Record house prices at Barfoot & Thompson in March

Property

Barfoot & Thompson's March sales figures show the market was on a roll before the lockdown with record average and median selling prices

2nd Apr 20, 10:46am by Greg Ninness

In a cruel twist for the real estate industry, Barfoot & Thompson's sales figures for March suggest the industry was the most buoyant it had been for several years before the Covid-19 lockdown brought the market to a crashing halt.

The agency set new records for both average and median selling prices in March, with the average selling price of $993,528 coming in well above the previous record of $968,570 set in March 2017.

The median selling price was $925,000, topping the previous record of $900,000 also set in March 2017.

Barfoot & Thompson managing director Peter Thompson said the average and median prices were pushed up by the exceptionally high number of more expensive properties that sold during March.

New listings were also stronger, with Barfoots signing up 1763 new residential listings in March, up 12% on March last year and the highest number for the month of March since 2017.

Sales were also stronger with 1096 residential sales in March, up 14% on March last year and the highest number of sales in any month for three years.

Those figures suggest March would have been an exceptionally strong month for the agency had it not been cut short by the lockdown.

"Without the intervention of Covid-19 we could have anticipated the market's momentum would have run through to late autumn," Barfoot & Thompson managing director Peter Thompson said.

Thompson said activity was also high in the rural and lifestyle markets right up until the lockdown commenced.

"While the close down is having an effect on sales numbers and will likely do so until the level 4 is lifted, market activity continues to tick over," he said.

"Through the use of online technology, sales activity has continued through the Covid-19 lockdown.

"Buyers are undertaking viewings through listings on our website, with our sales people progressing negotiations through a variety of technologies."

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139 Comments

by Due Diligence | 2nd Apr 20, 12:45pm 1585784756

I’ve been thinking about opportunities to pick up property, but with mortgage holidays on offer combined with exceptionally low interest rates I remain unconvinced that high unemployment in the short/medium term will translate into widespread forced sales (in main centres with 100K+ population. Areas with smaller populations are much more unpredictable).

by Sluggy | 2nd Apr 20, 12:56pm 1585785364

I made comment yesterday, I know of at least 5 air nz households in AK that have had dual job losses, these were the tip of the iceberg. My wife is a travel broker - she wont be earning for the foreseeable future, we are entrenched in the travel and tourism industry, there will be a lot of blood.

by Independent_Observer | 2nd Apr 20, 1:33pm 1585787583

Yes as a society our debt servicing ability will have dropped substantially and given what we're hearing, could be rather reduced for a significant period of time. Fine if mortgage free, but if not some hard decisions may need to be made. Until combine income is returned, I just don't know how the debt created is going to be serviced if earnings and employment are at such reduced levels. 1+1=2, not 3!

Anyone know what the upper limits of recession/unemployment were carried out by banks in terms of stress testing - what we're seeing must be near the outer limits in terms of probability?

by Due Diligence | 2nd Apr 20, 3:56pm 1585796163

I agree there will be blood in the streets. But will many be forced to sell if they are on a mortgage holiday? The worst of it will come in the next 6 months. Personal loan defaults seem more likely than mortgages.

by cmat | 2nd Apr 20, 4:33pm 1585798411

Do you honestly believe that everyone will just go back to being dopey and happy in 6 months time?

Seriously?

All those job losses will just magically fix themselves in 6 months.
All those business, including *thousands* of hospitality & tourism businesses, will just open the doors per usual.
Everyone will just go back to paying rent and mortgages... coz 50bp off your mortgage rate is going to be sooo much easier, even though you have no job.

JFC.

by Pat.T | 2nd Apr 20, 4:36pm 1585798589

We were supposed to have a housing/rental shortage, TradeMe rentals as listed today.

Auckland 3773
Canterbury 1389
Wellington 811
BOP 386
Queenstown- Lakes 120

Up until recently it was difficult to pick up a rental in Queenstown, I bet a lot of the above were let as Airbnb
Many motels are currently used for emergency housing, for how much longer?

by Fritz | 2nd Apr 20, 5:06pm 1585800388

Anyone know what Auckland would typically be right now? Ie. Is 3773 much higher than normal?
Certainly the Queenstown figures are

by chch | 2nd Apr 20, 7:51pm 1585810315

For Auckland, the number was 4015 one month ago, 4468 two month ago.

by Houseworks | 2nd Apr 20, 10:27pm 1585819643

Similar story across the country as a whole, down 3.5 percent from May last year. Auckland has almost exactly half of all rentals, listings down 13.2 percent from may 2019. Chch wellington (city not region) and Hamilton are on a steady slow climb between 5 and 8 percent up from 11 months ago.
2 bedroom properties mostly less available for rent akld down 16 percent and nz wide down 8 percent from 10 months ago.
I haven't kept stats for qnstwn or dunedin but the basic message is that facts beat speculation. That doesn't stop those who push factoids from ramming home their very misguided thoughts.

by Rubb3rduck3y | 6th Apr 20, 8:09pm 1586160591

Thats less than whats usually available to Auckland for instance North Shore City all last year never got below 650 available and now there is only 500.

by Due Diligence | 2nd Apr 20, 5:15pm 1585800959

What are you talking about? I didn't say any of that.

by Seve | 4th Apr 20, 8:01am 1585940488

My industry is predominately associated with tourism and events ,we are seeing people who have been around for 30 to 40 years closing their doors for good,really feeling it for young families who are heavily in debt.

by Narrabeen Boy | 2nd Apr 20, 1:45pm 1585788322

Completely off topic but has anyone else noticed that some employers are not giving the wage subsidy to there employees.I have come across my third family that seen to be not receiving the subsidy.is the payment for all workers or just citizens and residents?they have only got work visas

by rastus1 | 2nd Apr 20, 2:05pm 1585789557

if they are on the payroll the employer provides those details on the application. If then matched by IR paye records, the payment goes to employer to pass on to employee.
ie the employer is just a conduit and should be passing it on, not be grabbing it for any other purpose.

by refactornz | 2nd Apr 20, 2:43pm 1585791812

It's only for employers that qualify. If they haven't had a substantial drop in revenue due to COVID-19 then there isn't any subsidy to pass on to employees.

by cmat | 2nd Apr 20, 4:36pm 1585798587

The subsidy is required to be passed through to employees as far as I understand.

"If you are receiving the COVID-19 Wage Subsidy, you must try your hardest to pay the employee named in your application, at least 80% of their usual wages. If that isn’t possible, you need to pay at least the subsidy rate"

https://www.workandincome.govt.nz/products/a-z-benefits/covid-19-suppor…

by RickStrauss | 4th Apr 20, 2:02pm 1585962160

It's to prop up the company's ability to pay their normal wages (or at least 80% of them). You may not get the exact ones and zeros the government sent to the employer digitally but you should still be receiving a set of ones and zeros equivalent to 80%+ of your normal wages. The idea is to enable more companies to keep more staff on by reducing their monthly wage bill.

by tothepoint - d… | 2nd Apr 20, 12:51pm 1585785071

What happened in March will be no predictor of what happens over the coming months.

But property remains an excellent long-term investment. Most property owners/investors will ride out the shorter term - no matter what it brings.

TTP

by Rosenstein | 2nd Apr 20, 12:58pm 1585785533

To paraphrase - living in a house will keep you alive and healthy in the winter better than a tent.

by Houseworks | 2nd Apr 20, 1:08pm 1585786107

March results this year were truncated by a week and possibly longer. It must show just how strong the activity level was that they could comfortably exceed pcp

by stuart786786 | 2nd Apr 20, 1:18pm 1585786726

TTP Agree but has to be real loooong term now and also if looking for investment will rather wait than buy now to get more for your dollar. Specially when world has come to a full stop ( Never ever happened earlier) with lot of uncerainity so if have money and can invest in property for loooong term is a good idea but to buy now...have to be either brave or stupid.

Last month stock market was also all time high and now.....for long term even stock market is excellent, infact better than property in todays condition - the way it has and is falling.

People who are sitting on cash and have not suffer during this crisis ( lost job or business) and are healthy should wait instead of trying to catch a falling knife....their time and opportunity will come but NOT TODAY.

by Independent_Observer | 2nd Apr 20, 1:23pm 1585787007

Could be Japan long term - 30 years and still waiting.

by CN | 2nd Apr 20, 3:41pm 1585795263

Ireland house price index peaked at about 130 in 2007. Now at 108. So still 17% below the purchase price 13 years later.

https://tradingeconomics.com/ireland/housing-index

Remember house owners used leverage.

Assuming a purchase price of 130,000, a 20% deposit, 80% LVR, 40yr P&I mortgage,
1) the owner would have paid 106,642 (initial 20% deposit of 26,000, total P&I payments of 76,642) over the past 13 years
2) vs the current equity value of 40,860 (house value 108,000 less mortgage balance of 70,374)
3) so a loss of 61,782 (or 60% of the total amount paid so far)

That money would have been better deposited in the bank.

by Keen Observer | 2nd Apr 20, 11:55pm 1585824958

Sorry if someone already post it? - NZ is not Ireland last time I check.

by Nzdan | 3rd Apr 20, 6:12pm 1585890751

Ireland is not Japan either.

by Houseworks | 2nd Apr 20, 2:11pm 1585789902

Hi TTP

There was a report that 5100 people arrived into the country just last week!!! Extrapolate that to 265,000 in a year. How many of these are kiwis returning permanently to nz and they will set up in a home? That is why I have been saying it's early days. There will still be a level of demand from tenants/homebuyers and the property market will be reasonably well supported imo.

Covid 19 coronavirus: No quarantine for 3600 people returning to NZ from overseas
Covid 19 coronavirus: No quarantine for 3600 people returning to NZ from overseas
https://nzherald.co.nz/nz/news/article.cfm?c_id=1&objectid=12321689

by CourtJester | 2nd Apr 20, 2:17pm 1585790252

Why would you extrapolate a one-time unique event to every single week of the year? Most of those people are kiwis who wanted to return before the full lockdown. Do you think that 6 months from now, the same number of overseas kiwis will just realise that they need to return before the borders are closed?

by Fritz | 2nd Apr 20, 2:26pm 1585790811

Exactly.

by Houseworks | 2nd Apr 20, 2:43pm 1585791795

Because it helps to understand the size of the flows on an annual basis to put it in context. Just as quarterly GDP will be rephrased annually. It's not a conspiracy.

by Nzdan | 2nd Apr 20, 8:46pm 1585813606

160,000 Work Visas were issued in the 12 months to February 2020. How many of these will be out of a job and/or leaving the country within the next 12 months? 6 months? The previous 12 month period was mid 200k from memory.

by Houseworks | 2nd Apr 20, 10:11pm 1585818702

No one knows those answers yet but research is being undertaken by learned minds (I can hear the whirring) so that we can plan ahead. Jokes aside. I would be extremely surprised if our net migration figures do not fall back hard to near zero within 1 or 2 months. New figures are out soon but I dont know the release date.

by Rubb3rduck3y | 7th Apr 20, 9:27am 1586208450

which country are they going to go to get a job China?

by Smalltown | 2nd Apr 20, 4:03pm 1585796622

The couple of groups I know have squeezed into parents spare room-quarantining for 2 weeks. Their intention re long term accomadation is remain where they are.

by CN | 2nd Apr 20, 2:54pm 1585792468

"There was a report that 5100 people arrived into the country just last week!!! Extrapolate that to 265,000 in a year."

Why just stop at one year?

Let's extrapolate the recent past for the next 50 years. That means in the next 50 years, we can expect 13,250,000 to arrive. (& the population of NZ to grow to 18,250,000). Think of all that demand for housing ... likely to be an underlying housing shortage using that calculation ...

Assuming 3 people per household, that means we need 4.4 mn new houses for these arrivals on top of the current 1.8mn residential dwellings in NZ.

Think of all the infrastructure required - roads, schools, parks, etc. If you think immigration is a big issue now, just wait until 2070 ...

When some numbers are extrapolated, some results can seem crazy.

by Houseworks | 2nd Apr 20, 3:26pm 1585794416

Point taken CN.. You know there are 600 thousand kiwis on the Australia 444 visa. If just 5 percent or 30 thousand decide to return to enzed it will probably have a noticeable impact on our economy. Do you want to start a survey now to get a headsup or will we do what we usually do and wait till afterwards.

by Fritz | 2nd Apr 20, 3:36pm 1585795007

And return to what jobs?
I am not saying many won't return. However, for many that do return they will be staying with friends and family, and probably spread quite widely across NZ.
As opposed to housing and infrastructure I am far more concerned about the fiscal impact of a whole lot more people on the dole...

by Houseworks | 2nd Apr 20, 3:58pm 1585796286

Retire. Or look for job later. I note that scomo has offered nzers help (smart move by the way, he was very obviously worried he might lose a big chunk of his workforce, no amount of cajoling could get any movement until now) but still the nz safety net is much bigger. And will help with all manner of assistance to get on your feet and into accommodation. Yes?

by cmat | 2nd Apr 20, 4:47pm 1585799222

So, let me get your logic straight:

There's just a latent population of hundreds-of-thousands of cashed-up multi-millionaire Kiwis overseas waiting to come home to retire or don't need a job for an extended period.
Those same cashed up multi-millionaires have been convinced to stay in Australia by... ... $1,500 per fortnight.

You are seriously far more deluded that I gave you credit for.

by Houseworks | 2nd Apr 20, 5:01pm 1585800108

One hundred percent BUT on the other hand if there is net migration from ozzie then I would expect your sincere and grovelling apology thanks cmat

by Becnz | 2nd Apr 20, 3:42pm 1585795353

Most Kiwis overseas have good jobs why would they come back here and also house prices are to high compared to our past incomes. Now we have just lost tourism we are 40 billion dollar behind comapred to last month/year.

by Houseworks | 2nd Apr 20, 4:53pm 1585799627

The bright side, you will oneday be able to regale your grand kiddies with how you survived and prospered during the hardships of the 2020 great depression

by RickStrauss | 2nd Apr 20, 2:24pm 1585790695

In which case, it makes zero sense for taxpayers to be subsidising them.

by cmat | 2nd Apr 20, 4:39pm 1585798780

"no matter what it brings"

No matter what?
The Govt has put some measures in place to stop a tsunami of distressed property hitting the market in a fire sale.

Let's play real 'free market' for a change given you're so confident.
Take away all wage subsidies and accommodation supplements and see how many ride it out.

by CN | 2nd Apr 20, 6:32pm 1585805569

"But property remains an excellent long-term investment."

Not for these people.

1) Purchased June 2008 for $229,000. Sold June 2019 after 11 years of ownership for $190,000 - i.e lost $39,000, or 17% before the effects of leverage and interest. - https://www.qv.co.nz/property/10-eva-street-greymouth-7805/1364994
2) Purchased June 2006 for $290,000. Sold October 2016 after 10 years of ownership for $230,000 0 i.e lost $60,000 or 20%, before the effects of leverage and interest https://www.qv.co.nz/property/6-sievwright-lane-whataupoko-gisborne-401…

There are many many more examples.

by RealAgent | 2nd Apr 20, 12:52pm 1585785175

Regardless of what technology available, no one wants to buy a property without seeing it. The real estate market will be dead until the lockdown is over. That's just how it will be for now

by alittle | 2nd Apr 20, 1:54pm 1585788873

Realagent are you trying to convince yourself that house market will be down till lockdown period as reality is different that it will be down for sometime to come and the actual fall will be reflected in the housing sector only when the market opens.

by RealAgent | 2nd Apr 20, 3:55pm 1585796105

No, I'm not trying to convince myself, because I agree with you wholeheartedly. The Real estate websites in Australia and NZ are getting desperate and trying to convince agents to keep working by pushing virtual viewings but the reality is that no one will buy without seeing it in person.

by Keen Observer | 3rd Apr 20, 12:20am 1585826452

Sorry matey, received a report from C***a that students will be back again to learn in our Unis, virtually. So the full fees should start pouring after the lock-down, the rental accommodation will be offered at much lower rate, with virtual bear by the windows for signage, lower rental? because no hot water/electricity being used, it's carbon friendly transaction. NZ hotspot tourism/hotel/hospitality/restaurants - are all gear up to offer the attraction, show, menus online, it can be visited by remote virtual personalised hotel room, tours by using Zoom. The resto menus can be custom ordered, it can be delivered at the same quality pictures by local delivery resto/agent. C***a has been touted by Mr Sir JK for NZ future, so? from his last trip you can see the $ start flowing again despite capital outflow ban, NZ is being made exception to this, hence all those flurry activities poured from the blue Bank/A again - as we speak those funds sitting in OZ & NZ 'must find' it's way out to what it has been sent for - so, with that directives? - means, no need for a physical visit matey.. it's a clear online transaction happening now, it's going to be in the upcoming May-Jun-July RE reports. Here's a clue, for those with the 'hot money' without seeing it in person? if the shed cost 1-2millions, wouldn't care.. just buy it.. as in future it can always be turned into multi-million lotto ticket shop or to mine a rare mineral deposit underneath as per remote Feng-Sui read.

by childofthesun | 2nd Apr 20, 12:57pm 1585785462

"Through the use of online technology, sales activity has continued through the Covid-19 lockdown.
"Buyers are undertaking viewings through listings on our website, with our sales people progressing negotiations through a variety of technologies."

Wow. These people have either got nerves of steel or they've got loadsamoney and are considerably richer than me...

https://www.youtube.com/watch?v=U8Kum8OUTuk

by Big_Data | 2nd Apr 20, 4:26pm 1585797984

Ha ha this is a classic case of REA spin. I'd like them to define "sales activity" and "negotiations" - probably people throwing ridiculous offers on the table because they know sellers are shitting bricks about the crash once the lockdown ends.

by Taubin | 2nd Apr 20, 1:01pm 1585785678

There is absolutely no way I would buy a property without actually seeing it. Certainly not just with a video walk through where the seller/agent is likely to intentionally not show any spots that have issues.

by richard1965 | 2nd Apr 20, 1:22pm 1585786937

RE Lobby supported by medua and so call experts will try to prove otherwise and create FOMO but this times are different.

House price will have to take a hit.

by Pragmatist | 29th Apr 20, 9:28pm 1588152515

by CourtJester | 2nd Apr 20, 2:20pm 1585790401

To be fair, when someone expects land values to keep going up, they won't care about any of the issues you mentioned.

by Averageman | 9th Apr 20, 7:29am 1586374142

So value of improvements is meaningless? Surely you jest.

by Keen Observer | 3rd Apr 20, 12:51am 1585828276

To be fair, all those you've concerned? can be incorporated in T & C of sales, all would be in clear written contractually bound. We called a 'watertight' agreement on solid laminated paper, except once it has been signed by the buyer?, all parties (seller, lawyers etc) shall left the buyer alone in a life raft dinghy boat, leaky.. in the middle of Pacific or Indian ocean, no radio, no rations, no sail shade.. no toilet paper. Let alone website email / contact details / direct line to RE boss.

by B-practical_not_PC | 2nd Apr 20, 1:36pm 1585787777

Maybe physical property inspections and builder reports are an essential service and these technology savvy purchasers are the only ones who know it ;-/ although it’s doubtful.

by Houseworks | 2nd Apr 20, 1:49pm 1585788546

Is it necessary to see the video in minute detail if the home is generally show home standard. There is one hell of a lot of research aka due diligence someone can do online as well. But yes a fhb is probably looking at average type home which is wise to look closely. Does a builders report help

by stuart786786 | 2nd Apr 20, 1:07pm 1585786050

Interesting How Stock Market and Housing Market are running parallel with a gap of four to six weeks.

Last month Stock Market was where housing market is today (All time high) and Next month housing market will be where where stock market is today.

Last Month Stock market was all time high and had news / articles :

On 17th Feb : https://www.investors.com/how-to-invest/were-there-signs-the-coronaviru…

Than on19th Feb : https://www.investopedia.com/ask/answers/100214/what-dow-jones-industri…

From Boom to Doom

Finally after few weeks : https://www.thebalance.com/fundamentals-of-the-2020-market-crash-4799950

Simlarly Hosing Market Now : https://www.interest.co.nz/property/104385/barfoot-thompsons-march-sale…

From Boom to Doom

To fill/update will have to wait for a month or two to give down news...

However forcast / predection has started that housing market will soon follow Stock Market on the same forum :

https://www.interest.co.nz/property/104368/prices-and-listings-realesta…

https://www.interest.co.nz/property/104321/westpac-economists-say-after…

https://www.rnz.co.nz/news/business/412028/drop-in-house-prices-and-sal…

If vested experts and media are forced to predict that house market will fall by 7% or will be flat can understand how bad the situation will be - going future housing sector will follow the path of stock market and that of other businesses that are falling apart (being destroyed) not only in NZ but all over the world with no answer of how and when all this will end as are in unchartered territory and what everyone is doing now is guessing and hoping for the best.

Wait and Watch.... Give some weeks.... so FHB BEWARE and have patience to get more for your deposit instead of acting in hurry and see your deposit evaporating from value.

by alittle | 2nd Apr 20, 1:28pm 1585787315

As will fall fast from top and not gradual in this situation like share market, it may be bad.

How bad will know in few months so have to sit at home to be safe and also not take unnecessary chances by investing in this situation be it stock or house, specially housing market.

Think line between Bravery and Stupidity

Be Positive But Not Stupid.

by Independent_Observer | 2nd Apr 20, 2:04pm 1585789480

I'm not sure if the housing market will fall significantly until people realise that:

a. the government can't bail every failing business out.
b. the government can't pay/subsidise everyone's wages for long.
c. tourists aren't coming back soon.
d. immigration is going to be flat for a significant period.
e. banks can't defer mortgages forever.

When all these events combine in 3-6 months time, and assuming we don't return to full work capacity, the system is going to become very stressed - I think Ray Dalio uses the term 'pushing on a string'. Something will have to give. Probably asking prices.

While we're in this lock down and there are mortgage holidays and government is paying wages, its kind of a happy little bubble immune from the reality of what is going on. That will end when people try to go back to work and there aren't jobs or wages are significant reduced.

As a side note..here's a piece by Dalio late last year saying 'the world has gone mad and the system is broken'. Yes you are right Ray...:
https://www.cnbc.com/2019/11/08/bridgewaters-ray-dalio-on-economy-world…

by oreo | 2nd Apr 20, 2:26pm 1585790765

Yes and where is going to be the housing shortage when all the Work visas run out. Surely they won't be renewed and all those people will have to go back in their home country. What about all the Mainland Chinese, Australians or Americans that won't have a wage and can't keep their investment property in NZ.

by Fritz | 2nd Apr 20, 1:14pm 1585786450

When is HPI out?

by company of heroes | 2nd Apr 20, 1:16pm 1585786601

It was best time to sell your property before the lock down. If you have a plan to sell your property but haven't sold it yet. Prepare to hold it for the next couple of years if you can. In the next couple years, interest rate will likely increase due to large amount government debt protentially affecting New Zealand credit rating. Unemployment rate will remain high unless government find solutions to get New Zealand economy out of recessions.

by Independent_Observer | 2nd Apr 20, 1:22pm 1585786960

The assumption is that interest rates will stay where they are - forever! History doesn't agree.

by taimaiakka0 | 2nd Apr 20, 1:35pm 1585787712

What interest rate when people lose jobs and business may not be able to pay even principal in this situation.

Will be more interested in supporting themselves and their family instead of buying million dollar house.

by Independent_Observer | 2nd Apr 20, 2:06pm 1585789566

Yes - many people seem to own multiple properties in NZ. So if financial difficulties come, the rental might be the first thing that goes and we see a flood of supply on the market.

by Fritz | 2nd Apr 20, 2:16pm 1585790218

Yeah I think we will see quite s bit of that

by CN | 2nd Apr 20, 2:29pm 1585790953

Or the recently purchased family bach financed with a large amount of debt located in those beach towns - Whangamata, Opotiki, Pauanui, Whitianga, etc

by youngdumbandbroke | 2nd Apr 20, 4:18pm 1585797484

Great for the average folk who can't find a place in their hometown

by Pragmatist | 29th Apr 20, 9:28pm 1588152536

by youngdumbandbroke | 3rd Apr 20, 8:58am 1585857508

Yea it does for sure. If primary industries hold fast many small centres should weather it better than most

by alittle | 2nd Apr 20, 1:50pm 1585788632

Like it was the best time to sell even stock before the lock down not just house.

by B-practical_not_PC | 2nd Apr 20, 1:50pm 1585788649

Watch for tenants to flee rental properties and consolidate with family, friends or Good Samaritans. I’ve experienced this in the late 80s with 5 rentals. 4 properties vacant in the space of a quarter. I hope it’s different this time. Although, because it’s the biggest expense if you rent, when you lose your job you’ll certainly question the cost.

by THE MAN 2 | 2nd Apr 20, 2:11pm 1585789884

Most of our rentals are signed up until the beginning of next year, by then everything would’ve settled down.
Young couples don’t want to be living with parents I wouldn’t have thought?

by Fritz | 2nd Apr 20, 2:22pm 1585790565

What people want or don't want is very different to what people need.
Do you think most of your tenants will retain their jobs and 100% of their incomes? Are all your tenants in healthcare and education?

by CourtJester | 2nd Apr 20, 2:23pm 1585790599

There's "want" and there's "need". Many couples will lose 50-100% of their income in the coming months.

by RickStrauss | 2nd Apr 20, 2:26pm 1585790804

Young couples with secure jobs and plenty of money don't want to be living with parents.

by B-practical_not_PC | 2nd Apr 20, 2:56pm 1585792603

Financial hardship makes people do a lot of things they don’t want to do.

by CN | 2nd Apr 20, 7:34pm 1585809279

Exactly. Different financial circumstances gives people different available options

Couple 1: earning median salaries - accomodation options:
a) live with parents / relatives
b) live with flatmates
c) live in own accommodation

Couple 2: just lost their jobs, little or no savings - accomodation options:
a) live with parents / relatives
b) live with flatmates
c) live in homeless shelter
d) live in car, or be homeless

by youngdumbandbroke | 2nd Apr 20, 3:39pm 1585795159

I know two couples that have been living with parents to secure enough cash for a house. We also did this until we could afford a place

by RickStrauss | 4th Apr 20, 2:06pm 1585962366

I won't be surprised to see more multigenerational living after this, actually. Especially as the tourism component of export income has been sucked out of the equation we've got that much less foreign cash coming in until we figure out how to earn more export income instead of this brilliant plan of selling houses to each other for ever increasing amounts.

by gordon | 2nd Apr 20, 5:17pm 1585801049

All of the above is currently irrelevant. If they cannot pay they cannot pay. I am sure you will help them with some relief as we all know you are a generous and empathetic person. I am not an accountant but my two children are and I have also been talking to other accountants and bank staff. The number of people being made redundant and the number of businesses which are not reopening is staggering. The number of businesses and people seeking mortgage holidays is also staggering. I do not think we can currently appreciate just how bad our economy is going to be in when we get out of stage 4. If we carry on with stage four after four weeks the damage will be beyond belief. It is interesting that the people making decisions in our country that effect the health of businesses are people who are on large salaries that will carry on regardless. If only some of them had experienced the real world of business in their earlier lives. People are being laid off and they are not only worried about getting sick with the virus, they are also worried about how they will be able to pay the bills, pay the mortgage and put good food on the table.

by Fritz | 2nd Apr 20, 4:29pm 1585798190

The economy will be screwed by the lockdown. If it goes to 6 or 8 weeks even more so.
I have no confidence that the muppets in charge understand that.

by gordon | 2nd Apr 20, 5:21pm 1585801310

Fritz it is already screwed. Doctors are being laid off as evidenced by the Stuff article this afternoon. Unfortunately many of our politicians are career politicians and therefore have never had to risk borrowing money to start a business and they have never employed anyone. I spoke to someone today who manages staff in a large Catholic parish. The fear and despair they are dealing with when fielding calls from parishioners and the public has been challenging at the least.

by Fritz | 2nd Apr 20, 5:39pm 1585802359

Yes. But it will be EVEN worse if it goes longer than 4 weeks.
Yet we have 1 death out of what 800 cases?????
This is a response of epicly tragic consequences.

by house hunter | 2nd Apr 20, 6:39pm 1585805969

Would you do it differently?

by Fritz | 2nd Apr 20, 7:09pm 1585807757

Absolutely and have said so many times.
Would have kept it at alert level 2.

by house hunter | 2nd Apr 20, 7:27pm 1585808833

Interesting. What do you think the death toll would have been from keeping it at level 2?

by CN | 2nd Apr 20, 7:50pm 1585810232

Continue with level 2 option vs level 4.

A true life moral dilemma.

Some questions to consider. Each person will have their own personal preference depending on their priorities.

Could that have resulted in a medical outcome similar to Italy, Spain, US? I recall medical staff in Italy having to make life and death decisions as to who gets access to the ventilator due to insufficient ventilators. What if the person who didn't get the ventilator was you or your own loved one?

Would the ICU beds in NZ be overwhelmed?
Would medical resources in NZ be stretched so that other illnesses & medical emergencies are unable to be treated? Such as heart attacks, strokes, auto accidents, work accident, etc. What if that was you or your own loved one who was unable to be treated due to a lack of medical resources?

What is more important?
1) human lives not lost?
2) economy ?
3) other?

by Fritz | 2nd Apr 20, 7:51pm 1585810291

Why 'interesting'? It's the approach that Sweden, Korea and Japan have adopted. All very successful, well run and community-minded nations.
I have no idea what the toll might have been. But given the mortality rate is well less than 1%, perhaps several thousand people.

In 2020 we are obsessed with saving all lives. It's not the way the world works. Sadly.

by house hunter | 2nd Apr 20, 8:19pm 1585811993

Interesting because it's a minority opinion. I get where you're coming from even if I don't agree.

Sweden isn't out of the woods yet:
https://www.worldometers.info/coronavirus/country/sweden/
They're doing worse than Japan and Korea for some reason.

I don't regard several thousand deaths as acceptable, particularly when you're playing with fire i.e. a chance it blows out to tens of thousands. Each to their own on that one.

I do think we'll have to revert to a lower level before the virus is wiped out. In fact, I doubt we can wipe it out anytime soon. Didn't go hard enough early enough. The period at level 4 has been useful as it has allowed us to get our house in order and potentially learn from other countries.

by mikekirk29 | 4th Apr 20, 11:17am 1585952258

NZ 4 weeks behind o surge curve of world, so take off restrictions just in time. Brilliant.
When its your relative , will you be so sanguine?

by Averageman | 9th Apr 20, 7:50am 1586375418

Young couple renting, with secure jobs now is the time to move home and save like a demon. Damn the contract. Tribunal will let you off. Then vulture buy a house of the wreckage of the specuvestor.

by Fritz | 2nd Apr 20, 2:19pm 1585790382

Yes there will be a lot of that. Carnage in retail, hospo etc will see to it.
Highly likely that rents will drop in the next year.

by Sluggy | 2nd Apr 20, 3:31pm 1585794719

Dont forget the air bnb properties that will be added to the stock

by Seve | 4th Apr 20, 8:21am 1585941703

This is exactly what happened in the great depression ,people consolidated with their families even if they still had a job because there wages fell or they were concerned they would lose their jobs and wanted to have more cash set a side.

Having studied the great depression im hoping we never have to go through something similar.

by printer8 | 2nd Apr 20, 2:03pm 1585789382

Would seem that there is going to be considerable issues in setting realistic RV due this year given the current lock down and concerns over the market. Will Core Logic /QV use pre-virus/lockdown data in their estimates (which is likely as they use three month averages likely to cover this period)?

by Independent_Observer | 2nd Apr 20, 2:07pm 1585789679

P8 - in terms of realistic RV I've always pondered the likes of the Dublin housing market pre/post the crash. Was the market 50% over valued before the crash, or 100% under valued after the crash?

by printer8 | 2nd Apr 20, 2:56pm 1585792571

IO
The key is not whether the market is over valued or undervalued; the concern I raise is will the rateable value used be the current value or perceived value in six months.
I know here in HB in 2008 the figure used for RV tended to be post a correction; most were quite happy to see a lower RV as a multiplier in rate calculation. Will people be happy to see a historic high figure used as a multiplier???
If in the event of a reasonable correction, I can see considerable number of appeals (truck loads) on rating assessments - owners are not going to be happy to see rates calculated on what they perceive to be a high RV based on property sales over the current period compared to the RV in six months time.
What will QV use - the current values over a three month period covering the February and March high figures and April lock down, or will they use and anticipate estimated figure for the May-July period. Notice of proposed assessments should be out now or in the very near future - or will they delay this?

by nymad | 2nd Apr 20, 3:21pm 1585794114

Why does it matter what the RV is, though.
Your change in rates due to revaluation is related to how your property changes in value relative to the market average. Not what the nominal valuation is.

by Pragmatist | 29th Apr 20, 9:29pm 1588152570

by Jaf | 2nd Apr 20, 5:47pm 1585802843

Councils rates payable are calculated in some convoluted way. Never has my rate payments ever gone down.Neither have I ever heard of anyone having a reduction in rates payable. Councils stroke you with the feel good factor that your property has appreciated in value with very generous rating valuations. That reduces the sting of rate increases. Without rate increase how could Councils afford to have fat cats who also often award themselves generous salary increases????

by Averageman | 9th Apr 20, 7:54am 1586375647

I challange our commercial rate everything it is put up by greedy bloated Council. You have to pay a valuation fee but I have had it reduced 3 times out of 3.

by B-practical_not_PC | 2nd Apr 20, 5:27pm 1585801650

What will the council do? They won’t decrease rates because they’ve committed rates for the next few decades already.

by Pragmatist | 29th Apr 20, 9:30pm 1588152603

by youngdumbandbroke | 3rd Apr 20, 9:11am 1585858286

The classic bureaucrat playbook. Never fails when someone else is paying

by printer8 | 2nd Apr 20, 7:55pm 1585810512

pragmatist
I fully, fully understand as to how a loading factor is determined. I am not one of those "bugger all" :) Trust me.
I even appreciate that
- the RV is determined every three years by QV, and
- the loading factor is determined annually by council depending on it's total rate needs for each year (i.e. the loading factor varies from year to year).

However, as QV's (not council) estimate of a property's RV should currently be in the process of being determined. With the market shown by these figures on a high going to be realistic for a nominal September RV as property prices are uncertain and likely to be considerably less (50% or 60% if you believe some posts on this site).

If they take current values, then those "bugger all" that you refer to, will see that their RV assessment from QV being considerably higher than a property's value in a month or two (great great), but being upset that they then see their rate demand from council being calculated on a high RV (times the loading factor) when they have seen their property value being considerably less.
The reality is that when many look at their rating bill they will focus on the property's RV while the loading factor will mean little to them, and they will be under the misunderstanding that they are paying rates on a far higher valued property. Something quite different to the past decade with escalating prices.

by Pragmatist | 29th Apr 20, 9:30pm 1588152613

by Pat.T | 2nd Apr 20, 7:23pm 1585808631

Council rates are set on the land value, not the capital value

by Pragmatist | 29th Apr 20, 9:30pm 1588152627

by RichMuhlach | 2nd Apr 20, 2:39pm 1585791569

once the lockdown is over, the only buyers and sellers would be the ones that are desperate to buy and desperate to sell ... in these uncertain times, you can bet there will be more desperate sellers than desperate buyers

all it takes is one house to devalue a street .. one street to devalue a suburb .. and so on and so forth ..

house prices will go down

by CN | 2nd Apr 20, 7:07pm 1585807622

Investors get nervous when prices fall.

Look at Kiwisaver. Many Kiwisaver balances in aggressive growth funds fell by 20 to 30%. Seeing the falls in their balances, many switched out of aggressive funds into conservative or cash funds.

Price falls makes investors nervous.

Property prices have remained relatively stable in the last few years since their peak in 2017.

It will be interesting to see how many highly leveraged property investors will start to get nervous if property prices fell 20% and what they decide to do. Especially those that are negative cashflow.

by The Lark | 2nd Apr 20, 2:46pm 1585791966

Been watching and reading, rather than commenting. I wonder how many will see that the higher end showing an increase in sales in March, is an indicator that these are investors getting out, while the majority are still in shock, disbelief?
Clearly the demand for housing was at the FHB level, as they had been saving for the large deposits required. The housing market is now going to see sellers from top, to bottom. The first are already apparent, ie, the top end, investors who were hit big time by the stock market drop. These I imagine are represented by the many empty houses, not just the 39000 odd in Auckland, the many not counted, right across the country. Then the mid range, many of which were Airbnb investors, which we have already seen enter the longer term rental market. Yet how many of these will go to market, for any number of reasons, most likely due to the stringent regulations that have to be met by landlords, combined with the probable need to liquidate and attempt to reduce their loan exposure. Perhaps those with more than 3 such properties will use a number of strategies, ie, sell one, rent one, keep one free for Airbnb. (Possible quarantine use).
The last group are those that are impacted by loss of income. These are the group that actually have their house as a home, yet unfortunately will probably be the last to realise what's actually happened to global finance. Wouldn't it be nice if they woke up and acted fast, keeping their family in a stronger financial position, as opposed to holding on, and ending up carrying the larger proportion of the inevitable negative equity that will occur.
It would seem to me, that those with the least at stake are the first to see the situation for what it is, those that are actual experienced investors know when to act, and those with the highest levels of optimism have a lot to lose, little experience in markets, and simply hope everything will return to normal very quickly, as they do not have the objectivity to act like the pure investors, largely because their home is an emotive part of their lives.
Wishful thinking I guess, and yet I cannot help wonder for how many years office workers walked past an ever growing number of homeless, and at the same time never questioned how much the state really cares about it's citizens.
Why such high levels of trust in a state/society with such obvious double standards?
Food for thought,

by General HubHub | 2nd Apr 20, 9:27pm 1585816054

Bravo! Well said

by Becnz | 2nd Apr 20, 3:37pm 1585795021

The everything bubble is exploding and people think NZ housing is not going to pop need to quickly buy a few more homes and bail out people who have just bought at the top of the bubble.
The warning was house prices and sharemarkets going up at 10 plus percent a year that was a sell signal after 10 years of gains.
Now comes the pain and despair/ hangover from this big party.

by CN | 2nd Apr 20, 5:03pm 1585800239

The path to wealth. Property prices go up 8% per year like clockwork according to this property tutor.

https://www.youtube.com/watch?v=1VWO4eScuyM

The financially illiterate are taught this stuff. There are other property tutors in Auckland who teach their students to focus on capital gains as property prices double every 10 years. The danger is when these property investors use large amounts of debt to finance their property purchase. If they used zero debt to purchase, then they could hold on through the cycle even if property prices fell significantly.

by Fritz | 2nd Apr 20, 5:12pm 1585800776

Oh dear.
Some people are going to look very stupid in coming years.

by CN | 2nd Apr 20, 5:47pm 1585802840

The potential mental toll will be huge as well as the loss of financial security.

https://youtu.be/hK6sLYMyltU

Look at the couple from Perth - start 13:15

Some potential similarities with those property investors who purchased in tourism reliant locations such as Queenstown, Taupo, Bay of Islands, etc who were renting out on Airbnb.

by Seve | 4th Apr 20, 9:14am 1585944845

Thanks for sharing the video ,even though its over a year old its more relevant now .

I watch Martin North at digital financial analytics ,real interesting perspective,he of course is also interviewed in this video..

https://www.youtube.com/channel/UCKWDscRjYFTD1KHsmow4-bQ/videos

by Brock Landers | 2nd Apr 20, 5:53pm 1585803188

It's time to invest in some popcorn.

by Nzdan | 2nd Apr 20, 9:02pm 1585814564

$1.5 million of Interest Only Mortgages for 20 years. It's that simple.

by RickStrauss | 4th Apr 20, 2:08pm 1585962511

These investors will be fine. They can top up the mortgages from their own income/cash buffer for the next year or two or three of low rents and just play the long game.

by mikekirk29 | 2nd Apr 20, 5:26pm 1585801609

More mortgage debt, hence more bank lending on houses.
All those FHB over extending themselves right up to when Covid hit.
How much equity do they have, in 3m time??
All those Pollyannas urging them on.
World financial system has been a fly in search of a windshield for years. Now it has arrived.
We will now see how strong Aussie banks are when PROPERLY stressed.

by mikekirk29 | 2nd Apr 20, 5:40pm 1585802428

All West Auckland and North Shore, Rodney gains. Nil elsewhere.
And, compared to March 2019, which was a lousy month, not so impressive.
Purchases to sucker FHB to buy over-priced no-land townhouses mostly.
As Mr Hargreaves has pointed out today, much of FHB debt is loaded from loans at less than 20% deposit.

by Foreign buyer | 2nd Apr 20, 9:56pm 1585817813

Its like how ignorant the people on the titanic were just before it hit an iceberg. Poor buyers if they were just trying to get a home over their head.

by CN | 2nd Apr 20, 11:34pm 1585823697

It comes down to expected prospective property returns. Many are using the rear view mirror to determine their future returrn expectations, whilst others continue that there is an underlying house shortage.

Interesting to note that the recent QV article outlook was shared amongst a large group of property investors. Their response to the article was generally in one of three areas:
1) there is still an underlying shortage of housing (most frequent comment)
2) property prices do not fall by much - as evidenced by GFC in 2008
3) property prices rise significantly in price every 10 years based on previous property price cycles

by Keen Observer | 2nd Apr 20, 11:46pm 1585824363

No one can stop our rock star economy.. as we speak.. a lot of deal being sealed, payment move forward in urgency by online method. The result shall be reported by end of April - this is the first unprecedented times, being tested - that the robust online deal/communications can be done in NZ: LIMS report, RE agents, virtual viewing, lawyers signage, building inspectors virtual visits, all previous plans, photos... which all can be done via online now days.. even for a new tenancy.. we can do it, face to face via Zoom. The DGMs talking about Supply vs Demand, become Supply vs No Demand? is rubbish.. have a look at Trademe 'page viewer' counter for the Supply list, and then check it again in less than a week.. if it's still there - nope, it's GONE! - WHY?, the recent initial throwing future tax payers money by govt. in order to guarantee the price stability, and sustain pathway up for the RE industry. No One in our bureaucrats system are willing to make a loss on their property/ies right? - it's on their collective 'sub-conscious', so enjoy this during your lock-down, failed to click 'buy now' that nice corner shed, you will be in the May-June looser stat again. - You have been warned.

by Averageman | 3rd Apr 20, 3:41pm 1585881719

I suggest that all this "virtual activity" is all the ticket clippers around transactions attempting to stay relevant and ....paid.

by Keen Observer | 3rd Apr 20, 12:55am 1585828556

We started to see which camp is DGM: Doom & Gloom Merchant - a sad face emoji.
And another opposite camp (I said it first!) is BGM: Boom & Glitter Merchant - a happy face emoji.

by Averageman | 3rd Apr 20, 3:40pm 1585881630

You have it wrong DGM is Debt Grafting Mediary. Aka the middle man betweens someones wallet and the banks profits.

by TuaWai Smith | 3rd Apr 20, 6:42am 1585849379

Unfortunately all the figures in this article became meaningless about a week ago!

by Yvil | 3rd Apr 20, 8:24am 1585855460

It would be taken a brave soul 6 months earlier to predict record high prices in March, despite the numerous, often derogatory comments to the contrary

by Chairman Moa | 3rd Apr 20, 1:36pm 1585874217

Would you like to have a go at predicting the next 6 months?
My rough guess would be -12 to -15%

by mikekirk29 | 3rd Apr 20, 2:16pm 1585876570

Sales in March 17: 1110
Sales in March 19: 1064
Sales in March 20: 1096

Consents in between? About 40,000 more.
So, that is, STOCK of housing rose from about 530,000 to 570,000, or 7.5%
Meanwhile sales rose how much: NIL (cf 2017)
Meanwhile he is boasting that they sold loads over $2m. Affordable.

by THE MAN 2 | 4th Apr 20, 11:02am 1585951377

Sorry to disappoint the many on Interest.co that think the housing market is going to crash.
Reality is that with interest rates so low and not going to go up, people will be hanging on to their houses unless they need money to stop the Bank selling them up because of a bad business.
Houses in many areas of NZ are far less than the replacement cost so why are they going to drop if this is the case?
Any positively geared Investors will mop up any of the desperate sellers, however I believe most will hang in their as they need a roof over their heads.
At the end of the day, we have had one death and 12 in hospital, hardly a worry at the moment!!

by mikekirk29 | 4th Apr 20, 11:19am 1585952377

utterly predictable from you

by gordon | 4th Apr 20, 4:22pm 1585970532

Do you have any idea of just how many people have been laid off as businesses wind down staff or just give up the ghost and close down for ever? The statistics are irrelevant. One death or 1000 deaths. People are being laid off big time. This will take may years for us to recover from. Unfortunately for many they will never recover. As usual you have no idea of how hard it is out there.

by Averageman | 9th Apr 20, 10:52am 1586386334

Just heard of an other service industry culling 200 jobs at the behest of faceless international owners. I suspect there will be more and more of this. Tony Alexander's latest newsletter is calling out FHB Kiwisaver fund losses, lending reductions, greater bank constraints, govt tenant bias, impending departure of temporary visa works/renters, and the annihilation of AirBnB market, tourism and hospitality. Pretty bearish even for him.