Value of NZ housing stock hits $1 trillion

Property

The value of all our houses has been growing by $2.7 billion a week, to surpass $1 trillion in the September quarter; Meanwhile the number of houses sold fell 20% in the quarter

21st Jan 17, 9:08am by Jenée Tibshraeny

There isn’t much in New Zealand worth more than a trillion dollars.

However new figures reveal the total value of our housing stock hit the trillion dollar mark for the first time in the September quarter.

At $1.001 trillion, the value of New Zealand’s housing stock grew by 4% from the previous quarter and 16%, or $139.4 billion, from the same quarter in 2015.

While 16% is the fastest annual growth rate since the December 2005 quarter, growth peaked in 2003, when it hit 31%.

The Corelogic data, published by the Reserve Bank of New Zealand, shows the annual growth rate has been steadily increasing since 2011, when it took a dip.

Looking at the data a different way, the value of our housing stock increased by an average of $2.7 billion a week, over the year to September.

That’s well up from the previous year, when it increased by an average of $2.3 billion a week, and 2014, when it increased by $707.9 million a week.

While the value of our housing stock keeps growing, there was a large 20% drop in the number of houses sold in the September quarter.

Falling to 23,710 - from 29,484 the previous quarter - this is the lowest number in two years.

The number of homes sold peaked in the December 2003 quarter at 39,800, and then spiked on a couple of occasions in 2005.

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42 Comments

by Alter Ego | 21st Jan 17, 9:59am 1484945978

If we build enough houses to fill our entire Islands, we will be the richest idiots in the entire world.
If we do not allow anyone to live in them, they will not deteriorate, so we can draw on the money as they inflate, so we will all become trillionaires. (Eventually).
Farmers will go from debt to insanity in one fell swoop.
Landbankers will be proved wrong.
No money needs to change hands. (It is just con-jured up after all)
What is wrong with this scenario??.
I ask myself this almost Daily.

by PocketAces | 21st Jan 17, 10:17am 1484947032

Genius, lad, genius, you should have put your name forward for Trump's cabinet

by Alter Ego | 21st Jan 17, 1:10pm 1484957417

http://www.marieclaire.co.uk/entertainment/people/donald-trump-quotes-5…

A Cabinet is a store of knowledge as well. (But do not quote me...quote Don)

A house is a store of what??

http://www.trademe.co.nz/property/residential-property-for-sale/auction…

Cheap..at half the price.

by Ted Stanton | 21st Jan 17, 4:04pm 1484967879

House values are still rising just as they are internationally. Auckland is one of the most desirable international cities in the world.

by Ted Stanton | 21st Jan 17, 4:44pm 1484970244

Those 70,000 plus immigrants are going to hit the market in February or March!

These Buyers having held back in vain for a price reduction since October are going to create an incredible demand Price Rise explosion never seen before in Auckland.

by Cowpat | 21st Jan 17, 5:05pm 1484971555

That's odd , REINZ data show that median Auckland house price is now lower than August 2015.

by Zachary Smith | 21st Jan 17, 5:40pm 1484973618

Are you sure. Do you have a link to the figures?

by Cowpat | 21st Jan 17, 5:54pm 1484974489

Zach , forgot its now 2017. The median Auckland house price is now lower than August 2016. I thank you for your thoroughness and eye for detail . However , in terms of Ted's comment he remains in left field.

by NorthernLights | 24th Jan 17, 3:09pm 1485223799

Keeep holding onto those rentals.
Up to $1Trillion now Nothing can go wrong because of all those upstanding imported dishwashers as Gareth Morgan might say.
Meanwhile in the real world we must endure Drumf

by Macadder | 21st Jan 17, 10:21pm 1484990508

A Day in the Life of a Real Estate agent Jan 21 2017. "Ted" got home at 4.30pm from hosting 3 open homes in West Auckland; not a single god damned visitor all day; 4 more tomorrow and the weather is going to be crap. At least, might get out to Hut BBQ noodles again on Lincoln Rd for a quick bite. Thank god the property flyers have had a bit of blue sky photoshopped in. Having just opened a 3 litre cask of his favourite red and with Barry Manilow's greatest hits in the background, Ted can't wait to log back in again to interest.co.nz - but hesitates a little to remember which login to use. Of course! "Ted Stanton" the creative genius behind "Toy Story, " Woody and Buzz sort out their differences and it all comes right in the end, after that brats family move house. It's a pity B & T can't use that type of inspiration a bit more often.
Ted's is hoping the same thing will happen with Auckland property too. He got "Mandarin for Dummies torrent beta" from his ex girlfriend for Xmas 2015 but never got beyond page 17 last year when his PC crashed and is a bit annoyed others like Yvonne at B & T on the Shore got the jump on him the last 12 months. Roll on February he says to himself, I've done my homework now, just 50 more pages to go.

by Ted Stanton | 22nd Jan 17, 1:07am 1485000454

I'm so busy with buyers I'm working at 1am. North shore is the place to be.

by NorthernLights | 24th Jan 17, 3:12pm 1485223947

I doubt Ted can read English well either!

by Didge | 21st Jan 17, 10:36am 1484948177

The eventual crash will be a doozy!

by CJ099 | 21st Jan 17, 1:30pm 1484958643

Yes and we're already seeing the beginning stages of that with the current property market downturn. Just goes to show how much Overseas Investors had a hold on the Auckland market.

It's also looking like China will have to maintain its capital flight controls for quite some time to come, this could go on for years with the way Trump is throwing his weight around.

Bloomberg article: China’s Yuan Outflows Plummet, Showing Capital Controls Pay Off
https://www.bloomberg.com/news/articles/2017-01-20/china-s-yuan-outflow…

Still at least it will give NZ a chance to rebuild our real, vital industries and reinvest in our own citizens again. Rather than chasing a massively over inflated property market that just promotes a false economy.

by Penguin | 21st Jan 17, 3:18pm 1484965122

I think the shift of incoming capital flows has started to shift from the Chinese to wealthy Westerners moving over here.

by CJ099 | 22nd Jan 17, 8:49pm 1485071397

Really? Well I wouldn't bank on the Brits as they're screwed since the Pound is about to plummet further once they hit the EU exit button in the next few months.

And everyone else is talking about moving to Canada so which wealthy Westerners did you have in mind Penguin?

by NorthernLights | 24th Jan 17, 3:30pm 1485225058

CJ099 the Smartest *****

by NorthernLights | 24th Jan 17, 3:28pm 1485224902

No comment .........Oh heck ! Westerners are not flooding into NZ and those that do soon find out it is no utopia.
Mass immigration inflows have congested Auckland and there has been no matching response in infrastructure like schools hospitals roads and housing. Just a lot of talk which is the kiwi way ( Zach & Ted prime examples)

by Ted Stanton | 21st Jan 17, 5:06pm 1484971569

Dream on Didge and miss out on annual capital gain rises.

by Didge | 21st Jan 17, 6:02pm 1484974979

Time will tell.

by sharetrader | 21st Jan 17, 11:43am 1484952215

and how much debt is there to prop up the value, with most of the interest flowing offshore.
that is why the last two governments have encouraged offshore selling, without the capital flowing in as a country we are in deep do do

by avatar99 | 21st Jan 17, 12:04pm 1484953485

About half a trillion domestic debt:
http://www.nzherald.co.nz/personal-finance/news/article.cfm?c_id=12&obj…
Not sure how meaningful though since even a freehold house goes up in "value" if the whole market goes up, even if not sold or bought. I wonder how one would determine the "true" value of our real estate - anyone seen any calculations? I would think significantly less than a trillion, especially given GDP is only 186billion.

by Simon | 21st Jan 17, 3:03pm 1484964233

True value. Interesting concept. Npv of all future earnings? Would see auck property way over valued and provincial property yielding over say 6% undervalued depending on chosen discount rate...

by MikeM | 21st Jan 17, 10:15pm 1484990113

Agree. The intrinsic value of our housing stock is nowhere near 1 trillion if we use sensible growth and discount rates.

by David Chaston | 22nd Jan 17, 9:23am 1485030226

Actully, you data is not correct. Total housing ~~household~~ debt is $228 bln (ie $0.23 tln). This is what should be compared to the $1 tln housing value. That is a very very long way from $0.5 tln you claim. Also GDP per year is $256 bln (or $0.26 tln). (In a comparison like this, don't use USD value or 'real' values - they are not comparable to the other metrics.)

You can add up household, business, rural and govt debt, and that comes to $471 bln which is close to $0.5 tln. But to focus on this and then ignore the assets supporting the liabilities is just cherry-picking, politicising the data.

by Cowpat | 21st Jan 17, 6:07pm 1484975277

David, that figure is not correct either. The debt numbers your giving are housing debt , not household

by David Chaston | 22nd Jan 17, 9:25am 1485030351

No. The housing debt is $228 bln. Included in the second $470 bln is the other consumer debt of $16 bln. Kiwis are big not on personal debt, compared with other countries. Its housing debt we go overboard with.

by Cowpat | 22nd Jan 17, 9:14am 1485029671

David , you cannot have it both ways, its either housing debt or household debt figures your quoting.

by David Chaston | 22nd Jan 17, 9:24am 1485030285

Fair point. I fixed the wording above that causes the confusion. Thanks.

by avatar99 | 21st Jan 17, 6:19pm 1484975983

Thanks, hadn't read the article carefully enough. I see now that the 0.5 trillion number in the article was gross debt.

by Yvil | 21st Jan 17, 6:01pm 1484974919

We might be heading for another huge real Estate crash, just like the biggest one we had in my memory in 2008 when house values fell a massive........................................... 8% lasting all of................... 1 year . (see the graphs)

by Rob | 21st Jan 17, 11:49pm 1484995792

The thing is that to fix what happened in GFC was a whole lot of money printing, it wasn't a permanent fix to the underlying problem. The housing market is supply and demand, and since 2008 there have been a lot of factors that have increased house prices. These things go in cycles, and this time around with the lack of finance companies to take the hit, will we see banks fail? banks are trying to get people to lock in their savings into term deposits, and lowering the rates on on call accounts. These cycles don't usually hit in the same areas.
If a bank/s fail, that is likely going to affect the housing market to some extent, due to their exposure.Last time the housing market wasn't involved all that much in NZs GFC exposure, apart from overvalued apartments. Time will tell what will happen.

by NorthernLights | 24th Jan 17, 3:52pm 1485226356

Rob you got it alright. Worse is that world debt since the peak of GFC has exploded ever higher to be as at Oct 2016 = US$152Trillion.
All it will take is interest rates to rise and everyone will be watching which part of the worlds economy busts first and then where else it collapses from there.
Housing and other tangible assets have become a hedge for many of us due to poor interest rates and lack of trust in the sharemarket. At some stage there will be GFC2 as predicted but it might be at the end of 2017
or it might be 10 years away. Now we have the wild card Trump who will undoubtedly force the cards to be reshuffled as protectionism becomes the new mantra for the USA not Globalization. This will send the USA into depression not expansion. Globalization and free trade is a far better system for the world.
What will Trump do when robots are cheaper than human labour ? Tell Carrier and Ford and McDonalds they must keep employing humans ? Not likely. The world is changing and turning back the clock is merely a short term feel good option for the US redneck and the corporations who will make sure they profit off Trump.

by sharetrader | 22nd Jan 17, 2:32am 1485005540

you mean these stats
2008 Q1 dropped -4.5 % from 616 billion to 592 billion
2008 Q2 dropped -6.7% from 592 billion to 582 billion
2008 Q3 dropped -9% from 582 billion to 568 billion
2008 Q4 dropped -9 %
2009 Q1 dropped -3.1%
finally picked up 2009 Q2 +1.1%
then we had 2 quarters of drops in 2010/011 round the time of the election
I love looking back with rose tinted glasses as well but the stats and people caught up in it tell a different story.
but that's ok because this is NZ property and it can not happen again

http://www.rbnz.govt.nz/statistics/key-graphs/key-graph-house-price-val…

by J.C. | 22nd Jan 17, 9:06pm 1485072372

Good work.

by Cowpat | 22nd Jan 17, 9:49am 1485031764

The Wealth of the Nation report , by the Bank of Ireland 2007, gives a nice read on the reasoning between underlying asset wealth and debt.

by Rob | 22nd Jan 17, 4:15pm 1485054926

If you average the apparent value of housing, that would mean if that wealth was spread across the entire population of nz, each person would have gross wealthin housing of 220k, which is a lot. If you even just halve that for estimated debt, that would still leave a net wealth in housing of over 100k. But obviously this wealth isn't distributed evenly. I am wondering therefore if we have far too much of the countries personal wealth in property. That is of course based of the retail value of property today, using and agent, which is at a peak, but canny buyers never buy retail.

by Cowpat | 22nd Jan 17, 4:59pm 1485057565

Rob its 171500 average net, every man woman and child . The implication being that Kiwis are far from ' average'

by Rob | 23rd Jan 17, 12:48am 1485085717

Unfortunately it is not evenly distributed though. As well as many of the properties being overseas owned, many people own multiple properties.

by J.C. | 22nd Jan 17, 9:12pm 1485072724

Well if you allocated the wealth across household size (2.7), that would mean that approx h'hld worth of 594k, about 15% more than the median house price of 515k.

by Rob | 23rd Jan 17, 12:46am 1485085569

Yeah, they are crazy numbers, because many peoples on,y option is to rent. So it creates a big divide between haves and have nots. It is not a fair distribution of wealth. Also a huge proportion of that household wealth is in property. You just need houses to drop in value by 20 percent and it wipes a huge amount from people's household wealth.

by NorthernLights | 24th Jan 17, 3:01pm 1485223266

What was it rising ?