Housing sales crashed to GFC levels in June - REINZ describes the market as 'a little chilly'

What's the dollar likely to do from here, was up overnight against USD

Agree, keep rates as they are - our economy needs to recalibrate, painful as it maybe. We can’t have it both ways - high house prices and a strong economy. Much better to have lower, affordable house prices that will in turn, facilitate discretionary spent into the local domestic economy.

I love their optimism.. 'a bit chilly '.. be honest and confirm it's a couple of degrees short of being frozen 

Yep. RE Agents fighting off buyers within minutes of listing, being dismissive as buyers offered ever higher record sight unseen offers sure was not work, it was an abuse of power. They were just the contracted face between the buyer and the seller, and boy did they ride all and sundry like a pony. Well things have changed, no pandemic panic, lower medium rates (not high), and job losses and construction activity in free fall everywhere.

Agents were implicit in basting buyers with greed based sauce as the desperate and greedy cooked everyone else's goose. They have to eat burnt goose along with everyone else now. I wish them well, there are plenty of other jobs out there....oh wait...

It's not really up to the reserve bank. They've got to keep the economy going... It's our tax system incentives. We got rid of land tax and loaded the burden on income tax and GST. In effect, disincentivising work and trade, and incentivising unproductive and inefficient landholdings.

Which direction, though I guess you mean those smoking the green shoots

Would the students of housing market history care to share  their views on when we see some decent price adjustments.

Hi Rastus,

Up or down?

TTP

As a student I'd say the current climate gives me 2009-2011 vibes more so than 2008 vibes. With solid assets (especially necessities) nominal prices will floor to a proportion of the building replacement cost and go no further. 

There are some on here who believe prices will keep falling to 2015 prices (a 60% nominal drop). That simply wont happen when the cost of building sits around $4000/m2. You will either need a population decline or automated prefabrication of houses to make that happen.

Based on other property crashes: steady falls until 2027, flat for a couple of years then a slow pickup from there

Yes, they really like to selectively spin the stats.

It makes for more articles and click-baiting I suppose.

much worse than it looks

That also goes for GDP figures

The latest modeling shows a cold economy is causing climate change.

Other than that, it's just you.

Apart from the wintry blast,  the housing market is giving you the chills

https://www.nzherald.co.nz/nz/weather-heavy-rain-warnings-for-northern-…

Polar vortex hits the NZ Property Market?

Pavlov's dogs you reckon?

Remember,

• Pavlov discovered that dogs can learn to associate a neutral stimulus (bell ringing) with an unconditioned stimulus (food) to elicit a conditioned response (salivation).
• The dogs’ salivation was not an automatic response to the bell, but rather a learned behavior.
• The conditioned response (salivation) was not permanent and could be extinguished if the bell was no longer paired with food.

Where's the money going to come from ?  Interest rates aren't "automatically" going to go back to 3% . While if you lower rates in NZ, that will quickly reduce the NZD v USD and NZ will be paying way more for imports  - while you will be the first one moaning that petrol has gone up 25% 

You've had your fun .....the financial "gravy train" has finally derailed and "true" value of property is now falling, to come into line with NZ's "lacklustre" economy. 

When the cuts come, expect the volumes to pick up slowly, and the prices to meander around at much the same level for another year post the first cut.  That is unless the RBNZ massively overcook it on the cuts, in which case yeah, off to the races for another boom bust cycle we go, but with the DTI limits it wont be much of a boom.

Remember that a median offers limited understanding without other measures of dispersion such as variance and mean. 

Shortage of higher end homes available (as nobody is building them any more) so they sell for prices above CV, while lower end homes (particularly brand new 2 bedroom townhouses) sit on the market unsold while developers try to out discount each other. Thats what is happening in Christchurch at least.

It would be nice if the comment's section was limited to people 18 yo +

It's a blue Monday, I am looking forward to some inspiration comments from TTP to perk up such a dull day

Hi Chairman Moa,

Agree with you...... Lately, we've been having a bad spell of wethir.

TTP

Something which has been weighing on my mind is the possibility that when the curve does normalise, it may not do so only as the result of central banks dropping their policy rates. With all that is going on geopolitically, might we be entering into a 'new normal', in which longer term risk becomes even more elevated than it is currently, and the long end of the curve lifts another 50 bps?

If that were to occur at the same time that central banks made their initial cuts, might we see the long overdue normalisation, but without the short term relief that so many are praying for? Cast your mind ahead 6 months, and try to imagine a world in which the Republican Party steers American policy away from engagement with the world, and the ensuing turmoil that might cause.

If we see the OCR / Fed Funds Rate down to 4.50 - 4.75% in the New Year, with the longer end up of the curve lifting up near 5.00%, then we've reached the point at which things are said to be 'back to normal', but with little in the way of a break for the over-leveraged. There's a very real downside risk that you're right, and that 2025 turns out to be a right doozy. 

Concur.

Interesting to note too that this is longest period we've had with the OCR at peak rate. One has to ask the question why this bout of inflation control is different this time.

Bishop will be chewing on a cigar this morning...all part of the grand plan...right track 

Google Endoparasites. Natures definition of blood from a stone.

Rents are actually starting to level off and without a sharp patch of immigration may start going down.

Prices on the other hand are just positioning themselves for a cliff jump.

Also say hello to your behind for me.

LOL prices wont go up until the stock overhang is cleared, the only thing that will clear it is dropping prices.

For those who think that they save money by paying rent and not buying a property, Rent is not going to be cheaper anytime soon, 3 bedrooms in North Shore, $900-1K per week

That is just patently false, even Takapuna has a median market rent lower than the bracket you've quoted..

168 hours in a week x $20/hr = 3360/week in rent?     

I am waiting for solid signs. No point of timing the market really. 

Number of Mortgagee sales in 9 months.

edit: Aww, you shouldn't edit your comments Yvil.

https://imgur.com/a/DsBNJDm

So Noel Leeming had a sale last year and they sold 1000 appliances for a median price of $2000

This year Noel Leeming had the same sale at the same point in the year and sold 600 appliances for a median price of $2100

"Great success" said the manager, our median price this year is $100 more than last year!

Next day he booked an appointment at WINZ.

It's time to create a clear separation between apartments/townhouses and stand-alone houses, townhouses are getting cheaper whereas house prices keep increasing. 

Because most of us are at a point where we understand that high inventory and low sales are a leading indicator to price, particularly when taking properties off the market is becoming an untenable solution for many.

See: 2022, but this time with less people employed.

Because that wouldn't fit with the photo selected...

Bingo!

Barfoot's a week ago said their June 2024 average price was the highest since Dec 2021, lots of high end data is masking things by about 0.3% I think.

The fact that the Herald is asking how sick the property market is?, must be making the Spruikers feel sick.

Well, when you lay it like that….

Looooong way down it will before any meaningful floor will be found.

Ouch.

Thanks for those figures.  What they say is that over the past 16 years the price increases have averaged around 4% per annum - or probably less than the mortgage rate. 

And of course history isn't an indicator of the future. Which is why the much proclaimed doubling of house prices every ten years over past decades isn't a projection for the future.

Don't forget inflation - that $395552 in 2008 is $589372 today on general inflation (or $897903 based on housing inflation).

$400k equivalent to $590k mean it is not as dire as it appears at first sight, but still room to fall.

A key change is population - 4.26m in 2008 verses 5.27m today. That extra million people need somewhere to live and explains the demand for housing that provides a floor to prices - unoless they all go overseas.

Interesting - after 16 years with 4% annual inflation compounded annually, $395,552 would grow to approximately $835,105.78.

Chat GPT - If i've asked the right question;

To calculate the future value of $395,552 compounded annually at a rate of 4% over 16 years, we can use the formula for compound interest:

\[ A = P \times (1 + r)^n \]

Where:

- \( A \) is the future value of the investment/amount,

- \( P \) is the principal amount (initial investment),

- \( r \) is the annual interest rate (decimal),

- \( n \) is the number of years the interest is compounded for.

In this case:

- \( P = 395,552 \) (the initial amount),

- \( r = 0.04 \) (4% annual interest rate),

- \( n = 16 \) (16 years).

Let's calculate it step by step:

1. Convert the annual interest rate to a decimal: \( r = 0.04 \).

2. Apply the formula:

\[ A = 395,552 \times (1 + 0.04)^{16} \]

3. Calculate \( (1 + 0.04)^{16} \):

\[ (1 + 0.04)^{16} = (1.04)^{16} \]

4. Use a calculator to find \( (1.04)^{16} \):

\[ (1.04)^{16} \approx 2.1137 \]

5. Now multiply \( 395,552 \) by \( 2.1137 \):

\[ A \approx 395,552 \times 2.1137 \]

\[ A \approx 835,105.78 \]

Therefore, after 16 years with 4% annual inflation compounded annually, $395,552 would grow to approximately $835,105.78. This represents the future value of the initial amount accounting for inflation over the specified period.

Hard to know isn't it. On the one hand we are probably at the top of the interest rate cycle, on the other we have loads of supply and very little demand. 

Many regions are not being impacted, things changed post covid.

Flatlining for 20+ years looks like the most likely outcome ... Once we find a bottom.

=======

What you're saying is ..."it's different this time"

It won't be any different. The market might flatline for a while, but will trend up, it always does. 

Yip I’ve been watching Dunedin the last 6-12 months as might need to move for family reasons. The reported data seems to show a flat market but very little is selling and everyday I get alerts for 5-10% drops on asking prices on houses on the watch list. 

Yep. I suspect many new townhouses are struggling to sell, pushing the median up

From that article

There are more houses for sale than there are buyers, but the outlook for the market once rates start to fall is more positive. A year and a half ago we didn’t know when the Reserve Bank would call it quits on interest rate rises. Now, we know rates have hit a ceiling and at some point in the future they will come down.

Experienced buyers will use this opportunity to buy at the second “bottom of the market” and negotiate well. But, most will wait until they see more solid signs of recovery.

NZsheep, time to buy is now aye?

Thinkers, philosophers and common sense practitioners are generally poor. 

Many real estate investors are rich. I know what I'd sooner be.