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

No surprise really, everyone knows whats coming

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?

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))
http://tinyurl.com/y8gybmhs

House inflation will be negative for years to come....an 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.

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.

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.

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

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.

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

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!

TTP