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REINZ reports median price flat in Sept, but volumes down 33%; Canterbury sales down 57%

REINZ reports median price flat in Sept, but volumes down 33%; Canterbury sales down 57%

By Bernard Hickey

The Real Estate Institute of New Zealand (REINZ) has reported the median house price in September was flat nationally at NZ$350,000 from NZ$350,000 in August and NZ$350,000 a year ago.

Sales volumes were 4,323 in September, up from 4,287 in August, but down 33% from 6,464 in September a year ago.

This was the lowest September sales figures since the REINZ started collecting figures in 1992.

Sales in the Canterbury/Westland region fell to 396 in September from 623 in August and 921 in the same month a year ago as the September 4 earthquake hit sales in the region.

REINZ said the sales volume were less than half the number sold in September 2006, "when the market was at the height of the property boom."

“It’s pleasing the median price has held relatively steady at NZ$350,000 for the past two months, which is NZ$20,000 up on September 2008 when the market was at its worst in the midst of the global economic crisis,” says REINZ spokesman Bryan Thomson.

'Tax uncertainty and weather blamed'

“Sales continue to remain very subdued across the country but some of this could be attributed to uncertainty over the rise in GST and tax cuts, which came into effect on 1 October and also the shocking spring weather we have been experiencing," Thomson said.

"We would expect to see a pick up in the market in coming months as warmer spring and summer weather generally brings an influx on new property listings onto the market providing more choice for buyers,” he said.

The national median number of days to sell remained steady at 43 for September, the same as the previous month but 10 days longer than the 33 days recorded in September 2009.

REINZ said the breakdown of the values of the properties sold is 156 for NZ$1 million plus, 505 between NZ$600,000 and NZ$999,999, 1,080 between NZ$400,000 and NZ$599,999 and 2,582 for under $400,000.

The REINZ's Monthly House Price Index, which uses the stratified house price measures recommended by the Reserve Bank, shows prices fell 0.3% in September from August and have fallen 1.2% in the last three months and are 1.3% down from a year. House prices are 5.6% below their November 2007 peak. Once inflation is taken into account, real house prices have fallen 11% since the fourth quarter of 2007.

Regional moves; Prices Gored

Northland prices and volumes fell with sales in Whangarei falling to 39 in September from 61 in the same month a year ago. Central Auckland prices and volumes were solid, but the market was weak in South Auckland.

Wellington prices and volumes were firmer than the rest of the country.

Sales volumes in Queenstown were solid compared to the rest of the country.

The median price for a house in Gore also continued to slide – down from NZ$183,250 in July and $171,500 in August to NZ$120,000 last month

Economist reaction

ASB economist Chris Tennent-Brown said the housing market had again shown low turnover but relatively steady prices in September. However, nationwide seasonally adjusted days to sell rose to 45 days in September from 44 in August, although a slight rise in Canterbury meant the ex-Canterbury days to sell were steady on a seasonally adjusted basis at 47 days.

Tennent-Brown noted that days to sell extended in Auckland, but shortened in Wellington. "By this measure, the market remains tipped in favour of buyers, with days to sell comfortably above the long-run average of 38 days," he said.

He noted, however, that stripping out Canterbury, turnover picked up in raw terms, "but not to the extent we would expect given the seasonal pick-up at this time of year."

"Our ex-Canterbury turnover calculation shows turnover easing 6% in seasonally adjusted terms – the same sort of drop as the seasonally adjusted nationwide measure," he said.

Inventory was now getting quite high, with the number of months necessary to sell the total number of listings rising to 13.9 months in September on a seasonally-adjusted basis from 12.8 months in August, he said.

"We expect house prices nationwide to soften, and post small year-on-year declines of around 2%. However, behind the nationwide decline we expect a range of experiences, from modest price gains in cities where the market remains tight, through to declines in areas where the property fundamentals remain weak."

See REINZ comments below for more detail on regional price movements and sales volumes.

Northland

From $280,000 in June, the Northland median price rose to $307,500 in July and $310,000 in August, but fell slightly to $300,000 in September 2010.

But it was still 5 per cent up on the September 2009 median of $285,000.

Northland residential property sales volume fell from 88 in August to 81 last month, which is also well down on the 139 sold in September 2009.

In Whangarei County, the median price eased slightly to $333,000 after climbing to $340,000 in August, but was still down on the September 2009 figure of $380,000.

Sales dropped significantly to 8 residential properties, down from 22 in August and 19 in July.

Sales in Whangarei City recovered slightly to 39 after dropping to 34 in August from 43 in July.

However, they were still well down on the 61 properties sold in September 2009. The median price also fell from $302,500 to $281,050, but is still more than $11,000 up on the September 2009 median of $270,000.

Auckland

After climbing back to $450,000 in July, the median price dropped to $445,000 in August, but bounced back to $450,000 again in September, which is $5,000 up on the median price of a year ago.

September’s total of 1690 sales was up on the 1487 recorded in August but down on the 1505 recorded in July. It was also well down on the 2355 sales recorded in September 2009.

The median sale price for a North Shore City home increased to $530,000 in September from $520,000 in August and $490,000 in July, but is still down on the median of $555,000 in September 2009. Total sales were 304, up from 279 in August and 277 in July but down on the 407 sold in September 2009.

Sales remained steady in Waitakere City at 198 sold but still down on the 330 properties sold in September 2009. The median price increased slightly last month to $380,000 from $375,500 in August but is still well up on the September 2009 median of $362,500.

The median price for an Auckland City house rose to $525,000 in September, an increase over $485,500 last month and $492,500 in July and also up on the September 2009 median of $516,500.

At 602, sales were up on 534 in August and 520 in July, but down on the 813 in September 2009.

In Manukau City the median residential property price continued to fall to $420,000 after falling to $441,750 in August from from $455,000 in July. It is also down on the median of $450,500 a year ago. The number of sales increased to 362 from 296 in August and 289 in July but is down on the 483 sold in September 2009.

The Papakura District median price increased to $350,000 from $315,000 in August and $320,000 in July and was also up on the September 2009 median of $321,000. The 55 sales in Papakura in September was well up on the 30 sold in August and 45 sold in July.

The median price for Metropolitan Auckland homes recovered slightly in September to $455,000, after dropping to $450,000 in August. It is still down on the same month last year when the median price was $462,500. Sales of 1521 were well up on the 1337 recorded in August but down on the 2115 in September 2009.

Sales in the Rodney District remained relatively steady at 90 compared to 92 in August and 98 in July but were down on the 118 sold in September 2009. After falling to $443,500 from $450,000 in June and $459,500 in July, the median price recovered slightly to $447,500, which was slightly down on the September 2009 median of $450,000. The median price for a Franklin District home climbed to $363,500 from $308,500 in August and 340,000 in July but was still down on the $375,500 median in September 2009.

With 44 houses sold in September, sales were up on August’s total of 40 but down on the 51 sold in July (September 2009: 66).

In Thames/Coromandel sales jumped to 35 from 18 in August and 19 in July. However, it’s still less than the 56 sold in September 2009. The median price continued to fall from $326,250 last month and $390,000 in July to $315,000 in September, and still well below the September 2009 median of $355,000.

The median price for an Outer Auckland home climbed back to $400,000 after easing slightly in August to $393,500 (August 2009: $405,250). Sales volume increased to 169 from 150 in August and 168 houses sold in July (September 2009: 240).

Waikato/Bay of Plenty/Gisborne

At $314,324, the Waikato/Bay of Plenty/Gisborne district median price fell from $323,000 in August but was almost the same as September 2009 ($315,000). Altogether 570 houses were sold in the district, up from 557 in August, but down on the 898 sold in September 2009.

In Waikato Country 79 houses were sold compared to 69 in August, 97 in July and the 178 sales in September last year. At $275,000 the median price is well up on the August figure of $228,000 and the September 2009 median of $250,000.

The median price for a Hamilton City house was $344,500, which was up on the $335,000 recorded in both July and also up on the September 2009 figure of $319,000. Sales volume stayed steady at 150, compared to 151 in August and 153 sold in July but down on the 247 sold in September 2009.

In Western Bay of Plenty Country the median price fell to $359,000 from $420,500 in August and is down on the $385,000 median in September last year.

Sales volumes eased up to 55 from 44 in August (September 2009: 53). The median price for a house in Mt Maunganui/Papamoa continued to fall to $377,000, down from $405,000 in August and $412,000 in July, but slightly up on the September 2009 median of $378,000. Sales were 54 compared to 47 in August but are down on the 81 sold in September 2009.

In Tauranga the median price fell to $328,000 from $353,500 in August and is down on the September 2009 median value of $354,000. Sales of residential properties remained steady at 77 last month compared to 78 in August, but were still well down on the September 2009 figure of 130.

Rotorua’s median price continued to fall – down to $231,500 from $285,000 in August. The sale of 66 properties is slightly up on the 61 sold in August, but down on the 77 sold in September 2009. In Taupo the median price dropped to $298,000 in September from $350,000 in August. It was also down on the September 2009 median of $315,000. There were 27 sales in September compared to 32 sales in August and 45 sales in September a year ago.

The median price for King Country residential properties continued to fall from $140,000 in July and $125,000 in August to $92,500 in September. It is substantially down on the September 2009 median of $210,000. Sales remained steady at 9 compared to 8 in August but down on the 13 sold in September 2009.

The median price for a Gisborne City home eased back further to $210,000 from $220,000 in August and from $259,000 in July and is now significantly below the September 2009 median of $257,500. At 26, the number of sales is down from the 35 recorded in August and 42 in September 2009.

In Eastern Bay of Plenty Country, the median price recovered to $246,000 after dropping to $185,000 in August from $310,000 in July. It was still down on the September 2009 median of $277,650. There were 26 houses sold compared to 29 in August and 27 in July but less than the 31 sold in September 2009.

Hawkes Bay

In the Hawke’s Bay district the median price fell to $265,000 from $272,500 in August and was the same as the September 2009 median. Total number of houses sold remained steady at 159 for September, which was down from 235 a year ago. From $308,000 in August, the Napier City median price eased to $298,750 in September, and is up on the median of $280,500 in the same month last year. Sales totalled 76 houses, up seven on the 69 sold in August, but less than the 110 sold in September 2009.

In Hastings City the median price was $262,000, down slightly on the $269,500 recorded in August and $268,000 from a year ago. Sales continued to slip from 67 in July and 66 in August to 63 in September, also a decrease on September 2009 sales of 86. In Hawkes Bay Country the median price fell from $350,000 in August to $240,000 in September, also down from $260,000 in September 2009. There were six sales, compared to five in August and 13 in September 2009.

Manawatu/Wanganui

Across the Manawatu/Wanganui district the median price continued to ease to $216,500, down from $229,500 in August and $232,000 in July, also down slightly on $225,250 in September 2009. Sales at 222 were up on the 200 sold in August but down on the 286 sold in September 2009.

At $260,000, the median sale price for residential properties in Palmerston North City was up on August’s $256,444 but down on the $290,000 recorded in September 2009.

Sales of 87 were down on the 90 recorded in August and 110 houses sold in September 2009. The median price in Wanganui City fell to $180,000 last month from $215,000 in August, and is also down slightly on the September 2009 median of $190,000.

There were 45 houses sold in September, well up on the 25 recorded in August but down on the 57 sales in September 2009. Taranaki The Taranaki district median house price rose slightly to $269,500 from $265,500 in August but still down on the $283,000 median in September last year. Across the district 132 houses were sold, roughly the same as August’s figure of 134 but down on the 183 sales in September 2009.

The median sale price for a New Plymouth City residential property fell to $300,000 from $325,000 in August, also down on the median of $322,000 a year ago. At 62 the number of sales was on a par with the 65 sold in August but down on the 87 sold in September 2009.

Wellington

The Wellington district median residential property price remained steady at $398,500 last month, compared to $397,500 in August, and well up on September 2009’s median of $378,168. Sales for the month slid back to 492 from 501 in August and 512 in July and are also well down on the 701 sold in September 2009.

In the Wairarapa, the median price rose to $270,000 from $227,000 in August and $248,000 in July and also well up on the $232,500 median in September 2009. The number of houses sold remained steady with 47 sales in both August and September but was still down on the 62 sold in September 2009.

The median price for an Upper Hutt house continued its upswing reaching $361,000 for September, up from $324,000 in August and $322,000 in July. It was also up on the September 2009 median of $336,000. Sales of 44 residential properties were recorded in September, down on the 49 sold in August and the 80 in the same month last year.

The Central Wellington median price bounced back to $495,000 after dropping to $428,000 in August, well up on the September 2009 median of $461,000.

The number of sales at 35 was the same as August but down on the 43 residential properties sold in September 2009.

Nelson/Marlborough

Across the Nelson/Marlborough district the median price remained at $330,000, the same as the previous month and up from $327,000 in July, but down slightly on the September 2009 median of $337,125. Residential property sales jumped up to 172 last month from 145 in August, but were still down on the 224 sales in September last year. In Nelson City the median price increased slightly to $331,000 from $330,000 in August (September 2009: $345,000) and sales volume rose from 63 the previous month to 71 in September, though still less than the 83 in the same month last year. In Marlborough the median price increased to $312,500 from $280,000 last month (September 2009: $319,000). At 48, sales were up slightly on the 41 in August but down on the 76 in September last year.

Canterbury/Westland

The Canterbury/Westland district median price fell to $297,500 from $315,000 in August, also down on last year’s September median of $311,500.

At 396, sales were significantly down from 623 in August, and well below the 921 in September 2009.

The median price for a house in Christchurch City increased slightly to $338,000 from $335,000 in August, and is also up on the September 2009 median of $331,000. Sales dropped from 416 in August to 237 last month (September 2009: 618).

The median price in Timaru remained steady at $200,000 last month, but is still below the median of $218,500 a year ago. At 35, sales were on a par with the 37 properties sold in August but down on the 56 sold in September last year.

Central Otago Lakes

Across the Central Otago Lakes district the median price rose to $465,000 from $450,000 in August, well up on the median value of $405,000 a year ago. Sales remained steady at 77 but are down on the 103 sold in September last year. The Queenstown median price fell from $515,000 in August to $482,500 last month but is still up on the September 2009 median of $462,000. Sales were also up at 46 properties compared with 30 in August (September 2009: 50).

Otago

In the Otago district the median price remained steady at $230,000 last month, and is down slightly on the September 2009 median of $237,000. Across the region 191 dwellings sold last month, down on the 199 sales in August and 275 in September 2009. The median price in Dunedin City eased back slightly to $242,000 from $245,000 in August, which is also a decrease on the September 2009 median of $270,000. At 147 sales were on a par with the previous month’s 145 but down on the September 2009 of 215.

Southland

In Southland the median price continued to slide and was $185,000 last month compared to $194,500 in August and $210,000 in July. It was also down on the September 2009 median of $189,500. Sales volumes increased to 141 last month from 117 in August (September 2009: 144). In Invercargill the median price slipped from $210,500 in July and $210,000 in August to $189,000 last month, which was down on the September 2009 median of $195,000.

At 106, sales were up on the 71 sold in August and on a par with September 2009 (105).

The median price for a house in Gore also continued to slide – down from $183,250 in July and $171,500 in August to $120,000 last month. It is also down on the median of $159,000 in September a year ago. Total sales were also down from 28 in August to 15 last month. (September 2009: 17).

(Updated with chart image above, interactive chart below, comments from REINZ, regional details)

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157 Comments

But the value of the toilet paper fell 3% over the last 12 months....which means the $350ooo would have lost $11500. For values to remain flat the number would need to be $361500!

Wow, only 42865 sales for the year to date. There is a chance that the extremely low sales of 2008 will be beaten:

2008 sales: 56056

2009 sales: 69629

To beat 2008 would require selling at least 4400 properties a month in Oct-Dec. In 2008 that wasn't achieved.

Bloody interfering Govt. and the weather gods!

according to Bryan Thomson above, if these 2 bastards hadn't conspired against vendors the property market will be roaring by now.!

i wonder if he's got a book of "useful excuses for the real estate market"?

If he did have a book of " Useful Excuses for the Real Estate Market "  , he'd need a truck to cart the bloody thing around in !

If not he should write one....should make a packet....

regards

"Sales continue to remain very subdued across the country but some of this could be attributed to uncertainty over the rise in GST and tax cuts...."

"We would expect to see a pick up in the market in coming months...brings an influx on new property listings onto the market providing more choice for buyers

So sales are 1/3 down on this time last year because of a GST increase which doesn't apply to houses or mortgages, people's take-home pay is increasing, and because there aren't enough houses to chose from...?

I would have thought it had more to do with the fact that houses are really expensive....

Exactly PI R  When is he going to openly and honestly say that asking prices for properties are hopelessly over the odds in relation to buyers expectations , and as long as this continues , the market will remain subdued . The problem is that there is a whole generation of Real Estate agents who have never seen a falling market . Its all new and unexplored territory for them . It wont take long before they realise they are not going to eat and then there will be a reality check 

Given a lot of REAs have left the market I think they know what hunger is already....they live on commission, no commission no food....Its sellers that are un-realistic and that shows in the time to sell....this summer's selling season should be interesting....

Im not sure they are not shooting themselves in the foot, a REA makes money on a sale, by saying the market is OK it keeps the sellers expectations un-realistic...buyers are not dumb, sellers only see what they want to see.....

regards

Now if we do a little numbers magic...some 'Tolley math'....if the market stayed "flat" for ten years...that would mean the prices av would have to be 30% higher than $350ooo....ruffly another $105ooo....but if the av price is still $350ooo in 2020, that would mean a loss of 30% .....but property never goes down in value...how can this be so.....maybe the RBNZ will shove the ocr to 7% and bash inflation down to nearly zero...and maybe we will be visited by aliens with a taste for wool and wine...and a spaceship full of gold.

What then is going to bring the RE mob back from the dead...will it be an extra million asian students arriving loaded with loot and splurging on apartment dog boxes....or will it be waves of wealthy Aymereekans rushing down here to rid themselves of their freshly printed toilet paper....or will it be a magical recovery of the Noddyland economy, the 250 billion in debt liabilities turning to smoke...a return of the age of greed and utter stupidity..place your bets folks.....

Are you related to Tolley Wolly?

if so then that explains it all...stay off the pooter and get your grades now...

Oh  dear, how sad but

never mind the RE spruikers are in good heart for the Summer boom now that the Spring boom is a damp squib.

With core retail sales down as well, is the message finally getting through?

FYI updated with regional detail.

Wellington and central Auckland appeared stronger than the rest. Volumes didn't fall in Queenstown.

The median price dropped to NZ$120,000 in Gore.

Can't imagine September was a good month for open days in Gore...

cheers

Bernard

nothing wrong with gore..jeremey newsboy said on tv a while back it was the gay capital of nz?

Why ............ Can't they catch sheep , down in Gore   ?

ahhh - the best lol I've had in a long time..............

The median sale price for a North Shore City home increased to $530,000 in September from $520,000 in August and $490,000 in July,

North Shore appear to remain popular with migrant buyers.

How rude..how do you know i'm an indian?

I’m increasingly confident that the pieces are falling into place for high leverage to be a good play.

when u drill down on the relevant figures:

The median price for an Auckland City house rose to $525,000 in September,

an increase over $485,500 last month and $492,500 in July and also up on the September 2009 median of $516,500.

So thats

Sept          525k

Aug           485k

July           492k

Sept ’09   516k

Which means what excatly? That people who paid too much for their houses previously are selling them below purchase price now? Or the smart wealthy are selling down before it's too late? The median is up; volumes are down 33% ( the lower a sample, the less of a leading indicator it is). According to your digging; that can mean all sorts of things!

Hey SK..Supertramp had a hit song in the eighties named after you..was called " Dreamer"

I think that this is misleading - look what median actually means - just the middle number

The mode or the mean would be far more useful a measure

Ken Wells , GM of Link Business Broking , says that sales of businesses are up ! In the 6 months to end of September , 14 % more businesses sold than in the corresponding period last year . He believes that many Kiwis are coming out of the GFC with redundancy payouts . And that they're looking to " buy a job " . Small Mom&Pop enterprises under $ 150 000 are most popular . Only 22 % of businesses sold were muli-tiered enterprises .

FYI Updated with House Price Index (stratified measure) showing a 5.7% fall from the November 2007 peak and that house prices are down 11% since then on an inflation adjusted basis.

cheers

Bernard

Bernhard – please have more bite interviewing people.

Just a proposal:  Why not use 5- 10 questions/ comments from us bloggers at the end of your interview ?

Why not have regularly a politician debating with us about an issue or two - actualised for a week, so they have enough time to comment ?

 Not a good sign of the time: The encapsulation among media, the public and our politicians is widening.

Bernard Hickey,

I just heard a quote from you on Newstalk ZB saying now is the perfect time to be buying a house... Interest rates are low, it's a buyers market, etc...

Why the change of heart?

Also another question... Who pays your salary?

Really? I haven't spoken to NewstalkZB today or in the last couple of days.

What you're hearing might be a report from interest.co.nz of Kiwibank saying that now is the time to buy.

Think you might be confusing us reporting what Kiwibank said rather than us saying it ourselves.

Here's the report on our site.

http://www.interest.co.nz/news/kiwibank-ceo-urges-would-be-1st-home-buyers-take-plunge-so-long-they-can-afford

cheers

Bernard

Such treachery - your beloved doomsayer is hanging you all out to dry.

beware of the Ides of november...birds of a feather fly alone , you know!

Housing loan approvals fell again in the first week of October to 4,621 which is pretty much (ignoring weeks including public holidays) a record low.

http://www.rbnz.govt.nz/statistics/monfin/c16/download.html

Interesting divergence now developing between QV and REINZ data - does anyone actually independently audit the REINZ data?

Don't worry folks, all will be rosy again in next month's figures..... mortgage approvals and values will reverse their decrease, days to sell will decrease, median prices will begin their rise nationwide and all will be well, as the summer season kicks in, with increased quality listings being bought to the market, to be devoured by a pool of eager buyers ......

.........and this is all in the "fantasyland" of a real estate agent's mind.  

"Meanwhile the median sales price in Auckland bounced back to $450,000 last month, after dropping to $445,000 in August, according to REINZ."

Is that reporting or emotive BS... "bounced"   is a 1.0% change a "bounce" or an insignificant change that one would except each month

"REINZ said the breakdown of the values of the properties sold is 156 for NZ$1 million plus, 505 between NZ$600,000 and NZ$999,999, 1,080 between NZ$400,000 and NZ$599,999 and 2,582 for under $400,000"

Interesting but tthey miss out the bit as to how the ave price in each group  has changed and the number in each group, do that and one will see how the overall prices have dropped far more than the overall stats say, espec if compared back to end of 2007.

I cant figure out how legit reporters and collumists  do not come out and call the REINZ out on such manipulated press releases....or dont legit reporters and collumists with balls exist any more?

Supose not, they are forced to resign due to PC BS.

Steps,

I'm a sceptic, but happy to let the REINZ speak for itself and let you call them out.

I'm a bear on property prices, as you know.

cheers

Bernard

You've joined us  at last ! Ka-Zowie , another sticky gooey gummy Bear .........

......... . Tell me Bernard , is there anything in the financial world that you're not a bear on , at the moment ? Anything that you're not a septic about ?

1/ my reference was to media overall..Im not picking you out....

2//So reading between the lines...you basically agree with me.

What amazes me is the commentators and editorials in newspapers...reporter take things at face value....Damn most of their stuff is written for them....try to get something reported or published one has to write the articles for them to put their name at the bottom.

Most reporters are the laziest people I have come across in the last 40 yrs, and getting lazier...What happened to the Pat Booths of this world?

' Wolly maths', or should that be woolly maths?

"If a $350,000 property remained static in price until 2020, that would mean a loss of 30%.

Well, surely a $350,000 deposit in the bank remaining until 2020 will still be $350,000 as well?

Of course the bank deposit may net 4-5% interest pa, but that's no different to property rent netting 4-5% pa

So, old-timer, what's your point??

Quite right! But my landlord isn't running at 4-5% net income. Far from it! I guess he gets some LAQC relief, but those in a similar situation must also be running at a net loss ( could be nasty by 2020, don't you think?)

The point is a bank is a very low risk investment. Residential property is not.

A $350,000 house would need rent of about $450 a week to net that . Healthy. The median rent for a 3 bedroom house in NZ is $320, a "net" of about 3.5% after rates, insurance and maintanence, before any interest, time or management fees.

5 years at the bank is 6% currently.

Me, with a rental you will be lucky to be making any money at all after paying rates,insurance maintenance and other costs on a return of 4% if you are lucky. And if you are paying interest to the bank as probably most pi's are then it is even worse. At least with a bank deposit you only pay tax. I know where I would rather have my money at present, in the bank. House prices have a long way to go before they stabalise. People in NZ are just coping with their daily cost of living overheads and are avoiding any more debt like the plague. Too many houses for sale and not enough keen buyers out there at present. Houses prices were pumped  up on debt and not savings. Now that debt has to be dealt with.

Bernard what is your position on Auckland City house prices?

You know - the area where most people live?

The area where these stats show an 8% median increase in the last month?

SK, it just means more expensive houses are selling compared to cheaper homes as investors and FHB's are either backing off or cannot get finance. People who have equity in their existing homes and the ability to borrow are upgrading in a bad market which is the smart thing to do and this is pushing up the Auckland median. But talking to colleagues, in reality the market is slowly coming down in value each month right across the market and especially in the higher bracket where more and more mortgage stress is showing as the businesses that supported those big home loans are struggling.

Ex agent, what is the reported basis for your claim that  "more expensive homes are selling rather than cheaper ones?" Exactly the same claim was made last September. Can you produce figures to back up this claim? Since it seems that the biggest price hits by far have been taken at the top end of the market, unless the $1m + category has increased vastly as a percentage of overall sales it seems the middle of the market is holding up surprisingly well. I'm waiting for prices to adjust downwards but I'm sure glad not to be holding my breath while so doing, as the long predicted price crash appears to have missed the bus.

It is the same old comeback these guys use every month when their price drop predictions don't happen!!  Apparently every month for the last two years, people have been buying higher and higher end property, and no one is buying the lower end stuff anymore.

Yep now think that thru..they are buying higher priced property at much lower prices.

Thats more property sold at prices above Ave, and less property below ave as at  late 2007

What dies that do to the mean and the ave?

But the same property sells 18 to 22% below 2007 peak...yes there are exceptions, theres always exceptions.....exceptions are exceptions cause they dont have a dramatic effect on the overall scheme of things.

Stats are for 2 reasons

1/manipulate them for ones own agenda

2/To analysis to find the real trends

A lot of houses on the market are simply unsaleable due to leaking issues. Surely these must be affecting the days to sell and average price figures. It appears the more sort after areas such as Queenstown and the North Shore in Auckland are holding up price wise.

Gavin...has it not dawned on you that the days to sell figure is fictional bullshit? Is that some sort of oxy something or what?

Queenstown? Sought after....have you been there recently, Gavin? the words 'spoilt for choice' come to mind.

What's so great about Queenstown anyway? It's a dark dingy place that hardly ever sees the sun and everything costs much more there than anywhere else. The people are all ex JAFAs who seem to think they are royalty.

 Get yourself a camperbus The Man and enjoy the Otago lupin landscape.  

Wolly. Are you saying they draw them out of a hat or something? Surely today they must be actual days listed from computor generated stock held by Real Estate companies.

Yes Gavin ...the "or something" bit is correct...they only report the time it took the agent who sold the property to sell it...every new listing is a new to market listing...anything unsold for too long would damage the stats and is re listed!   Perhaps you can point to a listing that informs the potential buyers how many agents the property has been listed with and for how long....dammed if I can find it..................The stat is crap.

ex-agent its a stratified index.

Your personal attack shows you have no argument otherwise you would have argued that point rather than personally attack me. Are you one of my ex colleagues who cannot admit the truth which is the housing market is going to die by a thousand cuts. In other words just keep going down and down in value each month for the forseeable future.

@Gavin - the word you are looking for is 'sought' not 'sort'

The "days to sell" figure is not completely meaningless - at least it has been collected in the same way since 1992. However it is only the number of days to sell at the particular agent that sold the house, for those houses that did in fact sell.

Another measure of time to sell is provided by the listings at www.realestate.co.nz. They currently have 47,280 properties for sale (9.5 months supply - not counting another 7000 lifestyle properties). Half those were listed before 23 June 2010 so the median days to sell (from first listing date) is 113 days. This method doesn't distinguish between a property selling and being withdrawn from the market, however.

34 properties were first listed in 2008 or earlier.

 

median days to sell for lifestyle properties: 182 days

median days to sell for lifestyle sections: 294 days

median days to sell sections (17035 listings): 327 days

and the data probably does not include the properties that are being sold by the owners direct but were once listed with a variety of agents over and over again ....there are plenty down here in Marlborough unsold for years...not months!

Talking to agents,bankers  and valuers it is obvious that the people who are finding it the hardest to get finance are the FTB's and the investors who generally buy the cheaper homes Vera. Business and professional people who buy the more expensive properties are still finding it easy to get finance unless they have too much of it already or their businesses are struggling as some are. It is not a situation that is going to be fixed soon as the economy is not going grat guns at present as confirmed by recent GDP figures and alike. Vera there is not going to be a crash but prices will keep going down little by little each month and that adds up over 12 months. Just be patient and keep saving. The market is slowly coming back to you.

If you're waiting in Auckland City - you are already losing.

Sept          525k

Aug           485k

July           492k

Would you have made that comment, based on the minimal data you give, at the end of August? And if, at the end of October the median is, say, $485k again, what will you say?

And what about the stat. in the article "...still down on the median of $555 k in September 2009..."? Looks like you have a loose argument to me.

Right you are - not a word I frequently use.

My interpretation of that scenario would be that values are steady with an upward bias.

A very good September for Auckland City considering the earthquake, storms, and general low confidence.

Will be interesting to see the figures over summer and as sentiment improves (which it will) and as consumers return to more usual spending patterns (which they will)

Human nature does not change.

This is pretty amusing stuff. Who would have thought a 7.1 magnatude earthquake in our second largest city would kill off housing volumes in that market, and given it is the second largest city, have a very heavy impact on total sales?

Well - dear old bernard - the little conniving, disingenuous shock journalist he is thought having heavily biased articles like this would generate some website traffic and make him feel popular while pleasing his mindless, simpleton audience.

Perhaps BH is feeling a bit more confident these days - after all he can no longer shovel down tonnes of cakes and sweets into his obese belly, and is no longer the massive fatty that he was.  But he is still a twat. and this website is utterly moronic.  and with this i utter my last words, never to visit again. 

Party time...wooopeeee...piss off.

You'll be back

Keyser : It has been a treat , reading your contributions . I agree that Bernard's " shock-journalism " is wearisome , at times . But there's still alotta good articles/blogs/links to be had . Just pick out the bits that suit you .

He doesn't always please his mindless , simpleton audience ...... I for one , am not happy with the incessant doomsterism ..... hence the sobriquet , Chicken-Little Hickey .

[ KS :  after that second to last sentence  ...... his porcine pinkies may be poised upon the " You-Are-Banned " button anyway ! ]

come back Koozer- size..it's not that desperate ...we need your incisive observations and in-depth analysis..don't go ..we need you, Coozer!

don't go,man, don't go!

KS you obviously have no constructive arguments against what BH and others are putting up on this site so you have to attack BH personally. You therefore will not be missed.It is so obvious the market is going backwards in terms of turnover and prices being achieved and it is getting worse by the month so I am not suprised you cannot put up any real argument against what BH is saying. I hope you are not too highly leveraged with your investments.

It's not too difficult to net 4% on residential property, and if you go to places like Rotorua you can do quite a bit better.

If you take your $300,000 and  buy a 3 Bedroom house for $300,000 with no loan, and rent it for $330/wk (actual example), you need to net $12,000 to get 4%, or $15,000 to net 5%

Other actual examples are a $375,000 property rented for $400/wk ( it is net $15,000 to return 4%), and a $320,000 property with rent of $350/wk (it is net  $13,000 to return 4%)

There is depreciation allowable of chattels that covers a buget for replacement over time

I feel that unless you are elderly, which I'm not, it is better not to have lots of money just sitting in bank deposits, although agree it is sensible to have some cash, say 10% of capital on hand, but may be I'm wrong?.

.

Fair go me...you can get 7.75% for 5 years at FPF gov g up to 250K. Even if your tax was at the top rate you would be better off doing that than worrying 24/7 that the seriously unaffordable property ponzi scheme was about to implode and the ratings agencies about to tell folks just how bad things are in Noddy.

But you invest as you wish. No doubt none of your tenants are cooking P at night in your property. For sure you could replace them overnight if they left. Good luck to you...you need it.

Don't forget that 4% you speak of is just 1% above the planned destruction of the value of the currency by the RBNZ. 

Anyone paying bubble prices for rental property today is a bubble head.

Rotorua is a great example of the volatile nature of house prices. The median price dropped 18% in the last month according to the figures from REINZ.

 

That doesnt happen in a bank.

 

There will always be opportunity to find houses that yield good returns, frankly they are probably getting more commonplace in places like Rotorua, average rent is $260 a week, so you probably are yielding 4% now which will sweeten that $50k loss last month.

Yeah but a bank would not pay you a capital gain either...

The people who are in the investment industry always tell you to never assume you will make a capital gain on a property even though this has happened forever.  But surely they could not argue against assuming that the property will keep up with inflation in the long term. 

So even if you only make a 3% return from your property, and assuming you have a mortgage so are paying no tax, then that is a 3% return after tax and inflation.  Yes, property prices could go down and you could make a loss, but in the long term I think they are just as likely to go up and you make a gain.  So even now property does not seem like a terrible investment, but definately not as good as it used to be!!

I wonder if they think that it keeps up with inflation in Japan.......

Excuse me for repeating this, but DrHousingBubble blog points out that the Californian experience involved a sales slowdown and accumulation of inventory and rising mortgagee sales for two years - then the prices really crashed in earnest.

It was really only during those last 2 years that some smart hedge fund operators started placing huge short bets via derivatives, on mortgage backed securities based on mortgages in California and a few other bubble States. For most of this time, there were still large numbers of willing takers for the "long" side of the bet. Such is human nature.

 

Have been to a bookstore and saw front page of NBR which has surveyed 10 main economists- didn't buy the paper so didn't get to read the article but the gist is that 2011 is shaping up to be a good year in NZ.  Got me thinking surely they can't all be wrong/misguided/uninformed etc etc It seems to be a totally different analysis to the comments made by a number on this site.  I have noticed that the more reasoned voices on this site seem to leave it after a while

The MAN , the Duke , Keyser Soze .............. yup !

Interest.co.nz has become a playground of the perennial doomsters , aided and abetted by their illustrious leader , Chicken-Little Hickey .

Didn't the sky fall on Chicken-little Gumbo?

A corny story I know ....... But don't be out-foxed by  your fears , because of Chicken-Little's cries & tears !

Cluck Cluck

;)

Bernard

here's an excerpt from an email i rcvd today from a very successful R/E agent in response to todays figures....seems she's a fan of " the permed one a.k.a big tony"...but we can't all be perfect.

"Yeah Babe, I know! However Canterbury certainly skews the results.

We also know about prices here. I’ve just had to hit a vendor on the head and explain that her new and lowered RV is still NOT the sale price!!!! With reference to overall news, I prefer though to get the total picture from Tony Alexander, a lot of  “bits and pieces” end up like Pub talk! Though I greatly appreciate the info you sent me! "

Ciao

Gummy Bear, what seems to be going down on this site is not only the doomster message, but it's almost as if guys like Wolly  are hoping like hell that it does happen and the more NZ might get in the mire the happier they'll be.  Bit sad but it takes all sorts to make the world go round.  There was a young guy earlier who is making a go of things and all Wolly can do is talking about tenants cooking P and threaten him with an armageddon diatribe.

Some at this site do take a morbid delight in the possibility of the financial world collapsing into a maelstrom of depression / wars / riots ............ I'd rather take a mildly optimistic view of the future , whilst being alert to the risks ahead .

Wally is alot alike chilli pepper , a little goes a long way , but woe-tide that you make it a staple of your diet !

Good one Gummy Bear but as you know depression wars and riots have been the rule for thousands of years. I note you plan on being alert to the risks. I don't want chaos...I would suffer too...but I do want a govt that tells the public the whole truth and a media that is not owned by the advertisers.

This blather from English today is the first real hint that he has the ability to tell all. Notice the 6 part strategy spin has gone. No more comments about export engineered recovery. He is closing in on saying the current economy is as good as it will get for maybe twenty years until the Elephant of debt, which he is still feeding, has been paid down.

Sadly, just when this govt gets round to telling all...we will face the risk of a return of the progressive socialists with fresh resolve to bugger the economy in the name of buying a long stay at the pig trough. Perhaps this is the risk you write of!

AMEN Wolly.

very fair points, muzza...one would hope that not many people would take wolly seriously..i never have but he's kinda part of the furniture here but i guess newcomers don't know that.?

i try to chuck a bit of levity in to keep some thread of character and humour running through the posts so they don't get too bogged down in detail....but you make a good point....maybe bernard needs to put wally/wolly on ice for a while?

 

as for the doomster message it's a natural tendency for humans to swing to the negative but i personally like the contrarian point of view that interest.co.nz takes...i'd rather have that as it gives me chance to make my own mind up rather than try and second-guess spin like we get from r/estate co's or other financial commentators from the banks.

not sure what the answer ?

Muzza I for one just want prices to come back to a level where my kids and others can buy a house without needing help from mummy and daddy which is what kids have had to do as the prices were being puumped up to levels that were getting ridiculous if you considered normal fundamentals. Also the less fortunate and lower payed people will be able to buy again. This can only be good for the economy overall. More people buying makes a fairer and happy society. What is wrong with that. Up to 2007 people were just borrowing and borrowing and competing for property and pushing it up to unsustainable levels.

The tide of 'greed' has changed. Under these kinds of economic conditions people slowly start to look for a 'bigger picture' in life. Call it 'meaning' if you will, and owning property as a life 'be all end all' goal is beginning to evaporate.  "whats the point?" i hear many say now. Yes....yes...what is the point? ;-0 

Gosh, I don't know the point of owning your own property, as I don't own the house I live in, I can not comment,  as it belongs to some rather overly generous trust

I do however know the benefits of LAQC LLC ownership of rental properties. Sure not every one plays the game of paying rent, just like some people go to a dairy to rob it instead of buying their bread and milk, but that is business. Shrinkage I think is what retailers call it when folks go for the five finger discount.

The benefit of being involved in the ownership of other peoples homes, the ones they live in, is they pay the (or towards the) monkey. it will be completely nice when there is no monkey.

When I say monkey I am talking about a mortgage not Bernard Hickey.

I guess what I am trying to say is being somewhat of a jack of all trades and master of just some of them, is it's the only way I know how to have generated millions of dollars, which gives me some security towards raising a family and having something of a head start for the kids if they want it.

Do you see any point in that? I do....

The monkey is always there POP, even when the mortgage is paid off. It's just hidden in the  bushes of alternative application of funds.

Ah, the "milllions of dollars" you THINK you generated is actually just an illusion though. "speculation" being the word, "tender" being another. Both are worthless in reality but maybe another decade will teach you that eh. Oh, your kids will learn these things that's for sure. Your 'nest egg' is slowly cracking, can you hear it? kakakakakka

So plenty of houses for sale but no sales. Hmmmm.

If you are trying to sell a house at the moment it's time to get realistic and lower the price if you really want to sell it.

There is obviously very little demand at current inflated asking prices. It's not the bubbly, nutty market it was in 2007 with buyers no longer willing to pay crazy prices they can't really afford.

 

They won't heed your advice. They are stubborn and deluded and would rather go down with the ship than let you get a hand to it. Let them sink I say. Here's a way you can help. Don't borrow from their banks for anything. The banks need new capital to finance the money they borrowed to sell the mortgages. So......... cut the food chain domestically which forces the banks to find 'expensive foreign funds to stay afloat OR put up interest rates. Simple eh?

But try to buy a house in the better parts of Wellington at the moment. Friends of ours have been attempting to do that for the last few months. They have $750K + to spend, don't mind renovating but are pretty discerning. But the quality and supply is uninspiring. Anything decent seems to be snapped up pretty quickly. We've traipsed round open homes with them on several weekends when visting and there's hordes looking at every one we go to.  I've only see one I'd buy and they were very smartly outbid on that by a competing buyer who paid well over RV.  They are renting and happy to sit tight for another 12 months if need be but it questions the 'buyers market' story a bit - at least in more upmarket Wellington.  

Whats the rush? Tell them to just hold tight a little longer and do what i said above to Commonsense

Maybe, but what happens to demand ( and therefore prices ) when Kiwis get tired of boring old paying down debt  -  'we aren't having much fun are we and the economy's improved and our job security's better, I know , lets upgrade the house'.  Won't happen for while but memory is short and the bad times soon forgotten. Especially if we get another lot of borrow and spend all you like on houses and other crap, in the beehive.   

These 'bad times' are quite profound and have taken nearly 2-3 decades to finally hit home. Believe me, they have time, plus is buying a house really that bigger deal? Believing that it is why we are here now

"We would expect to see a pick up in the market in coming months as warmer spring and summer weather generally brings an influx of new property listings onto the market providing more choice for buyers,” he said 

So..... more new listings onto the market (greater supply), and likely continued subdued interest from buyers (static demand) likely leads to what.......???????

It would be VERY interesting if we could get a stat on the % of home sales that are apartments, preferably over time . I suspect apartments as a % of sales is relatively low at the moment by historic standards , this is probably keeping the medians up, with a bigger proportion of the sales being higher end houses. 

BERNARD - Are stats on the proportion of sales comprising apartments obtainable???? Could we compare mid 2008 with now? I theorise that the proportion of apartments comprising sales now is much lower than in 2008 

I also hypothesise that Wellington and Auckland medians are also holding up better than others because they have relatively large numbers of apartments that are not selling like they used to 

Middleman - yep, this "Labour Lite" govt hasn't slashed the bureaucrats like they said they would (and should have done)

So there are still hordes of useless overpaid bureaucrats producing mush and keeping values up 

Um, there have actually been quite a few government redundancies and cuts in the last year, not sure how you missed that.

But they are making up for any savings there by spending even more government money on the building of yet more roads in Auckland.

These roads will be great when oil doubles or triples in price in a few years, and cries of why didn't you sort public transport out instead come out.

Hmmm wonder what the news will be from the real estate agents in 6 months time?

No.1"Summer sales crap because people were on holiday"? 

or No.2 "Sellers have dropped asking prices of houses up to 30% and the market is back to normal (not bubble) activity".

I go with No.1

 

 

Nz'ers focusing on reducing debt, realestate sales volumes horribly down therefore first home buyers and investors are not paying the current high prices. Sounds to me like there's only one way for property to go and that's down. The only thing keeping that from happening is unrealistic sellers who are not forced to sell.

Does anyone remember the headlines in 2003/4 around coastal properties? "We are running out of land" Foreigners are buying it all up" "get in now before it's too late" Well here's a market where sellers did get desperate and you can now get a piece of land in a development for up to 50% cheaper then the 2004 prices. Coromandel has about 2000 properties on the market on trademe with 35 selling last month.

Where are all those coastal property enthusiast writers now? Not even Olly would say it's a good investment now. The rest of the property market will follow, it will just be a much slower decline and not to the same extent. I do think property is a good investment, we are just at the top end of the cycle so there's no point getting in now unless you get a real bargain like 25% off GV or going rates.

The resilience of the section market is even more surprising than that for houses. The peak volume month for sections was way back in September 2003, when 1252 sections were sold at a median of $97,750. The peak price was in May 2008, when 339 sections were sold at a median of $200,000.

In September 2010, 287 sections were sold at a median of $180,000. A 77% fall in volume with a 10% fall in price. 

The fall in volume matches the fall in new construction, which makes sense. But why haven't prices fallen? I can understand an individual investor holding one section deciding to hang on, but a large developer holding 100s of sections and paying interest on enormous loans, should surely decide to cut prices at some point.

Yes Wolly, Faifax, Philbest and marct, I am wondering if having 3 rental properties is a good thing.  But I don't own in Rotorua, or on coastal sites!

I commenced buying in  mid-1980's starting out after university.  Made the mistake of buying a beach property which I soon realised was not income generating, so sold it. Over about 18 years bought and paid off 2 properties which then funded the 3 now have, purchased 2003-05.  I will be disappointed if prices do collapse as you  suggest below that in 2003-05, as we have worked and saved hard in that 18 year period while raising a family and subsequently support our children through their university studies.  All I was endeavouring to do was to have a passive income stream if I decide to retire, and if in years to come there isn't the State support that you older guys enjoy at present

Well done , buddy ! Don't let the nervous Nellies here throw you off course . As uncle Olly Newland says , as long as the income keeps flowing in , it doesn't matter if the capital values wiggle around a bit . Over longer time frames , they will go up .

Bernard is a property septic . But he doesn't disclose where he plonks his dosh . So why take his advice !

How would you feel if you sold out , and then contrary to expectations , hot Australian & Asian munny sloshes into NZ and pushes the market even higher . Just because a market is over-valued doesn't mean that it won't continue to rise .

Provided I could get a good capital gain, I'd sell the rental properties now and bank the money in the medium term (say a five-year horizon).  During that time, I suspect, interest rates will head up beyond rental yeilds.  The equation would be assisted by the government deciding not to tax savings deposits ... and that might just happen as well given the push to raise more capital locally.  But having money in the bank allows you to make quick choices about investment in these volatile times.

Bernard, no any rent-related post from you for months, wonder why? 

Here are few recent from various media

Trade Me:

Number of available rental properties nationally dropped 18% and demand increased 22% per listing. Accordingly average rent increased 4%, and 9% in Auckland alone.

And conclusion: If you're a tenant in these areas (Auckland and Chch), brace yourself for a rent rise!

http://www.trademe.co.nz/community/announcements/post/895

 

“The biggest real estate agency in Auckland said its average weekly rental reached a new all-time high, for second month in a row”

 

This from Statistics NZ (last year)

”For those making rent payments, median (half pay more, half pay less) weekly rent payments increased from $220 in 2007/08 to $241 in 2008/09 (up 9.5 percent). “ 

And Bernards "ultimate" data from DBH:

 

http://www.dbh.govt.nz/market-rent-analysis

 

In summary “ Market rents are growing across most regions and dwelling types”…” the growth in rents continues, stronger in Auckland than for New Zealand” 

Alen1

We get the raw data from the Department of Building and Housing every month, which we use to update this chart series below

http://www.interest.co.nz/charts/real-estate/rents-median

It shows the median weekly rent for New Zealand unchanged at NZ$300 since February 2008. It remained at NZ$300 at the end of September.

The analysis you referred to included growth in Auckland rents and variable growth for different types of rentals. The overall median remains flat though, as you can see the orange line in Figure 20.

What we're seeing is low to no rent growth in provincial towns and cities and for larger houses in the big cities. This is being offset by rental growth in Auckland and in some smaller apartment types.

But overall flat. Meanwhile inflation does its thing... 

cheers

Bernard

To start with it’s calculated by adding up the weekly rents for all bonds and dividing this by the total number of bonds. So, for instance, if your rent was $100/week your bond is equal to $100/week, but 2 years later your rent is say $300/week, bond deposit remained unchanged, and “median” rent stays same, although  rent tripled!. That’s why it is so flat-ish. Correct me if Iam wrong about this.

Secondly,bonds are not compulsory and can be lower than actual rent!  Now, think about, would landlords rather put money on their account or governments? 

Also,  If you are charging significantly higher rent than for other similar properties, the Tenancy Tribunal can order you to reduce it. So, lot’s of room for speculation here  

Thanks for that Alen1.

Property investment becoming more attractive as yields increase, and interest rates remaining lower for longer.

Good times for Property investors.

Here are the September median prices for Auckland City over the last few years:

2010 $525,000

2009 $516,500

2008 $450,000

2007 $480,000

2006 $427,900

2005 $408,000

2004 $385,000

So after the previously recognised peak of 2007 there was a dip in 2008 but the previous peak has now been well and truly exceeded this year.

So between 2009 and 2010 property went up a gross....$8,500. That same $ 516,500 in the plain, boring old bank at 5% (after tax ,say 4%) sees that same cash now worth $537,160. So owning property in Auckland city has cost the owner $20 grand in the last 12 months ( plus whatever associated cost there are, let's not even do the sums for you if it's supported by a mortgage!). Even at 5% compounding since the $385k in 2004 you'd still  be out of the money after costs, and interest rates for deposits have been way over 5% during that time.Look like a real winner to me!

come on nic... these guys have 95% mortgages on these properties... as if they'd have that much money to put in the bank!

This is the point where that guy pops up to post his highly dodgy stats 'proving' that very few property owners have mortgages. He does it every time when ever anyone discusses mortgage debt levels.

Exactly! So that means that not only haven't they earned the 4% net, but probabaly paid 6% +, on the 95%, making the sums even worse for them!

Also the reason the median house price is up at the moment is because theres less action in the lower end. As per the plea from the head of Kiwibank for first home buyers to get into the market.

The reason theres less sales in the lower end is because buyers in that level of the market cant bring themselves to meet the price expectations of the vendors... which after a stand off period and all other things being equal means that the price in the lower end will drop from where it currently is to somewhere inbetween.

Of course that will be a pretty painful drop for some people.. especially those that mortaged up to the hilt to get into the lower end of the market in the last 5 years.

In my area there have just been a few mortgagee sales advertised in the lower end, and this is a pretty new thing for us. Previously the mortgagee stuff was fairly expensive apartments that never met their promised returns, not the lower end residential stuff.

So you can see why oldmate Kiwibank is pleading for people to buy in the lower end.. I suspect that's where the banks have really lent some high margins. If you end up with mortgagee sales in that area and a big slide in prices then the banks are going to have to realise some immediate losses on thier books and that'll be stressing a few of them out.

I think this is precisely why PIs invest in housing. The 4% is growth on cash they didnt have and the 6% is paid for by the tenant. 

Not saying it's the best thing to do, Not saying it's the thing I do, but if you are going to comment on something you don't understand, allow me to correct you on the concepts involved.

Nicholas, you didn't include any rental income!

If the property earnt $26k in rent, minus outgoings plus the $8.5k capital gain, you'd be up about $30k, or 50% better than money in the bank...

YES! It's fabulous! My real estate agent friends have told me how happy they are to get around $800k for homes that previously sold in the $2m range! They've sold way more of those than the ones which are fetching $500k instead of $850k...

525,000 - 516,500 = 8500

516,500 - 450,000 = 66,500

450,000 - 480,000 = -30,000

480,000 - 427,900 = 52,100

427,900 - 408,000 = 19,900

408,000 - 385,000 = 23000

See?

Dragging your stats up and "earning" $8,500 by selling a few expensive places miles below previous values is way better than losing $30,000 as a result of selling almost nothing at all!

 

 

Thanks for that Gummy Bear, Alen1 and SK. The negativity from some does get you to doubt what you've done. It is said that a character trait of NZ 'ers is that we are quick to be knockers and certainly there are those on interest.co.nz that reveal that.

 I also recall last night a post that indicated the NBR has done a survey and all 10 economists of major institutions say the factors at work predict a bouyant year in 2011 in NZ.  So hopefully those who stay on track are doing the right thing.  Don't think we should give up on NZ yet. 

"also recall last night a post that indicated the NBR has done a survey and all 10 economists of major institutions say the factors at work predict a bouyant year in 2011 in NZ"

hehehe

Ever stop to wonder why they all say the same thing?

Group-think?

Lose their job if they don't appear confident?

Maybe if you had quoted a bunch of economists who don't work for major institutions, and thus, are not beholden to major institutions for their pay cheque, then it may have been more believeable.

NZ may well do all right next year. But to believe economists from major institutions is a bit lame.

…and up and up prices go to the bitter end of the Kiwi dream owning a house - HA !

 …and how much longer can Kiwis compete with overseas buyers in that stupid race to the top ? Kiws concentrate on economic developments/ industries, which make economically sense.

Feel free to keep your heads in the sand while the ship is sailing off,

leaving you further and further behind.

 

@hamrod - recommend you revise information around leverage - you seem to have 1/2 the understanding so far.

Hold up mate, so you're saying that if hypothetically you are 16 years old is it your fault that you won't ever be able to afford your own home on your own wage? Are you saying that Nzers should be tenants in their own country? You disgust me with your greed

Kiwi’s property addiction is well, but sadly reflected in our economic madness.

@German Artist

I certainly dont disagree - however we dont make the rules - and why would we disadvantage ourselves by moaning about it instead of playing the game?

Who says the moaners aren't playing? You assume too much

@SK take a map from Europe - please ! Today - there are different countries.

..and another tip - read all my positive proposals for a better NZ economy.

moaning and playing - surely thats rather hypocritical and conflicted.

Better spend your money, if you have any, at the psychotherapist.

The problem with the NZ dream is that it came true, so greedy mofos like SK and crew could jump on the bandwagon, look what you have achieved! Sounds to me like you do not own your possessions, they own you, by the sounds of it you would rather turf people out of their own country if you couldn't make any money out of them, I pity you, to a point.

? Swiss or Austrian - German speaking - where is this going?

SK just click on me.

Ah lovely - I agree with your quote re: philosophers also.

I lived in Zurich for 2 years - including 1/2 of last year.

Beautiful place - great lifestyle - politically they are doing some worrying things however...

SK - don't get me started on the most corrupted Banking system.

Re the Gore sales there are no surprises in the report.  The demand at the moment is in the first home buyers market hence the lack of permanent material homes up to $200k on the market. Once over the $250k mark, there are few sales.

May change as it seems the banks are relaxing their criteria as far as deposits go.

BERNARD-  still waiting for an answer as to whether you can get apartment sales as % of sales, especially if we can get a comparison between now and say in 2007

HAMROD - Exactly, thats why I want to see apartments as a proportion of sales. The banks generally want 20% minimum deposit on apartments and flats, that takes a lot of people out of the market  who might have been potential buyers back in the days when a 5% deposit would do on these properties

There is no doubt whatsoever in my mind that the median is being help up by the mix of sales fundamentally changing

Matt in Auck,

Apols but I don't have a break out of apartment sales from the total. Haven't seen that from REINZ.

cheers

Bernard

But we bought our future on credit, unfortunately, and now, amid the abandoned building sites and ghost estates, what we're learning is that it doesn't really matter what's for sale if nobody has the money to buy it

Bernard- thanks for the reply. It could be a very interesting stat if one was able to see it.

Keep up the good work

MIA

Perhaps that stat conveniently (for REINZ) doesn't exist

So, Bernard, based on all relevant sources, (I mean all: Statistics NZ, DHB, Trade Me, B&T...) rents have increased around 10-20% over last two years, which seems to be  highest increase in long time. Even you can’t spin this! 

Where are you getting a 20% increase.

The national median rent as measured by the Department of Building and Housing, which uses tenancy bond information (ie everything) is flat at NZ$300/week for the last two and a half years.

Unchanged.

Flat.

Not moving.

Actually falling on an inflation adjusted basis.

B&T and TradeMe (listings rather than actual rents) are nowhere near as comprehensive as the Department of Building and Housing.

cheers

Bernard

The only trouble with the DBH data is it only counts new tenancies. Unfortunately there's no way of getting data on existing tenancies as we're not required to notify anyone other than the tenant about rent increases!

In that regard, the 5 yearly census is the most comprehensive, although it always comes in way under the DBH figures, I'm guessing partly due to low housing corp rents that aren't in the DBH figures?

For the record, our existing tenancies have increased around 10% over the last two and a half years, if they became vacant they would probably let at about 20% above 3 years ago.

Cheers ;)

To start with it’s calculated by adding up the weekly rents for all bonds and dividing this by the total number of bonds. So, for instance, if your rent was $100/week your bond is equal to $100/week, but 2 years later your rent is say $300/week, bond deposit remained unchanged, and “median” rent stays same, although  rent tripled!. That’s why it is so flat-ish. Correct me if Iam wrong about this.

Secondly,bonds are not compulsory and can be lower than actual rent!  Now, think about, would landlords rather put money on their account or governments? 

Also,  If you are charging significantly higher rent than for other similar properties, the Tenancy Tribunal can order you to reduce it. So, lot’s of room for speculation here   

Alen1 to demonstrate that you have even an ounce of credibility please refer us to a source that shows a 20% increase in rents over the past 2 years

bet you can't

Bernard is right - can't go on listings, as rents will often be lower when a tenancy is secured than what is listed

http://www.interest.co.nz/charts/real-estate/rents-median

3 brm houses in Akl have gone from 400 to 480 in the last 3 years. That works out to....  hmm... exactly 20% ! (over 3 years though, not 2)

My experience has been quite solid rental growth in the last 3 years, so the DBH median staying at 300 is puzzling...  I think we need a new 'stratified' index !!....

Matt, this appears to be updated today:

http://www.dbh.govt.nz/market-rent-analysis

shows increase of up to 5% for various types of dwellings, be aware it is very slowish due the way it’s calculated. It is consistent with Trade me at 4% increase and B&T, over last year.

This is from Statistic NZ from last year:

"For those making rent payments, median (half pay more, half pay less) weekly rent payments increased from $220 in 2007/08 to $241 in 2008/09 (up 9.5 percent)."

 

So, all up by some 13% over last two years, and I stated above around 10-20%.  I can’t find SNZ data for this year, and haven’t “investigate” thoroughly as it’s difficult to find ultimate stats, but data seems to be consistent from numerous sources 

I am guessing this DBH data applies mainly to HNZ stock, can’t see how it can be "most comprehensive.

I struggle to understand this “seasonally adjusted” and “adjusted for inflation” figures. If I deposit 50k in bank @ 5%, and after a year made a profit of 2k after tax, does it mean I actually lost 1k, not earned 2k? 

Bernard: Do you think you would be able to use figures for volumes sold over time and figures for total number of dwellings over time and produce a chart of % of total dwellings sold per year?

It would basically be the volumes chart but normalised for the increase in number of dwellings over time.

The recent home sale figures being around record lows, when normalised for total number of dwellings, are actually far worse than raw figures suggest.

Volumes sold is a leading indicator also, where volumes go prices follow. Not a good time to be holding large portfolio's.

Alen - thanks

the figures are as I expected. Reasonable % increases for smaller flats (but not much in $ terms), very little increase for houses

These figures will make little difference to yields, and the tax changes would wipe out any benefit gained from the small increases.

For long term PIs its just nice little increases that won't have much effect beyond cancelling out inflation etc.. But as far as I am concerned it does little to change my view that for potential PIs buying NOW, in GENERAL terms (save the bargains where one can find them) property investment is a poor investment

I'm happy to keep an open mind, and I do keep my eye on property. Occasionally I'll see a property that looks quite interesting - but then I'll dismiss it once I do the calcs and find its realising a net yield less thn 5%

Hard to see rents increasing much at all in the next year or so with low net migration, static / slightly falling wages, sluggish employment, rising cost of living

We have reached the bottom, time to buy, I put an offer on a 3 beddy today.

Interest rates will stay low and I'm picking a 2 year rate around 6.05-6.4% in the next 3 months

MIA  I suspect you will never ever  find a house in the inner suburbs of Auckland for a yield better than 5% because most people want to live there and hence the demand drives the price/poor yield. Serious question to you and the other bloggers who are sitting on the sidelines renting....do you honestly "do your calculations/yields stats" on a family home??

Why would you buy now and I assume with some borrowed money when institutions like the BNZ and Westpac for example are saying the prices of property in NZ are going to keep dropping well into next year with the risk of going further from there. Why the hurry to buy in such conditions. It defies logic and basic common sense. No wonder we are a poor country when all we seem to do is look at property for wealth.

Just wondering how the GST increase works with QV valuations. I presume that these valuations are GST inclusive.

Therefore our values will have gone up 2.2% with the gst increase to 15%

Will we see this increase reflected in the housing market?

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