The decline in property values is gathering pace according to the latest QV figures

Because shelter (housing) is a basic human need. Printed debt and leverage has been used in a very exploitive way in the last ten plus years. People are pissed off about that exploitation.

Banks daily profits (topical this week) really highlights were NZs productive sweat is ending up. And for what... 

There's not really a way to "make sure", because no one really has a reliable means to determine the width and breadth of the current economic conditions - of which house prices are just a passenger.

Until there's some decent stability it's even more of a roll of the dice than normal with any investing.

Yes. The algorithm used by homes.co is so wrong it isn't funny. Complete la-la land valuations.

One roof is more believable.

It's amazing how, due to the RBNZ-induced frenzy of 2020/2021, people forget houses were already massively over-priced in 2020 - and had been nationwide since ~2014, and in Auckland since 2006 at least.

There has been some wage growth over that time (minimum wage went from $8.50 hour in 2002 to $22.70 - but featured a lot of squish at the bottom end), but that fell far short of the increase in house prices.

The intentional introduction of an LVR over DTI in 2014 marked probably the worst of it, with those in power enacting legislation cornering the market for themselves. I still remember lying Simon saying "this will help FHBs", all the while anyone with a brain could see it would have the exact opposite effect - as history has shown. I guess the only way it helped was by reducing the number of FHBs exposed to what is about to unfold - though this didn't need to happen. The drop in interest rates wouldn't have had the disastrous effect they had if speculators had actually been required to pay for their purchases.

Agreed. We are back to pre pandemic levels and dropping. The graphs on Homes simply serve to show how great the stupidity of cheap debt was. 

Debt ain't cheap anymore....

I totally agree but also it has to be said that the market is also very volatile. I've been observing low new listings at the same time as a small relative bump in auction sales, followed by very low auction sales, and over the same period some houses selling over CV and others up to 30% down. Some new listings are coming in with very high expectations but increasingly it looks like many houses settling in around 20% below CV when they first come online (and many/most still not selling). Some very good houses with reasonable vendors are getting almost no interest while other houses are getting good attention. It's all over the place.

We were about to buy, so watching things very closely, but we decided to pause and watch a little longer. It's too risky to buy for us at the moment. We also think if we wait we might be able to get a better house at our price point. Given that we (as far as I can tell) are one of the few cash buyers out there in the bracket and area, and we are keen to buy, makes me think that there are a tonne of people taking the same course...I want a good deal but also I have to say, I feel sorry for some of the folks trying to sell a house right now. Some will do well but I think there is an increasing amount of uncertainty and pain out there for many folks trying to sell.

That models the Taylor rule....    which for a long time was close to what central banks used to do....

Central banks have been clinging to the idea that inflation is simply transitory - that once the covid pandemic calms down and supply chains revert to normal, that inflation will too.  Consequently they thought they could slowly raise interest rates because eventually there would be a cross over where the interest rate becomes higher than the inflation rate (~5%) and the Taylor rule will be restored.  The problem is that inflation is not coming down fast enough to meet the slow rise in interest rates, which is why the US Fed is now talking about increasing interest rates at a faster pace https://www.wsj.com/amp/articles/jerome-powell-to-testify-to-congress-o…

What central banks have done is merely create the space for inflation to become structural and not simply a response to the covid supply chain crisis (which is well and truly over). Markets were betting on a pivot from the Fed, then a pause, and soon the market will face the reality of "higher, faster, for longer" and asset prices will start the real leg down.

Higher interest rates are making it harder for FHBs to get approval in the first place. We have the worst of both worlds atm - a high deposit requirement and high interest rates, and one is not functionally offsetting the other. 

The problem is the rest of the economy is now set up under the assumption that you can extract blood money for housing, and decades of future earnings have been pegged against this by new market entrants. So for millennials et al to even be able to retire mortgage free, let alone with a nest-egg, we're looking at a severe contraction in spending in areas that will hurt young workers the hardest (hospo and other discretionary spend industries).

If we get just another 25% fall to return us to pre-COVID levels, I'll be surprised. We are staring at far more than 25% to rebalance the unsustainable in our economy.

Prices always overshoot - to be affordable prices need to be at a level that matches where they were when interest rates were lsimilar.

One thing which is not being talked about is people who have a house and nothing else and have retired.  When interest rates were 2%, a reverse mortgage was attractive - Now people on that train have are heading over the cliff and may wind up homeless. 

Anyone buying now at these prices is just too rich and do not care how much they spend. 

...or doesn't want to put their lives on hold waiting for the kind of correction that our political and financial institutions have spent decades bending over backwards to stop happening. 

Seriously, how long do you expect people to sit on the sidelines? You say house prices before the pandemic were nuts... if you spent four years waiting and saving, all that's happened is your savings have been monstered by inflation and won't have kept up with increases in your deposit requirements.  

REINZ HPI. 

Under

You are 100% right here.  We are looking at buying our future family home and have just recently sold our city fringe town house in Auckland.  We are in a fortunate position where we could have held and leveraged through, however the return on renting the property was 2% per annum vs. paying +6% on interest.

For the simple reason above, I think the lower end of the market has a lot further to fall.. 

Spot on. And the rest of the regions will follow Auckland on the way down as they followed on the way up.

Agreed. Without the tax rinse this should be a real blow for speculation. More new stock coming on line everyday to give renters better options as well.

Sound like you are promoting a New Zimbabzealand ?  

You know a bag of hyperinflated, worthless Kiwi$ to buy a loaf of bread?



Not for me.



Bonfire the specuvestors and lower housing cost all round please!

Anyone know if the banks are getting worried? Will they get caught with mortgagee sales where the market has dropped enough so that they don't recover all their $?

And that’s the problem coming down the line that no one seems to think about.

if unemployment raises above seven percent then why the need to import workers?

It will be really interesting to see whether any housing supply is 'unlocked' by reversing house prices, as owners realise it doesn't make sense to hold empty places for capital gain.

by HW2 | 9th Mar 23, 12:51pm 1678319506 - Inflation will drop and then int rates and then HPI UP

HW2, when is this happening? Will the wheels need to fall off the economy first before the RBNZ 1-3% target achieved? Are you forecasting this on the basis "it always has, so it always will"?

With NZD tanking and rates climbing all over world. Inflation and rates will stay high for a number of years, HW2 again you show how naive you are with financial matters.

Or maybe like Japan in 1989

Then quadruples over the next 5 to 10 years which keeps the 'ponzi' going. Inflation assisted of course.

Doubling every 10 to 15 years is only 4.5 to 7 percent compound. That is probably slow compared to what happened last time when inflation was last running.