Westpac sees 'lacklustre August house sales, price weakness, lengthening time to sell'

Westpac sees 'lacklustre August house sales, price weakness, lengthening time to sell'

Westpac economists predict more gloom for the housing market, ahead of the release of the Real Estate Institute of New Zealand's (REINZ) August house sales data tomorrow.

The bank's Weekly Commentary newsletter did not beat around the bush.

"There is no getting around the fact that the New Zealand housing market is weak. Net migration is slowing, upcoming tax changes are a clear negative, and floating mortgage rates are rising."

Westpac did note one offsetting factor in falling longer-term fixed mortgage rates, but still predicted further weakness in the housing market over 2010 and 2011.

"Anecdotes for the month of August point to lacklustre sales, a further lengthening in the days to sell, and continued price weakness."

REINZ's July house price index showed property sales fell to 4,411 from 4,575 in June and 6,014 in July 2009. It was the lowest sales month for a July since REINZ started collecting records electronically in 1992.

The median sales price in July fell to NZ$349,000 from NZ$352,500 in June, but was up from NZ$340,000 in July last year.

Days to sell lengthened to 44.6 days, the highest since March 2009, and the stratified house price index fell 1.2% in July.

REINZ is due to release its August house sales details tomorrow.

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56 Comments

That's two of the Big Four now, with Westpac joining BNZ in the 'gloom'. Only ANZ and ASB to go. But I can't see Corin Dann, or any of the MSM, repeating this.

It's a long way down for PIs...all the way to bottom...bit like the Kaikoura slip really. You just don't wanna be under that property market when she begins the slide...she'll take all the sprookers along for the ride.

It's gonna be one long wild ride ...... hang on to your hats !

I reckon all the major banks will begin to "tighten the reins" more than ever, which can only force prices down, if you are forced to sell....... bye bye all those capital gains a la 2005-2007

 

      It might look a lot like that, but as we are only a small player in a very big game. All it takes is a wild card to throw all the graphs and calculations on their side.

      The land grab is happening in Africa and South America, away from potential danger spots..George Soros has bought land in South America..and doubled his gold holdings..Putin is going to make a play for the Presidency of Russia...Tony blair has made not so vailed comments about Iran..Who just wanna have fun with Plutonium.The North Koreans have been printing "Superdollars" to Undermine the U.S..Economy. They are being passed into the Western economy, from ex? Kgb in Moscow...China what does it know? as a protector of North Korea.

   Israel has taken delivery of two Billion dollars worth of fuel over and above its usual supplies. Any fool can see that the shit! is gonna hit the fan ,at just about the time on the graph when the next Crash should occur. Yes folks all bets are off!  ..Chinas navy is now bigger than the States.Why if they are inherently peacfull?.....Remember 1938 when the Kiwi unions put an Embargo on scrap going to Japan,because they new we were gonna get the scrap back morphed into a shell?...How necesary is Australias raw materials to Chinas future growth...and should they be worried?.. Whats the point of waiting to fight over resources when their arn't any left...I wont be leaving New Zealand for at least a year. 

More likely that the residential market will become even more illiquid, with vendors taking their properties back off the market if they can't hit their price point or timing...  If they are moving cities for jobs its more likely that they will rent out their houses and rent also in the new location....

People hate to realise capital losses... so it means that the number of sellers will continue to dwindle...

You're right at this stage, HtG. What you describe happens in the UK starting in '89. By '92 people couldn't/didn't hang on any longer, and the 'buy and sell in the same market' came out. People realised that selling at a loss, and buying someone else's loss, wasn't a net loss~ and the market got on with it at a lower price point.

Problem is a metric buttload (approximately) of PIs desperately need to sell or they'll go under. Debt's funny that way.

Seems to be the case Horace. Over 500 fewer listings on TradeMe than 2 months ago and still dropping. Not much fresh meat out there.

this is only a temporary hiccup and once the scarcity of good listings kicks in,supply and demand will handle it and the market will rise up again...it always does!

Buyers have to be able to/want to pay the price of those 'good listing's first. Looks like a lack of 'good listings' mortgage capital coming from the banks, to me. Then, it's capital release time, for those that have to, because the banks aren't going to do life-style top-ups for quite some time.

The scarcity of buyers beats you scarcity of good listings..haha!

"The market will rise up again"...and pink pigs will fly!

Where's the finance coming from?

Good point ,( from Oz) "...As.... boomers retire so do their tax incentives ...as they can no longer negative gear. A good proportion of them will want to sell their investments to fund their retirement. Suddenly ... thousands of... investment houses become retirement funding vehicles and enter the market for sale..."

http://delusionaleconomics.blogspot.com/2010/09/oz-real-estate-and-desperate-banks.html

Thanks for the link #6, delusionaleconomics.blogspot  (great name) is in my favourites already.

If you have held a property for 30 years then it highly unlikely that the bank would have let you roll Interest only payments for that period. So in essence even if people have gone into the property investment game fo self fund their retirement, and 20 yrs down the track they retire, there should be very little of the mortgage, and the rents have been inflation adjusted throughout the ownership timespan. Thus, why would a PI need to sell if that were the scenario, especially given the likelihood of investors to hold in the face of capital price decreases. Why solidify the loss when you don't need to? If you have a good LVR, and you are cashflow positive, which one would hope is the case after owning an investment property for 10+ years (if its not then you bought really badly), then there should be no need to liquidate your position. You'd just live off the surplus cashflow paid out as wages.

The point made in the link in my post was, those PAYE investors who get a return from the IRD will no longer do so once they retire ( ie: they no longer have  PAYE). My thinking, until recently, has been that as self~funders retire they will release the capital to live on/enjoy life. This PAYE aspect is a new point of view I hadn't concidered.

Number of new  listings has decreased for 5th consecutive month, and housing shortage is becoming critical in some areas, even PM is addressing skyrocketing demand for rentals in Christchurch  

"Number of new listings has decreased for 5th consecutive month" - Nobody's buying.

"...housing shortage is becoming critical in some areas..." - Hilarious crap!

"...even PM is addressing skyrocketing demand for rentals in Christchurch." - And with that remark we have ourselves a new low. Who'd have thought a property spruiker could be so despicable?

It's actually quote from today's media:

 

The Government's moving to address housing shortfalls across Canterbury. Demand for rentals has sky-rocketed since the earthquake because people have been forced to leave their severely damaged homes.

Prime Minister John Key says a paper outlining support options will be presented to Cabinet on Monday. However Mr Key, who's visiting the area today, says some time will be needed just to assess how serious the problem might be. 

http://newstalkzb.co.nz/newsdetail1.asp?storyID=182169 

when 20%  of houses in a city are uninhabitable, of course any unlet inhabitable dwellings are going to become premum property jsut for the mere sake that people can;t go on living in Shelters for want of privacy.

Some will just plain leave the area. Good scenario for short term rental rises; bad for longer term rental prices and sale prices.

Of course, but as I quoted " Demand for rentals has sky-rocketed..." no metter what caused it.  What is  so despicable about? It is fact, like it or not.

Wow! those people at Westpac are real genius. WTF, tell us something we don't know

i was only joking!

it's down,down,down for the ole real estate market until those vendors get real!

Wow, a property thread with only 18 comments in 3 hours. Something's seriously wrong here.

As for house prices, I'm glad they've stopped increasing in a way that was completely out of line with wage increases. Maybe at some point families will again have a choice regarding having one parent at home with the kids as opposed to being forced to work two full-time jobs just to pay the mortgage and still make ends meet (here's hope).

Yep, the banks are very coy.

Even that old property bull Tony Alexander says things will be flat this year and most of next.

Curious that TA's "weekly Overview" has not been "weekly" for  a couple of weeks. Maybe he's got the grumps with his other economists who are paintly a gloomier housing picutre than he is

 

Tony Alexander's comments have become an intolerable embarrassment as far as the BNZ hierarchy are concerned.

You must be very ashamed of your name when decided to use mine 

yes, Elley...it's tragic..where's the fun, the wild raves as those posters of only weeks ago devoured their daily dose of RE porn?

the man, ex agent ,pres of prop..even small kev..all fallen silent..kinda spooky as the malaise settles over the land like whispering fog?!

A certain Johnny-one-note is a bit silent too.

DMac/Elley I am alive and kicking. I have been quiet of late as there have been so many other commentators talking the new reality which has been confirmed by the BNZ and Westpac. The news gets worse for investors by the day. I am talking to people in the industry daily and they all to a person say it is getting harder and harder to bring the buyers up to the vendors expectations. No suprise there. Tomorrow we will hear from my old institute the REINZ. You have to appreciate that their monthly reports are put out by hired spin doctors who are of course paid to put a gloss on anything that could be construed as being negative to their industry.It is rather embarrassing to think I used to be part of it. It was a good income earner however I am glad I am out of it.Thankfully I sold everything but my home in 2007/2008 as things are getting worse and will continue to do so for some time. I think we will hear less and less from the Man/Fool and co as they try to rescue themselves from a dying method of getting ahead. People are going to have to look to diversify in investing and at the same look to cut their standards of living as we now go into new territory. Capital gain of any significance is not going to happen for some time.

I would expect 150+ comments by now. I mean article is about housing doom!  Wally, have you lost all your alter egos? 

well put,ex agent,well put.!

A little while ago PIs were so terrified of the obviously inevitable collapse of their residential investment property bubble that they began invoking the spectre of a natural disaster or similar catastrophe to save it, and them.

It was all about some foreign awfulness driving hordes of wealthy refugees to our shores, guaranteed to pay enormous sums when snapping up all of NZ's residential property.

Now?

It's the Christchurch earthquake which will save them.

As all those poor unfortunates whose homes have been destroyed seek alternative shelter, the vulture-like PIs salivate at the thought of profiteering from the distress and predicament of their fellow countrymen.

That PIs gleefully hope to prey on Kiwi victims for their own financial gains, to cash in on their dire straits, clearly demonstrates the prescience and accuracy of all those who claimed PIs were disgustingly greedy pigs, with no sense of morals, ethics, scruples, or human decency, while possessing a gargantuan belief in their own divine entitlement.

would you rather the destitue freeze to death or find suiotable accommodation until their own house is back in order, which given the size of thte tragedy, will take some timee?

Westpac in Australia are still trying to pump up the property bubble over there as fast as possible .... adding more petrol to the fire

Australian Lenders Learn Nothing from US Housing Bust: Mortgage House offer 105% Mortgages, Westpack offers 97% Mortgages

http://globaleconomicanalysis.blogspot.com/2010/09/australian-lenders-learn-nothing-from.html
 

How can they be so thick in doing an action replay of what US banks did a few years ago when it is so obvious what the result will be?

I hope/guess the Oz government will be able to bail them out due low government debt once the whole ponzi scheme implodes.

But this screw up is definitely not going to help NZ due lower exports, higher interest rates etc.

Sunny Nelson,

This is very simple. They fuel the bubble because they can reap huge rewards now and know they will be bailed out later. This, if anything, was the big lesson learnt from the GFC.

As much as I detest this behaviour, I must admit that from a banks standpoint you'd be stupid not to do this. It's free money (for them).

Economists can't even measure real prosperity, let alone fiddle it. So they put on the GDP and employment numbers the way a bald man puts on a cheap wig. It makes him look ridiculous and fraudulent, but it's the best he can do.

~ Bill Bonner

i think they're referring to tony alexander

.....and all the pollys and know it all economists in aymereeka....yah....land of the rugs.

i've just bought two more rentals and i'm getting 9 % return on one 8.5 on the other and my rents on all my other properties have increased ,so why you guys see the sky falling i see returns rising, so what if values fall rents havent i'm not selling its about returns not capital gains i dont try and guess the future like some of you i just look at what i get back in return for my investment and that is getting to the level i like

Pull othe other leg the Man. Being a PI is all about capital gain to cover the losses from the negative gearing. And when you have not got capital gain like at present you are making a loss in capital and income. Why the heck would you buy at present when the market is falling and is going to fall for at least a year and a half according to Westpac. You are either greedy or not very bright or both. As they say a fool and his loan is easily parted.

spoken like a true RE agent, you guys just don't get that the investment game is about cashflow and capital gain is the cream. You can't go broke making a cashflow profit.

But the Bank can still call in the loans when they feel their security is insufficent. Ask the dairy farmers who are currently being forced to sell their farms even though their bank payments are up to date. As the house prices drop over the next few years more and more banks will want houses sold to reduce their risk of losing capital. Banks never lose.

Yep, ex-agent! The second a bank wants it's money, it goes for it; borrower's history be buggered!

http://www.businessspectator.com.au/bs.nsf/Article/ANZ-accused-of-harassing-debtors-report-pd20100914-99S4M?OpenDocument&src=hp3#Scene_1

Which is why you never keep all your lending with one institution, as it acts as leverage against upity/ flighty lending departments calling in loans

No. But you can make an awful lot more by concidering the alternative application of funds.

anyone wanna sell me their rentals ?

It's a no brainer aint it Andrew...all those suckers too dumb to see how they can get a great return...no need to worry about falling values...just laugh in the face of the knowledge you could have bought the same renter for 30% less capital if you had waited 12 months and then your return would be that much better. Fools for not see how good Andrew Financial Planning really is!

Andrew,

Instead of buying more properties, ever thought of investing into something that would contribute to the economy? Housing is not a bad investment if you are getting 8%-9% returns but this is not what the current economy needs now. We need job creating investments. Think outside the box.

and your invesment Marct is what field? How are they  delivering the benefits to NZ that you deem worthy?

O.k. i'm going to  say some words and you respond with whatever comes into your head....ready...?

Property

housing

land

boom

real estate

honesty

bank

profit

quick

bang

as long  as you have these important words you won't need to read any of the stuff that could be wasting your time not reading about ...these words.

And don't forget it's cheerful week...happy joy...! oh happy.

 

183 points?

I shall deliberate on your response and give you your score in due course Number 6....at a glance it would appear you have a fair grasp on reality. 

Help!

Olly N where are you?

.... well I am sitting here waiting for the great "spin" machine, the REINZ to come out with their August figures and what "spin" lines they will use in this months report.... ???

Could be .....

1. Housing shortage in CHC due to quake will firm prices in a "shakey" market"....

2. SCF funds "on the loose"  will boost Lakes/Queenstown district holiday homes market, heading for a peak November, just before the beautiful summer weather....

3. It has to be noted that as we are so intrinsically tied into the big 4 Aussie banks, real estate has never been a better and safe investment, in such uncertain uneconomic times ....

4. Interest rates have never been lower and are not set to rise anytime in the future...

5. ONLY ONE YEAR NOW TILL THE RWC ... SO GET IN NOW BEFORE IT'S TOO LATE !!! 

 

 

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