Auction activity has found its winter floor, and probably won't get any worse with spring just around the corner

House prices are unlikely to 'shoot up' off the back of lower mortgage rates alone, especially if potential buyers are uncertain about the economy and, more importantly, their ability to take on and service a massive mortgage for the next 2-3 decades.

My concern is that our economy has no legs to stand on. We've witnessed a huge outflow of skilled Kiwis, imported hundreds of thousands of low skilled workers and our infrastructure is as stretched for capacity as ever. I doubt milk and meat prices alone can pull the entire NZ economy back on its feet.

Comes down to fundamentals,  so NO,  can't think of any..

It is going to depend in the area of NZ.

Auckland will be flat for awhile as the returns and costs for investors just do not equate favourably.

This in turn will make a shortage of rental property.

There are other areas in NZ where prices will rise with the interest rate reductions and where people see value.

Over the last 2 years there is a pool of people who have ben saving deposits in the anticipation of interest rates falling, now that has started, those people will make their moves. I think it's smart of them.

I have 2 colleagues doing exactly this.

Weather that will be enough to increase house prices, not much.

I think it will take time for an increase in buyers to erode the house stockpile before prices increase

Hi Sam

so I will offer some views, which are clearly minority views around here. I have long been a housing DGM, but I would say at the more mild end of the ‘DGM spectrum’.

firstly, you always need to think of culture and mindset. We are overwhelmingly a culture obsessed with housing. That doesn’t go away overnight, despite a couple of years of a weak housing market. Despite the big falls of the past 2 years, I still hear a lot of denial and bravado about house prices.

secondly, there’s still plenty of money out there, even if a lot of it is tied up in housing equity. There’s still plenty of boomers with lots of equity who will be willing to help out their children. Also, despite what you hear about youth, many of their children (ages 25-40) are doing well, and accumulating plenty of money in their KiwiSaver accounts (which they will use as home deposits)

Interest rates are the major issue right now, but they will lower. Lower prices will eventually start stimulating buying too. Lower prices, the coming of spring, and the emerging view that interest rates will lower markedly in 2025, will - in my view - see the bottom of the market reached, at least in Auckland, by October. I think there could even be an ever so gentle increase in prices over this summer.

The economy is crap and unemployment is rising. Yet it needs to be kept in mind that even if 6% of the working age population are unemployed, 94% are still employed! I think there will be pockets of weakness though, where unemployment disproportionately affects the housing market ie. Wellington. I also think unemployment will disproportionately affect young people (18-25) still well away from house buying age. So not so much impact on the housing market.

I don’t think the market will shoot to the moon again, at least not in the next couple of years. But I think there’s a good chance prices will rise 5-7% between Spring ‘25 and autumn ‘26. From here to Spring ‘25, pretty flat, maybe small increases.

anyway those are just my views 

When the next phase of credit expansion occurs probably. You need people willing and able to take on debt, which is more difficult in a contraction/deleveraging phase of the cycle. Immigration is proving the share number of bodies currently is unable to do it based on all the per-capita data pointing south.

We might come out of this slide okay, or we could have another shock that makes it worse. It’s hard to know. 

A couple of things to consider. Firstly we need to earn the interest and loan repayments in the real economy and that one is not on a solid footing right now. Latest prove of that are retail spending numbers and high energy prices, both for electricity and gas, have limited industrial activities. Also we need to consider that the next couple of years the 'boomer' generation will be looking at trading down and we might see a shift in the real estate market towards smaller units and more family housing for sale. The boomer generation might also be looking at spending more on overseas trips and therefore further impacting our already negative current account and leave less for New Zealand GDP grow.

Hi Sam, same answer as I've given many times before. I.e. Zoning for higher densities throughout NZ will facilitate much more overall supply - at many different price points - and with a much more dynamic response - ensuring dwelling prices remain flat in inflation adjusted terms for 20+ years.

(And put another way ... Those factoring the capital gains we've had in the past 20+ years are going to sadly mistaken when that doesn't happen. And put yet another way ... Any resurgence of FOMO will just see FOOP become a reality.)

I was looking at barefoot results , lots of just under 1mil sales so cheaper quartile for Auckland is moving the rest not so much

That's what we use REINZ HPI for and it was the largest drop MoM in Auckland's data in REINZ History, no one hides from REINZ data

Not so sure about that. In the past few weeks, we've still seen people at auctions lose their heads and emotion take over which has resulted in some extremely happy and stunned sellers. Not as many as in 2020/21 but still it happens.

More an   \    right now, its capitulation super slippery slide time

So (1) 54% have sold below RV, and (2) What does RV mean anyway, except the mathematical distribution of how much your semi-annual Council Rates bill is? (The RV could be $1,000,000 or $1 and the RV will still collect the same amount of rates from you. We could replace RV numbers with letters A, B,C etc, as they do in the UK, but that would take away the security of looking at "My RV" for solace)

Ignore that column in the table. The numbers are always nonsense.  

  Eg how do 10% of 16 houses sold sell above RV in Auckland central suburbs?

Interesting to see the percentage selling above their valuation has increased. 46% of sales. 

Um, no - not exactly.. Being that the measurement is both above or equal, how many exactly could have sold equal to rating valuation? It could be 45%....

Anyway, these days the smaller pool of qualified buyers have the luxury of choice and those homes that tick the most boxes are more likely to sell and be represented here and therefore skew the mix in a low volume market. In frothy times, these homes would have sold 10, 20-30% above on FOMO alone.

Haven't CVs recently been set at a much lower level in some places? 

Something like 16 properties in Auckland sold over CV. 

Bingo!

We have a choice of what to do with all the New Debt that's going to be created to keep our leaky economic boat afloat. Do we plough it into resuscitating property speculation, or use it to fix the mess our neglected healthcare, education, infrastructure etc etc etc. is in.

It's not the Price of Debt that matters, but what we us it for.

Agree...theres distortion everywhere and its even infected rents ...some values just dont stack up... FOMO residue everywhere... some folk are likely sitting on unrealistic values in some of the not so sought after NZ locales where employment prospects are low and the supply chain is more complex. Flogging off 'overcooked' wont be easy... Councils are not dragging the chain so much now as all the infrastructure crumbles around them.... costs are rising.... vanity projects are no solution. 

That place was not a villa.   Even the RE agent called it a cottage.  Only your doom spruiker mate called it a villa.

Dunedin has been distorted IMHO by the larger houses used as student accommodation, since students have been able to lend so many $$$ landlords have rorted them, back in my day we had limited funding so lived in the same hovels for peanuts

If you can pick up a Devonport Villa for 1.4 m

$1.3M 

No yesterday was the time to buy...        Zwifter you win the prize for the Spruikiest Spruiker here.

You are wrong, but you will never stop spruiking and like a broken clock, somewhere along the 2026/27 bottom you will be right and at least you will be able to refer, going forward to that lucky seven hundred and thirty second spruiky post you made in July 27 that you called the bottom.

Even dissecting your comment - like if you don't buy by Xmas what happens, do you turn into a pumpkin?

I agree with this

Multiple rate cuts coming from September. The FED will start cutting, Orr will just follow as he must be pretty pleased with himself for jumping the gun on the FED.

but that does not mean that property suddenly becomes cash flow positive on the 1st January 2025, in fact at expected 6.25% 6 month fix at that point - I suggest property is still about 200bps of cuts away.    

All the gain is in the land, younger people hate old cold houses now.   National will open up land supply, the game has changed and gamed the slower players

Yield? Who cares about Yield! It's all about .... Leverage. Using Debt as THE tool to make yourself rich. Yield? That's for those not smart and brave enough to understand how the New Zealand property market has always worked, and always will. Use the Bank, and let The Tenant and the Taxman pay off your Debts for you. (just getting in ahead of the usual response!)

Miles away from Riverhead, I have my own bore and sewage system.  

It's pretty manic out there, subdivision spreading along the Riverhead-Coatesville Highway. 

Still pulling the trigger too early now. The economy is in dire straits currently. So bad Orr had to make the move down otherwise it would need A&E. This is no quick fix. He went too high for too long.

No change in the market either, it just keeps falling , did someone in the media say on average 8-9k a month all year?

Houses losing more then people make in a year?

Remember when houses used to increase in value by more then people made that year... tax free. nom nom nom