QV reports house values fell again October; values down 1.6% from March, but up 1.1% from a year ago

QV reports house values fell again October; values down 1.6% from March, but up 1.1% from a year ago

Government-owned valuer Quotable Value (QV) has reported house values continued falling in October and are now down 1.6% from March.

QV said prices rose 2.8% between October 2009 and March 2010, but have since fallen. However, they remain 1.1% above October a year ago.

“The low level of sales activity we have seen all year continued through October, with sales well below both last year and the long term average," said QV.co.nz Research Director, Jonno Ingerson.

"There is no sign of the traditional spring surge in sales, and we don’t expect any significant increase in sales before the New Year," he said.

“In most areas there are plenty of properties for sale, but many of these have been on the market for some time. The number of new properties coming on the market is lower than usual for this time of year. There remains a general air of caution around the property market. Some owners are choosing to stay rather than sell, some potential buyers are struggling to secure funding as lending criteria remain tight, and in general buyers are taking their time over purchase decisions.”

QV said that while nationwide values were declining, there was considerable variability within and between areas.

"The Auckland area is showing signs of stabilisation, while values in the Wellington area are dropping steadily," Ingerson said.

"At a local level these trends also don’t apply universally, with quality properties in good areas attracting plenty of interest and often selling for good prices, while those with undesirable features are not selling or are selling at reduced prices” he said.

BNZ economist Doug Steel said the figures pointed to weakness in the housing market, as expected.

"The generally weak undertones in the housing market are likely to be echoed in the REINZ October data release on Friday. These are again likely to show weak sales and subdued prices and not just because of the earthquake," Steel said.

 (Updated with video and BNZ economist's comments)

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I'm preapproved and have been looking for a bargain for the past 6 months, no sign of any crash, stable and steady

I am selling while i can still find the last remaining '28_29 year olds' out there willing to take on more debt, in NZ$ too so on a global scale everyones mortgage has gone up, while their house is still worth, well whatever they could sell it for... and that in nz $ terms is steadily falling.

We bailed out , too . Off to greener pastures ............ As a contrarian , one thinks that the future for the USA must be terrifically bright , given the daily slagging it gets from Bernard .

So, it's your fault! You've got the money and your selfishly not spending it? But seriously; At what stage do we ( and Australia where this figure comes from) say " we can't afford any more debt?"

"...households have managed the build-up in their debt, which has risen from less than a quarter of average household income in the 70s, to a new peak of 159 per cent in the June quarter, (RBA Governmor) Stevens' (said) it would not be "wise for that build-up in household leverage to continue unabated over the years ahead".

So in the 70's you could go to work; and assuming you spent 'nothing' you could repay your household debts in less than 3 months. Today it would take 19 months! That's a long time to spend 'nothing', and what happens when we try to inflate our debts away.

Oh. And maybe no hurry, 28/29 y.o.    "..In 2008, even as the market was softening, I honestly thought I had found my ideal home for a reasonable price....Two years ago, with help from my parents, I bought (for)€525,000...(today) apartments are being offered to first-time buyers for a sickening €190,000."

http://delusionaleconomics.blogspot.com/2010/11/stage-4-desperation.html

No one thinks it is going to crash 28/29. Just a long and slow death over many years as evidenced by the last few months. No such thing as a bargain now as it will be worth substantially less in years to come. Only fools are buying now especially for investment and with debt attached.

You dare to go against the sage advice of Uncle Ollie Newland ........... Financial philistine ! Go to an open-home immediately , and re-charge your faith that property only goes up  , mate !

No one?

um.....I think thats the most likely.....if I was in a passive savings fund I would have bailed by now because the banmks/markets are pumping it up....at some stage these big banks will withdraw the montains of $ and that will just nose dive it....just wait for the fear.

We might see things stagger on, with a slow death over many years but to be honest there are too many bad things and too much of it all over to have any belief "stagger on" is the most likely option.....ie its not just japan this time with 3 decades of stagnation....but the world.....and now with the GOP in Congress a TARPII bailout and similar programs I think will be blocked.....and in fact I agree with the expectaion that the GOP will freeze up the Fed Govn.....then there is the needed bailout of the US states many of which are in-solvent..........

All this just seems too severe so I indeed expect a crash....28/29 style.....though i think its more like the dead cat bounce of 32? where we will see a severe double dip....

regards

Hi ex agent

So are you saying my rentals in 15-20 years time, when they are all mortgage free, will be worth less than what I paid for them?

Can I ask where you have your money parked at the moment?I hope it ain't all in the bank. I hope you have some buffer against Mr inflation + future Mrs hyperinflation :)

You should look at how much interest you are paying over the time you have the mortgage, you should also look at not having all your eggs in one basket, well not just your eggs but the banks eggs as well.

Muppet King, who says it's not the tenant paying the interest?!  And as 28_29 year old says, if it's mortgage free in 20 years time, who cares if it's still worth the same? or less? it still provides an income...

Yes....even if its in its mildeest form of lack of inflation adjustment....all else being equal.

Money in the bank right now is probably the safest spot, this is because the immediate risk is deflation......we actually have dis-inflation at the moment.....so cash actually becomes worth more...assets usually worth less....I think someone (Hugh Hendry?) had a good point, right now its not about making money but protecting your wealth from the huge risk of huge losses...

Sure inflation could be a problem in the future but I think the biggest mistake ppl are making is looking at the money printing and assuming/concluding thats inflationary today, or even in 2011.....its not as inflation is more money in the system and actually more money chasing assets.  The problem is we have multi-trillion holes filled with multi-billions.....ie a huge factor off....so the money is actually contracting...and thats confirmed with core inflation reducing.  In the future, if you believe we will come out of the forethcoming double dip (and I dont), then yes thats inflationary....but thats years off if not decades....

So personally I think houses in real terms will be 50~60% down on today.....

regards

Ive made my 20% for the year already so I'm happy, don't think many people have made that on house lol chumps.

Yes I think there is a possibilty of that when you take into account inflation over that time and the fact that the property market is going back in value and for some years to come. Mainly in cash and some shares.  Apple shares and some good NZ shares like Ebos. I sold everything but my home in 07/08 and very happy with that decision. Nothing wrong with interest around 5 to 6% when things are so unstable.

Im all about the dividends at the moment, in saying that I really think the best market is the ASX at the moment, bargains galore on any market though I think, because people don't like shares in this country, haha and 20 years ago everyone loved them, I believe that time will come again no doubt.

Me too ! Sold the house in NZ , and then bought a swag load of Aussie shares .............. And blow me down but not only have the little monkeys run up in value , but a few hefty dividend cheques have lobbed into the bank-account too .

Ain't Australia brilliant !

You forgot to mention that you spoke a lot  with your former - on the brink of suicide-colleagues  recently... 

That is a bit harsh Alen 1. There are in fact a lot of agents in NZ currently under financial stress as a result of not having received the usual commissions they are used to getting and their families are indeed suffering as a result. Many have left the industry in the last year or so to start a new career. When volumes get as low as they currently are things had to give. I hope it improves for them as they need a regular income like anyone else.

Seasoned agents are doing just fine, with 4% commission on average house price of 350k comes to around 14k, minus all costs say 10k. So, if agent sells one property a month, as I am sure good one will, makes  some 120k/year, which is almost 3x average salary. Even with one sale in two months still makes more than average person working 40+hours week 

Most of NZers seem to be under some financial stress those days.

How many life savings  lost with finance companies and how many lives ruined? Two of my friends surveyors lost jobs over last 18 months and plenty graduates can’t find decent job. Architects struggle, builders, plumbers....although many of them seem to be moving to Chch. 

They are lucky if they get half of the commission which they share with the proprietor and often the person who has not listed it but sold it. Expenses are very high and getting higher by the year as they are self employed. No one pays them for them. One major North Island city currently has 140 agents and around 60 to 70 sales per month. If some agents get a few away there are a lot not getting any income in that city. Agents work long hard hours often seven days a week and only get paid if something sells. Would you do it Alen1 for a living.

For a year or more you have been here regaling us with tales of your fabulous property trading successes. They all sound suspiciously alike. My bet is you're really a 54 year old real estate agent.

Use of the word bargain is somewhat missplaced IMO. I think it is the ability to convice ones self that a bargain does in fact exist illustrates nicely where people get it so very wrong.

So whats the cumulative fall now from the peak (last Q 2007/first Q 2008)?

Looking at the graph suggests prices are now back to where they were Q1 2007.

Where is the breakdown of figures per area?

Yes, SK. It will be inertesting to see if Central Auckland is following Melbourne, this month..But maybe that will be next month...." the more affordable end of the market was still holding up. Across our network, we estimate that about only half of properties priced above $1 million sold...."

http://theage.domain.com.au/auctions-stall-as-rate-rises-shatter-buyer-confidence-20101106-17i8w.html

As usual Olly Newland has been proven right yet again. Any fair minded person will agree that the market continues to remain flat - just as Olly predicted over 18 months ago. Statistics must not be read on a month to month basis. They must only be read on a trend basis and the trend is flat to a small bias to the upside - up 1.1% over 12 months. Olly has stated that the whingers who have wrongly predicted that house prices will crash and have chosen to rent instead will wake up one morning and find that prices have got away from them leaving them doomed to rent for ever. And Olly was right on another thing- rents are rising steadily reachig a new record. . The whingers and whiners will no doubt be soon complaining about that as well. Serves them right.

link: http://www.barfoot.co.nz/Info/Market-Info/Stories/October-2010-Market-Up...
 

OK BigDaddy, I have a rental property and I rent an apartment, so a buck each way.

I will buy (as I am ready to now) when the gross rental rate of return in cash (not capital gains   - what are they at the moment  - zilch!! ) rises to a reasonable level, say 9% plus .... so IMHO prices still have a way to drop  - if you are refering to investment property and not a place to live.

Also prices remaining "flat" are useless to investors,  as your mortgage interest payments will just go straight to Ralph Norris and his AUD 16 mil paycheck !!

Big Daddy you are so right. The real problem is only "Bad news" sells.

And besides we are such a Nation of knockers that no one should really be able to make some "real money" should they?

The truth is we possibly haven't seen such a good market (for you know who) for some time and it won't last.

Hey Gavin. Petrol just went to $5 buck a litre! Is that bad news, or good? Personally, I see price rises as bad. So how come property price rises are good? Oh, of course...it's good for those with leverage, debt, isn't it! Well that's about to change, further, with any of ~ property price falls; interest rate rises or global financial meltdown. Take your pick.

Nicholas: Time  ---- Nicholas, you sound like you need a little more time under your belt. And of course you will have tried a few long term investments I trust --- or are you just all theory?

80% of the worlds wealth is in the hands of 20% of the people and reading some comments here its no wonder. Which side are you on?

Not theory, Gavin, I can assure you. When you've had a negative futures sterling straddle of $100 mio pounds ( not as impressive as it sounds! It was margined...that's how I learnt how 'leverage' works both ways!) and Sadaam Hussien walks into Kuwait, come and talk to me about 'investments'. Maybe you've done more than sell property as well. I don't know. But whatever it is, it has to be fundemental sound. ~ and property in New Zealand once was, but is no longer.

Nicholas: Well in that case you are braver than me. Futures trading I personally would just not go there, although it may be alright for some. I tend to stick to what I know, certainly at times I have lost money but have gained more than I have lost by a considerable margin. If I had my time over again, I would have borrowed less and been a bit more patient. Greed causes prices to rise and fear for them to decrease. Buy when people are fearful and if you have to sell (which I don't recomend) do so when people are gready ie. NOT NOW!

If you really believe your Buffet quotes, Gavin, here's a challenge for you. Look at you property portfolio, right now, and imagine how you would feel... selling all of it, right now., and putting the cash in the bank. If that thought chills you, that's exactly what you should be doing. It's the contrarian views of not only the market, but ourselves, that show us the real way of things. Do you think I'm not worried about money's value being inflated away? Of course I am! But that tells me that what I am doing is correct.

Nicholas, just curious - if you think there's a chance of "money's value being inflated away" - how would that make buying a section and building a house any cheaper in nominal values, remembering that mortgages are in nominal dollars and don't increase with inflation!?....

Very good point , Murray . If you predict inflation to rise , then why go into cash , St. Nick ? Hard assets will float up ( eventually ) as inflation increases .

Let's get back to some fundamentals : Central banks use inflation deliberately , to ease their debt burden . The losers are holders of " cash " ( term deposits / bonds / actual cash ) , it is a " tax " on them . Often retirees are stung hard , as their savings are eroded in purchasing power . 

Ask Ben Bernanke if he cares .

Jim Rogers is right , Bernanke only knows how to cranky out unearned Yankee dollars .

Print , and be damned ........... A fine epitaph for you , Ben .

Ben know's what's happening, he's following the bidding of his masters.  It's only a matter of time before the $US held as reserves offshore go flooding back to the US, or into hard commodities.  The smart central bank has been quietly diversifying, hopefully into gold.  Trouble is you can't do it without being seen to be disloyal.

Fundimentals...this isnt fundimentals unless you believe in voodoo magic....and this is economics...

Cash is good where there is deflation and risk of hugh losses from assets....the rate of increasing inflation is actually negative right now ie we have dis-inflation, so the risk of inflation or inded hyper-inflation is decreasing at least in the short term....by that I mean 1 year....

Hard assets can only float up where ppl can pay and especially where they have more money claadic inflation is too much money cahsing too few goods.......look to Japan, housing is deflating and has done for many years....probably we might get this staggering stag-flation....this is where essential items like food and energy go up factors above the core rate while housing and whiteware prices drop by a multiple of that factor....

So right now we have ppl spending less and that will accelerate...thats deflationary where a huge % of GDP is consumer spending....the Govn printing money or doing infrastructure work isnt enough to compensate....in the USA the GOP is promising not to spend more $....that will kill the US economy and in turn us NZ as exporters......let alone our NZD exchange rate...

Helicopter Ben does care, about the US....he doesnt care and neither do the US Govn about other countries, this is a case of lesser of several bad choices....

You seem to want NZ govn to stop spending, well just watch Ireland, they did that....or watch the US over the next year....the Hedge funds etc are running from Ireland...China is running fom the USD.....and is set to bypass it....financially, trading and economically....(if they dont implode first)....

Ive watched a lot fo Jim Rogers, and I mostly agree with him....however he's a one trick pony....Ben has to juggle many conflicting needs and the US Govn will add to that...I pity him, he;s the fall guy to take the flak from the GOP's coming disaster....

regards

 

 

And if 'they' fix or reference gold at ( pick a  $ number) $35 this weekend, or ban private ownership...again ( 'how better to punish those nasty speculator that have mucked up our economies!")...what is gold or any other hard asset worth? Won't happen? neither was QE supposed to if you go back a mere 10-15 years....Go back about that same time frame, and what were Central Banks doing? Flogging off their gold, they didn't want it. What don't people want today? Cash. I always try to have what 'people' don't have!

Have a re-read of my post, Murray. It's becasue I see the possibility that inflation of the money supply could erode cash value that I know ...it won't!

I agree, Nicholas, having contrarian views and going against the crowd often pays dividends. At the moment, property is very unpopular and many are predicting dire outcomes - what does that tell us?!!....

You reckon property is unpopular, Murray? I don't,..yet.. I reckon most people either  still have it, or want it. That to me is the obvious run. So, that's why I'm all sold up. When it makes financial sense to me again, I'll have a squizz. All I see in the wider world, are various views of 'it won't get any worse than this price' or 'it will get better from here'.....except a few posters on this site, of course!

Nicholas: Never be motivated by fear, it is a dead end street! Buy the world’s number one selling book and get to know your creator, things will then begin to make a lot more sense! We live in very exciting times and you haven't seen anything yet! I'll remain on my chosen pathway but keep shedding debt as fast as I can.

Harry Potter, the Lord of creation? Well I never...........
 

Hard to shed your debt when it's locked up in those rapidly depreciating property "assets". Good luck finding buyers. And try not to think about all the interest you're paying on those worthless "assets", or you may end up topping yourself.

Drooler, who says it's not the tenant paying "all the interest" ??!!

Me too.....debt bad, too much debt in circumstances like today is a killer.....Cash in hand very flexible....saving and paying down debt....lopped $1000 off last week....so at 6.15% thats a saving....v what they pay on a deposit account - tax....

regards

Drooler: Are you talking to me? If so who said anything about selling? Just repay debt from income produced. Personally I don't think you should sell property, just train your children to be wise with assets and hopefully let it pass down through the generations. I am the first to admitt that is possibly the greatest challenge, living in an "instant world"

But what will those children do, Gavin?, you know...for a job... Buy and sell ( or sorry, you don't sell, so that's one vocation unavailable) property to each other? Because the way we are shaping up, there sure won't be anything else to do in New Zealand; bar being a waiter or a bunge jump captain....

This might be a drive behind all those doomsters and gloomster, Sexual thrill:

http://www.telegraph.co.uk/finance/financetopics/financialcrisis/8085352...

 

Sorry Bernard, nothing personal 

You know it's over for you when you're reduced to hinting that those who hold differing opinions must be motivated by perversion.

I wouldn’t necessary call it perversion, rather excitement, but might be wrong. 

"The bankers who brought the global economy to its knees two years ago may have enjoyed the sensation of losing hundreds of billions of pounds and plunging the world into recession, according to Paul Crosthwaite of Cardiff University."

The BANKERS, not us doomsters and gloomsters....we are the ones pointing out their excesses are causing this....and yeah they are enjoying it....

Sorry Alen1 but you are twisted in the head if you raed the above this badly......nothing personal

regards

I've noticed a new trend in the property rags over the last month or so - many of the ads say the owner is willing to consider a trade.

Buying and selling is out, apparently, and swapping is in.

When bartering becomes the way of the housing market, you know it's in trouble.

Interesting, TheKübler-Ross stages of grief are denial, Anger, Bargaining followed by depression and finally acceptance. I’m holding out for the acceptance.

I'd suggest the 'bargaining' stage is more along the lines of a trade-off ~ to minimise the inevitable loss. Like,"Ok. I'll accept a price fall, as long as it's a slow, shallow and gradual one". The Depression bit comes shortly after, when the bargain is unfulfilled.

Nothing new here, just further evidence of the weak price falls expected

I'm expecting my prediction of a 3-4% decrease for 2010 to be close

Even Tony Alexander that great property optimist, is now saying prices will be flat "at best" over the coming year. 

The spruikers slam Bernard's predictions yet forget that back in 2007 most economists never predicted ANY falls, not to mention Infometrics' mid 2009 prediction of a 24% increase by mid 2012

yeah, what planet were Infometrics on that day in August 2009  - a 24% increase and I am Warren Buffett

Don't worry about the slow decline in house prices if you have a fairly good property in a good area of a growth centre, as you will get a reasonable rent.  No point in holding debt these days so clear any mortgages and take a net return equivalent to any interest on money in the bank (money in the bank is depreciating in value too).

My prediction... I reckon the market will be flat or fall slightly over the next few years but that value will be hammered by inflation.

Good areas close to CBD's are just holding values, further out have dropped. One area I've really noticed a lot of properties on the market and a drop in value is holiday homes.

Yes....even if its in its mildeest form of lack of inflation adjustment....all else being equal.

Money in the bank right now is probably the safest spot, this is because the immediate risk is deflation......we actually have dis-inflation at the moment.....so cash actually becomes worth more...assets usually worth less....I think someone (Hugh Hendry?) had a good point, right now its not about making money but protecting your wealth from the huge risk of huge losses...

Sure inflation could be a problem in the future but I think the biggest mistake ppl are making is looking at the money printing and assuming/concluding thats inflationary today, or even in 2011.....its not as inflation is more money in the system and actually more money chasing assets.  The problem is we have multi-trillion holes filled with multi-billions.....ie a huge factor off....so the money is actually contracting...and thats confirmed with core inflation reducing.  In the future, if you believe we will come out of the forethcoming double dip (and I dont), then yes thats inflationary....but thats years off if not decades....

So personally I think houses in real terms will be 50~60% down on today.....

regards

http://www.youtube.com/watch?v=NLejvdqF23M

This is the first recovery that has been met without us getting more credit....

http://www.youtube.com/watch?v=S_b9NmBMVWo&feature=related

Hard talk.........

 

 

The concern I can see coming out again and again here, is "WHAT" investment is "safe"?

If hyperinflation is coming, really nothing is safe except land and commodities (including gold).

It really is sickening what has been done to our economies by socialistic politics. The whole fiscal system SHOULD be geared up to making investment in PRODUCTIVE business, THE "MOST WORTHWHILE" thing. THIS is the origin of the whole problem. When investors will do anything with their money BUT this, because of red tape and unions and taxes; and this persists for years, it is pretty much a case of "kiss the whole economy goodbye".

The "fast bucks" have chased bubbles in NON productive investments for too long now. I think it is too late to reverse this - the voting public is simply too stupid and venal to accept the drastic changes that would make it worthwhile for investors to risk their money on ventures that actually PRODUCE stuff (shock, horror).

Abolish company tax, step 1. Can't do that? Can't save the economy, then. Suit yourselves. Bye. Pity you will never be intelligent enough to understand just how much your petty, anti-business spite had to do with all the disaster that is coming on you. What is happening to the "mixed economies" of the West is just a slow-mo version of what the Bolshies did to Russia, and Orwell brilliantly skewered in "Animal Farm".

(I am not addressing the more intelligent Interest.co participants here, just commenting about the average Kiwi voter. And the USA's ones too, given their 45% company tax rate).

The stupidity with "company tax", is that company profits are NO-ONE's "INCOME" until paid out to shareholders. If "retained" and used to grow the business, they are possibly the SINGLE MOST VALUABLE THING to our future collective prosperity. It is absurd to subsidise tertiary education because it is allegedly "good for" our future collective prosperity, and TAX company profits re-invested.

The government's taxation revenue from business profits, SHOULD come entirely from taxes on "income"; which is what profits are when they are distributed, not retained. If shareholders forego their income this year to grow the business and earn more income in the future, the government should honour that by foregoing any revenue until the later date when the profits will be even larger, will be distributed, and the tax revenue will be greater.

I honestly believe that company tax only exists because leftwing politicians and their voters are simply too stupid and venal to understand these elementary facts and/or are blinded with spite about "profits" regardless of whether or not anyone actually "takes them" as income.

Thanks Phil for your comment. It is really mind blowing that  this  facts don't enter our decision makers head and act accordingly. Sad, really.......

Fear is the sentiment du jour, this will not last - confidence and then greed will return.

Human nature does not change.

The rental property juggernaught will continue onwards and upwards.

Wow, good luck with THAT piece of wishful-thinking!

Where's the finance going to come from?

Not sure where you usually go to get finance.

Generally I pop into the local bank.