Housing sales volumes well down on last year in most major centres - REINZ

Property

Auckland housing sales the lowest for the month of March since 2010

17th Apr 18, 9:39am by Greg Ninness

The residential property market remains sluggish, with the latest figures from the Real Estate Institute of New Zealand showing sales in March were down 9.9% nationally compared to March last year.

In Auckland the number of properties sold was down 12% compared to a year ago and sales were also well down in the Bay of Plenty (-10%), Manawatu/Whanganui (-18%), Wellington Region (-18%), Canterbury (-8%) and Otago (-19%).

Auckland, which is the country's biggest market by far, recorded the lowest volume of sales for the month of March since 2010.

That is significant because March is usually the busiest month of the year for residential property sales and marks the end the summer selling season before the market starts to decline as it heads towards winter.

The figures suggest the market could be heading into a difficult winter selling season this year.

Volume increases were largely confined to the smaller regional markets, with increases in sales compared to last year posted in Gisborne (+9%), Taranaki (+3%), Nelson (+7%), Marlborough (+3%) and West Coast (+19%).

Prices were a bit more resilient with the national median price hitting a record high of $560,000 in March compared to $550,000 in March last year.

Record median prices were also set in Gisborne, Hawkes Bay and Wellington Region.

In Auckland the median price was $880,000, back where it was in November but still below the record price of $900,000 set in March last year.

The REINZ said 16% of all sales in March were by auction, down from 19% in March last year.

In Auckland, where auctions have been particularly strong, 29% of all sales in March were by auction, compared to 35% in March last year.

The charts below track the monthly volume of homes sold and median prices in each region.

No chart with that title exists.

Volumes sold - REINZ

Select chart tabs

Source: REINZ

Median price - REINZ

Select chart tabs

Source: REINZ

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130 Comments

by BB101 | 17th Apr 18, 9:46am 1523915214

Napier still performing well. One would think it must be very close to peaking but there is still plenty of buyer demand and a lack of supply.

by Boatman | 17th Apr 18, 10:09am 1523916595

@BB101 the Napier market is being lifted by cashed up Auckland Baby boomers getting the hell out of Chinatown to retire down there

by BB101 | 17th Apr 18, 10:17am 1523917030

Boatman that is fantastic news please spread the word. Not a bad lifestyle here value for $$$.

by Ex Expat | 17th Apr 18, 10:41am 1523918492

I know you voted for Winston (and regret it), but does it need to come though with ethnic comments?

by pacifica | 18th Apr 18, 12:25am 1523967958

To be fair when most your local shop signs are in Mandarin, (with no English translation) and none of your neighbours speak English it does feel like you instead have moved overseas, however in Auckland you are also likely to see a lot of Korean, Thai, Indian signs. It is weird though when council street notices are more likely to be in Mandarin than Maori. Even the meth dealers have moved in and get caught at what used to be classic nappy valleys making large deals in the local supermarket less than 50m away from schools and retirement homes http://www.nzherald.co.nz/nz/news/article.cfm?c_id=1&objectid=11836105 It is quite common to have there be Chinese only baby classes at the local community centre instead of inclusive ones now so even having a local centre for NZ families is more limited. If anything it really does depend on what part of Auckland you are in and quite striking differences between other sectors of NZ. NZ is far more likely to accept Chinese culture than Maori culture though. The NZ herald proved that when they only provided a localised Mandarin version (before they dropped their design for the waste they have now). It is not unnoticed that home owners in affluent burbs are often companies & non resident owners instead of the usual mix.Along with the tourist buses packed with recent travellers, literally seen staking out the SHA developments, each bus carrying over 30 people, (kinda spooked the locals though and the house quality was rubbish for the prices). Good garlic shoots & duck in the local Chinese supermarket though.

by Ex Expat | 18th Apr 18, 6:48am 1523990921

As you point out there are plenty of ethnicities visible in Auckland. I just don’t see the need to pick out one in a perjorative term. On one visit, my Brother in Law took a wrong turn from the airport and reported that he’d ended up in towel head land (Papakura). We were amazed, but put it down to his Queensland life. I’m wondering if we are as bad here? Maybe we are, but then we don’t swear in our household either, so are probably considered a bit precious and to be honest a bit hypocritical because I don’t like having openly lefties in my house.

by pacifica | 18th Apr 18, 8:43pm 1524040991

When did the term Chinese or referring to the highly popular ethnic hotspot Chinatown in many cities which are both widely known and appreciated for the culture become pejorative. "A Chinatown is an ethnic enclave of Chinese or Han people located outside mainland China, Hong Kong, Macau, or Taiwan, most often in an urban setting. Areas known as "Chinatown" exist throughout the world, including Asia, Australia, the Americas, Africa and Europe." Or do you think being Chinese makes it pejorative? Because there is certainly many pejorative terms out there that you don't need to go fishing. It is almost as bad as saying that calling an Irish pub an Irish pub is being pejorative when recognition of the cultural importance is anything but.

However confusing different Asian cultures when they cover an incredibly broad & diverse set can be insulting, (much like confusing European ones). Even worse is the assumption by physical characteristics alone (quite often a problem in NZ as many NZders are Maori & only look like Pakeha). But using classifications for businesses are quite often different e.g. food, culture, country of registration, primary language, culture of owners etc. So a NZ Japanese sushi store, advertising in English could be a business owned & run by Koreans so the classification of the business may vary depending on the characteristics referenced. Chinatown would be a large collection of business sharing both Chinese ethnic & Mandarin linguistic features. There is not many other cases for other cultures having enclaves so widely known and respected, although many informal ones do accumulate. The Pakistan, Indian, Fijian spice stores may share many products, foods & recipes but the cultures are still quite separate. There was a good collection of spice stores, restaurants & Halal butchers etc in a couple of Auckland spots where it would be hard to find even one store further South, (let alone a group of stores sharing similar products & culture), but you get used to particular businesses grouping so they can get more customers & share a bit of the advertising costs. Does get hard though sometimes for NZders because the lack of english pricing, communication & labels in many businesses are more difficult to understand but in general most food suppliers have legal requirements they need to stick to.

by RickStrauss | 18th Apr 18, 9:59am 1524002353

It is not unnoticed that home owners in affluent burbs are often companies & non resident owners instead of the usual mix.

One of the drivers for discussions of land tax or similar. The suburbs (as in Vancouver) full of houses paying next to no tax (offshore income) while enjoying all NZ's social benefits. As usual, the working plebs pick up the tab.

by NorthernLights | 18th Apr 18, 3:18pm 1524021532

https://www2.gov.bc.ca/gov/content/taxes/property-taxes/property-transf…
Wonder what Vancouver you are referring Ricky boy
Nothing is cheap tax wise in Canada
Why so many move south

by RickStrauss | 18th Apr 18, 3:36pm 1524022600

You haven't read of the situation I refer to, NL?

by NorthernLights | 18th Apr 18, 4:03pm 1524024216

Sorry Rick
My apologies
I’m out of line
I certainly agree Aucklanders pay a pittance annually in property taxes [ rates ] & combined with 0 land transfer tax upon sale the legacy is a near bankrupt Auckland City in huge financial debt

by RickStrauss | 18th Apr 18, 4:10pm 1524024635

Ah, no worries, was a while ago I was reading the articles about the situation and I understand they've been working through tax adjustments since. The articles were basically describing a situation of expensive suburbs contributing no or next to no income tax while enjoying free or low cost Canadian education, healthcare etc. Father was back overseas working, mother and kids were in Vancouver.

by ex socialist | 17th Apr 18, 9:52am 1523915576

Auckland is a drop of 2.2% compared to March last year. There are signs from the auction data that there has been less discounting and more sales at the higher end of the market. This would increase the median and so the actual decline may be greater than 2.2%.

The auckland market is so dependent on perception that the impact of this decline could be more significant in the rest of the year

The QV figures are commonly about 2 months behind the market, so this is the first sign of the correction in the market.

by Boatman | 17th Apr 18, 10:11am 1523916718

Correction ? About time . But I dont see this as a correction , its a small blip .

A correction is a 10 % plus drop , and thats not even enough .......even a fall of 10% will still see the Auckland market over-priced

by dtcarter | 17th Apr 18, 10:59am 1523919570

The data shows the opposite. Volumes at the upper end are down. Volumes at the lower end are up. HPI is up

by tothepoint - d… | 17th Apr 18, 10:04am 1523916244

Given the pronounced upswing of 2014-2016, house prices across New Zealand have been sustained remarkably well.

Even Auckland, which had an enormous price surge through 2014-2016, shows only marginal price slippage - while its inner-city suburbs continue to grow in value.

TTP

by mfd | 17th Apr 18, 10:38am 1523918283

I'm not an Aucklander so you may have to educate me regarding which REINZ region corresponds to the inner-city. I'd assumed it was 'Auckland City' which posted a ~6% reduction in median price vs last March. The only significant increase over the year is in Franklin with a 7.5% increase.

Looking at the stats in this report, it seems the cheaper districts are performing better than the more expensive areas, interested how you seem to interpret it as the opposite?

by printer8 | 17th Apr 18, 10:57am 1523919424

mfd please don't be too hard on TTP.
He/she has been predicting increasing prices in Auckland, so for him/her to concede "a marginal price slippage" is a biggie in terms of mind shifts.

by NorthernLights | 18th Apr 18, 3:56pm 1524023774

Mfd
Yes I see a meagrely number of houses sold in leafy North Shore auction
It’s the trend that counts as you are alluding to
On this blog there’s tendency toward self promotion by a microcosm of central Auckland leafy suburban home owners
They refer to Auckland

by Yvil | 17th Apr 18, 10:06am 1523916363

"The national median price hitting a record high of $560,000 in March compared to $550,000 in March last year."

"Housing sales volumes well down on last year"

Both sentences are from this article, guess which one was chosen for the headline?

by Retired-Poppy | 17th Apr 18, 10:21am 1523917303

Yvil, two questions. Which market is NZ'S biggest by far? Which market is most subdued? Hope this helps address your ridiculous grievance. Banked equity from Auckland is being spent in provincial markets. This provincial boom will soon draw to a close as Auckland further weakens. I think it very much matters what happens in Auckland real estate. The entire economy is more dependent on it than ever.

by Ex Expat | 17th Apr 18, 10:32am 1523917943

The last sentence will have Taxinda quaking in her Ugg boots. Without that extra $4 billion incremental tax in every single year they have a stark choice, tax more, borrow or cut back on spending. I'm picking Tax or Borrow, with a bias to borrow up until the 2020 election with tax post election. I love the smell of political napalm in the morning.

by paengski | 17th Apr 18, 11:53am 1523922781

Well if you are going to compare 2016 to 2017 that is 57,000 difference. I can say this is still a significant change.

Mar'16 - 493,000
Mar'17 - 550,000
Mar'18 - 560,000

Greedy investors doesn't like a small return. Which makes the bank term deposit giving a higher yield.

by Pragmatist | 17th Apr 18, 10:07am 1523916455

Perhaps you should stick to reading only the NZherald if all you want is warm air blown up your skirt?

Whoops, even they are leading with "Auckland house prices drop 2.2 percent as market cools" & "NZ house sales drop 10pct as market cools"

by Groen_mamba | 17th Apr 18, 10:11am 1523916678

Would you prefer this headline:
http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=120…

by Yvil | 17th Apr 18, 11:52am 1523922768

FYI here is the actual headline form the REINZ report itself.

"MARCH SEES RECORD HOUSE PRICES FOR NZ DRIVEN BY REGIONS. VOLUMES DOWN YEAR-ON-YEAR"

I would say it's more balanced but I'm sure many will disagree.
Link below for proof.

https://www.reinz.co.nz/residential-property-data-gallery

by mfd | 17th Apr 18, 10:32am 1523917952

'House prices increase in line with inflation' isn't very interesting.

by nymad | 17th Apr 18, 10:46am 1523918808

Obviously, unlike yourself (or the herald) Greg Ninnes understands that estimates are subject to variance.
(rounded) Figures of $550k and $560k are not necessarily statistically different from one another.

Thus, better to go with the headline that is based on more reliable inference.

by Yvil | 17th Apr 18, 11:33am 1523921602

Interesting how many people are upset with my post. I don't "want" a certain headline, I read the REINZ report in full and I come to my own conclusions.
My original comment does, however, highlight the biais of this site. Another good example is the January REINZ report on this site which headlined "a big drop in sales compared to the previous month" so, to be consistent, the headline should now be "big lift in March sales compared to the previous month". Both are silly headlines of course, as you should only compare same months, yet this site compared January 2018 with December 2017 as it suited their bearish biais

by Muter | 17th Apr 18, 11:49am 1523922582

I also read the REINZ report prior to the Interest article.

I came to the conclusion that Auckland market is flat and has been for several months now. So it's hilarious watching people on both sides trying to argue increases or decreases.

The market's reached a plateau, which is great. Now if only wages would catch up, we've got cheap immigration to blame for that one though.

by Yvil | 17th Apr 18, 12:19pm 1523924356

Well said Muter

by tothepoint - d… | 17th Apr 18, 11:10am 1523920238

Good point, Yvil.

And interesting to note that Auckland (average) house prices rose 96 per cent between 2006 and 2016.

Since then, prices might have slipped 1 or 2 per cent. But in the preferred inner-city suburbs, they are still increasing.

TTP

by Groen_mamba | 17th Apr 18, 9:59am 1523915995

I guess over -2% can't exactly be called plateauing. Nevertheless RE's will probably use declining plateau to describe the current market

Sorry "slippage" compliments TTP

by RickStrauss | 17th Apr 18, 10:04am 1523916285

-2% before inflation?

by Boatman | 17th Apr 18, 10:08am 1523916513

What inflation Rick Strauss ? Inflation is tipped to be 1% when the numbers come out this week , and in reality we are more likely to have real deflation rather than inflation .

by Aspiring home owner | 17th Apr 18, 10:20am 1523917221

Wage inflation is running at about 2.8% isn't it? (and has been roughly that over the last decade).

by mfd | 17th Apr 18, 10:43am 1523918595

CPI Inflation was 1.6% over last year, expectations are for it to increase

https://www.stats.govt.nz/information-releases/consumers-price-index-de…
https://www.rbnz.govt.nz/statistics/m14
https://www.rbnz.govt.nz/statistics/m13

by Pragmatist | 17th Apr 18, 10:51am 1523919067

Eh? Expectations are for it to decrease

https://www.bloomberg.com/news/articles/2018-04-16/inflation-goes-astra…

by mfd | 17th Apr 18, 10:55am 1523919314

For the quarter, and then to recover and rise.

by tgcam4 | 17th Apr 18, 12:00pm 1523923206

Interesting to note 2017 vegetable prices were excluded due to storms. 2018 seems to be having the same issue and with climate change this would be expected to continue.

by tothepoint - d… | 17th Apr 18, 11:14am 1523920472

Rick Strauss and other DGM's (doom and gloom merchants) need to fight over tidbits - but the big picture is that average house prices are up enormously over the last decade!

TTP

by Pragmatist | 17th Apr 18, 11:19am 1523920780

Unless you have a time machine there is no point looking at the past for investment decisions, you can invest now and look at what is going to happen in the future.

Or are you are the guy at the BBQ that raves on about how he played left wing for the Waipukurau under 17s rugby team 40+ years ago?

by RickStrauss | 17th Apr 18, 12:24pm 1523924657

You're welcome to point to any "doom and gloom" statements I've made. I don't think you'll find any. Bit sad that's your resort.

by Ex Expat | 17th Apr 18, 12:56pm 1523926568

I have read many of your posts over the last year and I can't recall any particular DGM statements, albeit I'm still trying to work out how connected to the hive you are, and they are not calling DGM either, so there is a consistency...

by RickStrauss | 17th Apr 18, 3:23pm 1523935412

Hah :) Yeah...I'm watching the housing market in interest, like others perhaps thinking it's difficult to call either way at the moment. Seems delicately poised, perhaps waiting for something to push it one way or the other.

by theglc | 17th Apr 18, 1:21pm 1523928074

Getting desperate MTP (missed the point)

by Mrs The Point | 17th Apr 18, 11:52pm 1523965936

Hi tothepint,

I agree, house prices are up enormously over the last decade, and this means that they will keep doing the same thing forever and ever. We use the past to predict the future, it's called Extrapolation DGMer's!

MTP

by Boatman | 17th Apr 18, 10:06am 1523916419

This is the only good thing likely to come from this new Government , a drop in house prices .

Lets hope its not overdone to the extent of a rout

by frazz | 17th Apr 18, 11:55am 1523922907

Hope you dont' get wheel clamped soon Boatman.

by Eco Bird | 17th Apr 18, 10:23am 1523917398

Auckland is the most prominent measure where most of the action, demand and supply shortage is ...Yes, the market has cooled down, but not frozen nor stagnant.

DGMs will always choose a reference point to suit their narrative - picking numbers without context suits them too .... We conveniently forget that A complete change in rules, buyers, and market sentiment has occurred since March 2017 and in the run up to the elections and further more after the change of Gov - this is not a Normal Year to make sensible comparisons of MoM and YoY.

However, the trend ( and the Median price in Auckland) since July 2017 till now is still rising - we are 6% higher since, and I expect the 12 months average July 17 - July 18 to be UP within the 2-3% range this year.

This Market has proved it is quite resilient to all the braking measures being imposed to slow it down. I think this is as good as it gets.

It is still possible to get low median prices this winter in the tune of negative 2-3% too, It is Winter afterall... But that does not constitute the Crash some are still dreaming off.

Watch the space.

by Boatman | 17th Apr 18, 10:31am 1523917899

@eco-bird You are right , we are more likely to see a soft landing than a crash ...... but a soft landing could take longer to bottom out

by Retired-Poppy | 17th Apr 18, 10:55am 1523919325

Echo Bird, Boatman, you base your reasoning in isolation to any global financial shocks. An outlook that is heavily biased by your own financial exposures. I have no arguments whatsoever that a soft landing would be the most desirable outcome. However, since we are in the midst of a global bubble of historic proportions, I'm picking this is going to get ugly.

I think the best possible outcome would be ten years of stagnant house prices. When adjusted for inflation it makes houses one very poor performing asset class and one hell of an opportunity for FHBs to gain ground by saving and earning interest.

Whatever scenario plays out, FHBs would be wise to wait, save and observe what happens to others that leverage today in the hope of big gains tomorrow.

by Boatman | 17th Apr 18, 10:50am 1523919030

@retired poppy....... If you are addressing me ......... I have no financial exposures that will cause any shocks to us personally . We have no debt , a solid income from work and good income generating assets , and if they stop being good income generating assets, it will not impact on our living standards or our lives.

We will simply not have the surplus we currently have every month

by Retired-Poppy | 17th Apr 18, 10:57am 1523919433

Ok, acknowledged :)

by Eco Bird | 17th Apr 18, 3:08pm 1523934498

You keep picking numbers and scenarios out of thin air RP ...

10 years stagnation ? ... LOL is that how long you think this COLs will last? .. Funny man!

Yeah, we all know that you are pessimistic and a doom and gloom believer .. and that is fine. But, What makes you believe that investment properties purchased 5, 7, 10, 20 years ago have poor return? -- we know that you don't have any experience on how to calculate such returns as we also know that you don't know how powerful money leverage could be.

So Please! ... stick to what you know !

by Retired-Poppy | 17th Apr 18, 4:52pm 1523940753

Echo Bird, only a fool thinks that the price destination of houses rests with the Coalition. It's a growing surplus of unaffordable houses thats the real issue here. Its an affordability issue cultured under the previous Government and not something to hold the Coalition accountable for.

Every time there's a bust, the misinformed novice opportunist's is left holding the baby. They are the ones that ignored the signs. This time round it's you that holds the baby.

by Eco Bird | 17th Apr 18, 10:12pm 1523959929

lol, with whatever respect I have left for you RP... I seriously suggest that you see a psychiatrist coz your situation is getting out of control and you are losing it fast !

Holding the Baby eh? .... LOL

by pacifica | 18th Apr 18, 1:36am 1523972163

Wait I have no familiarity with mothering phrases, I understand 'up shit creek without a paddle' and 'holding the short straw', or even the 'last to enter the pub toilet', (another musical chairs type reference), but isn't 'holding a baby' a good thing? i.e. families pass a baby around to hold and each member who asks does some awkward cooing before the baby is passed back to the mum. Or is baby holding an abhorrent unlucky position to be in? I know I would feel more like that but that is due to being an antisocial bastard geek more inclined to hold a whiskey than a child, not the state of a normal person.

by tothepoint - d… | 17th Apr 18, 11:20am 1523920832

The DGM's here have promised a crash.......

But said crash has proved mightily elusive.......

A figment of DGM's imagination.

TTP

by RichMuhlach | 17th Apr 18, 1:24pm 1523928270

Can you please provide at least one link of someone promising a crash?

by Retired-Poppy | 17th Apr 18, 2:33pm 1523932403

TTP, no one here has "promised" a crash. Your behavior only serves to undermine what fragile confidence there is in property - BIG FAIL!

What an absurd thing to say.

by Yvil | 17th Apr 18, 3:49pm 1523936957

RP, you repeatedly warned about a 40% crash, seems you have changed your stance significantly

by Retired-Poppy | 17th Apr 18, 4:32pm 1523939534

Yvil, again you can't get your facts straight. I think a 40-60% "Ireland style" crash over say a three-four year period cannot be ruled out. Timing when such a scenario will ensue is impossible. The important consideration is there is now a much elevated risk of one. Any debt ridden economy with global exposure to the missteps of other countries is a vulnerable one. I don't wish for a crash nor have I positioned myself to profit from one. It's just the world in which we live. It's now a time to position the finances for uninterrupted cash flow in a worse case scenario. Eliminate the debt.

My stance has not changed although, I'm getting the impression you're increasingly desperate to force me to change it. It's your stance that is changing.

by tothepoint - d… | 17th Apr 18, 7:49pm 1523951382

Hi Yvil,

You are absolutely correct: Retired-Poppy has warned of a crash many times.

But when it suits him, he denies what he's stated in the past........

That's why he's been referred to as "MR DUPLICITY".

TTP

by gingerninja | 17th Apr 18, 7:54pm 1523951675

Let's not have he said/she said. If R-P has said there will be a crash let's see a link to the comment.

by Retired-Poppy | 18th Apr 18, 8:33am 1523997183

TTP, Yvil, I'm still waiting for your proof where I commented there would be a 40-60% crash in real estate prices in 2018? You both spreading malicious lies in an effort to get me to go away. Talk about a couple of desperate REAs.

Of course I deny making this prediction. I recall John Wheeler making a 2018 crash claim several times. .

by Groen_mamba | 17th Apr 18, 10:38am 1523918302

OOPPSSS! Ego Bird was expecting a plus in front of the 2.2

by BB101 | 17th Apr 18, 10:51am 1523919081

Groen mamba do you think eco bird really cares when the Auckland market has moved 100% in the last 5 years...

by nymad | 17th Apr 18, 10:57am 1523919459

The Auckland market has moved 100% in the last 5 years?
Interesting.

by BB101 | 17th Apr 18, 11:00am 1523919653

Well it wouldn’t be far off 100% would it. I have heard of many properties that have doubled in value since 2012 in Auckland.

by nymad | 17th Apr 18, 11:05am 1523919954

You can literally look at the chart above and estimate the median price growth from March 2013 to March 2018.
Do the sums and tell me what the growth rate is over that period.
I'll give you one big hint - it is not 100%.

by Pragmatist | 17th Apr 18, 11:12am 1523920373

100% growth took 9 years.
March '09 Median = 440k
March '18 Median = 880k
~7.8% Growth rate

March '18 = 880k
March '13 = 565k = 56% growth
~9.2% CAGR

by denpal | 17th Apr 18, 11:42am 1523922131

In West Auckland the compound growth rate for houses has been approximately 6.7% per annum since 1990, that is over the last 28 years. In other words, a house costing $120,000 is now $735,000.

by Conrad | 17th Apr 18, 2:54pm 1523933648

For comparison

NZX 50 27 March 2009 - 2653
NZX 50 29 March 2018 - 8319

214% Growth.
~13.54% CAGR

(A bit overstated as March 2009 was a bit of a trough)

by BB101 | 17th Apr 18, 11:13am 1523920397

Apologies Nymad 100% in 10 years you are right! Still.... 100% growth on banks $$$ not too shabby is it. The power of leverage is powerful.

by nymad | 17th Apr 18, 11:18am 1523920680

Okay.
Whatever you say.
You are obviously very smart when it comes to investment.

by Yvil | 17th Apr 18, 11:39am 1523921988

Indeed BB101 is. It's a lot smarter to double your money rather than to argue if it took 9 or 5 or 10 years to do it

by nymad | 17th Apr 18, 11:50am 1523922612

I think doubling your money in 5 years is very different to doubling your money in 9 years.

by Yvil | 17th Apr 18, 12:21pm 1523924497

It certainly is very different to not making any money at all and spending all your time being rightous

by tothepoint - d… | 17th Apr 18, 11:05am 1523919911

Hi Nymad,

Not sure about the last 5 years - but Auckland values increased by 96 per cent between 2006 and 2016.

TTP

by nymad | 17th Apr 18, 11:11am 1523920268

Excellent point, TTP.

I'm not sure about the last 5 years, but I'm pretty sure NASA launched an Apollo mission in 1972.

Oh, sorry. That's completely unrelated. Perhaps it is unwise to follow your lead.
Best we keep on topic, then.
The comment was 100% in the last 5 years.
Not 10 years between 2006 and 2016.
The last 5 years.

by tothepoint - d… | 17th Apr 18, 11:16am 1523920605

Hi Nymad,

Your comments suggest you're a sore loser. Too bad.

TTP

by nymad | 17th Apr 18, 11:21am 1523920907

Woah, TTP.
Another excellent substance filled response of the caliber we have come to expect from an expert such as yourself!
We are forever grateful for your input!

by tothepoint - d… | 17th Apr 18, 11:38am 1523921893

Hi Nymad,

People will remember you boasting that you are an econometrician - but, subsequently confessing that you didn't know the difference between cyclical and structural factors impacting on housing markets.

So much for any "substance filled response" from you, my friend.

TTP

by nymad | 17th Apr 18, 11:49am 1523922542

A fool's words are only believed by fools.

by tothepoint - d… | 17th Apr 18, 12:00pm 1523923230

Hi Nymad,

Well - they were your words, Nymad.

You only have yourself to blame.

TTP

by BB101 | 17th Apr 18, 10:58am 1523919499

Groen_mamba it appears you have worked out the scandal a little late... don’t worry there will be strong growth again one day providing you are in the market...

by Groen_mamba | 17th Apr 18, 11:07am 1523920029

Thanks for the advice. I will be buying once it hits the bottom of this price cycle, and enjoy the strong growth you speak of.

by Yvil | 17th Apr 18, 11:43am 1523922185

G_M please let us all know exactly when the cycle hits bottom, thanks

by Groen_mamba | 17th Apr 18, 11:52am 1523922770

I most certainly will !

by ex socialist | 17th Apr 18, 10:38am 1523918321

I am quite fascinating how any realism is labelled 'Doom and Gloom Merchants' (DGM). It really is a wonderful tactic drawn from a Fox News approach to reality - namely give a group a title (same with MSM) and then extrapolate the opinions - for instance suggesting that 'it hasn't dropped by the 30% the DGM's said it would.

I wonder whether it would be more appropriate to label the advocates for further increases in market prices as 'PIE's' - Property: Irrational Exuberance (the term used by Greenspan to describe the share market bubble).

If anything the movement in opinion has been from commentators who were saying prices won't grow by more than 10% in the next year.

by Risky | 17th Apr 18, 12:47pm 1523926047

Agreed, Trump does it as well with his giving of names to people he doesn't like, Slippery Comey, Crooked Hillary etc. The CoL one that gets thrown about a lot is another one. Also why does TTP sign and address every post? It's ridiculous and annoying in its redundancy (maybe that's the point?)

by mfd | 17th Apr 18, 10:48am 1523918888

You are brave to still be predicting higher prices in July 2018 vs 2017 in Auckland. Time will tell.

by tgcam4 | 17th Apr 18, 12:28pm 1523924885

"this is not a Normal Year to make sensible comparisons of MoM and YoY."
Wouldn't this be a great way to compare if these rules had caused effective change though (at least via sentiment).

by gingerninja | 17th Apr 18, 11:00am 1523919642

Bubbles always last much longer than even the market bears believe they can. That is perhaps as classic a symptom of the psychological market cycle, as anything else.

The NZ housing market has so far been incredibly resilient. One could argue that NZ-ers belief in the value of their housing market is incredibly resilient too. Government has changed, and that has seemingly only contributed a moderate impact on price at this stage. But the drop in activity is still notable. Because they come along with several other indicators of NZ's economy slowing down.

The real bogey man haunting the NZ housing market is whether global inflation has truly returned and whether offshore borrowing costs will ever rear its ugly head, forcing higher mortgage borrowing costs. I don't understand how anyone can look at how precariously placed many home owners are in that respect. Huge mortgages, huge income to debt ratios and all their eggs in one basket. Of course, the higher borrowing costs may never materialise. Maybe inflation will remain elusive for another decade yet and the worst knock the housing market will experience is just another longer period of "consolidation" or low growth. Obviously, that would be preferable for the wider economy.

However, if you have planned your economic future based on the hope that interest rates will never rise, then you have left yourself in a very vulnerable position indeed. From my perspective, if interest rates rise for any reason over the next few years, all bets are off. Investors will be getting hit from every angle, rising costs, financial tightening, more regulation, no capital gains, no tax loop holes. Plenty of longer term landlords will be fine, but we all know that very few of the property booms new investors have been of this variety.

The bloom is certainly off the rose. But IMO only a change in one of the fundamentals will see a crash (i.e. rapid drop in migration or sudden hikes in borrowing). The concern should be because both of these things are completely possible.

https://tradingeconomics.com/new-zealand/indicators (there was no red on this report 2 years ago)

by Yvil | 17th Apr 18, 11:46am 1523922390

Good post gingerninja

by tothepoint - d… | 17th Apr 18, 12:27pm 1523924877

Hi Yvil,

Gingerninja is a smart woman - as evidenced by her consistently high quality, well-argued posts.

I might not often agree with her - and often we have fierce exchanges - but there's no doubting her intellect (and compassion for people).

TTP

by Jock Silver | 17th Apr 18, 12:27pm 1523924873

Slay it sister!

by pin3cone | 17th Apr 18, 1:04pm 1523927092

Are you still watching the WGTN market Ginger? I'm continuing to observe from the sidelines, watching houses go for $375k over RV in some areas, but regardless of the red flags in the economic outlook REAs are still playing the flute like a pied piper leading the over-exposed to the cliff. The moral compass of some people...

by gingerninja | 17th Apr 18, 1:58pm 1523930300

pin3cone We actually decided to take our money off the table and invest it elsewhere for now (not in any housing market), so whilst i'm still watching the Wellington market, we won't be looking to buy for at least 18 months.

Wellington house price growth was just into double digits 18-months or so ago, now it's back at single digits again and slowing. Sale volumes are down 18%. Several of the houses I was interested in sold for what I consider a discount (less then the asking price or trademe estimate).

The house I rent has an estimated value of around a million. The owner bought it in 2008 for $735k but ALL of the price growth has been in the last 2 years, the 2015 RV is $740k. He's spent upwards of 150k on a huge renovation, so over 10 years his house has given him around $115k. Average of $11.5k per year capital growth, and considering the mortgage costs it's not much to get excited about (he's only been renting it out a few years) and certainly nothing like the doubling in value seen in Auckland.

As i've said before, I don't actually think Wellington is particularly overpriced. The Welly market was flat and lack lustre for a long time after the GFC, and this brief 2 years of notable growth is something of a catch up. I expect that just like the Auckland heated market, eventually spread to the regions, so too will the chill. If there's an external shock, I may get a discount on a house in 18 months, if not, I still expect a buyers market and more wiggle room in negotiation, so pretty happy to wait it out.

by Yvil | 17th Apr 18, 5:58pm 1523944716

I'd be interested to know where you invested your money in theis low-return market if you don't mind sharing?

by pacifica | 18th Apr 18, 1:34am 1523972050

It is good to be in a position where you can wait it out, (often that does not meet many families lifestyles so being in that position is quite lucky). Who knows you might even be able to build your own if none look suitable and inheriting old maintenance faults is always a risk with buying existing stock. I would tend to agree that taking a while to watch the market & run through all the data on locations, & see the next 10 year council plans solidify first before stepping into what could be a changing environment is a solid plan. Especially on an investment that carries such a long term effect on your life. At least short term investments (less than a decade) are not backed by reams of information that need to be read and reviewed first.

Those 10 year council plans do look like they are dead on arrival https://10yearplan.wellington.govt.nz/ http://www.our10yearplan.co.nz/ especially since it looks like Wellington spent more on marketing than content, again. At least Dunedin's one was Ok enough with sensible content, reporting & even engineering reports to peruse (more spent on cycling than the entire road network budget overall but otherwise straightforward infrastructure & crisis maintenance being chipped away at). Auckland's one was a very dark and depressing shocker, (with so much abuse & discrimination of those with mobility issues & disabled it made even me scream & cry for the future). Wait no, the amount Wellington spent on marketing should be refunded, a 10 year plan site with no detail on how rates are expected to increase by proposals, or even no detail on service costs like water increasing. Sigh why could they not just be clear to let you know what to expect on a financial and infrastructure level. Considering it all up waiting to see what shakes out over the next few months sounds like the better investment decision.

by Averageman | 17th Apr 18, 4:51pm 1523940715

What if both come to pass, reduced immigration and higher interest rates?

by gingerninja | 17th Apr 18, 5:31pm 1523943085

Averageman... a blood bath!

by pacifica | 18th Apr 18, 1:28am 1523971708

You do not need immigration to sell NZ property overseas, you don't even need to have sales to people, (trusts and companies would suit just as well), you only need it if you intend to have more demand by those new buyers to become owner occupiers. Higher interest rates again may only affect those with typical NZ mortgages, (again something which can be avoided). In all likelihood it will only be those who failed to plan appropriately and position themselves at risk of rising NZ rates, so many FHB would be in the firing line. Bit of a stuff up when those who need the housing affordability the most are the ones most affected by risks but that has always been the case. They would likely suffer as well from related job losses around that period and in general be worse off. But NZ does love to pay it's middle class families a benefit to go to private housing businesses then slag anyone needing a benefit for sickness, or work related reasons. The accommodation allowance, emergency housing allowance & WFF is a shambles that cheaply patches serious foundation fractures in NZ.

by BigDaddy | 17th Apr 18, 11:28am 1523921335

The fact that prices are at record levels, or within a whisker of previous records shows that the majority of sellers are not under pressure. From experience I would say that 90% of sellers or buyers would love to sell or to buy, but if they don't succeed it doesnt really matter.

by Nzdan | 17th Apr 18, 12:42pm 1523925756

Conditions haven't changed, interest rates are still rock bottom so no pressure from that respect.

How many investors chasing capital gains are coming up to the end of a 5 year interest only period in the near future?

by alpappy | 17th Apr 18, 12:10pm 1523923827

It looks like WP self fulfilling prophesy is coming true. Recession late this year

by Yvil | 17th Apr 18, 12:24pm 1523924640

How do you come to that conclsion from this REINZ report?

by theglc | 17th Apr 18, 1:35pm 1523928906

YOY decreases

super low sales volumes

Ever increasing inventories

Not a lot of great news there for the COSL (coalition of sore losers)

Its coming!

by ham n eggs | 17th Apr 18, 4:37pm 1523939838

For those confused

- House prices will continue to climb
- Interest rates will continue to fall
- Incomes will go nowhere

There is no alternative. We need to keep adding more debt to hold commodity prices up ... because underlying commodity COSTS are always increasing. If we dont hold prices up, things quickly unravel.

And then at some point not too far away, it all blows.

by pacifica | 18th Apr 18, 1:44am 1523972699

Unlikely to blow, more like a murmur. Planning, infrastructure maintenance & corporate apathy are pretty real and NZders often take a lot before they do anything. Even on a serious medical fault basis the likelihood of being sued has been taken away from NZders, so anything that seriously affects their lives will have them more likely to shoulder the weight then look at those responsible for it. They are being conditioned to have no power to dispute anything due to lack of access, risk to employment & lack of funding. Those hit hardest by any downturn are those with the least ability to do much about it. After all living wages even for necessary roles like medical staff, police and teachers is non existent. It is when the country cannot fund all the benefits (pension increases, WFF, allowances, supplements, and job seeker etc) which is when the wheels start coming off. When the government cannot put more debt on the taxpayer tab.

by ham n eggs | 18th Apr 18, 9:31am 1524000706

Its a global predicament - not an NZ issue. We are all past the point of affording our benefits - deficits are standard and have been for years - tomorrow has the tab covered.
Viable income rises arent actually possible (due to resource limits) so at some point no one will believes a persons/countrys ability to service ever greater (future) promises. Until then its run up the debt because mass default is the only possible outcome.

by Averageman | 17th Apr 18, 4:49pm 1523940549

Govt needs more tax.Target of opportunity could easily be the the bloated whale of property gains. Does anyone trust Cullen not to aim at this....

by Ex Expat | 17th Apr 18, 5:11pm 1523941897

I salivate at the thought that they will take capital gains on all property as a policy to the 2020 elections. Maybe even double down and make it retroactive.

by Retired-Poppy | 17th Apr 18, 5:55pm 1523944504

Ex Expat, that would be as dumb as an election year promise of unaffordable tax cuts with a backdrop of ailing infrastructure. This Government values honesty, promises and communication with the public about goings on.

Early in the Coalitions/Labours second term I would expect to see a comprehensive capital gains tax on property that excludes the family home. I believe there is strong support for such changes :) Note I said second term? Who has the public voted as their preferred Prime Minister? A real leader of change not a overseer of status quo.

Besides, what happened to the statement you made earlier this year "I support any tax as long as I don't have to pay it myself"

Its mind numbing when people swear allegiance to a party simply because of its brand colour and because it's what their parents always did. It's smarter to think about what's best for our country overall.

by Eco Bird | 17th Apr 18, 10:41pm 1523961712

LOL, what second term RP? .... you surely do not believe that this CoLs will be elected again, do you?

The "country overall" doesn't need Noobs running a Gov, Doesn't need incompetent ministers stabbing in the dark and don't have a viable plan for the most urgent needs after 6+ months in power ...Just busy capitalising on photo opportunities ...

The imminent question today is : When will these noobs be replaced and who will they be replaced with ?.... any reserves on the benches?

Did you see the latest poll ... RP? I bet you just brushed that aside like any property report you hate to read ... eh?
http://www.nzherald.co.nz/politics/news/article.cfm?c_id=280&objectid=1…

LOL, we have only seen about 6 months worth of Blunders and Incompetence so far... we have another two and a half more years of prime circus material to watch ... It will become more interesting when the money runs out and when it's time to pay the piper after Jonesy come back with a kangaroo tail instead of rich investors.

CG tax is a ship wrecker, no one will buy it ... No matter what you and your party die hards propagate ... However, keep the good work, you never know, it could stick one day !...

by Pragmatist | 18th Apr 18, 7:03am 1523991836

No, it wont be the same coalition next time round, the voters will give Winston the heave ho, and we'll be back to Lab/Greens again. Hopefulky TOPbreaks thru the 5% threshold and grabs a couple of seats. ACT is history as is United Future.

by Solidname | 18th Apr 18, 7:23am 1523992992

Not sure about NZF, if they do what they've said they'll do in the regions then that will secure them some voters. The current polls show both Green and NZF up, Labour down and National up 1%.

Which bearing in mind apparently NZ is the laughing stock of the world, the next Venezuela, flailing from failure to failure, an embarrassment - choose your pejorative, flying in the face of all that "evidence" apparently the CoL would gain more seats and National would lose more should the election take place today.

ACT are a joke party, and their crumbs from the National table will surely end soon - but even with that massive Gimme seat the NZ Bigliest party can only muster 55 seats.

by pacifica | 18th Apr 18, 2:04am 1523973890

Certainly better than the 'there is no crisis', 'scientists are just reporting opinions', 'we need immigrant workers because all the NZ ones are on drugs and won't accept minimum wages' rhetoric. But you might want to recheck that optimism because MMP does rely on the wider distribution of NZ which is far more conservative & rural than the couple of large cities would have you believe. Even the large cities are dominated more by owners with millionaire homes in gerrymandered areas and as the saying goes the more money you have the more likely you vote conservatively (also backed by scientific data including a couple studies in the rapid change of values pre&post lotto winners which is particularly quick & interesting in how greed & current financial position drives principles). NZF is an odd case, how the transition to the next gen handles in the future will determine whether it will survive (the financials are the core of any party though and it really is marketing money & connections which drive that).

by Ex Expat | 18th Apr 18, 8:40am 1523997618

My parents vote NZF, and my siblings vote Labour, National and Greens. It makes for fun times at family gatherings.

If you look at the distribution of wealth, it's definitely National, NZF, Greens and Labour, in descending order. The NZF vote appears to center on two aspects: 1. Age, with the Gold Card free for all a big draw card and 2. Distrust of Labour and National over decisions made the 80's and 90s. The Greens voter is mostly environmentally biased with a touch of social justice and the Labour voter needs someone to fill the trough. The National voters are urban and rural, both focusing on self-reliance and fiscal discipline. I think the voting patterns are so entrenched that nothing will change them unless perhaps WP doesn't make the next election in which case I'm not sure which way my parents would vote. Possibly a split to Labour and National.

by KH | 18th Apr 18, 9:54am 1524002048

Ex Expat. Nicely put explanation of the party split. Something to think more about today.

by Foyle | 18th Apr 18, 12:51pm 1524012691

The Greens vote is mostly big-govt social justice with a tinge of naive environmentalism. Biggest in Wellington Central with it's armies of public servants. They are urban, and insulated from economic impacts on productive industries. They are not deep thinkers, favouring flashy virtue-signalling pronouncements over genuine improvement. eg they kill oil exploration to push the production offshore - huge local economic destruction, for no global environmental benefit. Push tourism as the great hope for NZ industry even though it uses around a quarter of NZ's fuel consumption (via international air and campervan/car miles) and is so the most polluting of industries. Try to ban supermarket plastic bags that have been proven again and again to use less resources than thicker reusable bags. Attack dirty farming when cities are demonstrably the big polluters with poor water quality surrounding them...

by pacifica | 18th Apr 18, 9:03pm 1524042203

Those family discussions are fun, especially when the older folks are trolling for a good political & philosophical discourse (and a bit of a laugh).

by RickStrauss | 18th Apr 18, 9:06pm 1524042391

If that's your family that goes a long way to explaining your perspective. Once you extrapolate that out as an assumption of everyone else out there in NZ.

by Ex Expat | 18th Apr 18, 9:42pm 1524044570

That would be your extrapolation, not mine. They are all decent law abiding functional members of society. We just differ on how we see the World and interact with it. That’s life.

by RickStrauss | 18th Apr 18, 10:26pm 1524047194

Might have misunderstood me, as it was not a comment on your family or any extrapolation I'm making. Just noting, if you associate right with self-sufficiency and left with looking for handouts in your own family, it's no surprise that's the impression you have of society.

Chicken and egg, though, I guess.

by Ex Expat | 19th Apr 18, 6:23am 1524075819

All siblings were raised in the same house, and went out into the World with nothing but a high school education, yet the financial outcomes are quite divergent after 35~40 years in the workforce. If you look at the behaviours you could reasonably predict the outcome. What is harder to understand is where those behaviours come from. I suspect it’s a complex mix of base nature and interaction with the World. Whether people naturally align with a political party or grow into it is an interesting question as well. I have been a National Party supporter for coming up 40 years and doubt I will ever change. Based on the comments here I see others as implacably loyal to Left wing parties. The reason I comment is because we have a system that allows other ideologies through elections to influence my life through laws and taxes I must obey and pay. To be governed by this current lot has me close to apoplectic at times because to my mind at least they are incompetent and led by an accidental PM who doesn’t have the required skills, yet I’m paying more than most for the mess they are creating.

by PocketAces | 19th Apr 18, 6:44am 1524077087

yet I’m paying more than most for the mess they are uncovering. There, I fixed it for you

by Ex Expat | 19th Apr 18, 8:32am 1524083520

Without Punch there is no Judy. I appreciate your contribution on that basis.