Auckland's housing market may be at a turning point and could start to cool next year

Property

We may be looking at the beginning of the end of the current housing boom, Realestate.co.nz figures suggest

2nd Dec 20, 5:31am by Greg Ninness

Auckland's housing market may be close to peaking and could start to cool next year.

The latest figures from property website Realestate.co.nz suggest the Auckland market is on a different course compared to the rest of the country.

Although the website received 12,622 new listings from throughout the country in November, up 14.5% compared to November last year, the total stock of dwellings it had available for sale at the end of November was 18,319, down 16.9% year-on-year.

Over the same period the average asking price of all the residential listings on the website increased by 3.2% between October and November.

Those national figures all point towards the sort of overheated property market other indicators are suggesting.

However the Auckland figures paint a different picture.

Realestate.co.nz received 5195 new Auckland listings in November, up a whopping 45.9% compared to November last year.

That was the highest number of of new listings for Auckland in the month of November since 2007, and the highest of any month of the year since March 2008.

And it was not just a monthly aberration.

New listings in Auckland have been running at significantly elevated levels for the six months from June to November and that is showing up in the total stock levels for the region.

While stock levels for the country as whole were down 16.9% in November compared to a year earlier, in Auckland they were up by 0.5%.

Not surprisingly, average asking prices in Auckland increased by 1.5% between October and November, which was less than half the national rate of increase.

All of the those figures suggest that supply and demand are moving more quickly at getting into some sort of balance in Auckland than they are in the rest of the country, and that if the Auckland market hasn't already peaked, it may be getting close to doing so.

There's an old saying in real estate that Auckland leads the market and the rest of the country follows. If that's the case, we may be looking at the beginning of the end of the current housing boom.

However 2020 has been nothing if not unpredictable and 2021 is likely to offer more of the same.

On the one hand the Reserve Bank appears committed to spewing out more cheap money into the banking system, most of which appears likely to end up in residential mortgages, and mortgage rates are likely to fall further.

On the other hand the Government is increasingly getting its panties in a twist over affordability issues, with a restructuring of the Bright Line Test for taxing property re-sales on the cards. And the Reserve Bank is moving to reintroduce restricitons on high loan-to-value ratio new mortgage lending from next March.

So whatever happens in the housing market next year, it won't be dull.

The comment stream on this story is now closed.

We welcome your comments below. If you are not already registered, please register to comment

Remember we welcome robust, respectful and insightful debate. We don't welcome abusive or defamatory comments and will de-register those repeatedly making such comments. Our current comment policy is here.

82 Comments

by Squishy | 2nd Dec 20, 6:16am 1606843012

Given housing represents an increasingly large slice of New Zealands econony will RBNZ allow house prices to cool? My thought would be any hesitation in price inflation would be passed through to CPI and RBNZ would trigger a new tsunami of liquidity.

by printer8 | 2nd Dec 20, 7:29am 1606847344

I agree with the headline but it depends what we mean by "cool".
Clearly the current levels of increase are not sustainable and even REINZ have stated this. I posted about a month ago that I see the market being flattish next year with some minor correction as was experienced 2017 - 2019 but quite likely for a longer period of time; I see that as "cooling".
Will RBNZ be prepared to live with this? While they have committed to FLP which will provide some stimulus they have also signaled LVRs for March next year.
So yes, RBNZ will seemingly allow this.
As the vaccines roll out, and economies not only adapt to a Covid world but also activity begins to pick up there will be less need for stimulus such as need to protect employment.
However, I don't think that after all the actions RBNZ have taken to simulate the economy and as a consequence housing, I don't think they will be willing to see all that undone. So I expect that will take whatever action required to try and avoid a major correction.

by Squishy | 2nd Dec 20, 8:55am 1606852510

I see your point but have you taken into account that CPI is still under RBNZs forecast with house prices rising at this rate and that New Zealand likely has one of the least closed economies so there is less bounce to be had?

by printer8 | 2nd Dec 20, 9:11am 1606853468

Likewise I agree with your point.
I note that the government and RBNZ are in talks regarding housing and as I understand it’s the government that sets the target and to whom RBNZ are ultimately responsible There may need to be some compromises on both employment and inflation if government accept that the housing issue is urgent and high priority.

by Squishy | 2nd Dec 20, 10:57am 1606859831

You know more about economics and policy than you do about politics and government. :-)

by Hamish | 2nd Dec 20, 8:52am 1606852340

Well once upon a time, sheep meat and wool used to make up a big chunk of our economic output. But I guess houses are different.

by Squishy | 2nd Dec 20, 6:11am 1606842682

by LFCYNWA | 2nd Dec 20, 6:09am 1606842599

Unlikely

by stuart786786 | 2nd Dec 20, 6:16am 1606842963

When their is news that RBNZ and Government may act - reluctantly as been forced and have no real intent still -still so called experts and media mostly supported by rich and powerfully RE lobby will start blackmailing government on tax or anything (as they know that Labour party has a complex of being portrayed as anti business and to prove otherwise easy to be blackmail or influenced ) and also news about cooling housing market...........anything to influence and deter Labour government for whatever little they may be forced to do to stop speculation.

Let us be honest, only economy in NZ is housing economy and no one wants the ponzi to stop.

by B727 | 2nd Dec 20, 6:20am 1606843233

Great- no need for rent controls or any other Bolshevik rubbish!

by PocketAces | 2nd Dec 20, 6:24am 1606843488

Is that because it is really, really good to have a few people owning all the houses while the rest can barely put food on their tables from having to pay for them for them?

by Zachary Smith | 2nd Dec 20, 7:31am 1606847477

You are exaggerating.

by tfair | 2nd Dec 20, 10:09am 1606856998

So is the guy whining about Bolsheviks above, welcome to the comments section - where hyperbole and ignorance are the name of the game

by Sprinkles | 2nd Dec 20, 6:41am 1606844492

Come'on Ace - where would we be today without the RBNZ's "bolshevism for Bank-owners"? Since 1934, this country has a proud history of socialism for the rich, propping up banks too big to fail, and ensuring their bank-owning school chums never have to see a loss. State intervention is only distasteful when it favours the common man.. Let's not forget it!

by Kate | 2nd Dec 20, 6:50am 1606845017

Yes need;

Becroft said he was calling for an increase in benefits, increased supply of state and social housing, and “new ways” to manage rental costs.

https://www.stuff.co.nz/national/politics/123565920/new-report-not-enou…

Point is, if we don't pursue these "new ways", the call for more taxpayer subsidisation of the cost-of-living just grows louder and louder.

by Flying high | 2nd Dec 20, 7:57am 1606849027

Kate.... apart from wgtn, rents are not going up that much. So why are rents in wgtn and lower NI rising but not the rest of the country. That's the question you should be asking. Could it be something to do with new HH standards forcing them higher... houses in wgtn need a lot of work to bring them up to standard or am I wrong about that.

by pin3cone | 2nd Dec 20, 8:27am 1606850826

Public sector attracting both full timers and contractors, tech sector in Wellington is strong, rates going up by an anticipated 22%, nowhere easy left to build, most buildable land is owned by private land bankers. Difficult to build up - strict earthquake standards. The rate of demand continues to outpace the rate of supply. I wouldn't say you're wrong about the HH standards, but I'd say most LLs are cashing out rather than upgrading them to the required spec.

by Basil brush | 2nd Dec 20, 8:39am 1606851555

Come on @flying high. Can you look yourself in the eye and tell yourself the favorable tax treatment and incentives for property investors isn't exacerbating the issues in housing affordability? We've all got different views on this subject but I think we all need to acknowledge a core number of facts.

by Dale Smith | 2nd Dec 20, 2:38pm 1606873113

Yes, these other things are exacerbating the problem BUT only because of the lack of any supply of alternatives. If affordable new supply was allowed that already had these benefits then any outdated stock would be discounted back to reflect this.

by Hamish | 2nd Dec 20, 8:53am 1606852438

It would be cheaper to just hand out 40% off puffer jackets to all.

by tfair | 2nd Dec 20, 10:14am 1606857264

What is so difficult for people like you to understand - it doesn't matter how many layers you put on, windows you open, or walls you scrub. If there is visible mold in a crappy old damp home then there is also unseen mold being breathed in also.

by Kate | 2nd Dec 20, 9:33am 1606854789

That's the question you should be asking.

No need to ask any questions - we just need to demand the government take action that is not at the expense of the general taxpayer.

The welfare state is not there to subsidise the cost-of-living for working New Zealanders. The cost-of-living needs to come down and the best place to start is with the largest expense for most people (accommodation).

Monetary policy is providing cost-of-living relief for asset owners - so regulation (fiscal policy) has to do its bit for non-asset owners.

by Flying high | 2nd Dec 20, 10:18am 1606857494

No need to ask any questions...

Ok that's fine you but it may not help your one eyed cause when people point this out to you. Hahhahahaha keep hammering away Kate,,, I have someone hammering away for me

by Flying high | 2nd Dec 20, 11:03am 1606860214

I have just realized that this is just a wind up... probably to scare off potential younger investors. You have already said you don't care whether there are negative consequences from fixing rents and now it's the one eyed "no need to ask questions" or have a solid view.

by Flying high | 2nd Dec 20, 8:05am 1606849527

Life is what you make of it... sam Morgan grew up poor and look at him now...

As a child, Sam lived with his motorcycle-riding hippy parents and two siblings in a house bus parked in a Newtown backyard.

Too poor to afford a mortgage, his mum Jo drove buses for the council, while dad Gareth pored over horse race statistics hoping to develop a get-rich-quick scheme.

Sam Morgan - the boy's done good - NZ Herald
https://www.nzherald.co.nz/nz/sam-morgan-the-boys-done-good/UMLNSZSRQ6C…

by Dale Smith | 2nd Dec 20, 2:50pm 1606873813

You really need to add in the next sentence to give context.

'The horses failed him but Gareth became a successful economist instead and got the family out of the bus and into Wellington's posh Oriental Bay.'

But you have to give it to his Dad, what a great segue, horse race statistic get-rich-quick schemes (I think a few horse people have just been convicted of similar-sounding schemes) to a successful Oriental Bay economist.

And 'nex minute' head of a political party.

by Flying high | 2nd Dec 20, 5:14pm 1606882473

Its a tough road lifting oneself out of poverty particularly with a family in tow. The morgans have made lots of money from their trademe idea and beat eBay to the punch.

by karl seastrand | 2nd Dec 20, 9:10am 1606853449

B727...wouldn't want to do anything to endanger resumption of your business class holidays even if it would allow people to put food on the table and clothe their kids.

by B727 | 2nd Dec 20, 9:38am 1606855111

No international flights currently so no BC for me either!

by karl seastrand | 3rd Dec 20, 12:35pm 1606952127

I've never paid for business class....or increased rent on an existing tenant!

by PocketAces | 2nd Dec 20, 6:23am 1606843380

Cool? To what? A bit less unaffordable?

by alittle | 2nd Dec 20, 6:56am 1606845362

Affirdable means rise by 50% than fall of 10% to pacify FHB this is the way experts and government screws average KIWI

by takapuna | 2nd Dec 20, 6:37am 1606844239

Could an explanation for this 45% jump in listings be simple pent up listings activity that was differed because of disruptive lock downs in Auckland?

by mikekirk29 | 2nd Dec 20, 8:38am 1606851480

Always important to look at what we are comparing to. Listings in 2019 and 2018 were weak and old stock OTM was about 32% of total stock.
Ditto, sales, which were on 5 year lows in 2019.
Hence second half of 2020 looks v manic by comparison.
Yet sales still 4,000 below 2013 in Auckland, on 12m running basis.

by alittle | 2nd Dec 20, 6:53am 1606845210

MAY be cool from NEXT YEAR.....

1 : Not sure but may be cool from nezt year
2 : What happens till Next year.... After 50% rise.

Why this Hypothetical theory/article now, when truth/fact is that housing market is on fire and average rise in Auckland is as much as from $4000 to $6000 per week and not $2000.

by Quiet Desperation | 2nd Dec 20, 9:43am 1606855439

I imagine it's the same reason behind this article from him eight days ago over at The Spinoff:

'Are first home buyers really in a worse position than three years ago?'

https://thespinoff.co.nz/money/24-11-2020/are-first-home-buyers-really-…

by Nifty1 | 2nd Dec 20, 10:25am 1606857930

Saw an article yesterday saying that FHB's are starting to loose interest in property with high prices & auctions. Do these articles try and reign people back into RE?

by karl seastrand | 3rd Dec 20, 12:41pm 1606952490

QD.. I have asked Greg Ninness to write an article on exactly this several times. Sadly he has never obliged or responded. Why? Who knows?

by northman46 | 2nd Dec 20, 7:16am 1606846598

Orr - "Hold my beer"

by CourtJester | 2nd Dec 20, 10:37am 1606858650

He's been doing this stuff for so long I'm starting to worry he'll get dehydrated

by Nifty1 | 2nd Dec 20, 10:40am 1606858849

IV drip, he's got it sorted. Don't worry.

by nigelh | 2nd Dec 20, 7:18am 1606846707

"From each according to his ability, to each according to his needs" In the NZ context the need is a few rentals and ability is to be able to borrow easily.

by VeryInterested | 2nd Dec 20, 7:28am 1606847330

This is not unique to New Zealand. We are nothing special. We are just following what is happening throughout the rest of the world. Central bank policy is to allow people to borrow as much as possible as cheaply as possible - in other words take on massive amounts of debt because it's cheap and therefore affordable. The borrowing Is completely centred around personal borrowing - no appetite for lending to businesses. Looking at the bigger picture what does this tell you? That we are somehow special and invincible? Or that we are up sh1t creek in a sinking boat without a paddle.

by RichMuhlach | 2nd Dec 20, 8:42am 1606851726

This is my take on it as well - it's a global problem and we'll soon see the effects of the coronavirus lockdowns from Feb / March manifest itself a year later in 2021. Basically when the virus hit, all governments around the world responded with lockdowns, stimulus, mortgage deferrals, wage subsidies, halt on evictions etc. Those basically bought us time to get to where we are now, having more knowledge on containing the virus (well, here in NZ we do, but the USA is another topic) and potential vaccines getting rolled out. But because people weren't forced to sell (so less supply) and cheap credit influenced people to buy (more demand) then obviously prices have risen. But come 2021, once more businesses close down and unemployment rises, more people will be forced to sell and there will be less people available to buy. NZ is not in a unique situation at all. This will first happen in the US then followed by Europe / Canada / Australia, then Auckland will soon follow. Then the rest of NZ. It will be a synchronized global slowdown.

by Nifty1 | 2nd Dec 20, 8:01am 1606849309

Stock is up in Auckland but it's terrible - North Shore/Rodney anyway. Poorly maintained & out dated. As soon as something decent comes to market it's snapped up in a week.

by mikekirk29 | 2nd Dec 20, 8:35am 1606851304

Hi Nifty,

I keep a record weekly of RE NZ stock for different districts. On November 28th 2019, Rodney district had 847 houses and townhouses OTM. It is virtually identical now.
But on Hibiscus Coast listings are way down, by about 20%.

by Sam Hill | 2nd Dec 20, 8:20am 1606850447

Some small towns are still catching up to Auckland from the pre-Covid price rises. It's very hard to justify houses in Tokoroa and Taumarunui selling for the same price as a three bedroom house in Tauranga, but in some cases this has been happening.

There is a lot of cheap money available that is fueling a one-product asset bubble. There are some very over-priced houses on the market and when we do finally get the correction, some communities are going to be financially ruined, while others likely won't see much of a correction at all.

How that correction occurs isn't likely to come through any change to supply. It's probably going to come through homeowners losing their jobs and needing to sell their home to put food on the table. The government paid half the country's wages for six months this year, and that money is starting to run out. The "kindness" will probably last til Christmas, but I expect there will be some grim faces early next year when the Christmas spending figures come in.

That scenario seems distant to a lot of commentators, but it's the most likely situation where we will see a sell-off.

by WellingtonInvestor | 3rd Dec 20, 12:40am 1606909206

Yes, some places in NZ are now looking very expensive, even when compared to Auckland. I think many areas are overcooked. Auckland Kiwibuild new houses don't look too badly priced, even though they don't look like great options.

by pin3cone | 2nd Dec 20, 8:21am 1606850487

So... Aucklanders moving out, creating overheated markets in other regions?

by mikekirk29 | 2nd Dec 20, 8:26am 1606850787

Auckland stock is different to what it was a year ago, although only slightly own in total.
The over 3m OTM proportion is lower by about 7% due to increase in turnover, which has risen about 50%.
That is, stuff sells a lot faster and a lot of stuff selling is not built yet (which used to clog up listings like bad oil in bottom of your sump.) That sludge is getting sold!
Also, the slow down in new listings per day started 3 weeks ahead of usual seasonal norm and has fallen 16% off the peak. So the "slowdown" or moderation, has in fact commenced already. Prices still rising however.

by B727 | 2nd Dec 20, 8:41am 1606851678

What happened to the 25% drop you were forecasting in April this year?

by mikekirk29 | 2nd Dec 20, 9:05am 1606853128

Again I will explain: in mid 2019 I forecast that prices in Auckland (median) would fall to $670k by end of 2021.
It is now December 2020 and no financial crisis has occurred YET.
As most financial commentators of erudition acknowledge, this is because of massive QE, far in excess of that 2008-13, already (in 10 months, not 5 years) + government largesse.
None of that, or CV19, was in sight or forecastable, in mid 2019. Plus interest rates cut in half and LVRs removed.
So, hardly surprising that my forecast has been derailed is it?
Prices will continue to rise until some of the above factors are removed, or we have an economic crisis that all of above factors are designed to prevent.
All these factors mean it is NOT a free market, so normal predicators of market cycle of sales and prices are anaesthetised.

by Bananafishbones | 2nd Dec 20, 9:55am 1606856147

Agree with all of that however do you honestly think Labour will allow a resumption of a free market and the potential it has to cause damage to its new found friends.

by mikekirk29 | 2nd Dec 20, 8:32am 1606851144

A little ill-advised, Greg, to use term "panties in a knot"
Wiser to keep it gender neutral!

by sparrow | 2nd Dec 20, 11:25am 1606861541

Undies in a twist, perhaps.

by youngdumbandbroke | 2nd Dec 20, 12:46pm 1606866392

So you're saying as a bloke I can't wear panties? The audacity of some people!!!

by karl seastrand | 3rd Dec 20, 12:50pm 1606953012

mikekirk29...in this day and age he needs to be more inclusive. What about those who don't wear panties? They must feel terribly marginalized and left out.

by b21 | 2nd Dec 20, 8:33am 1606851215

This week we knew more and more buyers thinking it is not a good moment to buy and given these listing numbers sellers think exactly the opposite, it is a recipe for prices to start going down and summer will also help in that respect.

by sit23 | 2nd Dec 20, 8:49am 1606852154

The Labour Party will have a pretty close figure of how many of the people who voted for them have houses already, and how many don't. My suspicion is that they have to pay lip service to the non house owners, and actually look after the owners. We will know by their actual actions, not their semantically careful words, what they really intend. Bringing in a new Bright Line tax doesn't count of course. Grant is starting to seem as financially imaginative as his Dad.

by b21 | 2nd Dec 20, 8:52am 1606852326

Their narrative is limited to saying this is happening in other countries too, which is as simplistic as it gets. They miss to mention they can but won't do anything about this but probably a simplistic sentence that can make it to a short header works for most of the population and they know it.

by Squishy | 2nd Dec 20, 9:03am 1606853027

They campaigned on Nationals policy platform (i.e. do nothing, apply a little window dressing to social welfare etc.) and now they are following through on that. TOP didn't even get over the parliamentary threshold talking about comprehensive reform.

What do voters expect? They made their bed.

by rastus1 | 2nd Dec 20, 9:28am 1606854480

Too simplistic. I own property, i am also a boomer and also a former Nat vote. I voted Nat out for housing reasons and will do the same with labor if they don't get on with it. I have many friends who are of the same mind.

Boomers + Home Ownership does not always = property spruiker.

Its just that noisy property owning boomers control the media narrative.

by waymad | 2nd Dec 20, 9:13am 1606853639

There's definitely an osmosis effect percolating (osmosizing?) out of Awkland. The plumber just around the corner from me is working on a $17m house in Fendalton, by a stream, and in an area badly affected by the Christchurch earthquake sequence. Irrational Exuberance doesn't begin to describe this.....

by Dale Smith | 2nd Dec 20, 2:55pm 1606874139

$16m will be for strengthened earthquake foundations. A group builder will be supplying the rest.

by mikekirk29 | 2nd Dec 20, 9:35am 1606854936

New listings of houses and townhouses on RE NZ yesterday: 111
Prev 6 day average : 176
Prev 6 day average prior to that: 213
peak day: 256 on November 5th.
Market listing is dropping and started doing so 3 weeks earlier than normal.

by sadr001 | 2nd Dec 20, 10:03am 1606856634

Fewer properties on the market means higher prices as there will be more competition for what is available?

by Carlos67 | 2nd Dec 20, 9:58am 1606856295

Hey lets not forget Christmas is now only a few weeks away and summer has not yet kicked into gear. Still more life left in this party yet. If we ever get the boarders open then people are going to start piling in here. Just as property begins to faultier in May 2021, then open the floodgates again, its a sure fire fix. There is no change on the cards as far as I can see. Clearly it doesn't matter who is in government, its just more of the same shit different day.

by Nifty1 | 2nd Dec 20, 9:58am 1606856303

FLP hasn't even kicked in yet, Orr's going to keep this party going!

by Albert2020 | 2nd Dec 20, 10:10am 1606857034

Had an email update on past weekly sales in central auckland from ray white. All sales had price undisclosed? What is the point of this? I would have thought in the current market they would want to be advertising the price far and wide

by Nifty1 | 2nd Dec 20, 10:27am 1606858071

Guess it's at a stage now where prices are discouraging prospective buyers. Prospective sellers may enquire - sale lead opportunity for them?

by VeryInterested | 3rd Dec 20, 6:00pm 1606971637

It’s either a) Agents desperate for business so they ask people to phone in for info so they can be “worked on” or b) The sales prices were not as high as the spruiking suggests.

by Patty2020 | 2nd Dec 20, 11:20am 1606861203

Government and reserve bank need to improve LVR to 50% for investors, and improve investors' interest rates. Otherwise, only a few people will own all the houses, and other people will just wait for HNZ to supply free accommodations. NOBODY wants to work hard to save deposits for a house because it is UNAFFORDABLE!!

by fortunr | 2nd Dec 20, 11:34am 1606862068

Well, there is only so much cheating the system that the RBNZ can do, and the economy balance will sooner or later reassert itself: once the Covid situation gets under control overseas, I expect that a good portion of high-skilled young professionals will leave our shores as a result of the utterly ridiculous house prices in NZ.
Maybe we will be left with a shallow economy over-reliant on house speculation and with a bunch of boomers selling mostly empty and depreciating houses to each other (PS: I am a boomer myself, so I feel like I can freely use this term).

by Patty2020 | 2nd Dec 20, 11:22am 1606861378

Look at the prices in the sky. How we can say it is cooling down?! Government and RBNZ need to take action NOW urgently!!

by Independent_Observer | 2nd Dec 20, 1:03pm 1606867438

I think the horse bolted - back in about 2013 - now its wild. Trying to tame a wild horse results in injury, meaning the responsible tamers (central bank and government) don't want to go near it.

by Dale Smith | 2nd Dec 20, 2:33pm 1606872817

Here is a new saying, 'Every city/town in NZ is just an Auckland cluster$&%@ waiting to happen.'

by Uncle Bulgaria | 2nd Dec 20, 5:02pm 1606881758

'increasingly getting its panties in a twist' - ugh

by house hunter | 2nd Dec 20, 9:39pm 1606898371

On the other hand we have a currency that is hitting multi-year highs which is hurting exporters and making imported goods more appealing vs domestic goods. Seems to me that dealing with that problem could be at odds with a cooling of house prices.

Also, if the vaccine really is just around the corner, that's going to throw some more fuel on the fire.

by Shoreman | 2nd Dec 20, 7:01pm 1606888860

4 more years of upward movement in Auckland prices, no way is it over, 2024 peak.

by Flying high | 2nd Dec 20, 10:13pm 1606900405

What value will Dow Jones be by then probably 50k and total bubble

by Pusheen | 2nd Dec 20, 10:33pm 1606901599

Wishful thinking headlines, just remember even a slight of wind probability or if majority of Economist (which means everyone) forecasting any correction, the opposite knee jerk reactions will be spear headed by the authority. Remember slight spooking house of cards or domino ponzi scheme in NZ? - the whole country will be at risk. Never, happen here.. so to all. Happy investing! - NZ has been promoted worldwide, for single assurances type of investment.

by flyer | 3rd Dec 20, 11:24am 1606947892

How many times have commentators said this? And yet the price keeps going up and up.

Let's face it, just materials and labour costs alone will keep the prices high!