REINZ says there are signs of renewed confidence returning to the Auckland market

REINZ says there are signs of renewed confidence returning to the Auckland market

House prices showed modest gains in most parts of the country last month, according to the Real Estate Institute of New Zealand's latest House Price Index (HPI) figures.

The HPI for all of New Zealand increased by 0.3% in June compared to May but was down by 0.8% over the three months to June and up 1.7% in the 12 months to June.

In Auckland the HPI was up 0.1% in June compared to May, but down 1.7% compared to March and down 3.5% compared to June last year.

The REINZ has released the HPI separately from its regular report (which includes data such as median prices and days to sell), for the first time this month.

Its regular report will be released on Friday.

REINZ chief executive Bindi Norwell described the figures for Auckland as "interesting."

"While the annual figure shows a fall of 3.5% in the value of the Auckland property market, the last two months have shown an uplift of of 0.3% from April to May and 0.1% from May to June," she said.

"While it's too early to call this a trend, it is certainly the first signs of some renewed confidence returning to the market.

What makes this growth in Auckland more interesting is that it's in winter, when traditionally values are a little more subdued."

In all other regions excluding Auckland, the HPI increased by 0.4% in June compared to May, was unchanged from three months ago and up 6.5% compared to a year ago.

The HPI hit record highs in four regions in June - Waikato, Manawatu/Whanganui, Otago and Southland (see table below for the full regional breakdown).

The HPI was developed by the REINZ in association with the Reserve Bank. 

According to the REINZ it analyses how prices in a market are influenced by a range of attributes such as number of bedrooms and land and floor areas, "to provide a level of detail and understanding of the true movements of housing values over time."

 

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12
up

"up 0.1% in June compared to May, but down 1.7% compared to March and down 3.5% compared to June last year." - And that's meant to signal renewed confidence? Where is the Auckland median price data or this still coming?

There are pockets of life around Auckland but the majority or agents and brokers I have spoken with have said the market is terrible out there. Some nice properties in good locations still selling well though and achieving solid results.

Hi Adam B NZ,

If you really believe that things are "terrible" in the Auckland housing market, then why don't you take advantage of the situation....... Go flex your bargaining muscle and buy a property now??

According to a number of people who contribute here, the Auckland market is all doom and gloom...... But the reality is that prices/values have proven remarkably resilient since the boom years of 2012-2016.

Notably, in many/most Auckland suburbs, house prices have been largely steady/stable over the last 3 years and, where prices falls have occurred, the downward movement has been minuscule compared with the whopping increases of 2012-2016.

There are some early signs that renewed confidence may be returning to the Auckland housing market.

TTP

17
up

Why catch a falling knife?

Behaviour and prices at the moment is typical of a price expectation gap unwinding.

You been to the North Shore or Eastern Suburbs in the last 12 months?

Knives don’t usually fall sideways.

Month on month flat *this month*
In a month with record low volume.
OK.
One swallow does not a summer make, nor one fine day.

Volumes are off a cliff and prices are down 4.3% from peak.
Listing drop-out rates are high (>40% LTM).
Spring will be telling.

Well said cmat. It's inevitable that the likes of price frothy Papamoa will soon follow Auckland of the cliff followed by Taupo etc. The undiscerning money that once supported the upper echelons of the market has dried up nationwide. Now all that's left is lower interest rates and they are the paddles making the sick patient jump.

Adjusted for inflation, house price declines for Auckland are already considerable. If sustained at the current rate over say the next ten years, it could end up amounting to an overall -30%! Patient savers like commentator Milkyone already knows the advantages at play here. Savings provide security and added advantage in a declining market.

When the speculator starts to sweat, hand him a towel not your money.

You wish 30 % ' ya dreaming mate' so would that be the time you would buy ? Please enlighten us ! hang on your a DGM you only preach doom and gloom it's so easy to be negative don't you think ? My pick as stated before is this winter will be the best time to buy in Auckland before the market improves. We settle next month on a place we have helped one of our offspring into. Remember as someone on here once said Doom Gloom Boom Ha Ha

I don't know how far this downturn will go - 30% seems apocalyptic.
But I'm being cautious now given downside risk in the global environment.
Better to be 2 hours early than a minute too late.

You may be laughing now, fine. Good for you.
Just don't expect an ounce of sympathy from me (or that taxpayer for that matter) for you or your kids if it goes the other way though.
I won't care less.

At -30%, I'm suggesting a -3% pa decline (when adj for inflation @ 1.5%pa) over the next ten years. Barring a GFC2, this scenario is not a crash per se, it's more of a long self fulfilling slide. Considering the gains made 2012/16 it doesn't seem much now but, like a creeping landslide of disillusionment, Specuvestors will one by one wake up to a total % theft of real wealth in their rear vision mirrors. I expect it will take considerable time for them to wake up. "From 1974 to 1980, house prices fell by around 40% in real terms"; https://www.greaterauckland.org.nz/2016/07/11/remember-the-last-time-hou...

RP, I popped in to see a villa yesterday in a nice part of Auckland but internally a very old property. One thousand+ sq meters of land. RV is 3.1mm. The place is under offer at a tad over 2.1mm.

Where would that have sold in 2016 ? Looking at the transaction data on the street prob around 2.8mm. So, maybe selectively we are down 25% in some special cases already ~ for old places trading on purely land value.

Rest of the top end is off 10-15% (I.e. Well presented places which folks can move into with much/any work.) but the bid is thin and very picky.

As we work through Winter and into Spring we will see where stuff trades.

Also of note I walked the CBD today looking at new builds. Did you know that in Seascape and Pacifica you will have over 500 new apartments in those two blocks alone. Add in the International, The Antipodean, 30 Madden and its way way over a thousand and that's not scratching the surface. The supply through to 2022/3 is simply a wave of epic proportions.

Can't wait for Auckland to introduce a 1% empty property tax a la Canadian model.

@Adam B NZ "Go flex your bargaining muscle and buy a property now" If that two dangling things you have down there is made out of hard steel then by all means go and buy, but please don't cry if by the year end you might have a negative start.

10
up

TTP - I'm not buying yet, I am waiting. The Auckland market is holding up better than I expected but given the state of the Global economy I think there is potential for more downside to come. There is still a small chance it could go the other way though but for now I still see a Global recession on the cards given the Trade Wars, Brexit and everything else going on. So yeah, ill be buying halfway through the next storm if I can time it right. If I'm wrong ill still do well off my existing investments so not fussed.

"But the reality is that prices/values have proven remarkably resilient since the boom years of 2012-2016."
No, that's not the reality. The reality is that HPI is down 4.3% from peak. At an 800k-ish median value, that's more than $30k lost.

That's nothing in comparison to the losses in Australia. Auckland is holding up ok but the true test is how well it holds up in this next downturn. What people need to understand is that the Auckland market has been flat / dropping at a time when we have had record low interest rates, high migration an alleged housing shortage and an ok economy. Imagine what it's going to look like in the next financial crisis if this is what its been like with drivers that should be pushing it higher.

Sounds like the median price data will be released on Friday.

I agree "renewed confidence" is overstating things. I think what happened is that April was a bit of an outlier, as the HPI jumped from 2.9% down YoY in March to 4.4% down YoY in April. May & June have seen it come back to around 3.4% down YoY. Ironically if April were only 3.4% down YoY, there wouldn't be any talk of renewed confidence.

Adam, Interest used to publish median figures rather than HPI, many on here complained as Median wasn't falling as most were hoping but HPI showed a fall (for Auckland). It looks as though Interest has given in to the pressure. I would still like to see a median or average figure, to me it's not much good to know that the house I want to buy or sell is worth an HPI of 2750

My impression is they're publishing what information they receive, soon after they receive it. I'm sure they'll come out gradually as they become available. HPI, Median, Average.

We need as much info as possible to tell anything much about Auckland, especially with Auckland volumes so low. On such small volumes it's easier to have strange looking things.

I want to see both :)

Me too

12
up

And this is in the context of recent interest rate cuts (to a record low), and the CGT being squashed. Yet its still incredibly weak. Compared to the impact previous cuts have had (rapid price appreciation) this tells me the continuing weakness is not going away.

Better cut some more then

15
up

Not even a dead cat bounce, just dead.
I for one am staying on the sidelines renting as we have been doing for the last two years. We are cashed up with a budget of $1.4M to purchase but will continue to pay outrageous rental for now. Have been watching the market and even attending open days. So far very pleased to have stayed out. By my estimation the reduction in home prices has more than offset the cost of rental, no complex 20 year calculations required. I am convinced that there is an easy 18 months of slowly declining market to come. More and faster if we get some sort of GFC event.

Good on you CM. Just be careful that the sideline sitting doesn't become permanent. For a FHB buying a house is driven by emotion more than by maths. It's indeed a very large expense and a huge step to buy a house and you can always find a reason not to buy. Now you worry that house prices may go down, in two years you want to have a big OE, in 4 years you have your first child, then a second child, before you know it you're 40 and still renting...

19
up

When did $1.4m become FHB territory?

"in two years you want to have a big OE, in 4 years you have your first child, then a second child, before you know it you're 40 and still renting..."

Could you be any more patronising?

11
up

Just the norm from him.

cmat & MTP, you seem to be totally unwilling to take on advice from anyone, that's your choice but I'll still try to help some in the hope that 1 reader is open minded enough to listen and improve his/her life (maybe NZDan?)

10
up

I'm surprised he didn't mention avocados or Starbucks.

Thanks for the advice Yvil. Not a FHB by any stretch. Just new to Auckland. Great city apart from the delusional property market. Luckily we have the option to sit on the fence.

And thanks back to you for not taking my comment as patronising. Since you're new to Auckland, it's a good idea indeed to get familiar with suburbs and house values before buying. Good luck to you

I wonder which areas are you watching and hopefully would give me some of your confidence as well. Perhaps in 18 months time, market will decline but not on those properties you actually want to live in. I doubt GFC event will help because that is gonna dampen residential building too, not gonna help with the supply.

If the market declines why won't it impact houses "you want to live in"?

A rising tide lifts all boats as we've seen - the good houses have pulled up the rubbish in this up cycle.
Why do you not think the reverse will be true in a down cycle?

The way the property market assesses comparable sales is highly rudimentary, sure, but it's a double edged sword:
If you argue that shoddy houses get the benefit of rising prices (land is the largest component of price after all) then the reverse must also be true - good houses will get sucked down by whatever sells in market and the only thing simplistic enough people have to anchor on is sale price vs CV.

Marginal sellers in this market will set the trend for prices.
Those marginal sellers will most likely be retirees, deceased estates and emigrants - they are time bound, they must sell in prevailing market conditions.
Retirees and decreased estates, who've held for decades, will more likely sell tired houses - that's what we're seeing.

Quality houses may sit on the sidelines because vendors are unwilling to sell in a slow market, but in the interim the market will be set by those marginal sellers and that has the potential to re-base prices.

11
up

I got an invite for a open home in Wellington, letter said “come along to our open home , guess the price this house will sell for and win a $50 gift voucher” how times have changed

Haha. YIP at Harcourts per chance? They've been doing it a long time. The trick for Wellington is to guess what the house is actually worth, then double it.

Professionals, it also said you may experience unusually high traffic in the area because of the open home.....3 cars lol

10
up

The crash is here people. If you can scrape together a grand or two that 3 beddie in Devonport will be yours soon. Kudos for those that stayed strong and didn't get sucked into the ponzi.

Given the high numbers of thumbs up, I don't think readers realise you're being sarcastic. Still, at least you know what to do if you want to be popular in this forum LOL

Just another leveraged Spruiker that's "losing it" with this down market.

Losing not loosing, loser

Lol! My bad. Houseworks enjoys his rare micromoment of what it's like to be a winner.

Enjoy :)

Yes winning beats whining. Our Black Caps are winners by getting on with the job at hand and not listening to the haters who have tried their worst and failed. Sounds familiar doesn't it.

Those micromoments don't last long do they......

Cheer up Spruiker, there's more to life than property. ^o^)

To me, three years after the peak, this spring will be a telling time as to direction of market.
In the meantime a -4.3% drop in the Auckland market since the peak is in the same magnitude of buying/selling more or less than at actual market value.
If the market, it’s future direction, and prices are an important fear for FHB, then they should be looking to buy at right price in winter season doldrums rather than getting hung up on market trends.
Sold my mothers place last month (Hawke’s Bay) and achieved 20% above valuers estimate, algorithm app estimates, and agent’s initial estimate as purchaser under pressure to find a place. An example of how a property can sell either well above or below market value.
Another I am familiar with: 351 Marine Parade sold April last year at $620k when apps were showing $420k and despite 9% increase in market since still showing only $420k.
Buying at right price is just as -if not more - important as market state and trends.

P8, Buying at the right price is definitely more important than market average movements, firstly, it's in your control and secondly you can easily buy 20% below or above value

Certainly the people that intend to buy when prices decrease to realistic levels are gaining confidence.

"Resilient" "Renewed Confidence" "Gains" "Uplift" "Record Highs"

Wonderful words

Due Diligence you seem to be clued up about real estate. Is REINZ a government entity or is it a business owned overseas ?

I get the impression you have a conspiracy theory you’d like to share?

Conspiracy theory? The REINZ's represents the interests of its members... i.e. to sell as many properties as possible. That is not a conspiracy theory, that is just the purpose of the organisation.

So any commentary made by the REINZ should be viewed in this context (and summarily ignored if you want an accurate picture of the market).

Hi Due Diligence,

The DGM always take fright when they see the word "RESILIENT" here.

"RESILIENT" is definitely not the DGM's favourite word.

The DGM don't have warm-fuzzies with the word "RESILIENT"

In fact, the DGM have an implacable hatred of the word "RESILIENT".

Despite this, the word "RESILIENT" keeps re-occurring.

The word "RESILIENT" itself seems to be remarkably "RESILIENT".

TTP

It is my understanding that the word "resilient" is a characteristic that relates to an event where something or someone has been knocked down , put on their knees and has overcome adversity and sprung back .. Relating resilience to the Auckland housing market is somewhat fatuous given that , it has not been on its knees (yet ), and rather than facing adversity it has been among other factors propped by the lowest generational mortgage rates

Cowpat, just a reminder that REA-TTP was caught out implying capital gains on property is guaranteed and as such can safely be included in a rented properties nett yield when comparing side by side with TD's. If you are as stunned as I was when I read it, you'll also understand why simple logic evades him.

Hi Retired Property,

Show me where I implied future gains are "guaranteed"? (And by the way capital gains are an entirely different/distinct concept from rental yield. You are completely confused.)

I have never "guaranteed" future capital gains. In any case, that would be silly.

In fact, in numerous posts - including the second post on this thread!! - I have acknowledged that capital gains have been negative (albeit by a minuscule amount) in some suburbs of Auckland over the past three years. Capital gains could continue to be negative - although, in my view, medium/longer term prospects for capital gains in Auckland are positive.

Retired-Poppy - you're a bare-faced liar. And you regularly lie here.

You seem to get some perverse pleasure from mis-quoting people - in order to mislead/deceive others.

TTP

by tothepoint | 3rd Jul 19, 5:17pm "When longer-term capital appreciation is added to rental yield, your argument for bank term deposits becomes very weak"

So are you now implying capital gains are no longer guaranteed? Are you now therefore prepared to admit that my argument in favour of term deposits is strong? Keep in mind that you're comparing side by side with the maximum term deposit term of 5-years or less.

Since mid 2017, you've been busy misleading and deceiving. Those FHB's who ignored you have gained valuable ground. In a desperate attempt to clutch onto what credibility remains, you now imply everything while admitting to nothing.

Where did he imply that capital gain is guaranteed? Nowhere in the above quote, that's for sure.

BLSH (reincarnated), armed with nothing but a rear vision mirror, Spruikers resort to hinting or implying future trends by using terms such as "bull run" or "upward march". In this instance, REA-TTP chose to include future capital gains as part in parcel of a $$ return, as an argument against TD's. In doing so. he is implying it is also a guaranteed-stable-reliable return in the same context as fixed interest. If REA-TTP is now flip-flopping and capital gain cannot be relied upon, then TD's are obviously the place to be :-) Does REA-TTP have the courage to admit it? Evidently not.

Stating that capital gains are a consideration to be taken into account when weighing investment alternatives is a far cry from claiming that capital gains are guaranteed.

Have you read the below article? I see you haven’t answered the question that I put to you.

https://www.interest.co.nz/personal-finance/100629/term-deposit-interest...

What is BLSH?

Due Diligence (BuyLowSellHigh reincarnated), it's a pity you can't comprehend my simple reply to your question. To help, I tailored it simple and logical so you wouldn't have to seek more clarifications on the definition of "implying" or "guarantee".

You will recall that interest.co invited all to make their NY 2019 predictions. Mine was "official cash rate at 1% by years end" I have already anticipated lower rates plus a considerable decline in the value of my own property over time. This has started to happen. Going forward, leveraged property investors will be amongst the hardest hit. Those who find themselves underwater will discover how quickly banks morph into Landlords and they, mere caretakers of the banks asset.

You are only what you're worth after you subtract what is owed. Those who lose least come off best.

You also predicted NZX-50 at 5600. You’re aware it is currently at 10,650.140? You think this fine country’s biggest 50 listed companies are going to lose about 50% of their value in the next six months.

I’m not this BuyLowSellHigh character that you’re obsessed with.

Yup, you're BLSH alright. I'm amused at the lengths some Spruikers will go. You predicted the OCR would remain at 1.75% all year and Auckland HPI would be +1% by years end when it's already at - 3.7. Anyway, there's still six months to go so we shall see :) By changing your username did you think you could distance yourself from potential embarrassment?

Hi Retired-Poppy,

What you quote me as stating** is true - as most NZ landlords/investors are well aware. It's part of the reason why property investment has sustained popularity in NZ.

Nonetheless, capital gain (like rental yield) can be positive, zero, or negative at any point in time - as every good financial/investment analyst knows. I emphasised this very point in the same thread as you quote me from. As you well know, I have never "guaranteed" capital gain (or a positive rental yield) over any time duration.

In your ignorance and arrogance, however, you have persistently dismissed/ignored the relevance of rental yield to property investment on this website. You have been repeatedly rebuked for this - and that is the main point I made in the thread you refer to. In short, your posts have lacked credibility.

You continue to mislead and be dishonest. Thus, I'm not interested in continuing with you.

TTP
** "When longer-term capital appreciation is added to rental yield, your [Retired-Poppy] argument for bank term deposits becomes very weak" [As stated by TTP]

"I'm not interested in continuing with you"

Translated, "much like the growing number of disillusioned property investors, I will also flee the scene"

Like I said, for the patient first time buyer, TD's are the best place to be. It's such early days of what will likely prove a prolonged correction in property values; https://www.channelnewsasia.com/news/business/preserve-your-ammunition--...

TTP, DD, I am currently in Bali, the currency here is the RP (rupiah), did you know that the RP is extremely weak? almost worthless, almost 10'000 to 1 NZD

Yvil, (Turkey) just keeps getting roasted day after day (0.26 to NZD). It's such an easy target being that it's perilously weak on guarantees.

RP, even with the Turkish Lira being roasted, RP is still 2'500 times weaker,

Open a wheelbarrow factory there. It might be a safer bet than your rental ;-)

Yvil, you will understand that the rupiah currency has actually strengthened against the NZD since 2014, it has appreciated a further 5 percent against the NZD since the start of the year. As a comparison , 1 USD currently buys 109 yen, does that mean the yen is 109 times weaker?

Yes the rupiah has been very stable for the last 14 years between 9000 - 10'000 NZD and also quite stable vs USD but I'm not sure you got my gist

As Cowpat has pointed out, Turkey (Lira) has lost credibility whereas Indonesia (RP) hasn't :-)

Thumbs up to your post

Pretty Pollyannaish words in the current market conditions, but that's to be expected, even as the market declines. Even if the market drops 20% they'll be looking for any slight glimmer of flat or upward trend each month. See Sydney over the past 2 years.

Hi Voiceofreason,

Sydney and Auckland are in different countries.

Sorry - but their property markets aren't comparable (just like apples and oranges aren't comparable).

TTP

......and yet you were lightening quick to compare them on the way up.

"Auction clearance rates remained above 60 per cent in both Sydney and Melbourne but the number of homes being put to bidders is down by more than a third over the past year"
https://www.stuff.co.nz/business/world/114113012/more-australian-homes-a...

Auckland clearance rates are struggling to get over 30%, the number being brought to auction is down markedly and prices are drifting. Like Auckland, Sydney/Melbourne real estate has sagged since the tide of foreign money reversed. Australian vendors are now starting to panic. Conclusion, Australian oranges are getting cheaper by the month, this is making NZ oranges look even more like a ripoff.

Voiceofreason, I've found your ideological doppelganger from back in the day - 'Anon good nurse'. Here's a comment from them back in 2011 just before the rapid escalation in property prices. All the same arguments, proven wrong by time.

by Anon good nurse | 30th May 11, 5:34pm

Which fundamentals have shifted so radically to cause people to believe that houses are a good investment now?
The income/price ratio is still highly unfavourable.
There are still more sellers than buyers, and that's excluding the coming vast bulge of retiring boomers.
None of the other usual economic indicators (employment, interest rates, CPI, etc) are good for property investment.
The near-exodus to Australia continues to increase.
The nation's public and private debt spirals ever higher.
How can low-paid people in shaky employment borrowing lots of money to buy overpriced houses in a property market that has yet to fully (and hugely) correct downwards be considered a good idea?
Only desperately spruiking RE agents such as SK could say you can't lose with houses right now, because everyone else knows much better than that.

https://www.interest.co.nz/property/53677/lower-ocr-boosts-housing-marke...

Due Diligence, interesting but I'm not a permabear about Australian and NZ real estate like that. As it happens I owned a place in the Sydney market up until 2011 (with really good profit from that, even though there was more to come in Sydney) and bought in Auckland, seeing plenty of upside in Auckland. However, after those multiple double digit annual gains in Auckland (especially that 20%+ year) I saw trouble ahead around 2015 and took action in early 2016. I still own property in Auckland, downsized and not leveraged. It's been a bubble in Australia and NZ, and I admit to riding it up and taking advantage, but I don't see a great time ahead for the next 5+ years in Australia or NZ.

"REINZ chief executive Bindi Norwell described the trend in Auckland as "interesting."

"While the annual figure shows a fall of 3.5% in the value of the Auckland property market, the last two months have shown an uplift of of 0.3% from April to May and 0.1% from May to June," she said."

"While it's too early to call this a trend, it is certainly the first signs of some renewed confidence returning to the market."

Translation: oh @#$$, oh @#@, oh @#%3, how do I spin this... find a positive somewhere and talk about it, and whatever happens don't mention volumes..

Nice one Pragmatist!

Jesus, just how desperate are they? A 3.5% (4.3% from peak) fall is not a trend, but 0.1% and 0.3% are clearly trends. Everything is a trend as long as it's a positive number aye?

She said it is "too early to call this a trend"

A wise man once told me to identify a trend print a multi year chart, stick it on the wall, and look at it from the other side of the room.

You forgot the funniest word of the lot from Bindi Norwell in relation to the Auckland market: "Interesting".
That's real estate talk for, "I've completely run out of ways to spin this data for my own purposes and anyone with half a brain will see that it is going backwards".
Edit: Sorry Pragmatist, was not trying to plagiarise your comment, I have only just seen it after posting.

as they say :Imitation is the sincerest form of flattery.. I'll take it :)

I like the switch to releasing HPI figures separate to medians etc. It means REINZ have to address the HPI trends in their press release if nothing else.

As for the Auckland HPI, well it does seem to be showing a degree of resilience. I expect it to drop further once spring comes around, but not expecting it to fall off a cliff. My guess is that the Auckland's November HPI will be down 5% YoY.

Lets just wait for the latest Block NZ auction night shall we?

Apartment renovated by amateurs? No, thanks.

ha yeah I reckon. As silly as it sounds, this one seemingly small minor tv show could result in national awareness of the state of awk ppty that no other commentator could. The impact could be immense...and so I imagine the RE's will already be out there desperate to find some buyers. Gonna be on my watch list!

ANZ could buy it for a healthy 50-100% over market value. It would be a win-win, really.

Up 0.1% in June, margin of error stuff really. 0.1% of...say... $850,000 is what? $850.

1.7% down on $850,000 is what? $14,450.

And the kicker - On ~13% less volume than last June if B&T is anything to go by.

Most of the listings this week in central suburbs with price range $1 m - $1.5 m are plaster homes. Please don't use that as your argument when they not end up selling well. They should written off the market and should be not part of the discussion. Quality homes in Auckland within most potential buyer's 45 minutes commute are hard to come by. Prices are not falling, which I hope they are but they are not. The fact that few good properties are being listed is fueling up price expectations on future listings that people actually want to live in.

Well done on publishing the 5 year compound growth %, a 10 year compound growth % would be even better because when we buy a house, we generally don't intend on selling it the next year, we sign up for a 20 - 25 year mortgage and the yearly fluctuation in price is trivial

Simply extrapolating past returns is rank folly.

You mean like when you extrapolate the HPI being down for the last year?
Just think a bit before posting any nonsense

Excuse me, when have I simply extrapolated HPI?
I've not said or implied that -4.3% this year = -4.3% next year.

I'm looking, as I always do, at what's fundamentally happening in the current environment and using that as a basis for my decision making:
- Trade wars between the two largest economies in the world;
- Global corporate earnings are weak, high chance the US will slip into recession in the next 12 months;
- UK's management of Brexit looks like an case study in futility / clusterf**k;
- Europe is a basket case.
- China is drowning in debt and further tightening capital controls (there goes the last vestiges of marginal money coming into NZ, even under cloaked auspices);
- Global monetary policy is reaching its lower bound limits. Bond yields are negative in over a dozen countries;
- One of the world's largest financial institutions, Deutsche Bank, is on its knees with one of the world's biggest derivative books ($43T)
- Weak Australian economy, basically surviving on high iron ore prices at the moment;
- Record high household debt in Australia & NZ, so limited capacity to borrow more if Banks maintain prudent stress testing (~7% interest rates);
- The RBNZ is determined to institute higher capital requirements.

Were all those conditions in play throughout the historical period you're looking at?
That's where Ashley Church and his muddled ideas on 3-years-flat-then-doubles-in-7-years falls flat.
It's the logic of either a fool or a charlatan.

Spot on. V much as I listed in LinkedIn post 2 weeks ago

Indeed cmat, future returns would be better data, do you have them, say for the next 5 years?

I think REA-TTP has access to future data. He's on record as implying capital gains are guaranteed ;-)

And Retired-Poppy is on record as being a liar.

TTP

Prefer a holistic approach to looking at what's happening in the economy more generally and looking for leading indicators:
- Starting with global macro environment - what are the big things happening offshore. They are far, far more powerful forces than anything in NZ;
- How that may/likely/[inevitably] impact NZ's economy (migration / jobs / wage inflation / cost of living);
- How that will likely impact the lending behaviour of Banks (the biggest driver of land prices and therefore real estate);
- What behaviours will that result in particular markets given prevailing conditions - e.g. real estate
- Then ask, am I seeing anything in the economy (early signs) that those impacts are manifesting locally?

The answer to that last question is a resounding yes.

So if you don't like historical data, from last month, the last 3 months, last year, why do you bother reading the REINZ data? Why do you bother commenting on this page?

I love historical data, I just don't extrapolate it.

If there are data indicators (plural) that point to changing conditions then they will influence what I think.

I don't come here, take the HPI index from 10 years ago, put a straight line through to today and then push it out to 2029 - is that what you're suggesting every muppet who reads interest.co.nz should do without question?
Seriously?

You really do confirm all the stereotypes about people who only know property.

Yvil, for once we agree! Historical data is indeed highly valuable. It teaches those with open minds that for failing to address the contributors of past folly, an even bigger price is in store. Those who worship the can kickers will pay the biggest price.

Only if you take the time to understand those past follies, extenuating circumstances and nuance of that time.

Rather than just taking it at face value and extrapolating a number on a page.

CMAT, another interesting stat for you.

New car sales data is published by the MIA (*what a great acronym). Quite the drop in the luxury end:

https://www.mia.org.nz/Sales-Data/Vehicle-Sales#mpss

And just to polish it off before supper...

Ponsonby Sales >1.2mm transaction volumes since 2016:

2016, 97 transactions
2017, 92
2018, 112
2019 ... 29 year to date.

Perhaps not surprising that REINZ choose not to publish sales volumes by price bracket.

Pretty sure that someone recently mentioned a familiar number plate spotted driving a luxury vehicle in Ponsonby.

; )

Nice, I was just looking at some data for the Eastern Suburbs (Orakei, Meadowbank, Mission Bay, Kohi, St Heliers, Glendowie, St Johns, Stonefields)

Aggregate sales volumes by price bracket for the 5 months year-to-date ( apologies for the formatting):

___________________2018________2019
$2m+_______________96_________ 56
$1.5m - $2.0m_______77_________ 62
$1.0m - $1.5m______126_________108
$500k - $1.0m_______64__________57
$nil - $500k__________9___________8

TOTAL_____________371_________282

Very soft at the top

Yep, it's the same story across all the nicer suburbs. (I also looked at Mt Eden, Takapuna, Campbells Bay etc). I'm certain the total sales figs are being boosted by sales in the new town developments on the fringe of the city. Traditional neighbourhood sales numbers are softer across the board.

Please name data source?

Rob Report - Bayleys.

Uses latest REINZ data.

I'm using core logic ~ property guru.

I use that too (and CoreLogic RPNZ) - but as I said in another post, CoreLogic lags quite a bit. It's slow to recognise sales because it waits until settlement and registered change of title.

Wish I had access to all REINZ data.
I have to rely on snippets.

Ditto. Also REINZ don't allow anyone to simply buy access to their data. I wonder why that is lol.

cmat also HAND PICKED AND POSTED 7 SALES from the Rob Report THAT SUITED HIS BIAIS BEST OUT OF 74 SALES !!! He is quite simply, purposely trying to mislead others.

For unbiased data the average sale price to CV ratio on ALL 74 houses sold is 0.97 and so is the median price to CV. That, cmat, is honest and truthful

Yeah OK, you posted this twice.

See your other post below for my response.

Because pre-settlement data is sensitive.
I can understand and appreciate that.
They could take purchaser names out of the data I guess.

It's not a done deal until money changes hands.

Your figures mean something different from what you think, Glitzy and cmat.

For sure, big money is still being spent in Ponsonby......

But increasingly on renovations/improvements - and less on buying/selling houses.

It's much the same trend with most of the top-end Auckland suburbs. When the market perks up again, massive profits will accrue to owners/vendors.

In a flat market, the great majority of house owners in these suburbs aren't interested in selling...... I thought that even you two would know that.

TTP

OK.

I'll wait on those stats.

TTP, the great majority of owners in any and every suburb aren't looking to sell.

Any other pearls of wisdom to share ? I might be able to make a necklace.

Hi Glitzy,

Most Auckland real estate agents are idle at the present time...... twiddling their thumbs.......

But have you tried finding a good builder for renovation work??

Clue: One has to book them months/years in advance.

TTP

Thanks the tips. I've learnt so much I'm mentally exhausted but champing at the bit for more enlightening words of wisdom tomorrow.

I'm now wondering what happens to an economy when the builders have finished all their work and are also twiddling their thumbs. That's a lot of thumbs.

Time for bed.

Yes, that is the last resort for the mom and pop investors. Hoping that a bit of TLC on their investments might get them a bit more money when they try to sell them. Probably all suggested by the Real Estate "That will sell so much better "

Slowly people are noticing disconnect between media releases and what is happening at different prices and type of sale

Hard to believe its almost 3 years since the first speed bumps appeared in Auckland. Just remember, if it's down -4.3% then add that again (for 3 years) for general inflation & you're minus 8-9%. My angle is that it needed to slow down for a while. It just couldn't keep going up at 10%pa forever.

11
up

Perhaps articles quoting REINZ figures should have the disclaimer:

"REINZ is the trade association for the Real Estate Agency business in New Zealand"

Beauty!!!

‘The HPI was developed by the REINZ in association with the Reserve Bank’

Pretty much says it all there...

‘Hey Bindi, we need some financial stability from that report we conduct together, you know the one that we all need for financial stability..the one on houses.. don’t leave it with that other lass this month, you better go out and say something yourself.’. ‘Said the RBNZ.
‘Leave it with me, we’ll come up an ‘interesting’ press release from those HPI numbers - no one really understands how that’s worked out anyway... then we can publish the other data later.. Hopefully no one will notice the collapse in sales volumes - I’ll do it myself this month I promise, but if it’s shit again next month, I’m getting the other girl back... Can you get Tiny Alexander on 7 Sharp too, that bloke from Oneroof, talking about his mum’s house going up from the 1870’s and encouraging people to take on interest only mortgages and not worry about the principal... well it just sounded desperate.. Tiny has a way with the oldies, they eat out of the palm of his hand, perhaps he can talk a few into remortgaging for an investment... or maybe stop them wanting to sell?’
‘Not sure if we’ll be able to do that 7-Sharp is sponsored by ASB and Tony works for BNZ’
‘I doubt if ASB will care, they’re all selling the same shit, do they want buyers or not?’

JW,

If you are bored silly and want to read about SPAR HPI its here in the paper published by the RBNZ. It's a very blunt tool.

What is interesting though is that the RBNZ stated that the REINZ database is a good dataset. What a shame they don't allow public access.

https://www.google.com/url?sa=t&source=web&rct=j&url=https://www.rbnz.go...

The SPAR is a "very blunt tool"? Care to elaborate?
It's not an input/tool; it's an output.

REINZ data is actually rather poor - CoreLogic data is the gold standard in NZ.

I'd be particularly interested in any alternative HPI either Glitzy or the fabled Joe Wilkes could propose.

REINZ are able to monitor sales closer to real time because they are recording prices and volumes as soon as offers go unconditional.
They're only able to do that because their members submit information.
Unfortunately it's not made public though because it's obviously sensitive information prior to settlement.

CoreLogic wait for the sale to settle - which may take a few months to filter through and is patchy in the interim.

Ultimately CoreLogic will log rock-solid data and their dashboards make it easy to analyse.
But it's hard to analyse the market for the last 6 months, for example, because it will be missing a lot of data points.

Nymad ~ sure I will explain. A single number can't in any way adequately represent a market the same as a single number has a very hard time representing for example inflation. If you look at CPI it tells you nothing about your own expenses or how they have changed. It's just the broadest possible indicator. It's a blunt tool.

Core Logic also has its faults. Its certainly quite good with houses but its very average when you come to look at apartment blocks. If you have access try looking at the transaction records for new block ~ its very hard to make head nor tail of the numbers. I don't have a view on REINZ data as I don't use it. It was the opinion of the RBNZ that they thought the data set was robust ~ as mentioned in their paper re HPI.

Re alternatives. If one absolutely had to have a HPI I'd suggest that you would need three.

1. Pure land / sections.
2. Apartments (excluding leasehold)
3. Houses

(I.e. Indices grouping similar assets based on a similar measure).

But most importantly IF the aim of the game were to inform folks of what's going on it would be easier to publish volumes by price bracket simple because of liquidity dries up then prices do fall.

But that's the thing. It's not the aim of the REINZ to inform people. It's their job to represent their industry. Its their industry pays their costs, their salaries.

Okay, so you are saying price indices in general are blunt tools?
That's sort of fair. But among the 'blunt' tools of measurement, the SPAR is pretty damned good. IMO the best in terms of out of sample forecasting and variance properties for minimum effort.

Yes, the CoreLogic dataset is poor when it comes to some complexes - the REINZ data is the same. The quality of the data is higher from CoreLogic - I have intimate knowledge of both.

Your alternatives (I was refering primarily to estimation strategy):
- Land; can't really do. There just aren't enough vacant sections that sell in genuine arms length transactions. Or in general.
However. I know for a fact that MBIE/Stats are going to be releasing a land price index (extensive) in the next six months based on a (price - IV) fixed effects based repeat sales method.
- Standalone apartment indices; again, data limits this - mainly from a spatial heterogeneity perspective. Big trade-off between variance and parsimony in these such indices.

A constant quality index, like the SPAR, aggregated of all of these intrinsically controls for these components without having to worry about variance weighting approaches. The SPAR HPI doesn't include vacant land sections, but it does include apartments.

Take the point that the commentary accompanying these releases is hog wash.

But I appreciate having a stratified index.
And I do respect the RBNZ for the most part - in a lot of respects its hand is forced by other unscrupulous central banks.

The REINZ HPI is not a stratified index..

Fair enough - I appreciate a metric that makes a genuine effort to account for sales composition.

Different day, same arguments. Meanwhile people get on with their lives. We went to see a property at 2/40 Speight Road, Kohimarama, going to auction, only to see a sold sign. RV of $940k and apparently sold for $950k prior to the auction. Meanwhile Core Logic have our home at 94.7% of RV and Homes.co.nz have it as 102% of RV. When the collapse comes give me a call.

Btw what happened to Westpac going belly up by the end of the year? Nick, come back, we want to listen to your next prediction

Ex Expat, welcome back ;-) "Different day, same comments about Kohimarama. It's diffrunt there" lol!

https://www.nytimes.com/2019/07/09/business/economy/recession-world-econ...

Thanks RP.

My move to cash in my KS was a poor move in hindsight and I'm being squeezed in my TDs (last renewed at 3.20% for 1 year). House prices seem to be going nowhere (I think I was quoting Core Logic at 95% early this year). I'm all at sea, so I'm sitting on my wallet. Meanwhile my area is going nuts. 300m2 houses being built on subdivided 800m@ sections, massive renovations in others. Sold signs around the place. Just my perspective.

Would you see a kohimarama property sold below a mil in 2016? lol! "Premium suburbs huh?"

That was really just a two bedroom, ground floor, unit. Pretty good price actually.

It was an average property in a below average street. Ground floor appeals to older people, but the carport was a detraction, albeit it did have storage.

Speight road has very average quality properties for the area with a lot of units built in the 60s, 70s & 80s. That leads to cars parked on the street making it narrow. Not a great vibe, but close to the Beach.

Now that the locals are losing the planning battle in Mission Bay with the planned 8 storey development on Tamaki Drive it's an interesting gambit in buying property one street back. You could be living in the shadow of waterfront apartment blocks or luck out and sell to a developer who will build above the existing ones.

Heh. Speight Road is an outrageously good location.

No one would call it "below average"

Speight is a long road. I'm talking about the flat area around the apartment that just sold. It's physical location is ok, especially on the odd numbered houses that have the Northerly aspect, but I suspect leasehold land has favoured a lot of apartments that are a hodge podge of styles.

Hey Ex Expat, here are some Kohi sales just from May alone for you:

_____________________SP_________CV________SP/CV
50B Comins Cres_____1.3m______1.425m______0.91
11A Sprott Rd_______1.295m_____1.45m______0.89
25 Hawera Rd_______1.26m______1.34m______0.94
And my favourites:
67 Baddeley Ave____1.71m______2.25m______0.76.... just a casual $500k knocked off CV and a $100k bath on the purchase price last year.
75 Long Drive_______2.5m_______3.2m_______0.78... or $700k if you prefer.

Also, some doozies from over the hill in Mission Bay:
30 Codrington Cres__2.85m_____3.25m______0.88
And wait for it...
2 Codrington Cres___4.6m______7.0m_______0.66....... a *2.4m* hit to CV.

But I'm glad you're happy for your pal on Speight Rd banking a tidy little itsy-bitsy $10k over CV.
That will show the rest of them - The market is roaring!

This comment shows a deep misunderstanding of the relationship between profit and CV. That is there isn't a relationship. Speight Road owner banked over 500k above the price he paid for the place.

Consider 2 Codrington Cres, bought for 630k in 2001. Sold for 4.6M in 2019, that's a staggerring $4000 a week for 18 years! That seller "banked" almost 4M profit.

Comins - banked 425k
Sprott banked 445k
Hawera banked 905k
Long banked 1020k
30 Codrington banked 2.3M ($1,700 a week for 26 years!)

Okay so Baddeley Ave lost 100k but they bought last year and selling now so to be expected.

Its not profit till you subtract the costs.. I notice no mention of interest paid, renovation costs, etc etc.

And once again, you are looking at the past, rather than the present. You can't drive everywhere staring into the rear view mirror.

CV is a rough estimate of what the property was worth in mid 2017.. if it sells for less than that today, and isn't a rundown dog of a house, its reasonably likely it has lost value in the last couple of years. (mostly in the last year since the Auckland market hit the buffers..)

2 Codrington was completely rebuilt by the Vendors.

It was previously a 1930-1939 roughcast home with 170m2 GFA.
Now it's a Stone bunker/compound with 494m2 GFA.
Your definition of "profit" then is very, very liberal to put it kindly.

And it was on the market for *15* months before it sold (Feb-18 to May-19).

Apple vs very large Watermelon.
But a C for effort.

Nevertheless the profit is what you sell it for minus what you paid plus costs. Nought to do with CV.

Also what about 30 Codrington? Well kept but looks original.

I never said it had anything to do with CV.
And it's the gain, not the "profit". You're wrong.
If you really think it's "profit" then, by all means, go and tell the IRD that on the next place you sell.

But my point was never what the definition of profit is - That is *entirely* beside the point.
You're missing/clouding the point, possibly deliberately.

My point was CV vs SP is for better or worse (mostly worse), is the main anchor potential purchasers use to work out what they will pay in market.

Sure, it's simple and rudimentary but it's i) something people can understand; and ii) it's, frankly, the only way to attempt to consistently compare sales results across various properties.

If SP is increasingly at a discount to CV then the market will peg off that.
But you know that already.

cmat, I get the Rob Report too, I find it great. In your post above, YOU HAND PICKED 7 SALES THAT SUITED YOUR BIAIS BEST OUT OF 74 SALES !!! Your post is quite simply misleading, you are purposely trying to mislead others.

For unbiased data the average sale price to CV ratio on ALL 74 houses sold is 0.97 and so is the median price to CV. That, cmat, is honest and truthful

I handpicked the Kohi ones.

The average SP/CV rate of the houses you handpicked is 0.83. the overall SP/CV is 0.97. You hand picked 7 that suited your bias best, just admit it

OK, this is typical of your simplistic view of the world, but I'll humour you.

1. This discussion is *specifically* about *Kohimarama*. So I *specifically* pulled the *Kohimarama* results from the report. *NOT* all properties in the Rob Report are in Kohimarama, I'm not going to list all 74 here when we're talking about a pocket.
And if we're going to be truly nit-picky on comprehension, I did say *some*, not *all*.

Arguably this one should have been in the list too:
3/5 Baddeley Ave, Kohi - 0.93x CV

2. I excluded properties that had been renovated because their CVs are meaningless - Here's the test: if someone tried to sell you a house and the comparable multiples included recent renos would you take that comparable list and pay away that multiple or would you exclude them?

114 Allum St - 1.09x
"This delightful 3 bedroom brick & tile single level home has been beautifully renovated and thoroughly modernized"
https://nz.raywhite.com/auckland-city/kohimarama/2094683/

1/234 Kohimarama Rd - 1.06x ($835k vs CV $790k)
"smartly renovated modern interior"
https://www.barfoot.co.nz/property/residential/auckland-city/kohimarama/...

3. If I broadened the definition of Kohi into fringe St Heliers there are also these:

54 Edmund St, St Heliers - 1.16x CV:
"current owners left no stone unturned in reinventing this architecturally designed residence"
So CV not relevant
https://www.uprealestate.co.nz/UPR14728

47 Edmund St, St Heliers - 1.13x CV ($1.18m vs CV $1.04m)
You can have that one - a 2 bed unit - but it's not Kohi

67A Edmund St, St Heliers - 1.03x CV
Same thing, have that one. Not Kohi

At a stretch:
29 Ashwell St, St Heliers 1.11x
Have that - this one genuinely surprised me. There is a LOT of work to do on this place.

The Long Drive one in my previous list is technically St Heliers

Did I miss anything?

"Did I miss anything?"

Yep, you missed posting the above sales in your original post because their SP is over CV, and that didn't suit your narrative

Urgh.

I gave the reasons.
They were irrelevant - renovations or not in Kohi.

And then my post would have been an essay.
I'm not typing out the full report.
No one wants to read that shite.

Capital gain - A capital gain refers to profit that results from a sale of a capital asset Wikipedia

Cool... if Wikipedia says it then it must be true.

Put it in your tax return then. No other information required.

The IRD would consider a gain and a profit to be the same don't you think? There are just different considerations with real estate concerning intent.

Anyway the argument was about CV values which you focused on in your original comment. You wrote, "I never said it had anything to do with CV".

But in the original comment you wrote:

just a casual $500k knocked off CV
a *2.4m* hit to CV
banking a tidy little itsy-bitsy $10k over CV

Seemed like a bit of focus on CV there. I was just questioning whether this was really important when considering gains or losses on real estate. Original purchase price seems more important. I have a bit of experience with this as my own home had a CV that was 60% more than its true value.

26 Sage Rd apparently sold for $3,000,000, a loss of $250,000 in one year. RV is $2,925,000. 72 Melanesia sold in January for $2,250,000, above the RV of $1,975,000 and sale price of $2,102,000 in April 2016. That house is having at least $400,000 poured into it. Meanwhile CoreLogic says my home is below RV. Seems like they are about right. Just noting, not selling.

Genuinely interested in 72 Melanesia - Is *having* $400k poured into it or *had* $400k poured into it?
The interior appears to be very new/modern and it appears that landscaping is recent (new garage out front too).

One thing I notice about CoreLogic and auto generated valuations is you need to understand the comparable properties they are using to make that assessment.
The QV e-valuer gives you that info and it's pretty ropey.
A house that is dilapidated should not have recently renovated homes as comparables.

I walk past 72 on my walking loop over the hill to St Heliers, so I've seen it over the years. I love the Villa look, and it's apparently one of a row of transplanted ones that were put there in the '80s. The garage is actually a carport and looks to have been there for a long time. I looked through the house when it was for sale in 2016. Apart from some repainted kitchen cupboards it looked homely but not state of the art. The new owners put on a new roof, then sold it. Whoever recently bought it is absolutely going to town. Multiple builders on site for months, a complete repaint with some impressive fittings visible on the days they leave the front door open. They have very good taste by the look of it.

I live down the other end of Melanesia, but haven't been past that villa recently.

I'll have a nosey this weekend.

I was just going off the photos in the listing that look tidy (they always do I guess):
https://www.barfoot.co.nz/property/residential/auckland-city/st-heliers/...

Just noticed it's listed as St Heliers. Strange I thought it was Kohi. Anyway, walk past and you will see what I mean. From what you can see from the street, it's had a complete exterior repaint and little of interior is unchanged with seemingly endless bins of waste. I only see it on weekends. Seems like they've been renovating forever.

Boom Time.

Market changed and moving up.

Lol

Why on earth does anybody give a rat's fanny what Bindi Spruikwell has to say?

She's like the Comical Ali of real estate.

It's your choice not to care but then why do you read and comment on this article about REINZ data headed by Bindi?

Because the underlying data is of interest to a lot of people. Not everyone finds the commentary from REINZ as interesting, as it’s not about understanding the data, it’s all about spinning the results to meet their agend (to sell more properties).

Not to worry Yvil.

If the REINZ was to report a major fall in house prices, the DGM would idolise Bindi Norwell - and cling to every word she uttered.

TTP

Hmmm, what would the DGM say if house prices did actually go down?

If house price did actually go down...

IF ....it is ACTUALLY down in Auckland. Percentage of fall can differ but house price is down atleast in Auckland.

In Auckland, only a Spruikers house rises in value. Elsewhere they are currently falling.

That's not right. Smart buyers can make an immediate gain if they bought undervalue. So they dont need the market to lift. You could have learned that sometime in the last 30 years if you were smart.

Not true, house values in NZ are not falling, they are still rising although I admit, very moderately, so let's call it flat for argument's sake.

So, what would DGM say if house values were actually falling in NZ?

"Thank God our children and young familys can finally afford their own home, so they can give some stability for raising the next generation of New Zealanders. And instead of giving billions of dollars to Ozzie banks, they can take that money and revitalise New Zealand's flagging economy to build the next generation of world beating NZ businesses."

Silverdale average for a 4 bed is down $50000 in the last 4m. Sales in Auckland , Albany Ward have been lower in last 2m than in last 3 and that 3m itself was lower than 8 m and 12m rate. As an Agent to me that is a weak market continuing to weaken. Sales are a bit up on last June for 3 and 4 beds that are priced in reasonable bracket. But apartment and section sales were crushed in June. Sales continue to be way lower the higher the price, than last year. Sorry to those trying to sell but asking prices are falling

Peak supply in Auckland. Add buyer strike. Equals price falls.

May the FHB's BeSensible

If any of these people and groups could even remotely accurately predict what the market is going to do, they'd all be billionaires by now.

Does multi millionaire count?

So the North Shore HPI is down another 1% and is now down 6.8% YOY

The gain in the last 5 years has been trimmed right back to 5.9%

Perhaps people should also remember that the CGT came off on the 17th April which resulted in a lift in sales for obvious "rentals". Certainly ones I had seen on the market for a few weeks sold within a week or two.