Record median price in May as housing market more buoyant - REINZ

Property

Residential property sales volumes rose strongly in May and prices were also firmer, REINZ says

14th Jun 18, 9:50am by Greg Ninness

There was a significant jump in the number of homes sold throughout the country last month and the median house price hit a new high, according to the Real Estate Institute of New Zealand.

The latest REINZ figures show there were 7578 residential properties sold in May compared to 6368 in April (+19%) and 7482 in May last year (+1.3%).

The improvement in sales compared to April was evident in all regions of the country, however, compared to May last year, Auckland appeared more buoyant than the rest of New Zealand.

In Auckland there were 2331 residential properties sold in May, compared to 1898 in April (+23%) and 2211 in May last year (+5%).

There was also a big lift in sales in Canterbury where 1021 residential properties were sold in May, compared to 849 in April (+20%), although the May figure was virtually unchanged from May last year.

Sales in the Waikato also lifted strongly with 757 sales in May compared to 628 in April (+21%) although May's sales were down 5% compared to may last year.

However, sales throughout the country excluding Auckland were down 0.5% compared to May last year.

Prices were also firmer, with the national median house price hitting a new record high of $562,000 in May compared to $550,000 in April (+2%) but just $2000 above the previous record on $560,000 set in March.

In Auckland the median price increased to $852,000 from $850,000 in April but remained well below its record high of $900,000 set in March last year.

Within the Auckland region, median prices were up compared to April in Central Auckland, North Shore, Manukau and Papakura, but down in Franklin, Rodney and Waitakere.

Around the regions, median prices were up compared to April in Northland, Auckland, Waikato, Bay of Plenty, Wellington, Tasman, Marlborough, West Coast and Canterbury, and down in Gisborne, Taranaki, Nelson, Otago and Southland.

They were unchanged in Hawke's Bay and Manawatu/Whanganui.

However homes are also taking longer to sell.

The median number of days it took to sell a property increased from 36 in April to 38 in May, which was one day more than it took in May last year.

The figures also show that buyers in Auckland continue to have plenty to choose from, while listings may be a bit tighter around the rest of the country.

The total number of homes available for sale at the end of May was 24,229, up 1% compared to May last year.

But in Auckland, total inventory was up 4.6% in May compared to May last year, while in the rest of the country excluding Auckland it was down 1%.

Median price - REINZ

Select chart tabs

Source: REINZ

Volumes sold - REINZ

Select chart tabs

Source: REINZ

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255 Comments

by blue meanie | 14th Jun 18, 9:55am 1528926957

So not the predicted crash then...? Jolly shame, but not unexpected.

by Retired-Poppy | 14th Jun 18, 11:01am 1528930901

Another imminent upswing - NOT. Looks like May was an excellent opportunity for smart vendors to escape.

by Houseworks | 14th Jun 18, 12:14pm 1528935282

Why would anyone take notice of these biased comments from a self-confessed anti-property person?

by Retired-Poppy | 14th Jun 18, 12:26pm 1528935988

Excellent question! I do love the family property I have lived in for 20 plus years and hopefully for many more happy memory filled years to come :)

by Didge | 14th Jun 18, 12:39pm 1528936758

"Why would anyone take notice of these biased comments from a self-confessed anti-property person?" Why? Because such views are enormously more likely to be correct than the views of blindly biased NZ property addicts. Of course that is assuming you really believe such silly things. Some of you are surely trying to influence the insufficiently informed. That is looking for more fools.

by Houseworks | 14th Jun 18, 1:02pm 1528938162

Excellent because it hits the mark and exposes a motive

by Retired-Poppy | 14th Jun 18, 3:52pm 1528948322

Ossifer? Am I allowed one phone call?

by Houseworks | 14th Jun 18, 3:50pm 1528948228

Hahaha no I wouldn't miss the daily comic routine on interest.co. However your comments are over the line one-eyed and potentially giving others a bum steer. I say potentially because I don't think first home buyers are taking any notice. And the facts are proving you wrong but that still wont stop your verbage.

by Retired-Poppy | 14th Jun 18, 4:09pm 1528949368

Houseworks - wrong. Its you thats biased towards giving advice to invest in property at the peak of a bubble. How stupid is that! Being a late arrival to the property party you're understably one of the last to accept that the Global investment climate is shifting towards another debt crisis. You bought a unit in Hamilton, 13 months ago wasn't it?

by Eco Bird | 14th Jun 18, 4:15pm 1528949721

lol, and how many investment properties you have exactly RP? oh, or how many have you run as a business in your lifetime?

None, I hear? lol

So //did you see the numbers? is July still a bottom in Auckland ?

by Retired-Poppy | 14th Jun 18, 4:44pm 1528951441

Eco Bird, as you already know, I have (thankfully) no investment properties. I cannot imagine my world having to need them. It's a great place to be. Yours and Houseworks recommendations to invest right at the height of a bubble are admissions you have zero comprehension of what comes next. The timing of these recommendation to buy now are totally suspicious.

by Houseworks | 14th Jun 18, 4:47pm 1528951673

How come you "know" so much about bubbles and property investment cycles yet do so little with that knowledge. Your investments returns amount to paltry fixed rates that a half wit could and would make?

by Eco Bird | 14th Jun 18, 9:13pm 1528967638

Cool RP and that is ok .. BUT, stop talking about investors and what they do and what they are going to suffer and whatever you preach .. becasue , as you just admitted , You DONT know shitt from clay in this business and you are just pissing in the wind and fooling some naive people here who think you are an authority on the business ...

Go back to your TD and count your cents RP .. and stay away from bullshitting people with stuff you have no real knowledge off .

enjoy your evening.

by Houses Overpriced | 14th Jun 18, 9:19pm 1528967941

Be a man and take it, else get the heck out of here

Go to the investor friendly site, landlords.co.... title "Auckland market CONTINUES to fall"

by Houseworks | 14th Jun 18, 4:28pm 1528950510

You sure are a try hard, not to mention blow hard. Twisting facts is a specialty of yours, in this case saying that I am a late arrival. That is not true as you well know retired poppy. What is true is that your experience with property investment is zilch and as an investor of any kind is extremely limited so please don't paint yourself otherwise. By the way, we notice that you are constantly editing and changing your posts retired poppy, that shows you are not credible.

by Retired-Poppy | 14th Jun 18, 6:58pm 1528959497

I think you're missing a key part of the picture of how I came to have my substantial principle to which I earn my "paltry" % return. I made wise decisions and choices and worked incredibly hard and didn't pay numerous six figures in interest. If you're struggling to comprehend what I am trying to tell you then more fool you. Its funny you running a down a person who has already succeeded in life. It speaks volumes.

Enjoy your evening!

BTW, I also edited this post too as I suck at grammar :-)

by Houseworks | 14th Jun 18, 8:34pm 1528965276

I have never said that you are unsuccessful. You made money and then invested in fixed interest, oh wow!

by tothepoint - d… | 14th Jun 18, 6:40pm 1528958443

Hi Houseworks,

I'd say Retired-Poppy is as envious as hell of all those savvy people who have established their own property portfolios. He's admitted that his dosh is in the bank - so he'll be getting a paltry return right now and, of course, be none-too-pleased about it.

His religious attempt to talk down house prices is no doubt motivated by his personal desire to buy a property cheaply - and before his bank deposits are whittled away to nothing. But he's starting to get the message that there ain't going to be a crash - so like it or lump it, he's missed the boat.

TTP

by Houseworks | 14th Jun 18, 7:13pm 1528960411

His backside will be pretty sore by now hahaha

by PocketAces | 25th Jun 18, 7:58am 1529870302

Did it ever occur to any of you that Retired Poppy's decision not to become a landlord is a moral one? Frankly, I think what has become of the housing "market" is completely without morals as it requires people to be unable to purchase in order to maintain a supply of "clients". That is the reason that investors have been prepared to push the market beyond the reach of FHBs.
You should all hang your heads in shame. This is a sign that we are beginning to eat ourselves in the search for "growth" which in reality is probably over, but we can't seem to find the courage to face it square on.

by Shoreman | 14th Jun 18, 9:43pm 1528969385

Nailed it !

by swapacrate | 15th Jun 18, 12:30am 1528979430

Paltry return is all relative.

Happy life with a paid off house and retired, living off interest from investments doesn't sound like a bad life to me. RP sound like he/she's pretty intelligent so, obviously knows what they are doing.

As for paltry, if you compare what you have TTP and what Warren Buffet has yours is like a gnat on an elephant, or even your investments compared to someone that owns a global company in NZ.

Property is not the only game in town. Good on you for being comfortable in your investments, but likewise good on RP for being comfortable with his.

RPs view is that the Housing Market as it stands, is on quicksand, there are a few fundamentals that make buying a house at this point in time a risky investment. You can either ridicule a POV that uses facts or you can actually offer facts to say why this POV is wrong. Until you give facts TTP then its hard to listen to your Trump like ramblings of fake news.

by Retired-Poppy | 15th Jun 18, 9:47am 1529012821

Echo Bird, Houseworks and TTP's emotive responses clearly shows factual messages are now taken seriously. Why should FHB's support a housing bubble they helped create!

by mfd | 14th Jun 18, 12:56pm 1528937797

If you can find anyone who isn't biased one way or another I'd be amazed. Better to just watch the data yourself and come to your own conclusions, or even better arrange your affairs and diversify such that you can handle (virtually) anything.

by Houseworks | 14th Jun 18, 5:28pm 1528954139

Volumes are up and median prices are up, that's a good sign and I think shows that property as an investment is still solid and viable. For fhb, prices are high but it is still the best option over renting.
Take this example from a well-known person "I do love the family property I have lived in for 20 plus years and hopefully for many more happy memory filled years to come :)"

by mfd | 14th Jun 18, 6:08pm 1528956531

Depends where you're talking. Auckland and Christchurch have flatlined for about 2 years now and show no signs of taking off, so I wouldn't be too desperate to buy right now.

The owning vs renting maths is quite complex and depends heavily on your assumptions about future house price rises, rent rises and interest rates, so I find your attitude to it rather simplistic. My instinct is that in Christchurch owning is probably the better bet, in Auckland probably not, but when you're projecting 25 years into the future to claim to know anything is bold.

I also own a house, although I rent it out currently. Renting isn't as bad as it's often made out, and it certainly frees up a lot of time from maintaining and improving your property. I will buy again once I know I'm settled, the main decider for me would be psychological.

Fully admit that owning has the large benefit of forcing people who aren't good with money to save and build up some kind of asset base, but I've not found that renting has stopped me from building up my stash.

by Houseworks | 14th Jun 18, 7:06pm 1528959982

For a fhb buying a property, don't get bogged down in making assumptions about future house price rises. Over the life of a mortgage owning a house becomes cheaper whilst the cost of rents increase. Easier to buy before starting a family. Good luck

by Houseworks | 15th Jun 18, 6:17am 1529000260

So there are no takers yet on my point above. Independent Observer, Bobster, RiP, Fritz, DGMs, where are you? Am I to understand, it's a valid point that you cannot pick holes in ^^?

by Groen_mamba | 15th Jun 18, 7:05am 1529003119

I think there's so many holes, most of us don't bother, but I'll bite.

INTEREST RATES GOING UP is one gaping hole in you argument

by Houseworks | 15th Jun 18, 8:04am 1529006658

My point is that over the life of a mortgage the cost of ownership becomes cheaper, as mortgage interest reduces and principal repayments increase until the mortgage is paid off. With respect you are thinking short term.

by mfd | 15th Jun 18, 8:08am 1529006900

With respect, you are completely ignoring maintenance, rates, opportunity cost of the deposit, lack of flexibility and a whole array of other factors which muddy the waters. Like I say, buy a house for psychological reasons, not because it's a guaranteed financial winner unless it's the only way you can get yourself to save money.

by Houseworks | 15th Jun 18, 8:46am 1529009197

I know that you said that you want to buy a house one-day but for you sadly that is just a dream and you are not cut out for owning a home. Stay renting Mfd, have the flexibility you crave, you can have the choice but you can't have it both ways

by mfd | 15th Jun 18, 8:57am 1529009870

I do own a house, I lived in it for several years before migrating to NZ. Now I rent it out. If I wanted to buy a house here in Chch, I would do, I could knock up a very useful deposit, but for now the flexibility suits me. I expect to buy in the next year or two if all goes to plan.

I did enjoy living in my hosue, but it's a real time and money sink. Renting gives you much more freedom, especially if you aren't sure you'll be living in the same city in 5 years time.

by Houseworks | 15th Jun 18, 9:09am 1529010552

Being a landlord is the worst of both worlds don't you think? All the responsibility and none of the pleasure of occupation. It's a long term game, as is home ownership

by mfd | 15th Jun 18, 9:28am 1529011702

I'd love to sell it, past relationship issues. It's fully managed so not much input needed from me now. Financially, you can consider being a landlord quite beneficial, you get exposure to the asset class and any mortgage interest can be taken off your rent income. If you live in it, no such luck.

by Houseworks | 15th Jun 18, 9:33am 1529012007

Good answer.

by Bobster | 15th Jun 18, 9:44am 1529012694

Oh, sorry, did I miss something? Never mind

by Houseworks | 15th Jun 18, 9:49am 1529012948

You wouldn't be interested hahaha

by Nic Johnson | 14th Jun 18, 3:58pm 1528948680

And that is what they have been doing.
I don't really know why these figures are such a surprise. The low value properties that the buy-to-debtors bought are no longer selling, in fact you can hardly give them away. It is almost impossible to sell an apartment in central Auckland at present.. Therefore sales are taking place on family homes that people need and those few first time buyers that can still move (have saved the deposit) are jumping up to middle market purchases - hence the median is raised.

You can find a stat somewhere to support the spruikers, the lenders and the real estate industry but the reality is that we are now in a compression faze.. The bottom is knackered, the top is knackered. The middle will follow soon enough because there aren't many buyers left that fit the banks criteria (Stupidly they used their powder too early).

Wouldn't want to own a flat at present and definitely wouldn't want to be over-geared on the family home. That's the next sector to go pop.

by tothepoint - d… | 14th Jun 18, 11:19am 1528931996

The Auckland housing market is proving far more resilient and robust than many people here dared anticipate.

The much-yearned-for crash of the doom and gloom merchants is proving as elusive as ever - a mere figment of their imagination.

TTP

by Hardly | 14th Jun 18, 11:19am 1528931999

I hate to break it to you TTP but if the housing market is not going up the bears win because of inflation. Also, house prices are down so the bears definitely win. As people note, the smart investor money is getting out. The faux bulls are just propping up the narrative while they minimise their exposure. Same thing happens in every bubble.

by Hardly | 14th Jun 18, 11:21am 1528932083

Also, while Auckland is in a little bit of trouble, places like Rotorua are completed screwed. The correction in rural/small town locations will be brutal just like 2008/9. Auckland may have escaped that last correction with a 10% fall but the other places got spanked.

by Bobster | 14th Jun 18, 1:46pm 1528940765

Yeah, I remember reading about the great capital gains being made in Rotorua, then when I was there I stood on the top of the skyline thing and saw the whole of Rotorua laid out before me, and I though “holy moly is that it....?!” It really did seems like a strange place to get struck by a property bubble....it’s like the plague had come to town

Although Rotorua does has an outstanding Szechuan restaurant, perhaps everyone wants to get a piece of that

by Hardly | 14th Jun 18, 4:39pm 1528951150

Auckland has high paying jobs and limited land. Rotorua has....

Part of the problem is someone said to aucklanders if you can’t buy a house in Auckland, buy one in the regions. Sheer idiocy.

by Bobster | 14th Jun 18, 4:47pm 1528951648

Yeah it was a bit of an eye opener. I kinda went, wow is that it!? And yeah, didn’t seem to be a shortage of green space.....

by Houseworks | 14th Jun 18, 5:38pm 1528954724

I pity you still renting bobster (rhymes with lobster). Why is grass green? Because only those who can afford it can have it and all the rest are green with envy haha.

by Bobster | 14th Jun 18, 5:43pm 1528954988

Oh, I’m sorry, did my comments about Rotorua upset you!? It’s has a top notch Szechuan restaurant, and the luge is fun. As is biking in the redwoods. Hope I’ve made it all better....

by Houseworks | 14th Jun 18, 6:00pm 1528956015

It can't be too bad, if the millions of tourists every year is anything to go by.

by Hardly | 14th Jun 18, 8:07pm 1528963667

I’ve always assumed tourists make the decision to go there based on imperfect information.

by Mrs The Point | 14th Jun 18, 8:24pm 1528964646

Rotovegas, boiling mud and rotten eggs. You beauty!

by tothepoint - d… | 14th Jun 18, 10:38pm 1528972687

Hi Mrs The Point,

That's a very good description of yourself.

TTP

by Houseworks | 15th Jun 18, 5:37am 1528997832

HAHAHA LOLS ^^

by Houses Overpriced | 15th Jun 18, 7:44am 1529005446

So who gives you the right to be derogatory?

So you specuvultures are above everyone else?

by Houseworks | 15th Jun 18, 8:25am 1529007956

Oh I'm sorry is that your mum?

by Houses Overpriced | 15th Jun 18, 8:59am 1529009978

Must be your.. you'll seem to go hand in hand all the time..

Freak, don't be sorry It's your mum

by Halfway To Paradise | 14th Jun 18, 6:32pm 1528957955

Standing at the top of 'the skyline thing' gives a very blinkered view of Rotorua. There is so much you can't see from there. 275 houses for sale on Trademe is an indication of the demand for Rotorua. A couple of years ago it was well over a thousand.

by mfd | 14th Jun 18, 11:53am 1528934026

Still going sideways while inflation eats away at it, seems like a good result.

Looking at the HPI data by Auckland district, it looks like the outskirts are the holding the citywide prices up, biggest gains in Rodney and Franklin while Waitakere and North Shore drop. Similar story in the median sales prices with Franklin and Papakura making up for Auckland City and North Shore falls over the last year. There seems to be a common narrative here that the best locations in the city centre are holding up the best, but I'm not sure the data agrees.

by tothepoint - d… | 14th Jun 18, 7:34pm 1528961683

Hi Hardly & mfd,

Sorry - but you forget that it's not only about capital gains! (Retired-Poppy was caught out on this very point recently.)

Landlords also get a return on investment through rental income, which is not insignificant these days - especially in Auckland and Wellington.

Conversely, those who live in their house forgo the cost of rent.

Thus, your comments above are invalid.

My point is clear: following the massive gains in (Auckland) property investment over 2006-2016, the market continues to hold on well - especially when rental yield is factored in.

TTP

by mfd | 14th Jun 18, 1:03pm 1528938229

I wasn't discussing investment returns, but sure lets go ahead. Auckland gross rental yields are not high enough to pay for current mortgage interest rates, or high enough to compete even with a reasonable term deposit. Capital gains are absolutely required for investment returns to do anything more than tread water.

If you're heavily mortgaged, you are likely cashflow negative in Auckland after paying rates, reasonable provision for maintenance, insurance etc.

If you're not mortgaged or have held for a long time, your equity would be better off elsewhere if there are no capital gains to be had.

With Auckland prices and rents where they are now, decent rent raises and capital gains are absolutely essential for any investment case to add up and compensate for the hassle of directly owning property. Whether we see capital gains or losses over the next few years I don't know, but I wouldn't be betting my life savings on it working out.

by kiwimm | 14th Jun 18, 1:08pm 1528938526

The only reason most properties in Auckland have positive yields is that people are forced to put in 40% deposits. The opportunity cost on such large capital contributions make the total return negative in the absence of capital gains.

by Bobster | 14th Jun 18, 1:13pm 1528938782

Yeah, at current yields the return on equity from yields absent capital gain is pretty much zero or negative

by Hardly | 14th Jun 18, 1:47pm 1528940835

I’m pretty sure it is insignificant. Isn’t the yield like 3% and that is gross of things like repairs and rates?

by mfd | 14th Jun 18, 1:59pm 1528941564

Both Interest and Barfoot and Thompson give rental yield figures with different methodologies (I think the main difference is Interest account for rental properties tending to cost less by using lower quartile prices while Barfoot use a straight average price)

https://www.interest.co.nz/saving/rental-yield-indicator

https://www.barfoot.co.nz/market-reports/2018/may/suburb-report

Auckland regions have a gross yield somewhere around the 2-5% region. As you say, this is gross, so you're lucky to turn a profit after maintaining, insuring, paying rates and mortgage interest if you bought recently.

by fat pat | 15th Jun 18, 8:46am 1529009213

Sorry - but you forget that it's not only about capital gains! (Retired-Poppy was caught out on this very point recently.)

Please refer to the fundamental law of accounting:
Assets - Liabilities = Equity + (sum of income - sum of expenses)

If your expenses exceed your income then, all things being equal, your equity will be decreasing. My guess is there isnt a single recently purchased Auckland property for which rental income exceeds expenses at ~80% LVR. So RP is correct, it's all about capital gains boosting equity, in upper quartile Auckland anyway. No capital gains leads to this -> https://www.youtube.com/watch?v=M5QGkOGZubQ

by Foyle | 14th Jun 18, 1:40pm 1528940433

Auckland city down over 3% (least squares trend) over last 12 months, that is about 5% in real terms and 6% vs money in bank.

Rodney best performing up about 3-4%, slightly above money-in-bank, Auckland region as whole is basically static.

by kiwimm | 14th Jun 18, 2:12pm 1528942336

Or you could buy Genesis Energy shares which would yield 5.87% after 33% tax at current price.

by mfd | 14th Jun 18, 2:23pm 1528943016

Ah, but then you don't get the fun of talking to Real Estate Agents, arranging tenants, performing maintenance or paying contractors to do it for you, worrying about whether the tenants are trashing the joint. So dull, sitting back and being paid twice a year and maybe spending a few hours reading the company results.

by kiwimm | 14th Jun 18, 3:15pm 1528946145

I know right. My total return of 111% over 4 years is just so boring.

by Laminar | 14th Jun 18, 4:12pm 1528949558

Depends on how much you put in. If its a a few thousand then yes its boring, if its $1,000,000 then sure its pretty good but not amazing.

by skudiv | 14th Jun 18, 7:00pm 1528959650

I'd say it's excellent, compared to if you bought in Auckland in 2011 with a 10% deposit (45k) on a $450,000 median house, you would have only made an extra $400,000 plus all the money you would have saved on rent which would only have returned %1000. I wish people would learn that housing is a very, very bad investment, and you should only ever buy shares.

by Hardly | 14th Jun 18, 8:17pm 1528964233

Or you could have borrowed a thousand dollars in the 1990s and invested it in Apple. The return on that investment is infinity percent. Because percentage return is (old price-new price)/initial investment. The initial investment is zero so the return is infinity.

This is why calculating returns using leverage is f*ing stupid if your point is to prove the superiority of an investment class.

by Mrs The Point | 14th Jun 18, 11:52pm 1528977164

Hardly Ha ha, thumbs up from me. You could have also borrowed the same amount as Skuwiff suggested and purchased CFD's which would have seen you outstrip the housing increase many times over.

by Laminar | 15th Jun 18, 4:51pm 1529038286

It is perfectly reasonable to compare this way as different classes respond to gearing differently.

by kiwimm | 15th Jun 18, 9:59am 1529013576

You miss the point. I gave Genesis as an example of a safe, yield share to compare against a low-yield property. You could leverage into either. My point is that if you are not getting capital gains then you could get a low-risk return of nearly 6% after tax. If property can't beat this then why put your money there?

If you want capital gains, then you could go for a high-risk growth share like ATM - up 326% in the last 12m (without leverage!)

by Laminar | 15th Jun 18, 4:47pm 1529038021

They are not missing the point, they are just poking fun.
You see Genesis is not 'safe', at least if risk is volatility it isnt. If you went big and geared up Genesis 5 to 1 youd already have faced two margin calls and likely bankrupted once all in its brief life of 4 years.
In property no such thing happens.
The general statement here is stocks outperform property but geared property outperforms geared stocks because you can gear property more than stocks due to its relative safety.

by skudiv | 14th Jun 18, 6:07pm 1528956431

I know, making 5% on 100% of your money is so much smarter than making 5% on 2.25 x leveraged money, especially in light of the recent gains, in recent years.

by mfd | 14th Jun 18, 6:15pm 1528956944

If you're happy with that kind of risk, then there's no reason you can't do the same with shares. ASB will let you buy Genesis shares with a 70% LVR, so pretty comparable to investment property.

Admittedly, the interest rates are a little higher, but they are likely to be tax deductible.

https://www.asb.co.nz/content/dam/asb/documents/asb-securities/2017/asb…

by skudiv | 14th Jun 18, 6:45pm 1528958758

I know right, shares are risk free returns, and you make exactly the same amount every year, and the past few years are an excellent predictor of future returns.

by mfd | 14th Jun 18, 6:56pm 1528959390

Yes, in just the same way as property. Obviously both have risks, especially if you leverage either. Personally I have roughly equal property and share holdings, and something like 25% LVR overall. I'm pretty conservative really, although I'm not averse to holding risky stocks.

by kiwimm | 15th Jun 18, 10:12am 1529014368

Good luck finding a property at current valuation that provides a return on equity of 5% after expenses and tax. And remember that shares also appreciate in capital value - typically at a higher rate than housing as they relate to productive industries.

And yes, I tax-deductibly leverage into shares when I see a good opportunity and losses can be offset against personal income (property is losing this soon).

by Laminar | 14th Jun 18, 4:11pm 1528949474

Given its a cash comparison you would need to include net yield on the rental option in which case an investment property at a yield of 4.5% is probably about even with cash.

by skudiv | 14th Jun 18, 6:48pm 1528958887

Cash is best, because you can eat it. Can't do much with a house.

by gingerninja | 15th Jun 18, 10:20am 1529014806

^^^^ HHHAHAHAHAHAH^^^^^^
Because somehow....you can't buy food (OR LITERALLY ANYTHING ELSE) with cash? Wowzas! This has to be one of the most idiotic comments of the day.

by Nic Johnson | 15th Jun 18, 9:05pm 1529053503

Maybe this year...

by skudiv | 14th Jun 18, 6:02pm 1528956139

The property market has been crashing since 2008, just as the prophet Bernard Hickey PBUH, predicted. If you can't see that this is a crash you must be so blind, like the blindest man on earth. It's all about price, once the price goes up, a crash is always guaranteed, and it will be big, the biggest ever. It's even worse now because property inveculators have a minimum 40% deposits, and stand to lose 40% of the house price, when house prices crash to zero.

by Nzdan | 14th Jun 18, 6:37pm 1528958268

I reckon house prices could go negative in the next 5 years. Vendors take out a mortgage to sell the house.

by skudiv | 14th Jun 18, 6:54pm 1528959283

I heard that in the US if you don't want to py your mortgage, you don't have to, and the bank will even sell the house for you. When can we get some sensible laws like that in NZ. It will at least make a crash much less likely if people can easily walk away from a house that they never paid a deposit on, and haven't even been paying a mortgage on.
Our draconian laws in NZ virtually guarantee house prices will go negative.

by kiwimm | 15th Jun 18, 10:36am 1529015793

Jingle mail (non-recourse debt) only exists in 11 of the 50 US states so a large minority but not systematic
Alaska
Arizona
California
Iowa
Minnesota
Montana
North Carolina
North Dakota
Oregon
Washington
Wisconsin

by Simon | 14th Jun 18, 9:56am 1528927017

Palmy Booming:

"GRAPH COMMENTARY
The median price trend is increasing strongly, with the volume trend staying consistent. The
days to sell trend has started to flatten. The House Price Index has had the strongest increase
over the past 3 months of all the regions (by quite some margin) with the twelve month
increase"

by dazz | 14th Jun 18, 10:03am 1528927435

Thanks Simon. Sales in palmy averaging 26% over RV according to Q.V. recently and some sellers are not taking very good offers as new valuations out in October.

by TainuiBabe | 14th Jun 18, 11:09pm 1528974565

Actually the boom in Palmy is over already, thankfully. House prices are starting to decline so go look elsewhere. Too many new builds happening, both residential and commercial new builds as the banks start to tighten up and have cut funding. Smells like the start of a recession to me. Even ex-Aucklanders can't find a house to buy because of the strict new bank loan requirements.

by Simon | 16th Jun 18, 5:15am 1529082936

The most up to date reinz stats disagree.

Record sales just last month with over 150 sold in PN.

Note listings currently around 170 on trademe so little more than 4 weeks of inventory, an extreme shortage which is seeing the strong price growth trend actually pick up speed

by xingmowang | 14th Jun 18, 10:09am 1528927758

Foreign $ flows in AKL first then there will be ripple effects accross NZ depending on internal migrants from AKL to elsewhere in NZ.

by gingerninja | 14th Jun 18, 10:13am 1528927981

Perhaps another one of the unintended consequences?

"Foreigners are scooping up houses in New Zealand’s priciest areas while they still can"

https://qz.com/1299734/foreigners-are-rushing-to-buy-property-in-new-ze…

"A large Chinese real estate website has seen interest in New Zealand property jump by over a third as buyers rush to secure it ahead of a ban"

.https://www.radionz.co.nz/news/national/348861/realtors-report-spike-of…

by printer8 | 14th Jun 18, 10:24am 1528928640

If Auckland and Queenstown are the areas that have been attracting foreign buyers as has been widely reported, then the data doesn't support your suggestion.
Auckland up 0.2% month on month and -1.3%YOY.
Queenstown -13.7% MOM and -7.0% YOY.
Double digit growth in provincial regions: West Coast (25.7%) Manawatu, Hawkes Bay, Tasman and Otago. I don't think Hokitika and Denniston will be featuring to strongly in overseas buyers minds. :)

by gingerninja | 14th Jun 18, 10:23am 1528928628

Yeah good point. Just the bubble spreading out, as it was always predicted to do.

by Bobster | 14th Jun 18, 10:28am 1528928883

GN, have you got an insight into what’s happening in the London market? Attached from zerohedge, whom I always consume with a large grain of salt

https://www.zerohedge.com/news/2018-02-19/londons-property-crash-has-be…

by gingerninja | 14th Jun 18, 11:05am 1528931155

Bobster, London prices have been dropping for at least 12 months. I have friends who have sold during that time. They did that stoopid move where the refused the early offers when the property first went on the market (because they considered them too low) and then a few months later ended up accepting offers even lower than that! They lost £75k

We want to sell our UK house pronto, but have tenants in situ so can't sell till Sept. Our property is in the South West, which is not in price decline yet, but certainly cooling. I have seen it myself but also had it confirmed by every Estate Agent i've spoken to. They're not in denial over there!

My opinion is that the whole market will continue to cool. This could result in anything between a stagnation and a massive crash.

It's the same everywhere in the world, sentiment is eventually contagious. London goes up, eventually so does the rest of the UK. London goes down...

However, this time *is* like no other. There's never been such a spree of foreign buyers in London before, there has never been such low interest rates and there has never been a Brexit! London was considered rock solid before Brexit, but with the risk of the city losing its financial passport in European markets, it might cease to be a major trading/financial hub. It won't happen overnight, but this could be the beginning of a major decline....currently no one knows what deal will be achieved and the UK gov are continuing to make a complete mess of the negotiations.

If somehow the UK pulls off a halfway decent deal with the EU, then that makes a period stagnation more likely. The UK does have a housing shortage, and the percentage of investors is no way near as high as NZ.

If the Brexit deal fails, I would expect house prices and the economy in free-fall for a few years. All types of investment has already halted across most industries in the UK, many major companies are already downsizing and catastrophe planning. No company can thrive or plan without having a clue as to what the future legal, trading, tax and economic landscape will be.

There will be opportunities in all situations for some plucky types, no doubt, but the uncertainty of Brexit is massively dragging on the economy. Prior to the referendum campaign, the UK economy was one of the strongest in Europe, and with growth on the horizon, might have been enjoying an even stronger economy moving by now.

The UK are years and years away from any substantive trade deals with anyone so, at least in the short term, it's hard to imagine good times for the London property market, or the wider UK unless some Brexit-deal miracle occurs.

by Bobster | 14th Jun 18, 11:18am 1528931883

Thanks for that. London looks bubbly but it looks positively rationale compared to us.

by gingerninja | 14th Jun 18, 11:25am 1528932321

Brits have a much longer history for their property market, so they have no problem believing that price declines can and do happen, there's no denial there, no religion of "housing always goes up".

There has been periods of foreign buyers and high immigration at various times over various decades and centuries. Booms and busts are an accepted phenomenon. Gordon Brown promised he'd ended them but he was epicly wrong!
The last time I would say that there was a denial/exuberance bubble in the UK it was the dotcom boom. And that was hugely about most investors not having any real grasp of what the internet could do or achieve and just getting totally drunk on the kool aid. Property investors in the UK never say the kind of blind-faith mantras that you get here, they always anticipate price cycles and are quick to cut and run if they don't think they will be able to see out the downturn.

by tothepoint - d… | 14th Jun 18, 11:38am 1528933097

Hi Gingerninja,

NZ is certainly fortunate in not being plagued with the types of problem that Britain is now wrestling with.

Keep up with your insightful commentaries!

TTP

by gingerninja | 14th Jun 18, 11:57am 1528934266

TTP...NZ was spared from the ravishes of the last cycle down turn by the Christchurch rebuild and good trading relationships with countries that had better growth than much of the rest of the world, during the GFC.

If interest rates stay low in NZ, debt affordability remains the same, no further credit tightening occurs and no non-housing related economic shocks occur... then I am inclined to agree that the property market will simply stagnate over the next year or two....(excluding some minor monthly oscillations ;-) ) If Kiwi's have no reason to doubt the value of the property market and can hold on to property, they will. They're a tenacious bunch and they sure do love houses!

I just happen to think, at this point, all of those are pretty big ifs.

by Bobster | 14th Jun 18, 12:23pm 1528935839

I actually think the principal reason we came though the GFC pretty well was that the Aussie banks had (up to then) been pretty well run and (more to the point) well regulated, and hadn’t feasted at the MBS and CDS troughs like most of their US and European counterparts. So they looked like a relatively good credit and could keep their international funding going. Plus Aussie was still riding the commodities wave driven principally by China. So our banking sector was kept in good shape.

Next time however, it’s going to be the Aussie banks (ie our banks) that blow up.

by rastus1 | 14th Jun 18, 1:42pm 1528940523

...sounds good in theory.

But why would anyone hold a negatrively geared underperforming asset requiring ongoing attention, cash top ups and ever increasing costs all around....if the values were stagnating?

Can't see stagnating being an option.

by gingerninja | 14th Jun 18, 2:08pm 1528942113

Rastus! It wouldn't be an option for me personally. We decided not to buy a house earlier this year and the money we would have put into a house has outperformed house capital gains. We calculated up mortgage, legal & moving costs + rates, maintenance and building insurance and renting vs buying and it was more or less neutral... plus the longer the property market plateaus the lower the opportunity cost it is for us to wait.

However, I do believe that many Kiwi's have an almost religious zeal for property. It's not necessarily based on logic or sound maths at all. The stagnation might go on long enough that the house "holders" are like frogs in the water being heated. At the moment though, whilst *some* cash is outperforming *some* property, there are still other factors (selling costs, tax liabilities, fixed mortgage penalties etc), so whilst things just bob along like there are, they wait. And underlying that, for many, is the belief that the market will rebound soon.

by rastus1 | 14th Jun 18, 3:51pm 1528948276

..nah not a poke at you.

Put yourself in the place of Mr Hubby. Against wifeys wisdom he went all in with property, geared himself up and now mums getting a bit p###ved that the family budget is getting screwed down.

Hubby was able to defend his great wisdom by reading the property rag headlines in Granny Herald to the dear wife each night...thus enabling him to reach peak excitement before turning off the light.

Now mother is getting really p###d. family budget is screwed with all that cash going out the door to pay the interst and fix the dog boxes he purchased. Hubby is getting worked up and takes most of it out on Interest.co.nz....despertely trying to talk up the market and get upticks.

But its not working...mums is getting grumpier by the day and the upticks are gettng less and less. He is getting tormented by retired poppy everytme he posts something.

He switches off the lights deflated...unable to reach any level of excitement.

Next say he lists.. ..

by Laminar | 14th Jun 18, 4:20pm 1528950059

You know the guy that bought just before 85, 91, 97, 99 and 07 looks like an idiot but is actually rich today.

by Bobster | 14th Jun 18, 5:04pm 1528952666

Yes, assuming he had not gone bust in the meantime. I think your analysis is subject to some survivorship bias

I mean, people who sold property in Ireland in 2010 and the US in 2009 (or upteen other places) didn’t do so cos they just “got sick of waiting”, they sold (or got sold) cos they couldn’t make debt service or the banks security was hopelessly out of the money. Your advice is, “hang in there you just can’t lose”. But you take no account of insolvency risk, which is surely the biggest risk for a leveraged investement?

by gingerninja | 14th Jun 18, 4:55pm 1528952129

Yeah, but the guy who bought during the proceeding trough of each of those is even richer.

by Yankiwi | 15th Jun 18, 9:13am 1529010829

As is the guy that sold at the peak. :)

by Laminar | 15th Jun 18, 4:58pm 1529038714

Playing big certainly entails risk yes.

by TainuiBabe | 14th Jun 18, 11:19pm 1528975196

Ginger ninja, those frogs are over half way cooked already and they don't even know it yet. I've seen a half cooked crayfish jump out of a pot to escape. It wasn't nice. Put me off both crayfish and debt for a few years lol.

by Chessmaster | 14th Jun 18, 3:13pm 1528945999

I don't know why these poms think they know it all. Funny that they are not in their own country and choose to live in NZ. I'm not born in NZ but no way would I ever live in UK. I want my kids to grow up in a safe and friendly City. That's why we will keep getting immigrants who can afford to be in Auckland coming, like it or not. Only $10m to get in, it's loose change on a richness scale around the world especially Asia.

Was reading an article today about prices dropping in Melbourne. House sold for $20m in a central surburb, they were expecting $25m on 1200sqm land. We are no where near these prices and a much smaller geographic space. Still very cheap compared to Melbourne and Sydney.

by Bobster | 14th Jun 18, 3:09pm 1528945760

Wow, thanks for your interesting and valuable comments.

by RickStrauss | 14th Jun 18, 3:42pm 1528947726

Really makes it look ever more like a decision to allow foreign purchasing and to run immigration at twice the OECD norm is a calculated decision to sacrifice the chances of younger generations of Kiwis for one's own personal gain.

Hope young Kiwis don't forget how politicians have shafted them for profit.

by gingerninja | 14th Jun 18, 3:51pm 1528948285

Chessmaster why on earth do you always have to be so antagonistic all the time?
I'm not claiming superior knowledge, just describing cultural differences in investor behaviour. Would anyone dispute the different history between the UK and NZ housing markets? Not to mention the different tax and lending environment.

And as for why I live in NZ, I married a Kiwi. A Kiwi anglophile, who lived in the UK for 13 years in total. I have no parents so our kids only grandparents were in NZ. They had been visiting the UK for 2month holidays every year but a health scare meant they couldnt commit to keep making that journey. Plus for the kind of lifestyle we live, we actually get much more bang for our buck here than in the UK. I totally agree that NZ cities offer a safer environment for kids and we are absoluting loving the extra peace of mind we have now. But then I never commented on any of that, you just randomly inferred it during your keyboard mashing tantrum.

What has that got to do with investor behaviour? I was commenting on NZ vs UK property market behaviour not NZ vs UK quality of life.

You're so fighty Chessmaster. You need to step away from your keyboard and find some chill.

by Nic Johnson | 14th Jun 18, 4:10pm 1528949419

I think you hit the nail on the head when you said 'just describing cultural differences in investor behaviour.' Englisth to Kiwi to Indian to Chinese is all different.

I used to have a friend who was involved with bookmakers in the UK and his best performing outlets were always in areas where there was a high concentration of Chinese restaurants.. he said that it must have been the MSG's that made people walk out of the restaurants into his betting shops.

by Chessmaster | 17th Jun 18, 5:41pm 1529214086

by Mrs The Point | 15th Jun 18, 12:23am 1528979017

Superiority complex? That's rich coming from one who calls himself "Chessmaster".
I for one find Mrs Minga's comments very well thought out and insightful.

by Nic Johnson | 15th Jun 18, 11:02am 1529017357

Cheesy. When people get sentenced for mortgage fraud do they take away their laptops so they stop bothering law abiding citizens with silly postings?

by Double-GZ | 17th Jun 18, 5:43pm 1529214219

What does 'N' mean, Chessmaster?

by Fritz | 15th Jun 18, 8:30am 1529008205

Very selective. You can buy a new house in greater Melbourne for less than 500k.
Also, please refrain from 'pom' bashing.

by Chessmaster | 14th Jun 18, 6:53pm 1528959211

Not in good surburbs close to city. I have a property there and I never invest anymore than 15kms out of Central City. Even with their superior infrastructure, they do have massive traffic problems so close to city is expensive.

by THE MAN 2 | 14th Jun 18, 7:05pm 1528959910

Rubbish! Nowhere near Melbourne central

by Fritz | 15th Jun 18, 8:32am 1529008328

Can you read? I said 'Greater Melbourne'. Try buying a new house in Greater Auckland for less than 700k

by tothepoint - d… | 14th Jun 18, 7:21pm 1528960897

Hi Chessmaster,

Indeed, you are correct.

House prices might seem high in NZ but it's illusory.........

There's still plenty of headroom.

TTP

by Bobster | 14th Jun 18, 7:47pm 1528962441

You are well qualified to talk about headroom

by Houses Overpriced | 15th Jun 18, 10:03am 1529013830

by Houseworks | 15th Jun 18, 9:38am 1529012327

7:44

So who gives you the right to be derogatory?

So you specuvultures are above everyone else?

Your post earlier. Someone who does what they tell others not to do is like a politician on his soap box

by Houses Overpriced | 15th Jun 18, 10:04am 1529013875

Fair enough.

Amended

by Fritz | 15th Jun 18, 8:34am 1529008443

Your rhetoric is tiring.
By all objective and credible measures housing in NZ is sky high.

by Scarletmanuka | 15th Jun 18, 8:49pm 1529052560

Chessmaster, I think this comment is completely out of line.

Gingerninja is a ‘pom’ and in my humble opinion she is one of the most informative, rational and entertaining commentators on this website.

Long may “poms” like her provide their valuable and insightful perspectives of NZers and the NZ housing market. People like her are giving us insular Kiwis the wake up call we so desperately need!

by Fritz | 14th Jun 18, 12:29pm 1528936164

unless the NZ-based market is really really subdued, and last minute foreign buying is propping up the market...

by Averageman | 14th Jun 18, 10:34am 1528929282

Is it unexpected for overseas buyers to have a last sprint in Auckland before the ban. If I was an overseas buyer wanting my bolt hole, laundering point, or free schooling and healthcare for kids in NZ I would get in now as well. Accordingly the glide slope is maintained with some late engine splutters before the engines are required to function on domestic activity alone.

Hoskings squawking on this issue recently seems out of balance with the "its only 3%" position.

by Retired-Poppy | 14th Jun 18, 10:53am 1528930399

This is nothing more than a dead cat bounce. If anyone wants a safe investment other than the family home, don't buy in this market. Now, que a barrage of short sighted comments from salivating debt addicts.......

by rastus1 | 14th Jun 18, 10:53am 1528930431

yep....the inevitable euphoric C##p will be flowing like the Waikato from the mouths of you know who for the rest of the day.

Might be a good idea to skip loggin in for the day while the addicts are on thier high. Come back next week when the hit has passed...

by tothepoint - d… | 14th Jun 18, 11:33am 1528932823

Hi R-P,

Based on the accuracy of your past forecasts, people would be wise, indeed, to ignore your advice.

TTP

by Retired-Poppy | 14th Jun 18, 11:48am 1528933721

TTP, since you were incapable of factually mitigating both internal and external risks posed in my previous questions, you cannot say it's safe for FHB's to commit hard saved 20% deposits on 30-year mortgages in the midst of this bubble.

You only have yourself to blame for having zero credibility.

by theglc | 14th Jun 18, 12:05pm 1528934737

LOL, thats rich coming from you!

by Groen_mamba | 14th Jun 18, 10:53am 1528930420

OCR 1.75% vs Fed rate 2.00%.......Wait for it!

by Hardly | 14th Jun 18, 11:25am 1528932349

This is so obvious I’m surprised we aren’t seeing more concern. There has been some reporting by the herald but the attitude on the street seems to be that interest rates will be in the low 4s for ever.

by sadr001 | 14th Jun 18, 11:35am 1528932903

A colleague said something about a bank offering him a rate in the mid/high 3s (ie 3.x % ). Feels like rates are going down not up!

by mfd | 14th Jun 18, 11:45am 1528933529

Agreed, but I would not be putting myself in a situation where my finances couldn't handle higher interest rates in the next year or two.

by gingerninja | 14th Jun 18, 12:00pm 1528934402

Fix as low as you can for as long as you can, would be my suggestion.

by Houseworks | 15th Jun 18, 9:03am 1529010237

I am waiting for you to put your money where your mouth is ginger

by Yvil | 14th Jun 18, 12:44pm 1528937086

ASB dropped 3 interest rates today, HSBC is at 3.85%

by CN | 14th Jun 18, 12:04pm 1528934656

The central bank rates of each respective country is influenced by inflation expectations in each country.

The inflation rate in the US was 2.8% in May 2018 and trending upwards. Whilst in NZ the inflation rate 1.1% in 1Q 2018 and trending downwards and at the lower end of the target 1-3% inflation target.

Mortgage interest rates are a function of cost of funds, and other factors such as a bank's desire for market share, loan growth, etc

by John | 14th Jun 18, 10:54am 1528930454

Bit like pulling the plug on a bath, pulling the plug causes ripples to the edges while in the middle a hole forms and then drags everything down.

by Houseworks | 15th Jun 18, 9:02am 1529010172

Nice analogy but irrelevant except for your rubber ducky. I prefer having a warm refreshing shower where I step out invigorated much like the feeling that good properties provide organised families.

by Yankiwi | 14th Jun 18, 10:55am 1528930534

Looks like a rather flat market in Auckland. Rather than taking a single months data and comparing, I recommend looking at a rolling three month average (if not longer) to reduce the odds of a conclusion that gets based on short term noise in the data. Mar-May 2017 had 6733 sales in total, averaging $872.6k. The same three months in 2018 had 6663 sales, averaging $860.7k. Declining sales numbers and declining prices is still the norm despite the one month upturn.

I'd wait a few months more before calling the market healthy and robust in Auckland. At best, the data indicates that the market is essentially flat with no real capital gains appreciation.

by Hari | 14th Jun 18, 11:22am 1528932130

Numbers out are about National avegare & Auckland bulls r celebrating...weird

by Tui12 | 14th Jun 18, 11:35am 1528932914

Dwelling prices in Sydney have fallen for eight consecutive months, and are down 4.3 per cent from their peak in mid-2017.

by Bobster | 14th Jun 18, 12:26pm 1528935960

Oh......glass half empty man!! A double ration of koolaid for that man

by theglc | 14th Jun 18, 11:41am 1528933306

Still the second worst sales volume in Auckland for May since 2011.

Auckland Median is still at the same level as Sept 2016, and sales mix can easily skew this

So I wouldnt be popping the champagne just yet

by Shoreman | 14th Jun 18, 11:59am 1528934358

Bugger the market just won't follow the wishes of the doomster's maybe it will happen later right ?
Prudent investors expect a drop over this 3 year period, after 90% gains a drop just opens up more opportunities for a few more canny purchases......All the negative wishes for a collapse are just fanciful in an economy that is growing well, has positive imigration, low interest rates, stable Government etc etc
If you really want a collapse you need to wait for a bout of Foot and Mouth or Trump firing of a nuke or something equally massive that is outside of our control. That will rattle a few cages......

by Retired-Poppy | 14th Jun 18, 12:15pm 1528935330

I love it when property addicts say "Doomsters" wish for a crash. Nobody need wish a thing. Greed has already primed the fear stage. Time will just set it in motion.

by J.C. | 14th Jun 18, 12:10pm 1528935040

Prudent investors expect a drop over this 3 year period, after 90% gains a drop just opens up more opportunities for a few more canny purchases

"Prudent" and "canny". Those are emotionally sticky adjectives, but what do they actually mean? Would a "prudent investor" expect a property crash? Why or why not? Are you saying that "prudence" is based on "expectations"? But considering that most people have to little to no ability to predict the future, how are these "expectations" any different from "guesswork"?

by Shoreman | 14th Jun 18, 12:58pm 1528937884

How about I use the words Experienced or longterm or successful instead of 'Prudent' and as for 'Canny' we could use - smart or clever or opportunist ?? Looks like RP has stated a 5% YOY for Auckland could well happen within the next 2 years and that would be fine.

But considering that most people have to little to no ability to predict the future, how are these "expectations" any different from "guesswork"? My reply to that is I agree however there are cycles that economies and markets go through. When I've talked about cycles before RP thought I was talking about push bikes LOL. If you understand and live through cycles you can gain confidence to put you're money where you're mouth is and invest with expectation/confidence that cycles continue. It's not rocket science and Tony Alexander amoungst others economists often refer to them. I would define a cycle as the some of human reactions/emotions over a period of time that effects the price of an asset in property it's 9 years give or take 6 months. Within any of those periods there are always stuff like interest rate changes, droughts, immigration, political you name it but the outcome is very reliable time wise.
So to sum up I have expectations from experience and life investing since early 80's that gives me confidence having my money in property, along with tourism and forestry.
Guesswork is just that a decision that is just a guess..............

by J.C. | 14th Jun 18, 1:04pm 1528938273

I see. So your future expectations are based on your past experience. Doesn't that contravene one of the first caveats of investing?

by nymad | 14th Jun 18, 1:21pm 1528939288

Which caveat is that?

If it is so, you better tell everyone who uses AR models as a basis for forecasting.

by J.C. | 14th Jun 18, 3:04pm 1528945457

""Past performance is no guarantee of future results." You'll probably see the disclaimer on almost every financial brochure referring to how well products have performed.

And if you really want to model house prices based on past performance, a rule of thumb is that house prices have barely kept up with inflation over time.

by nymad | 14th Jun 18, 3:22pm 1528946531

C'mon JC.
That's a disclaimer...Something very different to an investment strategy.
I've been coding some neural investment models recently - as you may be aware, these are fast becoming the gold standard of passive investing strategy and are impossible to build without historical training data.

And if you really want to model house prices based on past performance, a rule of thumb is that house prices have barely kept up with inflation over time.

I actually do model house prices quite often for various clients and I can tell you that that statement is categorically incorrect. The RBNZ seems to think so, too.

https://www.rbnz.govt.nz/-/media/ReserveBank/Files/Publications/Bulleti…

by J.C. | 14th Jun 18, 6:53pm 1528959195

That's a disclaimer.

That's right. A disclaimer to remove any responsibility. Effectively, a caveat.

I can tell you that that statement is categorically incorrect. The RBNZ seems to think so, too.

OK, I should have said "the relationship between increases in house prices and the CPI was similar until 1991". I'm sure that if the time series data were pushed even earlier than the 1960s, the relationship between house prices and inflation would be more stronger and more obvious.

But it does point to the fact that house prices in recent decades have little to do with the inflation construct, thereby understating the extent to which living costs have become worse over time for non-property owing classes, particularly those who have been born in the past 30 years.

by kiwimm | 14th Jun 18, 12:21pm 1528935699

I am hoping for a crash as the longer this keeps going, the worse it is going to be for NZ. The best time for a crash was 10 years ago, the next best time is now.

by theglc | 14th Jun 18, 12:26pm 1528935997

Obviously you havnt read the Train crash series

https://www.interest.co.nz/opinion/94213/john-mauldin-continues-his-tra…

by Chessmaster | 14th Jun 18, 3:11pm 1528945915

Exactly right Shoreman, I'm looking for the next opportunity to swoop on a bargain purchase. These guys waiting for crash will stay on sidelines for a long long time. Unfortunately the surburbs I look at have mostly buyers at the top end of the income scale. With my experience in Sydney and Melbourne, i know surburbs close to city do go up over longer periods and have much bigger jumps. They have had foreign buyer bans forever and hasn't affected their market much. It's those cities with jobs that keep attracting immigrants, shift from other cities and returning residents.

by BuyLowSellHigh | 14th Jun 18, 12:25pm 1528935915

Retired-Poopy,

I'm after an update please. How confident are you of your predicted 5% drop by December YOY for Auckland?

If you are beginning to doubt yourself, don't worry - even a blind squirrel finds a nut eventually. At some point in the future there will be some short of global instability causing a fall. Who knows when or what, but fantasising about it will no doubt give you solace.

by theglc | 14th Jun 18, 12:29pm 1528936188

Dont know about RP but I would put my hand up to say im very confident that a 5% drop by December YOY for Auckland will happen

by BuyLowSellHigh | 14th Jun 18, 12:45pm 1528937150

No doubt your confidence is based on a very tenuous grasp of housing market economics. Either that or just "feelings".

If a drop eventuates Retired-Poopy will be the blind squirrel that happened to find a nut. You can be the broken clock that is right twice a day.

by Didge | 14th Jun 18, 12:51pm 1528937506

Your silly choice of the user name BuyLowSellHigh automatically makes your views highly suspect to educated readers.

by BuyLowSellHigh | 14th Jun 18, 1:14pm 1528938895

Oh burn, my username is "silly". Please don't interrupt the thread unless you have something vaguely interesting or relevant to add.

by theglc | 14th Jun 18, 1:07pm 1528938476

Hmmm you seem a little salty.

Dont worry Im sure within a year you will be able to exercise half of your username and "BuyLow".

Is the problem that you are unable to "SellHigh" at the moment.

I can assure you my opinions are based on all the wide ranging facts, not just the ones you choose to acknowledge like many of your type around here.

by Shoreman | 14th Jun 18, 1:37pm 1528940235

I request the editor to remove members who post sarcastic remarks and revert to name calling please

by Double-GZ | 14th Jun 18, 3:44pm 1528947886

People are getting more and more ridiculous these days, even more so than me ^^LOLdgz^^

by Bobster | 14th Jun 18, 4:52pm 1528951932

Just so long as I still get to call you out as a #sadpropertypornaddict, I’m fine with that. It can be our special thing......;)

by gingerninja | 14th Jun 18, 4:58pm 1528952314

Don't leave me out Bobster, you can't have DGZ all to yourself.

Don't make me say it again because I will and then the mental images will revisit you.

by Bobster | 14th Jun 18, 5:12pm 1528953170

I don’t normally share, but I’ll make an exception this time. I am ok if you also want to be DGZs #propertypornbuddy

Although I must insist that Gareth’s rules of romance apply

https://youtu.be/seJt1wTVoh0

by gingerninja | 14th Jun 18, 6:24pm 1528957486

I think DGZ should be the one to define the rules of engagement Bobster. He's the one with the fancy postcode and we ought to respect our betters.

by Bobster | 14th Jun 18, 7:51pm 1528962672

Well it’s the same postcode as me. Honestly, the number of times I have had to walk the neighbourhood wiping down the real estate agents sign...especially the ones with “sold” on them....doesn’t bear repeating. Mind you, in an area where the local shops close at 4 pm (a colostomy bag is only so big) I’m thankful for the exercise

by Double-GZ | 14th Jun 18, 8:08pm 1528963686

lol, sure .. whatever!

by Bobster | 14th Jun 18, 8:18pm 1528964291

Honest, it is my postcode...we could be neighbours....describe yourself.....tell me more....

by Double-GZ | 14th Jun 18, 8:32pm 1528965178

What is your postcode? Do you really believe I live in Remuera in Dorkland??

by Bobster | 14th Jun 18, 8:48pm 1528966130

My postcode is Auckland 1050.....you are being evasive, it’s really arousing my interest. What do you like....do you like.....townhouses...or you tell me, I want to know...I thought you lived close and we could...hook up..

I just want you to know....I have no preconceptions about who or what you are....when you are with me, I want U to be U....

But, you don’t live in manurewa, .do you?!

Dammit, I’ve done it again....too much, too soon...

by Double-GZ | 14th Jun 18, 8:48pm 1528966088

I live in Shanghai, China. Text me when you visit China next *wink wink*

by Bobster | 14th Jun 18, 8:51pm 1528966267

Ok, now I know who you are, I’ve seen you on lucerne rd in your raincoat....and I know you like what I like.....yummy

by Mrs The Point | 15th Jun 18, 12:41am 1528980087

I think DGZ he lives in Akron.
https://www.youtube.com/watch?v=LeeJQU6hr_U

by Houses Overpriced | 14th Jun 18, 8:56pm 1528966619

Lol, there is only 1 shanghai..

by gingerninja | 14th Jun 18, 8:33pm 1528965187

Now if we had the app I suggested (aka Tindr or Grindr but for house porn addicts) you wouldn't need to ask, you'd instantly know how many meters your nearest property enthusiast was. Just swipe right and before you know it, a friend with benefits for life.

by Bobster | 14th Jun 18, 9:17pm 1528967870

Goddamit, that idea is pure gold!!

Buy we need an app name....suggestions?

BTW, Tinder has an “e”, or so I’m told

by gingerninja | 15th Jun 18, 8:40am 1529008807

Bobster...Okay so the app can be called "CapitalGainr"

And clearly DGZ handle will be "Shanghai Surprise".

by Bobster | 15th Jun 18, 9:02am 1529010153

Nice

by Bobster | 14th Jun 18, 8:36pm 1528965418

by Retired-Poppy | 14th Jun 18, 3:10pm 1528945826

BuyLowSellHigh, I'm bemused why the sudden obsession you've got with nuts. You might want to seek some help with that one. Anyway, as you well know there's always a possibility Auckland House prices could fall more than 5% by Christmas. If indeed they do, I dare say you'll spare no time in reminding me of how I suck at forecasting - right?

by BuyLowSellHigh | 14th Jun 18, 3:55pm 1528948555

Just checking. Glad you're still confident.

by J.C. | 14th Jun 18, 12:31pm 1528936269

This is a real humdinger of a news story about house price alchemy.

Average homes in Australia may cost up to $6.3million in just 25 years , a bombshell study has revealed. Projections show median house prices will reach that figure in Sydney by 2043 - up from $1.03 million today.

Wow.

The surveyors made their predictions by analysing house price changes over the past 25 years and extrapolating.

This is a similar method of forecasting as demonstrated by our own venerable Ashley Church. It's like drawing a trend line through a set of time series data points.

Not really sure what this "news" is suggesting but if it is any indication of NZ's future, I have a feeling that NZ is going to be very strange with "average people" sitting around in houses that increase in price at a greater rate than the owners ability to generate income. A nation of Lotto winners.

http://www.dailymail.co.uk/news/article-5837525/Prices-average-homes-re…

by Shoreman | 14th Jun 18, 3:11pm 1528945906

Who knows cause we can't predict the future can we ? but we can have an expectation from experience. All I know is in 1970 the average house price in Auckland was $12k, by 1974 it was $24k, by the time I bought my first house in 1982 it was $60k now it's $840k ?
It's more likely to be correct than not so I'm more than happy to have some property in my portfolio......

by Yvil | 14th Jun 18, 3:37pm 1528947461

Exactly, if you told people in 1970 that house prices would one day exceed $100'000 many would have laughed at you and said you were insane

by RickStrauss | 14th Jun 18, 3:50pm 1528948241

All I know is in 1970 the average house price in Auckland was $12k

Gee, imagine having such accessible home ownership thanks to a plethora of state and public-private efforts. What great parents you guys had.

by Shoreman | 14th Jun 18, 8:27pm 1528964863

Hard working returned soldier from WW2 was my Father no luxuries no state help just commitment for a better life thanks installed in his kids !

by RickStrauss | 15th Jun 18, 9:45am 1529012753

So you're unaware of all the post war NZ house building efforts huh? Worth having a read into that. Wasn't all just down on "own two feet" at all.

by Yvil | 14th Jun 18, 12:50pm 1528937411

I think the housing market is about flat, some months a bit down, some months a bit up but if we disregard the monthly fluctuations, values are roughly flat. I don't see why we should get excited over small variation.

by gingerninja | 14th Jun 18, 1:03pm 1528938211

Yvil. Yup, flatty Mcflatflat who lives on McFlattington Street, in Mcflatsville.

by Yvil | 14th Jun 18, 2:12pm 1528942372

Lol

by mfd | 14th Jun 18, 1:08pm 1528938528

All very boring, isn't it? It's lucky we get so many different statistics so we can argue about the +1%, -0.7% here or there.

by Yvil | 14th Jun 18, 2:12pm 1528942353

Haha, exactly

by paashaas | 14th Jun 18, 3:47pm 1528948052

boring is good.

by WestieAJ | 14th Jun 18, 2:38pm 1528943925

Isn't the median just the one magic number in the middle. If the agency compiling the statistics didn't like that number. Could they not find "statistically valid reasons" to remove some sales to get that magic number to be what it needs to be? If the foxes aren't happy with the median weight of the hens in the hen house, Just kill a few skinny ones. Viola problem solved and the foxes can tell everyone that the hen business is going great guns.

by mfd | 14th Jun 18, 4:19pm 1528949996

You'd have to remove a lot of data to significantly affect the median, there are likely lots of sales clustered around the median value. A mean would be easier to affect by tinkering with the really expensive sales.

by Chairman Moa | 14th Jun 18, 3:38pm 1528947519

There is a simple explanation for this upswing in price. Take example of a tennis ball being dropped from a great height, when it reached the ground it will bounce for a while and then gradually rolling off down the cliff. How much more house price is bouncing up and down is a mystery.

by Yvil | 14th Jun 18, 3:47pm 1528948054

So, you're saying the market/tennis ball has already reached the "ground" and will bounce around above the "ground" for a while

by Bobster | 14th Jun 18, 8:34pm 1528965284

Yeah. Of course. You’ve obviously never played tennis

by Yvil | 15th Jun 18, 11:25am 1529018739

Actually I play lots of tennis, I love it, and I have never seen a cliff on a tennis court

by Eco Bird | 14th Jun 18, 4:29pm 1528950589

DMGs are eating their words and prediction and trying to spin the market data philosophically as thin as they can because they cannot believe that the market at large is picking up ... it's a pride thing and dreams gone bad after all the hopes from chasing Auction result and reading tea leaves.

Look for the trend from now till October and watch prices rise slowly folks. higher lows and higher highs ... even a school leaver knows what that means.

The only thing that could have halted this appreciation a bit longer was a serious attempt at KB ... but that proved to be dead in the water when everyone discovered that the ministries involved are run by noobs.

Now that KB is crystal clear, nothing will convince buyers to wait any longer like the fools did in 2010-2011 ...Market fundamentals cannot be replaced with wet dreams.

No hurry eh? ... time will tell .

by gingerninja | 14th Jun 18, 5:06pm 1528952811

Ecobird...I can only speak for myself (and I wouldn't considered myself a DGM), but if house prices start going up again, I will certainly hurry to buy. But house prices aren't going up again, and i'd be looking for a few months of reducing ToM and a bunch of other metrics before I feel that urgency.... whilst it's a cool market out there, I'll wait.

In the interests of full disclosure, nothing has come up to tempt me either, if it did, I still might buy.

However atm every month we wait at the moment is just more saving and savings are A. outpacing HPI by a rate of knots and B. providing a nice yield elsewhere. Surely you wouldn't suggest this is a foolish strategy while prices have basically flatlined? What do we have to lose by waiting at this stage?

by tothepoint - d… | 14th Jun 18, 7:38pm 1528961937

Hi Gingerninja,

Therein lies the problem......

EVERYONE thinks they can tell when the market is going to turn - and then head off the rush. (It's part of gaming theory.)

BUT, in reality few can.

AND, by the time it's dawned on you that the market is moving again, everyone else is barrelling in as well - which explains why the housing market often gains ground rapidly.

INEVITABLY, plenty get left behind in the dust - wishing they'd got in "when the market was cool/quiet". (Competition makes it much tougher to find the "right" property.)

FINALLY, I will be relieved when you finally buy a property - and the sooner the better.

TTP

by Alter Ego | 14th Jun 18, 7:45pm 1528962306

http://www.calculatedriskblog.com/2018/06/mortgage-rates-higher-followi…

by gingerninja | 14th Jun 18, 7:51pm 1528962719

TTP, yeah, people are terrible at timing markets at the top or bottom. And i'm not trying to time the market to any exactitude either. I'm just saying that when the data shows the market is heating up again, I will be in more of a hurry to buy, than I am right now.

While the market is stagnant, I feel some breathing room to wait for the right place.

For me personally, there is ZERO chance of being left in the dust, I am watching every conceivable data point. There is no way that's going to run away from me. If a good opportunity comes along, i'm ready to pounce and I agree with TheMan2 when he says that there is good buying to be had at all stages of the cycle if you do your homework. As i've said several times, I don't believe that Wellington is over priced anyway so i'm not waiting for some amazing discount... I am waiting for the right opportunity.... and while the market is flat... I can take my time. I'm actually thinking about popping a few notes though some doors and see if anyone wants to sell any of the houses I like.

by Rex Pat | 14th Jun 18, 9:30pm 1528968641

I’m amazed and slightly saddened by your detached approach to buying a home. Wellington is full of a lot of crap properties. It seems like it would be easier to win lotto than find a property that attracts you and get it at a price you think is right.

by tothepoint - d… | 14th Jun 18, 10:17pm 1528971469

Hi Gingerninja,

I think popping notes under doors is an excellent, proactive, strategy. Avoid using REA's if you possibly can.

I hardly follow the Wellington market but I'm told there's a dearth of good family houses coming on - and that it's been like that for a very long time now. And there is a widespread view that Wellington's not particularly over-priced.

It seems that the city suburbs - like Kelburn and Brooklyn - are particularly sought-after and that you need to pay a premium to get in to them.

But as a cash-buyer and giving prospective vendors the chance of selling to you without having to pay a REA commission, I'm sure you'll score - and be delighted with your new home!

TTP

by Eco Bird | 14th Jun 18, 7:43pm 1528962192

Your case is exceptional, you have invested money that is making more than what you are losing by waiting for the market until is comes your way. ... just like I am making multiples of my entire portfolio annual rents from investing a fraction of their value in the share market ...

If your investment is sound you can afford to wait for some time in Wellington , as per the latest property values in the city there... then no worries ... however you could risk overstepping the mark and could lose on properties you would have liked to own... houses are not just price as you know...

by gingerninja | 14th Jun 18, 8:10pm 1528963849

Ecobird. 100% agree and if the right place came along, I would compete for it within reason. I'm looking for a family home, not an investment cash cow.

As i've just said to TTP, I don't think Wellington is particularly overpriced anyway so am not waiting for a discount but rather an opportunity to create the dream home without crippling debt. I'm trying to buy into a premier suburb, and one that hasn't even gone up that much in price during the recent boom (compared to others). The old classic strategy of buying the worst house on the best street.... and in a coolish market, I may just get it for a good enough price to be able to spend more on the reno and less on mortgage payments ;-)

I don't think I would feel the same if I was buying in Auckland right now. We did look at buying in Titirangi in 2011, and back then, I wouldn't have had a second thought about buying. Prices looked good in 2011. Prime buying time. However, we stayed in the UK for another 5 years and bought there (also a great buying time).

by Eco Bird | 14th Jun 18, 8:46pm 1528966006

Auckland is growing and has new suburbs which are just fab ...and it is a great time to buy at the right price there .. this market lul wont last very long

Good luck

by mikekirk29 | 14th Jun 18, 5:02pm 1528952523

Credit criteria tightening; interest rates to rise from here on in; Chinese buyers ban coming (oh, sorry "Overseas buyers") next month; negative gearing stop soon; economy slowing; construction activity declining; sales flat, prices flat in Auckland. Crashes are for drama queens. Whipsaw decline more likely and happening. Prices follow sales down. Auckland sales 25% below 2012. Prices will drop after overseas buyers ban comes in, probably by 10-15% in August-October period, compared to 2017. Expect owner occupation in Auckland to be below 50% when next census figures finally appear

by Solidname | 14th Jun 18, 5:15pm 1528953353

Your last point is interesting, I'm waiting expectantly to see what number of empty homes we have around the country, it was 20 odd thousand registered as empty in Auckland at the last census,I wouldn't be surprised if that number has doubled (not sure how many empty nationally). I'd be doling out a dose of "please explain" to the previous incumbents, and that empty house tax that was mooted and rejected recently, that'd go straight back on the agenda.

by Chairman Moa | 14th Jun 18, 5:40pm 1528954808

Throw CGT in the mix too.. never say never

by Eco Bird | 14th Jun 18, 7:47pm 1528962467

lol, sure .. whatever!

by Houses Overpriced | 14th Jun 18, 8:05pm 1528963540

Doesn't seem like you're really laughing

by Eco Bird | 14th Jun 18, 8:20pm 1528964414

I am ... the only ones crying all the way to the bank every week is your likes HO ...and I am laughing at those who don't know shite from clay like yourself and just trolling whatever comes to their mind... lol

by Houses Overpriced | 14th Jun 18, 9:02pm 1528966925

Hahaha, shame that you're such a twit..

Assumptions is the mother of all fuck ups

I know shit from clay, and you're definitely one

by Double-GZ | 14th Jun 18, 9:04pm 1528967094

Very classy English language and upbringing you have HO ^^LOLdgz^^

by Houses Overpriced | 14th Jun 18, 9:14pm 1528967669

Tit for tat isn't it,

It takes two to tango

by tothepoint - d… | 14th Jun 18, 10:26pm 1528972014

I think you'll find HO's vulgar commentary (above) will disappear very soon.

There's no room for him/her on this website.

TTP

by Nzdan | 15th Jun 18, 6:57am 1529002645

We all have our differences of opinions and quirks on this site, and it’s hilarious seeing some of the banter exchanged between people on here. But you’re right, there’s no place for HO’s nonsense no matter how frustrated he might be for not owning a house.

by Houses Overpriced | 15th Jun 18, 7:25am 1529004334

Hey sister, see who started the banter, you tard

by Nzdan | 15th Jun 18, 7:45am 1529005533

Maybe your attitude is the reason why you're stuck on the job seekers benefit and subsequently houses are "overpriced".

by Houses Overpriced | 15th Jun 18, 8:21am 1529007662

You muppet read my comment about assuming, shows you're a turd.

I have not taken a single dollar from the government my entire life.

Do something better with yourself

by Nzdan | 15th Jun 18, 9:33am 1529011992

You're quite a nasty piece of work aren't you lol! If life gives you lemons, use the Internet as an outlet for your pent up frustration.

by Houses Overpriced | 15th Jun 18, 9:56am 1529013392

It's lemons like you that exploit the Internet

by Alter Ego | 14th Jun 18, 7:52pm 1528962727

https://www.marketwatch.com/story/asian-markets-swing-lower-after-fed-r…

by THE MAN 2 | 14th Jun 18, 5:20pm 1528953654

It doesn’t matter one iota whether market median prices are going up or down if you are looking to buy.

What matters is what property you buy and how much you pay for it!

In every market there are heaps of opportunities to buy property at below true market value and you can even improve its value in several ways.

The negative posters on property were talking about huge price drops 8 to 10 years ago and we all know that those experts were totally wrong.

Yes if you live in Auckland I would be very wary but most of the country provides excellent opportunity to become financially independent thru property if you know what you are doing.

by Houses Overpriced | 14th Jun 18, 8:02pm 1528963361

You're definitely bonkers, one minute you say Auckland prices will continue to rise, without blinking an eye, you reverse your story

by THE MAN 2 | 15th Jun 18, 3:00am 1528988418

HO! When have I ever said that Auckland prices will continue to grow.
I have always said that they were overpriced.
Rental returns are negative so I wouldn’t touch them with a barge pole as an investor.
You make money when you buy so buying and relying on capital gains is not for “The Man”

by gordon | 15th Jun 18, 8:10am 1529007056

Those investors who in recent times avoided Auckland and poor old Christchurch will be smiling. Especially those in the Bay, Marlborough, Hamilton, Dunedin and the Bay of Plenty. I congratulate them on their skills.

by THE MAN 2 | 14th Jun 18, 6:52pm 1528959163

Gordon, I understand CHCH prices are still rising despite it being so cold, all the shaking and no job opportunities.

Keep talking it down Gordon as I am aware you are starting to look for the opportunities!

Challenge still there for you Gordon, are you willing to take it up?

Na, because you know you will lose!

by tothepoint - d… | 14th Jun 18, 10:30pm 1528972247

Hi Gordon,

Can't say I've come across anyone who's disappointed they've bought property in Auckland.

TTP

by swapacrate | 15th Jun 18, 2:56am 1528988195

Don't mortgagee sales count.

by custard | 14th Jun 18, 10:36pm 1528972610

My goodness – what a carry on.

I still think the key drivers of this rather enthusiastic residential market have either been removed – or at least to some degree somewhat diluted.

Thus it would seem logical to me that in the short, or medium term – prices at best will remain static, or probably continue their softer tone.

As for a ten year time line – barring any black swans, inflation will probably see to markedly higher prices – and waves of regret by those who did not act.

by BadRobot | 15th Jun 18, 8:23am 1529007811

But that is the thing - there is no inflation or very little.

by custard | 15th Jun 18, 10:35am 1529015708

Perhaps tell the NZ Herald that this morning.....

by gingerninja | 15th Jun 18, 10:49am 1529016586

Naughty Nanny Herald, spooking the herd.

by BadRobot | 15th Jun 18, 1:05pm 1529024716

Exactly :-)

by FamilyGuy | 15th Jun 18, 9:31am 1529011918

I'm not sure if market is going up. It is more like people are cashing out. There are many who want to and are selling their houses without listing them. An agent has contacted me if I'm interested in buying a house with CV 1.85 million for somewhere between 1.3-1.4 million. This house in a very nice suburb. we are considering.
Cheers.

by Tui12 | 15th Jun 18, 9:48am 1529012905

Hey TTP (aka The Turd Polisher) I've got one for you. His name is Shamubeel Eaqub.

by FamilyGuy | 15th Jun 18, 10:15am 1529014549

And there are a couple of others who bought in 2016 and 2017 and trying to get rid of their purchases but it seems a bit late now to get out clean.

by Simon | 16th Jun 18, 5:01am 1529082114

The most up to date reinz stats disagree.

Record sales just last month with over 150 sold in PN.

Note listing currently around 170 on trademe so little more than 4 weeks of inventory, an extreme shortage which is seeing the strong price growth trend actually pick up speed.