owe the bank - if a financial leg gets kicked out during this ongoing and increasing recession.
Dont be left holding the bag, especially without wearing shorts, as this tide goes out at a rate of knots.
I followed your advice, went down to the dairy and offered them 2006 prices for eggs, with the ensuing rationale.
All I have to show for it is no eggs.
Well that and the shopkeeper laughing at you on your way out the door.
No harm in trying. At least you've got no egg on your face.
At least you haven't gotten eggs that are going to rotten as you will not want to consume such expensive artifacts
We’re not going back to 2014 prices - unless you’re expecting household incomes to drop 30% back to 2014 levels too
It is completely possible when the cost of DDDDEBT goes up 150 to 400%.
10% interest rates are possible in the next 12 months. 8.64% is already being paid by some!! - and it is crippling!!!
Mortgages | interest.co.nz
Do the number on the average NZ income of 117K at a 9% test rate. Understand it.....then weep and wail if you have leveraged property......
- Watch and wait!!!
Forget about the recent wage increases- they are, in no way, keeping up with the highest interest rates increase is our history.
Wages are irrelevant in the current scenario - unless they double by 2025.
Is a 2025 Doubling likely? No.
Yes, when rates go up, things blow up... that is the plight of DDDDebtHolders
Bubble symmetry is a beautiful thing:
https://seekingalpha.com/article/4574170-what-goes-up-comes-down-bubble…
Housing is notoriously "sticky" when it comes to price declines, as sellers show remarkable tenacity in the denial phase. The last few greater fools buying on the first modest decline spur the hopes of sellers that the flood of mania-driven buyers is about to resume, but manias don't last nor do they resume.
The whole election saviour thing is driven by over leveraged speculators and vested interests. It won't make an iota of difference. The economy will tank regardless of who's in power. I'd be inclined to cash up as fast as you can and hang on.
Yeah, not long now and our primary industry can be the tropical fruit growing business.
Funny/not funny.
Bbbbrrrrrrrrrr..I'm cold says the housing market.. where are all you spruikers, can't you'll warm me up... dip into those rich pockets and bail me out..
Yes Lord, Yes!
Send me a strawman of naive optimism, for I shall eviscerate him with my cunning and guile.
Just remember , its always darkest... just before it turns pitch black.....
And we are in for a Very Long Dark Night Of The Soul.
If you went through one, and all you ended up doing when you came out is guess interest rates
You're probably doing it wrong.
Knowing 100% where Interest Rates are going Tim is Invaluable !
10% Interest Rates This Year, Guaranteed !
Can't be that valuable, otherwise you'd be able to front-run the market with your precise and accurate market predictions, make a mint.
Hi Hawkes Bay. For what reasons do you believe that interest rates will continue to rise?
Cheers
I just follow the teachings of The Prophet.
The Prophet tirelessly warned the people that interest rates were going to 7% in 2022. Most just mocked him because it seemed so impossible.
The Prophet was proven 100% correct. His predictions are correct. He left us with the Scrolls.
Those that heed the warnings will survive.
"Those that heed the warnings will survive"
Indeed - very succinct advice. No waffle!
Whereas those who don't follow the cult will die? Sure, that sounds like sane and sound advice to faithful lemurs who blindly follow the "dear leader".
Yvil, once again you're not reading comments carefully enough and misinterpreting the comments of others. You need to think outside the square. Those that follow sound advice will survive financially.
And the power's gone off, and you have no clock to look at, so you don't know whether it's 11.55pm, and about to get really chilly, or 4.55.am.
I remain of the view that the construction sector will come off massively very late this year and in to next year. The unemployment created will then drive house prices lower again.
I’m not trying to be negative, I just can’t see what all the tradies will be doing next year.
There is such limited financing and risk appetite around for all forms of construction.
Like many things going on in the world today, it's going to be a mixed bag, because construction is fairly diverse.
- New residential, obviously coming off the boil. This is the sector that gets most immediately effected by changes in market sentiment and mood. Renovations and remodelling usually increases in such a market as people defer moving to a new house and instead do up their existing one - although that will be unlikely to make up the shortfall from new housing declines.
- Commercial office space is going to be ho hum.
- The government is spending money hand over fist, both with covid era projects (many not even started), and the rather large upgrade of existing state housing, and new state housing.
- Industrial and manufacturing still kind of healthy, because construction projects there have timeframes in years so its not as stop start.
But that's only my view from the inside. I keep waiting for it to die, and things seem to just keep getting busier and busier, my books are looking to be closed till 2025 for any decent new projects. Some firms are going to fall by the wayside, usually the players who have always been thin on margins. But on the otherhand, there has been such a shortfall in capacity to meet the demand of the last 3 years, that a drop in activity might allow the industry to catch up.
Pa1nter, great comment. Thanks. There is a lot of diversity in construction.
As I said, I am not trying to be negative.
Evolution has us bestowed with a natural inclination towards the negative. Take some bad news, cast it wide.
Should the economy get years of the current market conditions, then things will change again and all bets are off.
Did you see today’s Herald article? As I have long predicted, the slump has well and truly arrived, workers moving to Aus, workloads slumping etc.
The implications will be quite broad, affecting many trades and professions.
Have the economists accounted for this?
Can you put up the link ?
Thanks HouseMouse.
Sadly it's against my religion to pay for MSM, so I can not open and read that article.
If anyone can find it somewhere else can you please post it.
Use archive[dot]ph
by Hawkes Bay | 22nd Jul 23, 10:39am
"Sadly it's against my religion to pay for MSM"
Translation: I don't want to pay for other people's work, I prefer to free-load, but I will complain at length about other things which are not in my favour, as being unfair.
The subsidies and tax rinsing landlords have enjoyed by far outweigh that. Same, but far greater, translation.
"night is generally darker than day", just like your reply it has nothing to do with people being too too scroogey to not pay for a service provided. Please try to stay on topic.
Or just the fact at the NZH can't produce content people find worthy of paying for and therefore capitalism is doing what it does.
They get govt funding and are extremely bias, why on earth would you pay for that?
If they knew how to market properly and sustain a digital business, they wouldn't be asking for pay to read content
They get govt funding and are extremely bias
Thanks Willie J and Liebour for corrupting the media. Thanks very much
Peter Williams is back Flying...I'm sure all those news reading days will make his opinion sort after 🤣
He'd fit right in at zb. He would take over the Hosks slot nicely when he retires
Hugh - tradies already moving to Aussie.
Just like GFC. The building undershot caused a generation of tradies to retire early and another generation to head to Aussie. All because the market only functions on artifical juicing of ever cheaper debt rather than normal trading conditions.
Winning....sarc.
This is about the auction process. In a dead market auctioning a house is a waste of time and money.
yeah the new auction process is now tender or deadline sale and if they dont get there price its then price by negotiation.Trying to buy a house for the last 6 months for cash in the over 1 million range in nelson area and all they play is mind games,so sick of it might just rent and put the money in term deposit at 6.15% and that will give 80k a year less tax, a good idea??????
Same issue here with more expensive property, mix of vendors who are greedy and think waiting is the the answer to getting their price, plus lately have encountered a few agents who have set a very high price to get a listing. Mean time median sale price is often dropping below $400,000 as the recently acquired rentals (2020,2021) are offloaded. We would consider building but still just too much profiteering happening with both labour and materials. So have our money on term deposit.
tender or deadline sale and if they dont get there price its then price by negotiation
Agreed. All the while prices and people's affordability decline while the speculation process wastes time. Good strategy...sarc.
Those that can wait, are. Those with mobility are heading to Aussie. The remaining few who can't wait are getting screwed with negative equity.
What wonderful options.
Top of the market around Nelson are not willing to meet the market. Some might sell for 5-10% under RV but that seems to be it as theres always someone else who pays or they just remove it from the market eventually. Vendors all seem shocked still that they get offers under the price they list, as they feel they’ve done a service by listing at 5% under RV.
Yeah, I didn’t notice the top of the south being mentioned. I guess this is because it's less common to sell by auction in that area.
That's a good budget for the area so I'm sure you'll find something. As for timing, no one really knows, we live in a globally interconnected financial and political world, that’s so complex everyone’s just playing whack-a-mole. You do you and try and be comfortable with the decision you make.
Good luck!
I wish I didn’t need to keep an obsessive eye on such articles in order to find the best opportunity to acquire a basic human need without destroying my financial future.
Don’t get me wrong, I have learnt much from such articles and the following discussions… and I don’t believe property ownership should be free, but in a healthy society we shouldn’t need to worry about FOMO, FOOP, spruikers, idiotic party policies and the opinion of economists to be able to buy a home.
The social contract of working a full time job and ownership of one’s own home has been compromised, to the detriment of everyone - including the wealthy as poverty affects all.
I understand that the purchase of one’s own house is the most important financial decision most people will make. But it’s so out of proportion today that the slow moving car crash of our property ponzi is possibly going to bankrupt a generation, many of whom just wanted a home to start a family.
I just want to live in one without strangling me slowly.
Well said Sam,I totally agree.
Apparently we need a swathe of Landlords to equity leverage up 100% of the purchase cost to outbid young aspiring FHB like you on entry level properties, because supposedly you cannot afford to buy the property yourself.
They use personal mortgages, but then claim they're businesses for the tax deductions despite paying no tax through negative gearing, but then they're just "Mom and Pop" saving for their retirement if the property needs to meet healthy home standards, and then it's not a business but their "home" if the tenant wants to hang a picture or get a dog.
I agree with everything above
Turning my attention onto "what to do about it then?" I see the short term solution voting for a party which actively wants the prices to go down to semi-reasonable levels (I know of only Greens and TOP, unsure about TPM, curious of alternatives) warts and all
Long term the only way out of this mess that I can see is by totally redefining the social contract we currently have. We currently rely on infinite consumption to keep things going, think that not sharing knowledge is a good idea (copyright laws) and also think that owning what you never use is somehow a good thing. I think a few decades on a successful society will have gotten rid of a number of these ideas (while keeping the benefits they bring), fingers crossed all of them
An interesting comment. An addition, perhaps a population policy, (if high immigration rates cause rents and house prices to rise)… Do any parties have one?
Ironically, the ones keeping the flood gates wide open (now) tentatively said they accept we should have a policy: https://www.interest.co.nz/public-policy/120608/its-interim-response-pr…
I know of no other hard published statement from any other party, but curious
There is a mixture of population policies that are ongoing.
- Migration
- Natural increase via encouraging childbirth (i.e. working for families)
I think what you're really after is clarity over what form NZs population should take, and why.
I totally agree with you.
But you will see a lot of people here who think that it's their right to make money of the housing market in a way that it hurts everyone else in the society and they are not even ashamed of it.
The greed and Ego in their life has entrenched so deep that it's part of their DNA and this always results in downfall. History has so many examples but humans are the only dumb species who do not learn from the past mistakes and do it over and over.
Agree with your sentiments. However the real issues is very different from what everyone here thinks. It isn't FOMO or Supply or Interest rates. The real issue is money flowing in from Mainland to New Mainland. Many would disagree to this but ponder over this quote from the news about missing RE agent. Hope she is safe and found soon.
During the conversation, *** asked **** how someone she was working with could transfer $600,000 (more than 2.6 million RMB) from China to pay cash for a house.
Ultimately its us who are buying our self out of our own land/house by buying cheap stuff and sending our money there and in return they are buying our land and future of next generation.
It remains a bear market
Indeed it does.
This Bear market has claws and its just getting warmed up, after a few initial 15 to 30%+ tears out of this overinflated market.
Add in the required inflation losses and the bears work is being done, while his paws are temporally at rest.
This still inflated housing bubble, has plenty of fat, untouched hind quarters and this bear is just starting to smell blood!
The Streets are still largely clean, with not much blood in the gutters, yet it will surely arrive - you can bet that expensive inflation hit tray of eggs on it!!
He will be back, for some continued fun over the next few years, untill this beastly bubble is torn, limp and beaten down on the floor.
The market confidence is completely shot.
FHBs take heart. The longer you wait, the much, much better.
The Spruikers and REAs acolytes (high priests: Tony A and Ashley C) need your blood and Debt ladened life sacrifice to save and reanimate this failing PONZI.
DONT GIVE TO THESE EVIL ONES!
DTIs will drop the market much further down next year.
FHBs don't make any offers over a DTI OF 6X
All UN my humble, exceptionally well researched opinion!!
Make your own decisions based on Good, Deep, Research!
Your research ideally wants width, not just depth.
"The Spruikers and REAs acolytes" There is that width you are looking for Tim.
The conversation is indeed easier for you by making me some sort of fictitious character.
Only one of us has a history of going by multiple different names.
And that is you Tim.
Hawkes Bay, Interest is a platform meant for adults, please behave accordingly.
Adults have more cred
Nice piece of fiction, akin to something from Game of Thrones
So Awkland is selling at an average of 36% of the CV. Is that right...?
Yes and no
Yes, 36% of auction sales were above CV
Also, 16% of all auctioned homes sold above CV last week
Depends on how you phrase the problem. For me, the most useful formulation is "if I have my house on the market this week, what's the chance I get an above CV price for it?". And all I know for certain is that 17 houses out of ~4,500(?) on the market right now in Auckland sold above CV. This doesn't include all other private sales, but I think the percentage is pretty dire in any case
Ok thanks.
We may start seeing further declines in Canterbury now. The last two auction results have been pretty abysmal. The drops so far have not been too much compared to other areas, I think some reality is setting in.
I'm still quite surprised by the high prices people get if they manage to sell at auction.
What have you seen... Tim The Player says dont be gloomie and I need an uplift after wading through the above comments
40 plus percent at RV or higher … still a lot of madness out there
Hi David, you need to check the CV date when looking at total sales. Auckland generally 2021, Wellington area 2020, Christchurch fairly recent I think 2022. New CVs are rolling out in some areas.
'Will you tell the folks back home I nearly made it ,Had offers but dont know which one to take" (Albert Hammond ," It never rains in Southern California")
Interest rate rollovers / Inflation /tightening expenditure/wage adjustments/election/ food/fuel costs....( 'It pours, man it pours') Gonna be sometime before 'Here comes the sun' (Beatles).... lol
The RBNZ has been hinting, then suggesting, then shouting at us ("There is a Recession coming, people - get ready!") for over 2 years now. Their 'failure' to kick on at the last May OCR review might have been political neutrality ahead of the election - OR, it might have been the RBNZ offering those close to the line, one last chance to pass the ball to someone more capable of withstanding what it sees as coming. i.e. those who now found themselves at ~90% LVR at the new V component, selling to someone who was 'only' 75% indebted etc.
Read all of the above article again, and the only conclusion that makes sense is, "Winter, is coming"
Life's always better to understand when you transpose lines from Game of Thrones to it.
Just tagging along with the headlined theme of this article! "Auction activity slumps as a winter chill settles over the housing market"
Personally, I'd call what's coming more of an Ice Age than Winter.
Hmm, so it's either an event lasting 3 months, or thousands (or millions) of years.
Brrrr that is cold. I don't think people need to worry about house prices in such a scenario.
I think the apartment sector is going to struggle more at auction with the new (as of May 19th 2023) Pre Contract Disclosure Statement that must be issued prior to any S&P including those at auction. This is a legal declaration from the BC about the dryness of the building and the health of the BC in terms of funds, costs and long term maintenance funds. Instead if having to rely on a BC minutes to discover issues, this offers instant transparency.
I still don't understand why Realtas carry on Auctions? Still they want buyers to fight and inflate the inflated prices? People should come forward and Boycott Auctions.
It's a way for the agencies to pressure the sale and get paid in a managed timeframe. They bully the sellers just as much as the buyers, especially in a declining market.
Remember, no sale no income.
So first home ownership was about gambling on capital gains, now its this.
"Clients who are determined to put their entire mortgage on a one-year fix, believing rates will drop next year. “It’s paramount to gambling,”
https://www.oneroof.co.nz/news/43975
For the many who's finances would be marginal if they bought today, take note of how home ownership cannot provide financial security when this is happening....
Sobering stuff, a property correction, isn't it. We on here all know this, but many don't.
“So not only has the client lost the deposit because they can’t settle, but now if that $1 million property sells on the market for $850,000, that developer could potentially come after the client for the shortfall. “A lot of people don’t realise that, you’re not just risking the deposit, you could also be sued.”
https://www.stuff.co.nz/business/132448217/settlement-looming-no-financ…
The del Valle family were in a particularly bad position, because they did not seek finance prior to signing their sale and purchase agreement in October 2021, despite only having a 5% deposit.
Have to wonder about the oversight from those involved in drawing up and presenting the S&P agreement. Surely the real estate agent would have some duty of care to ensure the buyers are aware of the process? I guess you can't save people from themselves though and they probably filled it all out themselves.
Let's be realistic and acknowledge that stories like this are mostly about alerting those who don't know better; part of the general authorised version of what's going to happen to the property market and trying to get the vulnerable protected. Who knows what the real situation is, but at face value, you're right.
And hot from the email in-box this morning, from Mauldin in the USA, we get a similar article, noting;:
While inflation is technically about general price levels, in practice we use it to describe living costs. That’s why the benchmarks measure consumer prices and personal consumption expenditures. These are where higher prices hurt because they apply to everyone. But one cost stands above all others. Housing is by far the biggest expense for most American households. Any inflation analysis that ignores housing misses not only the elephant in the room, but the room itself.
That's what we do - ignore it. Or worse, call it Capital Gains and cheer it on as being good.
https://images.mauldineconomics.com/uploads/pdf/TFTF_Jul_22_2023.pdf
One way to help stimulate the economy is to take borrowing off the central government's balance sheet, and have the private sector do the heavy lifting. Don't measure the outcomes that is high house prices though, because inflation targeting mandates will make this whole thing unwind.
Now Labour have doubled down on debt, going from $60b to $120b from 2019 to 2022, which people are furious about. But Mortgage debt was $200b in 2015, and $350b in 2022 which is also funnily enough around $20b per year. No outrage??
When we spoke to our bank at the start of this year, their agent explained they were no longer doing pre-approvals - they would engage more with us once we'd put a deposit down. The banks aren't stupid - the know what's happening and are divesting themselves of as much risk as possible. This family's story is likely mirrored en masse amongst those who bought off the plans in 2021, and a significant avalanche of defaults is looming large.
At no other time in my life have I seen the stage so perfectly for the biggest crash in both NZ Resi and Commercial property values.
9 and 10% Interest rates are now very likely in the next 12 months. This probability has increased.
I lived through the 87 crash and the GFC......largely unscathed, as much as you could be.
This was only due to my thoughts of how crazy toppy thing were getting and how I would survive if everything that was toppy crashed.
AKA : not have overexposure to these affected assets.
Many, Many, Many people I know are "All in on Property" "Cannot lose on property" they all told me. "Get as much from the banks as you can wring out of them" - Absolutely Foolish. THE STAGE IS SET BY THESE FOOLS!!
Dangerous as hell!
My old thoughts based on thousands of years of recoded economy history are true and solid " What booms massively, will ALWAYS bust massively"
Deleverage while a buyer still exists, even at a much less enDebted price.
This bust will be studied for decades. We are still in the early stages of this epic unravel.
The only thing preventing an Ireland type fallout would be population growth to underpin demand for housing. Hopefully there's enough essential skills visa migrants coming in to plug the gaps and add prospective tenants to our country.
Then you have the issue of preventing current migrant tenants from being tempted into Australia.
- Largest net migration loss to Australia since 2013
- https://www.nzherald.co.nz/bay-of-plenty-times/news/construction-indust…
And...it's not just NZ that is due for a correction. But we are, by far, in a much more precarious position than most others. From the UK this morning:
For lots of buy-to-let landlords, the dream of a burgeoning property empire is over. What’s increasingly clear is that some kind of all embracing economic contraction is coming. Quite how bad is in the lap of the Gods.(Telegraph)
A challenge is to imagine ways in which property prices may begin to rise again… I cannot see any good reasons why they would.
10 sellers for every buyer ... buyers market right now. No rush
10 sellers for every buyer where pretty much every buyer is eligible to borrow therefore spend 40% less. *gulp*.
Where I live ( a North Island provincial capital) the $1.5m houses and above are just not selling. All currently on Trade Me have been there for months , some well over a year. A few of them have had price reductions but not enough to sell. Some have not moved from their 2021 values. People either cannot get the finance or don’t want to borrow enough to buy them. When more houses hit the market in spring/ summer that will put the pressure on existing vendors. One thing is certain. Mortgage interest rates will come off their highs slowly and over a long period of time as central banks will not want inflation rates to rise at any stage after they have reduced. A second thing is certain. Mortgage interest rates will not reduce to those lovely 2-3 percent rates again unless the world is facing a calamity such as another pandemic or some idiot pushes the button. Even if Central Banks reduce their rates to emergency levels we will have other problems which will make life both interesting and challenging.
There are a whole lot of problems emerging in this world not that no amount of money printing can fix. Unfortunately things look to have pretty much hit their peaks now across the board and are set to decline. Bottom line is, too many people on the planet now to sustain the "Quality of life" that meets peoples expectations. The resources are in decline and peoples expectations just double each generation, its simply not sustainable.
by Zwifter | 23rd Jul 23, 2:39pm - "The resources are in decline"
Cue the inflation and consistently elevated interest rates to tame it and the underlying demand on increasingly limited recourses. Now, what happens to house prices when interest rates rise Zwifter?
The key question is, will it be 10% interest rates by years end?????
No is the short answer. People expecting rates to go to the moon are going to be disappointed. I have a vested interest in rates going to 10%, suits me just fine with TD's but I don't think its going to happen.
Only ~2% of NZ's population have the income to support a mortgage above 700k at current interest rates... and I wonder how that is affected by the removal of those who's income was derived from leveraging capital gains?
Coming here, although maybe it's already here.
Almost a third of all auction listings in Sydney and Melbourne over the past week were investment properties, as higher interest rates and taxes force landlords to sell. The surge in Sydney was strongest, with data from Ray White, Australia’s biggest estate agent, showing investor listings doubled to 30 per cent in the week. The figure comes as Jarden research showed investor listings as a share of all listings hit a record high of 40 per cent in Sydney in June (AFR. Today)
bollocks we are very near bottom
Love the Comedy!!
10% this year is Guaranteed. (that's Interest rates.....not the fomo cap gains!)
If you are a FHB and you dont have a trade or Uni qual then my advice is go get a trade or uni qual. Once you have some training behind you then go to Australia and graft for at least 5 years, with a partner you should be able to save at least $100k AUD per year (and thats being conservative and with their super added on top). After 4 years you can apply for citizenship so do that. After 5 years if you are hell bent on living in NZ for some reason (and there are not too many good reasons other than family) then come back with a huge deposit and buy a MODEST house in an area you can get employment in. If you follow the above you will have a nice life, it will still be a struggle but you will be financially secure. Whatever you dont jump in and buy in NZ now, there is no opportunity at all, you will only be feathering some boomers retirement nest.
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