QV's average property values have fallen in Auckland, Tauranga and Wellington over the last three months - vendors warned against unrealistic price expectations

QV's average property values have fallen in Auckland, Tauranga and Wellington over the last three months - vendors warned against unrealistic price expectations

Quotable Value is warning flattening or falling house prices mean we are now in a buyer's market and some vendors may have unrealistic expectations about what their property is worth.

"The data very much confirms what we're seeing, with values continuing to moderate or drop after a sustained period of growth," QV general manager David Nagel said.

"Interestingly, we're observing challenges around managing seller expectations on sales prices," he said.

"After a sustained period of national value growth, sellers can sometimes have an inflated - even unrealistic - view of the value of their property.

"This is resulting in slower than usual average times to sell properties across some areas.

"In this sense, it's a buyer's market," Nagel said.

QV's House Price Index shows that the national average value of a home was $675,680 in the three months to the end of June, down 0.3% compared to the previous three months.

In the Auckland region the average value was down 0.2% over the same period, while it dropped 0.9% in Tauranga and 0.8% in the Wellington region where the biggest fall of 1.3% occurred in Wellington City.

In Christchurch average values were almost unchanged, up just 0.1% over the three months to the end of June compared to the previous three months. But they were down 0.3% compared to where they were 12 months ago. 

The biggest fall in average property values over three months to June occurred in Opotiki where it was down 15.2% compared to the first quarter of the year, and down 3.8% compared to 12 months earlier.

The biggest increase was in Ruapehu District where the average property value was up 5.8% in the second quarter of the year compared to the first quarter (see the table below for the full regional and district figures).

'We've returned to normal market conditions'

QV Auckland senior consultant James Steele said value growth in the region had flattened.

"We've returned to normal market conditions with prices stabilising," he said.

More properties were being sold by negotiation rather than auction, mainly due to lower demand, he said.

"With less demand, sellers are adjusting expectations and are more open to negotiation in order to get their property sold.

"We're seeing some developments struggling with off the plan sales, although finished entry level stock within these developments remains in demand," Steele said.

In Wellington QV senior consultant Paul McCorry said value growth was continuing to moderate.

"Sales activity is subdued, with low listing numbers, particularly in established inner city suburbs," he said.

"Demand remains high from first home buyers, with many taking advantage of less competition at open homes and auctions through winter.

"This is particularly evident in more affordable areas such as Hutt City and Porirua," he said.

In Christchurch sales activity was slowing while property values were flat overall, according to QV Christchurch property consultant Hamish Collins.

There was growing interest for new builds in and around the city centre, but an oversupply of land and developments in fringe districts and on the outskirts of the city, he said.

These included areas such as Halswell, Wigram, Preston and the Selwyn and Waimakariri districts.

"We are seeing some developers offering new builds or recently constructed properties at discounts as a way to free up cash for their next project," Collins said.

"This is having a flow on effect on the overall value of new builds or existing properties in these areas," he said.

QV house price index

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Source: QV
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Source: QV

QV House Price Index - June 2018

Territorial authority Average
current value
12 month
change
3 month
change
  $ % %
Auckland Region 1,053,575 0.8% -0.2%
Wellington Region 639,112 4.8% -0.8%
Total New Zealand nationwide 675,680 5.7% -0.3%
       
Far North 412,220 0.9% -4.5%
Whangarei 525,816 6.7% 1.6%
Kaipara 534,368 2.6% 2.4%
Auckland - Rodney 957,145 0.1% 0.8%
Rodney - Hibiscus Coast 934,930 0.7% 1.6%
Rodney - North 979,832 -0.5% 0.0%
Auckland - North Shore 1,224,965 1.8% -0.9%
North Shore - Coastal 1,399,222 1.6% -1.6%
North Shore - Onewa 972,081 1.6% 0.1%
North Shore - North Harbour 1,213,442 1.9% -0.4%
Auckland - Waitakere 826,625 0.4% 0.2%
Auckland - City 1,243,037 1.2% -0.1%
Auckland City - Central 1,083,584 1.0% -1.1%
Auckland_City - East 1,564,605 1.9% -0.1%
Auckland City - South 1,105,723 0.2% 0.7%
Auckland City - Islands 1,175,112 6.9% 1.5%
Auckland - Manukau 903,686 0.3% 0.1%
Manukau - East 1,155,930 -1.2% -0.3%
Manukau - Central 699,672 2.3% 0.1%
Manukau - North West 782,457 1.4% 0.5%
Auckland - Papakura 702,677 3.7% -0.1%
Auckland - Franklin 662,417 -0.7% -1.9%
Thames Coromandel 734,202 3.3% 1.8%
Hauraki 403,558 2.9% 4.1%
Waikato 483,490 6.6% 2.3%
Matamata Piako 413,914 -1.3% -6.2%
Hamilton 556,426 3.2% 0.2%
Hamilton - North East 707,077 4.0% 1.1%
Hamilton - Central & North West 513,254 3.0% -0.5%
Hamilton - South East 507,314 3.2% 1.1%
Hamilton - South West 487,384 1.0% -2.3%
Waipa 541,141 5.1% 1.0%
Otorohanga 285,465 -0.9% -5.0%
South Waikato 217,158 5.1% -5.0%
Waitomo 192,294 0.4% -2.0%
Taupo 475,360 6.5% 0.9%
Western BOP 625,371 2.1% -1.9%
Tauranga 700,305 1.9% -0.9%
Rotorua 427,132 8.5% 1.8%
Whakatane 438,436 9.9% 2.9%
Kawerau 206,844 13.8% 5.3%
Opotiki 283,513 -3.8% -15.2%
Gisborne 311,304 8.9% 1.7%
Wairoa n/a n/a n/a
Hastings 455,678 8.5% -0.3%
Napier 512,519 15.7% 3.0%
Central Hawkes Bay 319,700 13.7% -2.5%
New Plymouth 450,067 6.4% 2.0%
Stratford 267,204 13.1% 4.1%
South Taranaki 218,754 10.2% -1.2%
Ruapehu 194,365 18.9% 5.8%
Whanganui 255,020 12.6% 5.2%
Rangitikei 204,733 9.9% 1.7%
Manawatu 340,819 10.4% 3.2%
Palmerston North 391,599 9.5% 2.1%
Tararua 197,597 12.4% 5.6%
Horowhenua 319,022 14.5% 3.7%
Kapiti Coast 557,092 9.6% 1.4%
Porirua 564,489 10.8% 2.8%
Upper Hutt 491,812 9.7% 1.9%
Hutt 535,378 5.0% 0.6%
Wellington 758,020 4.3% -1.3%
Wellington - Central & South 756,859 3.6% -1.3%
Wellington - East 810,297 3.2% -1.2%
Wellington - North 685,190 6.4% -0.9%
Wellington - West 868,905 3.0% -2.1%
Masterton 347,468 14.5% 3.2%
Carterton 396,287 13.6% 4.0%
South Wairarapa 479,944 16.4% -0.5%
Tasman 574,000 7.3% 2.0%
Nelson 563,287 5.9% -0.5%
Marlborough 458,958 4.8% 1.0%
Kaikoura N/A N/A N/A
Buller 189,000 1.6% 3.4%
Grey 217,055 2.7% 1.7%
Westland 239,784 -5.1% -2.2%
Hurunui 385,235 2.3% 2.2%
Waimakariri 440,005 0.0% 0.1%
Christchurch 494,707 -0.3% 0.1%
Christchurch - East 372,273 0.0% 0.3%
Christchurch - Hills 669,350 0.7% 0.1%
Christchurch - Central & North 583,746 -0.5% 0.4%
Christchurch - Southwest 471,922 -0.8% -0.4%
Christchurch - Banks Peninsula 516,466 1.7% 1.8%
Selwyn 547,662 0.3% -0.4%
Ashburton 351,972 1.2% 0.2%
Timaru 358,799 3.8% 0.7%
MacKenzie 521,108 13.1% -0.4%
Waimate 245,747 12.0% 4.8%
Waitaki 305,449 9.6% 0.5%
Central Otago 490,974 8.4% 2.6%
Queenstown Lakes 1,152,201 7.5% 2.8%
Dunedin 409,898 9.2% 3.0%
Dunedin - Central & North 426,882 9.8% 3.4%
Dunedin - Peninsular & Coastal 380,445 9.8% 3.7%
Dunedin - South 389,289 9.4% 3.7%
Dunedin - Taieri 422,578 8.3% 1.6%
Clutha 206,570 5.5% -3.3%
Southland 250,789 -1.2% -10.6%
Gore 216,425 2.7% -3.9%
Invercargill 265,151 9.7% 1.3%
       
Main Urban Areas 790,027 5.1% -0.5%

 

We welcome your help to improve our coverage of this issue. Any examples or experiences to relate? Any links to other news, data or research to shed more light on this? Any insight or views on what might happen next or what should happen next? Any errors to correct?

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156 Comments

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Up early as always Greg, I just wanted to say thanks for all your good work! : )

16
up

Vendors often have strange ideas.

A real estate agent was recently telling me his vendors believed that having added a small deck to their (820k 2017 CV) house made it worth 1.2 million.

Of course, I laughed in his face. Four months later with three price cuts it's still sitting there.

Purchasers often have strange ideas.

A real estate agent was recently telling me that one of his purchasers believed pointing out to a vendor that their house could have some minor "P" contamination would slash the price from $1.2million to just $820k.

Of course, I laughed in his face. Four months later the purchasers still haven't got a house. They've had to make three trips to their bank manager to increase their loan - as house prices have actually crept up in double grammar zone, which is the area where they're house searching.

TTP

25
up

You get more absurd by the day. Must be hard when reality is battering down the doors of your ego fortress.

26
up

Indeed. A little known fact is that a buyer never has to buy they can always walk away but quite often a vendor MUST sell.

Indeed. A little known fact is that a seller never has to sell to a particular buyer; they can always walk away but quite often a buyer MUST buy.

TTP

28
up

Patently false, like most of the crap you spout.

Debt, Death, Divorce.

A buyer always has the option of not buying.

14
up

OMG, I told tothepoint to take his Lithium this morning!

You need to keep an eye on what time he goes to bed MTP. He was busy posting last night until 12.55 and he's getting all bothered by this nasty housing crash that has just started, its not good for his blood pressure.
Hot water bottle, milk and honey and a foot rub tonight is probably what's required.

It will be hard for anyone who is not ready to accept the downfall has started specially for next few years and their response to defend and argue will get more and more rediculous lol.

If they do not accept the fact will have bad next few years.

All the best !

Denial phase of the bust cycle?

Lol, doesn't have much of a life then. Will probably have even less soon. But he isn't so much a nutter, there has been the odd one on here over the years. He is just a dick, and I don't know why anyone ever bothers with him. Now "Cowboy" was self admittedly nuts, even told us he was some grand wizard, but at least he was fun and even made some valuable deeper thinking contributions. All this he said, she said, crap over housing is such a bore.

Did my blood pressure yesterday, 108/52. Maybe I don't have enough stress.

Think he has taken too much, haven't heard from him since then

Surely you're trolling with these comments

No worries at least house prices are not as volatile as shares :) Just wait till air nz shares are falling faster than the lab produced burgers are being binned

Volatility is just a profit opportunity. Once i firm up my hedging positions i'll make more in a complete sharemarket meltdown than I will in a year of good index growth.

10
up

I suppose the 9.5% gross yield would provide some kind of consolation. The great thing about shares is how well you know the price at all times, with houses you never quite know until you sell, and most of the data you can base your estimate on is a month or two old.

And of course you can buy and/or sell in parcels, hedging against movements and as and when needed. Hard to sell part of a property.

I look forward to picking up some bargains

I can vouch for TTP's P story. Unfortunately the seller can counter this "canny" buyer by simply refusing a P test which is perfectly legitimate. A seller would be mad to approve of such a thing. I would refuse to deal with such a buyer from then on unless the offer was very good and there were no conditions.

What buyer is going to hand over large sums of money to a vendor point blank refusing an inspection?

Someone who buys at an auction?

both of them

both of them

11
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Someone who has a whole lot of dirty money in their pocket needing a "home" to park it in?

I feel a whole lot better now that Dr Smith is vouching for ttp.

Hi Mrs The Point,

Dr Smith mentioned that he prescribed you some lithium.

TTP

Hi tothepoint,

So now you are cutting and pasting from my comments? Step it up and think of something original for a reply.

MTP

Can someone please tell me wtf 'double grammar zone' is?

It's a suburb in Auckland that is within the school zoning for two desirable schools. That is an excuse for higher house prices.

Oh good, so if they travel back in time to the 1950s they can show off their diploma from a prestigious high school and people might care.

It's a way for the wealthy to throw money away trying to keep them and their kids away from riff-raff.

The DGZ is also supported by those who hate free market capitalism. Schools shouldn't be restricted by arbitrary zoning, it's all about performance.

Vendors can be pretty odd at the best of times as you are dealing with everyday people. I don't see many people trying to move up the "property ladder" as the step up in cost between properties is too much for most. Also if people are happy where they are then why sell. Low listings are no surprising if people have no reason to sell or are not in a position to sell (without ending up homeless).

The $400k deck is probably their imaginary ticket to get out of the neighbourhood. From the personal finance side generally people that are so detached from reality may well have other financial problems. It has all the potential of being a future bargain.

Yeah it is funny.

Few properties / 2 bedroom units have been listed for 825000 in Howick which if lucky may fetch 700000 or max 725000. Understandvthat agent too has listed fully aware that will not be able to sell but will atleast have some listing to his name and anyone who approaches him will help him ro sell other propery where vendor is genuine.

Still few vendors are hopefull of selling at a premium of RV not realising that now it depends on what discount to RV.

Anyone who bought in 2016 onward and now out to sell will have to take a hit and some even who bought in 2015.

@ Brock
The vendors have probably been to Aunty Westpac or Uncle ANZ and managed to get themselves leveraged to over $1,000,000. Really wouldn't surprise me at all, there are hundreds of these muppets out there who have borrowed the entire house and then somehow refinanced for that and half the neighbours house as well. No need for a Royal Commission though in NZ , We're diffrunt!

Quick trip to LINZ (and $15 fee for the mortgage instrument) will give you all you need to know on whether the house canactually be sold for a sensible price or not, or whether the owners will be waiting 30 years for Mr Westpac's return to normal - he knows how much house price growth has already been pre-sold into the market!

https://www.linz.govt.nz/land/land-records/order-copy-land-record/land-r...

Very happy for the buyers but I still see properties being snapped up by investors in DGZ despite the hefty price tags. I'm surprised that a recently purchased $2.65M property will be made available for rent soon. That's a bit disappointing especially for those who missed out who just want to call the place home *sigh*.

I noticed another 2M plus house on DGZ Gt Sth Rd recently sold and now for rent.

Both these examples will be pretty naff yield presumably.

18
up

Money laundering is a fickle beast.

Nail. Head.

As of 4 days ago real estate agents and lawyers come under the anti-money laundering regulations. Its game over :-)

Untill people realise private education is cheaper than the interest only difference. Their school roles are booming. Plenty of very nice homes outside of gz, just buy one of those, pay some school fees and literally save millions...but dont tell the zone trolls.

#specuvestorbypass

A lot of the good private schools are in or near the DGZ. What seems to have happened is that the DGZ has extended beyond its normal boundaries and prices have gone up beyond the outer periphery. My battle cry of "Make all of Auckland DGZ" is coming to pass.

AK boys has been importing kids out of South Auckland for 30 years to prop up the first 15. Is that what you mean by extended boundaries and all of Auckland DMZ ?

I know lots of guys who talk of their miserable time at Auckland Grammar

Yes I made a point of not being in zone. Might be good now but i friggin hated it, even more so in retrospect,
Took some time to get unfuckedup after having to endure that institution - bully teachers bully students.
Having my PE teacher chip my spine when he stomped on me is a fairly good example of fucktardness- along with the fear the people in authority held over you with the threat of the cane and other punishments - Fuck you Mr Leggat
President of Property...

This experience may well have made you a better person but you are right it is a bit effed up. I was brutally caned once at school. Strangely it is an experience I wouldn't wish to have not happened as I enjoy telling my kids about it and how it left deep bruising on my backside. A classmate had processed some negatives he found in the darkroom at school taken by the adult night classes of a naked woman and distributed them to his friends. I was brutally beaten for being one of his friends. Pornography produced at a school though??...tut tut. Somehow I think in this day and age it wouldn't be me that was punished for what happened.

It would be great to revolutionize schooling. The trouble is kids are primal, closer to their wild jungle state than adults. It could only be done through a type of segregation. If kids are treated like adults they need to act a bit more like adults. No bullying or physical assaults and if it does happen the punishment should be severe. Physical assault and straight to borstal I think. I was punched in the face several times, being a bit of a cheeky lad, lost a tooth, serious crimes I believe. Yet I never did this and always protected those that were bullied. I would have thrived more in a school that had segregated its lower quality individuals.

Maybe I wouldn't be such an elitist with zero sympathy today :)

.

@ Averageman. Not sure you are correct here. What do you think is the approximate average premium for a house in Grammar Zone is as opposed to a similar house outside Zone? Price for 2 kids at Kristin = $50K.

Assumes you have the income cash flow to do so (house paid off). Apples for apple house, good section, free standing, not a leaker, garage, garden, 3-4 bed. The premium from out of the zone to in it is around $1m or more if it has an 8 in the number. Interest only rate of return on $1m at 5% is...50k. Smaller classes, no teacher shortage, and quality education, and the opportunity to invest the $1m elsewhere and as long as its getting 5% or more you are fine.

If you want to downsize to a crap box leaker half section with no parking then sure you can do it. But why would you subject yourself and your kids to that?

If house prices were still going up at 20% per year then it could make sense, but they arent and after a 10 year overseas printed cash bull run there is more chance of capital decline than gain.

#specuvestorbypass

Averageman, this was the realisation we came to in Wellington. We had been looking at suburbs in particular catchment areas and trying to future proof education choices. Until our youngest (only 6) showed signs of utterly failing and becoming lost in our local suburb school. Which is a great school, trying the best it can... but simply unable to cope with oversubscription and years of underfunding (victims of their own success also). We would never have considered a private school because my experience/perception of private schools as a Brit is that they churn out psychologically brittle elitist shits and bullying is rife. But I've been thrilled to be proven wrong by the private schools in NZ and blown away by the quality of education, lack of elitism and enjoyment my girls are experiencing now. IMO better than many UK private schools and yet half the price.
And of course, now we can live anywhere and my husband can have his life long dream of living within spitting distance of the beach.

As for DGZ, I spent 2 months living in Auckland in 2016 and then spent another 2 weeks there in 2011. The only bits I liked were DGZ, Ponsonby and Devonport. They're pretty, leafy suburbs and if I was forced to live in Auckland for some reason, I would be wanting to live in one of those because I just preferred them. I don't think it's just the lure of the school catchment.

Thankfully most of our family joined the Auckland exodus and so we don't even have to visit anymore. Apart from for a few gigs. (And yes, I'll be at the Def Leppard, Hysteria gig in ironic full 80s cockrock ensemble later this year).

I saw the Deaf Leapers in the round at Earls Court a few years back, great concert. Rock on Mrs Ninja!

Where would you be thinking to buy in Wellington? My dad will be selling his 3 bedroom, 15 years old townhouse in Hataitai this coming summer.

At least 180sqm, preferably old, requiring a major refurb (including major energy efficiency upgrades), with a relatively flat section or at the very least.. road access with space for off street parking and a garage. And probably close to a beach.

So that discounts all the northern suburbs ;-)

These houses do come up, but maybe only 20 per year and with the market cooling, we've resigned to take our time. The good news for us is, that these houses tend to come up when older people downsize or their kids sell their estates. And even more recently, some landlords have been selling these big older houses because the cost to bring them up to modern regulations just doesn't add up.

Definitely not in Brooklyn though. The Bruce Avenue house is externally pretty. Although, IMO they've ripped out too much character on the inside.
I get a kick out of painstakingly restoring old houses. I've done it a few times in the UK, and am not going to pass up on the opportunity of cherishing some grand old lady in Welly. There are some beauties out there!

Housing New Zealand are buying them. They’re going to trial housing at risk youth in grammar zones to see if it might condition them to a change in mindset, steer them off their current path of drugs and crime.

Drugs and crime follow the money, so it'll be a match made in heaven, and those schools are already full of the children of organised crime figures.

I went to one of those elite schools, in the late 80s. My fellow pupils were being used to move drugs around the city, in uniform. Because who would ever suspect them?

I wonder what these canny investors expect to rent it for? Or is it just a safety deposit box for shady money like most of that area?

I wonder what these canny tenants expect to pay in rent? Or will they manage to purchase a KiwiBuild house for the price of a secondhand Toyota Corolla with deflated airbag and wound-back odometer?

TTP

It was a serious question, I want to know the yield on this "investment".

Would you like to contribute something useful to the conversation?

It was a serious question, I want to know how far that odometer was "wound back". (It's an offence under the Motor Vehicle Sales Act.)

Would you like to contribute something humorous to the conversation?

TTP

14
up

Sadly there can only be one village idiot and you've already filled the role.

Happily, there's always room for humour and it's great to see someone fill that role.

TTP

Hi tothepoint,

If only it were funny! Have you done your ancestry? There could be some Germanic background, as you have a truly German sense of humour.

MTP

No one canny is renting in Auckland lol.

How is it a buyers market in Auckland when house prices are still averaging over a million dollars?

The prices can be high, but the power is with the buyers. If the buyers walk away the vendor will have a hard time finding others.

I was privy to the inner goings on at a very recent auction. There were several bidders but the winner still got it for 50k less than he was willing to pay.

Buying at auction is likely a good strategy for a buyer these days with sales under 30% during the actual auctions. Sellers want to sell and are likely to make a quick decision on the day. Especially so if you know they bought it for considerably less some years earlier and don't actually live in it.

The prices can be high, but the power is with the sellers. If the sellers walk away the buyer will have a hard time finding a similar house.

TTP

You are absolutely right TTP. The seller doesn't have to sell at any price to anyone. This is obvious to you and me and to anyone who thinks about it for a second or two.

Death.
Debt.
Divorce.

Or they can just HODL like bitcoin. That strategy has already been proven highly effective in a buyers market :p

I guess the village idiots missed this...
If your head is in the sand, you never hear anything contrary to your delusional thoughts.

"We are seeing some developers offering new builds or recently constructed properties at discounts as a way to free up cash for their next project," Collins said.

So sellers have to sell to anyone for any price? Interesting.

Not at all, sellers also have the right to turn down an offer and wait to receive an even bigger haircut in 12 months time, it is their choice after all.

We're not discussing exceptional circumstances here.

Or be like my American friend. Over there you didnt fight to keep the house, you fought to be able to walk away from it. My friend had to pay $45k for her ex to continue paying the mortgage. Ah the Joy's of negative equity lol

10
up

Zachary, TTP, if the vendor wants to sell at a price that meets their expectations, yet can't, where does that leave their views of the market? As more and more vendors find themselves in this pot then only more gloom and anxiety gathers on a collective basis the more time ticks by. No matter what the financial circumstances are, the speculator quickly wants rid of their once prized commodity if they believe that there are no bigger fools lining up to buy it. The market is heading south, best be prepared than huddle in a foolish bastion of denial.

We are not at that bridge yet. We cross bridges when we come to them.

Hi Zachary,

Retired-Poppy is a tad accident prone......

He's inclined to fall off bridges while crossing them - and land himself in trouble.

TTP

But nor does the buyer have to buy at any price. It goes both ways. I would argue that generally sellers need a sale more urgently than buys need to buy.

And TTP I think you're wrong there, I don't think buyers have a hard time finding similar properties, unless they have very very specific requirements.

Is the power really with the seller though?

Presumably there has been some rationale or catalyst to list, particularly if it's OO. They have not done so on a whim. Maybe they're moving, changed jobs, upsizing for kids, downsizing as kids leave. The point is, THE SELLER initiated the process to sell.. so, I would imagine in most cases, they'd like to actually sell it. Hence, their price expectation will eventually meet market.

Spot on MisterB!!!

Sure the seller doesnt need to sell at any cost on most occassions, however by the time they have gone through a failed auction and have had their house listed with a price for a few months and can see that the market is turning to the downside then the thought process clearly changes.

The seller has already invested a lot of time in sprucing up the house, having open opens and going through the disappointment of the auction and If they really want to or have to sell then the expectations naturally have to change and become more open to lower offers.

Obviously this is easier for those who have owned for a long term as as they will still be taking a gain, those who purchased at the peak however have a lot more mental and financial turmoil to deal with,,,,,

Gonna be a long winter for agents. Low sales and those listings they have not selling because of specuvestor FOMOG (fear of missing on gains)

Winter is no longer coming...

Game of Thrones as the best predictor of global property market.

All the recent purchases by those sweet summer children having never seen a winter and who decried the Long Night as myth and doomer legend.

PS. Who is more excited about the Game of Thrones prequel set in the Age of Heroes, than NZ property price fluctuations and spends more time on ASOIF subreddit than interest.co.nz????

Just me? ;-) :-) :-0

.....prepare now, White Walkers coming!

Too late to prepare, the kingdom is war torn, grain stores have been burned, The Wall is demolished and The Night King is riding a muthatuckin zombie dragon.

If I were a Westerosi, I'd just emigrate

oh no, spoiler alert!

Mrs The Point, for that to be a spoiler, you would have had to have avoided the internet in its entirety for the last year... but anyone who just woke up from a coma, is just catching up with GoT;'s and happens to be reading interest.co.nz.... my sincere apologies ;-)

ZOMBIE DRAGON OMG ARRGGGHHHHHHH

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The issues facing NZ is not unique to this country alone. We are in a world adjustment and it can be seen in Sydney/Manhattan/Vancouver/Toronto. The China "tap" is dry and money is prevented from leaving the country facing a major Yuan devaluation. It's been a great run but time to be realistic and look for other investments moving forward. My prediction is 10-15% real estate devaluation in the coming year and I'm being quite conservative based on what's currently happening around the world, politically and economically.

https://www.cnbc.com/video/2018/07/03/manhattan-real-estate-continues-to...

So the housing shortage meme is over.

Yep. LVR removal and OCR cut on the way.

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Overseas amendment bill should be implimentd this month unless giovernment gets cold feet and give window opportunity to speculators and oveerseas buyers.

This type of bills should be with immediate effect to avoid rush, manipulation and to avoid the very purpose the bill has been introduced.

THIS WILL BE A LITIMUS TEST OF CURRENT GOVERNMENT.

All eyes on them and if they delay and dilute will lose all crediability and no matter what they do in future will cost them the next election

Any news about when it will make it to the third reading

Minister had promised last month that it will be pass by July but the question is even if passed will it be implemented with immediate effect or will the government give opportunity to overseas buyer / speculators to go for a kill which violates the purpose of the amendment.

Also will have to see how much the bill is changed from the original as not to forget that politicians changes and say one thing when in opposition and feel differently when in power. Though Labour government will not be able to stop the bill and will have to implement it being their flagship election promise but the important thing for all to watch is :

1 : How much the bill is diluted from the original proposed amendment under the cover of advise from experts (Labour should not forget that the same so called experts and vested interest in the first place was not in favour of ban so why did they did not listen to them in the first place if they so value their opinion)

2 : Implementation : Once passed it should be with immediate effect or will the government give few months to Non Resident buyers and estate agents to go a kill as must not forget that even estate agent lobby is very powerful and rich.

Labour is now in power so do they care.

Most politicans forgets that in politics perception is very important and will soon know how Labour handles and impliment the overseas amendement bill and its real intent.

If timely enforced and with little changes from the propsed amendement will give them a thumps up and if the come under pressure and give away to much than can forget about winning next term - no matter how and what they do in future.

http://www.sharechat.co.nz/article/52cf3809/nz-house-values-fall-in-buye...
He expects values to "remain fairly constant or steadily grow across most of New Zealand throughout winter."

"Auckland region did marginally better in the quarter, with property values falling 0.2 percent to an average $1.05 million in the past quarter although they are only up 0.8 percent year-on-year, QV said."

So, "asking prices" were down 8% but we are up 0.8% YoY ...

Muddying the waters with numbers from left right and centre do not change facts an prices in the market.

The Valuable stock is moving up , others are moving down as always predicted ... and the Gap is widening, one will never buy a quality house for the price of a do up !!

All is going as predicted so far - nothing to see here ...let's move on and wait for REINZ numbers soon.

You do realize asking prices are just asking prices, whereas property values are taken from actual sales data?

Yes I do, I was referring to the fiasco caused by this article yesterday :
https://www.interest.co.nz/property/94591/average-asking-price-auckland-...

Eco Bird, the definition of a buyer's market is when supply exceeds demand, giving purchasers an advantage over sellers in price negotiations. I realize this will quash aspirations you have of any segment of the market moving upward especially knowing the oseas based buyers ban is imminent. At least term deposits are still marching in the right direction aye!

Asking prices are current prices. Sales data is a few months old. The drop in today's asking prices will show up in sales data 2-3 months from now when the properties settle.

It's just the start mate, wait for the policies to start making an impact

You guys are sulking so much, might as well do a mass booking for a trip to Europe.. at least that way, we know our beloved citizens are not losing it

Long time lurker

What are people’s views of the Wellington property market? Falling prices and low supply seem counter intuitive.

I notice very few listings for the last four years, or so, in Wellington City. There’s about 420 atm. I remember a time when there’d be double this.

This latest report shows a leveling-off of prices.

I’m looking to buy an investment property. I’d like to be a yield investor and want to hold for a long time. I like the advantages property can provide from leverage, and tax perspective. And, as a kind of diversification - my other investments are in equities.

Gross yields seem very low, around 4.5 per cent.

Will prices decline over the next 18 months? If yields are so low, is there any point investing in property? What am I missing? Is there really a shortage of supply? If so, why does this not translate to increased price, particularly with interest rates at a relatively low level? Really appreciate thoughts from bears and bulls. Thanks.

Hmmm. I've been watching the Wellington market for a few years.
I don't think Wellington is overpriced after the recent boom because 8-10 years before that values barely budged.
A lot of investors have ploughed into the Wellington market over 2017/18. As I've watched countless houses go on the market for sale and a month later hit the rental market. I check the net yields and they are abysmal. Well below 4.5%. Wellington rates, insurance and maintenance costs are high. The weather is very hard on the houses.
There are many more houses to rent than buy in Wellington atm and I think the rental shortage is somewhat overstated. That narrative hits the headlines every Jan/Feb when there is an influx of students needing accommodation. It's not really a shortage but rather a time specific bottle neck. That said... I think Wellington has a strong rental market and you would be unlikely to suffer long voids.
I think the market may possibly go down a bit over the next few years but I don't believe it will crash because the market only boomed for a brief 2 years and Wellington is a popular city, regularly ranking for being the most liveable, it has a large student population, loads of government jobs and loads of IT and creative industries. I don't think a recession will see a big uptick in unemployment in Welly.

So Welly is probably not going to give you any Capital Gains from now for a good while, the net yield will be crap but you'll have a steady stream of tenants and your house is unlikely to lose a huge amount of value unless the Wellington fault goes.
There's probably better places to invest in for an easy life and higher yield atm.

@gingerninja Let me tell you a funny story that happened to me at work today. A colleague saw me commenting on interest.co.nz and came over to my desk and told me that he thinks the average Auckland house price will reach $2M in 2030. Without further ado, I asked him if he was DGZ and I couldn't stop laughing ever since lol ^^

Sure it wasn't your shadow?

Good points. I agree with your view - low price appreciation but able to rent out the property

I do think there will be price appreciation again at some point but not in the short to medium term. My guess is there may possibly be slight declines over the next few years (or flat but declining when inflation adjusted) and then flat or very slight increases for a few more years after that before price inflation returns.

There are decent yields in the wider Wellington region, but not in Wellington city. Don't take my words for it though. Look at houses advertised to rent and look at the ones that sold in the last 12 months. You will see how pitiful the yields are (even after the recent rent hikes).

Wellington has plenty of room to grow as a city and it has the public transport plans to facilitate that too...there is loads of space out after Brooklyn, Karori, Churton Park, Newlands, Johnsonville and beyond (eventually Wellington and Lower Hutt will meet) and there is also the Miramar peninsula. Not to mention that many of the old houses in Wellington have been allowed to become fairly derelict, there are serious damp and bora issues and with earthquake regulations, it's often more economical to knock down and start again, and of course, then there is incentive for developers to densify. I'm seeing it happening all over Wellington atm. As well as the obligatory subdivisions. The Miramar peninsula major development will kick of eventually and will add LOADS more houses.
Wellington has a very damp causing climate that causes a lot of problems for houses... but increasingly, tech is solving those problems so the areas that people don't like to live in like Aro Valley or Karori become much more liveable. Damp is caused by poor ventilation and uneven heat, and that's easily solvable now.

lots and lots of negative gearing in Wellington region..
The crash (and remember first that this is a credit crash we're starting not a normal recessionary correction - that comes later to magnify the issue) - as GDP falls, contract work gets cut and re-offered as salary under the labour government. those that bought another and offset will all be on the market by mid summers day. Lots of stock and a continuing tumble..... Take a look at the Welly region and how many houses for sale were bought between 2014 and 2017..... There are a remarkable number of 2016/2017 listings.... ooops the numbers never covered the mortgage at purchase, capital gains? How when the numbers never stacked up in the first place...

I think that you may be being slightly optimistic on Wellignton's future direction

Nic maybe, I do think some people overpaid in 2017, but not the seriously cray cray prices that happened in Auckland 2015/16. I genuinely have no idea how many people are negatively geared in Wellington, I noticed that Wellington took off after the LVR restriction came in as investors looked outside of Auckland because 40% of Auckland was just too much dough for some and the yields were awful. What is your source for all the negative gearing in Welly?

hundreds of mortgage deeds.

I should add. Salaried workers and particularly government employees are not always particularly entrepreneurial. Property however makes them feel that way and provides something to talk about at dinner. It is an easy way to feel better than your peers. (even if the maths was stupid).

Where does one access 100's of mortgage deeds?

I haven't seen many mortgage deeds myself, but I have spoken with plenty of Wellingtonians who are mortgaged up to the hilt and struggling financially. I've never met any who talks or boasts about the value of their homes over dinner though. All the Wellingtonian's i've hung out with at least, seem pretty grounded and don't do much status signalling.

\ginganinja

https://www.linz.govt.nz/land/land-records/order-copy-land-record/land-r...

$15 to order the mortgage instrument for any individual property. Don't look at your friends and neighbours as you may start getting worried about them.

Nic, well, if you want to spend $15 per property to look at that data, you go for it! I'm saving up to buy a house and that's 3 avocados worth!!! ;-)

Some of the Wellington prices are a bit silly. I couldn't believe my dad's 3 bed townhouse on 250 square metres was recently valued at $1.2 million

And there's all that marginal farmland with nothing on it but a few sheep out on the west and south coasts and north along the motorway and railway. Eventually some of that'll be developed, even though it might not be for a few decades.

As a born and bred Wellingtonian (long time resident in Auckland, save a few years in a few international locales) I can say I concur with many of your observations. I note however that Wellington often declines off the back of Auckland declines. Also, will the government start to pull back some of the staggering subsidisation of the film industry?

Fritz, I hope not! I think the film industry is one of the few industries to offer long term growth and productivity in NZ. It adds a vitality to Wellington. If there is some kind of austerity programme at any point, then there's always a risk that any subsidiary is at risk though.

I do think there might be a shorter term possible decline in Wellington prices if Auckland really tanks. The Auckland bubble was contagious eventually and an Auckland crash would be too to an extent, but Wellington just doesn't have the insane income multiples that Auckland does, so i'm not sure a credit crunch would impact as hard here.

Wellington tends to be a bit steadier. Not boom as much, not bust as much. The high number of government employees helps keep things stable.
Auckland is more vulnerable to a global shock. After the Gfc many jobs in Auckland were lost or hours reduced, in sectors related to property / development /real estate. Wellington is less exposed to downturns in those sectors

I think I recall a significant slump in Wellington prices around 2002. I can't recall what triggered it. Might have been partly trend of head offices moving out of Wellington

There was a long cold spell after 2007 too right?

My landlord bought the house I currently live in in 2007 for $740k. He spent a LOT on it (extension, major ground works that required a helicopter etc). In 2015 the RV was $740k. I don't think he made back on the purchase + renovation spend until maybe 2016. And after 11 years, It's worth around a million now. I'm guessing he spent $100-200k on renovations and extension
I've seen a lot of houses purchased in 2007 only really get beyond their 2007 price after 2015/2016 in Wellington, they were flat for yonks.

There was an article in the NZ herald a few days ago as to how taxpayers have subsidised 'Wellywood' to the tune of more than half a billion dollars

Yeah but Wellywood is also a huge boost to tourism and longer term, if it establishes itself as a major player in that industry it will require less subsidies one would hope.

It's been getting a lot of subsidisation for a long time

"Money generated by New Zealand film production has doubled, thanks to a bounce back from Wellington's movie sector.

The Statistics New Zealand screen industry survey, released on Wednesday, show the screen industry generated revenue of $3.3 billion in 2016 - up 3 per cent on the previous year. Of that, film production revenue doubled to more than $1b.

Total screen industry revenue had been stable at just over $3b for the last three years, however, 2016 saw a 15 per cent increase in revenue from businesses involved in production and post-production."

https://www.stuff.co.nz/business/91487173/screen-industry-boosted-as-wel...

Sounds like it's paying off to me.

A recent report debunked lots of those claims

Care to share the report? I was just looking but didn't find it.

I hate to disagree with you Ginge, but hey, I'm going to disagree with you. Wellywood is/was a shit idea and outside of Weta (not based in Wellington) and Hobbiton, also not Wellington, I'm struggling to see the benefit. It's the Peter Theil of industry subsidies, much vaunted, little delivery.

I don't mind anyone disagreeing with me! Weta isn't based in Wellington?

I don't profess to know a huge amount about the NZ film industry, but it's generating a $3 billion per year average, and production and post production in Wellington has been growing in particular. Stats NZ says that 64% of the production revenue is generated in Wellington.

But do share with me better and contradicting data if you have it. I've only gone on what i've seen published as I bumble around the news. I haven't dug under the hood at all.

Hobbiton was just a set location wasn't it? None of the production is done in Matamata.

On my annual Xmas pilgrimage to Wellington last year I visted Weta Workshop and was profoundly underwhelmed.
But they have made plenty of cool films!

whoops, for some reason I always had it in my head that Weta was based down in the South Island, Dunedin or somewhere. Head vs facts

My guess - no buyers (or lack of willing buyers).

I'm very keen on Wellington as an investment. It is geographically constrained, so land in the city and central suburbs is going to be at a premium as population increases. NZTA and Council have a first class long term strategy for the city in terms of transport infrastructure too. Good fundamentals is terms of population base (centre of govt, Centreport, airport).

There is no doubt that there is substantial demand for rentals in Wellington. Crowds at rental viewings are still common. In terms of why rents aren't higher, I believe that this is due to affordability constraints and that rents will increase slowly over time, slightly ahead of inflation, as incomes rise - https://www.interest.co.nz/sites/default/files/embedded_images/dickens-2...

Yields aren't too bad at the moment. If you purchase now, your mortgage payments will essentially remain the same going forward (will fluctuate with interest rate changes, buy likely to average out at about 6% over the course of the mortgage). However, rents are likely to increase steadily, so your yield will improve over the years.

Earthquake risk makes me nervous though. I was working at a Ministry down there in 2013 and experienced a few.

My expectation is that prices will be flat until 2021/2022. Good time in the cycle to buy now if you can secure finance as you'll be in a good position to negotiate. I think were about 5 o'clock on the property clock at the moment.

The earthquake risk IS a concern in Wellington given the debacle that was Christchurch. Have home insurance premiums shot up much?

Yes, for sure. It’s definitely my main reservation. Not sure about the premiums. Up in the hills your risk of damage is much less from what I’ve been told, but then I wonder about landslides.

The sad reality is that when the big one hits Wellington probably every property will be damaged to varying extents

Wellington is sh*t in the sense that it only takes one large shake to ruin them all. Watch out guys...

Wellington property market has gone flat at present. A flat market essentially means turdy properties sit on the market, whereas desirable properties still sell quickly. Wellington has the highest average wages in the country so affordability is not an issue. Bank lending policies have put the handbrake on investors. I chiefly bank with one of the big four, our personal bank manager had an issue with a DTI of 6 (ie investment mortgages are approximately 6 times gross rents), with no mortgage on our own home. I tried to explain that a DTI of 6 over an investment portfolio (in minimum decile 8 school zone suburbs), equates to a gross yield of 16.67% on funds owed and that this is a completely different kettle of fish to a DTI of 6 over own home. The logic did not prevail, my impression is that the big 4 are concerned about big losses in Aus and Auckland. This situation will likely create an opportunity.

The key is to buy on the CBD side of the Ngauranga Gorge. Transmission Gully when it opens in 2020 will cause bedlam getting into city, as more vehicles are funneled through the bottleneck. Also large Plimmerton/ Porirua subdivision given go ahead with sub-divisions galore in Upper Hutt/ Wairarapa, will add to the problem. Wellington inner and Eastern and Southern suburbs should do well. Given limited residential space available in the area for development, Hipster/ Boho trendy vibe in CBD and high incomes, I can see this area becoming incredibly desirable and elitist. So Wellington should do well, the risk is to the upside rather than the downside. Hope this helps

Interesting, I would have thought a DTI of 20 would be a more appropriate maximum if you had a mortgage free home and good salaries coming in. Time to change banks. Are you self employed? My bank, one of the big four, often tries to get me to borrow more.

Technically self employed, but working at same location for many years. Bank was not happy as I cut work to only 2 days per week. As I no longer needed a high income, as no personal debt and investment properties paying themselves off. Banker couldn't understand why I would not want to work full time.

I've commented before about the steep rise in the index from late 2002 through to 2007 (800 odd to near 1600 - double). I attribute this to the Welcome Home Loans policy, which issued a Universal Price Signal to every seller in the land. That price floor settled for a while between 2007 and 2012 then took off to Buzz Lightyear territory (infinity and beyond - all right, 2500 ish on the Index) between 2012 and now.

In both cases, I think that availability of credit (Welcome Home from the Gubmint, later from everyone and not a few Dogz) against a fixed (or at best, inelastic) supply per capita of an increasing population, was a major driver.

So while a little irrational exuberance is certainly a factor in explaining the price rises, I cannot see that getting Awkland prices backed off by 10-15% worth of de-Exuberentiation is gonna help Supply......

What am I missing here?

Waymad, i'm not entirely understanding your question.

"So while a little irrational exuberance is certainly a factor in explaining the price rises, I cannot see that getting Awkland prices backed off by 10-15% worth of de-Exuberentiation is gonna help Supply......

What am I missing here?"

Could you rephrase? Or explain?

It's just that I cannot see any connection between price indexes rising, falling, or going sideways, and Supply. Everyone from the Productivity Commish on down to Umble Common Taters such as Moi, has pointed to supply-side constraints as a major build price driver: materials, Elfin Safety and consent nightmares on the House build itself, RMA, zoneration and Clueless Councils on land prices. Credit availability and Universal Price Floors (like KB and Welcome Home) may well impose downwards price stickiness. But that's still not actual new-build House Supply.

Perhaps it will all be clearer after a G&T....

I'm too chilly for a G&T but I have a hearty glass of red to warm my cockles and aid brain function for now ;-)

So you are highlighting that the data doesn't support the notion that house price inflation relates to new-build housing supply costs? That's very interesting. I've never looked at that data. There are plenty of other causes for new-build price pressure though, as you say.

Napier property prices still booming ... & 2 or 3 other regions.
Southward internal migration?
Bouyant economy & job growth?
Lifestyle attractant?

They will pull back after Auckland pulls back

Why?
The anti-lifestyle will still continue in Auckland. And the unaffordability.

Because historic data clearly shows the provinces boom after Auckland booms, and decline after Auckland declines.

Here we go again...Half of teachers at a south Auckland school on verge of quitting
I'm sure this has something to do with the QV report. https://www.nzherald.co.nz/nz/news/article.cfm?c_id=1&objectid=12083064

So sad isn't it.
This is what happens when house prices go mental and are not properly addressed.
Pity that when the party is at it's feverish heights few stop to think about the consequences.

The many who failed to stop and think about the consequences were preoccupied with throwing out jibes about Millennial Avocado Binges and other spending habits.

" ***scoff*** it was just as hard in my day we had 37% interest rates and 3 mortgages "

I can't help but remember back to those good ole days when the media was all over Auckland house prices increasing by several hundred a week and now there is silence and yesterday this old song that I hated during my youth, just popped into my head. The lyrics made me laugh! Can anyone guess the song?

You got to know
When to hold 'em
Know when to fold 'em
Know when to walk away
Know when to run
You never count your money
When you're sittin' at the table
There'll be time enough for countin'
When the dealin's done

Kenny Rogers.