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Although some of the froth has come off the prices being achieved at auction over the last few weeks, there's nothing to suggest a major collapse in prices since changes to tax rules on residential investment properties were announced

Although some of the froth has come off the prices being achieved at auction over the last few weeks, there's nothing to suggest a major collapse in prices since changes to tax rules on residential investment properties were announced

Activity at the residential property auctions monitored by interest.co.nz has remained steady over autumn.

Over the six weeks from April 3 to May 14, the number of properties offered at auction each week remained between 307 and 359 in all but one week - April 17-23 - when it dropped back to 267.

The sales rate has been even more consistent, ranging from 51% to 59% over that six week period (see the graph below for the weekly trends).

That's down from where it was during the summer selling peak in February/March, when many auctions had sales rates above 70%.

That suggests some of the froth has come off prices, with vendors being a bit more cautious in their bidding than they were a couple of months ago.

However there is nothing to suggest a major collapse in pricing following the changes to the tax treatment of residential investment properties, which the Government announced on March 23.

Even Auckland's CBD apartment market, which has been hit hard by the downturn in international student numbers due to the COVID pandemic, appears to have settled.

At the latest auction by Ray White City Apartments auction, five of the eight properties on offer were sold under the hammer and although the other three received bids, they were passed in for sale by negotiation.

However those that sold generally went for prices that were significantly below their rating valuations, suggesting vendors have accepted that the market for those types of properties has changed, at least for the time being, and are generally being realistic with their price expectations.

Details of the individual properties offered at all of the auctions monitored by interest.co.nz, and the results achieved, are available on our Residential Auction Results page.

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38 Comments

18
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And if it is not on auction, the asking price is still insanely high. This is such a slap to all the hardworking folks. It is really very depressing. I don’t know how the government can go to bed knowing that they duped NZ about their housing and immigration policies. My only hope is that karma gets them very badly for their deceit.

And based on the past couple of weeks of auction activity, it looks like price growth is headed vertical again. Without some significant RBNZ intervention it will be another feeding frenzy in Spring 2021.

The RBNZ will only intervene if it sees inflation or financial instability. We may see inflation but we have heard that before over the last 10 years and it has not happened. I think they would be wise to wait until inflation has bedded in before raising rates. But maybe signal the possibility of some big rises to spook the housing market a bit.

I don't think RBNZ has any tool or intention to intervene.
We will see that today's unrealistic reserve price at the auction becomes the new norm in the coming months.

Precisely. What can be done without massively increasing supply? Also, these days, according to law every property must be of the highest standard. This doesn't increase the number of available dwellings. It reduces the number.

Post GFC 2008, property prices did go down a bit. Why? The banks wouldn't lend readily, a credit squeeze was implemented while they waited for the situation to pass. So that's one way prices can reduce, the banks inability to lend. But that doesn't help the FHB, as they won't be able to get a mortgage. It does, however help qualified buyers, who can buy during depressed times. It's the best time to buy property, when you are the only one interested and able to buy.

One more thing could be tried, banning interest only mortgages completely. But this too would potentially screw over FHBers as well.

The best thing to do is nothing. And wait for the supply to increase, or another big economic shock.

“Such a slap in the face for hard working folks” so you don’t think that people who own property worked hard to own it?

You want a big collapse in the market and hence the economy so you can buy a house on your 60k a year salary.

What a looser. I hope karma gets you and you stay renting for life.

13
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My parents bought their house 40 years ago on a single average salary.

they could do the same today if one of them was an MP or maybe worked for RBNZ.

MP 160-180k. At 5x DTI, 800-900k borrowing. At 80% LVR, $1-1.1m purchase. So possible in AKL but only just.

14
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Yes my dad was a factory labourer and my mother was a stay at home mum of two. Bought a 3 bedroom house in an average suburb in Christchurch in their early 20's without really breaking too much of a sweat. Sure it wasn't easy paying off the mortgage, but they managed. Besides, no first home buyer today is complaining about how hard it is to pay off a mortgage, because many of them cannot even obtain one.

11
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Wow, so you are saying people on the average wage don't deserve a home of their own because you feel more entitled and better than them? So people like frontline workers are loosers for wanting a home for their family? For what so that you can feel rich?

sad to think that 60k is the new poverty base line for the working poor,30 dollars an hour used to be a hoped for wage,but now we know nobody can buy a house with a single income of 60k,you would need double that.

Next year wiill not be surprised if $80000 is new poverty wage.

Thanks to Jacinda Arden and everyone thought of John Key. It is only when one experience, one realized otherwise even Hitler would not have gone as far as he did.

My sentiments exactly. They're not called essential workers for nothing. Nurses and the like. I bet LD faints at the sight of blood

I'm a front line worker, spent many years saving, missing out on trips away summer vacations, movies new phones new anything actually, any money we do have goes on kids sports etc, but after many years we bought a new house off the plans. I say the poor me attitude is crap and its all about perspective, I know of family's who say they are trying to save for a home but yet they have paddle boards, New phones etc, go away at will because they "need a holiday"sick of the bs. Put up or shut up.

You're right, it's not the house price it's the money people spend on fruitless endeavours. Tuition for kids, overseas trips to see grandparents, museum and zoo trips. I even hear they don't take lightbulbs out and move one room to room as needed. No wonder they can't afford a house. They just don't know how to save.
Paddle boards? What happened to just throwing the children into the water, heck even I used to have hours of fun with a piece of string...

10
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Lord Dowding has to be The Man reincarnated as they both have no empathy at all.

Oh Lord, you are so right. I have been too foolish all my life. I helped out when others needed it, looked after my parents, did volunteering, had multiple jobs to pay off student loan, never took out student allowance. Contribute to charity regularly and pay my fair share of tax. I don’t have fancy accountants saving me thousands. Hey but you know what the term for people like us? Doormats.

When a kid steals, breaks in etc, we always think what a bad upbringing and throw them in jail, yet we fail to see what happened that this kid turned to this. The severe divide between the haves and have nots are ever increasing. Crimes will rise as a result of this. As for me who gets paid over the 60k salary you mentioned, if I am struggling I wonder what it is like for those in 60k salary. Living a normal decent life is not rewarding. Deceit, loopholes, walking on others, greed, etc are only rewarding. Today is a bad day for us, yet another offer rejected because of a finance clause even though we were willing to pay exceptionally higher than what it is worth.

New Zealand doesn’t want people like us. It only wants rich investors interested in greed and gluttony. Most young New Zealanders will be forever slaves in our nation. I never thought I would say this. I really wish my parents were wealthy. They are not. Perhaps the government should make selling organs legal. May be I will have a chance then?

$60k is a below average salary but these are a lot of the people complaining they can’t afford a house and wanting the economy to crash for some delusion that it will suddenly get them one.

Instead of being so spiteful why don’t you try working smarter and not harder. My career has been stalled since covid started. No income. Indefinite leave.

But I still pulled the trigger on buying a house last year as we had more than 30% deposit. We paid a lot of money for a pretty nice but not spectacular house. I didn’t want to rely on my wife’s income alone so in that time I started a business which has boomed remarkably well. Our house would sell for about 150-200k more than what we paid for it but that isnt important as we will be here many years.

Even if I didn’t buy in that time I would not be on here consumed with envy parading schadenfreude to all those that have what you want. Hoping the aircraft crashes will all the country onboard is utterly shameful.

Good luck.

Congratulations on your achievements so far. As for your comments on schadenfreude, I think you got to look in the mirror. Just because you got something at the very right time and all stars aligned for you doesn’t mean it does for everyone. Not everyone can just start a business. Remember businesses needs workers like me, unless ofcourse your business is properly investment. I am not envious of you. I just want to progress in life and it’s not an awful ask. I am not asking for handouts, I am not asking for help. I am a hard working person who deserves to have a decent life. What I am spiteful of is greedy people. If you think I am spiteful of you, it’s not you, it’s your never ending greed. Keep feeding your massive ego. From the likes you have received we can say majority here are decent people hoping for a decent living. Considering 70% of NZers want the property prices to fall I know I am one among the people rather than the likes of you who have a super high opinion of yourself surrounding yourself with people who stroke your ego.

Keep stroking it buddy. Karma is sure to get you one day for the way you look down on others.

I own 1 property pal hardly greedy.

But I do not wish for the economy to implode for the few that are finding it hard to buy.

Happy for prices to stop rising yes but not by throwing the baby out with the bath water.

You are correct as today is few FHB but if continues will be non left.

Lord Dowding, congrats on the home and sharing your story. I am happy for you. Sending you much well wishes for your business. Have a good evening.

$60K wouldn't be a below average salary in NZ, far from it, thats a high salary. Perhaps you could argue the problems all started when more women went out to work, the average household income suddenly took a big jump and it allowed house price inflation to continue out of whack. Now if your mortgage borrowing is based on two incomes that creates a whole pile of extra risks. We made world news the other night again on Aljazeera for all the wrong reasons, our stupid high house prices and homeless people shown sleeping on the streets, great images NZ well done. Also front page news down here in Tauranga the couple on $140K that cannot afford a house........

Your problem is you think you are owed something, stop crying, no one actually gives a crap. You are a socialist, that's okay, but I for one believe life's not fair. Life's short, get ahead, provide for yourself and your family, have fun then you die. Good luck with your socialist ideological ideas of a fair and even life. Oh and if a kid breaks in or steals he creates victims, they are the priority, not this offender based wo as me crap.

Fully agree with you. I bet if everyone had left NZ and the population continued to dwindle down every year, he can own all the houses/land he wants, but no one would want to buy it from him nor would there be something called a "working economy" in NZ anymore as there would be no jobs, no companies, no investment for infrastructure, etc. What a great country to live in huh?

While we are at it, why not get rid of immigration, and all non-native New Zealanders? Yes, that would mean all non-indigenous people. I think that would only be fair since we want to talk about equality now right? Everyone can just go back to their ethinic routes of Europe, Great Britain, North America, Asia, etc.

What a naïve comment; hoping for a housing crash. Destroying people's livelihoods just so you can benefit from hard working people's suffering.

16
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https://www.newshub.co.nz/home/politics/2021/05/newshub-reid-research-po...

Jacinda Arden.....Jacinda Arden....are you listening that even most kiwis want the insanity to end and you were wrong that house price should continue to rise despite 50% jump in a year.

Ask your FM and Reserve Bank Governor to meet to act ( not discuss).

"Although some......there's nothing to suggest a major collapse in prices since changes to tax rules on residential investment properties were announced"

Mr Orr has delayed the announcement with hope that may be ....may be....he will be able to hide behind data and use it to not act on Interest only loan and DTI, as data is normally soft during winter but alas ........

Now even after two months of announcement by Jacinda Arden and reintroduction of LVR, ponzi still continues, SO......will the Almighties act now.

If Mr Orr was seriously waiting to see the effect of housing policy and LVR on house price and IF had no hidden malice intention, should act and act fast.

Now it is Mr Orr's intigrity which is at stake on 26th May. He may have got away earlier, many a time but this time will be under microscope - His Judgement day.

I don’t see how stoping interest only loans will help. I doubt there are many people buying houses that can’t afford the principle payments as the banks are very cautious about that, I know through my own experience. Interest only loans are mostly a tax dodge to minimise profit and tax, and have almost been made pointless by a very wise move by Labour.

14
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Interest Only loan is the reason many Speculators are able to indulge in speculative activities.

This is not a silver bullet but closest to silver bullet in targeting speculative demand and is the very reason that Mr Orr is hesitant to stop IO as the ponzi may actually stop.

Can't people just take the hint and buy investment property? The government and Reserve Bank want to make you wealthy. This is the greatest lolly scramble in a generation, prices and affordability don't matter...just buy.

The Dutch had a similar Lolly scramble didn’t they? Lollies are never good for you long term.

"there is nothing to suggest a major collapse in pricing"

The fact we are all wondering whether they should collapse is reason enough to suggest it may happen.

No the only reason that is a discussion is because prices are up 20%+ in the last year and Adern and the Greens have tried everything they can to attack Investors and stop the demand. They might have investors on pause but the vast majority of purchasers are OOs.
OOs want a property to give them and/or their families security, pride and comfort. Essentially it improves their lives and therefore the emotional demand will always be there as we are seeing.

Sheer failure of Arden & Robertson policy announcement, but at least they give it a shot to rectify the f***up.

Orr didn't even try to do anything other than hiding under a blanky "better go to hell & don't come back from sick leave", I bet if Orr's position will be empty for rest of the term there will be better outcome.

This survey result could wake up the government-73% want the property prices to come down!!!
https://www.msn.com/en-nz/news/national/poll-shows-kiwis-don-t-think-gov...

It's not a matter of choice. They simply can't let house prices fall. Because if they do a) The economy tanks and b) They are chucked out of office.

Do agree. But 73% of kiwis say price should drop. Though don't know the survey numbers or locations.