House prices at the bottom end of the market have declined 7.3% from their March peak, while mortgage interest rates continue to slide

House prices at the bottom end of the market have declined 7.3% from their March peak, while mortgage interest rates continue to slide

Falling house prices at the bottom end of the market and tumbling mortgage interest rates came together over the recent lockdown period to make it easier for potential first home buyers to purchase their own homes.

That is, of course, assuming job security and a willing lender against the backdrop of the COVID-19 crisis.

According to the Real Estate Institute of New Zealand, the national lower quartile house price hit a record high of $480,000 in March and then declined to $458,000 in April and 445,000 in May. This means the lower quartile price has declined 7.3% from its March peak.

The lower quartile price is the price point at which 25% of sales are below and 75% are above, representing the bottom end of the market that is usually of most interest to first home buyers on average incomes.

The decline in lower quartile prices between March and May was evident in all regions except three: Hawke's Bay, where it rose from $399,000 in March to $420,000 in May, although that was still below the December 2019 peak of $441,000; Manawatu/Whanganui where it increased from $295,000 in March to $300,000 in May although that was below the February peak of $325,000; and Otago where the lower quartile was unchanged on $395,000 in March and May, although it was still below the January peak of $417,000.

All other regions posted declines in lower quartile prices between March and May, with the biggest decline occurring in Southland where it dropped by 10.5%, followed by Canterbury/Westland -5.3%, Nelson/Marlborough -4.8% and Waikato -4.0%.

The other regions to post declines were Northland -2.4%, Auckland -3.5%, Bay of Plenty -2.2%, Taranaki -0.3% and Wellington -3.5%.

The immediate impact of the fall in lower quartile prices was to put homes more within reach of prospective first home by by reducing the amount they would need for a deposit and also reducing the size of the mortgage they would need.

The amount needed for a 20% deposit on a home purchased at March's national lower quartile price was $96,000. By May that had declined by $7000 to $89,000, while the size of the (80%) mortgage needed to buy the same property declined from $384,000 to $356,000. That's a reduction of $28,000, giving a total saving of $35,000 between March and May.

First home buyers would also have benefited from the steady decline in mortgage interest rates that has been occurring, with the average of the two year fixed rates charged by the major banks declining from 3.31% in March to 2.88% in May.

Falling prices, combined with lower interest rates, have had a significantly beneficial effect on the mortgage payments required to purchase a home. estimates that the mortgage payments on a home purchased at the March national lower quartile price of $480,000 (with a 20% deposit), would have been $388.25 a week, while the mortgage payments on a home purchased at May's lower quartile price of $445,000 would have been $340.96, a saving of $47.29 a week.

So potential first home buyers benefited significantly from falling prices and lower interest rates over the lockdown period.

More detail from's Home Loan Affordability Reports 

Table 1 below shows how much people would need to save for a 20% deposit on a lower quartile-priced home in all parts of the country and what the mortgage repayments would be, based on May's lower quartile prices.

This highlights that even with lower prices and low interest rates, many potential first home buyers may still struggle to afford their own home because of the amount of money required for a 20% deposit.

In Auckland, May's lower quartile prices ranged from $615,000 in Franklin to $815,000 on the North Shore (the most expensive district in the country), which means 20% deposits in Auckland ranged from $123,000 in Franklin to $163,000 on the North Shore.

The average 20% deposit across the whole of Auckland was $142,300. estimates that if a couple were both working full time at the median rate of pay for 25-29 year olds and were able to save 20% of their after tax pay each week, it would take them 7.7 years to save a 20% deposit for a lower quartile-priced home in Auckland.

Of course it is possible to purchase a home with less than a 20% deposit and Table 2 below shows how much money would need to be saved for a 10% deposit in all regions and districts of the country and how this would affect mortgage payments.

Unfortunately there are downsides to a lower deposit, because it increases the size of the mortgage the borrower will need and they will also likely pay a significantly higher interest rate for it. estimates the weekly mortgage payments on a home purchased at the national lower quartile price of $445,000 with a 10% deposit would be $445.33 a week, which is $104.37 a week more than the mortgage payments on the same property purchased with a  20% deposit.

In higher priced areas such as Auckland the difference is even greater.

The mortgage payments on a home purchased at Auckland's lower quartile price in May ($711,500) with a 20% deposit ($142,300) would be $545.15 a week.

But if the same home was purchased with a 10% deposit, the mortgage payments would be $712.02 a week, an extra 166.87 a week.

The trade off for a lower deposit is substantially higher mortgage payments.

So although lower prices and mortgage interest rates over the lockdown period would have been helpful for first home buyers, many will still face significant financial challenges to get into their own home, particularly in higher priced areas such as Auckland.

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Table 1:

Home Loan Affordability - 20% Deposit
For Typical First Home Buyers with a 20% Deposit
Based on the REINZ Lower Quartile Selling Price in each Region/District
May 2020
  Amount needed for 20 % deposit $ Time needed to save 20% deposit* (years) Amount of 80% mortgage $ Weekly mortgage payments (30 year term) $ Median after-tax pay* for 25-29 year old couple (weekly) $ Affordability (Mortgage payments as % of after-tax pay)
Northland      81,000 4.8      324,000         310.31           1,605.70 19.3%
Auckland    142,300 7.7      569,200         545.15           1,730.26 31.5%
Waikato      95,000 5.4      380,000         363.95           1,670.97 21.8%
Bay of Plenty    101,000 6.0      404,000         386.93           1,598.83 24.2%
Hawke's Bay      84,000 5.0      336,000         321.80           1,599.53 20.1%
Manawatu/Whanganui      60,000 3.5      240,000         229.86           1,626.43 14.1%
Taranaki      66,000 3.8      264,000         252.85           1,626.43 15.5%
Wellington    109,000 5.8      436,000         417.58           1,756.44 23.8%
Nelson/Marlborough    100,000 5.8      400,000         383.10           1,641.06 23.3%
Canterbury/Westland      72,000 3.9      288,000         275.83           1,708.82 16.1%
Otago      79,000 4.6      316,000         302.65           1,614.61 18.7%
Southland      51,000 2.9      204,000         195.38           1,676.71 11.7%
New Zealand      89,000 4.9      356,000         340.96           1,698.24 20.1%
Whangarei      76,000 4.2      304,000         291.16           1,714.21 17.0%
Rodney    144,600 7.9      578,400         553.96           1,730.26 32.0%
Auckland Central    150,000 8.2      600,000         574.65           1,730.26 33.2%
Auckland North Shore    163,000 8.9      652,000         624.45           1,730.26 36.1%
Auckland South    130,000 7.1      520,000         498.03           1,730.26 28.8%
Auckland West    144,378 7.9      577,510         553.11           1,730.26 32.0%
Papakura    130,600 7.1      522,400         500.33           1,730.26 28.9%
Franklin    123,000 6.7      492,000         471.21           1,730.26 27.2%
Hamilton    108,000 6.1      432,000         413.75           1,665.15 24.8%
Tauranga    114,000 6.7      456,000         436.73           1,615.97 27.0%
Rotorua      80,000 4.5      320,000         306.48           1,659.33 18.5%
Gisborne      67,200 4.4      268,800         257.44           1,452.03 17.7%
Napier    103,000 6.1      412,000         394.59           1,605.93 24.6%
Hastings      88,740 5.3      354,960         339.96           1,599.53 21.3%
Wairarapa      77,000 5.3      308,000         294.99           1,379.35 21.4%
New Plymouth      82,000 4.8      328,000         314.14           1,601.02 19.6%
Whanganui      43,000 2.7      172,000         164.73           1,503.65 11.0%
Palmerston North      83,000 4.5      332,000         317.97           1,723.53 18.4%
Kapiti Coast    110,200 6.6      440,800         422.18           1,569.72 26.9%
Porirua    116,000 6.5      464,000         444.40           1,666.10 26.7%
Hutt Valley    106,252 5.8      425,008         407.05           1,708.62 23.8%
Wellington City    138,700 6.5      554,800         531.36           1,995.58 26.6%
Nelson    100,000 5.8      400,000         383.10           1,641.06 23.3%
Christchurch      75,000 4.1      300,000         287.33           1,702.69 16.9%
Timaru      62,000 3.7      248,000         237.52           1,560.86 15.2%
Queenstown    151,300 8.8      605,200         579.63           1,614.61 35.9%
Dunedin      83,000 5.2      332,000         317.97           1,510.41 21.1%
Invercargill      59,000 3.5      236,000         226.03           1,597.90 14.1%
Notes: Time to save a 20% deposit is based on saving 20% of after-tax pay each week plus accrued interest. Median after-tax pay is the combined median full time pay of 25-29 year old couples based on Statistics NZ's Linked Employer-Employee Data Series and standard IRD tax rates.

Table 2:

Home Loan Affordability - 10% Deposit
For Typical First Home Buyers with a 10% Deposit
Based on the REINZ Lower Quartile Selling Price in each Region/District
May 2020
  Amount needed for 10 % deposit $ Time needed to save 10% deposit* (years) Amount of 90% mortgage $ Weekly mortgage payments (30 year term) $ Median after-tax pay* for 25-29 year old couple (weekly) $ Affordability (Mortgage payments as % of after-tax pay)
Northland      40,500 2.4      364,500          405.30           1,605.70 25.2%
Auckland      71,150 3.9      640,350          712.02           1,730.26 41.2%
Waikato      47,500 2.7      427,500          475.35           1,670.97 28.4%
Bay of Plenty      50,500 3.0      454,500          505.37           1,598.83 31.6%
Hawke's Bay      42,000 2.5      378,000          420.31           1,599.53 26.3%
Manawatu/Wanganui      30,000 1.8      270,000          300.22           1,626.43 18.5%
Taranaki      33,000 1.9      297,000          330.24           1,626.43 20.3%
Wellington      54,500 2.9      490,500          545.40           1,756.44 31.1%
Nelson/Marlborough      50,000 2.9      450,000          500.37           1,641.06 30.5%
Canterbury/Westland      36,000 2.0      324,000          360.26           1,708.82 21.1%
Otago      39,500 2.3      355,500          395.29           1,614.61 24.5%
Southland      25,500 1.4      229,500          255.19           1,676.71 15.2%
New Zealand      44,500 2.5      400,500          445.33           1,698.24 26.2%
Whangarei      38,000 2.1      342,000          380.28           1,714.21 22.2%
Rodney      72,300 4.0      650,700          723.53           1,730.26 41.8%
Auckland Central      75,000 4.1      675,000          750.55           1,730.26 43.4%
Auckland North Shore      81,500 4.5      733,500          815.60           1,730.26 47.1%
Auckland South      65,000 3.6      585,000          650.48           1,730.26 37.6%
Auckland West      72,189 3.9      649,699          722.42           1,730.26 41.8%
Papakura      65,300 3.6      587,700          653.48           1,730.26 37.8%
Franklin      61,500 3.4      553,500          615.45           1,730.26 35.6%
Hamilton      54,000 3.1      486,000          540.40           1,665.15 32.5%
Tauranga      57,000 3.3      513,000          570.42           1,615.97 35.3%
Rotorua      40,000 2.3      360,000          400.29           1,659.33 24.1%
Gisborne      33,600 2.2      302,400          336.25           1,452.03 23.2%
Napier      51,500 3.1      463,500          515.38           1,605.93 32.1%
Hastings      44,370 2.7      399,330          444.02           1,599.53 27.8%
Wairarapa      38,500 2.6      346,500          385.28           1,379.35 27.9%
New Plymouth      41,000 2.4      369,000          410.30           1,601.02 25.6%
Whanganui      21,500 1.4      193,500          215.16           1,503.65 14.3%
Palmerston North      41,500 2.3      373,500          415.30           1,723.53 24.1%
Kapiti Coast      55,100 3.3      495,900          551.40           1,569.72 35.1%
Porirua      58,000 3.3      522,000          580.42           1,666.10 34.8%
Hutt Valley      53,126 2.9      478,134          531.65           1,708.62 31.1%
Wellington City      69,350 3.3      624,150          694.01           1,995.58 34.8%
Nelson      50,000 2.9      450,000          500.37           1,641.06 30.5%
Christchurch      37,500 2.1      337,500          375.27           1,702.69 22.0%
Timaru      31,000 1.9      279,000          310.23           1,560.86 19.9%
Queenstown      75,650 4.4      680,850          757.05           1,614.61 46.9%
Dunedin      41,500 2.6      373,500          415.30           1,510.41 27.5%
Invercargill      29,500 1.8      265,500          295.22           1,597.90 18.5%
Notes: Time to save a 10% deposit is based on saving 20% of after-tax pay each week plus accrued interest. Median after-tax pay is the combined median full time pay of 25-29 year old couples based on Statistics NZ's Linked Employer-Employee Data Series and standard IRD tax rates.

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"House prices at the bottom end of the market have declined 7.3% from their March peak"

You aint seen nothing yet...


I'm not sure it's the Bottom End of the market we need to be watching.....Upper Middle, where white-collar (is that still a thing?!) management households reside are going to be tested on the $585 per week (before tax!) Subsidy, until the end of August. Then....


During one of the zoom parties during lock down someone raised the possibility of picking up a good deal on a house. I pointed out that I was already looking and waiting to see how the high end is hit. A lot of houses have turned up on the market but the prices are all wrong.

@bw ...I think you are correct about your assumptions

the lower end/FHB is a good indicator of things to come and is often tracked for this purpose.
although based on the report for the higher end those in the north shore will be of interest to watch. I notice today that so far on interest 11/15 auctions have been passed in today. (note: this area is of interest to me but the place i am watching i feel is 25% overpriced to vendor expectations)

Then reality hits!!, we've been sharping the knifes over the last few weeks, I'm under no illusion that I will be safe or the others making decisions about the first cull. But a few are walking around oblivious its coming, long term FT employees who have seen us ride out storms before, but we don't think we will this time, and as the weeks tick by so does d-day...and its a damn sad situation.

If perditions are correct, by the end of the year prices would drop at least -12% compared to last year,
so compared to March it would be approximately -25%.

I can feel the pain already ...


Perditions, what an apt Freudian slip!

Oh yeah, good spot - looked it up: perdition - noun:
- (in Christian theology) a state of eternal punishment and damnation into which a sinful and unrepentant person passes after death.
- complete and utter ruin. "she used her last banknote to buy herself a square meal before perdition"

A traditional name for Lucifer was "Son of Perdition".

Totally unsubstantiated prediction . . . 25% just a guess or hope?
I bet that you are one of these widely recognised bunnies who when they go to the races, rather than considering factors such as the form of horses, track conditions, barrier draw etc, you just guess or at best choose a horse on your lucky number or the jockey wearing your favourite colour.

Totally unwarranted Ad Hominem followed by a strawman argument.
You lose this argument.

Wow... did I touch one of your secret button printer8?
We are here to express opinions and betting and judging hiding your identity behind a keyboard doesn't make you a man.
Who's the real bunny now ?

... or maybe I'm just chatting with my printer which has evolved with AI... lol


Gee not -25% !!!! I said that months ago and people on here just laughed. As has already been pointed out above, the falls have not even started yet, in fact I'm very surprised that prices are ALREADY falling while everyone is still getting a wage subsidy right ?

For next time I am at the races; What is your lucky number / favourite colour?


Resulting to personal insults is definitely a sign that your ideas are superior.

If perditions are correct, by the end of the year prices would drop at least -12% compared to last year,
so compared to March it would be approximately -25%.

If you're referring to ANZ's prediction of a 11.8% fall, that was for March 2021, 12 months from March 2020, not from last year ( p15).

thanks for correcting my comment. Appreciated :)

lol apologies.. predictions - perditions... it's pretty much the same at this stage :)


Great news for prospective FHB! For those who purchased in the last 12 months........not sure?

A 7.3% drop is a 73% loss in equity on a 10% deposit. Praying for a 2021 upswing.


Leverage is a wonderful thing, without it huge losses of net worth wouldn't be possible.


Quote of the month right there. People are about to realise that leverage is actually bidirectional. Dont complain that seminars never covered this.

leverage is actually bidirectional

But how is this possible when house prices only go up?!

Mr Orr is about to drop that mic and exit left. There's not much else he can do..... It's nearly finally over!!!!

Barely seen a listing in Wellington all Winter. Typical, I suppose. Summer will be interesting.

...need more data for Wgtn city family pads... check back in Oct maybe?

Indeed, that's usually when the flurry begins.

Can't have potential buyers knowing how damp the house is in Winter, after all.


DO NOTHING ................SIT ON YOUR HANDS !

You are going to witness the biggest fall in house prices in our history

House prices at the lower end are going to fall dramatically when 120,000 Kiwis have lost their jobs be December .

Landlords letting to lower income workers who have lost their jobs will be forced to exit the investment if they lose their tenants and cannot afford the mortgage

Bring it on . . . just as with other some other investors I know, I'm all cashed up, watching and waiting.
It can only get better with fall in house prices and improving yields . . . and even more so with falling mortgage rates.
But don't worry about the landlords; those 120,000 with accommodation supplements . . . . ahh, great. Housing shortages and accommodation supplements currently driving rents up. As previously posted, here in the HB someone I know very well rented out a property - over 60 responses and three or four (clearly on accommodation supplements) offering more than rent asked. MSD wanting to manage properties, guaranteeing rents and damage, no letting fee . . . . and at no cost.


Ummm, what housing shortage? You haven't brought into that narrative have you? Even Ashley Church has been quoted as saying there is no housing shortage and he is the biggest property spruiker of them all.

Re your comment "what housing shortage" is not fully explained.
You seem not to have read the link re shortages here in the Bay - woman waiting for two years in motel waiting for accommodation and she seems a reasonable sort.
Why is MSD in desperation is happy to manage your property, plus guarantee your rent, plus not charge the landlord letting fees . . . . and not charge the 8 to 10% management fee charged by commercial property managers? Note that their management offer is not just limited only to HB.
Plus MSD to my knowledge have got at least four HB motels totally full and another four with some all seeking proper housing accommodation.
I think that is about a housing shortage here in HB.


There are 90 places for rent currently being listed in the Hawkes Bay area.

A couple of places have been listed since March / April.

Why would this woman be unable to rent one of these places listed?

1) landlord does not find them suitable to rent to - for various reasons
2) the property is unsuitable or unaffordable to the tenant - if it is the latter situation, then there could be a shortage of AFFORDABLE housing (and that could be the reason they might even be receiving the accommodation supplement) - that is very different to a shortage of underlying housing.

FYI, the minimum price for a 1 BDRM place is $250 / per week and the maximum is $695 / week (that is equivalent to $13,000 - $36,140 per annum - what percentage is that of the household income?)

I note that she has 2 children - a 2 BDRM place ranges from $335 per week to $650 / per week (that is $17,420 per annum to $33,800 per annum - what percentage of the household income is that?)

It can be a struggle with a working single parent with children:
i) who will look after the children when she is working?
ii) if they do not have family, what is the cost of daycare if the children are not yet of school age?

The mother may not be working, so that means on a lower income, those rents may be unaffordable.

Sorry - you are so, so wrong.
I assure you that there is a shortage in Napier hence a number of motels full with or have "homeless". Notable are The Fern, Marineland, Bluewater, Nautalis, Shoreline, Spanish Lady . . .
Have a Google on Marineland Motel - great being adjacent to Ahuriri lagoon and Weshshore Beach. Currently closed for homeless.
Try Googling Bluewater Hotel in Ahuriri - really nice seaside overlooking the yacht club and boat harbour. Currently closed as full of homeless - and I hear that they cancelled long term bookings for a conference group.
Try Googling Fern motel . . . do I need to go on?
I see daily a number of motels along Marine Parade with homeless - motels that typically charge $300 a night.
I also hear of motels in Auckland being used to accommodate homeless.
As I mentioned, MSD is so desperate they have a unit who are approaching local landlords offering to manage their property without the usual 8 to 10% commission charged by property managers - nor the two week rent letting fee.
You say that "The mother may not be working, so that means on a lower income, those rents may be unaffordable". I have no problem that it is "unaffordable" hence accommodation supplements - and I mention experience of those on accommodation supplements prepared to offer more.
As a past landlord, mothers on a dpb were great reliable tenants - benefit direct credited from WINZ and long term as they were tied to children's schools.

Your confusing social housing demand with residential demand...they are completely different.

You must be very proud of yourself *rolls eyes*


P8 is this a sarcastic comment? You are suggesting here that significant falls are likely and you are ready to pounce. This contrasts with your frequently stated view that house prices are unlikely to fall much.

Just keeping my options open. :)
Unfortunately, the significant unsubstantiated claims - such as a fall of 50% - as suggested by the keyboard warriors on this site are probably unlikely. However, if so . . . .well then.
Personally, I think RBNZ and bank economists are more likely to be right than the unsubstainiated claims of these keyboard warriors. So maybe a little sarcasm in there . . . or even a bit of a wind-up . . however as I posted late Feb I battened down the hatches, are cashed up, watching and waiting. :)

Congrats on the welfare mentality.


Printer8, congratulations on your exploitation of what may be a vulnerable housing situation in the Hawke’s Bay and congratulations on being a vicarious beneficiary of the state. It’s great to see our respected elders get ahead in life at the expense of others. Happy investing!.

A Quade Cooper comment. :)

Interesting, ... I just paraphrased your comment and congratulated you. Maybe you've lost perspective. Happy first home buyer deprivation investing!. :)

There are housing issues especially affordability for FHB, high rents due to a combination of low yields and accommodation supplements, and in parts of the country, housing shortages. There is need for constructive discussions and at the moment it is going nowhere - both on this site and a lot more widely. Housing is in a poor state.
Maybe as a start there is need for many posters on this site to get over their emotional filled views and start to look at this constructively.
If you note many of my comments over the past year or so they have been concerned about FHB. For example when I posted last winter that the Auckland market showed signs that it was bottoming and then in the spring it was showing signs of an upturn there were deafening counter cries.
I appreciate that it is tough for FHB - but continually having posts making unsubstantiated claims and shifting blame achieves nothing.
The reality is that 80,000 mortgages (145,00 people?) in the last three years have gone to FHBand Auckland figures are 300 to 500 (500 to 800 people?) monthly - RBNZ data.
However the reality is also that homeownership for 25 to 35 year olds has dropped from 65 to 35% over the past 30 years and that need to be addressed.
I find many comments on this site no more than being wishful envy fuelled. To change that would be a start. So not in a bit least concerned about challenging or upsetting those who are making ridiculous or unsubstantiated statements.

I'm watching HB closely too, not as an investor just hoping things will get more affordable for the average family here. Lots of sold signs still going up in Hastings at the moment.

To be fair Boatman it wouldn't take much more of a fall to be the greatest of all time in this country as we have never really had a true "Crash" and that is the main reason why the "Houses only ever go up" brigade on here have made easy predictions for so long, its been a given until this virus hit. So easy a monkey could have called it. Not so easy to make a prediction now though is it ?

Yes and then add Airbnb's that are piling up on the long term rental market and that's a potent mix than can only result in lower prices in the absence of one of our main industries tourism.

What is tourism?

Does this include all those who created and caused the issues in the first place. If so,, maybe there is a devil called Mamon in Investment circles.

Please for my kids sake, let it happen! For years we have been paying down mortgage, only one property (our home), investments outside property etc because I am horrified at what property has turned into in this country, a feeding frenzy for greedy speculators at the cost of a lot of NZers and future generations. BRING IT ON!!!!

Expecting house price to fall but in Manukau area (Pakuranga, Howick, Bucklands Beach Road and nearby) does not seem as of now.

Most houses listed are at premium, in fact expecting much more than in February / March before the lockdown as if panademic and shutdown did not happen.

Just one example, a house with RV of 910000 when checked with agent was advised that encouraging people in early to mid million to view the house

Even houses where auction has failed are asking premium (CV 1275000 and asking 1349000) :

Similarly are many (Can check) and agents are asking as may be few that are being sold in Auction have gone for decent/premium, hence the confidence and expectation.

With all the money/liquidity floating in the market, it will be a while as government has been very generous and many have made a tidy fortune out of it as one businessmen rightly sums it up in TVNZ :

Besides wage subsidy unemoloyment benefit is also boosting like in US unemployment benefit at the moment is $987 per week (Much more than the actual wages for many) similarly in many other countries besides money / interest free loan given to many businesses despite them doing much better business.

Will be important to see how the housing market behaves in September/October, as government to win will bring next installment of freebies just before election (Should bring but should target those businesses that have been affected by border/travel restriction or unable to do business for no fault of their but due to panademic).

Could it be the “buy the dip” buyers are out? Could we be seeing the housing equivalent of Robinhood traders buying up bankrupt Hertz? Do buyers not understand the gravity of the dire financial mess that the world is in?


"Do buyers not understand the gravity of the dire financial mess that the world is in?"

Easy to not understand when nothing is allowed to fail, unfortunately.

I think they should have called it "Bailer Twine"....not QE. More apropos, methinks.

I agree the world has huge financial problems. Having been on the fence for a while (deflation vs. inflation) I'm more convinced that printing press is the evil of choice for the US and China. Unfortunately their activity is on a scale that borders on economic warfare for the rest of us.

Stagflation is coming - declining real earnings and jobs, but increasing equity and realestate prices. The transition will be finished off by mass inflation putting even more distance between haves and have not's. Sadly for our retired population the worst place to be at the moment seems to be to have savings in the banks, but no income. You are being forced to watch you life's work nest egg becoming increasingly worthless.

Damian Grant is a convicted fraudster. He has virtually zero ethics, an arrogant so and so he believes he is above everyone. Just look at the business he runs, takes a special type of vulture to survive off failing businesses.

It appears he hasn't changed his spots. Why we give criminals of low moral fiber airtime is beyond me.

'Why we give criminals of low moral fiber airtime is beyond me.'

Because he's yet another right wing shock jock. Kiwis can't get enough of them.

On this site it is incorrectly considered by many that a home is an investment property.
Your first house is your home - very different to an investment property. Your second and subsequent houses are investments when economic considerations are the paramount considersation.
Unlike an investment property, owning a home is a long term investment (40+ years?) although one will trade on the same market so short to medium term fluctuations in the market are less important - provided one has confidence in servicing the mortgage and is prudent regarding risks and shocks.
Factors important in a home compared to an investment property are factors such as the social and financial security of one's family, and the intrinsic value of owning one's own home. When renting there is always the likelihood that the landlord may decide to sell, one is in a forced move; a situation with turmoil to the family and at a timing not suited to you, as well as issues including not only having to find another suitable flat at relatively short notice, but also the possible turmoil of children having to shift schools and loss of their friends.
Trying to time the market for a first home buyer should be a secondary consideration and there is no certainty as to the future of the market or the extent of any possible fall.
Currently, given the economic uncertainty due to the implications of Covid, the most important factor FHB should be considering is the security of both their job(s) and income and the ability to service the mortgage.
Rather than market unknowns, finding the most suitable house (in terms of wants and financial constraints) for a FHB should be the more important consideration. Buying well rather than trying to time the bottom of the market may well be more cost effective and have greater certainty.
I shake my head in disbelief at the predictions of the envy-fueled scaremongering postings of the anonymous key board warriors on this site who post unsubstantiated comments clearly thinking that they not only know better than the RBNZ, bank economists, and respected commentators (A. Church excluded) but also that the RBNZ et al are all simply ignorant bunnies. Unlike the 145,000 FHB (80,000 mortgages) over the past three years some of these keyboard warriors need to start looking at themselves and asking why? Claims of 50+% bubble bursts contray to RBNZ estimates and housing being a "ponzi scheme" are simply their comfy blankets - just like the need of those three and four years old scared of dragons and monsters.

You are correct that for FHB anytime is good time to buy if they are confident about their jobs or business but when better times are ahead it may be prudent to wait not forever but for few months to get more for your deposit/money.

Current market be it stock or house is not reflecting true economy but is based entirely on liquidity which has been distributed generously by government.

Panademic is a crisis for many but may be an opportunity to some only if able to overcome FOMO.


I shake my head in disbelief at the predictions of the envy-fueled scaremongering postings of the anonymous key board warriors on this site who post unsubstantiated comments clearly thinking that they not only know better than the RBNZ, bank economists, and respected commentators (A. Church excluded) but also that the RBNZ et al are all simply ignorant bunnies

Most respected commentators are predicting falls of between 8 and 12%. Not sure why you think "now" is the time to buy.

And stop with the "falls in prices don't matter if its your home" bullshit. It DOES matter if you don't have sizable levels of equity. It DOES mater if you don't have perfect job security. Very few FHB buyers have either right now. The vast majority of FHB purchase with 20% (or less) deposits and will be dis-proportionality hit by job losses over the next year.


And stop with the "falls in prices don't matter if its your home" bullshit.

The extent to which it "matters" is beyond the comprehension of most.

- The bulk of NZ's "savings" is in our houses. It's not in liquid assets like cash. As a yardstick, 70% of h'holds have <6 months' income to tie them over. I susepect the reality is not as rosy as that might sound.

- Consciously or subconsciously, people's spending patterns are determined by how wealthy they feel. This is why property bubbles are tolerated (and quite often promoted) by the ruling elite. A 10-12% fall might not sound like much, but that might be a key driver in the purchase decision of a new car or adding the luxury food item in the shopping basket. Those cars / food produce the income / revenues that NZ relies. It's all circular if you understand how bubbles work.

- I think there is a strong belief among NZers about the greatness of NZ being the primary driver of the property miracle. Any notion that it's simply the work of the commerical banks' ability to 'lend into existence' to bit up prices on existing houses is not understood or even known. Why is this important? The banks rely on the general ignorance of the public to maintain the charade. A 10-12% fall can have the effect of people searching for information or being more receptive to reality.



I'm looking to buy my first house in the next 6-12 months, and the idea that short term fluctuations are not important strikes me as pretty odd. Put it this way - before March in the area I was looking, you'd have need 500k to get a decent place. If prices go down 10% on that, that's a saving of 50k - but not just that, as it's also a saving of the interest I would have had to pay on that 50k (which over 30 years even at 3%, works out at 75k). That 75k is about a quarter of what I would need to save on top of government super to have a 'no frills' retirement. So 'short term fluctuations' seem like they will make a very big difference to my overall financial well-being.

Yet I'm left thinking that I must have something wrong because of how many times you hear people say things like 'short term fluctuations don't really matter if it's your home, you'll be buying and selling in the same market, etc. So what am I missing?

You are not selling so that’s a huge advantage. Be patient. The bottom of the market in this downturn will sit for a long time. Remember, you make (or save) the real money when you buy, not when you sell.

"if it's your home, you'll be buying and selling in the same market, etc. So what am I missing?"

That comment is intended for existing owner occupiers who sell their existing home to finance the purchase of a new home.

Some examples:
1) people moving to a larger house, (i.e upgraders), perhaps due to couples having children
2) people moving to a different suburb - perhaps to be in a good schooling area for children, proximity to family, etc
3) people moving cities due to job relocation, transfer, etc
4) downsizers (elderly selling the family home to downsize to a smaller property to live in now that the adult children have left home)

Sure, but a lot of the rest of your comment was about first home buyers. I'm not being snarky here - I've heard people say similar things so many times in the past that I genuinely worry that I'm missing something, given that (as I've explained above) it does seem like it does make a big difference if prices go down, even if they eventually go back up again.

Edited to add: sorry, I just realised you weren't the OP whose original comment I was referring to in the first sentence.

"it does seem like it does make a big difference if prices go down, even if they eventually go back up again."

Absolutely agree with you. It make a huge difference as you pointed out in your comment. That is the reason for a number of commenters speaking up for owner occupier buyers on - so that potential owner occupier buyers can make a fully informed decision.

"If prices go down 10% on that, that's a saving of 50k - but not just that, as it's also a saving of the interest I would have had to pay on that 50k (which over 30 years even at 3%, works out at 75k)."

You are bang on the money with your comment above.

People are in very diverse financial circumstances, and many property promoters do not consider the very different financial circumstances of different people. Property promoters are marketing property as they have a vested financial self interest (e.g real estate agent gets a commission for selling property, by persuading a potential buyer to buy - and they have a huge financial incentive to get the buyer to pay a higher price - higher dollar value of sale price means higher dollar value of commission for the real estate agent. Real estate agents try to create urgency and a fear of missing out to persuade the potential buyer to pay their maximum price - which may be unaffordable in the long term as the buyer takes on too much debt, and spends too high a proportion of their income on mortgage payments.)

The other interesting point is that some commenters on who say people should buy:
1) one commenter just sold their multi-million dollar property
2) another commenter has money to purchase property but is not buying themselves.

Thanks CN - I really appreciate that detailed response.

Read about the Peakers vs the Troughers and the different financial trajectories of the one single decision to buy a house.

It should be titled valuation matters.

After being aware of the Peakers vs the Troughers, and with that in mind, here is a reminder for all potential owner occupier buyers and current owner occupiers - choose your scenario and act accordingly.
Which will the owner occupier regret most:

1) missing out on future potential gains in equity?
2) potential loss of their savings invested as the initial deposit for purchase of the house or even potential negative equity?

For owner occupiers, a reminder of the impact of leverage (it amplifies property price changes both on the up and down):
Scenarios of financial impact of leverage on equity, assuming an 80% LVR for owner occupier, for a recent $1,000,000 property purchase, $200,000 initial deposit, mortgage $800,000. (simple round numbers used for illustration purposes)
A) Scenario - property price rise:
1) property price rises 5% to $1,050,000, mortgage $800,000, equity $250,000, so 25% gain in equity value from $200,000.
2) property price rises 10% to $1,100,000, mortgage $800,000, equity $300,000, so 50% gain in equity value from $200,000.
3) property price rises 15% to $1,150,000, mortgage $800,000, equity $350,000, so 75% gain in equity value from $200,000.
4) property price rises 20% to $1,200,000, mortgage $800,000, equity $400,000, so 100% gain in equity value from $200,000.
5) property price rises 25% to $1,250,000, mortgage $800,000, equity $450,000, so 125% gain in equity value from $200,000.
6) property price rises 30% to $1,300,000, mortgage $800,000, equity $500,000, so 150% gain in equity value from $200,000.
7) property price rises 35% to $1,350,000, mortgage $800,000, equity $550,000, so 175% gain in equity value from $200,000.
8) property price rises 40% to $1,400,000, mortgage $800,000, equity $600,000, so 200% gain in equity value from $200,000.
9) property price rises 50% to $1,500,000, mortgage $800,000, equity $700,000, so 250% gain in equity value from $200,000.
10) property price rises 100% to $2,000,000, mortgage $800,000, equity $1,200,000, so 500% gain in equity value from $200,000. (i.e if they believe that the property price doubles every 10 years)
Remember, the owner occupier must be able to hold on under ALL economic environments (including any potential significant reduction in household income).
B) Scenario - property price falls:
1) property price falls 5% to $950,000, mortgage $800,000, equity $150,000, so 25% loss in equity value from $200,000.
2) property price falls 10% to $900,000, mortgage $800,000, equity $100,000, so 50% loss in equity value from $200,000.
3) property price falls 15% to $850,000, mortgage $800,000, equity $50,000, so 75% loss in equity value from $200,000.
4) property price falls 20% to $800,000, mortgage $800,000, equity is ZERO, so 100% loss in equity value from $200,000.
5) property price falls 25% to $750,000, mortgage $800,000, equity is NEGATIVE $50,000, so 125% loss in equity value from $200,000.
6) property price falls 30% to $700,000, mortgage $800,000, equity is NEGATIVE $100,000, so 150% loss in equity value from $200,000.
7) property price falls 35% to $650,000, mortgage $800,000, equity is NEGATIVE $150,000, so 175% loss in equity value from $200,000.
8) property price falls 40% to $600,000, mortgage $800,000, equity is NEGATIVE $200,000, so 200% loss in equity value from $200,000.
9) property price falls 45% to $550,000, mortgage $800,000, equity is NEGATIVE $250,000, so 225% loss in equity value from $200,000.
10) property price falls 50% to $500,000, mortgage $800,000, equity is NEGATIVE $300,000, so 250% loss in equity value from $200,000.

For owner occupiers, an example of buying at lower purchase prices - the median house price in NZ was $680,000 in April, and fell 8.8% to $620,000 in May.

A) purchased in May
1) At purchase
Median house price at purchase price $680,000
Mortgage $544,000 (at LVR 80%)
Equity deposit $136,000 (20% of purchase price)

2) value today
Median house price at purchase price $620,000
Mortgage $544,000 (now LVR is 87.7% due to house price fall)
Equity value is now $76,000 - the original initial deposit of $136,000 is now worth $76,000 - a fall of 44% in just 1 month.

B) Alternatively purchased at today's median house price of $620,000
Same equity deposit of $136,000 as above
Mortgage $484,000 (now LVR is 78.1% due to house price fall) - the mortgage is 11% less than above - resulting in:
i) lower debt service payments, lower interest costs over the life of the mortgage or
ii) same debt service payments as in scenario A resulting in shorter repayment period of the mortgage loan, lower interest paid over the life of the mortgage.

Offcourse it matters. As a buyer, your will maximize your gains if you buy anything you want at its lowest price point. The challenge is timing that price.

So you're confident if any FHBers find themselves under water or in negative equity they will be left alone by the banks as long as they keep paying the mortgage?

NZDan - I can't speak for NZ, but in the US I sold distressed properties for banks and home owners during the GFC - it was about 90% of the homes I sold over a period of 2 - 3 years and I got to know how the banks operate pretty well. Some banks were better than others to deal with - some would talk to you on the phone (trying to help owners in distressed situations), others were extremely rigid with massive contact centres and very little human interaction.

The process evolved somewhat over the time period, but once they got into the groove, banks were doing anything to avoid foreclosing on a loan. Typically there is a fairly long process after you miss the first payment, involving multiple notices and warnings and opportunities to remediate the debt. I knew of some owners who were in default for over a year. Most banks had an entire department dedicated to supporting 'short sales' - where the owner sells the home for less than what is owed, and the bank accepts the loss, with limited damage to the owner's credit rating. Other options existed too, such as refis, government programs, loan holidays etc.

To answer your question, I never heard of a bank even raising an eyebrow as long as the mortgage payments were made on time. Banks do not like to own real estate. It's way outside their business as usual and a total headache for them disposing of assets, especially en masse.

I appreciate your reply, very informative. Was always curious how the situation would be handled, e.g. not ideal for a bank to have $100 million of mortgages backed by $80 million of property but mass foreclosing could turn that into $60 million of property.

A little bit different over here though? In the US you have 20 - 30 year fix terms. Here it's predominately 2 year fixes, that pesky little issue of refinancing. I suppose the banks keep it floating and apply a risk premium? Switching banks will be nigh on impossible.

Condescending much? You said it yourself, there is uncertainty. So why do you think your predictions are worth more than anybody else's?
You're saying people who predict something you don't agree with are scaremongering, fueled by envy, and need "comfy blankets" like scared three and four year olds. This is pure arrogance.
You claim that some of these predictions are unsubstantiated... but 2020 has shown us that the impossible is very much possible, and reality doesn't follow trivial logic. Who are you to say that house prices can't fall by 50%? Why does it upset you so much that there are both 'bears' and 'bulls' in this comment section?

Needs a safe space.

"postings of the anonymous key board warriors on this site who post unsubstantiated comments clearly thinking that they not only know better than the RBNZ, bank economists, and respected commentators (A. Church excluded) but also that the RBNZ et al are all simply ignorant bunnies."

1) The RBNZ cannot make certain comments publicly - it would potentially fuel some panic in the market and potentially create a self fulfilling price cycle - many commenters on are aware of this (especially those who have been active in financial markets for a long period of time - FX dealers, FX traders, rates traders, bond dealers, bond traders, etc). That is why those comments from previous RBNZ officials are so enlightening.

2) in the US, the Federal Reserve did not see the property price bubble before hand

"Unlike an investment property, owning a home is a long term investment (40+ years?) although one will trade on the same market so short to medium term fluctuations in the market are less important - provided one has confidence in servicing the mortgage and is prudent regarding risks and shocks."

There is a commenter on who is a relatively recent first home buyer and bought as Printer8 has suggested. This was their comment on the prospect of recent house buyers who may face significant loss of equity in their recently purchased house (there seems to be a tone of regret at purchasing the property at the price that they did).

"But that's only because while I am unlikely to starve to death on the streets or be totally financially crippled, some of my friends will not be so lucky. Statistically, some of us will not make it out the other side alive."

"I'm conflicted. I'm a recentish (1 year ago) FHB so vulnerable to a correction ... We have a government-owned bank. Speaking purely out of self interest, we could set up a mortgage product that let FHBs still living in their first homes the chance to insure their equity at current levels."

'That is, of course, assuming job security and a willing lender against the backdrop of the COVID-19 crisis.'


Agree.... and how many employed people actually understand how safe their jobs are, how strong the Underlying business is and whether that business will be affected by the global recession we are currently entering?

We really need some reports on bank lending practices. Yvil commented recently from a large scale established mortgage broker that they were getting plenty of applications but that some banks were now looking for a 30% deposit from some borrowers. I have seen comments in a few places that banks are applying stricter lending multiples and taking more conservative valuations.
If banks are unofficially changing internal assessment on lending it would be really good to know. Is there anyway could look into this?
Or how about commentors... anyone FHB/investor/downsizer or traderupper applied for a mortgage recently and experienced any change in behaviour from the banks?

Hi Greg

just this morning I have been speaking with 9 agents in different firms in Auckland and all are saying that property is under contract with back up offers. All at 600 - 735 range. This fully backs what you are saying.
As you say, crux is now job security and lending of banks, over next 6m. Also, pent up demand has to go through from 3m lockdown


I'm a bit concerned about how this headline may affect Yvil's mental health. Are you sure you don't want to sugarcoat it a bit to soften the blow Greg?

Come on Yvil's a smart cookie. He just sold his 1m+ home (presumably is renting) and owns a motel receiving government subsidies. He is probably in a better position than anyone to capitalise as he will be able to pick up a similar property soon for a substantial discount. He also knows the gubbmint cannot stop paying peoples rents (particularly a Labour one), so his motel housing people in need will continue to do well.

I suspect he is rubbing his hands together, not running scared!

Thanks Blobbles, I'm sleeping fine.
Also for your troubles, the drop in prices from March to May this year is similar to 2019, and also to 2018 and most years. Most people don't understand you cannot compare different months, it's like saying March prices were higher than January prices therefore the market is going up, then why not go completely blind and extrapolate these two months into a continuation for the other 10 months… it's just ignorant

Why can't you compare different months like that, Yvil? (I am indeed ignorant about the reasoning behind this).

Al123 you can't compare month on month because there are seasonal fluctuations that are reasonably consistent year on year. I.e. summer's always busier than winter, etc. So you'd want to compare March 2020 with March 2019 to get a real feel of what is happening.

The other stat that is abused by the media is median house prices—watch out for that one. The important one to watch is HPI, because HPI accounts for the *type* of property sold, it's not just a measure of the middle pricing of all homes sold. For instance, in some markets, there might be a big influx of high-end fancy homes (e.g. overstretched owners fearing a crash etc). That would shift the median (i.e. middle) value UP - even though, for example, the price of the typical 3-bed in Takapuna has declined. So some might say, "ooh look, median is up", hoping you'll believe house values are going up, when in reality, it's just that heaps of people are dumping their expensive mansions, and in fact, prices are going down.

So you have to watch these little tricks, it's how people on either side - bulls and bears - twist the narrative to suit the story they are selling... And the reason they are selling a story, is that markets are influenced heavily by people's beliefs about that market. If everyone thinks it's going up, FOMO sets in and lo and behold, it goes up. Same if people get fearful of a crash - they stop buying, which precipitates a crash. Hope this makes sense and apologies if you already knew this.

Thanks Yvil - I do understand why HPI is better than median. With year on year comparisons though it seems like at the very least in a scenario like this they are not that useful. Some markets in NZ have gone up 15% in the last year. So even if those markets dropped 10%, the y o y comparison would still show house prices up on (say) May last year. But it seems like it would be very misleading in that case to say 'house prices going up in Area X'!

You can usefully compare month to month if you take into account seasonal variation.
A more important point is be careful about reading too much into a "pattern" that occurs in just two monthly data points.

So how's your Motel business going Yvil wasn't it in Christchurch, have you decided to keep it or have you put that on the sales market too?

It would be very difficult trying to sell a Motel currently and I wouldn't get a good price for it. We're doing OK (haven't claimed the 2nd lot wage subsidy) because we're accommodating a lot people from WINZ. Hood to have bums on beds but they are more "hard work" than usual guests


Dear FHB
Now is not the time for Fomo.
Look by all means but don't be pushed by agents looking for a quick sale, many of whom haven't made a sale since pre lock down.
If a old house is being pitched towards FHB and over 3 quarters of a million dollars, question the agents on this. They want numbers thru the home, to look good to the seller.
If you've no intention or ability to buy tell the agent a lowball figure.
And auctions are for auctioneers and agents benefit, not yours.
There has been approximately 14000 new builds for the year in Auckland and many more coming, immigration has stopped and jobs are being lost, wages cut for some.
Without capital gains an older house is a liability in terms of ongoing maintenance.
A new build 2 bed apartment of 3 bd kiwibuild will not require maintenance for years giving a stable period to build up equity.
Take your time, do your homework and keep saving that deposit.

Is real estate subject to the fair trading act?


Agents on the whole are not playing the game with any ethics at all. Their favourite sales technique is to create FOMO or as I prefer to call it a "Sense of urgency". Pretty sure they lie most of the time by telling you several other people are interested in it when its already been on the market for months and you need to put in an offer now. Pretty sure I got played a few months back by putting in an offer on a place that was already conditional but was taking far to long and up for the 3 month renewal just so the RE could legitimately tell the buyer there was another offer on the table which possibly pushed them into bridging finance so they didn't miss out.All sorts of dodgy tactics used.

Thats why I ask. Surely they have to be held to account when giving advice to people that could ruin them financially?

Could be.... but remember you can contact REINZ and make a complaint if you suspect fowl play. The fines are quite severe!

Yep there's a lot of wiggle room for agents to be somewhat misleading without being so misleading as to get in trouble for it.

It is the job of the Agent to get an offer to the table for their Client.

Not surprised you have an issue with "Agent and Ethics" in the same sentence. Not an agent fan, sell my own houses when required etc, but If they use fake scenarios to achieve a written offer, that is not a big issue as long as its not illegal. Agents and the Agencies are really motivated on making a sale, any sale. They generally do this by pushing the whole Auction scam whichis designed to put pressure on both seller and buyer to generate income for the agent aka "the commission". Who gets screwed at Auctions is dependent of whether the market is heading up or down. NZ real estate has been a lolly scramble for some time with the foreign influences, mainly bank profit, driving it.

Have to say that when I was an agent, I would truthfully tell people there was no way that offer would go through, and that there would be at least 5 offers on a specific home, and I always felt awful because I knew they didn't believe me. It would take losing 2 or 3 homes for them to trust my advice - which is fair enough. Agents have a bad rep because there are some unscrupulous shockers out there, and some idiots too. Weirdly, even during the GFC when prices were declining, there was huge demand for repo homes, and most sold under multiple offers. Made sense really though, when you'd be buying at a 30, 40, 50, 60% discount.

Are these quarterly after-tax pay figures vs monthly selling prices? If so, maybe more recent pay figures would also show a decline, and thus affordability not really changing much?

> Falling house prices and lower interest rates are making life easier for first home buyers

Until housing prices continue to fall. Then life gets very uncomfortable.

Brought my first house with he sole intention of a place to live and build some equity via improvement and time. Its went down in value on paper for a while after purchase, but myself and wife had secure employment, and as we never missed a payment. Neither we or the bank cared that it had declined as longs as we kept paying.


"That is, of course, assuming job security and a willing lender against the backdrop of the COVID-19 crisis."

Spot-on. Have falling mortgage rates boosted house sales? RE agents' spin is that it does. But, in reality, falling mortgage rates mean nothing if buyers are unable to secure mortgage-financing.And it sure is a problem now.

The very reason interest rates are falling in itself is sign of things to come.

Yes, it's tough times atm, but if you've got a good job & have been saving hard & can land a good deal, this could be the year to buy your fist home. I'm old, but am still heartened to read these FHB stories. Buying your first property is always a big jump. The beginning of your maturity perhaps, settling down, having a family & all that. I can still remember my time providing my one income for four mouths & a greedy bank manager (at 20% at one point) which forces you to grow or go. Sure, I suffered from depression at times during that period, but by sticking together we all made it through, as you (FHB) will do today. You only get one crack at this life & there will be times you have to be brave & bite the bullet. Your early 30's only last so long. If you've found a great partner that's prepared to put up with all your issues & you're ready to nest, this moment (IMO) in time (long term time) is probably more important than what the market's doing. Look. Learn. And good luck.

I'm old too, but the kids don't need a pep talk about being tough, having good habits and sticking it out together. Houses in Auckland were already a "severely unaffordable" 5.9 x average annual income by 2004, and by 2019 they got far worse (9x).

The issue is not a lack of moral fortitude, its that the numbers are totally different to the 1960-70s and are really smashing people's standard of living, and the finance sector is behaving in a way that benefits the already rich.

I did some calculations a while ago, and came to the conclusion that despite the record low interest rates, the average mortgage payment / income ratio is the same as it was when interest rates were at record high levels (mid 80's if I remember correctly). Low mortgage interest rates are an illusion.
The deposit is the difficult part, which takes much longer to save up for than it did 20 or 30 years ago.

Also plenty of "household income" comparatives are often thrown out there, without any mention of household income to average income ratios.
I.e. 30 years ago the average household income was the average income. Today it's nearly 2 x average income for a household income.

At least this article is transparent about this measure (2 incomes), thank you Greg.

"Today it's nearly 2 x average income for a household income."

And if even one of those double income households is affected for a highly leveraged household (and on a high debt service ratio), this could put significant cashflow stress on the household.

Sure lower interest rates may help. But how much will it help if any one of the double income household experiences any (or a combination) of the following?

1) one or both incomes experience a fall - due to salary cut, lower hours worked for wage earners, lower commission income, etc
2) one or both incomes are lost
- due to unemployment - for example both are working in the tourism industry,
- for one who may be a business owner - due to difficulties in the business, the business is now in distress and cashflow negative

"the average mortgage payment / income ratio is the same as it was when interest rates were at record high levels (mid 80's if I remember correctly). "

The debt service ratio for North Shore in Auckland at 47% is crazy high if salary increases in future are going to be negligible (i.e no chance of promotion of position, etc). Leaves little margin for error - now imagine if one of the two income earners in the household gets a paycut, or lower wages due to fewer hours worked, or lower commissions due to lower volumes, or loses their job.

That 47% debt service ratio just massively increased (as income household fell, whilst the mortgage payments are unchanged), and now may be too much for the household to bear if they are unable to maintain their household income at prior levels.

Yes, and even if a household's income holds up, that high debt to income ratio adds an extra risk if all this liquidity berrrrrring out the windows spurs inflation and even moderate interest rate hikes. That risk doesn't show up on the mortgage calculators, but its there in the background.

We have now obviously gone past the turning point where mortgage rates can do nothing to stop falling prices.

FYI, real (i.e inflation adjusted) house prices from 1980 - 2019

Houses seem to be selling well after the lockdown in my area with high prices paid. Haven't seen any sign of prices dropping.

You didn't see the actual data then?

Many people are told that property prices go up and they can't lose with buying property.

In Auckland, the median house price has risen by 180% since November 2003 (from $325,000 to $910,000) - roughly 6.2% per annum for 17 years -

Yet can you believe that people who have owned property in that very same time frame have lost money in property in Auckland?

Take this single property and the two consecutive owners who may have used 80% LVR mortgages to finance their purchase (interest only assumed for illustration)

A) Owner 1 - buys in November 2003
1) In November 2003
i) buys in 2003 for $270,000
ii) 80% LVR mortgage of $216,000
iii) equity deposit of $54,000

2) In May 2018 (after almost 15 YEARS of ownership)
i) sells in May 2018 for $168,000 (38% lower than purchase price)
ii) mortgage of $216,000
iii) equity value is NEGATIVE $48,000 (loss of 189% from initial deposit of $54,000)

B) Owner 2 - buys in May 2018
1) In May 2018
i) buys in 2018 for $168,000
ii) 80% LVR mortgage of $134,400
iii) equity deposit of $33,600

2) in June 2020 - listed for sale
i) listed for sale $1 reserve - no bidders, and property passed in (assume $10,000 - so a price fall of 94% from purchase price)
ii) mortgage of $134,400
iii) equity value is NEGATIVE $124,400 (loss of 470% of equity value from initial deposit of $33,600)

"9H/100 Anzac Ave, CBD. Century on Anzac building. A 31sqm studio. The building has remediation issues and the unit had a rating valuation of $235,000. The property had a declared reserve of just one dollar but there were no bids and it was passed in."

Even though this particular apartment might not be for an owner occupier, I have a friend who is an owner occupier in another apartment complex in Auckland and has owned for 17 years. The property value is still 16% below their initial purchase price 17 years ago (and that is before the impact of leverage). At current market value estimates, assuming an 80% LVR, the owner has an unrealised loss of 82% of their initial deposit. This loss has caused not only a financial toll, but also a mental toll on the owner occupier.

To all owner occupiers - CAVEAT EMPTOR

Lesson on cheap apartments unfortunately. Appartments are done very well in Aussie but here they are not