The gap between the asking prices and selling prices of homes continues to reduce as vendors increasingly get more realistic about what their properties are worth and drop their price expectations to meet the market.
Interest.co.nz monitors the difference between the average asking price of homes advertised for sale on Realestate.co.nz each month and compares that with the median selling price recorded by the Real Estate Institute of New Zealand (REINZ) the following month.
Although averages and medians are calculated differently, the trend over time provides a worthwhile comparison.
And that trend is very clear.
Since October last year the gap between asking price and selling price has been steadily declining, dropping from $139,636 in October last year to $71,688 in June this year. (July's asking price will be compared to August's selling price when those figures become available next month).
The trend of a reducing gap is very clear in the first graph below.
There has been much talk recently of the housing market hitting the bottom and showing nascent signs of a pending upturn. Some market commentators may see the closing of the gap between what vendors expect to receive for a property and what buyers are prepared to pay, as a sign of an improving market. But they would probably be wrong.
Because the figures also show that the biggest movement in prices since October last year has been the downward movement in average asking prices.
In October last year the average asking price on Realestate.co.nz was $947,636 and that steadily declined to $835,292 in July this year, a drop of $112,344 (-11.9%).
Selling prices also declined over that period, but not by nearly as much.
In October last year the REINZ's median price was $820,000. By July this year that had declined to $770,000, a drop of $50,000 (-6.1%).
So asking prices are declining at a greater rate than selling prices and that is the main driver narrowing the gap between the two.
That trend is also clear, as shown in the second graph below.
That suggests there could be continuing downward price pressure in the market, which may be softer than many commentators believe.
This suggests that without some meaningful interest rate relief, it's likely the housing market will remain subdued for some time.
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90 Comments
Although averages and medians are calculated differently, the trend over time provides a worthwhile comparison.
Not really, comparing the average of one set, to the median of a non random subset is... janky.
Thanks for highlighting for all of us here that stayed at school past "Skool C" how uneducated you are.
"non random subset"?? Same data mate - median being middle number, average being total/number so often skewed heavily by outliers.
So the houses that sold aren't a subset of those that were for sale?
Who pissed in your weetbix?
Its not that buyers don't want the houses....they do. The reality of today's inflation, interest rates, and banks being forced to actually do realistic math on affordability CCCFA have a real impact. Buyers simply cannot meet the price expectations created during the the low interest environment of the last decade. The speculative window is closing, those facing rolling over to today's interest rates are capitulating.
Ticket clipper PROPaganda in overdrive. Be patient.
Sure is, look at this doozy
https://www.stuff.co.nz/business/money/300952612/heres-where-house-pric…
My advice to FHBs...
Buy at "pre Covid" CV or as close as possible ( +/- 3%)
How do you come to +/-3%?
That's about where the price would have increased to if covid had not happened
a work mate of mine said to me today that they are looking to buy a house, but they can't because just not enough listing out there
Not enough good homes listed TBH, and especially not listed for a reasonable ask price.
Figuratively murder your local real estate agent.
These people list all houses at peak 2021 prices then wait for you to price discount.
Yep. A bloodbath for listings out there. Let them eat cake, or realistically... each other.
Yp. Absolutely correct
Spot on brother . Covid CVs are calculated based on dumb buying!
Now it's time for dumb selling
yup - "dumb selling" being selling now when credit is tight and so buyer pool is reduced. Yet HPI and many measures show despite this prices are now crawling more and more upwards just like inflation and most people won't notice until 12 months time when they see the same house being sold (after a lick of paint) for 100k more and they then regret not buying now (actually 3 months ago was best buying) when the competition was low.
No sympathy sorry.
Slightly off topic but related...if people are wondering where the recession is (that could impact asset prices), it is typically 22 months between the start of central bank hikes, and recession hitting. Fed started hiking early 2022 so on average we could expect to see recession hit late this year or early next year.
See the chart here:
https://pbs.twimg.com/media/F3vYwDXWEAAvphk?format=png&name=large
Also Ray Dalio thinks China is heading into a real debt problem that will likely need some form of restructuring. Watch this space.
https://www.linkedin.com/pulse/china-needs-engineer-beautiful-deleverag…
For which markets?
Not sure I understand your question. Will need to clarify.
The 22-month rule, the structure of how interest rates effect economies are quite individual, from trade deficits to the structure of their finance sectors (with USAs 30-year mortgage rates for instance) could that really translate to all nations. Or are you saying, 22-months from US Fed hikes beginning the USA will typically enter recession and the rest will follow?
I'm not suggesting anything other than the US may enter into recession later this year and generally when the reserve currency nation goes into recession it impacts the remainder of the world because of the influence of the Feds monetary policy on global markets/economies (but there are always exceptions of course).
IO - Is that what people mean when they say "if the Fed sneezes, the rest of the world catches a cold"?
I'm definitely feeling temptation start up, being a FHB... ooo only $250/week more than my rental for the mortgage... ooooo can we swing it sort of thoughts.
Hopefully the rational mind can stop the emotional want and drive for my own home for a little while longer.
Just sit on your hands, do Nothing and Save thousands per Week.
Wait Wait Wait.
And more importantly - ignore the advice of anyone who pretends to be certain about the future (in either direction).
Unless they have a 100% track record of been Correct !
I'd be even more suspicious of someone claiming a 100% track record.
You should do your home work.
Yup, at 6% you're making around $200 a week there on your deposit money, while your next house is dropping by around $1000 a week.
A net gain of $1200 a week for doing nothing. Thats a very nice extra salary.
You dont' have to be certain about which way this is going to go, wait for confirmation.This market is not going to bounce, it's a very slow climb up from wherever we get to. The bottom is in when you see prices actually start to rise, not when they are continuing to fall.
Correct, although dropping 1K per week is extremely low. Maybe you meant per Day ?
Spot on Lassett. Thats how im playing it.
NoT a FHB but negotiated 6.1% for 12months with a weekly return of $1300 smackers per week wh[le holding enough cash to buy without to much mortgage.
Come March if no go then off to Europe for 4 months using the cash which my 6 % has/ Is returning.
I am still picking the bottom for house prices as 2027
Your 100% onto it Km.
I would surmise a 2026 2027 2028 bottom as well. Then gains matching the CPI.
No one is currently 'making money' on term deposits when factoring in inflation and tax. Losing money slower than housing, yes.
Not sure you're being sarcastic, $250/week is more than $1000 a month (4.3 weeks a month, averaged). It's a LOT of money for many.
You've seen this?
https://www.interest.co.nz/calculators/full-function-mortgage-calculator
Have a really good play with it before buying. Play with:
1. various terms from 15 years to 30 years
2. overpayments above the minimum
3. various purchase prices while making the same weekly repayments
4. various deposit amounts while making the same weekly repayments
5. What you can afford to repay / borrow at various interest rates, e.g max out now and what happens when rates fall vs. max out at covid rates and what happens when rate rise to where they are now.
Focus on what the graphs and "Full Home Loan Amortisation Schedule" table are saying.
This sh1te should be taught at high schools in NZ. Because it isn't - NZ's retail banks make a fortune.
The MUCH longer you wait, the much better your future Debt free life will be.
Don't be the land barons sucker and be their debt deleverage monkey.
Paying anywhere near current pricing is lunacy and see your best years as the Exiting Land Baron Bitch and the Bankster life long slave.
Play it smart and have a much quicker debt free, with an initial: 4 to 6x DTI HOME Ownership.
Dont worry the National Party stand by to help their struggling investor mates and real estate donors get through these tough times.
Dont worry the National Party stand by to help their struggling investor mates and real estate donors get through these tough times.
If National spend the next 3 years devoted to keeping the bubble alive and throwing all available resources at it, it's going to be another wasted opportunity for the country to find something meaningful to attach to in terms of our socio-economic destiny.
"If National spend the next 3 years devoted to keeping the bubble alive and throwing all all available resources at it, it's going to be another wasted opportunity for the country to find something meaningful to attach to in terms of our socio-economic destiny."
I genuinely believe that is the last thing on their, or the current Labour govt's, mind. Herein lies the problem. All the major parties are completely self serving.
We already wasted the covid opportunity to change our economy and NZs polluting ways. We are just reverting back to what it was. Our economy relies on fossil fuels and tourism.
Dare I say the National Party is ensuring Key gets his payoff? (Oops. I just did.)
Yip, FHB should be avoiding voting National or ACT at all costs. Labor at least is pulling the right levers to bring property prices down.
My reading of the party's policies is the opposite. The biggest component of our overpriced housing is the value of the zoned land - National/Act will open up much more land and Labour will continue the disastrous urban containment policies.
Te Pati Maori make the valid point that Labour's Kiwibuild policy is only at year 5 of a 456 year roll-out to get to the 100,000 houses promised.
I think you've got it a bit wrong, it isn't the lack of land it's the zoning restrictions on existing lands. Other cities in the world have intensification efforts near the CBD and grow out from that which works as infrastructure is already built in those areas. Our main limitation is councils don't allow buildings in the areas people actually want to live in.
Sprawling outwards is a terrible idea as we don't have the infrastructure for it and it becomes considerably more expensive than just building where the jobs actually are. Not to mention the traffic issues even more people living further away from the major job centres in Auckland would be, it ruins productivity if we have people sitting in cars 2 hours a day.
Sprawling outwards is a terrible idea as we don't have the infrastructure for it and it becomes considerably more expensive than just building where the jobs actually are.
Spot on! Where jobs are, as well as schools, roads, parks, libraries, etc.
Infrastructure already in those central city areas has a fish hook too... how much up can fit in the 70 year old pipes in the street and from there to outlet/treatment plant....
It's expensive to retrofit capacity in an existing built up area... rip out the old pipes and dispose of it... deal with traffic while trying to do the work.... is there is space with all the other services.... relocate other services ... deal with street trees... work out if the downstream network can cope with that and all the other infill trying to add into it... replace downstream pipes tlif required... reinstate roads, paths and whatever else was above the old pipes...
All the low hanging fruit might be gone ...
100% right E46. The only good National policy they did was proposing the MDRS which Luxon is now committed to reversing. He's a disaster.
It was only a few day ago RBNZ was saying housing market had hit bottom. Experts seem to be clueless for the last few years. Most people on this website are more in touch with reality, the housing market will continue its crash for quite sometime and could hit bottom when average wage couples can afford to buy.
It was only a few day ago RBNZ was saying housing market had hit bottom. Experts seem to be clueless for the last few years.
I had a comment deleted asking if Orr's remuneration was similar to Jay Powell's. Sensitive times questioning the wisdom of the ruling elite.
Try emailing interest and ask why they will not do articles on Standard Interest Rates.
Spruikers addiction to greed.
They look at the wrong numbers
I get the feeling that whoever is saying the market has reached the bottom are people with some form of vested interest in property, and is what those people want to be the case. So maybe they think the more they say it, the more buyers will hear it, and think now is a good time to buy, before prices go up. But prices are still dropping on houses in my area every day. People just can't pay these prices at todays interest rates. Maybe banks need new products, such as a 35 year mortgage. As National are essentially increasing the retirement age if they get in, longer mortgages I suspect will become the norm.
Why not one hundred year mortgages? Where does it stop. The only right answer is to let prices drop to a level that the average NZ wage earner can afford.
National/Act will solve landlord problems by at some point reinstating 100% interest offset against rent, also drop the Brightline timeframe back to 2 years, pump immigration, particularly high net worth migrants in an effort to keep prices from falling further.
After all Christopher Luxon, Mark Mitchell etc own multiple rental properties and have a strong vested interest in the real estate market. They will also cut back on development within cities preferring the greenfields option so that will also put pressure on existing h house stock. Gonna be an interesting 3 years ahead.
It is crazy that professional couples teachers nurses still have no chance of buying a home from scratch in most areas in New Zealand, which tells us housing is still way over valued compared to incomes.
Even people on low incomes used to be able to afford to buy homes in NZ, and why should they be priced out of the market due to timing. Kiwibuild was supposed to be the answer, but the increased caps on those mean that people still need a massive mortgage for many.
And a massive reason why do baby if these professional couple move to Australia so they can buy a house and have reasonable living standards.
NZ never paid as much as Australia but at least housing used to be cheaper. Not anymore.
These policies are exporting the skilled labour we have trained for decades to benefit the economy of Australia.
Hence, they won't be getting my vote!
Labour still have Orr in the seat of power even if National get in.
Just simply raise rates.
No party is worth my vote at the moment with their dumb as policies. Same old giving the carrot to public to come into power and enjoy bums on comfy parliament seats.
This might change in next few months if they can bring some good policies which help grow and educate this country of sheepple.
God save NZ
TOP have some very good, costed up economic policies
A argument BASED on greed is just bu____ it!
JOHN KEYS, LUXONS, MITCHELL'S ALL WORKED FOR THEIR MONEY, DIDNT BREAK ANY LAWS, AND USED THIER SMARTS.
Adern, etal own multiple properties but thats ok!?
BUT... you'd rather vote for a crowd that gives YOUR MONEYS to thiefs, bludgers, racial divisions, , murderers, gangs, futile minorities, and 200+k of people who want money to do nothing and breed more losers.
Mate, you are very deluded
Can you give a link for Jacinda Adern owning multiple properties? If that is an important part of your argument?
https://www.newshub.co.nz/home/politics/2023/05/revealed-how-many-prope…
Sandringham and point Chev, Hubby to be may have a few under a trust.
I think there are more hidden away under trust names
https://www.yourhomeandgarden.co.nz/real-homes/home-tours/prime-ministe…
https://www.stuff.co.nz/life-style/homed/latest/101946100/jacinda-arder…
I'd be quite happy for rental property interest deductibility to be re-instated .... If a comprehensive Capital Gains Tax was also created.
Seems like a fair exchange.
And it'd focus minds on what actually constitutes a "great investment". (Very good for our economy!)
I'd be happy for rental interest deductibility to be reinstated if it was applied to owner occupiers.
Maybe politicians would think twice before they allow low interest rates to fuel credit bubbles, before the "bait and switch" occurs and genuine home owners are left paying 1/4 of their income in tax and then subsequently an extra 1/4 when mortgage rates more than double.
If businesses get to claim tax back in their money rent because it is linked to residential housing, it seems only fair that people renting houses directly should also be able to claim tax back from their rent.
Every dollar that a landlord is claiming tax back on is a dollar their tenant paid tax on only to transfer the use of that dollar to their landlord - so tenants are paying tax for their landlords!
Fair point too. The reasoning behind landlords claiming interest costs against their income is that it's a cost associated with deriving that income.
Is paying rent or a mortgage not also a cost associated with deriving an income? Pretty hard to work a day job if you're kept awake at night living under a bridge.
Not sure about CGT, but I think a business should be charged commercial rates, renting property being a business. Then give them their deductibility, leveraged would be underwater in days.
Well they claim they're a business in the context of tax deductions, but they're just "mom and pop" investors to justify taking out personal mortgages to fund capital expenditure/growth, and then it's their "home" if the tenant wants to get a dog or hang a picture.
China Evergrande sought Chapter 15 bankruptcy protection in New York on Thursday, which protects company’s US assets while restructuring arrangements are worked out elsewhere. We kind of already knew this was coming.
Wonder if this impacts our foreign investor strategy.
Since the sector's debt crisis unfolded in mid-2021, companies accounting for 40% of Chinese home sales have defaulted, most of them private property developers.
Where are those who keep on pushing the agenda of ever rising house prices as if it's a good thing.
Building a house by a builder for someone to earn a living is a good thing and helps the economy. But only if that someone is going to live in that house and makes it a home for their family.
It hurts the economy and society if that person did it out of greed to make money and benefit from it.
And in NZ most of it for last few decades have all been for greed. Hence our society is in such bad shape and not getting any better.
God save NZ
The NZD tumbling will keep inflation way over 2% level so no hope for rates to go lower but if crap hits the fan rates could go way higher, then a 50% drop in house prices from high would be best outcome. If you purchased a house today in 18 months most will be in negative equity just wait until you see the whites of their eyes then jump in and save yourself thousands.
10% Interest Rates This Year, Guaranteed !
Well if it gets to 10% on my 12 month TD, its already going to be carnage out there for a huge number of people.
Aussie taxpayers going in on 40% equity in houses with low and middle income families when asset prices are at the highest in history.
What could go wrong? Steady as she goes lads.
https://www.afr.com/politics/federal/first-home-help-to-buy-scheme-to-s…
Shared-equity schemes - it had to happen given the unaffordability of renting.
If our pollies were smart - they'd introduce same alongside regulation of the rental market. Given we're presently subsidizing landlords, it's a much better option to instead subsidize renters to become owners.
Stability and affordability of shelter solves so many other social ills - prevention saves taxpayers money in the long run no matter what the 'ill'.
!00% Agree.
Currently there is far too much virtual signaling by putting ambulances at the bottoms of cliffs.
Shared-equity schemes - it had to happen given the unaffordability of renting.
Shaping the future of neo-feudalism. We won't need an economy when we're all partnering with the govt.
From the US, but similar story here:
"In 2020, you could afford a $758,000 house with 20% down on a $2,500/month 30-year mortgage. Now, you can afford a $443,000 house with 20% down on a $2,500/month 30-year mortgage. Needless to say, things are changing quickly. Rates are at a 20-year high and approaching 8%"
https://pbs.twimg.com/media/F3wVla8XIAAgroo?format=jpg&name=large
There are many metrics to look at to judge where market prices and sales will go in next 6m
One that is not often shown (if even available) is what average earnings are for couples, both working, in Auckland for example. From 2016-23. Then compare to what average mortgage payment is for same couple. Then look at what deposit is required and stress test by banks. Est their disposable income over that period.
Finally, how many bought in the previous 18-24 months and hence highly unlikely to move again in next 2-3 years, esp when prices are falling and rates are rising.
That will pretty much guarantee you that sales will not rise more than 2-5% before end of 2024.
Prices will continue down til then also, because China RE market is imploding and that is sucking away demand for NZ export farm products and hence impacting on currency, and inflation.
So, risk higher, disposable income down,recession coming, over-priced asset still falling. Not inviting is it?
Hi Mike,
MOST PERTINENT QUESTION OF THIS TIME!
Stats NZ have all those figures if your prepared to dig and get a little frustrated while doing so.
I found the average NZ household income, was recently listed at 117k.
Given the personal variances this would equate to 350 to 490 k borrowing capacity at the test rates of 9%.
Imho....we will see mortgages over 9% in the comming year.
We have a very long drop ahead of us. This is a real stinker/ stonker!
So quite simply our market is locked up, low volumes, as it is being dragged unwillingly to the cliff and the required bag toss over it.
I know of over leveraged who are waiting (praying to Jesus) for the "spring uplift" "Nationals back in" -to ditch their cash hemorrhaging rentals. Its a heavy anchor! Like going on an impromptu fishing trip with a Mob boss and seeing at the last minute, it's only concrete blocks in the boat and no fish bait.
It won't end well for the pre- 2021, miracle leveraged wealth machine.
Rock meets a hard place. More like diamond crashes into diamond !!
Good work. People are usually only asking shallow questions which don’t get to nub of dropping sales.
The reasonable folks here have right handle, on how this likely plays out, in the new High Debt Cost World.
Anyone talking of a bs bottom now, is a fraud, desperate as hell and only looking to keep the Awfull Ponzi going, like 7x houses Luxy life and REA paid Tones A , aka the comb.
I would surmise a 2026 2027 2028 bottom. Then small gains that match the CPI, perhaps.
The upcoming DTI regulations will insure it.
While we all think NZ IS "special"
In some good and bad ways, the Sustained and ever Higher cost of Debt will see all debt funded assets drop massively, there us no doubt, it's fundamental.
HIGHER RATES AND HOLDING~ SPRUIKERS NIGHTMARE SCENARIO.
Look and see, most similar property crashes, as we indeed have playing out right here, right now in Lil old NZ, last one on average for 6 years, one was over 20 years - as occurred in Japan.
As we slide down this spiky staircase, many, many "come to Jesus moments" tough call moments, will occur/play out in the minds of the "one way, one track" thinking of the Housing Ponzi slick boys.
I stay eternally positive on Nz housing and see it rebounding before 2043, tied down to inflation = returns.
NZ will then be a winning place fpr the average Kiwi battler/FHB.
~ Rejoice, for they will be the winners from the follies of the land bankers and property hoarders.
NZ property is already bottoming out.
I've just bought a section on the outskirts of Auckland and it's all sold. The For Sale signs are down. The cost of building new houses is always increasing as are the costs imposed on landlords. New building standards on wall, roof and floor insulation, safety, water, windows, fire protection, moisture, legal, insurance and council restrictions and costs etc ensure the price of new builds will increase.
It's a no-brainer if you want a quality property that'll have good resale value.
With vendors "meeting the market" when will RE agents do the same ? A $60k commission for a $1.5 m home is outrageous.
Sell yourself. It's pretty easy if you are uptodate and realistic about the market. Recent sales data is all free and online.
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