The median Auckland house price has fallen $5k from a year ago to $850k, while the median price across the country is up $10k to $550k, according to REINZ

April was a relatively cool month for the country’s residential property market, but signs of heat were still there.

According to the Real Estate Institute of New Zealand, the country’s median house price fell $10,000 from March to April, to $550,000, yet was up $10,000 (+2%) from April last year.

In Auckland, the median price fell $30,000 over the month and $5,000 (-0.6%) over the year to $850,000.

Affordability constraints and uncertainty around changes to government policy are likely to be affecting prices here.

Taking Auckland out of the picture, house price growth throughout the rest of New Zealand remained strong. The median price increased by +6% over the year to $460,000. From April 2016, the median price increased by +19%.

Otago, Southland and Manawatu-Wanganui experienced significant year-on-year median price growth of +19%.

Growth was also substantial in the Bay of Plenty (+9%), Northland (+8%), Gisborne (+14%), Hawke's Bay (+12%), Taranaki (+6%), Tasman (+7%), and Nelson (+16%).

However it was subdued in Waikato (+3%), Wellington (+3%), Marlborough (+2%) and West Coast (+4%).

Other than Auckland, Canterbury was the only other region in the country to experience a very slight median price decrease over the year to $441,000.

Kiwibank economists say, "Some of the smaller regions, such as the Manawatu-Wanganui and the Hawkes Bay, stepped up a gear in the month as they play catch-up to other main centres.

"Also houses in these regions are likely to represent value for buyers such first home buyers following the loosening of LVR [loan-to-value] restrictions on lending at the beginning of 2018, and for investors on the hunt for yield."

Gradual recovery continues

Looking at sales volumes across the country, these were up nearly +7% year-on-year to 6,368.

While many more properties were sold in April 2016 (8,554), year-on-year sales volume growth has been picking up since it dropped right off a year ago.

Sales volumes in Auckland were up +2% over the year, to 1,854.

They were up +6% in Northland, +6% in Waikato, +11% in the Bay of Plenty, +5% in Hawke's Bay, +23% in Manawatu-Wanganui, +13% in Canterbury and +36% in Southland.

Only three regions in the country experienced slight sales volumes decreases - Wellington (-2%), Taranaki (-7%), and Otago (-1%).

While sales volumes are showing signs of stabilising, ASB economists expect them to remain subdued “given that there are still a number of uncertainties surrounding New Zealand’s property market”.

The median number of days to sell a property increased to 36 days in April, from 34 days in March and 34 days in April 2017. It took only 32 days to sell a property in April 2016. 

Overall, ASB economists say: “The tug-o-war between stretched affordability/legislative changes versus still-strong population growth and low housing supply looks to have continued. Regional differences remain stark, with the smaller regions playing catch-up. 

“We expect the situation to persist until greater clarity over the impact of the new government reforms emerges. This could be some time away, and the market is likely to remain directionless for a while yet.”

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274 Comments

Thanks for a nicely balanced headline

should have added "but Winter is coming"

Agreed

up
10

I would say that prices are actually scorching hot everywhere, but it's the rate of house price change (the increases over the past decade) that we've become used to talking about using a temperature analogy. For the mathematical, that's the first and second derivative base value and first derivative -- the value and the rate of change of the value.

In relation to 'normal' incomes, house prices remain at extremely high temperatures.

0th and first derivative?

Thanks for spotting that! It is the base value and the first derivative.

Bloody 0th

You can always spot a physicists' kid in kindy learning to count. 1, 2, 3, 0, 4...

Zeroth
Hilarious

Always sticky on the way down. Hang on for the capitulation Auckland.

@Ocelot , I wish I could agree with you , it needs to go into free-fall , but with massive pent up demand, and a still huge monthly inward immigration figure ................ I simply dont see it happening anytime soon .

You cannot get a house to rent at anything like a reasonable amount , my daughter and 2 friends have just signed a lease for $870 a week for a small 3 bed 1950's board and batten in Belmont on the North shore.

She really struggled to find a decent place to rent .

And the local Asian buyers/ investors/ builders have not disappeared , they are just on the sidelines .

What demand????

only 34 sales away from being the worst April sales volumes in Akld since 2011

Akld Inventories are still sky high at over 12300 on trade me

Doesnt seem like "massive pent up demand" from buyers at the moment to me

There is definitely pent up demand, just not at these prices..

If there is no demand someone might want to tell Twyford before he start buying all those houses with our money.

At last another reader / poster who looks at Trade Me figures. Of more concern to me are the numbers of rentals advertised. Auckland has 4651 as of 4th May. This number is huge compared with the total number of private rentals in Auckland. Little wonder the rents are not going up. Winz are now forcing people to apply for private rentals but winz are clearly not following through with the landlords re these false applications. I have noticed a recent surge of "uninterested" enquirers.

Hi Ocelot.

Bad boy Babou!

MTP

MTP How was your date with TTP ?
Was it moving ?

Strictly study to increase ones knowledge of the ever increasing property market. Seems there has been some oscillations in the communications, no Ronovationz yet.

Ocelot
Always Sticky on the way down is an entirely apt description of the usual decline trend with Auckland property
The vendors hang on desperate pining for their top price for months & years until finally one day the market
wakes up across the board to the new lower base paradigm

Christchurch City is the standout.

Yes, since 2012 the Chch market has very stable volumes and prices rising in line with inflation. In other words, it is a correctly functioning market unlike the rest of NZ. Bodes well for Chch when a crash comes.

Well spotted. Great supply within city boundaries, intense inter-TLA competition, with Selwyn, Waimak, Hurunui and Ashburton DC's all eating the city's lunch to some degree, and all down to a Gubmint that threw the stoopid planning restrictions under the nearest heavy vehicle (may have been an Army Tank) - the LURP. Ms Market has had her wicked way with plot and house prices, as this survey so clearly shows.

Awkland, however, is another matter. No LURP because politics, no inter-TLA competition (because there's only one Magnificent City Council), no sign of an unfreezing event sequence such as the Christchurch earthquake sequence, and no public discussion of the obvious contributing factors (TLA economic stupidity aside) such as immigration because shut up, We Know Best.

Chch has had declining population figures for years now , no wonder the prices are falling

Echo Bird, do you still stand by your July 2017 price bottom for Auckland? 13,456 for sale on realestate.co.nz. Lets refrain from creating a side show by suggesting its only "rubbish" that is dropping. In a market confident of future capital gains, "rubbish" sells well as potential do ups.

Haha, look at the median sell prices in Auckland yourself RP, I don't need to confirm anything. these are REINZ prices not mine.

Which number is higher you reckon July 17 $ 830K or April 18 $850K ?

I suppose 850 is still higher and the bottom stands by itself on its own feets,

Oh BTW, look at history, prices tend to rise from here until October / November almost every year and dip in January .... lol, I bet you won't buy that observation either ..haha

On the other hand, please keep watching the prices of Rubbish Houses
and tell me how cheap they are getting - dont take my word for it, do a bit of research yourself.

After the PT underwriting bomshel yesterday, the market will flourish and confidence in the existing good quality brick and mortar will shoot up.

Watch the space

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16

5k change on $850k is margin of error level. When it gets to 15-20k down YoY then its heading down. At the moment its definitely not heading up anymore, but to say its heading down is a bit premature.

up
10

Agree - $5k is bugger all, but the trend line has certainly changed. A year or 2 back it was 10-12% YOY gains = $70/80k capital gain to play with.

Now if you are leveraged up on an "investment" property, most prob cashflow negative in the dream on endless cap gains you'd be very very nervous.

Interesting times...

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10

REINZ data shows North Shore down 10% from April 2016.

I am aware of several properties currently for sale on the Shore where the vendor merely wishes to recoup the purchase price they paid several years ago.

40% of buyers in Auckland the last few years were investors weren't they?

Be careful who they are labelling as investors.. The corelogic series uses multiple propetry owners which could include all of the following groups

Landlords with multiple properties
Developers
Social housing providers
Home owner with a holiday home.

etc.

Also be careful if the figures are $$$, or number of properties/transactions

A more correct phrase would be non-owner occupiers.

Other non-owner occupiers motivations include:

property renovators for purpose of resale (buy, renovate and sell)
property subdividers for purpose of resale (buy, add another dwelling(s) onto the large section, and sell)
property landbankers

Definitely seeing many more interest from smaller scale property subdividers.

double post - refer above

Classic Auckland
Stubborn

More to come ............Looking forward to the next episode in this ongoing saga .

The market may well freeze , simply because of policy chaos, and that chaos has effectively ensured that the best course of action is to do nothing at all .

And a shambles it is .

Kiwibuild has now become Kiwi-buy as the Government desperately tries to sort out the hole into which it has dug itself

They have taken a housing supply opportunity and made a total shambles of it by making all sorts of threats to property investors from CGT , ringfencing losses , bright line tests , and who knows what else , effectively ensuring that investors are locked out due to uncertainty and risk .

Lets not forget that about 40% of Kiwis are renters , and that massive population of people are almost all dependant on investors who provide housing stock for rent .

So , the best investment advice is : when all those around you are losing their heads , stay calm ............. sit on your hands and do nothing until the storm is over .

some confused points in here - the environment has become less attractive for investors and speculators, but can't be described as a shambles. That will bring down the price of houses but not really impact rentals. It will mean prices will need to fall a long way to make housing investment attractive.

And in fairness - the focus of the Kiwibuild is to change the supply format - rather than just substitute for private sector investment. I suspect some of the supply will be where there is limited demand, but changing the supply function is critical to reducing the boom-bust in the property market

@ex-socialist , I dont mean to be disrespectful but your train of thought remains very socialist .

In 1979 , my first economics lecturer was a full -on socialist , spent his first lecture telling us how we could visit Karl Marx grave at Highgate cemetry in London..........He was an idealist believing the fall of Capitalism was imminent, and that socialism was the road to equality and salvation .

Its a common trait among socialists to believe that things will be fixed by lefty policies , like getting rid of market players ( investors ) will fix the housing problem .

The belief that the Beehive will provide , is a another socialist belief ............. its a myth. They may have a surplus right now , but its not much at all , and they dont have enough money to build houses for everyone .

Quite simply investors are probably the most important providers of housing in the country ............. and by removing them from the equation by making investment "less attractive " to use your words, it will have unintended consequences .

I dont have , and have never owned a rental property in Auckland , but my advice to investors is to wait - and -see , do nothing, because the Governments attempts to sort out the supply side is already a shambles and they are bumbling from one crisis to the next .

The facts are ,

1) Immigration is still too high , pushing up demand , so prices will not drop
2) New builds are costing $3,000 / m2 , so a 2 bed unit of 100m2 is costing $300k to build , plus the section for $400 k plus GST , so thats the 'average " price in Auckland and used houses are simply tracking the price to build new ones
3) A water meter costs $15,000 from Auckland council and waste water a huge amount on top of that .
4) The Resource Management Act is a major hurdle to growth
5) DC levies are so high , its a wonder anyone ever does property development

There is no quick fix , and if you think that prices will drop by removing investors from the equation . think again .

Hello
sorry much confusion in one submission. Yes - ex socialist because I have observed that interventions often have the opposite affect than their intention - such as the accommodation supplement driving up the growth in Auckland.

In terms of the points you raise:

1 - the boom in Auckland house prices hasn't been driven by immigration - it has been driven by speculation (classic bubble). If it had been driven by immigration rentals would have gone up also - but as rentals went up people found alternative options - such as more flatmates.
2. Some new builds cost $3,000 - some $2,000 psm. However, the section price is only $400,000 because house prices are high. Land is valued as sale price with a house - minus cost of building a house - results in land price (actually in valuation law). When house prices come down land prices will come down.
4) RMA is a hurdle - and supply of land has shifted with the new urban plan. A lot of land banking and speculation has limited supply. I think the lessons from the SHA's was that there is not a lot of capability for fast urban growth as well.
3 and 5) That DC are the problem is a myth spread by land bankers - that the previous Govt bought into (see 2 above). In fact DC don't cover much community infrastructure (eg libraries are excluded). The problem is that if the actual cost of developing property was pushed onto developers DC would be a heap higher.

And yes - I have thought again and I do believe prices will drop. I am cautious in believing that a CGT will impact prices as it attacks symptoms not problems - but I am equally sure it won't increase prices or rentals.

@ex-socialist ........... you make good well -thought through points , and I hope you are correct , as prices need to fall to sensible levels .

However , I think while there is some speculation there is also some barriers to entry for speculators like 30% deposits , so investors need real money to play at this table .

I believe rents are somewhat restrained by incomes , but they have nevertheless gone up over the past 36 months , and to be fair the rents in Auckland are ridiculously high anyway .

I once subivided a property and the sums demanded by the old NORTH SHORE CITY COUNCIL were beyond the pale , I wont do it again

Point 2 -
Don't oversimplify the cost of land.
Yes. It is the residual of total property price and cost of construction. But as an accounting exercise only.

The price of property does not drive land price. It is the other way around.

Thus saying that land value will only drop when property value does is a pointless assertion. It is the other way around.

No - Property prices drive land values - just compare vacant land in different suburbs.

Okay, I'll bite. Because this is plainly stupid logic.
How exactly do property prices (cost of construction + land value) drive land prices?

Conventional wisdom would state that price is a function of the utility bearing characteristics of a good. Your opinion seems to be at odds with conventional microeconomic wisdom.

Vacant land - exactly where do we find enough of that in Auckland to accurately estimate its value?
Hence the accounting simplification of LV = CV-IV

Land value is a function of it's respective amenity value.
Property price (CV) is a function of IV and LV. Causation flows in this direction, not the other way.

Perhaps with this level of understanding you should have stayed a socialist?

$15,000 for a simple water meter connection !
The actual cost of the meter & the plastic box it sits inside along with the plastic pipe & connection to the street water main pipe is around $1000 including labour in NZ
That’s still a high price but then it’s NZ
The other 14K is pure profiteering
Trump would be proud

And it is so much higher than anywhere else I've come across. That connection price ought to be investigated by the CC.

That contribution is not for the cost, it is a contribution to WaterCare expansion and maintenance costs of the entire Auckland water and wastes water projects - very similar to the ACC parks and Infrastructure contribution which mounts to about 50,000 on a good day.

Hence it is not uncommon to spend 80-100K when developing a new sections or subdividing a piece.

where ever you look, There is hardly a buildable section in Auckland that is under $600K today ( any cheaper than that would be about 50km from the CBD or a steep as hell section which needs another 100K in engineering to build) ... add roughly another 100K development costs and you are away laughing.

Wonder why Akl new house prices are over $1.3M ( excluding apartments and townhouses) ?

I went and had a look at it because I thought you might be talking about a Development Contribution (under the LGA) - but no it isn't, here's the explanation;

In Auckland, an IGC is charged instead of development
contributions for water supply and wastewater. Many
councils outside Auckland require development
contributions under the Local Government Act 2002 to
recover the cost of growth-related capital expenditure on
water supply and wastewater infrastructure. However,
unlike development contributions, an IGC is a contractual
charge.

That's interesting. Were it a Development Contribution, there are some parameters set in statute under the LGA (and strengthened/tightened by National if I recall) that, I believe, would likely provide greater transparency and accountability. Given this IGC is a contractual charge - it isn't governed by the LGA (rather it is contract law).

All the more reason though that it should be investigated by the CC, given WaterCare's monopoly status... but I imagine that might well have already been challenged via the Courts and successfully defended by WaterCare?

Eco bird, do they charge for second dwelling connections? I’m thinking of redeveloping part of the house to use up extra cash and create an income stream.

Hi Rex pat, yes they do if it was to be an income or granny flat, i.e legal second dwelling ... Although in lesser amount and case by case, it has been awhile since I did that but better enquire and ask them directly of what it would cost , AND make sure to ask about the total cost ... I know that water connections will be the same 15,000.

Mind you, most people develop their properties as an additional extension to the house or sleep out without getting into all that expensive exercise.
The difference is that you will not install a proper kitchen, but use a small kitchenette instead and share water and power.
That would save you at least $40,000

@ECO-BIRD .Watercare is a burden on Aucklanders, the ex- CEO was on a salary of $900,000 per annum , (yes $900 k ) about double what John Key was earning as PM at the time .

How is that even possible that a Civil Servant , who is basically in sheltered employment , where all decisions are made by a committee so no one is held accountable , be earning such a salary ?

@Kate , thanks for that , yes CC should investigate . Council is double dipping , with DC LEVIES plus water connection fees

Yeah components are about $500. We sell them all the time in our company.

The whole Watercare monopoly is a disgrace . The DC LEVY should cover the costs of such infrastructure and the connect fee ( currently $15 k ) should be reduced to $1k

I completely agree.

Going even further - why is Watercare a CCO anyway? Seems to me that might solely be so that contract law applies, as opposed to local government statute.

Northern Lights are you offering to pay for the upgrade of the Waikato water pipe so that new connections can simply pay for the mere connection that all this new waitako will flow to?

Spot on with those new build prices. There are other council charges plus delays that cost too much to even consider building. I just dropped 2 build projects as I got too frustrated plus im unsure what the financial condition of the builder is. There are more of them that will go under and leave half finished houses. Would never recommend anyone to build after my recent experience. No new supply coming from landlords so watching with lots of interest. Thankfully I don't have to sell any properties as I think it's the worst time to sell right now. Rents are looking after more than the mortgage (on my initial costs) and I'm increasing rent every year to keep up with the market. Not being greedy but im not doing this for charity and that's the reality of renting.

Wow - the associations you've made here with respect to cause and effect might be questionable (at best)....

If we now lock out investors from the market and more people can afford to become home owners in their own right, then there's no requirement for those investors right? You're assumption is that homes can never be more affordable than they are now and the only solution is to have more investors....its a similar position that some have where the think the only solution to debt is by having more debt....

@independent observer ...........you are missing my point completely .

Firstly by "locking out ' investors , houses will not miraculously become cheaper , nor will they become any more affordable for anyone .

If anything it can only make matters worse , way worse , as some houses that are currently let may be sold off , but its more likely that demand for rentals will push up rents even more as we add more new immigrants.

The fact is , it costs anything up to $3,000-00 a square metre to build , so a tiny 100m2 unit costs $300,000 to build , plus the section at $400,000 and hey presto you have a small unit for sale for $700,000 plus GST and there you have it , a small unit for the Average Auckland price of just over $800k .

There is no way round the problem , the price is set by the costs of land ( the section ) , the exhorbitant costs of materials and an over- the - top wage rate .

Right and Tulips were worth 10x the annual individuals income at the peak of the mania - this certainly didn't become the price floor. It was recognised in time to be irrational - so why not Auckland land prices?

Second point - I thought markets were driven by 'supply & demand'? And if 40% of buyers in Auckland the last few years were investors, imagine what that will do to prices if 40% of the demand suddenly steps aside?

Perhaps residential landlord investors should be treated like foreign buyers in some markets.....they can only have a rental via a new build so they are actually adding supply to the market, not just demand......

But who wants to hand over a brand new house to tenants to trash?

Get out of the slumlord mindset and you discover there are good tenants that look after houses too. Just need to a be a little pickier with your tenants (and have quality properties to attract them in the first place)

@independent observer ........We are not at odds , I also want prices to fall , I still have 2 kids in their 20's at home , and its a pain the the backside , I want them out , on their own and am prepared to help them buy houses .

If the Government helps or offer help , then we are in the queue for 3 houses .

I wish it was a simple as "removing 40% of the demand " by locking out investors , but the truth is those 40 % of buyers are providing rental stock , and my eldest daughter is a renter , she cannot afford to buy without my help .

The Government is only making things worse by trying to "lock out " investors , because the Government cannot house everyone .

Hence my advice to investors , sit on your hands , dont sell if you have a tenant , because Government policy is only going to make the housing shortage worse , and push up both rents and prices .

I think your advice for investors is perfect for FHB....why make an investors problem that of the younger generation? Its an older generation that has caused this mess (exact causes are hard to identify, but greed and fear are in the mix) - so it would be very unfair for a younger generation to take on that burden via debt of an older generations greed.

Oh for goodness sake, you cannot compare Tulips with Houses .......... you dont live in a Tulip .

House prices are not set by speculators alone , and for most there are very real reasons to buy a house, like a place to live.

Frankly most people dont give a toss about tulips , but we all need shelter

If we want a serious drop in house prices we need to make 60,000 to 100,000 sections available from Kumeu to Helensville , very soon , and bring in 100,000 temporary workers from Asia to build the houses in a massive Public Works Program

It will never happen

You can compare tulips to houses to the extent that the tulip craze (disputed) shows people behave when confronted by price increases. Logic dictates that all other things being equal the faster a price rises, the more likely it is to drop/stagnate. But people see a price increase and take it as evidence that there will be more price increases.

The boom bust cycle has been demonstrated repeatedly throughout history and every time people say ‘this time is different’. The USA, UK, Spain and Ireland had a massive property bubble in 2007 followed by a crash. Now we have a property bubble and on this very forum people say ‘this time is different’ because Auckland is special. It’s ridiculous.

I think you are mistaken here is comparing the GFC with our decade long undersupply of housing. Its not a question of "its different this time" the question is weather or not its "the same in the first place".

I agree that house prices are overinflated and are in need of correction, but a martial drop in price and a stagnating price are worlds apart.

You're right, not directly - but it highlights the behavioural finance aspects of a market and how people might behave.

You guys are very idealistic in your assumptions and calculations ... you depend on a lot of IFs and brush aside the reality that is right in front of your eyes.

Sorry this will be long but I will try to be to the point.

Have you ever asked yourselves why the Market is not and has not behaved according to what you are assuming as in behavioural aspects and the rest of it ?... well yes I hear your answer to that , it will take time !!

OK,
Can't you see that house prices are stable and rising ( albeit very slowly) month after month ? July 17 is still the bottom so far, REINZ numbers not mine !

Can't you see that there is no stampede rush to the exit doors and selling cheap cheap? ... in fact selling prices are holding up firmly todate in auctions or elsewhere?, again REINZ median prices are higher.

Don't you see that any Gov plan to make a tiny dent in this market is 2-5 years away ( if there was a good one or ever happened)? .. You surely stopped believing in the 100,000 home KB shambles by now . eh !

Don't you take into account the 35,000+ organic growth per annum in new housing demand generated by our own youth leaving home, growing up, studying, or starting a family ? - that is real demand and increasing every year.

Can't you see that we are still adding 65,000+ new immigrants a year and no one is doing anything about it? Not sure if the Pacific and refugee quotas are in these numbers.

Can't you see that we are building almost the same amount of houses every year ( total new consents only up by 3% over last year !)

Don't you know that we are 45,000 houses ( some say 60,000) short right now? .. and we need 15,000 to meet demand every year? and we have been building only 11,000 - 13,000 at best for many years now ?

So how can supply catch with up demand with all the above ? - By Hope or Prayers ? Do you really think that TAXing anything could provide an answer or a solution ?

It is absurd to assume that 40% of investors would sell and leave the market anytime soon and that will solve the pricing or availability issues - you guys think that everyone is as "Clever" as you are ? --- you don't seem to understand why people invest in property!

If 40% of the market ( Investors) "sold" tomorrow, and these went to FHBs as you think and hope ... then you will have at least 25% of the tenants of the 450,000 rental properties in NZ on the STREET ! ....

Yes, I know IO you don't believe in that and you think that it's a zero sum game --- Well , it's Not, and it will be a disaster .. even the noobs in this CoLs know this one !! and they are still willing to have a crack at it.

Want a solution ? solve homelessness first .... the GOV has the cash !

GOV should allocate and develop its own land (or council land) and put ready made 80 - 100 sm 3/4 bedroom premade / prefab units on them to lodge all the homeless people in the space of 12-18 months -
( Businesses like Keith homes and others provide these nationwide to NZ standards) .. spread the civil works on multiple contractors and sites to finish the task in parallel ASAP.

Gov pays for the Units in full - recoups its cost from the bleeding of AS , WFF, and motel expenses (paid to these people now) within the next 10 -12 years ..... so they become HNZ properties ...

These Units cost about 100k -150K each ( cheaper en mass) and they can order 5.000 - 8,000 of them built in NZ in that space of time - that will house 30 - 40,000 homeless people - and will employ thousand of semi skilled workers etc. Almost all homeless people with kids cannot live in apartments or shoe boxes, they need space.

Done, No more moaning about poor, sick, and hungry children and car dwellers and all that crap PT annoys us with every time he speaks to reporters - so if there was a Will there are many solutions and Ways. they could have done that instead of stuffing around chasing their tails in the last 8 months !!

Now, should they like to chase SOME investors out of the market to make room for FHBs as they are dreaming of, then they should build much more of the above prefab units first ( or some refugee camps) to accommodate the thousands of beneficiaries who will become homeless.

I am assuming that you know which benefishieries I mean -- eh? these are people who live on WINZ weekly paychecks and have at least 3+ kids and do not even have a bond or dentist money -- These people can never buy a house IO - and they are in the thousands.

Also, this CoLs should seriously get on with KB instead of mucking around and scaring investment and businesses then inviting them to PPPs.

I hope that all young guys could think objectively about the above and weigh the factors affecting market dynamics before crying wolf or repeating stupid comments made by some market illiterates here and elsewhere, there are market realities that cannot be changed even by tough regulations!

I remind you again with Newton's 3rd law : For every action, there is an equal and opposite reaction.
some call it " unintended consequences ".

Last word to FHBs, Buy now if you find what suits you if you can secure a loan, or it will cost you more later or maybe miss out and wait longer - the housing market will become tougher going forward ... current solutions and plans do not make sense and don't promise a rosier picture in the short term.

Eco Bird, I sense an element of caution creeping into your forecast. "July 2017 low still stands - (so far)"

I sense elements of disappointments creeping into your comments RP :)
take it easy

Remember Birdy it takes at least 2 years of stagnant house prices for property markets to really slip in their prices. We're only through the first year and a few months so we still while to go yet.

And obviously your prediction of the Auckland property market having 'bottomed out' last August was completely wrong, the market is still slipping albeit slowly until the foreign buyers ban is enforced.

LOL, you better go to Specsavers ....

Maybe you are confused with the Canadian prices!

look well in the charts above, and see where the bottom is ..lol

You can't always stay in denial Birdy, time to face reality and the facts.

Do you even know what behavioural finance is? Lets not confuse economics, finance and psychology with physics (in reference to Newton) unless you intend on heading out and hitting market prices higher with your sledge hammer?

Yeah some comments are way out there

(a) Restrictions on land use around city boundaries cause higher prices for land within cities ( a given )
(B) Building Intensification in cities does not create better quality of life in cities nor does it create better economic outcomes than simply developing green fields. Rather intensification creates congestion and demands more of all forms of city infrastructure. I’m told Auckland with a mere 1.5 mill pop has traffic problems you’d only see in much larger pop cities.
(C) The building supply duopoly strangles the ability to keep costs of building materials down to acceptable levels along with lack of mechanization within the Auckland cottage like building industry means longer construction times and less volume.
(D) Lack of enough highly skilled trades people ( there are a few women now ) causes delays in construction time tables & without importing labour has remained a problem due to lack of apprenticeships for decades now.
(E) Auckland City is carrying extreme debt which is costing millions a year in interest and a government that fails to address this fact instead requesting Auckland find matching funding if government will contribute to new infrastructure expenses.
Auckland is carrying so much debt it’s only a billion less than the city of Toronto with 5 Million pop!
Auckland has no way to pay its massive debt and can barely service it.
Jacinda & Winston & Co better talk with Phil and. Work it all out now rather than tinker
I love Auckland it deserves better from central government It deserves the rest of NZ to stop bagging it needlessly.

Regarding B, couldn't you argue the traffic is so bad because of the lack of density. You can't just keep building outwards forever. London is only 50% bigger area wise than Auckland but has what 5 times the population? It's that density that allows for better public transport options.

Yes your theory is very good as I'm sure we have thousands of renters sitting on 20% deposit even at 30% lower prices. Get real mate, they will still be renters as people don't have that kind of deposits. There are few who choose to rent and may buy if things go down by that much which is very unlikely. We (Auckland) simply don't have enough houses to accommodate our growing population.

Go educate yourself:

https://treasury.govt.nz/publications/staff-insight/are-today’s-young-people-super-savers-or-splurging-spenders

Your story would make more sense if the trend has obviously changed with the change in government. The market turned sideways well before that, this is just more of the same

Given that many here like to promote weak interpretations of cause and effect when making an assessment of economic and political events - what about the theory that the sole reason the National Party was so popular the last decade was simply luck in that they governed in a period of falling interest rates causing a false sense of prosperity, growth and wealth? When in reality their policies did nothing, they simply rode the wave of cheap money which caused average joe bloggs to accidentally associate the government as the cause of their sense of improved well being? As soon as the rate of cheap money flowing into the economy slowed down, and average joe bloggs realised the party might be over, they looked for salvation from the left.....

Of course I have no factual evidence to prove this association, but neither do many other comments here about their theories of how the National party were gods who could do no wrong....any thoughts?

Additional to luck I would say National knew this party could not last forever but instead of changing too much just rode the wave as you say. The left needed the votes so came clean on what was really going on which was the fact the party is over folks. They almost blew it with the tax discussion before the election but held on. Unfortunately they have little chance of correcting things or getting NZ to a point of being able to sustain its total population. However for the people the COL has at least been open even though they show weakness at every corner. Roll on the down turn, lets get the hangover started. I love spending money, even if I don't have it, especially $2:50 petrol, bring it on!

So the GFC was "simply luck " was it ?

You'd have to ask the bankers that.....

Pretty much, China held up, therefore Australia held up, there New Zealand held up.

National did a good bit of pruning financial expenditure but they also used the massive cushion labour built by paying down debt.

More an Atlantic Financial Crisis than a global one, really.

LOL , apparantly it was

There was skill. Don’t forget John Key convinced New Zealand that they were indispensible. Oh and he stole all Labour’s policies.

The policy chaos is not new, we had the original bright line, 10-20-40% LVR's, LTC's, Chinese capital flows, SHA's and healthy homes all trying to deter property investment, yet in the face of it all, property prices have held up remarkably well.

Lets not forget that about 40% of Kiwis are renters , and that massive population of people are almost all dependant on investors who provide housing stock for rent .

Still trying to push the if investors leave the market there will be no houses myth I see.

Sadly entirely predictable, but no truer now than it has been for the last 6 months you've been pushing that line.

PS: those investors are dependent on buyers if they want to get out of the market.

Fortunately there are 125,000 new immigrants every year to buy those houses. Doesnt help the locals though who can't find a place to rent, can't save for a deposit, and can't qualify for mortgage financing.

You can't 'help' those 'locals' anyway, living on handouts is all they are capable of.

Yep, but investors getting out of the rental market does not change the number of houses. There is a supply problem (but not as bad as some make out), the real problem is affordability.

@Pragmatist , my rationale may turn out to be wrong , but why would investors with tenants 'leave the market " or suddenly be dependent on buyers , especially if they have a tenant , and with such huge demand for houses to rent ?

Inward immigration remains so high its out-of -control in my view , and demand for rentals is still too high .

Any changes to the tax treatment of losses will be phased in as is always the case

A CGT takes up to 3 years to fully implement and is not as much of an disincentive to investment as you may think .

Banning foreigners is more likely to cause capital constraints than help the problem get sorted

You/Eco bird and others are the ones that keep going on about landlords leaving the market and all the houses suddenly disappearing.. No reason for longterm landlords to leave, only those that are feeling the pinch on negative geared properties and were hoping for capital gains.

But if they don't leave then how are house prices going to crash ¯\_(ツ)_/¯

Don't need landlords to leave the market for it to crash, just the usual turnover from people that need to move due to work/relationship breakups etc sudenly discovering there are no buyers.

I have repeatedly said I don't think its going to crash.. unless there is some external event.
It think its going to stagnate and creep downwards for the next decade while incomes catch up with stupid house prices.

@Pragmatist can you explain to me why you believe landlords would suddenly leave the market and prices collapse ?

Of course houses are not going to 'disappear' but houses coming on the market at affordable prices are sold before the auction in many cases. It may be to another investor , or occupier ......... its a zero sum game

There is no evidence of what you refer to as a 'pinch "

Mortgagee sales are at an all-time low

The banks insist on a 30% deposit ( RBNZ Rules) for investors, so most new investors have a lot of cash invested in the property , and if they are in trouble thats different , but most are not showing evidence of stress ( Bank non -performing Mortgage debts are an all -time low , the Reserve Bank publishes the data )

With current immigration levels , we still have huge rental demand , and that's not going to go away.

New builds are so expensive its not funny , and that's increasing the value of existing stock.

I have never said landlords are going to leave the market en mass, so you can quit with this strawman already.

No you might not, but some like I_O did and keeps assuming that life is that simple.

Without going to the extremes of a discussion, because that is unhelpful .... most of us Investors are saying that the new negative gearing regulations will force some Landlord to quit the market as it becomes too expensive for them to run this business ( just like any other business) - for example so many businesses will go to the wall if you put up minimum wage by another $10 / hour.... there will be so much they can pass to customers - rental is no different.

Some new investors with 1 or 2 properties rely on a tax refund of maybe $7K - $15K pa or maybe more which helps in covering running costs and expenses of these rentals. some might not be able to continue coughing that out to sustain the business - so they might take the CG made in the last few years and quit.

Hence our argument is that these properties will be sold to the people who are capable of buying in this market ( high income, credit worthy with deposits) - the result of this change of guards will be changing the status of the property from a rental to owner occupier ....

This will surely put out hundreds maybe thousands of tenants on the streets as there isn't enough new rentals added to market and rents will be creeping up.

Hence a double whammy, decrease the supply of rentals & increase competition among tenants, And increase homelessness as HNZ is struggling as it is...so where is the benefit?

Most seasoned landlords are in for the long haul and will not sell ... they know too well that the weather could change and properties will remain the only valuable assets in the market long after the noobs of this CoLs are replaced and gone.

But you just said that a landlord will sell to an owner occupier (who presumably is currently renting)....so how is it a double whammy? Renter becomes owner occupier so no longer needs a landlord - less demand on available rental stock, no increase in rents then?

Problem is ................... we actually need people who are stupid enough to want to be landlords . We would have a real housing crisis if we had no landlords .

Twyford is looking so out of his depth in the housing minister role.
How he can continue to change things is unbelievable and he really hasn’t got a clue.
Time he stepped down and got a real job.

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Amazing.....you do a word swap of Twyford with Smith, this comment could easily be from 12months ago and still read perfectly.....what are the chances!

Turns out extremely high, since Smith was and Twyford is incompetent and boats full of cheap labour keep sailing into Auckland Harbour. Nothings changed.

are you going to beat yourself up for the next 2 1/2 years?

I feel for you

It may be that a larger percentage of transactions are reverting to once again being underpinned by New Zealand wage and salary earners.

As JetLiner alludes – if the above is the case then prices are probably still somewhat overcooked – and Auckland done to a crisp.

I don't think you appreciate how much people can afford to pay for a house. Houses are reasonably affordable, even in Auckland where a good gardener earns $40 per hour.

We put on a new roof just before we sold in Auckland; one roofer came to give me a quote and he was driving the latest Range Rover HSE. Naturally I gave the job to a guy with a Great wall ute, he did the job himself and a good one too.

I'm guessing he was still making a lot more than $40/h though.

$40/hr that's before ACC levies, insurance, running cost and other and overheads.. I am guessing that will leave him like $25-30/hr before income tax.. That's bugger all for an expensive city like Auckland.

He should take up landscaping, make more than that without the hassles of being self employed.
https://www.trademe.co.nz/browse/categoryattributesearchresults.aspx?sor...

Correct. See my comment before in this comment thread.

Strangely enough, thats simply not true, interest.co.nz affordability series for example says otherwise. Even real estate agents are saying otherwise, thats why the sales volume is down, plenty of people can't get finance, its not like the underlying demand for home ownership is down, people just aren't able to pay current Auckland prices when banks wont lend them stupid amounts of money on typical Auckland incomes.

It's still around 40% of take home pay, and lets not forget that Aucklanders take home a lot more pay.

Its based on incomes for that area. And 40% is the limit of affordability.

Best not to try and explain Math or Facts to skudiv, seems to do more harm than good.

An Auckland household could spend 40% of income on housing and still have MORE left over than the average Northland household even earns to begin with.

So what, Northland households probably earn 1000% more that Nigerian households. What can we take from all this, don't live in Northland and definitely don't live in Nigeria.

Well that's just your opinion, sadly lacking facts and maths.

But of course my dear, one must always communicate at the same level as the one they are communicating too.

Great call!

The median weekly after tax income for a first‐home buyer household in Northland was $1,502.52 in February.
The median weekly after tax income for a first‐home buyer household in Auckland was $1,622.72 in February.

From interest.co.nz rent or buy series from feb 2018.

So no, you need to connect to reality.

Having lived in Northland, I can tell you the median income is no way near that high. So I wonder where they get their data?
http://nzdotstat.stats.govt.nz/wbos/Index.aspx?DataSetCode=TABLECODE7480#
Median income all sources 1157 - Northland v 1778 in Orcs
Must be all those rich, property investors in Auckland skewing the stats for the non FHB's

Yep, no point including the long term beneficiaries, because there is no way they are going to be able to service a mortgage. But even in northland the unemployment figures are dropping.

the interest.co.nz figures used LEEDs data from stats nz.

PS: did you forget to factor in all the under the table money from the Northland green economy?

Clearly you are making up statistics - Auckland wages aren't that high relative to other regions - certainly lower than Wellington for instance. High proportion of manufacturing, tourism and transport in Auckland which arent that high.

Clearly you are making up statistics - Auckland wages aren't that high relative to other regions - certainly lower than Wellington for instance. High proportion of manufacturing, tourism and transport in Auckland which arent that high.

Indeed Pragmatist - and then of course there's the small and possibly inconvenient matter of coming up with a meaningful deposit....

Which as we all know is unpossible /s

I do contract gardening work at $60+gst , with annualised costs at around $20 hour for everything(truck r u.c..power tools.acc.insurances.diesel.petrol.dump costs.acountancy charges.holiday pay da-de-dah.).So I concur that there might nearly ne $40/hr in it.probably net $25.00. But i pay myself less.As i am single a net $25 hour on an effective 30 hour work week charged(55 hours out of home to get that 15 hours of driving time.., 4 weeks off work in winter. Rainy days etc).that.will not pay any mortgage on anything, not even leasehold.That is the reality.
To keep quoting 40% of those living in nz are renters is also disingenuos as renter households have 50% more people in them compared with owner occupiers.Over half of all people living in NZ are in a renting situation.And i do not think i will get to 65 in this work.There are a lot of people working very hard getting no where, With no prospects of it getting better.

I know people are getting paid $40/h as employees, and employers are struggling to fill positions at those rates.

FHB all the signs are favourable for you.
Year on year; Auckland City down $35,00; Manakau down $10,000; North Shore down $12,000; Papakura down $20,000. Modest gains in other Auckland urban regions.
To cheer you up and give you a good weekend; Auckland City down $33,000 month on month which will probably off-set that rent and still leave a bit for a couple of lattes .
The trend is a cooling property market especially in Auckland and while these figures are for a month and therefore abnormalities (e.g. a landlord unloading a number of rentals urgently or a lack of high value properties sold) they are consistent with Quotable Value whose are based on a three month sales period.
Having said that, it is unknown exactly when a market is going to either peak or bottom out. However, a number of factors - such as the winter season, government actions such as ring fencing tax losses for landlords and possible capital gains tax and less interest from property investors - suggest a further cooling in the short term (six months) at least.
So FHB, take your time, look for that home that really suits you, and put in a hardball offer.
Don't get conditioned by agent speak such as "We have other people interested"; in such a case try responding, "Ok then, we will have to go with that other house we are looking at so we don"t miss out on that" to get a stuttering back pedaling from a suddenly white faced REA.
Remember at auction 70% of vendors are not getting their minimal price, and that is after further conditioning by agents when bidding didn't reach the reserve.
So go home tonight, get the homes classified pullout from tomorrow's Herald tand start to see a really great winter ahead of you for buying. But don't rush, be hard-balled in any offer and don't be disappointed if there is further medium term cooling as you are in it for both intrinsic reasons and the long term.

Completely agree.

Having said that, it is unknown exactly when a market is going to either peak or bottom out. However, a number of factors - such as the winter season, government actions such as ring fencing tax losses for landlords and possible capital gains tax and less interest from property investors - suggest a further cooling in the short term (six months) at least.

Excellent advice to all, especially to FHBs. Tide is slowly, but certainly turning in your favor. 3 years of patience is going to pay in the comings months. I for one, self pat on my back.

"So FHB, take your time"

Sellers get in quick, get those capital gains locked in before prices go down, and the long plateau sets in.

Reported elsewhere *coughsnannyheraldcoughs* ToM days rose by 2 days also from 34 days in April 2017 to 36 days in April 2018.

ha-ha, yes. "One Roof" also reported that "house sale market" will not recover till spring as vendors are reluctant to list in this market! Can you imagine all those extra listings added to overhang still there from the "hot" season lol!

Strange as it might seem to some, this is becoming the market I may well list in this spring. My reasoning being I will be able to sell and then take my time to purchase my preferred property. Might even rent for a while (or house sit) while I take my time. No worries about the market running away or competing with bucket loads of john key voters. A declining market is the best time to upgrade.

rastus - great idea. Sell your house now - I'll buy it if it's Central Auckland or within 8kms of City. Need minimum 600sqm land, don't care about condition of your house. Will pay you 20-25% below 2017 CV - cash unconditional. You can bank that and buy your dream house when price fall 40-50%.

Do it my brother, it's a win-win.

When going over the cliff, one would start with some nice gentle slope and then the big one!

Then there's the teetering bit

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Sales volumes in Auckland were up 2% from April 2017 to April 2018, to 1,854.

Yeah, and sales volumes in Auckland were down 10% from March 2017 to March 2018. (2712 down to 2434).

Auckland Sales Volumes:
May 15 - Apr 16 - 30612 Sold
May 16 - Apr 17 - 26116 Sold (Down 15% on previous)
May 17 - Apr 18 - 21672 Sold (Down 13% on previous)

Volumes in Auckland are down Down 30% since May 2015.

Yes there are less houses selling, so?

If you read the article, even in it's amended form since my original comment, you would have seen that the article suggests there's a "Gradual Recovery" of sales volumes, where Auckland sales volumes have increased 2% over the year. They haven't.

Working on YoY figures doesn't tell you what's happened in the middle. YoY Auckland sales volumes are up 2% for April, but YoY figures are down 10% for March. So what is it?

When you buy or sell a house do you really want to know how many similar houses have sold in the previous month/year ? No, what matters is how much you pay or get for it

That's a very simple mindset to have when selling a house, particularly coming from someone like yourself who puts themselves out there as a "big property market know it all". Just ignore the market feedback, your house is special.....

I am Falling . I am going backwards, Its all down hill for me from here. I am feeling weaker by the day. This winter could be the end.

don't worry you are still being supported by a few folks...

just depends if they can withstand winter.. hopefully the have taken the flu jab... lol

Why do i have a mental image of a timelapse series of a cheer team holding the head cheerleader overhead, and as the timelapse progresses it becomes obvious the head cheerleader has been on the KFC and Coca-cola diet for far too long..

Where are you tothepoint?
Vendors desperately need your optimism to console themselves.

he and the kid are having a serious discussion

You should put warnings on posts like that, i almost gave the work laptop a coffee shower. The thought of a serious conversation involving the boy.. haha

Talking totheboy.

He's trying to work out what happened to his predictions of the market taking off again "after the election" and then "in the summer selling season"

Auckland house price go up, or they flatline, they don't crash - despite what the doomers keep saying. If you stick around for long enough you will see it is true, and if you look back historically you will see that it is true.

Ah, of course, Auckland is "special" or do you prefer "magical"?

....another Utopia based Zombie whose head is so deep in the game he sometimes forgets to eat.

Name calling is certainly an effective way of making your point. Where did you learn that?

skudiv or is it skullduggery.

What about prices when adjusted for inflation? I'd say there are likely significant periods were Auckland house prices haven't made real (capital value) returns.........sure the last 30 years have been a dream run - but have we ever seen interests rates do what they've done since the 1980's until now before?

http://3.bp.blogspot.com/-Scat_VEIW9I/URrH6UrACXI/AAAAAAAABqs/I6shP2ednN...

One could argue house prices are similar to bonds....interest rates up, house price down, interest rate down, house price up. Now that we've almost hit zero on the interest rate front what future does this leave for growth of house values?

The good part about inflation is that combined with debt, it actually works in your favour. I know that in the 80's inflation basically paid of mortgages for many people. You could borrow $3000 to buy 3 deer and a few months later sell 2 deer for $3000 paying off the loan (true story) Of course the doomers were out in strong force encouraging people to give up....

Skudiv, but that's the entire point...there is no inflation to speak of in NZ currently... People have giant debts and very low wage AND house price inflation to eat away at that debt. Now that the housing market has slowed right down, the capital in the housing market is dead money, it might be losing value.

In which case mortgage rates are going lower, which does the same thing in a different way.

Skudiv, not necessarily because at the same time as rates have come down, length of mortgage has also gone up. Over the life of the mortgage what is the additional cost of those extra 5-10 years paying mortgage debt?
Also, whilst mortgage rates are low now, they are historically low. I do not accept with any confidence that mortgage rates are going to keep going lower. They may, but they also might not, there are opposing forces at work.

Opposing forces indeed, on one side the people, business and governments who have debts and on the other side, those without debts. Not exactly an even match up in my books.

That is exactly right, however, property market can see marginal drops from time to time, but for it to crash there needs to be something very significant, shutting out the investors for the past year and a half has resulted in market flat-lining. If anyone is waiting and hoping for it to all crash and burn, keep waiting. I remember end of 2016 when a lot of speculators here were saying by the end of 2017 prices will drop significantly, still waiting for that, or maybe at the end of 2018? Personally I would like to see the property prices drop so it provides opportunities for a lot of people out there but just like many we are hoping to catch that lucky train.

You can go back to 2008 when the world ended, and yet Auckland house prices started another spectacular leg up.

skudiv,

1/ What were the fundamentals behind this this post 2008 price explosion from already lofty prices?

2/ What fact based fundamentals will support the next leg up you forecast and when is it happening?

Please spare us the "high immigration" spiel because immigrants are finding that our house prices are over valued by world standards too.

Can you offer all the DGMs out there something fact based to support your views. More than "prices will rise without a crash because they always have" Note also mortgage rates are dropping in recent months with no effect on house prices like they have done in the past.

skudiv?

I think your flatline might need recalibrating

Clearly that's why not everyone is rich mate.

Sales volumes up. Probably all those foreign buyers rushing in now that they realise that Labour will never do anything about banning them.

When will we ever get a decent Housing Minister ?

Nick Smith was hungover until around midday , so he really only was a half-day employee .

And Twyford is a clueless idiot , living in a Walter Mitty world of make-believe .

Probably about the point the bubble bursts - investors will label the minister the devil, FHB will label him the messiah....

Running at 37 comments per hour. Lot's of new views being expressed, not. Keep it up.

Scroll on by then dude.

Rex Pat, when you're finished here, shuffle down to your gate and count red cars. Tomorrow, yellow and so on.

To be fair though, your comments are generally the same old thing poppy. Every time your name pops up I think of Fraser from Dad's Army wearing a tinfoil hat with early-onset dementia.

https://www.youtube.com/watch?v=sxqvwkmTNy8

(sob) please Sir, not the naughty corner, it's too crowded there. Seriously though, my comments are consistent and that's what matters. Please feel free to tune out.

Yes, consistently wrong.

Didn't mean to hurt your feelings though - Fraser was actually one of my favorite characters. Just because he had a screw loose doesn't mean he wasn't entertaining.

Cheer up retired-poopy, take some comfort in the fact that the property market is doomed!

Parts of Auckland have dropped significantly since I've been a member here. "toppy" priced property is largely an investment no-go zone. My comments as a born and bred Aucklander have (consistently) formed an accurate reflection - tick :)

Hahaha thanks for the laugh BLSH (the link that is)

Post # 212 - are you all done? Did anyone change their view? No, didn't think so.

Rex Pat (aka Ex Pat), you continued ad nauseam with months of "Taxinda" laced tirades. Even a hypocrite should know when to give it a rest.

Retired Poppy, I’m not excluding myself from this. In fact my AI bot comment mentioned I could often be replaced with one given the lack of diversity in my comments. I’m just pointing out the incongruity of the number of comments to what was a non descript slice of news. Commenting appears to be a release for most, as is posting on Taxinda and COL for me. It’s healthy to get it out. I don’t imagine you will stop any time soon, neither will I. In fact I’m heartened to see that the Taxinda and COL monikers are gaining wider use in MSM.

Phffffffp ! .... so Auckland house prices fall by $5k ?

Do me a favour ! ............. and I mean that sarcastically

After" increasing" by $320,000 per annum since the last Auckland Council rates assessment valuation ( in our case ) , they now drop by $5k

The market has a long way to go to get back to reality

The market is reality. Everything else is opinions.

Eugene Fama fan?

So Auckland's market has fallen 5.6% in 13 months, which is 6.7% in real terms (inflation adjusted)

I suspect this is the new norm, and may well continue for a decade.

That is also my pick, barring black swans, and other more predictable factors like the US going into recession or an equity market correction/crash.

... or the Russians launching WW3 ... a cyber-war attack on the world wide web .... shutting down commerce across the globe .... blacking out communications ....

Reckon it can't happen ?

..... hmmmmm ..... we'll need to find pencils and paper gain ... anyone remember how to use carbon paper to make duplicate copies ???

A question for the economics and investment-minded: Assuming it doesn't go down much (yes, big assumption), for how long would the Auckland market have to remain flat for prices to return to historical averages of affordability? Also assuming wages will rise at historically average rates while market remains flat.

The last I heard, it was 20-30 years before wages would catch up. Politicians talking of wages catching up were politicians avoiding the issue, basically.

The likelihood of a gentle deflation back to historic averages via wage growth is precisely zero

It'll only take 25 years if we get 3% wage inflation AND 3% house price depreciation..

Oh, is that all? 1/3 of a lifetime. Ok then...

Based on this statement form the stats nz page: https://www.stats.govt.nz/information-releases/labour-market-statistics-...
"Average total weekly earnings for a full-time equivalent employee increased 3.9 percent, to $1,204.85."

And and auckland median house price of $850k, assuming you mean long term average of 3 x median wage = median house price.

And long term wage inflation of 3% as recently discussed.

The answer is 51 years..

Note: wage figure i used is average, not median.

The market will keep flat as long as restrictions are in place, owning property has always been a struggle by many, and now beyond, wages will never have leverage on property affordability. Based on my opinion I would assume property market wont be moving this year, right through to next year, you may also see marginal decrease in values through out. As far as spikes in values like the last few years, wont be happening for a long time.

That's a question for the theoricians who sit on thier hands. It's also a pointless question. House prices will never return to "historical averages" why would they? ( because I can't afford them is not a reason)

House price inflation will never return to "historical averages", why would it?

This game is fun!

Just to clarify, we're talking about house prices, not house price inflation as you say, it's not the same

No, we're throwing out stupid statements about what the future holds without any logic to back them up. Its an easy game, but there is no winner.

They would because something usually happens where they do, that's why it's an historical average. See: Ireland, US, Spain etc. Never happen here or Australia though, right? It's different this this, there a million reasons why it's different. Oh wait, it's not different..

I think the banks will have to answer that question. Money, it seems, is everywhere and cheap! I love to spend and hopefully the bank will say "bigspender, glad you could make it, but before we give you your $850k +/-5K extra needed to buy your NZ house you will need to go through our stringent loan qualification. Do you have 10 cents in your pocket? We'll no I don't sir, I deposited this into this bank yesterday. Good to hear, you are approved. Good luck with you NZ dream! BS"

So end of the day more bad news for our friends tothepoint, ecobird, skudiv. & Yvil

better luck next month, youre going to need it.....

Why?

sorry i left your name out, i will edit you in, hope you feel better now :)

nice!

Thanks for adding my name (sort of) although we're not friends. Also it allowed you to dodge the question, "why?"

Auckland houses are only worth what people can afford to pay and over the last 5 years they could afford to pay lots because the world was awash with cheap money and banks eager to lend. The world is no longer awash with money so now lets see what those Auckland houses are really worth.

What makes you think banks aren’t still falling over themselves to lend?

I'm sure they are keen to lend, thats how they make money. But there are a bunch of 3 letter acronyms getting in the way... LVRs, CFRs, threats of DTIs.

N=1 we earn $200k + per year, we have a $600k deposit. Plus various other savings and investments worth another $700k. We were looking to borrow an additional $500k or so to buy a house. We have no debt, and no huge outgoings.

When we first looked to get a mortgage in 2016, banks were falling over themselves to lend us money. But you'd assume that right? We're desirable borrowers.

Then we actually decided to get pre-approval so we could look to buy this year and the banks said no. Why? Because we run an overseas company. Never mind that the company won awards last year, that we have turned increasing profits since 2011. Computer said no.

We could go to second tier lenders or HSBC and probably be fine (although none will lend based on 100% of our income, they will only lend on 50-60% of our income. So we just decided to sell our UK home to buy here (plus the UK housing market has peaked, we're happy to cut and run and hate being landlords).

We're only one household so wouldn't want to imply any generalisations but we certainly have noticed a difference in lending environment now than 2016.

Anyone else noticed any tightening of lending criteria?

The Banks tightened up credit last year re offshore income. It was probably targeted more at Asian based income. They’re also noticeably more reluctant to rely on extrapolating income for older borrowers (smart considering my current situation]. Expect more income verification, less for older owner occupied borrowers and less tolerance of interest only.

Well, ours is a UK ltd company and we earn in GBP so totally understand why banks would be twitchy about us. Brexit continues to prove itself unpredictable beast ;-) although thankfully unlikely to ever impact our particular market.

We're just lucky that we have means and not need a mortgage because we love running our own company and would hate to go back to being employees. *shudders*

Christchurch market is the best performing market in the country currently.
Enough houses for everyone if they have saved enough for a deposit, probably too many new ones built but that is because so much land has been rezoned for the next 20 years years or so.
Affordable well built and warm rental houses generally!
Good performing yields for experienced intelligent landlords!
Christchurch property market is the envy of Auckland no doubt and with the population still growing will be the city of choice for many going forward.

I would say Hawkes Bay is probably the best performing housing market in the country currently. Good capital gains for landlords and rents are rising also. Nice warm weather certainly helps to make a place like the Bay so popular. No wonder those house prices are well above what you need to pay for houses in the South Island which is so much colder especially in winter. I can only imagine that those people who have left Auckland and Christchurch for better pastures certainly will agree with me.

Careful....you are about to be removed on the basis that all you do is post advertisements for the Christchurch property market (daaaaaaaaaaaavvvvvvvvvvvvvvvvviiiiiiddddddd.........where are youuuuuuu)

Rastus, the site is designed to help people make financial,decisions, and that is what “The Man”does.

Only fools would follow your advice The Boy. They would be better to follow advice from investors in Dunedin for a start. At least their values and rents are rising. You are a one trick pony and the trick you play is not one that one would want to follow as it has been all down hill in recent years. Hence you are now number 17 in New Zealand house values wise. You will deny this of course but the official data is there rents wise and values wise.

Gordon, if the fools follow “The Man” they will become financial independent within a few years and be able to leave any full time job if they are prepared to listen!
Dunedin is not my cup of tea.
We are professional,landlords that like to look after our assets as well as get great returns with the capital gains on paper.
Offer still there Gordon, but we all know you haven’t the guts to take up “The Man’s” challenge or have you?
Come on Gordon, stop baiting the Man and put your money where your mouth is or are you just full of wind?

Number 17 and rising!

Look and look again, before you leap though. Any pre EQ or EQC repaired house is really potentially unsound. Not all EQC’s fault. There are plenty of opportunists and shysters about too.

I am really amazed and scared about the Christchurch market being classified as "best performing". IMO the discounts and reductions being offered represent losses and unpaid contractors. Giving free rent at the beginning of a lease is a loss to the landlord that is never recovered. Charging the owner and not the tenant the letting fee is a loss to the owner. Less profit to property investors eventually equals less money being reinvested. The trouble with these swings and surges is they can take years to show up and by then a different set of conditions are blowing in our face. It is hard to smell the roses when our noses have been punched.

Property Leader, We give no free rent to anyone.
If tenants can’t afford to pay from day one and haven’t got great references then we wouldn’t bother with them.
Money to be made still in Chch and is based on solid business foundations and nothing over inflated!
Positively geared and capital gains are assured providing you buy well!

... " the city of choice for many going forward " .... still looks like a bomb site .... with a shelled out , devastated Cathedral Square as it's iconic heart ...

Property yields have been steadily falling since the flood of housing developments in satellite towns has hit the market ....

.... those rivers around us that still flow , after dairying has run many dry ... are not even wadeable ....

The artesian water is now so polluted by dirty dairying that Chch is forced to chlorinate its water supply ....

... oh yes ... the envy of the rest of the country .... tee heee heeeeeeeeeeeeeeeee ...

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

Nice summary from our cousins across the ditch from yesterday.

Martin North is a national treasure for Australia. It;s a pity that NZ doesn't have an equivalent. Bur realistically, most Aussies wouldn't have heard of him nor would they have any interest in what he is saying.

I like his analysis but… Why would the Auckland, Vancouver, and Sydney housing markets stall in unison from the end of 2017? Why would the provinces in New Zealand continue to appreciate while Auckland crashes? I like Martin North but he doesn’t acknowledge what’s so obvious to all of us who lived in those cities and been to the auctions. That is that the price setters have, for years, been predominantly Chinese house buyers.

you only have to watch the first 1min 30 seconds...
If government remove negative gearing (penciled for 2019), plus the difficulty to get loans increases (which will be set by the aussie banks essentially as they tighten over there) and interest rates increase (also an outside influence force, Whaadup Janet Yellen) then 75% of the influencing factors look negative...

Yeah I saw that, he’s quite compelling this guy. Although he needs to buy himself a new shirt....

Thanks for the link Clementé, this guy is great, he explains things clearly and in a simple way. Do not stop after 1min 30sec though, watch the whole video, it's a lot better than reading the childish comments on this site

What’s the gig with this oneroof thing, is it NZME doubling down on the monetisation of property porn? It just seems to be a consolidation of other NZME property pieces.

Yes.

NZME are a giant steaming turd of a company.

Real Estate Agents are still marketing property to overseas buyer - infact much more now than before and playing on the fear of those rich foreigners to act fast before it becomes a law. And many are buying though it has reduced and is not because of our government or its poliscy but because of restriction imposed by China.

Labour government has won the election with major promise on reducing immigration and ban on foreign buyer but once in power are playing with the time.

Atleast national government did what they said or did not did what they did not, unlike Labour and its partner who are having cold feet and are trying to delay or if not to dilute the ban.

Real shame for people who voted Labour.

End of May / Early June, the draft will be presented in the parliment but wait and see how the current Labour government plays and delay its implimentation. 1st They delayed from Feb to May by extending the timelimit and now for each process will delay or play with time.............politicians.......all are same.

By giving Time (delaying), governement is helping those with vetsed interest.

How true : Power corrupts; absolute power corrupts absolutely.

yep that one single policy was a major factor in my voting choice. If the current government fails to deliver it's election promise on foreign buyer restrictions then I predict that NZF will get a huge percentage increase in the next election.

Its building up to the big fork in the road. Either a property reset or a wage and price inflation spiral.

Reset will nail the leveraged, but a wage and price spiral will nail everyone/everything and especially punish retired/fixed income (beneficiary's). Cant see Winston or Jacinda leading the charge to nail either of those voting groups. Time will tell.

The reserve bank has a mandate to ensure price stability. So in theory interest rates would be raised to prevent a price spiral and asset values would be the victim.

This of course is the naive view where we don't live in a corrupt, crooked and rigged system.

CPI calculations can be a fairly fanciful and convoluted process – because it ultimately involves and quantifies Government expenditure it has been manipulated in the extreme – ultimately bearing little relationship to the amount paid at the counter.

As for in your face inflation – look to the asset classes – one day this measure may rate as important as do consumables – no surprise that it’s the mis-pricing of the asset classes that does the most damage at the end of the day.

Oddly enough this does not fall within the remit of most Central Banks – and I think in the long run we are the poorer for it.

I still wonder – am I witnessing a relatively slow growth in properties for sale, but a relative surge in rentals.

Arise – the new property owner class – “the reluctant landlord.”

Might be a bit ahead of myself – just thinking out loud really.

I was speaking to a well established AKL estate agent the other day.

The takeaway comments were

-the Chinese buyers are struggling to get funds out. We have known that for a while as since the start of 2017 Chinese people moving funds offshore have had to sign a declaration it isn’t going to be invested in propert.

-there is definitely an uptick in activity but people are being cautious and not over bidding.

-obtaining credit from the banks is much harder than previously. This is part a knock on from the banking investigation in Australia- where 15% of all mortgages issued should never have been but also the banks are wary of increased offshore funding costs. Generally they are being more cautious.

Net result. There is a shortage of homes and private developers are taking a step back due to funding issues and generally uncertainties. Fewer houses are being built in near term and emphasis is now on the public sector kiwibuild- which probably needs foreign capital to finance. Overall house prices will probably remain at current levels but to be honest not my problem. I own my home outright and not moving for probably a decade.

It's incredible how houses in NZ polarize people, we have over 200 comments, yet the news is really unspectacular, as expected, Auckland still flat, the regions still up.

To be fair, I never worried about Houses that much, but the last 4 years have changed that. I never worried about immigration, but the last 6 years have changed that. I never worried about traffic but the last 6 years has changed that. There are many things where I was blissfully disinterested, but now.

It just seems in the last few years everything has gone from a relatively quiet, stable place. To a place that I hardly recognise.

Mass immigration – what a curse.

Many never wanted it, many detest it and many want it ceased – now.

However, politically those in opposition talk strong – but once in power, it’s suddenly a place you don’t go.

That's because sticking up for yourself and your culture is "racist". The worst possible thing in the world is being labelled "racist". So we be doormats instead.

Very successful at the Remuera Auction rooms yesterday with three out of three auctions selling under the hammer. Standout auction was 27 Orakei Road, Remuera which after a competitive auction with 13 bids sold for $3.6 million. https://www.bayleys.co.nz/1751486

Another notable sale outside the auction room was 4 Staffa Street, Parnell. This property sold within days of being on the market. https://www.bayleys.co.nz/1751503

Despite some negative commentary in the market (especially by HO and R-P on this site), quality properties that are well marketed are attracting excellent buyer interest.

Thanks for that info Double-GZ. You certainly cannot get top dollar for run down and shabby, poorly presented houses.
I'm trying to work out how the driveway works on that Orakei Road house. It appears to be shared. All that money and you have to share the driveway?

Definitely shared with the house at the back. It still has its own freehold title of over 700sqm though. I think $3.6m is about right, just a tad over the 2017 CV.

There's a good article in the herald on the prospect of an oil price shock due to the US sanctions on Iran, Venezuela in free fall amd opec holding to their restricted supply plan. Oil is up 60% from a year ago. All assets over inflated will take a hammering if the price gets up to $150. The last shock in july 2008 preceded the gfc & exposed the credit bubble in us & eu. Where's that black swan, in Trumps pocket by the looks.

Some recent sales in my area I managed to compile this morning:
1. 42 Arney Road - Sold $10,870,000 (CV $8,600,000)
2. 15/460 Remuera Road - Sold $6,500,000 (CV $$3,125,000)
3. 82 Bell Road - Sold $4,070,000 (CV $3,900,000)
4. 41 Clonbern Road - Sold $3,385,000 (CV $2,850,000)
5. 32 Platina Street - Sold $2,980,000 (CV $2,675,000)
6. 34 Sonia Avenue - Sold $2,800,000 (CV $2,325,000)
7. 1A Glenbrook Street - Sold $2,750,000 (CV $2,750,000)
8. 28 Seaview Road - Sold $2,725,000 (CV $2,650,000)
9. 20 The Glen - Sold $2,601,000 (CV $2,250,000)
10. 17 Rangitoto Avenue - Sold $2,600,000 (CV $2,375,000)

How many of those did you sell?

Latest Top 10 Suburbs (QV Median Home Value)
1 Herne Bay $2,703,950
2 St Marys Bay $2,333,350
3 Remuera $2,128,150
4 Campbells Bay $2,017,300
5 Stanley Point $2,011,850
6 Orakei $1,947,150
8 Epsom $1,926,200
7 Westmere $1,897,900
9 Mission Bay $1,868,100
10 Ponsonby $1,846,800

Hindsight is 20/20 but I thought this was interesting. It was written just over 10 years ago http://unconditional.co.nz/blog/will-we-see-property-prices-rise-before-...

If you were 34 in 2008 (rough average age for the first home buyer), took Hickey et al advice, then you are now 44 and probably posting about feces oozing out of boomers mouths.

The point of the above? No one can predict the future and you only have so many years on earth. If you can’t see yourself ever affording auckland, move. If you can afford it, buy when your personal needs and financial ability allows. I bought my home in 2009 and felt sick to the stomach that I’d bought before the world was about to fall apart. For that action I’m now labelled as greedy. It’s all about perspective, but I can tell you that no-one here has a better understanding of your needs than you, and no-one is going to stump up cash if you lose money or opportunity. Talk is cheap and opinions are like belly buttons in that everyone has one.

... the great prognosticator of all prognosticators , the Hickeysterical Bernard has now predicted that house prices across this fine land will increase by a further 50 % over the next several years ....

It is a perfect storm for house prices to continue their bull run .... he says ... 50 % up ... not 30 % down ...

... it's counterintuitive , methinks .... that based on Chicken Little Bernard's track record ..... now is the time to bail out , to cash up , and run like hell ....

You'd do better to consult a groundhog for prognostications ...

Written well before the OCR went from 8.00 to 2.50 over a 10 month period starting in July 2008;

https://www.rbnz.govt.nz/monetary-policy/official-cash-rate-decisions

And neither Bernard, nor the blogger in that piece saw that one coming.

Kate, I don’t think many did. Similar to the cash crunch in ‘86 sending rates sky high. We all need to temper our estimations of our ability to predict the future.

Yes, agree but my point is, it was a logical conclusion a few months prior to those repeated reductions in the OCR, to think that the peak had peaked and we might have expected a correction around the corner. The RBNZ actions at the time, bolstered the market as borrowing rates started their long grind downwards.

Logical without a doubt- and yet completely wrong. I think that is the point...

Yes, it is the point. We can all make grand predictions and some of us will be right, but that doesn’t prove we could actually predict the market direction. It’s just chance.

Very, very well said Rex Pat. Take responsibility for your own life instead of blaming circumstances and other people

Interesting how its that mindset that could be cause of the problem/s we see today, as opposed to the solution to our problems. We live in an interdependent society (on a global scale now), what each individual does has a flow on effect to others. The next evolution of your thinking might be, if I do this act, how will it negatively or positively influence others?

This is where I don't buy into the invisible hand theory (Adam Smith)- I think selfish behavior results in selfish people. But perhaps believe more chaos theory/butterfly effect - one good action could have significant benefits for many in the future.

I_O you and I are well meaning New Zealanders , I want everyone to succeed and am willing to pay tax to ensure no one starves and we all do okay and get food and shelter and universal health care and education , freedom of speech and association and rule of law .

In short , we are comfortable, in a caring society that takes care of the vulnerable and the poor ( or at least tries to )

However , on our doorstep is Asia , with almost half the world's population who have an instilled culture of what looks to us like greed, ruthlessness, sharp practice and selfishness ( which is quite normal and acceptable there ).

They have the death penalty , and execute people for various crimes , and the brutality of many regimes is legendary .

And we have invited a significant number of people with this mindset to come and live alongside us as our neighbours .

They will bring the culture with them, its who they are , thats inevitable , call it multi-culturalism or racism or whatever you like , but recognise it for what it is .

Our society has changed , it will never be the same again , and we need to look after ourselves and OUR Whanau as best we can

Falling house prices not the answer.
Who wants property prices to fall? In New Zealand there have been plenty of commentators, politicians and economists who have argued long and hard that New Zealand's property market is grossly inflated and needs puncturing.
https://www.oneroof.co.nz/news/falling-house-prices-are-not-the-answer-3...

From that article:

You can bet your last dollar that those currently craving a crash as a way to get onto the property ladder will be expecting capital growth once they are on it.

I have often thought this. A lot of the resentment comes from the belief that current property owners, especially multiple property owners, have taken huge gains and possibly taken the gains from the future. It's like the future capital gains that FHBs should be looking forward to have been greedily sucked out of the future by present owners.

The issue isn't the morality of making money on family homes unless someone has taken those gains for themselves and ruined your chances of doing so then suddenly it becomes a moral issue. Only lunatics would seriously suggest that housing prices should be set in stone and profits should be impossible. If FHBs could be guaranteed that they would make significant capital gains from purchasing a house there would be a lot less angst and grand standing about the morality of it all.

Of course us "spruikers" have been saying all along that you practically cannot lose if you are in it for the long term. For this we a re derided yet it is the answer buyers want to hear.

I guess one's moral position is simply a reflection of their values and principles....you could explore this by asking your 'self' questions like?

- Does it feel good making money from something that is a basic necessity of life?
- Does it feel good avoiding taxes using negative gearing from an asset, while the average kiwi worker who has no rental properties has to pay that tax void so that the government can in turn pay accommodation supplements for some of the tenants who (can't afford to buy or pay all of their livings costs including rent) are living in the asset of the landlord who is doding taxes with?
- Have been fortunate in my timing the market and dropping interest rates which has generated wealth (little skill and a lot of luck), does it feel good to provide opinions abiout the market in a facetious manner, when many are struggling to pay the bills?

There is nothing wrong with making money from something that is a basic necessity of life.
No taxes have been avoided unless you believe accepting a lower salary is somehow avoiding paying high tax.
One can feel good about being lucky.
Nothing "facetious" about my comment. We need to be able to discuss these things without appeal to emotion. This is an investment forum not Mother Teresa's fan site.

Mother Teresa did not skim money off of the Citizens of the World, and work the system, aided and abetted by Bwankers and Politicians who also skim and invented the game of "monopoly"......she gave "Freely" of her time. and did invaluable work.

And thank God it is Mothers's Day ....Surely you are...Not playing "Housie Housie.".....like all on this site who...."Benefit"

I'm not stopping anyone going off to help the poor in India although I think it is a bad idea. I just don't think it is relevant on a thread about house prices on an investment web site.

Yeah, she was a real saint alright.If anything she was worse.

.

Please do not be deceived: in advance of the overseas buyer ban, all those wanting to get their land bank in by buying sections in Rodney are doing so. This represents usual bringing forward of demand. Also, not increase in sales priced $550-750k which are landlords offloading property due to prospective attacks from government and also needing capital due to increases in rollover loans. Al this precedes the second drop due May-August 2018 as credit dries up and growth curtailed by cyclical drivers. Increase in sales in Rodney has driven its average price up notice (see REINZ) to about $919k. NSC sales are not supportive of this (falling still) So, where are buyers coming from? Not FHB and the amount of mortgage loans going to them does not explain the surge in sales in the bracket identified. A closer analysis is needed and Auckland market will drag others down next year. This is a 30 year cycle and NZ is 43% driven by Auckland. 30 years after 1987 debacle is now a year past and the cycle has turned. Credit cycle in NZ and Australia will be severely impacted by US 10 year and oil price.

Please do not be deceived: in advance of the overseas buyer ban, all those wanting to get their land bank in by buying sections in Rodney are doing so. This represents usual bringing forward of demand. Also, note increase in sales priced $550-750k which are landlords offloading property due to prospective attacks from government and also needing capital due to increases in rollover loans. Al this precedes the second drop due May-August 2018 as credit dries up and growth curtailed by cyclical drivers. Increase in sales in Rodney has driven its average price up notice (see REINZ) to about $919k. NSC sales are not supportive of this (falling still) So, where are buyers coming from? Not FHB and the amount of mortgage loans going to them does not explain the surge in sales in the bracket identified. A closer analysis is needed and Auckland market will drag others down next year. This is a 30 year cycle and NZ is 43% driven by Auckland. 30 years after 1987 debacle is now a year past and the cycle has turned. Credit cycle in NZ and Australia will be severely impacted by US 10 year and oil price. Crux is 20% of sales that landlords were making will be replaced by sales. This has just started.

I have heard a lot about credit drying up in 2018 , I wonder if it will actually happen ?