Housing sales slowed to a trickle in April and median prices were also weaker in most regions, the Real Estate Institute of New Zealand says

Housing sales slowed to a trickle in April and median prices were also weaker in most regions, the Real Estate Institute of New Zealand says

The real estate industry took a heavy body blow in April with the number of homes sold throughout the country dropping from 6082 in April last year to 1305 in April this year, a decline of 78.5%, according to the Real Estate Institute of New Zealand (REINZ).

That was not surprising given that sales activity was heavily curtailed during the lockdown period.

April's figures also showed the first signs of prices falling.

The REINZ's national median selling price in April was $680,000, which was up 1.5% compared to March, but the regional prices tell a different story.

Median prices in April were down compared to March in Northland -9.7%, Auckland -2.1%, Waikato -11.7%, Bay of Plenty -3.0%, Gisborne -0.4%, Manawatu/Whanganui -7.0%, Taranaki -10.7%, Marlborough -8.9%, Tasman -2.7%, Canterbury, -4.9%, Otago -25.2%, and Southland -14.6%.

For the whole of the country excluding Auckland, the median price was down 5.5% compared to March.

The only areas where the median price was higher in April than March were Hawke's Bay +18.9%, Wellington +3.1%, Nelson +9.1%, and West Coast +4.9%.

The REINZ House Price Index, which adjusts for changes in the composition of sales made each month and is considered a more accurate indicator of price movements than median or average prices, was down 1.8% for the whole of New Zealand in April compared to March.

Although the price declines were relatively modest in April, the fact that they were so widespread is an ominous sign and worse may be to come.

REINZ Chief Executive Bindi Norwell pointed out that many of April's sales would have been negotiated in march when confidence levels were higher than they are now.

"It's important to take this into consideration when looking at the figures," she said.

In a Home Truths report on the figures, Westpac Bank's Chief Economist Dominick Stephens said the fall in the REINZ House Price Index was the biggest monthly decline since May 2008.

"With such a low number of sales, there is scope for the price data to go awry, so the exact figure should be treated with caution," he said.

"Still, a monthly house price decline of this magnitude so early on does suggest that prices are set to decline significantly during the post-COVID recession.

"We are forecasting a 7% house price decline between March 2020 and the end of the year."

The interactive charts below track the REINZ's median price trends and monthly sales volumes in all regions.

The comment stream on this story is now closed.

Median price - REINZ

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NZ total
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Northland
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Auckland
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Bay of Plenty
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Gisborne
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Hawke's Bay
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Manawatu
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Wellington
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Nelson
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Marlborough
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Volumes sold - REINZ

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NZ total
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Northland
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Auckland
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Waikato
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Bay of Plenty
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Gisborne
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Hawke's Bay
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Manawatu
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Taranaki
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Wellington
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Tasman
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Nelson
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Marlborough
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West Coast
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Canterbury
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Otago
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Southland
Source: REINZ

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175 Comments

48
up

Thanks debt stacking middlemen. Are you entertained yet, or are you such narcissistic sociopaths you just don’t give a crap…?

Speculator and Banker greed has caused this mess, which will punish future tax payers for generations trying to pay down Govt debt being poured on to try and put the fire out. Hoping the Govt has the balls at the end of this to enforce debt to income ratio to save banks and specuvestors from their own greed driven stupidity. It’s going to get worse. Cutting staff is the only option for employers because of the high cost of wages, and then if that’s not enough, bankruptcy for the business owner. Wages are primarily driven by stupid rents and mortgages levels resulting from the debt driven housing speculation. This will spiral down and down for some time yet. Banks and speculators need to be “educated”, just like happened in Iceland post GFC.

How did Iceland clean up its banks? https://www.bbc.com/news/business-35485876 I love the bit about putting all the banks senior execs in jail for their reckless behaviour. Some telling quotes…

"we were more focused on how they gave their loans out; if they followed proper procedures. If they didn't, that was an indication of some wrongdoing.” "I do not think that we'd be able to establish faith in the system without this being dealt with. It is always about trust.".

Who trusts our financial lending system at the moment, and what is the Govt going to do about it?

Now, now.
You don't want to frighten people with your comments!

Given the uncertainty about, the housing market is performing pretty well.

No surprises with the latest data.

TTP

28
up

LOL.

You really are unflapping.
Not even a global pandemic and economic apocalypse can shake this thermonuclear spruiker.

18
up

If hes right, our markets aren't markets. If he's wrong, clearly delusional.

They aren't markets.

Hi TTP
Isnt it so typical, I log on interest.co to see the chatter and find the DGMs all in a lather. They still cant understand how houses have not done a complete meltdown like their shares barring the odd exception for fisher healthcare. Each time one of them makes a bar humbug comment they cheer with upvotes

12
up

You do realize that houses are not a liquid financial asset right, especially during a lockdown. Patience grasshopper...the realists (aka DGMs) will be proven correct by the year end. You don’t have 1000”s of kiwis filing for unemployment each week, 100k mortgage holders asking their bank for financial relief, migration coming to a halt, whole sectors of the economy decimated on top of the global meltdown not negatively affecting the housing market.

Did you read this yesterday "March net migration gain more than double what it was in March last year"? An extra 5000 (yes that's right) and all need a home. Poor grasshopper.

One month?! Based on many kiwis (of which many applied for the unemployment benefit based on recently released figures) returning home prior to lockdown. Where’s the continued migration going to come from grasshopper?

200 - 250k work visas are issued each year, these last 1 year.

You talk about an extra 5k in migration now when a month's intake of Migrant work visas alone is almost 20k.

19
up

Just a typical RE agent talk..
That comment reminds me of Monty Python's Always Look On The Bright Side of Life

Given the uncertainty about, the housing market is performing pretty well.

No surprises with the latest data.

Only for those who don't understand that the data is not necessarily representative of reality. I think data analytics should be a mandatory subject or component in high school because of its relevance in modern lives. People need to learn to understand data within its context. So when you say "the housing market is performing pretty well", you're basing it solely on one measure: recent sales in a 1-month period. For basic statistical analysis, people need to be able to understand why comparing a data set of 300 with 30 or 40 is a a fruitless exercise. Unforuntately, the FIRE industries exploit the general person's woeful understanding of data in general and related to house prices.

You mean like NCEA level 1 mathematics?
Statistical analysis is a compulsory component of that. I know, having had to tutor a niece recently.

But, your point stands. I doubt the Ashley Churches of this world would not be able to pass the level 1/2 statistics standards.

Edit: Typo

FYI, Ashley has property industry experience, yet no formal property qualifications.

His work experience is in the area of sales, property industry promoter. Certainly no formal property valuation qualifications. No formal qualifications beyond School Certificate from what I can determine.

Ashley has been high visible in the media, as a property market commentator, property price forecaster. Even though he has been allowed to espouse his thoughts on platforms with large audiences (such as national television), it does not make him an expert on property valuations. Remember people should not confuse a bull market with genius.

1) work experience: https://www.linkedin.com/in/ashleychurchnz/
2) formal education / qualifications - "My formal education never progressed beyond School Certificate at Tamatea High School" - https://www.oneroof.co.nz/news/ashley-church-do-you-need-to-be-born-rich...

FYI, here is his website - https://ashleychurch.com/

Yea, just realized my error.

It was meant to emphasize that the Ashley Churches of this world would struggle to pass the statistics requirements in NCEA level 1/2.

Exactly the point I have been making to the grumpy Boomer speculators round these parts. You can't hold bubble beliefs if you understand 6th form maths. Response has been wailing and gnashing of teeth. Not sure a class in data analytics is going to make any difference.

“You will never fully convince someone that he is wrong; only reality can.” – Nassim Taleb

You mean like NCEA level 1 mathematics?

No I don't mean that. Most people lack the basic understanding of how to understand data, which is completely different to understanding the fundamentals of stats such as deriving normal distribution curves and Baeysian Theorem. I think the illustration that I gave sums it up. If I say "property has help up well" by comparing median sales price in April 2020 with April 2019, that is a fallacious statement for quite a number of reasons. This is more about understanding the structure of data.

Another example. Tony Alexander was talking about how retail is holding up well by using data from a survey run from subscribers to his newsletter. When I pointed out that this is not necessarily representative of the broader population, his response was that it would be representative of 'mid to high-income earners.' This is wrong. The survey would be representative of 'subscribers to Tony Alexanders' newsletter.' He even admitted that he didn't have any demographic data. And this is coming from a public economist.

Most people lack the basic understanding of how to understand data, which is completely different to understanding the fundamentals of stats such as deriving normal distribution curves and Baeysian Theorem.

The fundamentals of statistics is central tendency, which a lot of people grasp. However, they don't often understand the limitation of inference associated with these simple measures. That can only come by understanding probability densities / distributions, etc.
In my experience, even those who think they know a lot about statistics don't know enough to be cognizant of it's limitations.

Your second example - understanding sample vs population distributions is in NCEA level 1. As I mentioned.

You didn't read what I wrote

About your TA revelation?
That is exactly what is taught in high school statistics - inference of sample distributions...

Understanding data is entirely about understanding distributions. If you are arguing against this, you need to find a different line of work..

You're missing the point. Inferences about a sample drawn from Tony Alexander's newsletter readers with no demographics is not representative of anything more than 'Tony Alexander's newsletter readers.' I'm right, you're wrong. And that is the point. Generally people don't understand basics about how to understand data.

Yes...That is statistical inference..

Guys guys, much as I enjoy a wonkish stats argument you both have valid points. It is stuff that is taught in high school, but probably needs to be taught a bit more effectively in applied form for people who aren't nerds, rather than having people learn it via virus pandemics and housing bubbles.

Leave them to pull each others hair

There is something about that guy that makes my skin crawl.

This really just wipes out March's historic rise. I don't even think it does for Auckland. Some property markets are in for a reduction no doubt but Auckland should be split into four categories. North Shore and Central will hold up a lot better than Manukau area etc where a ton of the tourism industry will live who work/worked at Air NZ and Auckland Airport.

35
up

If you look at where we are at now, and the meteoric rise in prices over the last decade, Auckland would have to be one of the worst places in the world to own a property at present.

Only if your up to your eyeballs in debt, otherwise traffic and rugby performance aside, its not that bad. I recall a certain investment model, interest only, stack it as high as you can. That model will have an issue. The problem for the rest of NZ is that behavior is going to cause everyone else problems as well.

20
up

And my rellies still have 7 new builds in Auckland to sell. You can lead a horse to water.... but then it stops speaking to you!

17
up

Poor horse. If it doesn’t drink it dies, and if you hold its head under, it dies as well. You need to let the horse (market) find its own path. But hay, we can always tank interest rates some more - oh snap - we cant because theres bugger all left to tank.

17
up

The Bindi's of this world have ordered a taxidermist for the horse. Nobody will notice!!!

They went for the taxidermist after the Weta Workshop Animatronics dept said even they couldn't pull that one off.

15
up

I went through Long Bay the other day looking at all the for sale signs on the new and soon-to-be completed builds. I definitely wouldn't want to be involved on the selling side of that.

I'm really looking forward to buying a 3br in Long Bay for around 700k next year...
Wishful thinking? Time will tell.

Based on global averages for cities of a similar size, you'd still be overpaying significantly.

24
up

Yes I've had friends who couldn't understand the risks they were taking having over a million dollars of debt invested in the Auckland housing market (multiple properties). Some discussions were quite difficult but when you realise that they don't understand what a bond is or how it is priced, how would they understand the risk of a million dollars of debt? They don't.

11
up

A bond? Isn't that something your tenants lodge with MBIE?

Exactly

"when you realise that they don't understand what a bond is"

The most common understanding of "bond" by the general public in New Zealand:

Q: "bond?"
A: https://youtu.be/TXxKZkE2MGo?t=15

33
up

Only utter delusional thinking or self-serving real estate speak can possibly fail to admit what everybody can see: a significant slump in house prices is coming. And Auckland is going to be part of this mess, with no exception. 20% decrease of house prices in 2020 in a very distinct possibility. And further decrease in 2021 is well on the cards. The music has stopped, notwithstanding the desperate singing of the promoters of this housing Ponzi scheme. Unemployment of 10%, the ridiculously inflated current house prices, the crash in immigration numbers, the drying up of overseas speculation, the number of over-exposed house owners, the slump in wage growth, the collapse in international tourism, the reticence of banks to lend to buyers with no stable job prospects, ALL of it will cause this house price slump. Many housing speculators will be monumentally shafted. No suicidal RBNZ trick can stop this.

When you saying many housing speculators will be monumentally shafted - don't you mean they will be rewarded for their leveraged risk? (and not even to the full extent due to central bank intervention?)

Surely all they need to do is wait a few years, because investing in housing just involves "waiting".

Yes - see Japan.

The reality is their paper equity will decline. If that, and or income declines to a point uncomfortable with the bank, the there is a margin call. This is normally a mortgage sale.

I have heard this repeated over and over again. It’s an urban myth that a margin is called on bog standard residential mortgages due to reduced paper equity.

10
up

Falling house prices are also an urban myth in this country eh.

Yeah, come on Averageman that's not something that happens to owner occupiers. Mortgagee sales only happen if they fail to make repayments.
I'm pretty sure the margin call thing can and does happen in the property investor sector though and will therefore have potential knock on effects.

Agreed. But mortgage pending and no or reduced income is more less the same thing.

There are a few different roads to insolvency, for sure.

It doesn't happen to investors either; bank contracts are tempered by the Fair Trading Act which can not be contracted out from. The Fair Trading Act limits 'unfair contract terms'. As a result, a bank contract to recall debt in the face of equity loss is limited to things like crime or negligence. An example of crime would be if you burned down the building, or negligence like letting the structure fail due to deferred maintenance, in either case, the bank would then have a fair shot to require you to post another suitable security, and if you fail to do so, it may then recall the debt.

"The Commerce Commission then decides if they will ask the District Court to declare the term unfair. The Court must be satisfied that the term in a contract:

causes a significant imbalance between you and the business
is not reasonably necessary to protect the business's legitimate interests
would cause detriment if enforced."

Are you saying people put themselves in a mortgage sale...?

You stop making payments, there is a mortgage process, and then the bank instructs someone to sell your house. The bank has lots of rights to your house when you sign on the loan.

Yes, you do have many good reasons for a decline in prices, but all of that is trumped by the expressed will of the RBNZ to support house prices, even if the currency is trashed as a consequence.

If they go negative with the OCR property carnage will be avoided.
That's a big 'If'...

How is it trumped by the RBNZ?

Even they are King Canute in the face of this thing.

Peri, the RBNZ will do everything it can but what it can't do is force the banks to lend or at a particular value. RBNZ can chuck a load of RBNZ tokens onto bank balance sheets and say "ta-da now you have even bigger reserves go lend as much as you can" and banks will do whatever the banks decide is in their best interests. Generally, when the economic outlook is poor, banks reduce their credit risk exposure. I can't think of a recession when this hasn't happened. They just maintain bigger reserves until the sun comes out again. While there are gloomy skies, banks will be very cautious on lending and this will invariably have a negative impact on house prices, it always, always does. Try and find me any example to the contrary.

So the taxpayer will essentially be paying to stablise the banks reducing the risk of an OBR, but the banks won't be lending much? In which case if prices fall too far...taxpayer will need to further stabilise the banks? Let's hope a whole lot is not pilfered and sent to Australia to stabilise the parent banks.

Rickstrauss, I don't think it's that simple, alas. Firstly, government debt is political, how it's repaid is political, often it is never repaid and the terms of it can often be extended indefinitely, so that in the fullness of time, the value is a few cents on the dollar. One of the biggest economic misunderstandings the average person makes, is confusing government debt with personal debt. The main time that government debt can cause the same issues as personal/private debt is if it is owed to a a foreign entity (and a foreign entity or sovereign debt system powerful enough to enforce the debt too). The method and speed of government debt repayment is a political decision. It's complex and there are numerous factors, including trade, global credit and currency markets but provided a government can pay for what it wants to pay for (especially foreign debt), provided its voters support its decisions and whatever narrative it sells and it can project a glamour of competence to the world, governments just trundle along carrying debt so long that it doesn't matter. If the debt gets too heavy because there was insufficient growth over many business cycles, or if there is a massive demographic issue (too many old people, not enough young people etc) then the debt can get heavier, global investors start to fret, currency can become volatile, foreign investment decreases, rates of foreign debt goes up...and it can get less easy. But NZ is nowhere near those kind of risks. We'd need to f&%k up and/or be unlucky over several decades and business cycles for the current debt to ever be a problem. Unsustainable household and business debt is always a much bigger problem.

Banking collapse is a big problem. A deflation cycle is a big problem. Both of those relate to confidence and sentiment, not to government debt. Government debt is often used by political parties as a slur and the use the naivety or ignorance of the voting public, and their experience of their own personal debt to confuse the issue. Especially with threats about what their children and grandchildren will be forced to deal with which motivates voters. It's mostly just rhetoric, all parties happily take on government debt as needed or suits their purpose.

Taxes are taxes. They move about, sometimes a bit higher, sometimes a bit lower. Sometimes paid more by the wealthy, sometimes more by the poorer. In history taxes were sometimes actual lives, human bondage or enforced military service. But there have and always will be taxes as far back as we have a historical record, if the taxes ever get too high, usually someone revolts. Some of the tax is wasted , some of the tax is productive dependent on the competence of those in charge of the system and even that is political. Depending on the values of the culture at the time, people look back on Domitian as a good Emperor, sometimes a bad one. Caligula started out great and then ooops. But it always only really depends on the story that you tell and how convincing that is. Thankfully, we have at least some veneer of democracy and despite its flaws, the people will get something like what they choose if they give their leaders a strong enough mandate. The NZ political system often forces parties into coalitions or weak majorities, which mostly discourages any kind of truly transformational or revolutionary policies being enacted and we just get more of the same. NZ blue teams and red teams talk a good battle, but unless one or other of them gets a strong mandate, we won't get any big change (change can be good or ill too don't forget). Maybe the pandemic and associated recession will shake things up? Maybe it wont. I'm rambling now because its wine o'clock.

Thoroughly enjoyed that ramble

Ah yes the incestuous North Shore where keeping up with the Joneses is second only to real life Monopoly as the most popular game in town.
Just wait for all those leasehold Mercs,Audi's 4x4s and the like being hastily returned as reality bites and the "Villages" in the bays lose a little of their charm as the rush for the exit causes a bottleneck at constellation as more affordable G town becomes de rigeuer,cause it's only for a little while and there's such marvellous views of the city from high on Manuka Dahlink.

Question to avoid the usual tribalism where youre either labelled a DGM or Spruiker:

Will there be more buyers or sellers entering the market in the coming months?

Both. To much debt and reduced/no income you will be a seller. If you can qualify for a loan (high equity) or have cash, then you may be a buyer, but at what price...

Less of both to start with Id say

very low listings and bugger all buyers

I think there will be the last of the greater fools to work through in the next ~6 weeks.
i.e. People who sold in the months prior to COVID and either:
a) need to move for whatever reason after settling their house; and/or
b) are blissfully ignorant to the fact the Global Economy just got doused in accelerant and someone has lobbed a molotov cocktail onto it. These people do walk among us.

On lower stock levels these fools might give the illusion of prices holding up in the next month or two's data.
This will give Bindi enough ammo to prop up Bernie on a deck chair and shamelessly report that there is nothing to see here.

Then reality will hit.
The economic devastation will be apparent to even the most ignorant and naive.
Consumer spending will stop dead.
Deleveraging will commence.
Banks will be far more cautious about new lending.
Markets will take another leg down - hitting FHB KiwiSaver balances (mercifully saving them from themselves)
New buyers will dry up.

Your prediction didn't come true Yvil!
Sorry, that's unfair. It almost certainly would have if covid-19 hadn't struck.

Wasn't his prediction about the March house prices?

He wont put his neck out at the moment though

Sometimes reality is just too hard to accept.

14
up

I think all the property bulls have bolted for the hills, either that or they're at the Real Estate Agents trying to negotiate down their bloated commission rates to flog their empty rentals as quickly as possible.

14
up

Oh sheeeet, its like holding onto the brace that comes over your head and shoulders on a roller coaster when you reach the top and theres silence as you wait for big drop.

12
up

Very apt. But there is no complete silence yet... I can still hear the desperate sound of the chanting of the real estate Ponzi scheme promoters.

12
up

There was one such article on Stuff yesterday, "Remuera cottage defies predictions of price slump", hailing good prices still being achieved. As the comments pointed out however, it sold for 10% under RV and below Homes estimates (of 1.35 million) at 1.21 million. Sure still a lot of money, but the article reeked of desperate pumping.

I was watching that one, it was promoted heavily on all websites. Pre auction offers maxed out at 950k, I think the vendors got lucky, that little house ticked a lot of box's.

More will sell for less than homes.co.nz estimates. Will be a sure sign as the algorithms start mapping downwards

Homes.co.nz algorithms have been a joke for a long time.

I watched 4 houses on a street in the Eastern Suburbs sell for $300k-$400k below CV and Homes estimates in 2019 and their estimates didn't budge on the rest of the street.

In Wellington, at least, whatever they were you'd add on $100k to be in with a chance.

Sold for 690K exactly seven years ago so that's a pretty good price for the vendor. Not double grammar zone either.

Of course, we're all aware of the past 7 years.

In 2014 the CV for that place was 990k so I reckon it has tended to be a bit below the CV. I don't think it would have got more than it did if it sold earlier.

Maybe it was one of DGZ's

23
up

This is nothing give it a few more months to see where we go most likely south by 15-20 percent.

Exactly right. I am thinking exactly the same.

Yep it's happening like clockwork.
I wonder how low it will drop by mid 2021?

14
up

The ozzie MSM are not so corrupt. If the CBA warns 32%, then expect 50% in many places.

https://www.abc.net.au/news/2020-05-13/coronavirus-commonwealth-bank-hou...

10
up

from that article - More than 200,000 borrowers ask for repayment holiday

How many asked here? That is probably a(nother) good pointer of what lies ahead.

Very good point our houses are priced of the charts and the people asking for a repayment holidays did not even understand how it worked shows you how financial we are as a country. If wages deflate which seems to be happening this week will be the best for retailers for a long long time just like the Mcdonalds drive thrus are now quiet the pain will be worse than anything any poster here will remember unless you are 100 years old.
This is no ordinary 2008 GFC event.

Still waiting for double bottom?

"How many asked here?"

109,638 customers as at May 15, 2020.
Total loans worth $37.9bn

1) reduced loan payments
i) 55,830 customers
ii) loans totalling $18.7bn

2) all loan payments deferred
i) 53,808 customers
ii) loans totalling $19.2bn

https://www.nzba.org.nz/consumer-information/covid-19/consumer-lending-d...

CN

Thanks mate.For the interesting read & the link

"Manawatu/Whanganui -7.0%...Canterbury, -4.9%"
But if you are buying now in PN and CHCH it will be 7% and 4.9% below market value respectively.. It's win win situation. What can go wrong?

Yes according to Agent The Man.
I've come to the conclusion that he's an agent. He made a comment the other day that didn't make sense if he's a landlord.

Fritz, what was the comment ai made the other day?I have stated many times that I was a real estate salesperson, but not anymore.
Enjoyed the selling and was quite successful, however the investing and providing accommodation is far more satisfying and financially rewarding.
The beauty is that we can do what we want when we want and not reliant on anyone else.
How can you beat that?

TM2, you forgot to remind everyone that you have a model material wife.
So if I am not wrong, you are rich, successful, have a good life, happily married (a model looking wife).
Then WTF are you doing in this website?

Chairman Moa, Yvil is happily married to a model-looking wife (I know i've seen her). I don't know how much his wealth will suffer after this recession but he certainly looks rich and successful. I don't think we can ever really know why any of us plough time into one thing or another. We're all a bunch of weirdos hahah

I recall one time The Man 2 was bragging about going on a cruise somewhere. Then he spent all his time posting on Interest.co.

You basically said 'how can there be a 'whole lot of rental properties being listed when they all come up for renewal at year's end'.
Anyone who knew anything about the rental market would know that's not true, tenancies are signed up, periodic or fixed, all throughout the year.

Chch vacancies are falling ie not as many

Hahaha, you only just realised that his comments don't make sense?

Otago -25.2%
The volume is probably too low, but holy ****. I'm a DGM but didn't expect such a big drop so soon for Queenstown. I'm guessing this will stay at a similar level throughout this year and not fall much further.

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All those genius specuvestors cannot understand how such a thing could happen to them. All their previous investments went up? They were convinced that they were modern day kiwi Buffets. How naive they were!!!

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That is one thing I always find absolutely hilarious.

All these property 'tutors' will tell you property is the most fantastic asset class ever invented to [vomit rising into my mouth] "guarantee your future wealth"
Then every single one - EVERY. *SINGLE*. ONE - has a Buffett quote in their spiel... quoting a guy who doesn't invest in property.

And as if they've ever read a single book about Buffett and deriving fundamental value.

It's the greatest irony.

Here is something that is easily a better investment than property and it was a Kiwi startup now only listed on ASX go figure.
https://www.interest.co.nz/opinion/66694/never-made-profit-never-paid-di...

Only 15 comments and no arrogant landlords abusing the author of being a DGM. How things have changed.

Go with the HPI, that's much more reliable especially on low volumes.
HPI was up 0.2% for the month in Queenstown.
That will fall way in the next few months...

.

Being a resort town, Queenstown has always had its ups and downs, and will certainly be up in the long run. It’s def a place not to buy near the peak of a cycle! I know people who did. There’ll be some great bargains at the bottom though. This could be a deep trough. Not DGM, rather value investor.

Agreed. Southern lakes have been mental. Wouldn't be surprised is some sales end up half of what they might have been. Time will tell.

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You're not allowed to say a 50% drop in house prices on this website.

"Value investor".

You misspelt 'speculator'.

Cmat, speculating is not doing research and momentum buying at expensive prices on the hope that prices will keep going up, doubling in x number of years. Value investing is buying good companies/houses/whatever at inexpensive to reasonable prices, which reduces risk on the downside significantly. What we have had in NZ is very expensive prices in recent years, but people fooled themselves into thinking they were not (with the help of vested interests).

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I talked to a Real Estate agent in Queenstown November last year. He said Queenstown is no longer a boom/bust town because they have tourists all year round instead of just winter so buying in Queenstown is a good investment.

Here we are May 2020 and Queenstown is a bust, just like in 2008.

they always have been and always will be.
at some point the Alpine fault will rupture...

The volumes are too low to provide useful data, particularly at the regional level.

I dont think the real flow on impacts will be felt for a couple of months yet. Way too early for any trends to be deciphered.

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Glad we didn't buy a rental in Albany 3 months ago. Existing tenant worked for Flight Centre!
Will stick with my mortgage free home for the time being in Greenhithe and watch what I spend carefully (except for wine).

Yeah so I'm glad we sold our rental property a few years ago to help pay off our mortgage on our main home. Currently watching a lot of our friends getting in to mortgage distress due to owning Airbnb's. A few have managed short term six month lets but they're in areas that don't really have an economy without tourism. There now having to consider selling below relative value.

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I think we’re about to find out how there isn’t actually a housing shortage in NZ, which I have been saying for ages. Airbnbs hitting the rental market and people selling their second homes will make for oversupply.

Yes I saw the same thing happen with rental properties during the GFC in the UK. People flooded the sales market because those who couldn't get the property sale price they were looking for and had to relocate decided to rent out their home, so they also flooded the rental market. It was a bit of a domino effect that pushed prices downwards by -20% in some areas it was a lot lower.

I agree - if we didn't allow houses to sit empty and if FHB weren't competing with property investors, and if AirBnb didn't become such a thing. But they did and it created the perfect storm for price appreciation. Smart money will have cashed up in my opinion.

I guess you have to cling to every crumb as they become available, but I reckon it's too early to tell on these tiny volumes of odd things that happened during lockdown. I reckon down 15-25% is on, but I'm not sure that this is really the indication of the start of it; that comes now as level 2 comes online.

House sales tricked in April that was during lockdown - so 20% was also not bad as everything was under lockdown.

Even May data will not give clear picture as many deals would have gone unconditional (That had conditional offer in March and April) so would be on high pre lockdown price.

Have to watch for direction in June/July and full effect by October/November.

To be fair, on such low sales numbers these figures mean Jack

Absolutely, take the Hawke's Bay figure. The median price is up 18.9% month on month, but that's based on just 39 sales, compared with 238 in March.

39 out of 238 sales were unconditional.

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"The 39,000 newly unemployed are richer, younger and more likely to be European."
39,000 incomes with all the attendant financial commitments are going to do what? Become a carpenter? Probably, but not overnight.
In the meantime, the bills and weekly commitments will keep coming in, and when they get down to 'having to sell something' they will.
The BIG question for any of them is "Should I be selling now?"

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The psychology around the downside of a bubble is almost as interesting as the way up. Expectations of joy vs avoidance of pain.

"The psychology around the downside of a bubble is almost as interesting as the way up."

Yes. Also interesting is the narrative that shapes property price expectations both on the way up and way down.

Saw a comment from a potential vendor who saw that RBNZ forecasting 9% fall in house prices and asking if they should sell no, rather than later. This is how property price expectations for many potentially active buyers and potentially active sellers are formed ...

Source? I would have thought a lot of the job losses are in retail / hospo / tourism

Well that quote from BW above is very misleading, not that I am blaming him/her.
'Richer'? Yes, in that they earn over $585 pw. Anyone who works fulltime on the minimum wage would be doing that!!!!!!!
I guess it's all relative. Perhaps many of the people who normally go onto the dole were only working part of a week?

Great time to buy the dip! Once in a life-time opportunity! House prices will always go up in the long run!

Haha Bindi.

How does she keep a straight face?

Botox presumably.

Pretty hard to understand any optimists arguments.
Retirees/ near retirees, looking to cash in and downsize. How long can they, will they, hold off?
Massive number of interest only mortgages out there, with capital gains disappearing fast, how long for them? I put both above groups in average of 2.5 years before they have too, and they have to weigh up what will happen in that time.
Massive job losses, mortgages "topped" up to buy cars, overseas holidays etc, mortgage stress quite possible.
Overseas investors, domestic investors, both in situations where they may be wanting to cover losses elsewhere.
Immigration at a standstill.
Rents dropping.
Only real buyers, fhb, and they've been saving so long, that they are largely market savvy, so unlikely to jump in too quickly.
Enter the govt, they've been buying everything up, so will they seriously buy 6000+ houses to keep the market inflated? Anything's possible I suppose, who would have guessed they were prepared to pay everyone's wages for 20 weeks?
20% drop sounds ok if you consider where it will likely go.
The govt are almost ensuring that this is like a Wylie coyote cartoon, and the edge of the cliff was back in March, and the coyote is going many months past the edge.
By my above estimate, roughly 5 sellers to every possible buyer. This is pent up supply.

"Pretty hard to understand any optimists arguments."

Here are their arguments
Reminder that these are some reasons given in the mainstream media, property market commentators, property market promoters, bank lending promoters masking as bank economists, real estate agents, property market mentors & other sources as to why property prices in Auckland will not fall by much and that there is a low probability that property prices will fall dramatically:
1) during the GFC, house prices in Auckland fell only 7-10%
2) over the past 50 years, house prices in Auckland have averaged 7.2% per annum (or commonly referred to as house prices doubling every 10 years). This trend can be expected to continue into the future - https://youtu.be/Agp9xFWoBX4?t=172
3) there is a shortage of underlying housing in Auckland, so property prices won't fall by much - https://www.interest.co.nz/.../auckland-councils-chief......
4) there is a growing population which means that there will be more demand for houses - https://www.stuff.co.nz/.../house-prices-have-fallen-but-...
5) we have inward immigration which means more demand for houses
6) Auckland is an attractive city with an attractive lifestyle - that makes it desirable and attracts foreigners to move to Auckland and hence raise the demand for houses
7) lower interest rates are supportive of rising house prices
8) lower interest rates make debt servicing easier for borrowers
9) Low interest rates were also forcing retirees and those nearing retirement to look for investments that would produce income, such as rental property. "Plans of the baby boomers to retire and live off a conservative yet well-yielding portfolio have evaporated with low interest rates," he said. "[They] are seeking assets and buying investment properties. They are also seeking assets they can hold and live off of for three decades in retirement rather than just 15 years given advances in health and medicines." - https://www.stuff.co.nz/.../all-predictions-of-an-auckland...
10) we mustn't forget either the vested interests in ongoing stability. No government, central bank or trading bank with mortgage exposure wants materially lower house prices. Nor does an incumbent Beehive want falling house prices going into an election campaign https://www.stuff.co.nz/.../think-house-prices-are-going-...
11) the economy is doing well, with low unemployment - https://www.stuff.co.nz/.../think-house-prices-are-going-...
12) there has been insufficient construction of new builds to meet the housing shortage - https://www.stuff.co.nz/.../house-prices-have-fallen-but-...
13) there are high construction costs to building a house. House prices cannot fall below their construction cost. - https://www.stuff.co.nz/.../house-prices-have-fallen-but-...
14) people don't sell their houses at a loss - https://www.stuff.co.nz/.../house-prices-have-fallen-but-...
15) continued inflation means that house prices will continue to rise in the future
16) The fact is, debt levels have barely changed from the beginning to the end of those 10 years, compared to GDP levels, compared to household assets, compared to household disposable incomes. And much more importantly, debt servicing is very much easier now, an item that is almost universally overlooked. We are not pushing out to unsustainable levels now, and even if they creep up a little, we are far from that point. https://www.interest.co.nz/.../if-you-think-new-zealands......
17) in aggregate household debt servicing is low in New Zealand - currently at just under 8% of disposable income of households - https://www.rbnz.govt.nz/.../key.../key-graph-household-debt
18) property market participants & commentators who have been correct in their predictions about recent property price trends have more credibility and hence their predictions of upward prices are believed by a wider audience (such as Ashley Church, Tony Alexander, Ron Hoy Fong, Matthew Gilligan, etc). - https://www.stuff.co.nz/.../all-predictions-of-an-auckland...
19) previous warnings about a house price crash have been wrong - property prices have continued rising upward significantly since these warnings were given, so there is little reason to believe these warnings.(such as Bernard Hickey) - https://www.stuff.co.nz/.../all-predictions-of-an-auckland...
20) its unlikely Auckland prices collapse. I think the main two reasons though are:a) Affordability has been this bad, and worse, in the past and it only resulted in about a 10% drop. b) The number of homes built over the last decade has been too low and will take some time to recover - https://www.interest.co.nz/.../housing-market-continues-hibe...
21) returning New Zealand expats will buy houses in NZ -
22) NZ is a safe haven from COVID-19, etc - expats will buy houses in NZ - https://www.theguardian.com/.../why-silicon-valley...
23) More QE, lower interest rates, mortgage holidays, interest free loans, wage subsidies, no LVR... it's getting harder and harder to see house prices falling

Impressive list of media articles. I take my hat off to you. From my own perspective I think the reality is that the gfc set in motion a high degree of monetary easing, exemplified by low interest rates, which had been falsely inflating house prices and stock prices, an intentional outcome of investors seeking higher yielding returns. The global pension funds, including kiwisaver funds, have by mere nature of their purpose, gone on to invest (inadvertently) in higher and higher risk "assets ". Chiefly derivatives, of one form or another. Global derivatives are valued at somewhere between $1.2 to $1.5 QUADRILLION. So it's easy to see why global media is keen to keep the dream alive, as global real estate and associated debt, makes up a massive proportion of the assets underlying these derivatives.
Trouble is, when govts start massive deficit spending, in a reduced tax revenue, shrinking gdp environment, the effects start to be realised exponentially, and no amount of smooth media talk can change financial realities, it can only suspend, or postpone them. NZ is clearly opting for the postponement model.
FOMO was the ruling mantra since the gfc, yet at some point it will reverse to FOLIV, fear of losing investment value.
Those in their own homes, who have not continually maximised their loans on equity gains, and can keep their jobs, will be fine. The rest is a complete mess, and it will take nerves of steel, or a complete head in the sand approach to keep with the established narrative of "it will all be fine". The wiser ones may start to reflect on the ever increasing number of homeless they passed on their way to the office over the last decade, and make some form of plan to protect their wealth.
And good luck to them.

CN, do you have a blog? If not, you should.

Agree, CN I would love to see you turn this into an article for Interest.co, I'm sure lots of us millenials would like to have something like this to send to the friends of ours who don't quite 'get it' yet and are in danger of jumping into the meat grinder. You have a very clear and concise way of explaining things that gets the key points across.

No blog.

Just wanted to highlight potential property price risks to hard working potential owner occupier buyers, so that they make fully informed buying decisions on their largest financial purchase, which can alter their entire future financial trajectory.

The media and those with a vested financial interest in property promotion (real estate agents, mortgage brokers, property mentors, main stream media, lending institutions, radio entertainers such as Mike Hosking, etc) have heavily promoted and marketed property activity due to their financial interests.

Meanwhile, an open discussion of property price risks increasing has been denied to hard working owner occupier buyers, and since there is no open discussion, they are unaware of possible property price risks and this does not allow them to make fully informed buying decisions. Due to a lack of vested financial interest, there is no active marketing of this perspective to the wider audience, and no financial incentive by media to report this perspective frequently. There have been one off interviews by some insiders of this perspective in the media, however this has been drowned out by the marketing dollars of those with vested financial interests (as well as political interests).

The above asymmetry of viewpoints on property price risks in the media, etc shows how property price risks develop at extremes. And how many people can get caught out subsequently.

I have known people who have lost their financial security and have been collateral damage (some have been relatives). It takes both a financial and mental toll on people, and at extremes leads to suicide (which then affects the surviving family members, especially children). By discussing potential property price risks, and allowing hard working owner occupier buyers to make a more fully informed decision, I am attempting to help families avoid being potential collateral damage and avoid the resultant pain.

I don't make property price forecasts - they are inherently unpredictable. Instead, I choose to use a risk relative to reward, and probability (and range of possible outcomes) framework. At current price levels in many geographical markets, there is a lot of risk for very little or no reward.

Great post CN - you're doing a good job (in my opinion..)

Agree, great list.

I think the biggest factor is the RB knows the banks are in debt up to their eyeballs. The RB will do anything it can to ensure the banks remain stable. If that means literally giving the banks billions of dollars of printed money to remove any chance of a drop, they WILL do it (see negative rates). No central bank now is giving a second thought to moral hazard, they will do anything to avoid a financial crisis. This may mean directly bailing out people who took on too much debt as well, because if they hit the market, they will cause drops, which can cause a crisis. Sure - this might cause riots in the streets if they aren't smart about it by hiding it behind some complicated financial instruments, but social stability is not their mandate. Financial system stability is.

Although I would love for property to get back to fundamental values, the forces at work are so entrenched in them continuing to increase (see their recent removal of LVR's etc), I can't see them significantly falling. It will take a great change in the system to return to times when financial responsibility was the norm. Probably nothing short of a revolution. The government can and likely will continue to keep the poor and unemployed placated with printed money at the behest of the RB to keep the wolves from the doors.

Dalio thinks it will be reform vs civil war in America.

CGT on every single property sale starting now. Not just on new purchases. No more gearing either. No more excuses. Houses are to live in.

What, so we can give property investors tax credits? CGT when they are done falling.

I'm happy for them to ring fence tax credits on *realised* losses.
That's how it works for other assets.

Can't apply it to other income though and can't apply unrealised losses to anything.

No more tax credits. Enoughs enough.

False dawn, real impact not til July figure
Meanwhile cue a few folk thinking out loud that it’s not as bad as expected.

Anyone else notice in the cover letters of the HPI report Bindi this month focuses on the annual changes,
"the HPI indicates that housing market value nationwide year-on-year has lifted 8.5%, up in Auckland by 8.4% and increased outside Auckland by 8.6%"

Yet I distinctly recall last months commentary being heavy on the April months results compared to April last year.

Would it hurt her to acknowledge that there is a global pandemic, most of the world has shut down and things actually weren't that sh*t hot for a month?

Yes, it would hurt her.
When you keep pushing the narrative that house prices NEVER go down, you can't just admit that you were wrong for so many years. You would lose face in front of your core audience.
Instead, do what most scammers do when shit hits the fan: ignore reality and keep the narrative going as long as possible, then disappear.
To be fair, she is so young she never had the chance to see house prices falling in NZ.

She's employed to be the REINZ's 'Chief Spruiker' so we shouldn't expect anything else.
She sometimes throws in the odd qualifying comment to provide a semblance of balance....

Selective statistics is the core tool of the real estate spruiker. Every press release they cherry pick whatever looks the best for their agenda.

We know what Bindi is. She knows what she is. It's not even worth reading her garbage.

Everyone is still on wage subsidies and mortgage holidays, we haven't seen unemployment rise yet or multiple big corporate busts. This will take years to play out.

House prices are already tanking in the UK and this has not even got started yet.
https://www.dailymail.co.uk/news/article-8318651/Coronavirus-UK-Mortgage...
Been saying a 20% drop in NZ for a month now and got little support and mostly ridicule on this Website but my have the opinions changed over the last week or what ?
Price drops are now going to be a fact, all there is left to predict is by how much ?

I’m still not convinced that the doom and gloom is justified.
99% of the people I know have still got their jobs and it is business as usual.
2 people I know have been laid off from Air NZ, received hefty redundancies and paid off their mortgages, they both have new jobs already as well.
People seem to be focusing on the likes of tourism shedding jobs but missing the other side of it where there it is business as usual and staff shortages for many other industries.

I agree to *some* extent. And I have said something similar - although not as bullish - before.
The reality is that the majority of people getting laid off are in the retail, hospo and tourism sectors. Many of these people will not own homes. Although some will.

What I think you are underestimating are the business owners who will be going under, or at least severely hurt.

There will also be plenty of 'white collar' professionals losing their jobs, but it's certainly likely to be a lot less than people in the service sector.

I think you are too bullish. Some of the DGMs, on the other hand, are far too bearish.

I think the reality will be somewhere in the middle.

Why would it be in the middle? The psychological momentum that drives a bubble up works in reverse on the way down.

There are lots of reasons why it will be somewhere in between. I don't have the time or energy to go through them.
It's why most economists are rightly projecting a moderate drop of circa 10-12% drops on average overall.

How do you know they are "rightly projecting"? What an absurd statement. Economists have an abysmal track record of making accurate predictions, they have been empirically shown to be no more accurate than random guessing. That's in 'normal' times. There is no historical corollary to this particular overlap of events (debt bubbles, money printing, pandemic, global shutdown) so why on Earth would the economists have any clue whatsoever? How many economists correctly predicted the GFC?

Remember Bernard Hickey? He infamously said prices would crash 20-30% in 2009-2010. He was fatally wrong.
DGMs will be fatally wrong once again.

An economist was wrong, that's evidence for your point not my point... how exactly?

From what I know, you are a fairly new commenter on this site.
I have been bearish on house prices for a long time. Which you may know, if you have followed this website for a while.

In 2018 I predicted prices would fall 5-10% from their peak (few people were predicting falls). They fell about 5% before rising again from the middle of last year.

Then, mid last year I started to say that, before 2022, an event or 'shock' (undefined, but some sort of financial shock) would occur that would result in a decent house price correction - I said 10-20%.

My reference to Bernard Hickey is valid, because it shows how 'sticky' house price falls can be, against quite apparently logical reasoning for price falls. Many of the things Hickey was saying in 2009, people like you are saying today. (PS I thought the same in 2009)

But what happened then - and what is happening now - is that the government pulled out all stops to prevent a collapse. On both occasions, NZ was better placed than most countries to 'rescue' the economy and housing market.

Why I think prices will fall:

- Significant rises in unemployment
- Limited ability to cut OCR further (other than negative OCR, which I wouldn't rule out BTW)
- Much lower migration

Why I think prices will 'only' fall 10-15% in addition to the above (and whether they are a - or + factor for the housing market):

- A large proportion of unemployment will hit the retail, tourism, hospo sectors. Many of the people losing their jobs are not home owners: POSITIVE FACTOR
- A number of businesses, especially in these sectors, will fail. That will mean some fire sales of properties: NEGATIVE FACTOR
- The government is pumping huge money into the economy. Much of that money will go into infrastructure and housing construction - this will help keep employment up *reasonably* well in building, supplies, design, engineering and all the hanging on services : POSITIVE
FACTOR
- There will be significant job losses in real estate, and perhaps to a lesser extent in financial services: NEGATIVE FACTOR
- A significant proportion of employment is in the public sector: teachers, nurses, doctors, fie service, police, etc etc and all associated administration. Plus all the huge bureaucracies. Overall there will be limited job losses in these areas. These areas make up a large chunk of NZ's home owning middle class: POSITIVE FACTOR.
- Relaxation of LVR rules: POSITIVE FACTOR
- I think the OCR will go negative: POSITIVE FACTOR

Overall the main reason I think price falls will be limited to 10-15% (on average across the country, some area will fall more, some less) is because I think that unemployment will disproportionately hit people who do not own homes. There will still be a significant amount of 'white collar' unemployment, but not massive.

You are still completely missing the point.

The fact that your overly bearish past predictions were wrong relates IN NO WAY to the accuracy of your predictions going forward. It's completely irrelevant. "Bears were wrong in 2009 therefore they're wrong in 2020" *is not sound logic.*

Why would you accept that your past pessimistic predictions are wrong but still convince yourself that your current optimistic predictions are somehow accurate? You have *no idea* about key variables like whether there will be multiple waves of the virus globally.

Part of the dynamic of how bubbles work is that early bears get 'proven wrong' because the end of the bubble is incredibly hard to predict and it usually goes on longer than they think it will. Therefore the early 'wrong' bears capitulate, become bulls, and perpetuate the bubble. This is NOT different from what has happened in every other bubble in history.

There is no analysis at all in your breakdown of fundamentals of how bubble psychology actually works. ie, "Prices only go up" thinking perpetuates buying (with debt) at any price because of the belief there will always be a greater fool. The same dynamic works in reverse, ie people selling *purely because they believe they will never get a better price than they will get today and by holding they risk huge losses.* That dynamic can operate just as independently of fundamentals on the way down as it does on the way up. There is NO reason to assume a market that's irrational on the uptrend won't be just as irrational on the downtrend.

As to your analysis of fundamentals, that seems pretty flimsy too. People losing jobs who aren't homeowners is a positive for housing? How? If a renter loses a job and moves back in with Mum and Dad that's not a positive for house prices.

The RBNZ isn't the Fed.

Kind of seems like you just don't really get how deflation works. The fact that the unemployed people don't own homes is not the point, they are still the customers of the people who do own homes. Everyone gets hit.

I love how you throw the flimsy argument at others, while you yourself make wild assertions... then you get into hot arguments trying to justify them.

Good analysis

https://www.abc.net.au/news/2013-02-04/economic-forecasts-no-better-than...

That paper found that 70 per cent of the RBA's forecasts for underlying inflation for the year ahead were close to the mark, but its predictions of economic growth were less accurate, and its unemployment rate estimates no better than a random walk.

"The reality is that a random walk is what you would get from chance," said Bill Mitchell, a professor of economics at Charles Darwin University.

"The Reserve Bank employs numbers of people on very high pay and what they're admitting now is that their - all of this so-called science - has produced nothing more than what a roll of the dice could produce."

Fatally? They die if they get their prediction wrong?

Predictions by economists esp bank economists? I would lump them together with tarot-card readers, soothsayers, palmists, astrologers etc.They can predict just about everything EXCEPT when the next sucker will come along to pay for their lunch.

No offense but I would prefer to follow the actual published governmental data (see today’s summary) rather than some anecdotal reports of what your friends’ current employment status is. Don’t forget that the jobless number doesn’t account for the many other people that are working but are on reduced wages.

To all you Doom & Gloom punters out there. If you think prices will tank from 20% to 35% youre unhinged.
A quick lesson in RE. Prices will only drop significantly in Covidworld ( 20% Plus ) when you have a Desperate Seller with a lack of Buyers. A desperate vendor will probably have lost their job, otherwise why sell?? Just ride the wave.
Unemployment is tipped to be about 10%, the majority are in 18 yrs to 39 yrs demographic which mainly do not own a property.
Banks will not worry about a drop in equity as long as mortgage is being serviced.
I just cannot see a fall of higher than 10%
Just one Caveat, doesnt include Queenstown, Wanaka area.

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A desperate seller is also one that doesn’t have a tenant to cover the mortgage (see the flooding of rentals on trademe, mass departures of migrants etc) or does have a tenant but rents have dropped significantly so that the rent doesn’t cover the mortgage. Many landlords and owner occupiers who are lucky enough to have a job will find their wages reduced also which adds another avenue of financial stress.

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I like your optimism. The world is having an exogenous shock about a 10 on the economic richter scale.

Tourism is dead. Our main export market 'the world's factory' is idle. We have umpteen million newly Ue across all developed countries and we have consumer confidence being savaged. We have a construction industry which is sh~tting itself the boom is over.

We also have a foreign buyer ban and a five year bright line test.

And yet house prices are gonna hold up ? Not a snow balls chance.

Just fyi in USD terms house prices are already down 25%.

I thought milk and other exports were our main export earner? However I also thought that domestic tourism made up more than half or tourism dollars. If NZers aren't going overseas to spend their money, but spend it holidaying here instead, then surely that could increase to about 75%? So we only lose about 25%, but have the benefit of living a normal life in NZ without the virus. Anyone coming into the country just has to quarantine for a few weeks, build it into their holiday.Personally I have disliked the way NZ has become over the last 15 years, especially with all the greed over housing. Way too many people here now, and our growth seems to have been largely fueled by record immigration. The way we were running our economy IMO wasn't sustainable long term, including all that fossil fuel used to get tourists here. We need to use this virus as an opportunity to change NZ from the way we were heading. But I can see some things heading back to our old way of doing things.

I think your forgetting all the local pay cuts and reduced hours as well as redundancies and job insecurity there Rob. Travel, even within New Zealand is discretionary spending. If you suddenly cut the average wage in this country 20% then you can kiss any travel goodbye. Many people already live from paycheck to paycheck and the country as a whole is up to its eyeballs in debt. By the time the average wage earner in this country has paid all their bills there is nothing left. Anyone who borrows money to go on a holiday is a nut job. The full impact of this virus is going to take months to come to light, in the meantime we are going to get nothing but positive spin on it. For many people its going to be a really, really bad Christmas.

So basically, you think what Ashley Church thinks? https://www.oneroof.co.nz/news/ashley-church-how-to-handle-a-drop-in-hou...

Remember folks, every bubble in history had true believers clinging on to the bitter end.

And what happens when the demographic you mention, now unemployed, can no longer pay the rent that is used to service many of these mortgages? You're the unhinged one here, if you're trying to rationalize why things won't fall further than 10% based on such a narrow view.

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