Tony Alexander/REINZ survey shows housing market cooling on all fronts

Property / news

House prices declining, listings rising, FOMO being replaced by FOOP - the latest survey by Tony Alexander and the REINZ is grim reading

6th May 22, 10:29am by Greg Ninness

Tony Alexander.

The latest survey of real estate agents by the Real Estate Institute of New Zealand and economist Tony Alexander suggests the housing market could be grim over winter.

Responses show overall market conditions remain weak, with agents reporting first home buyers and investors are less active, prices are falling, FOMO (fear of missing out) is being replaced by FOOP (fear of over-paying), and interest from overseas buyers is at a two year low.

On top of that there is an abundance of properties being listed for sale.

Overall the survey's results suggest the housing market is continuing to soften.

A net 65% of agents surveyed reported fewer people attending auctions, while a net 63% reported lower attendances at open homes.

Also, a net 60% of agents reported that prices were declining in their area, up from 51% last month and a complete reversal of the situation in October last year when a net 60% reported prices were rising.

The number of agents reporting prices are falling is now at its highest level since the survey began.

There has been an even bigger turnaround in the number of agents reporting that FOMO is driving the market.

In October last year 70% of agents reported FOMO was a factor in the market but in the latest survey that had declined to just 6%.

The survey also found that the reopening of New Zealand's borders had not resulted in a lift in buyer enquiry from overseas.

In fact overseas interest continued to decline with the number of agents reporting less interest from overseas hitting a record 51%.

"There is no border-opening induced flood of Kiwis looking to resettle back in NZ in a purchased home, and no rush of enquiry by migrants anticipating residency visas either," the survey's summary said.

On a slightly more optimistic note, there had not been a flood of investors looking to sell their properties either.

"There is no wave of investor sellers hitting the market," the survey summary said.

"Despite rising interest rates, tax changes, Healthy Homes legislation and altered landlord flexibility in management of tenants, investors continue to see benefits of long-term holdings of residential investment property," it said.

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194 Comments

by Fitzgerald | 6th May 22, 10:48am 1651790881

So a softening market is described as "grim" and "weak", and signs of potential listing shortfalls are described as "optimistic".

All media (Interest.co.nz included) are too biased towards the perspective of people who already own property. The media completely ignore the perspective of people who cannot afford to buy a home.

It is sick. It is disheartening. It is mindless. And I am sure that this terrible bias in all media (including interest.co.nz) has contributed to depression and mental health problems for those poor suckers who got stuck on the bottom half of the K shaped recovery. These people are not only stuck in overpriced rentals (like olde timey serfs), but they must face a constant media barrage that portrays the status quo of unaffordable houses as a good and desirable thing.

A recent survey showed that the vast majority of Kiwis wanted house prices to fall.

So why all the doom and gloom and emotive reporting? Why can you not report from the perspective of non-property owners? Check your biases please Greg.

by Independent_Observer | 6th May 22, 10:57am 1651791471

Having the worlds most expensive houses Fitzgerald is a sign of success! If young people are depressed and suicidal because they can't see a way forward/future in their country of birth, who cares! Capital gains for those who are already well off are more important than providing opportunity for younger people....(sarc obviously).

by refactornz | 6th May 22, 11:42am 1651794126

NZ doesn't have the world's most expensive houses.

by malamah | 6th May 22, 11:47am 1651794452

A nit pick but sure. Most expensive/least affordable in similar vein.

by Gummy Bear Hero | 6th May 22, 12:15pm 1651796138

Demographia had Orc Land at just 8'th most unaffordable cities in the world ... as a ratio of average house prices to average local household income ...

... 11.2 at the time ... about 3 or 4 times the long term average , of 3 to 4 ...

by Dale Smith | 6th May 22, 6:00pm 1651816840

You might want to watch this: https://www.youtube.com/watch?v=3-b2ydB_JTw

and read this: http://www.demographia.com/dhi.pdf 

by RCD | 8th May 22, 10:43am 1651963412

As soon as i saw this article heading "Grim" I thought, NO this is fantastic news, later this year i might actually be able to buy the property i wanted.

by Markus | 8th May 22, 5:46pm 1651988799

This may only be possible if you still have employment. If house price falls and interest rate hikes continue at the current pace, many might find themselves unemployed in an economic crash, unable to get a mortgage. If house prices were to fall to deposit level (i.e. a fall by 80%), the deposit may also disappear due to bank insolvencies.

In other words, beyond a soft landing of the market, it is an illusion to think that many renters waiting for opportunities may benefit. An illusion that many on the sidelines have - that they will benefit from falling prices. Up to a point yes, but once we leave correction territory and enter a serious crash followed by economic collapse, renters waiting to buy will NOT benefit. Who benefits from total collapse?

by Advisor | 6th May 22, 11:03am 1651791789

I believe the majority of Kiwis don't realise how dependent their jobs are on house values holding up or perpetually rising. A sustained fall in house prices will cause job losses in financial services, construction and real estate but the ripple effects will arguably be much worse in hospitality, domestic tourism and non-core retail.

Look closely and you'll notice the government and RBNZ's Covid response has further increased this dependency in the absence of foreign tourist dollars.

Obviously, most of those who can't buy a home at all-time highs may not have the income and savings to buy under gloomy macroeconomic conditions either.

by WestieAJ | 6th May 22, 11:12am 1651792326

That is why there will be one more 50 bps rise this year. No more after that and a 25 bps cut as close as politically possible to election 2023.

Construction will fall off a cliff Q3 2021. Rents will start falling. The revised CPI weighting that was given to these two on the way up will have reverse effect on the way down. Inflation will be officially subdued. Except for food prices but that's not important.

by Small Kev | 6th May 22, 11:44am 1651794258

“Obviously, most of those who can't buy a home at all-time highs may not have the income and savings to buy under gloomy macroeconomic conditions either.”

100% correct, those who can afford can buy in any condition. If price fall 50% they will jump in and pick up 2 or 3 houses and then price will come back up again. Makes no difference at the end of the day.

by CapitalNone | 6th May 22, 1:21pm 1651800061

Yes it will be tough on the economy - but lets not listen to those who are just trying to protect the status quo this time.

Perhaps this would be an opportunity to rebuild to rebuild our economy around a sustainable productive model - rather than rely on real estate debt, that really just steals money from the future. We should have done it after the 2008 GFC - instead bailed out the banks and the real estate markets and created an even bigger mess....lets not do this again!

by Advisor | 6th May 22, 3:47pm 1651808856

Perhaps this would be an opportunity to rebuild to rebuild our economy

That idea was floated when Covid first hit our shores over 2 years ago and the foreign dollars from tourism and international education dried up. The Labour government saw this as a chance to double down on the housing market to save the economy.

So nothing to suggest a rebuild will happen. More population easing perhaps!

by Zachary Smith | 6th May 22, 3:53pm 1651809210

It was certainly a missed opportunity. Everyone was ready for change at that point except the government.

by Pa1nter | 6th May 22, 6:06pm 1651817211

I think giving the government credit for the rapid rise in house prices is a pretty big stretch.

Virtually every economy experienced rapid house price rises. The government were complicit in making debt cheap, which was a contributing factor, but it also kept the entire economy going.

by msp | 8th May 22, 9:57am 1651960670

yes but the intolerable percentage of income that pours into the roof over our head strips that money from every other part of the social fabric...lower housing costs has to lift expenditure elsewhere...surely...maybe not into estate agents or landlords pockets but into Ebikes, EVs, restaurants, sports...spreading the cash a little doesnt sound grim to me...

by KH | 8th May 22, 4:05pm 1651982738

I can't see umemployment rising because house prices trend down.

by Carlos67 | 6th May 22, 11:00am 1651791641

I'm going to call BS on most home owners wanting house prices to fall. Spouting rubbish is cheap and easy, when your house actually falls in price its a different story. People that say drops are fine know in reality its probably not going to happen anyway so opening their mouth isn't actually going to cost them $200K. Sounds like you are really caring though, Aroha NZ.

by Independent_Observer | 6th May 22, 11:07am 1651792037

Lol - do you find it difficult to believe that some homeowners want to create the conditions/opportunity for future prosperity for its young people?

Hardly BS or spouting rubbish. House prices being where they are is in many respects is the BS and rubbish because of the financial and social instability it is causing.

by Yvil | 6th May 22, 12:41pm 1651797677

"some homeowners want to create the conditions/opportunity for future prosperity for its young people?"

Oh IO, you think you are so morally superior to others

by Independent_Observer | 6th May 22, 1:59pm 1651802354

I think I might be more principled than others, but definitely not morally superior. Then again, believing that a housing bubble that creates financial and social issues is a good thing (and attempting to financially benefit from such a thing) would be a morally flawed position to take, so perhaps from that respect, yes I might be morally superior to some other commentators here in that one small facet of life.

Would that view rile you up or trigger you? If so, it might be a good area for deeper self reflection.

by malamah | 6th May 22, 1:52pm 1651801977

If considering future generations wellbeing as a metric of broader economic success constitutes moral superiority then count me in.

by Independent_Observer | 6th May 22, 2:01pm 1651802462

Strange how thinking that financial stability and the prospect of prosperity for future generations makes you 'morally superior!'

No...I just want fair outcomes and a society that isn't divided and at war with one another over something as simple as housing.

by malamah | 6th May 22, 2:06pm 1651802811

... which creates a diverse economy where all of our wealth isn't tied up in risk assets. What on earth!?

by Independent_Observer | 6th May 22, 2:15pm 1651803330

Yes I think one of the challenges is that we have generations of men who view the world as a competition where I win you lose...as opposed to saying how can we collectively move forward together. Yvil thinks that because I think house prices should come down, that it means I think he should lose. Which isn't true. I just want to see society working together again towards a common purpose as opposed to trying to turn your neighbour into your rent slave for your own personal financial gain.....that is how communities/society become toxic....which is where large parts of the western world have ended up of late (fear and greed is creating the division and instability we are facing).

by Yvil | 6th May 22, 3:17pm 1651807053

IO, since your principles for equality are so superior (that's what you believe) why don't you go to town right now and offer your couch to one of the homeless person to sleep on. He will be better off and you will be worse off, so you will have indeed achieved more equality.

Are you going to do this?

by Independent_Observer | 6th May 22, 3:26pm 1651807566

lol - giving couches to homeless people isn't an example of equality! But nice attempts to drag me into a strawman argument.

BTW - you could give you million dollars of untaxed capital gains from your housing investment (that you had to tell everyone about on here very proudly) to the homeless person so they could buy a house? Now that would be a much better method of solving the inequality issue....giving them a couch....not so much.

by Yvil | 6th May 22, 3:36pm 1651808180

Rubbish, if you offer your couch in your lounge to a homeless person, they have more, you have less, it is indeed increase in equality, so are you going to do it?

by Independent_Observer | 6th May 22, 4:08pm 1651810108

Ok so just to be clear...you gained a million dollars in capital gains from the housing market and in the process increased inequality. But you want me to put one of the victims of your gain (a peson who can't afford housing), in my lounge, on the couch? Why don't you put him up in your longue given you now have a million dollars from housing gains, which means the homeless person may never be able to afford a house now?

This more or less sums up the issue we have in society at present. People want the financial gain that comes from things like higher house prices, but then expect somebody else to deal with the consequences of it.

And if you refuse to be involved in things like housing investment, because you can see the damage it does to society, you get told you've got a bad attitude or act like you are morally superior to those who are/have benefited from it. Yet those same people expect you to deal with the consequences of their actions.

The hypocrisy and ignorance is almost unbelievable.

by Yvil | 6th May 22, 5:36pm 1651815398

Deflecting again.

I'm not the one judging all others for how they make their money, that's what you do, all the time. I'm not the one going on and on about inequality, that's what you do, not me. I said it below, I come to this financial website to get information, so I can make more money.

So in order to increase equality, are you going to go to town tonight and offer your couch to a homeless person? No you're not and that makes you a hypocrite, pointing your finger at others when you're not prepared to do anything yourself.

by al123 | 6th May 22, 5:42pm 1651815751

That's both an ad hominem and a slippery slope. Whether equality in the form of a more accessible housing market for younger people is a good thing or not doesn't really have anything to do with whether or not IO is a hypocrite. Someone can be right even if they themselves are fallible. Furthermore, you can think that equality is an important goal of social, financial and economic institutions, and that people have negative duties not to deliberately exacerbate inequalities, without thinking there is a corresponding individual positive duty to minimize any form of unequal distribution of wealth or opportunity in whatever way we can. It's a pretty common - and I think reasonable - view that we have duties not to go around doing things that would make others worse off (duties not to harm) but that we don't have duties to benefit.

I know you keep saying that the only reason you come to this website is to get information to make more money, Yvil, but it seems you're really getting into the philosophical side of things today!

by mfd | 6th May 22, 6:05pm 1651817129

I'm enjoying the Moral Philosophy updates here - it feels like watching an episode of The Good Place.

by al123 | 6th May 22, 7:55pm 1651823717

Thanks mfd!

by Independent_Observer | 6th May 22, 5:50pm 1651816241

I think the homeless person, likely a victim of inequality, which has become far worse due to property speculation in this country, would be much better off with a house than a couch....you have a million dollars of untaxed capital gains sitting around from housing investment in this country.....why don't you just go and buy him/her a house to live in? That would permanently solve the problem for the individual....me putting them on my couch for a night doesn't solve their problem. But you have, with your capital, the solution to their problem....

(and no I'm not a socialist....but I can see cause and effect....actions and consequences....e.g. high asset prices/debt speculation...and the relationship with rising inequality and homelessness.....you benefited from rising asset prices while the homeless person was a victim....perhaps you could even the playing field with them?)

by Fitzgerald | 6th May 22, 6:29pm 1651818580

Kiwis are so poor that even our strawmen are homeless

by Yvil | 6th May 22, 9:03pm 1651827831

Great idea IO, I could buy a house for someone who doesn't have one and in exchange for me providing a family with a roof over their heads, they could pay me some weekly or fortnightly money, so I can pay the mortgage, rates, insurance, maintenance… Hold on, I'm already doing this, but you keep telling me I'm the bad guy for doing this...

Can you now see the irony and nonsense of your post?

by Fitzgerald | 8th May 22, 7:55am 1651953331

You don't prove the "irony and nonsense" of somebody's post by constructing a strawman to demolish.

by Small Kev | 6th May 22, 6:49pm 1651819796

“So in order to increase equality, are you going to go to town tonight and offer your couch to a homeless person? No you're not and that makes you a hypocrite, pointing your finger at others when you're not prepared to do anything yourself”

by al123 | 6th May 22, 3:32pm 1651807928

Yet another interesting philosophical question! Actually several, but the one that sticks out at me here is the question about the extent to which we ought to be self sacrificing in order to live up to our moral obligations. I think it is reasonable to hold that (a) equality is an important moral goal, but that (b) a theory which obligates an individual to do something like offer to house a person they have no ties too and could impact on their safety is too demanding. I think this because I think in general equality is more about how we design our political, social and economic institutions rather than individual actions (so, something like John Rawls' view). There are plenty who disagree with me though - you might like Peter Singer's work on this Yvil, or even Nick Hornby's novel 'How To Be Good' which deals with exactly this sort of scenario, and the implications of attempting to live one's life according to the kind of maxim you are suggesting.

by ibas | 6th May 22, 4:57pm 1651813024

I would give you more than one thumbs up if I could Independent_Observer

by No Moa | 6th May 22, 3:34pm 1651808080

Thumbs down to Yvil.

IO is one of the more mature balanced on here.

by tuisbest | 6th May 22, 4:01pm 1651809715

Yeah, thank you IO for restoring a bit of my faith in the human race here. Great to see that there are people on this site who are not consumed by their own selfishness and greed.

by Independent_Observer | 6th May 22, 4:18pm 1651810715

Thanks for the support tuisbest....Its been very painful to see the quality of society be eroded through selfishness/greed (which if you dig deep enough, you realise that its because people are afraid of the future). We just need to have more faith that there is enough for everyone and if we work together for the benefit of each other, we can make things better....not worse. Trying to exploit others for your own financial gain is a fools game that in a closed loop system (which is our society) always comes back to bite you in the long run.

by tuisbest | 6th May 22, 5:24pm 1651814694

No worries, Mate. You've earned it.

by linklater01 | 6th May 22, 4:30pm 1651811436

Yvil,

I know that anecdotal evidence has to be treated with considerable caution, but here's one. My younger son and family live in Meadowbank in a nice but not exceptional property recently valued at $3m. Now, they have 2 young children and would very much like them in due course to be able to do what they took for granted-buy somewhere to live.

he and his wife are well paid and have decent equity in their home, so they fully understand that if the value fell to say $2m, they would not be in any way, worse off. in fact, should they wish to move to somewhere bigger, then they could expect these properties to become more attainable and for their children to have a better chance at home ownership. That has nothing to do with any sense of moral superiority, but does have something to do with basic morality.

He tell me that in their crowd, such a view is common. Now in his late 40s, when he left university-in the UK-he did not carry a large debt as so many now do. Perhaps it needs the market to fall even further than that.

by MLSmith1 | 6th May 22, 7:06pm 1651820799

No he’s just empathetic not a egocentric narcissist

by msp | 8th May 22, 10:00am 1651960858

I think IOs morally superior to property investors...who are morally bankrupt, getting others to work hard to pay off their debts for them

by tuisbest | 6th May 22, 3:55pm 1651809307

Wow. Some astounding selfishness and greed are being brandished here, for sure.

Again makes me feel incredibly lucky to have a kind, considerate partner and other friends who have a different set of values. I don't think I'm talking about morals, it is more about how much you value a happy society where there exist enough fair opportunity, as opposed to only being interested in how far 'ahead' you can get.

by Carlos67 | 7th May 22, 12:13pm 1651882401

Yep all these people spouting rubbish about their poor kids are free to sell their self proclaimed "overpriced mansions", downsize and give their kids the deposit to buy a house.

by DTRH | 6th May 22, 11:41am 1651794119

Carlos it only cost them when they sell this will be hard for anyone who purchased in last few years. But will cost them more than 200k if purchased at top of market end of last year so maybe 400k to 600k in Auckland. I thought you was in for the long run 10 years you said other day.

by Small Kev | 6th May 22, 11:55am 1651794906

“I'm going to call BS on most home owners wanting house prices to fall.”

If they do exist would they sell their house at a discount now to assist with the price fall I wonder? Or they are happy to go deep into negative equity with a sizeable mortgage?

Maybe they own their home out right and retired not having to worry about money, 1 or 3 in a 100 but definitely not “Most”.

by mfd | 6th May 22, 12:00pm 1651795245

It is possible to think we'd be better off with lower house prices without having to volunteer yourself as a martyr. No point in me selling my house for half it's market value - that's just pissing into the wind.

I've said a number of times I would prefer to see house prices lower than they are now, despite owning my home. A 30% drop would not change my life one bit but would be life changing for those desperate to get into the market and gain some stability in their lives, as well as helping rebalance our nation psyche away from property investment at all costs.

by ex socialist | 6th May 22, 1:30pm 1651800607

some confused thoughts in this exchange.

Firstly - no one is selling their house for less than the market value - they are selling at the market (or reasonable) value - it is just that the market value is lower.
The concept that because house prices fall people lose jobs is a bit of a stretch - there is a wealth effect of people not spending cos they don't feel as rich - but less money sucked out in interest payments
The only people who would be hit by a 20% drop is those who bought recently - the rest are buying and selling in the same market.
There is a massive long term advantage for the New Zealand economy of getting rid of the concept that the only investment is housing, it goes up regardless (doubling every ten years nonsense). This might get people investing in productivity improvements

by mfd | 6th May 22, 1:47pm 1651801646

I agree - the only reason I was discussing your first bullet point is the previous comment:

"If [home owners wanting house prices to fall] do exist would they sell their house at a discount now to assist with the price fall I wonder"

Obviously a crazy argument aimed at closing down differing opinions.

I agree with your other points. I suspect a large fall in house prices would be very painful in the short term and very beneficial long term.

by KH | 8th May 22, 4:14pm 1651983264

I own two houses in different towns and I live in both.

I think NZ would be a better place if house prices drop. Folk with this view are numerous. And don't they need to claim some moral high ground as they do.

by ACB | 6th May 22, 12:21pm 1651796477

As you allude to, if your house price falls to the same extent as everyone elses, i.e. buying and selling in the same market, and you have no debt and your house meets your retirement needs i.e. there is no excess equity required to be released fund retirement, then theoretically you should be indifferent to whether prices rise or fall and therefore should be favourable to prices declining of the greater good.

But it's not a reasonable argument to expect you to sell your house at below market value and take a hit for the greater good.

by Small Kev | 6th May 22, 12:38pm 1651797503

“But it's not a reasonable argument to expect you to sell your house at below market value and take a hit for the greater good.”

Exactly the point, it doesn’t make sense.

Wishing for a crash so one goes deep into negative equity then bank sells the house? Take that for the greater good.

by mfd | 6th May 22, 1:28pm 1651800530

Do you not see a difference between the housing market falling in value, meaning that all participants can buy houses for less than currently, and those who sell and buy in the same market are relatively unaffected, and an individual selling their own home for below market value?

This argument makes no sense. If I think food is too expensive in this country, do you think I could solve that problem by selling a few tins of beans for 5 cents each?

by Small Kev | 6th May 22, 6:43pm 1651819383

Still doesn’t make sense, it might be ok with you but many will struggle with negative equity, taking them down as well for the greater good?

Not everyone wants to own a house , some simply not interested and fine with renting and for those who do own a house most of them worked hard for it why punish them.

Like people trying to get into university, some not interested, some work hard but miss out, do we lower the standards so it’s easier for everyone to get in?

Life isn’t fair, I might not be able to help but we don’t kick people off the boat to make space for the ones drowning in the water.

by MisterB | 6th May 22, 9:16pm 1651828569

Who will have negative equity and how will it make them struggle?

by Carlos67 | 6th May 22, 10:52pm 1651834358

Some on here seem really obsessed with negative equity. Basically you just keep paying that mortgage, you don't care, you play the long game. The alternative is to panic sell and then what ? take a huge debt with you caused by that loss that your still going to have to pay off AND then pay rent on top of that ? Yep that really makes financial sense. Genius.

by Pa1nter | 7th May 22, 8:48pm 1651913315

Might as well stand outside any car dealership and laugh and point at anyone signing up for car finance, the minute they pull out the driveway they're at least 5-10% negative equity.

20% if it's a European car.

by MisterB | 6th May 22, 9:15pm 1651828504

The bank doesnt sell your house because it is in negative equity. That's an on-paper calculation only. If you're paying your loan payments, then you're paying your loan payments.

Also, even a 50% drop in prices will not put majority of owners in negative equity. I note ANZ, the largest lender, reported their dynamic LVR on their book at mid 30%, which is likely indicative of the other banks too. Sure, those who bought last year would be affected, but again only on paper. It is scaremongering to say all these people will lose houses if values drop.

by Fitzgerald | 7th May 22, 8:00am 1651867217

What happened in England was that folks in negative equity got charged higher mortgage rates. Kind of a penalty rate for having low/negative equity.

by Nzdan | 7th May 22, 9:50am 1651873839

Happens here too. It's a low equity premium on a sliding scale, but usually a 1% adder from what i've seen.

by MisterB | 7th May 22, 4:40pm 1651898450

No it doesnt. The banks have gone on record to say they will not at a premium for existing loans.

by Carlos67 | 6th May 22, 2:04pm 1651802658

Exactly. To all you out there that want to sell your house for half price your welcome to start a Facebook group and buy and sell to one another. Absolutely nothing stopping you listing your house right now for hundreds of thousands below RV, kind of strange it never happens I have no idea why. I'm sure if the 80% who said it was a great idea did so at the same time it would crash all the prices ? I think what people really mean is it would be great if houses prices crashed as long as theirs does not crash.

by mfd | 6th May 22, 2:17pm 1651803438

Explaining this is like hitting your head against a brick wall, except less entertaining.

It makes essentially no difference unless the whole market moves. This is what I would like to see. Yes I know this includes my house. Finally, I do not even want to sell my house and wouldn't do so even at or above market price.

Please point out any genuine inconsistencies in this position and leave the straw men alone - they've had enough of a beating.

by Nzdan | 6th May 22, 2:47pm 1651805271

I would sell my house for 30% less if it meant my next purchase was also 30% down on today's values.

by Miguel | 6th May 22, 12:36pm 1651797374

That is because you are an entirely selfish and self centred person. You have said as much.

not everyone has this attitude

by Yvil | 6th May 22, 12:45pm 1651797939

We all are selfish Miguel, some just don't see it. When you wish for house prices to be affordable to everyone, you do it because it makes you feel good, it's in line with what you think is fair and equitable, it makes you happy. It's as much a selfish reason as the person who wants to make more money for their family, you just don't realise it.

by Brock Landers | 6th May 22, 1:20pm 1651800029

Today's gem of Yves wisdom: Mother Teresa was as selfish as a specufestor. You just aren't smart enough to realise it.

by Waikatohome | 6th May 22, 2:31pm 1651804262

Philosophically Yves makes an interesting point. We do act in our own self interests whether consciously or sub consciously. But the effect on others depends on whether our self interest is of benefit, or not, to them. Mother Teresa probably got personal satisfaction from helping others (a benefit to her) but it also benefitted the poor she was helping. I suppose an investors self interest also provides benefits to bank managers (and sometimes tenants).

by Brock Landers | 6th May 22, 2:07pm 1651802877

Yvil seems to have a lot of difficulty distinguishing right from wrong at times.

by Yvil | 6th May 22, 3:00pm 1651806050

Yvil can see that "right" or "wrong" is in the eye of the beholder, Brock doesn't seem to understand this.

by al123 | 6th May 22, 3:21pm 1651807267

That's a different philosophical view - Moral Relativism. That's a bit more popular than Psychological Egoism, but it's still pretty controversial. So while Yvil might believe that right or wrong is in the eye of the beholder, there's room for reasonable people to disagree about this.

by Waikatohome | 6th May 22, 8:58pm 1651827491

I think on pretty much everything, my views are diametrically opposed to Yvil's, however today I kind of agree with him. I am doing fairly well in life and financially would benefit from a National or Act government compared to a left leaning government. However I believe that greater inequality leads to a less happy and more dangerous society. It leads to rising crime and a damaged environment. Therefore I am more likely to vote for a party that would address this. Am I doing this because I care about others? Or am I doing it because I personally will enjoy living in a safer and happier country? Having said that, I still don't know who to vote for as Labour have failed to stop the housing bubble or address inequality.

by al123 | 6th May 22, 4:06pm 1651810004

That's slightly different from Yvil's point, I think. What you are saying here is that there are two reasons why you might want greater economic equality - because you care about others, or because you want to live in a society that's safer for you. If the latter is the only reason why you wanted more equality, that would be selfish. But Yvil was proposing a stronger claim, by the sounds of things - the claim that even if the only reason why you wanted greater economic equality was because you cared about others, the fact that greater economic equality would it would make you happy because you would be getting what you wanted meant that you were being selfish (or at the very least, self-interested). I think this gets things backwards - precisely what it means to be unselfish is to want other people to do well, and to be happy when they do.

by JustAnOpinion | 6th May 22, 4:14pm 1651810467

I agree, I think that is Yvil's point but it has been missed in the angst of the left leaning commentators on this site.

One word of caution, voting for a party that explicitly claims to want to solve a problem, has it plainly in their published policy and campaigns on it does not mean it would be delivered. Voted Labour in 2017 (for the first and probably last time) to see if they could do what they claimed to want, reduce house prices. The result was the highest most aggressive house price increases in living memory.

by Waikatohome | 6th May 22, 4:19pm 1651810796

Agreed. Labours stated policies at the time of the election looked good to me, but their actions and results have been incredibly disappointing.

by al123 | 6th May 22, 2:45pm 1651805158

The view he's alluding to is Psychological Egoism, which has very few proponents as it is a very implausible view.

by Gummy Bear Hero | 6th May 22, 4:07pm 1651810071

Imagine an Islamic suicide bomber ... he's completed his mission ... and is sitting in Allah's vestibule , awaiting his reward in heaven of 17 virgins ..

... . a giant hand opens the door , and ushers in Mother Teresa & her 16 sisters ...

by Dale Smith | 6th May 22, 6:06pm 1651817214

There is only one God after all.

by HW2 | 6th May 22, 7:18pm 1651821538

Aged from 65 to 95... that is the ultimate revenge from those the killer murdered

by MisterB | 6th May 22, 9:18pm 1651828729

#lifeinYvilsechochamber

by Yvil | 6th May 22, 12:39pm 1651797567

I'm going to call BS on most home owners wanting house prices to fall

Of course it is Carlos, if they were serious they could sell their houses for far less than fair value and voila. It does help people like IO feel better about themselves and superior to others who are more honest about their pursuit of making money.

by Miguel | 6th May 22, 12:49pm 1651798151

This is an idiotic comment, even for you. If the price of all houses fall and you own 1 house, you will be buying and selling in the same market. You don’t suffer any loss if sell and then buy again the same market, as the price of property you buy has moved in the same direction.

if you sell your house for a lower price, but prices of other properties remain the same, you can no longer afford to buy a similar house.

The question is are you so myopic you can’t see how this works, or are you just being disingenuous?

by Yvil | 6th May 22, 1:06pm 1651799212

I think I'm one of the most honest commenter on this site, I come to this financial website to get information, so I can make more money. How is this not honest?

by MisterB | 6th May 22, 9:21pm 1651828889

And here I was thinking you just come here to troll and/or brag

by Cheetahlegs66 | 6th May 22, 2:37pm 1651804634

Nope.

If I sell my 1.4m house and buy a house at 1/2 the price, I pocket $700k.

If the market declines by 50%, I sell at $700 and buy the cheapy at $350. My spare cash has dropped. You can play the same game with price increases and see where you end up. This assumes rises/falls (%) are spread equally across different valued houses.

Time for a run then a beer

by Miguel | 6th May 22, 2:48pm 1651805290

If the 1.4m house drops to $700k and you wish to upgrade you get the opposite effect. The 2.8 million house is now 1.4 million so you only have to contribute an additional 700k instead of 1.4 million, so in that scenario you are better off.

So in aggregate it balances out.

by al123 | 6th May 22, 2:55pm 1651805722

This assumes rises/falls (%) are spread equally across different valued houses

Is there any reason to assume this, though? When I was looking for a house, it certainly wasn't the case - lower priced houses were selling for much greater percentage increases relative to RV than higher priced houses.

by Independent_Observer | 6th May 22, 2:11pm 1651803108

If buying and selling houses within a housing market that is creating severe financial and social instability, is your way of honestly making money, then yes perhaps I am morally superior to you.

There is going to be no good that comes from making money out of a housing market such as our....some individuals might have done very well out of it....but the collective damage could be very bad.

But you don't see to worry about the collective harm, only what might be best for you personally....that is where we differ. I care about the collective good....perhaps you only care about Yvil...I'm not sure...although you do say you work at a food bank.....so perhaps you do care after all!

And thank you for deciding that I can be one of the targets of your personal insults today...I'm sorry my positions/views threaten you so much.

by msp | 8th May 22, 10:10am 1651961427

housing is an essential commodity so should be off limits to profiteering and exploitation...end of story...so should essential food

by tuisbest | 6th May 22, 3:56pm 1651809371

Absolutely hopelessly clueless comment.

by iliketobike | 6th May 22, 2:18pm 1651803527

I'm a homeowner and I want house prices to fall, quite a bit.

I'd like my kids to move out of home in a few years, rather than out of the country.

by JustAnOpinion | 6th May 22, 4:22pm 1651810937

Yes this is the real issue, I am not interested in the virtue signalling of it, maintaining the systems and infrastructure of society takes a food-chain of people young to old and if the youth disappear off shore those systems will falter and eventually collapes.

For example our medical systems and infrastructure are on life support, we ignore the data regarding pay, we ignore the data regarding collapsing infrastructure, the ramifications of this are the exiting of talent, we must be almost all the way through this process.

by al123 | 6th May 22, 4:29pm 1651811351

I think that's a really important point, JAO. We can talk about morality all we like, but there is inevitably going to be disagreement about what matters morally. The thing is, this is a situation in which we don't even have to attempt to appeal to morality in order to claim that there is something seriously wrong with the housing market that needs fixing. Even someone who is entirely self-interested presumably wants a reasonably well-functioning society, and it is pretty clear that the sheer cost of housing in this country is putting that in jeopardy in a number of ways.

by tuisbest | 6th May 22, 4:58pm 1651813132

Even someone who is entirely self-interested presumably wants a reasonably well-functioning society

Good points, al. Maybe it is the combination of greed/selfishness and short-sightedness that poses the biggest threat to the happiness of individuals, as well as their wider social circle/society.

by tuisbest | 6th May 22, 4:23pm 1651811008

My landlord's kids moved out of the country long before housing even became an issue. His wife also left him many years ago, but he still talks about her just about every time he sees me. He is always going on about how amazed he is that she left him even though he had (and has) so much money. Sad really. He'll happily tell you about the size of his rental portfolio before complaining about how expensive it is to maintain his Porsche. Such a rich bloke who owns so many more material things than I do - yet, frankly, I'd hate to be him.

@iliketobike Considering your attitude, I won't be surprised if your kids will one day be less eager to get away from you than my landlord's kids (and wife) were.

by Cheetahlegs66 | 6th May 22, 2:26pm 1651803980

Hey

I'm freehold on a plot of dirt with an ok shack built on it. If it halved in price (extreme) I'd be happy. Why? The little 3 bedroom down the road would most likely fall accordingly and then as a cashed up buyer I might consider getting a couple. Currently I wouldn't. Disclaimer-previously owned rentals which have been (regretfully) sold.

by pdemp | 6th May 22, 5:15pm 1651814134

I own two properties and I'd happily see a moderate, say 10-20%, drop in house prices followed by a prolonged period of zero growth. The young generation are being screwed and deserve better.

by Solid_Granite | 6th May 22, 11:09am 1651792169

Very good rant thank you. I do feel hard done by by the property bubble coming along just when I was planning to buy a house.

this is good news, however you have to take a long view. FHB’s can only buy in a year or two once prices have fallen enough, today FHB’s are still locked out, homeowners are currently losing wealth, it’s bad news all round.

by Fitzgerald | 6th May 22, 11:18am 1651792733

It was never really "wealth" though, was it? It has been a mirage of prosperity, created by borrowing.

Real "wealth" for a nation comes from the production of goods and services. All that NZ has done is borrow from its future to create a "wealth effect" or illusion. The piper always needs to be paid at some point.

by Yvil | 6th May 22, 3:03pm 1651806183

Settle down Fitzgerald, stop throwing your toys out of your cot. Interest is a financial site, its motto is "HELPING YOU MAKE FINANCIAL DECISIONS", or in simpler terms, helping you make money, it's not a site about ethics and morals.

You should read and comment on a different website or enter politics if your aim is to make a better world for everyone or perhaps for yourself.

by Fitzgerald | 6th May 22, 12:38pm 1651797483

You seem somewhat triggered.

Perhaps it is the "grim reading" on interest.co.nz that has upset you.

Personal attacks won't help you to make better financial decisions. Be kind, aroha x.

by Yvil | 6th May 22, 12:48pm 1651798100

Triggered? LOL, re-read your post and see who is triggered

It is sick. It is disheartening. It is mindless

That is being "triggered"

by Fitzgerald | 6th May 22, 12:59pm 1651798756

You are making very personal, angry, attacks on a single poster.

I was commenting on the ills that have befallen our society.

Very different things. I think you may be too angry right now to spot the difference.

by Gummy Bear Hero | 6th May 22, 1:09pm 1651799386

Many times worse than Covid , a large chunk of our society has become obsessed and sick on housing speculation ... Dr Orr has finally arrived , to lance that pus filled boil ...

by Yvil | 6th May 22, 12:54pm 1651798463

But you are missing the point Fitz, there must be a renter's forum or another site where your rants about inequality are more attune to the website's purpose, try these

by Miguel | 6th May 22, 12:38pm 1651797519

It’s amusing that you believe you should be the arbiter of what can/should be discussed here. Interest.co.nz have published numerous articles discussing societal impacts of financial issues, so you are just overlaying YOUR opinions on what can be discussed, you don’t speak for the editors/owners or employees of the website

by Just Some Advice | 6th May 22, 12:41pm 1651797684

Oh, you didn't you know? Yvil is the unofficial Moderator for interest.co.nz.

by Yvil | 6th May 22, 3:00pm 1651806009

It's not an opinion Miguel, scroll to the very top of any and all Interest.co.nz page (including this one) you will see it there.

HELPING YOU MAKE FINANCIAL DECISIONS

by Brock Landers | 6th May 22, 1:17pm 1651799830

No it doesn't. It says nothing about "better". You made that up.

by Just Some Advice | 6th May 22, 1:29pm 1651800595

How could you put that succinctly? 'LOL'

by Yvil | 6th May 22, 2:59pm 1651805990

I stand corrected, the word "better" is not in the motto, I've corrected my post now

by MisterB | 6th May 22, 9:28pm 1651829324

And you conflate making financial decisions with 'getting rich'. A FHB buying an affordable house relative to their income is not a financial decision? Or just not a financial decision you want to succeed?

You've gone all out to be a real number in this post Yvil, quite a lot of personal attacks and an inability to conceive others have a differing world view to you and dont see all financial decision making as simply a money grab. For a while there on other articles it seemed you reined yourself in, but back to type now eh. Don't stress too much dude over paper equity.

by Miguel | 6th May 22, 2:11pm 1651803095

How do you believe that sentence proves we can’t discuss the wider societal impacts of financial events/news/decisions?

Understanding the context of financial events, from a range of perspectives, is useful when “making financial decisions”.

If you run a fossil fuel company it is wise to understand the impact of the industry and how it is viewed by society as a whole, as this will be useful information for financial decision making

by malamah | 6th May 22, 2:05pm 1651802704

As a millennial, I can't tell if I am offended, triggered or amused.

Either way here's your Friday financial RPG:

You run both a food chain and a health service. Due to hard economic conditions, the only food left in NZ is Popcorn and avocado - which both sell for $1. Which would you choose to sell?

Now think long and hard about which product you would rather sell. And when you arrive at Avocado, realize that the base of your [better] financial decision was an ethical decision.

by Yvil | 6th May 22, 3:06pm 1651806375

… and if I choose to sell popcorn ?

by paashaas | 6th May 22, 4:06pm 1651809979

Me I would sell what people want to buy - as long as it is legal.

Unlike you I do not presume to know what is good for them better than they are able to judge it for themselves.

by Yvil | 6th May 22, 9:09pm 1651828143

Agreed, but if you sell a roof over the head of a family who doesn't have one, you're the bad guy on this left wing comments section

by MisterB | 6th May 22, 9:32pm 1651829536

If you sell it at an absurb premium that locks them into unbearable debt, yes, bad guy.

Like the bottom feeders selling milk on credit in door to door trucks

"but people need milk, even at $11 + interest per litre" - Yvil.

To quote Mike Myers "Yyyyyyyyvil, like the fruuittts of the devvvvvvil"

by Independent_Observer | 7th May 22, 1:27pm 1651886838

You could always go onto twitter Yvil....Musk is going to sort out those nasty left-wing views on there....it will be great!

I mean the accommodation supplements, the welfare, those nasty left-wing voters and politicians pump into the poor, which end up in the hands of the rich landlords.....they're terrible creatures aren't they!

So unworthy of having views on the economy and financial matters....I mean how dare they? Its only right-wing political leaning people who should be allowed to have views on the economy and finance.

(I'm centrist by the way.....before you want to label me as one of those nasty left-wing people)

by DTRH | 6th May 22, 3:30pm 1651807816

Yvil you spend a lot of time on this site but for a few funny stories like how you made a million by cutting down some trees, I have never read any good financial advise from you . Maybe you should listen more than criticise you might learn something.

by msp | 8th May 22, 10:18am 1651961905

so there are no ethical rules...screw anyone anytime?. That's fine, keeping it all within the laws, but then complain like hell when a leftish policy threatens new laws that limit the pursuit of making money at the expense of others...like the uproar over CGT...interest deductibility,

by kamo | 6th May 22, 3:26pm 1651807599

To me you must look for a political decision the market is controlled by the government. The government and reserve bank control the interest rates. Interest rates have been going down since about 2000 and now they have reached the bottom the government wants to lift them . As rates go down the market goes up as rates go up the market goes down. The banks are very happy they increase there Margin all the time. You can get 3 %the banks lend out at 6%. Over the years wages have gone relatively because of immigration. Again the government continues to control things. So its up to the young to get politically involved this is the only way it will change. An example is the labour government printed 53 billion dollars increasing house prices by 43% in 2 years . So of course as assets go up in value people want a better return. But the wages and standard of living are not going up.

by No Moa | 6th May 22, 4:56pm 1651812984

Kamo this is a great comment, we need to understand the Govt plans to make financial decisions, thats my biggest problem when doing a deal. The Govt are hard to trust because they appear to make poor decisions and seem to have hidden agendas, I would go as far as to say I dont trust NZ politics anymore. Its like we are heading down the same road as the US which is looking like the next step is a revolution.

by KiwiinSpain | 6th May 22, 6:55pm 1651820112

Great comment. Thanks.

by Leelabella | 7th May 22, 12:00am 1651838406

by Leelabella | 6th May 22, 11:51pm 1651837901

Well said, evidenced by the 54 upticks.

The positive spin that continually refuses to portray the downside of ever increasing house prices and the seismic impacts it has on our society, and its cohesion or lack there of is beyond my comprehension. Have never understood the desire to aquire monetary wealth when those actions impoverish others. Seems a tad empty to me.

Your comments have restored my faith in my own perspective of the NZ housing market. Thank you

by CapitalNone | 6th May 22, 10:44am 1651790668

"There is no wave of investor sellers hitting the market"

...yet. This will be the final nail in the coffin before the property market is buried (its already dead)

by Independent_Observer | 6th May 22, 10:50am 1651791041

Yes there have already been comments on here and from friends who are property investors and previously said that their rentals were buy and hold forever....but now that they are seeing the market fall...they've gone and listed/sold...

by GV 27 | 6th May 22, 10:57am 1651791451

could....could it have actually been about the incidental gains this whole time?

I'm shocked.

by Independent_Observer | 6th May 22, 10:59am 1651791566

Of course...but its classic bubble psychology....they buy on the way up and say that I'll never sell....but the pain of potential loss drives them to sell when prices stall/start falling (see Kahneman).

Watched the same thing in the US during the GFC...

by General Comment | 6th May 22, 11:59am 1651795140

Paranoid me says this may be a reference to my comments yesterday, in which case they couldn't be further from the truth.

Realistic me recognises what you've said is happening anyway.

(edit) Oops, should have been a reply to your previous comment, sorry.

by Advisor | 6th May 22, 10:52am 1651791170

no rush of enquiry by migrants anticipating residency visas either

Ah, so the hopes of reviving the housing market were previously pinned on migrants who couldn't otherwise qualify for a residence without the government offering them a generous pathway.

by WestieAJ | 6th May 22, 10:50am 1651791001

Possible case study https://www.trademe.co.nz/a/property/residential/sale/auckland/waitaker…

This terrace home sold brand new 785 k April 2019. For sale since March 1st asking price $1,138,000

Ad says owners have bought. Must sell

Next door (joined) identical looking sold 799 k July 2019. Sold Nov 21 $1,229,000

Eventual sale price will give an idea of peak to current trough.

by Te Kooti | 6th May 22, 10:58am 1651791522

That's a $900k property.

The stock market selling off and rates heading up is ground zero for financial markets. This is when you know the really bad times are coming. The next clue is yield curve inversion.

by Carlos67 | 6th May 22, 11:09am 1651792198

Not for a 2 story 183sq/m plus property in Auckland it isn't, even in Swanson. Its still a million dollar plus all day long in the present market. That will sell for $1.095. Problem is in 3-4 months time it could drop into the high $900's if they get desperate. The $1mil market is still running reasonably well even down here in Tauranga for a decent place, that figure pretty much maxes out most of the buyers in the market.

by WestieAJ | 6th May 22, 12:04pm 1651795499

Pay 219K deposit and $800 a week in Interest rates and insurance to buy that house. Or rent a better one nearby for $800 a week all in and keep your 200k in a bank TD earning 2.5%. https://www.trademe.co.nz/a/property/residential/rent/auckland/waitaker…

by Fitzgerald | 6th May 22, 11:25am 1651793153

... and watch the value of the house you are renting fall by more than $800/week. Effectively giving you free rent for the duration of the market correction.

by Te Kooti | 6th May 22, 11:45am 1651794349

Carlos, it's 194sq/m land. What is the build cost on that unit, $500k? That would leave $400k for the land, what does a 770 sq/m section in Swanson go for, >$1.6m?

You maybe correct, I'm not that close. My feel is that in a changing market prices adjust down very quickly.

by WestieAJ | 6th May 22, 12:34pm 1651797291

Even in the unlikely event the owners above get full asking price. They are have lost $1750 a week relative to their neighbor who sold at peak in November.

by Whome | 6th May 22, 11:44am 1651794288

Until you wake up in 5 years time, are still renting paying someone elses mortgage off and your $200k in the bank has lost 20% of its purchasing power due to inflation and house prices are back up higher than they were in 2022...

by Te Kooti | 6th May 22, 11:46am 1651794411

Agreed, it's just the timing of when to buy.

by WestieAJ | 6th May 22, 12:04pm 1651795464

Yup. And now is not the time. When interest rates go down property values go up. When interest rates go up property values go down. Just wait

by Carlos67 | 6th May 22, 2:13pm 1651803210

I agree now is not the time to buy but the question is how long do you wait ? Some people on here have been "Waiting" for 10 years for a crash so you have to put a time limit on it. I would say looking at all the factors in play you have a 4 to 6 month window to see where this is all heading and then you need to make a decision or I can guarantee you are going to wake up in 10 years time to houses that are twice the price.

by GV 27 | 6th May 22, 2:52pm 1651805549

Carlos you and I disagree about a great many things, but you are bang on with this. The traditional economic cycle is seven years and this party has been going for fifteen. "A crash could happen at any minute!" has been stopped-clock logic for eight years now, and aspiring FHBs have had to watch increasing politicisation of tax, monetary and fiscal policy in favour of investors until extremely recently, all the while stable accommodation got further and further out of reach.

by Independent_Observer | 6th May 22, 3:06pm 1651806385

Twice the price in real terms or nominal terms? For housing prices to double from here, we're looking at the average house price of approx $2million so we better get the money printers set to bbbrrrrrrrrrrrrrrrrr..............................average take home pay will need to be around $200K with interest rates still stuck at 0.

Guess its all possible...but in terms of purchasing power, nobody is better or worse off for it....because in real (inflation adjusted) terms house prices would have gone nowhere....and inflation would have to be exceptionally high....so we would need to continue severe financial repression where we have say -7% real rates (OCR at zero with inflation running away at 7%).....but then again that becomes problematic because how do we create higher house prices while the consumers within the economy are experiencing severe financial repression?

by Carlos67 | 7th May 22, 12:24pm 1651883077

Don't start that real terms or nominal terms crap again IO. Over the last 40 years house price gains have outstripped wage rises by at least 2 to 1 every year. Very easy to do the calculation in my head from what I earned in 1990 to just before I quit working full time some years ago now. Wages have not even gone up 3 times and house prices have gone up 12 times. Its a total no brainer, if you think you can come up with some sort of calculation where house prices are going down over the long term you have rocks in your head.

by Independent_Observer | 7th May 22, 1:14pm 1651886076

"Over the last 40 years house price gains have outstripped wage rises by at least 2 to 1 every year"

Haha you add great value from a comedy perspective Carlos! (its a statement I agree with, but it exactly highlights why we are in the mess we find ourselves in...its evidence that the nominal (and real) price gains we have experienced are completely unsustainable)

The only reason you have experienced what you have over your adult working life, is because we managed to import deflation from cheap foreign labour, which has allowed the RBNZ to drop interest rates to 0% over that 30-40 year period.....and if you understand how assets are priced (P = CF/r to infinity) then you will understand how that has caused the decoupling between wages and asset/house prices.

The reverse will be true if globalisaiton has failed now and we have to base interest rates upon sustainable domestic wage rates....you might see wage increases outstripping gains in asset/house prices because the RBNZ will have no option but to continue to raise interest rates to keep inflation under control. Which will put a cap on house prices in nominal terms, but could hugely reduce their value in real terms. And at the end of the day, it is real buying power that counts, not the depreciated value of funny money.

Have a read of the real estate section of Robert Shiller's great book "irrational exuberance" if you want to start to understand where I'm coming from. If you can get your head around this "crap" that would allow us to have meaningful debate on these issues (escpeically around nominal vs real)....until then I can chose to base my views on the 100+ years of research and trends by a guy with a nobel prize in asset pricing, not the random dude from Tauranga who appears to be suffering from cognitivie dissoance because the current data we see in the market doesn't match his other issues related to recency/confirmation basis (what happened 1990 until now). And anything that doesn't fit his recency/confirmation bias has to be argued away as "crap". Sorry man....I'm not a believer.

by Carlos67 | 8th May 22, 5:58pm 1651989514

You can throw all the books at it you want, doesn't change the facts, the housing market is what it is and most people don't live long enough to be sitting on the sidelines for decades waiting for it to change. Nobody can predict the future with certainty but only a fool doesn't learn from history.

by agnostium | 8th May 22, 8:16pm 1651997762

I think IO is talking about facts rather than your "reckons" TTP

by jimmyH | 6th May 22, 3:29pm 1651807782

Last time ,gfc period ,here in Auckland,it felt like mania peaked 2006 ,but was steady selling still,on into 2008 ,then troughed through to early 2012.( My recollections only).

Even if we are going to have something similar ,and we are at the early 2008 equivalent now, there would be a 4 year period ,where underlying inflation balances up the nominal prices. However,due to RBNZ double pumping, we got a double peak, 2019/2020 then last years madness . So we pushed the top of the top ,even further.

It will not be as mild a correction overall ,as 2008 to 2012. Can't be ,really. Must be more exacerbated,and a longer period of underlying inflation ,not being expressed in the nominal price,before the catch up surge happens again.

by mfd | 6th May 22, 12:04pm 1651795490

What if they have invested the $200k into stocks or a business? Meanwhile they haven't had to pay rates or maintenance, and could (should?) have been investing that money as well. The property market generally performs less well than stocks - lower risk and correspondingly lower return, although the easy cheap leverage makes a difference.

The renting vs owning calculation is not as clear-cut as most assume, especially those who think 'property doubling every 10 years' is a rule rather than a temporary aberration.

by Waikatohome | 6th May 22, 1:15pm 1651799718

https://www.rightmove.co.uk/properties/85157016#/?channel=RES_BUY

Or you could move to the UK and buy this for $870K. 1hr 9 mins from London Kings cross. 30mins from Cambridge.

Prices have become detached from true value in NZ.

by EdwardD | 6th May 22, 6:40pm 1651819201

Exactly. It's what you get for the crazy prices that shocks me.

by Brock Landers | 6th May 22, 11:26am 1651793186

It's even less than a $900k property. But similar units in that development were being marketed by Feltchers with a straight face for up to $1.3M not long ago. People were lined up out the door with sales droids running around in fluro vests. Feltchers certainly dont go out of their way to use quality fixtures and fittings (or builders) either. I swear I saw a heat pump mounted at a five-degree angle. Those units were very good for driving home the reality of what 1.3M gets you in Auckland versus Queensland. ✈️ ✅

by Zen20 | 6th May 22, 12:41pm 1651797696

Post of the month Dirk!

by EdwardD | 8th May 22, 1:05pm 1651971930

The term 'Fletchered' was a common term in ChCh after the EQ - the quality of their workmanship was well known.

by Cheetahlegs66 | 6th May 22, 2:42pm 1651804977

Ray Dalio had a good write-up yday on equity markets and if the current scenario could be described as a bubble. Whilst only 1 man's opinion, worth reading. It is available if you subscribe to his updates (free).

by HouseMouse | 7th May 22, 9:36am 1651872976

I reckon one million is a reasonable expectation. But no more than that.

both land and house are significantly bigger than most townhouses these days. Plus garaging.

by DTRH | 6th May 22, 11:06am 1651791965

People are still buying! hopefully at huge reductions as this housing market will be falling for long time depending on inflation and rates which look like going higher. I would predict when average wage couple can afford to buy a house is where it will find support. The people who did partake in FOMO and believed rates would stay low over next few months deposit will vanish and be in negative equity for a number of years.

by malamah | 6th May 22, 12:04pm 1651795482

There is a fair amount of chained OO buying happening based on conditional sales I assume. One purchase may set off a chain reaction of 3 - 4… maybe who knows.

But you’re right, support is a long way off at the moment. The market is still churning much higher than any applied resistance: interest, LVR, DTI, brightline, supply and demand tipping due to emigration and new builds… who knows where we’ll land but the rate at which it lands could cause it to dip lower than support for a period.

by Nzdan | 6th May 22, 3:18pm 1651807090

Happens quite often. Especially in smaller regional markets. When we were looking to buy/sell late last year our agent was a participant in a 7 sale chain, each buyer conditional on the sale of their own property finishing with an FHB which was subject to finance. Once the FHB obtains finance it sets off the chain.

by Brock Landers | 6th May 22, 11:14am 1651792467

That image looks like Tony Alexander Pepe.

Feels good man.

by malamah | 6th May 22, 2:32pm 1651804322

feelsgoodman.jpg

by CourtJester | 6th May 22, 11:39am 1651793948

"There is no border-opening induced flood of Kiwis looking to resettle back in NZ in a purchased home, and no rush of enquiry by migrants anticipating residency visas either," the survey's summary said.

Cue that cartoonish sound effect of disappointment: Whomp - whomp - whoooooooomp....

Some people here have argued that residencies being handed out to people who have already been in the country for years would create a surge in demand. And all that talk about a MASSIVE influx of returning kiwis, all ready to buy houses...

The only "fundamental" that matters in the end is credit availability.

by Averageman | 6th May 22, 11:40am 1651794005

So the prince of price pumping actually states that commercial gravity is happening. Credit to him for that at least, and shows how lagging stats are. Specarus has flown far to high and his wings have melted.

Freefall time.

by Yesyesyes | 6th May 22, 12:03pm 1651795423

Anecdotal of course, but I only keep a close eye on Remuera and listings have been sluggish recently - falling even the last 3 weeks. While they are still low this last week there has been a definite uptick in listings. I wonder if people have held off selling, waiting to see if this too would be an easily shaken off small bump. Now it’s looking more serious and longer term they are going to market.

by Neonlights | 6th May 22, 12:49pm 1651798157

I’ve noticed that too. I think the Easter break has probably had something to do with it. I also agree though - people waiting to see if buyers coming back to the market after the break have realised they are not.

by J.C. | 6th May 22, 12:31pm 1651797093

Good to see a post based on the work of Tony Alexander.....with no character assasinations or snide comments about Granny Herald or even TA's soul brother Ashley Church.

by Yvil | 6th May 22, 1:00pm 1651798857

Agreed. The funny thing is though, that, had he said anything other than the housing market is going down, there would have been multiple posts rubbishing him

by Brock Landers | 6th May 22, 1:02pm 1651798929

Why is it funny?

by J.C. | 6th May 22, 2:23pm 1651803786

Agreed. The funny thing is though, that, had he said anything other than the housing market is going down, there would have been multiple posts rubbishing him

Yes, even I haven't pulled out any jibes. They only come out if they amuse me first.

by Nifty1 | 6th May 22, 12:40pm 1651797609

Tony Alexander in January...

my best guess is that on average New Zealand house prices this year will rise by about 5%.

by WestieAJ | 6th May 22, 1:24pm 1651800276

Now that's funny

by Carlos67 | 6th May 22, 2:23pm 1651803782

Not really funny, you don't get to have a laugh until January 2023. I'm still going for single digit house price gains for Tauranga for the year. We are almost half way through the year and I'm still not seeing a significant shift in the market down here. Could take months yet to see a shift and by the time it actually happens it could easily be 2023. All in the hands of the RBNZ really, a few more 50bps rises will certainly kill the market but that's a yet to happen so really not a given. Things also go quiet up to 6 months before an election so it could be Q2 next year before it goes into freefall we appear to be lagging Auckland quite badly.

by Fitzgerald | 6th May 22, 2:27pm 1651804062

If you haven't seen a significant shift in the Tauranga market yet, it may be time to go to Specsavers 🙃

by WestieAJ | 6th May 22, 3:22pm 1651807355

The 3 months to March 2022 HPI for Tauranga City was -0.8%.

1% is a single digit. I suppose it is possible. But not plausible.

by malamah | 6th May 22, 2:37pm 1651804629

If an estimated 5% "Tony's special" yearly increase equates to about 5 - 10% decrease over a few months in the real world, then what does an estimated 5 - 20% "Tony's special" yearly decrease equate to?

by Wrong John | 6th May 22, 1:24pm 1651800247

Down at ground zero it's always interesting, but the one's to watch are the commercial banks. These guys/gals now have two-thirds of their books in residential mortgages (they're more like building societies than banks but that's another story) which in my mind says ''Whooo boy. Enough already."

If the market continues its correction through this winter - say 10% down buy June, 15% plus by September - the banks will be looking to influence the markets from falling too much more, as it's their money on the line here. You may say, well they can let it drop 25-30% before they have to start scrambling & you could argue they've still got the property to sell even at minus 30% so we've got most of our costs covered. However, there's nothing sharper than a bank shareholder & they'll be having their say behind the scenes for sure, so my point is the big banks will only let it fall so far before acting to save their own skin.

The other issue feeding into this is demand. We don't have a housing shortage per se, we have a social housing crisis with 25,000 families wanting permanent accommodation. At the top/other end there are about 100,000 homes not occupied for various reasons, or partly occupied (by time) etc.

Part A: A failure of recent govts of all colours is the total disregard for the accommodation of the poor. Yes, the poor are also responsible for this themselves & have to take some responsibility, but my point being, we have enough land to rebuild thousands of houses for the new poor, but the old poor who are already there don't want their quarter acre of rusting cars & accommodation of sorts, moved, demolished, updated, whatever. They want to stay rotting where they are.

This is where the big bad landlords have stepped in over the past 30-40 years to buy up all the old damp stock that they can get for f-all & rent it to the needy & the seedy, because of the failure of successive govts to address the issues of generational over-breeding & over needing at & within the lower decile districts, underwritten by our famous friend welfare, as we all know.

Part B: This year we will see the building & construction industries grind to a halt (it's already happening) through huge over costs from pretty much all points of the compass - labour, materials, regulation being the biggies but also includes the central bank's constant blundering of the past 2 years. So, who's going to buy all these new houses that will be asking one point something million, for a minimal dwelling, probably very averagely built if history is any guide, when rates are rising & prices are correcting?

So, I think we have all the ingredients for a tough winter on the streets (& in the trenches, literally) in the residential accommodation sector in New Zealand this year. It has to happen this year as the Labour Govt will panic next year, forcing the RB to lower interest rates so that house prices stop falling, so they can get re-elected in October 2023.

My suggestion is: Hang on to your hat & pants for the next 12 months folks. It could be short sharp & painful but they will engineer things to deceive us once more, that all is well, with house prices turning north in the spring of 2023, just in time for GR & JA to spin the wheel one more time.

Epilogue: And remember to be grateful. We still have pretty good lives down under, even if it costs a fortune to do it. Last time I looked the air was still fresh, the fish were still swimming in the seas & the poor were in motels up & down the country. And more importantly, we don't have to live in the Ukraine.

by HouseMouse | 7th May 22, 9:45am 1651873511

Excellent post. And not just because it’s entirely consistent with my views :)

by kazadi | 6th May 22, 1:48pm 1651801689

"A net 65% of agents surveyed reported fewer people attending auctions"

I guess the other 35% had their eyes closed then.

by Zachary Smith | 6th May 22, 3:55pm 1651809353

One of the few houses to sell at auction in Auckland this week:

https://www.barfoot.co.nz/property/residential/north-shore-city/beach-h…

678k (RV 980k)

How much would it have got in Nov 2021?

by malamah | 6th May 22, 3:58pm 1651809493

Seems to have lost its intrinsic value..

by Zachary Smith | 6th May 22, 4:03pm 1651809790

...and its front steps!

by beau | 6th May 22, 6:30pm 1651818657

Tonka truck it.

by taimaiakka0 | 6th May 22, 4:08pm 1651810112

If THE Tony Alexander says that housing market is cooling..........it is really bad and may be in line to crash.

by DDH | 6th May 22, 4:40pm 1651812045

Can anyone tell me why any store is given to TA's commentary which is based on a small sample of real estate people's survey answers?

I do admire RE people's resilience and ability to keep their swagger and positivity in the face of all things pointing in the opposite direction. But, I really wouldn't put a lot of credence on it.

There is no substitute to getting out of your chair, going out into the market and seeing reality in action.

by J.C. | 6th May 22, 6:15pm 1651817759

Can anyone tell me why any store is given to TA's commentary which is based on a small sample of real estate people's survey answers?

Small sample on his own database panel. Like talking to the same people over and over again. Respondent bias.

by Averageman | 7th May 22, 11:18am 1651879098

No investors selling... All the people at work are selling their rentals, with the exception on the one with no debt.

No one should be surprised if there is a retreat to pre covid levels before the financial stupidity by central banks really started, or even lower. The last couple of years has been one of the most artificial in history. Everything has been so removed from the the reality of income, most people have lost the ability to spell it. Aka a period of gambling like speculation.

Like the song it's time to pick. Hold em or Fold em. Just dont moan or ask for a bailout when you are wrong.

by Markus | 8th May 22, 5:36pm 1651988188

The housing market is now facing serious risk of a crash that could lead to a domino effect of insolvencies, unemployment and economic depression. The interest rate hike by 50% (from 1% to 1.5%) last month occured when house prices had already fallen significantly. The rate hike will have a delayed effect, as mortgage contracts roll over slowly.

The Reserve Bank needs to take bold action to prevent economic disaster, lowering rates considerably, and with urgency. This is within its mandate, to protect employment rates.

It must be understood that after years of quantitative easing the value of the Dollar cannot be preserved and significant inflation is inevitable. We now only have a choice between a deflationary collapse in the style of the 1930ies or a period of stagflation in the style of the 1970ies. Deflation and inflation will both unwind the debt bubble, whereas deflation represents a hard crash and a period of stagflation represents a soft landing.

What does our Reserve Bank prefer? They speak of choosing the path of least regret. Why are they raising interest rates then?