The overall sales rate at Barfoot & Thompson's latest auctions dropped below 10%

Auctions are a waste of peoples time in this market. If you want to sell, the market is 10 to 15 % below last years hot air prices.

Put an old fashioned fixed price on the dam house. All this BEO, by negotiation,tender and auction is a waste of time in a falling market. Put a realistic price on it and then take off a further 20 to 30k and do a private ad on trademe. If you want to sell let people know the price. 

A quick perusal of the results for this week show that 111 properties were passed in. 29 received some sort of bid while 82 got no bid at all.

So close to 75% of properties that get passed in do not get any bids.

Dead until school starts up, not much happens over the summer break.

As Carlos reminds us..house prices  will peak and then die much like BTC and it's election time. Xmas is very close..

Hopefully that means summer will last a few years.

Agree with you Carlos.

Housing market will remain very quiet until late-January. The recent Covid surge won’t be helping.

By mid-2023 market could be recovering - but not before a few businesses and over-mortgaged property owners feel pain from their over-zealousness.

Certainly, a Tory win in the 2023 General Election could provide a significant stimulus to the housing market - but my vote will be going to Labour. 

TTP

well the asparagus is certainly shooting out of the earth

Green shoots when the roots are damaged? 

Dp

People will only hold on for so long, At today’s still lofty prices, many Mum and Dad Landlords, owner occupiers, either in or nearing retirement, can still bank vast amounts of equity. Many have paid peanuts for property to start with but heavy discounting still seems a sour pill to swallow. Some will be understandably anxious “brick and mortar” as a retirement nest egg is threatened. While they can still sell at a discount to the Nov-21 peak and come out okay – a viable opportunity exists to sell, profit and bank. Enter the offspring to which they installed visions of great wealth and helped financially into first homes who are now under water or soon will be. Unfortunately, the sad reality is that despite prices declines, there still persists a glut of expensive homes for sale and the process of actually banking any equity involves having to pursue a more discerning and retreating buyer. When the collective confidence of a quick recovery or at the very least an imminent floor in prices is fading fast, investing in property becomes sleep depriving and more and more tilted towards collective “it will only be cheaper tomorrow” narrative. Many now bear witness as to how houses (as retirement nest eggs) can be notoriously illiquid as an investment despite still plummeting prices. I think demographics will play a major part here. I think some serious selling has a way to run yet.

For these obvious reasons, for retirees and those saving for their first home, term deposits are now firmly back in favor. They are certainly much less hassle.

To me the most telling is the 77 passed in no bids, I am sure people went to open homes, so this means that the price guide from the agent did not excite anyone to "put their best foot forward' (what a crock), please any foot?     The buyers see prices falling 1% a month, if you want 20% off just wait 12 months then offer 8 below, easier as less resistance from sellers and agents.

Too many immigrants on here, they didn't see the carnage in the late 80's crash. Short memories too. 

Scarfie, thats a little to bit extreme DGM, I cannot match that.....      You are completely right re the credit, I have worked in "That Industry" my entire life.   Its crazy to me that you can walk into a branch and a 20 yo can load up your mortgage application, but try to loan money for a internet startup, or a packaging or small cheese factory etc ....          I do not think we go back 40 years though, I think we will go back to a DTI of 3.5-4.5 perhaps banks will be limited to lending only 25% in the 4+ band etc....   Every OCR lift knocks the bid of FHBers further away from the current market.

Well said

Fitz, such Landlords are as much a social service as a Brothel. Neither are essential for the good of society. On occasions, while they might need each other, society doesn't need them. Be suspicious of a Landlord that comments they charge "below market rent". Their service might be below the current legislated standard. It might be more about the service they don't provide.... 

It wont be instant. But Karma is going to kick them right in the face.

Mr Orr has definitely focused the mind (as once murmured by a hanging judge).  As for the MSM they are a mirror of the populations current thinking, they cannot afford to be too far ahead or behind or they will be ignored.   As the wall of interest rate resets go off next year we are going to see real stress.

Maybe it's good that Kiwis are waking up and putting an end to this unhealthy obsession with property being a risk free investment.

Repricing of risk must occur.

 Why Blackstone’s $69 Billion Property Fund Is Signaling Pain Ahead for Real Estate Industry - Bloomberg

Why are some of you surprised by these auction results some of us have painted the picture for you all over last couple of years. The house price falls will continue with larger price reductions over coming years. 50% off from top of market last year is looking on the cards and could get even worse if world downturn hits us hard.

I've seen 3 FHB families buy in the last 3 months : stable long term employment, paid multiples of median income, big deposits that were growing.

They're happy with their purchases - I know at least one offered 20% below the listed price and was pleasantly suprised when it was accepted.

They're content.

But the point of this is that not all purchasers are dodgy - there will be genuine buyers (even investors and speculators who mistime the market!) all the way down.

That’s the sad part, most of them are hard working, honest people buying modest homes for exorbitant prices which they’ll pay double the sale price for over the next 20-30 years. No wonder we’re getting less productive as a country. 

</sarc> Yes this worked in the GFC, In the US they would run bus tours around the mortgagee sales , thats a great idea HW2   Best idea you have had this year <sarc>

The buyers still ingrained in FOMO will run out, and as rates increase they'll offer little competition to those on higher incomes. Let the weak hands play out first I say. The only thing I'm not looking forward to is paying around 100k pa interest, but that's only for a couple of years hopefully.

population growth =/= demand.

Credit growth = demand. Unless you think everyone is buying with cash.

When demand dwindles the construction costs will eventually come down.

Demand works both ways. Why would construction costs stay elevated with no demand?

The basic question should to be to ask is why would a house cost 900k to build?

This is the greed of few making life miserable for many.

And add in the worst policies of consecutive governments in terms of how growth is maintained and managed, and wallah we get the country called New Zealand.

Just 5 years ago house would only cost 250k to build. Greed Greed and Greed all the way. 

Hmmmmm yes and no. 

If construction slumps as I have been predicting since early mid last year, a lot of jobs will disappear. Not just in construction.

With jobs disappearing, there will be less immigration.

it is instructive to look at what happened back in 07-08. Construction slumped as did immigration. Property prices dropped circa 10% and it took 3-4 years to start rising again, but slowly.

Your right if people can afford the $900k at the time of population growth. Think of this wild scenario. If banks stopped lending all together, forever, what would happen? Construction stops, people pile into existing houses, quality and price of building drops then eventually some people can build a $50k tiny house on a $50k section in mission bay lol.

Friend recently completed his new house here in Napier. He's a builder and built it himself. Cost of all materials was a bit over $2,000 sq/m. The house is about 230 sq/m so there's $460,000. The section cost $345,000. I don't know what he paid to the architect and for all the council fees. I'd throw a dart and come up with $25,000 (night be a long way off, I know). So, that's $830,000 NOT INCLUDING the builder's labour. That has got to be another $75,000 at least, I would have thought. So you're over 900K to build a house - and this is in the provinces, not Auckland. I'm sure there is stuff I have not factored in like the cost of credit and various other things.

Of course, land prices can come down and houses can get smaller which would reduce the total price. Will the cost of labour drop at some point? So while there is some talk of prices plummeting by 50%, I am not sure I can see it. There has to be a price floor at some point, based on the reality that you simply cannot build a house for less than $xxx,xxx (whatever that figure may be).

Doesn't seem to cost $900k to build a house in other countries. Funny that 🤔🤔🤔

Yes exactly.

What constantly astounds me - although not really - is how oblivious more than 90% of people seem to be. And I include within that some quite clever people I know. 

confirmation bias is a very powerful thing.

Couple that with a profound ignorance amongst most people as to how markets work.

Those who drive the motorway at peak hour will be stuck going nowhere and cursing other motorists. 

BUT of course there are others who get in early and whizz along. They get to where they are going all relaxed and ready for the next part of their day.

The late comers arrive at their destination late and steamed up. That is if they get there at all.

(ITGuy and IO because you need everything spelled out - the above is an analogy)

Peak hour was those who purchased in 2020-2021 during the rush - stuck going nowhere now (like your children) because they find themselves in negative equity with rising interest rate costs they can't afford. 

I once did a boat trip on        D e N i l e 

I think that’s a good analogy HW2.

TTP

Hi Black and White,

Look behind you.

TTP

In any market thats falling the first stop loss is the cheapest.

They get more expensive after that.

Since the Royal Commission into banking in Australia, the banks have become very averse to the prospect of kicking a family out into the street for being late on Mortgage payments.   

The Banks have no such qualms about forcing an investor to sell if payments are missed.    We will likely see the most carnage in the investor fleet, especially the ones who used to review their equity each year, and ride the bank limits hard so they could borrow to the max believing property would never fall.   

Seasoned buyers of the dip, like me and HW2, know this as we have been around the market for a long time.......

We both know that there will be opportunities in this space, much like sharks turn on each other when they hunt in packs.

HW2 knows deep inside that this could be the greatest buying opportunity for him, and his kids, that he has ever seen.   We are ready if properties fall by 50% to get twice as much as we could last nov....

Absolutely. Therefore the cashed out money flowing into regional/holiday locations is at best "in significant retreat".

The market is doing really well, 

It's tip-top.

https://www.youtube.com/watch?v=UKN3AWNLuJM

with Rodney the only district where the sales rate made it into double digits

You just spoiled the narrative

Same, he was right on top of the epi-centre of the crash, did he get banned by any chance?    Powerful players don't seem to like powerful data analysis.