QV figures show Auckland now just short of $1 million average house price; national average ticks over $600k

By David Hargreaves

The rocket ship that is the New Zealand housing market is showing no sign of losing impetus, with the average national price rushing past $600,000 for the first time, according to the latest monthly QV figures.

Auckland continued its rapid ascent, with its average price rising by some $552 dollars a day during July and ending the month quickly closing on the $1 million mark.

As of July the average in the country's largest city stood at $992,207, up from $975,087 in June.

The Auckland market has increased 16.0% year on year and 5.2% over the past three months. Values there are now 81.6% higher than the previous peak of 2007.  When adjusted for inflation values rose 15.5% over the past year and are 54.2% above the 2007 peak.

The latest monthly QV House Price Index shows that nationwide residential property values for July have increased 14.1% over the past year. Values rose by 6.1% over the past three months and are now 45.4% above the previous market peak of late 2007. When adjusted for inflation the nationwide annual increase drops slightly to 13.7% and values are now 23.5% above the 2007 peak. The average value nationwide has now ticked over the $600,000s and is $602,434.

In June the national average was $590,909, so nationally house prices rose nearly $372 dollars a day during July - though of course that figure does includes Auckland's prices.

QV National Spokesperson Andrea Rush said values continued to rise rapidly in many parts of New Zealand - buoyed by low interest rates, strong investor activity and high net migration.

"Hamilton, Queenstown Lakes and Tauranga have seen some of the highest growth with Hamilton values rising 31.5% since July 2015, nearly twice as fast as Auckland which rose 16% over the same period.

"The Auckland market, however, has continued to accelerate - up more than 5% over the past three months."

Rush said the Wellington and Dunedin residential property markets also continued to show strong growth.

"Christchurch by comparison is showing much more moderate value growth and along with supply meeting demand for homes in the city, there’s now an over-supply of rental properties which is resulting in a downward trend in rents there."

It was too soon to tell what impact the Reserve Bank’s new 40% deposit requirement for anyone purchasing a property they do not intend to live in, would have on the market, Rush said.

"However there are reports the new rules have already led to some offers being withdrawn by investors in parts of the country."

See the table below for the average dwelling values throughout the country.

QV House Price Index July 2016:

Territorial authority Average $
current value
12 month change% 3 month change %
Auckland Areas 992,207 16.0% 5.2%
Wellington Areas 524,063 14.4% 5.5%
Main Urban Areas 722,243 14.9% 6.6%
--------------------------------------- ------------ ----------- ----------
Total NZ $ 602,434 14.1% 6.1%
       
Far North 355,485 13.6% 3.6%
Whangarei 421,750 19.9% 6.0%
Kaipara 422,295 15.1% 5.1%
Auckland - Rodney 859,303 16.0% 2.8%
Rodney - Hibiscus Coast 844,826 15.0% 2.2%
Rodney - North 874,992 16.9% 3.4%
Auckland - North Shore 1,160,094 15.1% 5.3%
North Shore - Coastal 1,322,798 15.2% 5.5%
North Shore - Onewa 937,297 13.8% 6.1%
North Shore - North Harbour 1,126,152 16.8% 3.9%
Auckland - Waitakere 782,039 13.8% 3.7%
Auckland - City 1,163,464 14.6% 5.6%
Auckland City - Central 1,003,978 14.9% 4.8%
Auckland_City - East 1,453,988 14.8% 5.5%
Auckland City - South 1,060,567 14.0% 6.4%
Auckland City - Islands 982,998 18.1% 5.6%
Auckland - Manukau 859,005 20.0% 5.7%
Manukau - East 1,100,754 18.2% 5.7%
Manukau - Central 662,182 19.4% 4.5%
Manukau - North West 741,947 23.6% 6.5%
Auckland - Papakura 638,678 21.1% 4.9%
Auckland - Franklin 613,696 15.1% 3.3%
       
Thames Coromandel 586,608 11.5% 3.8%
Hauraki 307,560 18.3% 6.0%
Waikato 389,220 27.5% 4.2%
Matamata Piako 354,534 24.3% 7.3%
Hamilton 513,094 31.5% 8.9%
Hamilton - North East 659,231 33.1% 10.5%
Hamilton - Central & North West 472,328 30.0% 9.2%
Hamilton - South East 463,194 29.6% 6.5%
Hamilton - South West 449,546 31.0% 7.4%
Waipa 445,080 23.2% 4.7%
Otorohanga 250,202 29.0% 12.4%
South Waikato 159,854 24.1% 5.1%
Waitomo 164,555 4.8% 7.1%
Taupo 393,296 13.1% 3.5%
Western BOP 540,128 24.3% 5.9%
Tauranga 615,625 25.7% 6.6%
Rotorua 338,679 24.8% 9.2%
Whakatane 356,353 17.6% 8.1%
Kawerau 143,765 41.0% 15.5%
Opotiki 238,218 18.6% 5.4%
Gisborne 246,757 8.8% 4.8%
Wairoa 146,174 1.1% -2.6%
Hastings 353,255 14.1% 6.2%
Napier 379,698 15.1% 4.6%
Central Hawkes Bay 233,417 12.5% 3.7%
New Plymouth 389,690 8.3% 1.3%
Stratford 217,705 9.4% 1.1%
South Taranaki 188,513 1.5% 0.2%
Ruapehu 141,512 10.2% 1.2%
Whanganui 200,022 10.3% 4.8%
Rangitikei 156,715 9.9% 7.1%
Manawatu 267,894 9.8% 2.9%
Palmerston North 320,134 9.3% 3.6%
Tararua 155,591 2.2% -0.2%
Horowhenua 234,491 12.7% 8.4%
Kapiti Coast 427,620 12.4% 5.2%
Porirua 429,950 12.6% 4.7%
Upper Hutt 373,082 10.6% 6.0%
Hutt 420,972 12.2% 4.6%
Wellington 633,611 15.9% 5.7%
Wellington - Central & South 632,974 14.6% 6.0%
Wellington - East 704,208 17.3% 6.9%
Wellington - North 558,101 16.5% 5.4%
Wellington - West 732,912 16.9% 4.9%
Masterton 249,667 4.7% 0.6%
Carterton 286,582 6.5% 2.4%
South Wairarapa 329,795 8.0% 3.1%
       
Tasman 457,542 8.2% 2.5%
Nelson 464,885 12.0% 3.1%
Marlborough 392,566 11.2% 4.4%
Kaikoura N/A N/A N/A
Buller N/A N/A N/A
Grey 215,864 0.3% 2.1%
Westland 226,176 -1.4% -0.9%
Hurunui 367,915 5.2% 2.0%
Waimakariri 429,832 2.5% 1.5%
Christchurch 492,165 3.5% 0.7%
Christchurch - East 373,972 4.1% 0.8%
Christchurch - Hills 674,056 4.7% 1.2%
Christchurch - Central & North 577,863 4.0% 0.8%
Christchurch - Southwest 465,303 2.7% 0.5%
Christchurch - Banks Peninsula 506,657 2.1% -1.6%
Selwyn 531,517 3.0% -0.2%
Ashburton 351,057 7.4% 1.6%
Timaru 323,296 5.8% 0.1%
MacKenzie 355,551 16.4% 1.9%
Waimate 214,782 7.8% -2.0%
Waitaki 241,912 6.2% 2.9%
Central Otago 390,534 18.3% 6.6%
Queenstown Lakes 910,974 27.0% 8.1%
Dunedin 331,967 11.1% 4.5%
Dunedin - Central & North 348,835 12.2% 6.0%
Dunedin - Peninsular & Coastal 294,844 6.3% 3.8%
Dunedin - South 316,332 11.1% 3.3%
Dunedin - Taieri 342,699 11.7% 3.9%
Clutha 174,420 3.5% -2.2%
Southland 219,557 1.3% 1.0%
Gore 196,117 6.2% 3.0%
Invercargill 223,487 7.8% 2.7%

QV house price index

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Source: QV
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Source: QV

 

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118 Comments

More rocket fuel on its way on Aug 11.

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15

shame to see the cancer starting to spread throughout NZ. guess there will be a lot of councils now to blame from this government not just auckland

Sour grapes much?

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17

no, unlike yourself empathy for those young NZ's trying to get their Home which is now even harder for those in the regions

In the regions they are much better at translating house price rises into construction, so it becomes easier and easier for young NZers to find a home in the regions.

A lot of young NZers are turning their backs on the toxic asset inflation/anti-construction policies of Auckland Council. Some are moving to regions, some are moving to Aussie.

Curse the local councils for their unfettered immigration policy and lack of restrictions on foreign buyers. Curse the local council for the lax visa rules! Why aren't the councils tapering immigration?!

Cancer ???

I have had to strap my house down to keep it from rocketing upwards.
Question - I have some fixed mortgage coming off soon, what would you do in current environment? My feeling is to float it and wait for Wheeler to drop OCR 50 pts? Wadda reckon?

If you are asking that question, you need help.

Not really, just getting an opinion.

You don't need opinions when you can do maths..

It was a legitimate question nymad. TBS Your on the money with that one personally id wait and see what happens. (Im unsure if or how much the banks will pass on to borrowers) The hard question is how long to fix for. 1 year rates are looking extremely attractive.

Really nymad? I think it's a legitimate question. Fixed rates reflect the market's 'baked-in' view of the likely track for funding costs over the respective terms - definitely not just the OCR at home. Rates could be higher or lower on average than what's currently expected, nobody knows. I'd look at fixing at least some. Spread the maturities to reduce your rollover risk. I'd go 2, 3 and 5 or something like that - the 2-3s seem well contested at the moment.

That 50 bps your expecting from the Governor is already priced in essentially (to fixed rates - it may or may not flow through to floating). That would mean the biggest potential for a surprise is on the upside.

Sell it

Floating is 5.5-6.0 at the moment and you can fix for 1 year at 4.19 (Kiwibank). That's at least 1.3% lower than floating. I am in the same situation as you and will fix for 1 year as I think it will go lower...

Can someone tell me why the Chinese investors move to small town?

Lol. Those 3% that were buying everything in auckland? You see all the young ppl complaining about high prices? That's call demand side. They are desperate to buy. This is a fhb phenomenon and always has been. Speculators and investors are never the marginal buyer preferring a bargain or something that yields well. Chinese part of 3% foreign buyers; they simply are not the major factor here; interest rates and FOMO - both of which have a long way to run before tapping out esp with kiwisaver pumping up the lower end.

A sliver of wisdom, Simon? Some real numbers provided to these people here? Nah, those statistics are cooked, false and a massive conspiracy according to most commentators here who love their stories.

Yes, those statistics were highly flawed (as per LINZs own admission). Thank you for acknowledging this.

Can someone tell me why the New Zealand investors move to small town?

I was waiting for this comment. Thank god you didn't disappoint me.

..i feel the need to comment..but i'm speechless. This looks to be unstoppable. It's as if the locals are getting a massive wage cut without even figuring. Time to start shopping for a car with a decent fold down seat?

At 30% yoy gains what you are really seeing is a re-rating. Nothing to do with fundamentals, simply means the price a year ago was out of wack when all things are considered. When everyone starts to see 600k as cheap and affordable it makes 3 bed stand alone houses a very decent cities all get re-rated by general population from (in Hamiltons case) 350k to 500k.

Unlimited fuel thanks to kiwisaver this will spread further and only stop once either fhb's are told they need 50% deposit (politically impossible) or interest rates go up to 8% plus - which in global environment is off the agenda for at least a decade

A group decision. People's power.

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11

As long as the outlook is for lower interest rates and OCR.....with no changes to migration then expect this to continue until it can't. Just makes the complicit RB and Government look like fools really.

When would it reach the point where it can't function any longer? Serious question, when would ever upwards and increasing prices really cause enough damage for us to see it clearly, right in front of us. What exactly can we expect when this happens?
I agree I don't think it will stop, I too see it continuing to go up and up and up. But, I do ponder what happens when average prices (for example) in Auckland go to 1.5 - 2 million. Saw a fellow renters post on FB last night about looking for a rental. One of the only places she could afford (her and her partner both have good jobs btw) was at a 'reduced rate' because of construction in the neighbouring unit and 'the future tenants electricity will be used in the construction whenever needed'. I dunno, it's all getting a bit toxic now.

The most you can do is look at historic events and unfortunately the bubble that is going on right now could go on for decades. The long it goes on for the larger the correction at the point where it fails. It could collapse this year or it could collapse in 20 years time. No one can predict when it will happen.

https://en.wikipedia.org/wiki/Japanese_asset_price_bubble
http://wolfstreet.com/2016/04/29/the-hong-kong-housing-bubble-implodes/

Should ask PM, if supply is the only reason for house price than can he assure kiwi that house pruce will not fall as supply is far away.

Good comment. If you look at the graph above click on % change and scroll back to max time it will give you the last 40 years. You will see that the biggest "crash" was a drop of 10% for about 1 year

Whangarei districts prices dropped about 30% after the GFC and have only now recovered back to 2007 prices.
If there is a correction it is Auckland that will suffer it the most, at this stage the rest of the provinces are well behind.
As long as the Government maintains uncontrolled population growth then there will be price pressure.
At some point population growth will stabilize, foreign investors will start to pull out of the market and then there will be a collapse back to what working class NZ'ers can afford.

Too much money waiting to flow out of china. Government is blinded by chinese money without realising that NZ is such a small island for Chinese that they can buy NZ number of time and that is exactly what is happening.

Also many non residents knows that things may change and JK may be out soon. So will see more movent before next election as will hurry to buy before their supporter and symphatizer is kicked out.

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21

The Government knows exactly how to stop this huge problem ..... simply change the immigration settings .

Helen Clarke did this regularly , and would move the points between 90 and 140 on the skilled migrants system depending on the numbers they wanted to let in.

She also made the investor category quite onerous , and National have loosened the rules so all we have ended up with is more $2 shops , shonky takeaways , and nail salons.

Labour were also big on migrants being able to speak English and were very strict on rating the migrants qualifications through NZQA well BEFORE giving them a Visa

Wow! Prices are certainly accelerating again! 1.052^4 = 1.22 i.e. a 22% annualised rate of increase over the last 3 months versus an average of 15.5% over the past year.

The 5.2% increase in the average Auckland house price over the last 3 months is 2.5 years worth of savings for us! Another way of looking at it is that the required deposit on an average house is increasing at twice our savings rate...

Had a friend who bought house for 750000 in western spring in Auckland last year and just sold for 1.1 million. Ask JK to calculate the percentage rise and justify it.

I paid 750000 in 2008 in Epsom. My 2014 CV is 2450000. Can you let me know my percentage rise? Thank you.

More than happy to help. By my calculations you have 6 years between 2014 and 2008 and the price of your house has increased by a factor of 2.45/.75 = 3.27. So the equation is x^6 = 3.27. Thus, x = 3.27^(1/6) = 1.22 or a straight-line 22% increase per annum on average over that period. Presumably you've also done well in the interim. Not too bad at all.

Thanks but I did spend about 350k in renovation in 2011. Do you need to take that into account?

I wouldn't worry about it. $350k is chump change compared to the killing you've made.

The "CRAZINESS" continues ...... this goverment won't turn off the immigration tap, as this is where all the cash is coming from !! .... their mantra is we have to keep the Auckland voters "thinking" they are so "wealthy" and that all the capital gains in the last few years can be attributed to the Rt. Hon. Mr John Key et al ...elections looms folks ....nothing will change the 'status quo' at the moment.

The banks realise to keep the house prices increasing, they need these overseas funds to make their way here, as if it was just the citizens of this country that were the only ones buying, the whole ponzi scheme would crash ......when are we going to change the current immigration settings and tax property buying non NZ passport holders...this could be a way to "deflate" the bubble.

yes that would deflate the bubble.
But our government prefers to blame the locals and lock them out of the market with higher deposits.

Wow, to think you can buy a house in Ruapehu, move it to Auckland, and make a seven fold profit. I'm surprised that state highway 1 isn't clogged with house moving trucks.

has happened the other way, can buy a house in auckland for a dollar ansd moving costs as developers want the land to build multiple units

I know of a very large 2 story timber house in Palmerston North being cut into pieces and shipped to Auckland. I was told it was going in 6 pieces which flabbergasted me. I will need to ask some more direct questions closer the the source to verify that.

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11

A housing article, bound to get a hundy comments. Might as well do my bit.

I disagree! I think it will get 150 comments!

Quite right, I would not have wagered at it stopping at the hundy.

But only from about different 35 commenters (out of about 12,000 registered users). This story itself will be read by about 4,000+ people however. Commenters are never a good sample of our readers. (Yesterday, for example, we had 16,907 unique readers who read 57,264 pages of content.)

What's the geographical range of the readers? Do you have records of that?

The last analysis shows Auckland = 38%, Wellington = 17%, rest of NI = 25%, Christchurch = 9%, rest of SI = 11%.

Thanks. Is international readership so small that it disappears in the rounding, or just left off the above figures? Numerous commenters based overseas, and presumably the active natterers aren't the only readers.

One of the things I am learning about the technology adoption curve is that a small number of people can have a huge influence in the buying behaviour of others. The British recording industry worked out how to use this to their advantage.

Confirms what we knew. Elevated house prices will remain high until the supply side changes from 2018 onwards.

Look at the QV prices index from 1980 to now. It's a nice smooth gentle progression up. No bubble. You can clearly see that house prices were subdued between 2008 and 2012. Houses prices are now where they should be. Shame on all the doomtards who scared FHB away in 2012. Shame on you. How do you sleep at night?

騎虎難下” (qí hǔ nán xià): “riding a tiger and it being hard to get off of.... (I do apologise in advance if the characters or translation is off - hard to tell in the InterWebs...).

But Hey, y'all are getting Richer.....

No doubt IRD will trawl through the LINZ database looking for those doing a quick profit for CGT. I can Mr Burn from IRD is rubbing his hands smiling..

The RB has no one blame but it self for rising house prices. I have repeatedly warned that controls and regulations create distortions and unintended consequences.
Increasing deposits creates the panic that drives people to buy before deposits and prices increase even further. Giving 3 months notice of new deposit regulations was another dumb move as paniking people with pre-approvals are forced to act in haste.
Separating Auckland from the rest of the country when it came to LVR's was yet another colossal blunder and has pushed buyers over the fence and spread the contagion further and faster. The bright line test holds property off the market and threats of extending the bright line test makes the shortage even worse. In any event it still excellent business to sell and pay the tax and be done with it for some speculators. Making people favour new houses pushes up building costs which feeds directly into the second hand market.
Threats of a general capital gains tax makes people hang on. If you don't sell you don't pay tax. (There is an argument to tax people who don't sell). Removing depreciation allowances for investors has fed straight into rents and threats of ring fencing losses will feed even more into rents. Charging 15% GST on new builds is highly inflationary in itself. Leaving home owners out of any regulations allows the majority to buy and sell tax and regulation free to their hearts delight. Every move that distorts a free market has bad consequences and we see now that we have a run away market feeding on itself.
There will be tears.

Rubbish! New Zealand's problem is that it IS a "free market" that's just tinkered with at the edges. People are all in on property because of the lack of tax disincentives, money laundering exemption and guaranteed gains from the government.

Victoria put a 7% stamp duty on houses due to an increase in value and look at prices here - $725,000 average and only up 7.5% in a year.

You're blinded by ideology, like many in NZ. Sad to see the older generation turn into such sell outs!

So glad I escaped the New Zealand poverty trap by moving to Australia!!

So glad I escaped the New Zealand poverty trap by moving to Australia!! --> This is the ultimate irony. You rail against "foreigners buying up NZ" but then move to Australia. I hope you are not driving up the prices of Australian property there by contributing to their demand for residential properties and buying up their houses? Even by staying there, you will be renting and therefore contributing to the demand for rental properties. If you come back to NZ, will you not be competing with these "poor local FHBs" by paying top dollar thanks to the money earned overseas?

Victoria put a 7% stamp duty on houses due to an increase in value and look at prices here - $725,000 average and only up 7.5% in a year. --> "only up 7.5%". Guess the 7% stamp duty didn't do that much (but you are of course free to argue that the rise could have been more).

As a sidenote, I also noticed you haven't responded to my pretty detailed responses regarding "NZ$1.5 million buying house and citizenship?" Nothing to say eh?

If you have left for Australia why are you so bothered with so many comments about the NZ housing market?

What are you talking about? I am responding to his comment. Read carefully.

I think it is a good idea when quoting another commenter to make it italics or at least put quotation marks around it.

Yeah @tired_immigrant; We have pulled you up on your rambiling before it helps if you put the "@User_name" to direct a comment.

hahahahha. You have got to be kidding me. rambling*.

Try not to misspell.

I didn't reply because I'd already answered you. I was offered a job in oz because they couldn't find the right person. Given how depressing the future looked as a young aucklander I took the opportunity.

If I'm paying taxes and contributing to society in a positive way why shouldn't I be able to buy a home for my family? Big difference to simply buying up houses for profit. And there's a big difference between 7.5% & 15%!

"I didn't reply because I'd already answered you. " --> nah, you didn't. You failed to prove your assertion that buying a NZ$1.5 million property will get you residency.

"I was offered a job in oz because they couldn't find the right person. Given how depressing the future looked as a young aucklander I took the opportunity." --> good on you. But remember you just added to the demand, either for rental or purchases of property.

"If I'm paying taxes and contributing to society in a positive way why shouldn't I be able to buy a home for my family? Big difference to simply buying up houses for profit. And there's a big difference between 7.5% & 15%!" --> uhm, paying taxes and contributing to society = being able to buy a home? When they buy and sell houses, do they not pay taxes? Not sure what "contributing to society in a positive way" means given its vagueness. Who is to define "a positive way"? If they pay more taxes than you in a year because of capital gains, does that make them more eligible to buy more houses? Doesn't mean that I agree these "foreign investors" should do what they do but just pointing out the flaws in your argument.

Because I care about my family, friends and fellow hardworking New Zealanders....

Strange concept to you is it?

Not strange at all.

What's stranger is that you repeatedly single out a particular racial group (without any nuanced distinction between citizens, PRs, temporary workers, non-tax residents etc) for inflating the market (but conveniently leaving out cash-rich investors as a whole) and insist that your anecdotes are right (despite official explicit immigration policy and facts/figures on the contrary), all in the name of caring about your family, friends and fellow hardworking New Zealanders. To round off your tour-de-force arguments, you moved to Australia to inflate their market (just like how others moved to NZ and led to an increase in demand and naturally an increase in prices when supply is short) but that's OK for you and not OK for others who have done the same in NZ.

Keep going, mate.

Ask PM and he wiĺ laugh if you say that have housing crisis.

The "loans" from mum and dad to their FHB children have played their part in this too.

By the time that the plans for Auckland have any effect where will prices be$1.5-$2 million (2-3 years baring something like China crashing)
When the crash comes it is going to be huge.
Teachers, nurses, police and other vital service providers simply cannot afford to live there or pay rentals that support these prices.
Get out now while there are still places left in NZ where you can afford to buy a house.

How long before John announces special subsidies for Teachers / Nurses / Police etc to be working in Auckland? If there was ever a salesman who could get this past the NZ public, I'm pretty sure he's the guy for the job.

Anything to keep the party rocking!

That has always been a bone of contention within those three professions for decades, and will never change because 2/3rds of management are from outside of Auckland. If you live in Auckland just pay your inflated insurance, put bars on your windows, and suck it up when you have teachers and medical professionals that have English as a second language.

Why the hell should the rest of the country subsidise Auckland like that. It is already chewing up far more of the economy than it is worth, what with roading, rail and other infrastructural support. Auckland has and continues to predate the regions, so let them sort out their own mess. If people want good affordable housing and education then they should leave Auckland and redress some of the imbalance. The balancing effects of the free market have to be allowed to act.

Many I know and work with have English as their second, third language. I don't see a problem as long as they communicate well.

People who live in $1,000,000 houses must be in decile 15 zones so they should need even less funding.

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12

What is absolutely astonishing in the total lack of any political will to address the real causes of this problem . Its not even hard , it just needs to be done

Restrict overseas buyers as is the case in Australia and Canada
Lower the number of migrants
Make more land available
Tax speculators as traders

Is it a lack of political will or citizen will?

When will we attack the root cause(s) of the problems you list? They are still only symptoms of a greater issue.

Best attack is by voting or if you really want to be proactive lobby your MP to your point of view. :)

What percentage of NZ home owners want negative equity? Which political party is advocating for that?
Cause right ....there is your answer is it not?

NZ is a very family orientated society, so most will want their children to have a future.

You are right, right and right Boatman.

Why doesn't the government act???

I have no idea - there is no obvious reason not to act - so I am thinking conspiracy theories.

Such as perhaps J Key is not well and this is being kept from us.....

If that was the case, somebody would have rolled hm by now.

I suspect that we've got a bunch of useless narcissistic dimwits who don't know how to do anything but pander and campaign, and lack the know-how and spine to actually step up and do the job they're paid for.

Why is this so difficult to understand? Who is going to vote for a political party advocating for what essentially means a crash with negative equity? No political party will act on this! They ALL would rather wait for the crash and blame

Indeed. So don't vote National next time around.

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12

Foreign buyers are the main driver. foreign buyers includes temp visa workers and students + offshore

Looking at the data in more detail from LINZ

8751 work or student visa intend to occupy
4707 work or student visa and don't intend to occupy

13,458 were work or student visa of the total

50,910 house sales
1695 to non residents
7521 to corporates and trusts

That leaves 41694

13,358 / 41694 = 32% of the sales to nz tax residents was to temp students and foreign workers

http://www.radiolive.co.nz/Why-wont-Nick-Smith-answer-this-one-simple-qu...

Nick Smith speechless.... couldn't answer the question. He was asked 5 times.... still couldn't answer. How many students and temp visa workers are included in the kiwi buyer numbers ?
.

Joe P... thanks for that link...
That interview with Nick Smith was Mind boggling... oh my God.....
Everyone should listen to it..... Its' not that he couldn't answer the question... he just wouldn't ...He can't be that stupid so he knows full well...
Almost unbelievable.... Nick Smith was so Blatant and stupid.... its actually funny...

If this doesn't make one lose faith in National.... nothing will. They are playing us as fools..

Agreed. The number of non resident buyers should be anyone who doesn't hold a nz or Australian passport. That's it.

Yes the prices are high and yes there will be a breather at some point, but the problem is we don't have any other investment options. It's not about dis-incentivising property investments, it's about incentivising other investment options. I have lived in Asia, the US and the Middle East and property is always the preferred investment option for the common man as well as the rich. It is a a tangible investment....not a piece of paper like most other investments and will always have a value. This is a resetting of the price of property in NZ because suddenly the world has realised what a good place it is to live in. Australians love it now as well so that's telling you something. And Auckland is one of the best cities to live in in the world.....in spite of what the rest of NZ has to say about it,it's a fact. My concern with the pricing is not Auckland but the increased price of property in smaller towns etc where there is no real reason for the huge price increases other than the Auckland effect. So when there is a correction those prices will nosedive and will take ages to recover and again will depend on another Auckland boom.

I totally agree with you comments. I think it is quite dangerous buying property in small towns unless you are happy to live off the yield for many years. The old adage location,location,location springs to mind. In the London property crash in the early 90's the central areas(Chelsea, Kensington etc)bounced very quickly whilst prices further out( like Balham, Tooting) took many years to get back to break even.
Also with the congestion going to get far worse proximity to the City Centre is going to command a bigger premium in years to come.

Facts from the QV chart supplied above (move the slider back to the max to get the last 40 years data).
House price increase over 10 years (June July):
1976 - 1986: 2.9 x
1986 - 1996: 2.1 x
1996 - 2006: 2.1 x
2006 - 2016: 1.7 x
Interesting...

Do the same thing in absolute terms Yvil instead of the percentages

2006-16 1.7 may in fact be more than the previous 3 decades combined in absolute terms.

I agree too often percentages are used without context. Reference absolutes regularly enough to keep grounded. ..

I don't see any new info in this, actually house prices haven't appreciated that much in the last 10 years compared with previous decades ...Have a close look at the curve above and calculate: .. it is common knowledge that house prices have been doubling in the main centres every 7 to 10 years depending on their population and economic activity as well as the distance from city centres and other factors ....
From the curve above ..
Jun 1976 - Jun 1986 increase was 205%
Jun 1986 - Jun 1996 increase was 100%.
Jun 1996 - Jun 2006 increase was 111%
Jun 2006 - Jun 2016 increase was 63.4%
We all know that percentages can sometime be misleading, but it is showing that we are just following a trend and its not too bad really. BTW the same trend exists in USA, UK, and Europe
The numbers are now bigger ,... but the problem is that the average income has not appreciated enough to catch up with the curve - in fact was left quite behind ... and that is the case all over the modern world for the same period of time .... Its not a cancer , its a system that needs a complete redesign from the roots up .. In a world of Globalisation, Treaties and Open markets the rich can buy almost anywhere and distort local markets where diminishing safeguards give way to economic necessities. If houses look cheap compared to the rest of the world then someone will jump and buy them - Hong Kong, Dubai , KL , SF, Sydney are just few examples.

You are right Eco, in this globalised world economic theories don't hold up and predictions are often completely incorrect.

Beyond incorrect, in individual countries like ours the results are disastrous. We have yet to see the full ramifications of house prices today, check back in, in another ten years.

do it again but in real inflation adjusted terms. Then remember that inflation doesn't include second hand houses. We see this in property because of global QE. It was meant to spark inflation by being used productively but everyone is opting for safe havens. Most extreme cases are negative interest rates we see overseas. That would be equivalent to owning a house outright that was so expensive that the rates maintenance insurance alone exceeds yearly rental returns. So gross yields of 1% or less most likely. If rents stayed the same where would a 1% gross yield put the price of your property?

Well ill illustrate: I get 380 a week from one of mine. That's $19,760.

Its worth around 300k in today's market.

At 1% gross yield it would be valued at $1,976,000.

And rates insurance management maintenence of 19k a year to make it equivalent to some of these govt bonds wouldn't be unrealistic.

People PAY to ensure preservation of principle in these crazy global times.

Get your head around that and you'll be less mind blown by what's happening with property prices in NZ.

And yes, I still see PN with size and diversity of employment and major Uni and defence to be UNDERVALUED as preservation of principle is fairly certain and underpinned by kiwi Saver due to median price being only 320k; yet solid returns of 5-7% gross off the shelf are still everywhere. It has been my pick for a while and even with prices starting to rise quickly I still have a huge BUY rating on pn real estate.

jk lost the plot

@ Penguin: This is probably attributed to wage stagnation which is a global issues but there are factors that tip the balance which we are experiencing here in larger cities. And that factor that is tipping the balance in Auckland, Sydney, Vancouver, London is foreign investors.

They pump questionable capital in that Government welcome but it comes at a high cost to real people - pricing them out of their homes in larger cities.

Definitely agree on the wage stagnation. Up to the GFC we had wage inflation to help offset the house inflation. It's also worth looking at the executive pay figures for CEO's, lawyers, accountants to understand that the pay at the top end has gone up dramatically whilst at the bottom end it hasn't changed. The top 5% have been busy buying 2/3rd homes as pension assets with surplus earnings.

Good example is Auckland
2006 500k average
2016 1m Average

So this decade prices have moved up more than all the other decades combined.
500k average increase how much has the average wage increased in the last decade ? 20k maybe 30k ?

That's why one should not get too caught up in percentage terms....

As CJ rightly says it is the wage inflation or lack of it which is the main factor.

I think also several hundred million people moving into the middle classes in China and then wanting to store their wealth in a politically stable, first world country could be a factor. Especially if the governments in those countries they are buying into do absolutely nothing to prevent them from buying in. In fact as is happening in this country they are taking out the local investors via the lvr restrictions and making it less competition for overseas non resident buyers and buyers on temporary visas.

"I think also several hundred million people moving into the middle classes in China and then wanting to store their wealth in a politically stable, first world country could be a factor"
I think it is the number one driver, and NOT because of the racial make up of these people but because of their political situation at home!!

Still got India to go as well, they are behind China in moving into a developed economy with the new middle classes. So plenty more buyers for NZ property out there. Not being racial, just stating it how it is on the world economy at the moment.

And you are right to point that out, and, surprisingly, they appear to be prepared to pay OTT numbers for properties as well, which kind of surprised me when it became fairly evident to me.
The motivations are a bit different though, as Chinese money is probably primarily seeking a safe harbour, anything else is a bonus, price means little, but Indian money is definitely what has given us the phrase "slumlord" pretty sure of that. I guessed that term came to be after the movie "Slumdog Millionaire", not because of the content of the film, just the phrase. That was the first thing I thought of, anyway, when I first heard that term.
And yes, I don't think we should shrink from calling it as it is, no-one would bother to call you racist if this money was coming from France or the USA. In fact, if it was, we might feel more comfortable about doing something about it, for that same reason.

"And yes, I don't think we should shrink from calling it as it is, no-one would bother to call you racist if this money was coming from France or the USA. In fact, if it was, we might feel more comfortable about doing something about it, for that same reason." --> Funny then why nobody said anything about Australians/UK buying up (and presumably driving up) NZ housing prices for the longest of times. Oh and don't argue that they and NZ were all part of the Commonwealth and therefore there was this very romantic notion of shared history. HK/India/Singapore were part of the British empire too; they just happen to not look white.

Unfortunately, we have a separate arrangement with Australia but it is at least reciprocal and as for the English, I don't think they are having anywhere near the effect that Chinese and to a lesser but not a lot, degree, Indian. There is definitely a whole new culture around houses in this country that did not exist all that long ago, it came from somewhere.

"Unfortunately, we have a separate arrangement with Australia but it is at least reciprocal and as for the English, I don't think they are having anywhere near the effect that Chinese and to a lesser but not a lot, degree, Indian. There is definitely a whole new culture around houses in this country that did not exist all that long ago, it came from somewhere." --> Strange. I wonder how did houses double approximately every ten years for the past few decades then. As for the English, the once mighty colonial masters are on its way down as a footnote in history.

It has gotten so far behind now, that any correction is either going to take a few generations or drastic action, on both wages and housing price growth.
I think we should take a very deep breath and do what has to be done to put things to rights.

If we are all "richer", how is it that the National Debt has grown by over $100,000,000,000 since 2008 - and who is going to pay for this?

see http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=1072...
and http://www.nationaldebtclocks.org/debtclock/newzealand

Should we all sell our houses now or leave it for future generations to pay off? Gee I wonder...

People have NFI about how to pay off debt. They can't and don't even consider it. If they did, they would know that it's harder than it looks. Many people will find it easier to default, and start over, than pay it back.

haha, Don't be frightened Zed, these are all scare mongering tactics to shake the ordinary laymen .. who thinks he would pay that dept himself ... so no one will ask you or me to come up with 24K anytime soon ...not even your grand kids ... USA has $19T and counting ...but make you feel better have a look at this site:
http://www.statista.com/statistics/268177/countries-with-the-highest-pub...

Japan has been in deflation and stagnation for the best of 30 years ...dept 249% of GDP, can't say they are begging at the doors or in the streets eh?

Oh, BTW you might also like this one ... it is really fun to watch
http://www.usdebtclock.org/

The rank and file continue to think Key has been great for NZ but they are mostly just looking at the rise in (if they are lucky to own) their house prices.

Conveniently forgotten is that the Nats came to power with a govt debt around $10bn (after some excellent work by Labour running surpluses) which is now up in the $90bn range or higher if you believe the link Zed mentioned. Also forgotten is the luck the Nats had with dairy having a massive blow out after the GFC (which the Nats have now cheer leaded to destruction along with our rivers) and the gigantic influx of funds after the CHC earthquake.

There's really not a lot that can be produced to counter the argument that the emperor has no clothes, especially as it seems lately all his team can come up with is that "at the end if the day we will do nothing"

His attempt recently to make the RBNZ do all the hard lifting on housing frankly is embarrassing. Lets face it - the average joe in the street knows we have too much immigration.

Money supply also plays a big part in House price rises..
New money can enter an economy thru any sector ...and then flow into housing.. SO... using broad money M3.... gives a great correlation to the "amplitude" of changes in House prices....
NZs' unfettered money supply growth ... has alot to answer for, in regards to house prices.

http://www.datasciencecentral.com/profiles/blogs/the-real-reason-for-hou...

Yes, all this new money yet.......virtually no (cpi) inflation. The fudged economic arithmetic suits banks and governments well eh.

Interesting article here. If you believe in reversion to the mean - NZ has the highest house price to income & house price to rent % deviation from long term average of all the OECD countries.

interesting comments on the Canadian market where they have slapped a 15% tax on foreign buyers and are also implementing a fax on vacant houses

https://www.youtube.com/watch?v=beh16OyKT8A