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The latest RBNZ survey of house price expectations brings a sharp dive in those seeing gains in the future. In fact capital gains may have vanished; the risk is now to the downside

The latest RBNZ survey of house price expectations brings a sharp dive in those seeing gains in the future. In fact capital gains may have vanished; the risk is now to the downside

Each quarter, the RBNZ conducts a survey of household expectations.

(Well, actually they take data from the UMR Research "nation-wide telephone omnibus survey".)

The questions the Reserve Bank is interested in relate to consumer price inflation and also house price inflation.

Specifically, the questions about expected house price inflation are:

"In one year's time do you think house prices overall will have increased, decreased or stayed the same compared to now?"


"By what percentage do you think they will have increased or decreased?"

The data for the December quarter of 2017 has now been released (H/T Cowpat), and on average house prices are expected to be unchanged from now in one year.

Optimists are still around however; the number of people in the survey expecting prices to be higher in a year than now is still positive, but only just.

The main takeaway from this latest survey however is the sharp, sudden fall in optimism.

This survey has only been going for house prices since June 2011 but the latest data is the lowest on record.

And it is changing very fast, negatively.

It would be fair to ask how accurate people responding in the survey are in assessing what house prices are likely to change by in one year.

And of course we can test that by looking forward a year and seeing what the change actually was.

This view compares what the survey responses were with what actually transpired in one year. So the Q3 2016 expectation of a +5.5% gain actually came in at a +4.2% gain in Q3 2017.

Respondents see the future as relatively stable, which of course it isn't. They also clearly underestimate what will happen.

And that underestimate can cut both ways. In a period of optimism and growth their views respond slowly to the actual lift in market prices.

If that is true on the way down, this chart may be a warning that even as they now see no price growth the reality may again be an underestimate.

One thing is clear from the RBNZ survey: the immediate future is unlikely to see any house price growth.

Capital gains may have vanished; the risk is now to the downside.

(The RBNZ survey data is not available by Region or City.)

Median house price growth

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No surprise really, everyone knows whats coming

Well actually, according to the survey, respondents are expecting prices to be flat in 1 year. I'm not saying that will happen, that's what the survey says

This is a pretty clear indicator. TTP, now that 2018 is nearly upon us, what's your take? Has the RBNZ just released a flawed survey?

Again, actually, according to the survey, respondents are expecting prices to be flat in 1 year. I'm not saying that will happen, that's what the survey says

It's a fairly well scientifically documented phenomenon across many areas of life, but particularly financially.


Nobody wants to be the bearer of bad news. That may be why it is almost impossible to find a housing market expert who predicts a crash - or even a slowdown - this year. But don't be misled; there is increasing nervousness about house prices. One national newspaper last week forecast a modest downturn..the Land Registry said house price inflation had slowed for the third month running in November. Prices still rose, but at a much lower rate. So, could this be the year the housing market's 10-year bull run comes to an end? Not if those analysts brave enough to make forecasts are to be believed. Then there's David Miles, the respected chief economist at the investment bank Morgan Stanley. In November, Miles warned that only half the recent growth in the housing market can be explained by genuine issues of demand and supply; the remainder was due to a speculative bubble that could be about to burst. etc etc etc

There's nothing new under the sun, nothing.....( quotes from 2007, before The Crash - all 65%- 75% of it depending on where your property was))

The survey suggests that the "speculative bubble" referred to by Miles is at an end.
The future direction is going to be driven largely by a variety of other supply and demand factors.
These factors include affordability, changes in mortgage interest rates, new house supply, changes in building costs, immigration and internal migration, any RB moves on LVR, government constraints on foreign investment as proposed, and public confidence in the future of house prices. No doubt other factors also play a part.
Factor all of the factors in and one may get a guess of where the market is heading.
Personally, I wouldn't "put the house it" with any certainty other than that the unsustainable rises in past years are sustainable :)
Trust that you Auckland homeowners enjoy the moment with your new RV asset wealth.

House inflation will be negative for years to adjustment in houses is needed as we are a low wage economy. Scale back immigration and foreign ownership and watch the tide go out.

In a simple sense perhaps demand, in whatever guise, is currently simply exhausted. Obviously there is demand – but not at current prices – difficult deposit requirements and lack of readily available credit making a purchase almost impossible for many traditional buyers.
The market has run out of puff – I would find it somewhat remarkable if prices did not fall back further as the next 12 months unfolds – barring some unforeseen event I would imagine that such a pullback would be rather unspectacular and gradual until a new equilibrium is set.

In is incorrect to say demand is "simply exhausted". Last month 5,689 properties sold in NZ and 1,632 sold in Auckland. In September 5,428 properties sold in NZ and 1,591 sold in Auckland.
So volumes increased in October and these figures alone show that a considerable number of properties are changing hands proving there is still significant demand.

1632 and 12000 are now up for sale.

That smells like about eight months worth of inventory.

Once the foreign scum are banned we might find it what prices local incomes really support.

The 50% of real estate agents with Chinese sounding surnames might have a lot less income too.

Most of the Chinese agents speak perfect English and assist Kiwis of all ethnicities buy and sell. They do have an advantage with foreign Chinese buyers.

Suuuuuure they do, suuuuuuure they do.

If house prices were to track inflation then I will consider that a satisfactory outcome for the next 20 years. Hopefully the period of rampant global house price inflation is now over as it is causing an imbalance in society that isn’t healthy.

That is a deeply unsatisfactory and improbable outcome. Houses should not sit on a permanently high plateau totally unobtainable for the inhabitants of a city.

The next financial shock or significant interest rates rises will obliterate bloated asset values. It's a matter of when, not if.

I would posit that perhaps we have reached an inflexion point over the last couple of weeks – possibly under the combined weight of simple market forces in conjunction with a barrage of impending legislative changes that would be regarded by many as having a negative impact in the short to medium term.
I do not doubt the existence of significant demand – I just wonder moving forward how much of that demand can convert into a new purchase – as opposed to those merrily buying and selling and already in the market. It’s the amount of new and viable demand I question.
Are the new entrants able to push overall prices even higher – I doubt that, can they keep prices steady – maybe, but with the removal of cheap money sloshing about I’d have to say it’s going to be tough – so will prices gently ease back until these new entrants can start to nibble at perceived “bargains” – in my mind the most probable.
Bear in mind I’m referring to the market in general – and I certainly do recognize that the leafy suburbs dance to their own tune.

Great to read a balanced, common sense post

Those in leafy suburbs in the following countries probably thought the same thing! Its the old "it will never happen in my neighbourhood" No suburb is immune where there is seriously high leverage against lofty valuations preceding a bust. All houses would tank in value - even mine. :

Well the good news is that it's the paper millionaires that will feel the full force for the Auckland crash. What goes up at a rapid rate will naturally come down, thanks to Nationals false economy based on lots of speculative foreign buyers.

Why is that good news CJ ?

A false economy is an unsustainable economy. Haven't you figured that out yet Yvil?

Or think of it this way; If NZ property prices handn't been driven up so rapidly by foreign buyers who then vacated the market due to their Government clamping down on money laundering, local Kiwi and resident buyers would still be able to afford to build new homes. Now do you get it?

Unfortunately for you Yvil, you're going to be left out in the cold until property prices drop to affordable levels and then people can build again.

Their leverage is going to hurt on the way down.

With a balance of respondents (albeit a small one) picking house prices to be higher in a year's time, the result of this survey is more positive than I would have thought.

After the housing market upswing of 2014-16, a slow-down was bound to occur. My view is that prices will oscillate for the foreseeable future, as I've stated on this site before.

Talk of a "crash" (as above) is, of course, unsubstantiated nonsense. Without doubt, this blog attracts more than its fair share of gloom and doom merchants - some with little else to think about.


TTP, a timely Earth reality check. Over leveraged meaning = having an excessively high ratio of debt capital to equity, Tuna really is a fish and it also rains on houses in Epsom. Clearly you think that China will come to the rescue and play the role of the biggest fool. It really is different this time. Your posts clearly illustrate you have been a Earth bound witness for a very short time! Oh those property seminars you attend have a lot to answer for............
As you know, I'm firmly in (camp 2) as explained here:

Why its different this time here:

Great post RP.

TTP I notice that your posts keep reappearing in the comment stream again, well after they were originally posted, and the time stamp keeps changing, so I guess, you are going back, and editing or re-posting them? If I look at this post, I can see that the time stamp of your comment appears to be after the one beneath by Retired-Poppy, even though yours clearly came first??

Why does this happen with so many of your posts? Is it a conscious tactic to try and make your posts more visible in the comment stream or do you just obsessively go back and re-edit? Because this doesn't just happen to an occasional post, this happens all the time. And can easily be checked by seeing your time stamps being changed to a later one than the replies you receive.

It's annoying because your posts are really predictable and generally repeat the same content over and over. But for them then to hijack the comment stream so that I can't see other peoples comments when the occur, is *really* annoying.

I agree it is a little annoying gingerninja. I have been tempted to do it myself when a particularly epic and profound post appears to get no reaction or upvotes or the article goes off the main page however I think it should be done rarely.

Well honestly Zachary, if you have made a epic post that would make for a great discussion, I wouldn't mind you bumping it in the comment stream at all. I don't always agree with you, but I enjoy your contributions immensely.

I only object to it from TTP because he's not usually saying anything epic. Obviously, he can say what he likes, and everyone has as much freedom as anyone else here, but he does repeat himself an awful lot, and his stance is pretty overt and well established. He's not often adding anything new, nuanced or adding context, just kind of repeating the same thing.

Thanks for the kind words gingerninja, I enjoy reading your comments too.

And they lived happily ever after...

Hi Gingerninja,

The only reason I ever edit a post is to correct grammar or spelling (and very occasionally an ambiguity).

I detest poor spelling/grammar - and anyone who reads my posts will know that I keep very high standards in this respect. (If you notice a spelling/grammar error - or an obvious ambiguity - in any post of mine, you are welcome to let me know.)

I never make substantive changes in editing a post - because that could easily be detrimental to the flow of discussion/discourse. If I want say something new or different, I always start a new post.

If you don't like my posts, Gingerninja, then you don't need to read them.

In fact, a short while ago you stated that you were going to ignore my posts in the future. I suggest you follow through on that. (I might add that I find your fixation with me to be odd - and somewhat tiresome.)



You make yourself very difficult to ignore Sir. And sometimes I wonder if you do that purposefully or whether you actually can't help yourself? I genuinely don't know anymore.

But you misunderstand my point. I am perfectly capable of not reading your posts, that isn't the issue I have raised. The issue is that the comment stream shows posts as they are made, so as a particular article is being discussed, the stream shows who has recently commented and contributed something new. The comment stream is there for that very reason. However, because you keep editing your posts, you keep re-appearing in the comment stream for comments that have already occurred.... so you actually CROWD OUT other peoples comments. Yet because you are simply editing, rather than writing anything new, the people who have actually added new comments are missed because YOUR EDITING HAS FILLED UP THE COMMENTS STREAM.

Perhaps you could consider just copying and pasting your comments in a word document and edit them there, getting your grammar and punctuation just to your liking before posting them here? You often say that you don't care what anyone thinks (despite frequently referring to peoples reputations) but if you care about how others perceive you, maybe think about this one small aspect/gesture of online courtesy?

As for your assertion that I am fixated on you....has it occurred to you, that I am not so much fixated on you, but rather struggling with your relentlessness and am just hoping you will reduce some of your more annoying behaviours? (which is exacerbated by your editing and hogging of the comment stream so that I can't even see anyone else's comments)?

I did used to try and respond to you thoughtfully and civilly but there really is no point sometimes because you respond like a pre-programmed spambot much of the time. You repeat yourself endlessly and you often refuse to ever respond to the most pertinent issues raised by others and instead kind of just clog up the comments with more repetitive, banality. Not always, sometimes you genuinely add something new and interesting, but I am not alone in finding your repetitiveness annoying and frustrating and that isn't about having opposing opinions. I like a good differing of opinions, but you often simply don't engage with the issues being discussed and just repeat the same 5 or so points ad nauseum. I said I would stop responding to you because I feel like sometimes the responses to you (including mine) border on bullying and i don't want to do that. It's not cool.

I mean seriously dude, why do you think so many people here respond to you the same way? Is it all of us and you are doing nothing at all? Seriously?

If you could just chill on the repetition of points, patronising tone and hogging of the comments stream and I think you will have a lot more interesting conversations. Nobody wants to silence you and nobody has that right anyway, but if you could just tone down the relentlessness a little, I think it would be better for all concerned.

gingerninja, well said!

Hi Gingerninja,

You write, "I like a good differing of opinions, but you often simply don't engage with the issues being discussed and just repeat the same 5 or so points ad nauseum."

That's a strange comment and doesn't stand up to scrutiny. In fact, my posts seem to attract as much feedback and spark as much useful/interesting/feisty debate as the posts of pretty well anyone else who comes here. And just the other day, someone added that I was also the most "entertaining" poster who came here. So, not all bad.

That some of my writings are perceived as offering a minority viewpoint (at least among the contributors here) is not necessarily a bad thing at all, given the democratic principles that underpin the site.

Further, the editors/moderators of have never signalled any concern with my use of the site.

On that basis, I'm relaxed about contributing here. Am prepared to take the time to make my posts as meaningful and clear as I reasonably can.

Finally, I greatly appreciate the quality of the lead items contributed by Greg Ninness and the other skilled journalists/analysts here. Plus, the administration of the site is absolutely first class. None of us here should take for granted the effort that goes into running the site so competently seven days a week - especially when there's no financial cost to us. For me, it's a privilege to support the site in my own small way.

In celebration of and its talented staff !!



This comment, as with so many others, reads like a spambot of logical fallacies.

Just in your comment above you have used;
-special pleading
-personal incredulity
-tu quoque (I mean you do this one ALL the time)

But you also frequently use ad hominem, gambler's fallacy, composition/division. Actually, rather than just list them, it's easier to say that you use most of them so I will just to link to the Thou Shall Not Commit Logical Fallacy poster.

It's pretty obvious that you are not going to hear any feedback, so I will cease responding because of the sheer futility of it. Which is a shame. IMO I gave you some genuine and constructive advise.

Hi Gingerninja,

You write more about me than substantive issues.

To put it candidly, I don't give a jot about what you think of me - or the contributions I make.

Suggest you move on from me and find something purposeful to do with your time.


AH-HUH, so this is what prolixity is.......

Financial anti gravity has been shutdown. Looking forward to leveling out at financial reality for the averageman. To the domestic stupidly leveraged, interest only ponzi....leverage is a heartless mistress on the way down have fun.

Apologies if this is a little off topic, but the “leafy suburbs” posts interest me. These are obviously sweeping generalisations, but as I have said before, I certainly think they dance to a different tune – being maybe not quite so concerned with the daily trials and tribulations facing the outer suburbs but nevertheless still facing the daily challenges and threats that ever permeate the economy at large. Not for them the concerns of a $50 a week shortfall on an investment property or an additional fuel tax surcharge to contend with.
However, this group is in general still a world of heavy leverage with associated risk and reward – the downsides of which they are not immune.
Simply google “bonds biggest bubble ever” and you find one such concern that could make life for some in the leafy suburbs rather troublesome – for those that have made big in forgiving times can later lose big when forgiveness is in short supply.
Whether the bursting of this bubble will take place, or in fact be allowed to take place is another topic and another day – regardless, should the winds of change blow then even a relatively small puff could send some of those contented leaves into the gutter.

I was going to reply, then I read that you had posted before and yet your membership is less than two days old. Are you are a respawn? I’ve resisted the urge to do similarly.

OMG Zach's popped out another one

Custard posted yesterday, I think for the first time. I recall because I queried his assertion that demand for houses was exhausted.

Simple answer is no.
I’ve been an avid follower for some years and finally thought I would join in some of the discussion and contribute – although “contribute” is probably somewhat subjective – it is simply my thoughts and musings on the topics of the day.
Overall I have found this site and forum very interesting and informative, and have learned a lot from it – to the point it has become part of my daily routine. Like all gatherings of individuals, I accept there may be the good, the bad and the ugly – however, in this instance the good to my mind are in the clear majority.

Oh well, must be just coincidence that makes it seem like there is a pattern forming

Its interesting to note some pressure on rental prices now that many investors have been removed from the market. In the short term this is likely to persist as house prices are still too high. In the longer term with lower immigration & the Government building affordable housing, house prices will have to fall further (rental yield up) to remove some of the excess rental demand.

I reckon this summer (Jan - March) will set a record for rents in Wellington and Auckland, especially for inner-city houses - where the shortage is growing.

I hear that there's growing resistance to apartment buildings by tenants - especially those in older buildings with less satisfactory earthquake ratings.

I understand that older single-storey wooden houses are the safest buildings to be in during earthquakes. Worth keeping in mind......


TTP, the source of your prediction appeared on Stuff 3-days ago:

Not a terribly bold prediction that rents will be higher in a few months than today, in cities where rents are currently rising. Rents tend to rise pretty steadily, so records are set all the time.

Hi R-P,

Not surprised - the evidence is mounting.

There's a risk that people will pay premium prices for sub-standard accommodation.

With me own eyes I've seen how awful a 3-beddie rental can be in Auckland Central - yet still fetch $750pw. Disgraceful!