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

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.

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

Be Quick.... Yeah, Nah.

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.

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.

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...?

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…

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. 

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.

-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.

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

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.

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

So gravity does indeed exists 

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). 

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

Auckland HPI down about 10% from peak.

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 

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.

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!

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

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)

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