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Housing market could be in for a long cold winter with sales volumes and prices taking a hammering in April

Property / news
Housing market could be in for a long cold winter with sales volumes and prices taking a hammering in April
[updated]
House in snow

It could be a very cold winter for the housing market this year, with sales volumes and prices both falling further in April.

According to the latest Real Estate Institute of New Zealand figures, there has been a particularly big decline in the number of homes being sold, with just 4860 sales throughout the country recorded in April.

That's down 35.2% compared to April last year.

All regions suffered from the decline in sales, led by Marlborough where sales were down a whopping 53.6% compared to April last year, followed by Auckland -41.3%, Hawke's Bay -39.2% and West Coast -38.3%.

Sales in the Waikato were down 35.5%, Bay of Plenty was down 34.3%, Wellington Region was down 34.6% and in Canterbury sales were down 32.1% (see the first chart below for the monthly sales trends in all regions).

Prices are also declining but at a slower rate.

The national median selling price was $875,000 in April, down by $15,000 (-1.7%) compared to March, which means it has now declined by $45,145 (4.9%) since it peaked at $920,145 in November last year.

In Auckland the median selling price was $1,170,000 in April, down $30,000 (-2.5%) compared to March and down by $130,000 (-10%) from its November peak of $1,300,000.

The median selling price for all regions except Auckland was $755,000 in April, down 2.4% compared to March (see the second chart below for the monthly median price trends in all regions).

"We're seeing a slowdown in activity, there is more stock staying on the market for longer, and while annual price growth is more moderate, the month-on-month trend shows a fall in median prices," REINZ Chief Executive Jen Baird said.

"Falling attendances at open homes and auction rooms, and a decrease in buyer enquiries were reported across New Zealand, exacerbated by a spate of public holidays in April.

"Affordability, uncertainty and changing financial conditions remain primary concerns.

"Tighter lending criteria, LVRs and increasing interest rates coupled with inflation continue to create challenges for some buyers, particularly first home buyers and investors," Baird said.

The comment stream on this story is now closed.

Volumes sold - REINZ

Select chart tabs

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

Median price - REINZ

Select chart tabs

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

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171 Comments

During the beginning of the boom, rentals, being cheap were sought after. As prices rose, it did not matter if one took a year to re-paint.

If indeed, falls, as predicted, will ex-rentals become rentals again.

Up
1

Rollercoaster has gone over the hump and is picking up speed.

Up
15

The moon and water interact more than we think. Water goes in and out. Up and down.

 

TimeToPanic.

 

edit: Crazy to think some people have lost $130k since November. That could be their deposit depending on circumstance.. 

Up
12

Yes those on low LVR's in Auckland who purchased last year will be moving into negative equity unless prices stop falling (but we're not even in a recession yet...). If drops keep coming, those with 20% deposits might be next. 

Up
12

Hate to be an investor who got sucked in by the RBNZ removing LVR's and leveraging myside to death. The tide has only just started to go out. Still a long way to go before it hits low tide.

I just refixed my loan. Was at 2.19 @ 1yr last June. Got 4.4 @ 1 yr this June. Literally double. 

 

TimeToPanic.

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20

Not to quibble, but it is only your interest portion that has doubled. 

A $500k mortgage on a 25 yr term at 2.19% has a weekly mortgage payment (principle & Interest) of exactly $500. At 4.4% that same weekly mortgage payment increases to $634.  That is a 26.8% increase in the mortgage payment (nowhere near a “double” of course). 

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3

40% of investor loans are on interest only terms.

So for that 40%, the payments have/will soon double.

Up
18

Interest only lending in a property market like ours has been the last 10 years, is one of the most insanely stupid things that one could think of allowing. Especially by the state entity whose job it is to manage financial stability. 

Up
38

So very true. I’ve been harping on about IO lending and the risks it poses for a long time.

The typical spin from those with a vested interest is that prices can’t fall as home owners will hunker down and refuse to sell. There is some truth in this, but it ignores the high proportion of properties owned by investors on interest only terms.

The sensitivity of this type of lending to interest rates means many of these people won’t be able (or willing) to absorb the interest rate rises. Removing LVR’s on this type of lending during covid was completely irresponsible 

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17

Thank you, something a lot of commentators on here fail to understand

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2

Total interest paid goes to 400k from 182K. That interest is loaded into the front end of the loan. So you pay bugger all principal in the first few years. Giving the illusion of "affordability"

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4

Yep - very few understand that you pay less than 20% principle off in the first 10 years of a 30 year loan.

It’s why residential investment never stacks up when you have no capital gains. 

It’s why the whole ‘renting is paying a landlords mortgage’ is a myth - most landlords have to top up considerably as rent never covers outgoings unless they have very low LVR. 

 

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8

Dddebt... I see it thru a monetary inflation lens .

Much of the socalled gains of real estate are simply the effects of monetary inflation.

Rents going up , at a compound rate of 3% a yr are also the effects of monetary inflation. 

History of monetary systems is mostly periods of inflationary expansion , recessions here and there, and then , once in a long while , deflationary shocks.  

The odds favour monetary inflation...

My best guess is the real estate will back off ,somewhat, in nominal terrms ... But in real terms it will look worse.... Just like in the 1970s. 

A big crash requires pretty major mortgagee stress , with lots of mortgagee sales , in my view.

High unemployment goes hand in hand with that.

 

 

 

Up
2

Yes and that was a bad mistake, thats the problem with fast rising rates when people get in to late, they go short term because they cannot handle it. Anyone on a year now or less to go is in serious shit becuase when this comes due rates are going to be in the 7's.

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5

It going to keep dropping for sure interest rate is still just off emergency level with inflation high and NZD tumbling anyone who purchased a house in last 3 years will see deposit gone and in negative equity.

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6

Indeed, just look at the median price chart!

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0

Be Quick.... Yeah, Nah.

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20

I am supremely confident that we can still put a positive spin on this and reaffirm that property is the only investment worth considering in NZ.

We are on the verge of witnessing something that most have never seen before, but that doesn’t mean it hasn’t happened before or can’t happen again.

Up
18

Resilience 🤡

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16

To be completely fair, the market resilience is very surprising. The lack of resilience, however. Not something we've seen before given this is not a product of recession; we are heading towards recession. More surprising lack of resilience factors to come...

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5

I wouldn't confuse market resilience with central banker insanity. Our asset markets are moving inline with the insanity of the policies set forth by central bankers. If they can't keep rates near zero, we may see that asset prices aren't very resilient at all (look at crypto and US sharemarkets as early indicators as changing discount rates applied to future cash flows (for shares at least) severely impact the current pricing of those assets). 

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17

In a sense you are right.

A prospective home buyer is today saving circa 5k per week just by NOT buying an house

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24

What would you invest in now? 

  • Savings in the bank perhaps?  Losing 2-3% per annum?
  • Equities? nah inflation is not kind. 
  • Bonds?  Nah clearly a bloodbath, 
  • Gold? Not at the moment, it is on losing streak
  • BTC?  Yeah nah?
Up
0

A term deposit might not be a bad option now, assuming the banks don't fold!

Investors may now look at the world through the lens of the least worse return.........until the dust settles. 

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4
  • Gold? Not at the moment, it is on losing streak

Which is exactly the time to buy. 

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1

Pay down debt and build resilience. The next 12-18 months will be about economic survival. Global supply chains are in a mess, fertiliser and food prices are going through the roof. Just live the simple life until the dust settles. 

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2

Equities obviously 

Up
0

A moment of silence for the first home buyers who were lured into becoming cannon fodder last year by those of dubious morals.

I'm sure Printer8 has some soothing nonsense coming soon to distract you from your lifetime of frugal penury.

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40

Oh please, don't encourage him to post. We don't need 150 pointless comments on this thread.

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19

too late. They are already here

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1

too late. They are already here

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2

This is so true, you just have to look back at the bull* spread on FHB Facebook groups and in auction rooms by those with a vested interest, "prices only go up!", or "get in with the most amount of debt you can, while interest rates are low". Spreading FOMO was a key tactic used by the ticket clippers, and it really did mess with people mentally.

 

After the crash some of these artifacts will be pulled up as potentially criminal. 

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16

Not to mention the sheer disregard for advertising standards within the housing market. Search for "affordable" on trademe property, affordable for whom?

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10

Criminal indeed. Things like owners of dodgy property companies, convicted for price fixing, giving out financial advice under the guise of being a “renter” with no vested interest

 Not that we would see that here, right?

Up
20

Asset bubbles are generally very unethical things and often show the true character of people (if a person has a tendency to be greedy, those true colours will show). Oddly those same people will claim innocence in the aftermath and ask to be bailed out by those who gained nothing at their expense on the way up.....but at the same time say that socialism is for losers. 

Up
19

... I'm interested to see if Robbo hatches some madcap scheme to protect homeowners equity in the next 12 months ... I do recall Ardern saying that they didnt want a property collapse , she just wanted houses to continue rising in price , but more slowly , sustainably  ....

Our leaders are completely disconnected from the real world , the one Mum & Dad on Struggle Street  battle  with every day ... bereft of understanding , bereft of empathy ...

Up
18

Could not agree more.

Watch them ramp up the accommodation supplement (aka welfare for landlords) and hand out bigger FHB grants.   

They already have a property developer bail out fund... so watch that get ramped up in an attempt to stop fire sales of bare land.

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7

Every intervention into the market will only make things worse in the long term.

(and it also risks the western world turning into the thing that we like to compare ourselves as morally better than........communism). 

Up
11

What is the developer development fund you're referring to please?

Up
0

Good question, I'd be interested in the answer, haven't heard of that....

Up
0

Thanks. That’s just a tiny band aid that might save only a few…

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0

.....just look across the ditch for evidence of that madcap nonsense. Are we seeing the end of home ownership and ownership by the State?  Seems to be the Aus plan.

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2

Yes it very obviously risks turning our societies into communist states. Are we sure this is what we want?

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3

Millennial Woman -  Agree, and the commentary by economists and others who should know better like Bernard Hickey, who (maybe still)  started to post along the lines that that the RB and government won’t ever let prices drop. In recent years there started to be a real absence of warnings that house prices could, and do, drop, that the recent increases were driven by factors like low interest rates, and LVR restrictions going, that would reverse at some point. I don’t blame FHB as their FOMO was stoked by this type of comment.

 

Up
11

@BL...and those same folk of dubious morals are now sitting on the sidelines with pockets of cash,quietly hoping the downturn continues in the hope they can buy those same properties back in the coming fire sale...

Which is why the extended bright line test & the removal of mortgage interest deductions should NEVER be repealed.

This is the reset the NZ property market needs...

Up
19

This is what sill make me hesitant regarding national - they will drop it all to back their property supporters group and own rental portfolios.

Up
20

Extended Brightline and loss of interest deductibility could be gone in a flash. Careful who you vote for next election.

Up
16

The societal looters may elect fellow looters to help them loot more.

Up
5

Funny how Dad (P8) was on here talking up the market to FHB's last year while his children were selling out their property portfolios in behind the scenes. 

Perhaps P8 legitimately disagreed with his children and believed last year that house prices were still a good buy, or perhaps he was blatantly on here talking up the market to maximise the profits of his children at the expense of some other poor FHBs out there. Who knows. 

 

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15

Well said Brock

Up
8

A moment of silence for the DGM who, 6 months ago, told us the housing market would have fallen 30 percent by now.

No such luck for the DGM. The housing market is more RESILIENT than they dared believe.

Lesson: watch the statistics 🦉 not the talking heads 🐒 

TTP

Up
8

Who said it would fall 30% ‘by now’?

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21

The doom goblin (lol) that hides under TTP's bed at night and whispers nasty things about house price falls.....

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24

Ha  ha ... console yourself. Its only a timing difference and we are well on the way.

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8

Well looking at the statistics, since December there is a 12% drop in median prices in the Manawatu/Whanganui region, and more specifically 11% in Palmerston North. More notable is the 20% drop in median down the road in Wellington City.

Not sure who said "by now" but they are entitled to have made an observation. If you're referring to 2022, they were in the boat of a guaranteed 30% by the end of 2022. Ether way, I would not consider substantial statistical drops in: median, index, mean, and most notably volume across the nation to be proof of resilience.

 

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13

Palmy was way overcooked during 2019-2021. Out of town buyers/investors added to the problem

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1

To be fair to TTP some people here need to be a little less cockey. Claiming 30% falls as a given at this stage is probably a little premature. Personally I would be taking more of a wait and see approach but one thing for almost certain is nasty high interest rates before next year. Very high rates will almost ceratinly cause housing havoc, the question that still remains is how high will the rates get ?

Up
7

"To be fair to TTP some people here need to be a little less cockey. Claiming 30% falls as a given at this stage is probably a little premature."

Would claiming that house prices double every 7 years be as equally cocky and premature?

It would mean we need to hit an average NZ house price of around $2,000,000 in 2027-2028. Is that a cocky and premature view to take also and will you also tell those people to stop being so cocky?

Up
17

To be fair, making a statement based on verifiable historical fact backed up by Robbo & Jacinda stating that we expect to see house prices keep rising and that successive governments have done everything in their power to ensure they do, isn't particularly cocky, whereas trumpeting about an unavoidable absolutely guaranteed real estate implosion based on a meagre 1-point- something percent decline in a month certainly is. Sure - it ain't looking like rainbows and unicorns out there atm, but we're in very unfamiliar territory, so any statement right now is pure guessing (altho I'm sure hoping there is a decent reset)

Up
5

No one is making any claims based on a single month of data.  We have now seen price falls of at least 1% or more in 4 of the last 5 months in the HPI.  And this includes the peak season for property sales.  We have seen inventory rising, and sales falling dramatically across the whole country.  We also have near universal acceptance that interest rates will rise over the rest of the year.

People were welcome to be skeptical that prices were trending down in December, as it really was just a single data point in a low volume month.  But  there is now a clear trend, and attempting to ignore it by claiming its "based on a meagre 1-point- something percent decline" makes you look either stupid or dishonest. 

Will the current trends continue?  Who knows, but there is plenty of evidence to suggest the prevailing trend will continue for the foreseeable future. 

Up
9

Pre Covid 2019. Interest rates were 4% for fixed. What could people afford to pay then?

That is what they can afford to pay now.

Up
6

The 1 year fixed mortgage rate is now the same as it was in April 2018.    The 2 to 5 year fixed mortgage rates have landed on the moon.

30% falls are baked in.    Look at house prices in 2018.

Not that I believe TTP for one moment.   I don't recall anyone on this site ever saying that we would have 30% falls by now.   

Telling The Porkies.

 

Up
10

I don't remember the specifics but there have been some rather premature claims made on here. However, TTP's current stance seems to be akin to celebrating the fact that only your kitchen and lounge are currently on fire, when someone on the internet claimed your whole house would have burned down by now. 

Up
22

Look over the horizon. Supply chain disruption out of China and a Ukraine situation that will keep on growing = total disruption to the norm.

This has hardly any impact yet, but it will hit soon and hard. 

What you think might happen to unemployment, disposable income, inflation of everything and the ability to pay that increasingly expensive mortgage?

30% drop+ is entirely on the cards.

 

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4

lol nice, won't someone think of the children?  Oh the humanity!

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0

No surprise and more to come. Artificial finance pushed prices to fantasy levels during the Covid plunge protection window. Add in roaring inflation there are going to be some people really burned from leveraged positions.

Will this be the 87 share market moment for NZ property...?

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15

Were most people leveraging into the bubble in 87?

This could be worse.

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16

Worse. They leveraged against the house to invest in shares. When the margin call occurs it more or less the same.

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5

Land doesn't disappear like shares (unless you own land on the coast). I doubt there will be many 100% drops in the value of houses.

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1

Some will lose more than 100% of their equity

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32

Yes that is true indeed but if they are patient they will see it return.  This has been the case since we started tracking the price of housing.  It took a long time for someone who bought in 2007 to see an increase in their values, 9-10 years in some cases but by 2021 they will have seen a price that looked a little like 7-8% per annum.  It's not a law of nature and may change, but it hasn't so far.

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0

FHBs who purchased on a 10% deposit/LVR in Auckland late last year have just lost 100% of their money and potentially will now start losing the banks money. 

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16

The banks never loose..

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2

They have been very loose in their lending........

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17

Not a nice feeling,but hopefully the FHB's can get thru the next few years of increased interest rates,at least they will have a roof over their heads that is there own.

Newer investors mind you must be positively squirming,loss of interest deductions,increased mortgage rates,brightline and possibly a difficult conversation with the bank about equity...if leveraged over multiple properties,their own homes are at risk...oh dear..

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8

"a roof over their heads that is there own"

I think the point is if they get into negative equity then no it's not their own. It's entirely the banks house.

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8

I meant figuratively 'their own' as in a place to call home,if the banks asked for all the homes back that they have an interest in,we & they would be in deep schtung...

They are more likely to work with an owner occupier,where as an over leveraged investor is likely to be told to off load some properties.   

Up
1

The fools run after March 2020 was quite something. Once the rate of price increase outstripped the rate of return and the expected rate of savings, it was clear the prices were not sustainable. The fact that has happened after a declared housing "crisis" in terms of cost simply added fuel to the fire.

My heart does go out to OO and FHB caught up in the mess, however many/most should be able to ride it out.

Investing has a risk, as the adage states: never invest more than you are willing to lose. Difficult to show empathy towards anything lost in stake. It still sucks.

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3

Shares don't disappear any more than property.

There is no difference, it depends on the quality of your investment every time.

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1

Imagine thinking that a NZ property in our famously shaky isles is more resilient than, say, McDonalds. 

Up
8

Yep, and even if the house still exists, the bubbly price you paid may be mostly gone.

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0

Rasta’s - LoL - tell that to investors in companies that disappeared from the stock market after the 87 crash. The share certificates may remain in a bottom drawer somewhere but the companies disappear or languish as penny stocks until they are delisted. 

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0

Plenty of homeowners who have lost money too, in various times and various countries. 

In general shares are higher risk and have a correspondingly high reward. Property is a little more stable and therefore less profitable. Many NZers have in their heads that property is far more rewarding and maybe even follows set rules like doubling every 10 years, but I suspect this is recency bias coupled with ignorance about the history of property in other countries. 

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9

LOL yourself. It about quality of investment, no matter what the asset. 

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2

This statement is a clear example of the problem that we still have of widespread financial illiteracy in NZ. 

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2

Only if you are stupid enough to put all your money into one share or type of share. If you are diversified you won’t lose everything by any stretch of the imagination. And if you are worried you can cash out at any time, unlike owning a house with a declining pool of greater fools. 

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1

Pretty steady falls in the HPIs too - NZ down 1.9% in the month, 1.4% ex Auckland (Auckland was down 2.7% in a month). No signs of this slowing down yet. 

https://www.reinz.co.nz/Media/Default/Monthly%20Press%20Release%20Asset…

Up
7

The HPI is definitely always the most interesting. If the price falls we have seen in the HPI continue at the rate of 2% per month, that is definitely in “crash” territory.

Wellington city down 5.9% in a month… yikes.

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12

Do you find it strange that they've changed the timescale on their charts to only go back to 2016, so you can't see the extent of the insanity if you look at prices over a longer term?

Pretty sure the REINZ charts used to go back much further, but in the last few months now that prices are falling they appear to have changed the timescale so it isn't clear where a possible floor on prices might be. 

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6

Hardly surprising when the Church of Ashley refers to history as beginning in 1982

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9

Interesting observation.  They actually made the change for the Dec 2021 report - i.e. when prices started going downwards.  You can see why, the November report makes the price rises look incredibly dramatic.  Then the December report makes the price falls look very minor.

https://imgur.com/a/0GplZXM

Up
7

Nice work Miguel - exactly. It flattens the lines right out so that you can't see prices went vertical for a while and may now be going vertical again in the opposite direction (with who knows what bottom to support those prices). Changing the timescale flattens the trend so it doesn't look so bad....

Odd how it was okay to present the data so it looked good going vertical on the way up....but not so much when the worm turns the corner. 

Might just be a coincident of course....but then again reading the tweet made by REINZ today, they said that 'price growth was slowing', not that prices were falling!

Up
4

Great graphic - would be good to be able to analyse the data closely.

It seems (squinting here) by the 1992 - May 2022 chart that the current down turn since Nov is almost on par % based as the entire GFC period... where's the interactive data to play with.

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2

It would be quite the coincidence that they just happened to change the scale the exact month the market turned.  I am happy to trust the underlying REINZ data, but ignore any commentary or interpretation of the data they provide.  As that tweet shows, they aren't interested in informing people, they are interested in pushing their agenda (just keep buying properties)

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8

Thanks so much for that, Miguel! Excellent work.  How did you put this together?

Really puts the falls into perspective, as well as how the powers that be are trying to spin the narrative.

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2

I'm not a big fan of interest's approach to stringing things out by reporting medians today and HPI tomorrow. We all know the HPI is out today as well.

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6

I have a half memory that there are reporting restrictions on the HPI or something, but I could be making that up. I agree it's strange. 

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0

As a renter, I really only need to see an HPI fall of around 5% per year before I am effectively getting "free rent".

It seems that we might soon see 5% HPI falls each month.

This may turn out to be one of the fastest housing corrections that the world has ever seen.   All the stars are aligned.

Up
19

Are you interested in buying?  This may be your season?

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1

Squeaky bum time for those who lent money to developers like Duval and WIlliamscorp in their highly publicized 10% return deals a few months ago. Often the first people who were "asked" to invest were staff at those firms. 

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11

Agreed, the speccy ressy stuff will be the first to go. 

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6

Didn't Evergrande ask the same of their employees?

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6

I used to ask questions under Duval's facebook posts re guarantee just to get condescending responses. It will be interesting to see how many people lose their money to these scams and whether the people in charge will ever be punished for it.

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1

I’m sure I read the other day, Kenyon the Duval guy is moving overseas to set up something in Singapore? Escape plan? 

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3

March 2020 NZ total mortgage debt 279 Bln. March 2022 331 Bln. So 52 Billion increase in 2 years. The underlying value of all dwellings in NZ was 1763 billion as at December 2021. So it only takes a 3% drop overall to eat that 52 billion. 

Total dwelling value March 2020 1188 Billion. So increase 575 billion in 2 years.

The value of housing stock includes all private sector residential dwellings (detached houses, flats and apartments), lifestyle blocks (with a dwelling), detached houses converted to flats and ‘home and income' properties. It does not include vacant land.

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4

No wonder the banks are laying off staff, and closing branches all the while banking max profits. They are getting ready for something big.

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3

How much have they funded to second tier lenders for Mortgage Backed Securities? 

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0

-30% annualised decline in Auckland not very healthy. With winter to come it's not unrealistic to see another 15% taken off by end of year. 

Add in a worst case scenario of an economic downturn in 2023, knock off another 10% and we're starting to look at what people might think of as affordable.

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7

“-30% annualised decline in Auckland not very healthy. With winter to come it's not unrealistic to see another 15% taken off by end of year. 

Add in a worst case scenario of an economic downturn in 2023, knock off another 10% and we're starting to look at what people might think of as affordable.”

 

 

And once we get to that “affordable” stage people will start buying and competing then it will go back up again.

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1

Enough people will be burned by this "correction" that they'll think twice before acting so irrationally in future.

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12

If you look at Japan, Ireland, Spain and the US, property buyers have been much more careful following their crashes.  Or is NZ-ers diffrunt?

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7

A sprinkling of schadenfreude on my popcorn.  Bring on the entertainment.  

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7

Think of the schadenfreude that has been experienced by the gloating landlord class on here and the facebook forums the last 10 years while you enjoy the popcorn. It might be sweet and salty flavoured popcorn given what this could do to innocent people in the economy if it all comes crashing down. 

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9

Much as I dislike landlords, they have only been responding to the landscape in front of them. My main gripe with them in their inability to understand risk and reward. Point the finger of blame at those that caused the issues - massively increased bank lending, successive govt policy, tax rules and inaction, and reserve bank too low for too long policy.

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"Much as I dislike landlords, they have only been responding to the landscape in front of them"

As is true for every human being on this earth. But ethical decision making is still a choice regardless of the landscape. Whether one decides to exploit a situation for ones personal financial gain at the expense of say, FHBs, while increasing the countries financial and social instability, perhaps comes down to ones moral character.

Imagine a landlord the last 5 years saying "hey, I see FHB's are struggling to get into the market. I'm not going to compete with them push prices up even further....that wouldn't be an ethical thing to do".  Have we seen that? In my experience, 99% of the time it is no....landlords have been encouraging competition between themselves and FHB's in order to push prices even higher....making the financial and social instability even worse! In terms of sustainble, ethical investment, its been as dodgy as all hell (in my view, and I know my moral compass is very different to most as I'm told by the likes of P8 and Yvil - we each have our own values and perspectives). But as a society, we will collectively have to deal with the consequences of the unethical decision making, and there will be consequences. You can't have this level of disrespect for one another within a society, and expect that there will be good outcomes. Trying to turn you neighbour into your rent slave for your own personal financial gain, is the recipe for financial and social disorder....that successive governments and central banks have encouraged the behaviour is a stain on the quality of leadership and the degradation of our society as a whole. 

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Yup. I was trying to buy a house in the second half of 2020. I was talking about it in the staffroom - I think by that point I had been outbid about 5 times only to see the same house come up for rent on Trademe. A woman at work who already owned her own house plus three rentals started complaining about how difficult it was as she was trying to buy another rental. I couldn't believe it. I can't understand how someone who had already done very well in the property market, knowing how badly it was affecting other people she knew (I wasn't the only younger staff member struggling) would not have any moral qualms about trying to buy yet another rental in those circumstances, let alone complain about it out loud to the very people who were watching years of effort and savings disappear in a matter of months due to rampant increases. 

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There are principles that govern the way the world works - and they can be cheated in the short term, but not the long term.

The level of greed you describe above will be met by karma at some point in time in the future.

If governments and central banks manage to rig the housing market again to benefit landlords/property investors, there will be so many angry and bitter non-home owners out there that political turmoil and instability will reign. And history shows that asset prices don't like unstable countries....investors flee from them. You need good, fair, democratic countries for capitalism to work well.....and slowly those factors have been degrading in countries around the anglosphere in which the policies set forth have been so unjustifiable in favour of one group over another. Its the recipe for future social and financial instability. Its impossible to protect property rights when a large proportion of the population become so broken down by the system they are forced to be apart of that they have no respect for the law at all. 

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If she "owns" 3 rentals, she might be about to be so broke, so fast, that her head will spin.

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That has been a major reason for me avoiding investing in family homes.  I have a home, I see it as monstrously selfish competing with young  people who just want their own castle. 

I have little time for these leaching scum who have destroyed the hopes of so many great young people.

In particular landlord politicians should be ashamed. 

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Yes I'm the same....buying a rental during what is called a 'housing crisis' for personal gain over someone who is struggling to get started wouldn't allow me to sleep at night.

I think we need a mindset shift from 'individualism' into 'collectivism' so we can better understand the interdependent nature of society. One persons actions impact another and so forth and can't be viewed in isolation. 

Outbidding a FHB at an auction and pricing them out of the market, might just create another depressed/suicidal young person who ends up being a non-contributor to society and in fact may become a beneficiary or a complete loss. The 'get ahead' mindset without consideration of the costs that are associated with it, are too narrow in view. 

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Our mortgage broker was quick to point out that our level equity would enable us to keep our first home and buy a home to trade up into.  

No thanks, I'm well aware of my level of equity and I also have ethics.  Stoked that we sold to FHB.  

 

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I agree.  This is why I believe people who 'invest' in rental properties should be paying business tax.

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"ethical decision making is still a choice regardless of the landscape" - perfectly said, IO.

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I agree with you and avoid property as an investment. When I arrived several years ago as an immigrant, I actively chose to build a house rather than take one away from a local. However, the majority votes for more of the same every 3 years - $$$ clearly tops morals in the NZ psyche.

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..it tops morals in our two main parties.  That is the problem.

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Enjoy the popcorn lol!  As a housing investor I could not be less worried about my mortgages going up.  It's a business, can't afford to keep some assets (unlikely but if interest rates get over 15% it may be an issue) then sell some for whatever the market will pay.  Not worried in the slightest.  

I will however also be looking to leverage my other assets when we get closer to the bottom to get in while the going is good, all the best!

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Interesting to note that the 52 billion increase in mortgage debt over the past two years is very similar figure to the hand out number from Mr Robertson over that same period.

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If it was a cocktail we could call it the Double Whammy. Now we get the hangover.

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Pan Galactic Deposit Blaster ?

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Does anyone have a link to the table that breaks down each area for monthly, 3 months, and yearly.

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So gravity does indeed exists 

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FHB's who didn't buy late last year have been saving themselves almost $10,000 a month, or $333 a day by waiting. And if we do fall into a recession as interest rate rise, those savings may become far more significant this year. (let alone considering the amount of saved principle/interest over 30 years of a mortgage). 

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One step closer to sending my letter of complaint to the NZ Herald.

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If you do end up sending it could you share it with the interest commentariat. Nothing like a well written airing of the grievances.

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Sure, I will share the content. I am going to wait for at least a couple of months more of price declines, though. 
I am also weighing up making a complaint to the Press Council on the Herald’s one sided reporting on house prices.

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I don't have much time for the herald, but I was actually surprised how little of the usual spin was in their headline today (at least the online one).  "Housing market: 'Demand has weakened, prices are falling': REINZ".

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Still, nowhere could I find the fact that Auckland's prices has fallen 10% since November.  Did I miss that?  I'd like to see that as the headline.

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watch TVNZ 1 6pm news ----- its becomign a buyers market -- but dont worry the medium price has still gone up 8.8%   big 8.8% graphic -----   sure later on there was a bit of clarity that thats a year on year figure --- but no its now 10% off its peak --- and most people would only have got     medium up 8.8%     

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Auckland HPI down about 10% from peak.

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This should be the headline of this, or at least some, news article.  

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Yeah, that's the first thing I checked too.  I recall you said that things will speed up next year, but in Auckland it's already happening rather fast - can it really get faster?   In any case it doesn't take long to reach crash territory if the market is falling at 2% a month.

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If you'd like to know if it's possible to be faster, have a look at Wellington City. 20% off the median peak since December... nearly 12 months of unprecedented rate of growth knocked out in about 4 months...

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and of course -- the mortgage rate rises not only have a fair way to go -- but have hardly even touched teh majority of folks who are due to refix in the next 12 months -- 

As much as its really really needed -- and even a 50% drop would still only just make Auckland affordable at say 7% -    there is goign to be a whole lot of pain and sufferign out there -- and most of it on ordinary Kiwis 

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Good point. Indeed there is more pain for the leveraged to come, a lot more.

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Published yesterday but worth republishing again on this article.

The Median I recorded during April was $849K - which was almost identical to the REINZ median which turned out to be $847 and interestingly is now lower than  April 2021 median price - which is what my data is starting to show. Listed prices have  dropped by almost $100K on where prices were at the end of 2021.

 

Hutt Valley Market Update 9th May

 

The number of houses for sale is continuing to trend downwards a large number of new builds came off the market this week.

Unfortunately, I can’t tell just yet if this is because they sold, their trade me ad expired or the development has been pulled – 8 are from the same development and were all withdrawn on the same day so I am tempted to think that the development in this case has been pulled. The development in question discounted each townhouse by 20K prior to withdrawing them from the market

 

Current Market Listings

628 houses on the market- down 18 on last week.

There were a large amount of houses withdrawn from the market last week unsold. There are a lower number of listings this week (Consistent for this time of the year)  combined with withdrawals and what looks like a consistent number of sales appears to be the key reasons for the decline in the number of houses.

Based on the REINZ data which showed that 96 sold in Feb and 104 sold in March giving an average sale of 25 houses per week– 628 houses means there is 25 weeks stock on the market.

 

House Price Reductions

306 houses have a listed price

50% of the houses listed with a price have reduced their price since listing

The average markdown has risen this week from 83.5K  to 84K.  

Of those that have listed prices (pool 306) -30 have reduced their prices by 100K (last week this was 32 properties – a number of  properties where the discount has been >100K have either been removed from the market or sold)

8 have reduced their prices by over 200K and 2 have reduced their prices by 300K with the biggest reduction been 350K (a total 20% reduction)

The data continues to show the majority of houses listed are under 900K. The Median house price for all 648 listings is now 830K. (Down 19K on last week and the lowest Median YTD – previous low was $839K)

The latest QV valuations (valuations by QV which are updated every month and give an approximation of a houses value)have dropped $130K since Jan for the Hutt.

In April the QV valuation had dropped 80K – approximately 20K a month since the start of the year but this escalated in April – dropping 50K in one month.

 

Houses sold vs houses removed

My records show 142 houses listed with a Price have sold YTD (up 6 from last week).

I have records of a further 122 houses (up 15 from last week)  that have been removed from the market unsold YTD. 

16 of those houses removed from the market have been listed on the rental market

The total number of houses removed from the market in the last 3 weeks is 46 (this compares to about 5 houses delisting a week over the previous 14 weeks).

The increase in the number of houses delisting is to be expected in Wellington where owners with cold damp houses try to avoid selling over Winter when this problem becomes quite noticeable. I am expecting more houses that listed in the peak of  summer will be considering coming off the market for winter and relisting in Spring (for those sellers who can afford to).

 

Length of time on the Market

Given how slow the market now is – I’m adding a new Length of time – which is houses that have been on the market for over 90 days- effectively these houses listed in 2021 and Jan 2022 which remain unsold.

  • 472 of the houses have been on the market for over 30 days  - 75% (last week it was 463)
  • 286 of the houses have been on the market for over 60 days - 46% (last week it was 292)
  • 166 of the houses have been on the market for over 90 days – 27% (last week was 181)

Whilst I haven’t seen the latest time to sell numbers for the hutt valley – ¾ of the market has been on for over 30 days and with half the market on for over 60 days – you would estimate average sell time is at least 50-60 days at the moment.

For those thinking of getting a bridging loan when buying you would need to be calculating the costs of maintaining the loan for at least 3 months – 60 days to get the sale and then a further 30 days to settlement.

I am aware that a number of houses with price by negotiation are actually under offer but subject to sale of another property – in some cases there has been a chain effect occurring where there are now several houses all in the chain subject to sale.

 

Rental Market

Meanwhile the rental market has 194 properties for rent (down 8 on last week), and up 72 on this time last year – when just 122 houses were for rent.

Average rental price reduction is $53 a week (up $3 on last week)  and 42% have dropped their prices since listing.

As noted last week I have also been noting how many properties are listed for rent over $650 a week.

At the moment the percentage of properties listed at $650 fell this week to 40% - last week it was 43%. This is the lowest percentage of houses over $650 since the week of the 27th Sept 2021 when 38% houses listed were over $650.

 

 

 

 

 

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Re: the townhouse project, was that an ‘off the plan’ thingee?

 

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yes thats correct - there were at least 22 townhouses in the development in Stokes Valley

 

 

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Good to see that progress on increasing housing supply is stalling as we open up the borders to a population increase. /sarc

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There’s a stack load being completed over the next 4-5 months.

And remember kiwis are free to leave just as more migrants are free to come.

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... I'm expecting nurses , teachers , truckdrivers ... Kiwis in the thousands to head across to Oz ... and we'll replace them with migrants from ? ... we only look attractive to the third world  ... 

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I find it coincidental that as this is all happening, Wellington and Auckland have been nominated amongst the most "liveable" cities in the world on various sponsored media outlets...

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If you understand how those surveys work, then the one big irony is that they don't survey the people that live in those cities.

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I'll admit I have no idea how those surveys work, but not at all surprised to hear that!

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Thanks. Off the plan sales are undoubtedly crashing. And hence so will housing completions in a year or so’s time.

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It is not just the off-the-plan sales to watch. It's the coming expected settlements from people that have already purchased, that can't either get finance to settle or will be settling on properties with already negative equity.

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There is an outside risk of this but as someone in this position I have already built the war chest to complete as have the others I have talked to.  There is also the nature of the current RV being $210k more than I will have to pay.  The market would need to fall ~25% for me to be in negative equity.

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It will especially hit those people who have bought off-the-plan sections, and anyone who signed up for off-the-plan apartments that are not complete and don't already have confirmed settlement funding.

In the GFC, the default rate on many subdivisions was as high as 50%. Although in today's market, it is building companies who have pre-signed up for sections, so if they don't get the clients they were expecting, many might struggle.

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There was an article recently about a developer trying to get a vendor to drop his agreed price by $500k as he thought he was being clever by having a long settlement.

His reasoning being that the vendor either accepts this new price or he would walk away from his 5% deposit and default on the purchase.

When the market was on the up,I'll bet that same developer didn't go back to vendors and say "here's a top up,I think I under valued your property..." 

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Found the article;

https://www.stuff.co.nz/life-style/homed/real-estate/128403463/develope…

Developer asks for $500k price cut from seller, two weeks before settlement

excerpt;

 homeowner and her elderly mother are incensed after a developer buyer of their Auckland property asked for a $500,000 discount, just two weeks out from settlement.

The developer bought the property sight unseen at auction seven months ago, for $4.07 million – at the time a record price for Drury village. He paid an unrefundable deposit of 5%, but was apparently prepared to forfeit that to walk away from the deal.

The sale and purchase agreement on the 2646 square-metre Sutton Road property (in two titles) was a standard unconditional contract, and was due to be settled on Monday, May 2. This was the same day the vendors, Taryn Parkinson and her mother, were due to settle on another property in Wellsford. The owners of that property were also due to settle on another property.

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Great information as ever. Good to see rents falling, this is not being reported in MSM as it goes against the narrative that Healthy homes legislation and removal of tax relief have pushed up rents. It looks as though the turning of the market is starting to have some benefits for the least well off. 

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It definitely makes you wonder as leases expire over the course of this year will those who invested in 2020 and 2021 be able to make ends meet in a falling rental market?

There is a lot of fat in the rental market which could very well disappear at a rate much faster than the drop in house prices, these are the properties which need to move, need to yield. Will that cashflow be there in 6 months time?

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A slight side issue but on residential housing and politicians promises.

UK tory house building promise shortfall

" Gove angers cost of living campaigners by ruling out emergency budget

Minister accused of minimising crisis as he also admits target of building 300,000 homes a year will not be met
Michael Gove has been accused of minimising the cost of living crisis after he ruled out an emergency budget and admitted the government would fail to meet its target of building 300,000 homes a year."

theguardian.com/business/2022/may/11/michael-gove-angers-cost-of-living-campaigners-ruling-out-emergency-budget

UK population  ~65m, 300,00 homes per year.
NZ population    5m, Labour 100,000 homes in ten years, 10,000/year
So based UKs politicians promise NZ would need to build 23,000 homes per year based on our population!

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Michael Gove == Cockweasel

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No doubt of that, overly generous in fact.

Tory government epic fail on the 300k the UK only built 243,770 houses.  I can but dream of failures like that.

"In 2019-20, there were 243,770 net additional dwellings."

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Did the Tori’s build 243,000 houses, or were they built privately? There were 20,000 odd houses built in Auckland this year, per capita the UK would need to build ~750,000 a year to match that. 

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think we need to be careful when stating median prices (middle number) vs. average as they are not the same thing

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Yep - in the housing market the average will always be higher than the median whilst rising. That's why it's such a great marketing tool to bleat on about. Those outliers sitting well above 2x the median push the average up and make it look "rosy", non-numbers folk think "well, average cost for an average home I guess" and drop stacks, not realizing some $5m home nearby just cost them an extra ~$100k in their critical thinking process.

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For someone like me that was in Spain when the housing market bubble popped I know that this market is going to crash (there is not going to be a soft landing) Whoever thinks that it's not going to happen in NZ, probably needs to do a bit more research (maybe outside the like-minded websites). I remember my Spanish coworkers back then talking exactly the same stuff as here now: bricks and mortar are the safest investment, there are not enough houses, or the property market in Spain will never go down. I imagine that it's the same narrative in any country with a massive bubble (ask the Irish, British, Americans and the rest of the countries before the bubble crashed)

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Spruikers are noticeably quieter, as the correction / possible crash sets in. 

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They certainly are. They kept saying interest rates would not lift. How wrong they were. And who predicted our high inflation growth. They are too busy trying to sell. If in fact they hold any property.

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