42% overall sales rate at Barfoot & Thompson's latest auctions

Property

Prices ranged from $665,000 for a three bedroom house at Otahuhu to $2.775m for a villa in St Mary's Bay at Barfoot's latest Auckland auctions

14th Aug 18, 10:41am by Greg Ninness

Barfoot & Thompson had an overall sales rate of 42% at the agency's latest auctions.

The number of properties being auctioned remain on their winter lows, with Barfoot marketing 79 residential properties for sale by auction last week and achieving sales on 33 of them, with the rest mostly passed in, which meant they became available to buyers who needed to make conditional offers.

At the biggest auctions where 10 or more properties were offered, the sales rates ranged from 27% at the Manukau auction where most of the properties on offer were from south Auckland and the eastern suburbs, to 54% at the Shortland Street auction on August 8, where most of the properties offered were from central Auckland suburbs.

Selling prices ranged from $665,000 for a three bedroom weatherboard and tile house on a 708 square metre section at Otahuhu, to $2,775,000 for a four bedroom villa with harbour views in St Mary's Bay.

Details of most of the properties offered and the selling prices on most of those that sold are available on our Residential Auction Results page.

**Barfoot & Thompson Residential Auction Results 6-12 August 2018**
Date	Venue	Sold	Not sold	Total	% Sold
6-12 August	On site	1	3	4	25%
7 August	Manukau	6	16	22	27%
7 August	Shortland St, CBD.	3	1	4	75%
8 August	Whangarei	1	1	2	50%
8 August	Shortland St, CBD.	7	6	13	54%
8 August	Pukekohe	0	1	1	0
9 August	Shortland St, CBD.	2	3	5	40%
9 August	North Shore	8	11	19	42%
10 August	Shortland St, CBD.	5	4	9	56%
Total	All venues	33	46	79	42%

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96 Comments

by Double-GZ | 14th Aug 18, 11:02am 1534201331

Auckland is ranked 2nd in the world’s most ‘overvalued’ cities for housing. It's time for Auckland house prices to slide downwards at least 30% in the next year or so. And if history is any guide, where Auckland goes the rest of New Zealand soon follows. To all the spruikers on this site: "Take cover before you're hit by the falling scud missiles!!"
https://www.oneroof.co.nz/news/35261/?ref=nzhhome

by gingerninja | 14th Aug 18, 11:04am 1534201499

Troll lolz?

by Mrs The Point | 14th Aug 18, 11:34am 1534203266

He's following in the footsteps of his glorious leader, John "Flip-Flop" Key.

by Bobster | 14th Aug 18, 11:13am 1534202011

You used to be funny......what happened?!

by Retired-Poppy | 14th Aug 18, 12:11pm 1534205502

...Buylowsellhigh must have stopped deliveries of his "Sunny Papamoa" water ;-)

by Pragmatist | 14th Aug 18, 12:49pm 1534207784

Papamoa Electric Puha more like it.

by BuyLowSellHigh | 14th Aug 18, 2:35pm 1534214128

Somebody's given him doom and gloom kool-aid. At 30% discount I'd love to invest in an additional sunny Papamoa property.

by Retired-Poppy | 14th Aug 18, 3:28pm 1534217323

BuyLowSellHigh, are you saying -30% would restore Papamoa to fair value?

by BuyLowSellHigh | 14th Aug 18, 3:27pm 1534217278

Papamoa Beach is 6% undervalued at the moment, so no.

by Retired-Poppy | 14th Aug 18, 3:33pm 1534217583

On what already stretched fundamental are you basing this juicy factoid?????

by BuyLowSellHigh | 14th Aug 18, 3:41pm 1534218063

Various facts, figures and equations that you wouldn't understand.

You've mentioned RBNZ in quite a few of your previous comments. What do you have to say about the fact that a fall in house prices isn't in their projections for the next few years?

by Retired-Poppy | 14th Aug 18, 4:02pm 1534219358

BuyLowSellHigh, it's good that he's mindful not spook the horses;

https://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=12…

"He was careful to add that a slump is not forecast in the Reserve Bank's current projections. In Auckland, where prices have been flatlining for more than a year, the prospects of prices slipping in to negative territory looks increasingly real. Even Reserve Bank Governor Adrian Orr has warned of the possibility. "We're within a wisp of that happening in Auckland housing prices at the moment," Orr told TVNZ's Q+A at the weekend.

Note also, I watched the Q & A and there was no mention of the trade war or other Global risks that are currently building. These are also rather large elephants in the room that could derail our economy. I guess such eventualities is what the unconventional tools are meant for - right?

by BuyLowSellHigh | 14th Aug 18, 4:01pm 1534219306

Are you saying that RBNZ's projections are wrong?

by Retired-Poppy | 14th Aug 18, 4:02pm 1534219336

Are you?

by BuyLowSellHigh | 14th Aug 18, 4:11pm 1534219890

No, I think their projections are spot on. They acknowledge the risks, which pretty much everyone knows exist, but on balance do not anticipate a fall.

Are you saying the RBNZ's projections are wrong?

I'd love a yes/no answer, but I'm guessing you won't oblige.

by Retired-Poppy | 14th Aug 18, 4:52pm 1534222348

BuyLowSellHigh, I think their perception of potential headwinds our economy faces are spot on as is their preparations. Orrs comments on Q & A were carefully worded and safe. Where you and I part company as that you underestimate the risks. Orrs comments were intended to send a message that businesses should invest as per usual and that those taking on a mortgage should think carefully about having the future income to cover it"

BuyLowSellHigh, what else could he say? The following was a press release from Bernanke on 15 Feb 2007. It's a perfect example of what is drip fed to the public, doesn't always reflect the prevailing risk;

'Despite the ongoing adjustments in the housing sector, overall economic prospects for households remain good. Household finances appear generally solid, and delinquency rates on most types of consumer loans and residential mortgages remain low.'

Here's another from Bernanke on October 31, 2007 'It is not the responsibility of the Federal Reserve -- nor would it be appropriate -- to protect lenders and investors from the consequences of their financial decisions.'

On Dec 31. 2017 the RBNZ released this "Reserve Bank warns: 'It's not our job to protect you from the housing market'

https://www.stuff.co.nz/business/99408539/reserve-bank-warns-its-not-ou…

I now prefer to focus more on the contingency. You simplistically label it gloom.

by BuyLowSellHigh | 14th Aug 18, 5:14pm 1534223676

I’m very well aware of the risks. Where I see risk, I see opportunity.

I’m still uncertain if, taking your view of the risks into consideration, you agree with RBNZs projections. Oh well.

Term deposit returns are falling. Isn’t that your preferred investment option and where you currently have your savings? (May be mistaken, but that was my impression)

by Retired-Poppy | 14th Aug 18, 5:34pm 1534224862

BuyLowSellHigh, are you implying my bank can reduce the rate (4.27%) of the five year fixed term deposit, I took out in January? I can hear the ice cracking under your feet ;-)

by BuyLowSellHigh | 14th Aug 18, 5:52pm 1534225922

Nope. I’m implying that one should be cautious before following your lead or taking your advice, as the already low returns of your preferred investment option are heading in the wrong direction.

You have about 4.5 years left in your term. By that time we’ll be in the upward phase of the cycle, so you’d be best off to invest more wisely in Papamoa at that point.

by Retired-Poppy | 14th Aug 18, 6:16pm 1534227395

BuyLowSellHigh, you're right, rates are heading in the wrong direction. With history as your guide, the opportunity to pause and think, why are mortgage rates already hovering at 60 year lows. There's only so far this method of support will stretch before it breaks.

Enjoy your water ;-)

by BuyLowSellHigh | 14th Aug 18, 6:32pm 1534228334

You’re a very nervous and pessimistic man poppy. Your spirit animal is Eeyore.

by Retired-Poppy | 14th Aug 18, 6:48pm 1534229339

...hardly, years of double digit returns on managed funds and now today, my bank accounts tell me otherwise :)

by Nzdan | 14th Aug 18, 6:53pm 1534229596

Actually I think he’s probably more of a Droopy than an Eeyore. Probably looks like Carl Fredrickson (old man from up) in person.

by Eco Bird | 15th Aug 18, 12:35am 1534250125

lol, you might both be right .... haha

by tgcam4 | 14th Aug 18, 12:11pm 1534205470

Got to respect someone willing to change their point of view. Sounds like your timing's been spot on. I'll admit I got bearish too early.

by tgcam4 | 14th Aug 18, 12:13pm 1534205596

What was the information that caused the tipping point for you btw?

by Laminar | 14th Aug 18, 12:39pm 1534207173

You guys are literally immune to sarcasm.

by Mrs The Point | 14th Aug 18, 12:54pm 1534208058

I agree, it is a prime example of Poe's Law. He needed to include a winky emojie at end.

by tgcam4 | 14th Aug 18, 1:34pm 1534210485

Poe's law huh, learn something new everyday

by tgcam4 | 14th Aug 18, 1:30pm 1534210222

Us guys? haha probably just me. Maybe my sarcasm detectors been switched off, but I've seen a few bearish posts from DGZ lately.

by Laminar | 14th Aug 18, 2:57pm 1534215443

Its just his sense of humor.

by Mrs The Point | 14th Aug 18, 12:50pm 1534207859

Don't be so easily taken in by this ruse. It is very difficult to deprogram a fanatic.

by Nic Johnson | 14th Aug 18, 9:29pm 1534238976

Double GZ. I see Stuff have published the identity of your $9.6 million Remuera seller.. Yep 3 years and $4,000,000 profit spanked and banked. No wonder he didn't want a foreign buyer ban. You're not him are you? Hence the I'm out, bugger the rest of you attitude you seem to have taken on?

https://www.stuff.co.nz/life-style/homed/celebrity-homes/106260203/remu…

by Nzdan | 15th Aug 18, 6:34am 1534271659

I wonder if DGZ is Hosking. He’s changed his tune on this site over the past week, coincidentally not long after the sale of this property.

by Double-GZ | 15th Aug 18, 9:33am 1534282425

Or I could be the born and bred Mainland Chinese who just purchased Hosking's property?

by Nic Johnson | 15th Aug 18, 9:50am 1534283452

Wherever you're from Double GZ - you're good value on this site so keep up the good work.

by Stealth | 14th Aug 18, 11:15am 1534202155

A slowing economy rates will fall and put a floor in the market. Money in the bank useless Property, Shares or a business the only way to go. Renting is dead money your paying for the landlords retirement.

by Retired-Poppy | 14th Aug 18, 11:47am 1534204032

Sounds great! But, what is interest, rates, Insurance and maintenance on a house that's eroding in value? Dead money. How confident are you that banks will open the taps, relax lending restrictions on a commodity they are already overexposed too? All this at a time when nonperforming loans are more than likely pouring through their back doors during a declining market.

Don't get me wrong, I always support owner occupier house ownership but, not right now. First time buyers risk paying out shed loads of unnecessary dead money just to line the pockets of a speculator. Then there's the interest to pay on it. No-way.

First home buyers, declines are just getting started. Wait, save and watch it all unfold.

by Nic Johnson | 14th Aug 18, 1:27pm 1534210053

Stealth

How would you interpret this chart provided by our good friends at interest.co.nz? Tap the change value in YonY approvals.

https://www.interest.co.nz/charts/credit/mortgage-approvals2

by Retired-Poppy | 14th Aug 18, 1:29pm 1534210141

...or here; https://www.rbnz.govt.nz/statistics/c31

by Nzdan | 14th Aug 18, 2:18pm 1534213098

And that chart only goes to October 2016.

by Carlos67 | 15th Aug 18, 9:23am 1534281795

Money in the bank is not useless, money in the bank means you already have a s%&tload and its a low risk investment that makes money while you don't even need to get out of bed in the morning and its very low stress. Its working pretty well for me. Things change when you get older, your priorities shift in a big way. I could have had a rental but chose to sell it. It don't have time for drop kick tenants and the stress the type of people renting bring.

by denature | 14th Aug 18, 11:39am 1534203581

But Stealth it doesn't matter what the reserve bank does here or if the economy slows here.
The US is tightening, so the USD is strengthening. The NZD is falling not only against the USD but generally.
This is inflationery. It is irrelevant what the politicians do and what the reserve bank here, does or says. You can have high inflation, high interest rates and economic decline. That is not very unusual at all.
Foreigners own 50% more NZ assets than New Zealanders own foreign assets. So what matters is what is happening to them, and how they respond to that, not what is happening to us and how we respond. Like it or not we have become a debtor nation with poor productivity.
There will be inflation and it will take off suddenly and before anyone can do anything about it. That's how people work. Everyone is still scared of deflation as that was the most recent crisis. The market always gives you what you don't expect, it's why contrarian investing is successful.......and extremely difficult. It's hard to do what everyone else isn't, we are not geared for it because of the safety of the herd.
Once it becomes clearer that NZ is in trouble there will be a run on the dollar and inflation will skyrocket. The reserve bank will be forced to raise interest rates and it will crush the housing market. And it will happen because we don't have our eyes on the ball, we are all worrying about what is happening here and what happened most recently and basing our decisions around that.....as if we are in control of our own destiny. But that is just a fools vision, given by the last 10 years of easy credit and an asset bubble.
You know this has happened so many times you would have think we would have learned. But we don't. Most likely we won't next time either, or the time after that.
Stay safe everyone.

by rastus1 | 14th Aug 18, 11:46am 1534203972

..and the usual tool, putting up interest rates to control inflation, will not be an option. Then what?

by denature | 14th Aug 18, 11:58am 1534204706

They will have to put up interest rates. We import too much and are too small for them to let the NZD drop too much. Look at petrol prices now.....imagine what happens if in NZD terms they go up another 20% or 40%.
And that's just oil.........it's far from the only thing we import.
So yeah they could do nothing and no one will be able to transport anything anywhere. Or they raise interest rates and crash the housing market. There will not be a good side / bad side, just bad side / bad side. But that's just the way things are, poor decisions have been made for a long time and hidden by cheap credit. Call it karma, yin and yang, mean reversion, chaos theory, whatever you like. There are forces at play larger then politicians and central banks. Either way we all have to feel some pain. We have kicked the can down the road for so long..... that the can is now so bashed up it just won't move when we kick it. So we are just left with a crappy broken can.

by rastus1 | 14th Aug 18, 12:42pm 1534207367

..commentary recently (I forget which economist) was that this was a major US risk. When inflation rears, they will not have the ability to control it via inteerst rates - as they are unaffordable. The same in Aus with up to 1 mill in mortgage stress already...and so I'd say ditto NZ. There is no wriggle room...if they go up..it's all over...

Not saying they won't, but if.......bang pop crash.

by Laminar | 14th Aug 18, 1:06pm 1534208813

@denature Cutting rates reduces the value of your currency and aids exports. Inflation is very low, a bit higher is probably tolerable. Not sure why you think rates will have to rise, doesnt make much sense as it would worsen our export sector and cause inflation to drop as households close their wallets.
I dont think a 40% rise in fuel costs is a credible claim. You're out on a limb making extraordinary claims so youl need some extraordinary evidence to defend yourself. The oil that is purchased is only part of the cost, the refining of a lot of oil occurs in NZ and so prices of petrol are not solely at the mercy of exchange rates.

by denature | 14th Aug 18, 2:01pm 1534212078

Yes inflation is very low now. But I'm sure you have heard of "the geanie in the bottle" when it comes to talking about inflation. Just because it is low now, does not mean it will be in 3 months or 1 year.
Rates will have to rise to shore up the value of the dollar, so we can still afford to import all those things we need. If there is a run on the dollar, the ONLY thing that can be done is to raise interest rates. I mean we could buy dollars but that hasn't worked for the Swiss, or the English or the Japanese when they have tried it and their pockets are a bit deeper than ours. Interest rates rises may still not work but how will we afford to import anything if they don't? The export sector has to import things as well. You are slipping into a classical economics mode. If your argument is we don't want to hurt our export sector then my argument is why would you hurt the import sector? It is just as valuable, we need the things it contains, and it's larger than our export sector because we run a trade deficit. So why would we penalise it by making the price of it skyrocket and when all of us depend on it. We don't all depend on farmers making money however.......
No, the cost of oil is not the only part of the cost of petrol. But how does it get moved around the country? And who drives it around? How does it get here on NZD supertankers? How does it move around within NZ? If the cost of living goes up for the truck driver he wants to get paid more. The cost of the gas in his truck has gone up. The cost of moving the parts to repair his (or her) truck has gone up. The cost of his food has gone up, so has the cost of all his clothes and his Netflix subscription and his iphone. Sorry which of these things can we just make ourselves?
Oil is also used heavily in the fertiliser industry and the pesticide industry. Sorry laminar I forget whats the name of that industry that we are so dependent on here? The one that uses all the fertiliser and pesticides? And how is that fertiliser moved around? And all that milk how does it move around? With magical dancing shoes? We import all of those things and we pay for all of them in USD that we have to convert from our rapidly falling dollar. We do not exist in a linear system, that is why people who understand these things are so shit scared of inflation. Once it is unleashed it pops up everywhere and it feeds on itself. It is why it is so difficult to get back under control.
You are simply viewing the system like all great classical economists......price a is affected by factor b. Therefore if we pull lever c, everything will be fine. It is an absurdly simplistic view of the world and chaos theory alone proves that it cannot be so, without considering anything else. That and that fact that economists forecasts are mostly wrong most of the time.
As are mine. But I recognise that at least. And I am not afraid to say something unusual might happen just because it isn't patently obvious it will happen now.
History is absolutely rammed with points where a certain set of circumstances or possibilities were viewed as ridiculous or highly improbable. And they promptly happened anyway.
I have tons of "extraordinary" evidence of massive inflation. So much so that it is actually pretty ordinary. And that's the point. The last 15 years since the GFC have been extraordinary. Negative interest rates, I mean WTF how does that even work and when has it happened, ever? But inflation......The Weimar republic, Zimbabwe, Venezuala, right now, is running at nearly 1 million % inflation. What, you think they all planned that? The stagflation of the 70's you think that was because all they had to do was one thing that you have thought of and everything would have been fine? Do you think Paul Volcker raised interest rates to 21.5% in the early 80's and sent the US into recession because he thought it would be a laugh, or because inflation in the US peaked at nearly 15% and was still on an upward curve when he came in? And 15% isn't even very high. But he went to 21.5%. Think about what that would do here. And this is the US, not some tin pot little third world crap hole.
And don't get me started on currency crises......talk about a commonly common thing that is very common.
I may be completely wrong, but it's called the business cycle because it moves in cycles. So it's very reasonable that some permutation of these things is not very far away.
As I say be safe everyone. Hope for the best prepare for the worst.

by Laminar | 14th Aug 18, 4:47pm 1534222079

"Rates will have to rise to shore up the value of the dollar, so we can still afford to import all those things we need."
No, we can import less, export more and improve the balance of trade.
The idea that you support NZ exports with a higher dollar is laughable. Exporters earn in offshore currency and so offshore input costs as a percent of revenue are not affected by a drop in the NZD. Its local inputs (labor, materials, capital expenses, compliance and such) however do drop relative to revenue and exporters thus become more profitable. Over time they can drop the prices and become more competitive, so over time you see rising export volumes as a secondary effect.
The GFC was 10 years ago not 15.
Ultra low rates are just a math function. Negative rates are more complex but not particularly relevant as its not likely we will see much beyond very slightly negative rates. It does remind me a of a joke though, if you dont earn enough to pass bank servicing then just request to borrow more until the negative rate boosts your income above servicing minimum requirements.
Inflation is not as general as you imply and in fact only occurs where money flows, you dont get a Weimar crack up if you dont put the money in the peoples hands but instead pump it in to assets. Look at Japan or the USA for examples of this. The transmission mechanism is largely confined to fees which is a modest effect, so you can ram money in to assets and not much happens to CPI.
What the West has done has a cost but that cost is mostly going to be in the form of long-term lower than trend growth rates. Effectively we have overly finacialised and a bulk of the finance industries revenues represent a type of waste.
NZ wont have a currency crisis, rates will not rise much, fuel will not cost 40% more, there will be no hyper inflation. A lower dollar will slightly support exports, slightly reduce import and slightly increase non-monetary inflation short-term

by denature | 14th Aug 18, 9:34pm 1534239287

I don't understand your post. Who said anything about supporting exports by increasing the value of the dollar? I simply said we need imports. We are more dependent on imports than exports that is why we run a deficit. I never said anything about supporting imports or exports.
"Exporters earn in offshore currency and so offshore input costs as a percent of revenue are not affected by a drop in the NZD. Its local inputs (labor, materials, capital expenses, compliance and such) however do drop relative to revenue and exporters thus become more profitable. Over time they can drop the prices and become more competitive, so over time you see rising export volumes as a secondary effect"
WHAT ARE YOU TALKING ABOUT!!!!! Everyone who operates in NZ uses NZD. I don't know where you go in NZ that accepts other currencies but I have not seen anywhere that does. Exporters get paid in USD or Euro or whatever yes, but they have to convert that to NZD for all of their activities. Potentially a kiwi fruit grower might get paid in yuan and use his off shore yuan account to pay for shipping but that would be neutral it would not affect revenues in any way. An expense is an expense regardless of currency. So yes they get more NZD, but all the things they need to buy here cost more NZD so how are they any better of? What has the relativity to their revenues got to do with anything? Their revenues increase but their expenses do as well. The kiwifruit grower doesn't buy his irrigation pipes, or fertiliser or lumber or tractor in yuan in China and then ship it back on the empty ship that took his kiwi fruit over. He has to buy all those more expensive imports here.
Sure an exporter might sell more because their product appears to be cheaper, I grant you that. But this is a function of their product appearing cheaper to users of a more valuable currency. What the hell does relativity to revenues have to do with anything there? And how the hell does compliance fall? What, are you really trying to say health and safety laws change for exporters as the dollar falls? Same with labour, their employees will need more income to pay for all the more expensive imports so those costs won't fall. And if their sales are going to go up then they are going to have to hire more people to make more stuff. The only way you can use less labour is if you get more efficient and more sales don't make you more efficient.
And you still haven't even addressed the fact that the majority of New Zealanders are importers. We either buy things made here or we buy them made overseas. So what happens to exporters is for most people irrelevant. Most people working in cafes, or bars, or retail in Auckland don't realise much money from exporting. Neither do doctors or nurses or teachers. Plenty of these people own houses though. So is this when you tell me none of this matter relative to their revenue? That increasing the cost of most things for most of the people will somehow be balanced by a very small groups increased profitibility and we will all be magically better off?
And really you are going to pull out the GFC was 10 years ago not 15? Congratulations you have managed to say a sentence that is completely irrelevant to the argument, instead of just plain confusing. How exactly is that point relevant to anything either of us have said?
Exports are not the only function of an economy and actually should only roughly equal imports. The point of exports is to support imports and vice versa.
It is true that velocity of money is as important as the supply of money. But if you have a massive increase in money supply, then you are half way there already. The supply is still important. The fuse is there all it needs is a light. And it does not take much velocity to generate inflation and as I said before these things feed on themselves. Once they start the grow very quickly.
And the economy is not a maths function. Inflation and interest rates are based on mathematics yes but they are imposed by humans. They are not physical laws subject to the universe they are distorted by bias, politics, hubris and all the other things that make humans make mistakes. Interest rates are not set by the market they are set by a few people, who often make very little sense, but for some reason everyone seems to think that means they are clever. Why would you think that Bernanke or Greenspan or anyone else would have some ultimate mathematical understanding that the rest of us don't have? Or know something we don't? There is not some logical mathematical proof at work in the GFC or any other facet of the economy. If there was both you and I would be able to predict what markets would do tomorrow or next week. But we can't.
Negative rates are a sign of dysfuction. Ultimately debt is a promise. I agree to lend you money and you agree to pay it back at some stage with some cost. Money being a measure of value. A negative interest rate has no place in that contract. It is a complete abstraction. I give you value and then I pay you to keep the value. It has no place in an economy as it implies value has no value. Or value is limitless. One is a contradiction in terms and the other is plainly false. Nothing within our economic world is limitless.
Ultimately I have no idea how you can be certain of so many things like you are in your last statement given the rest of your post doesn't really make any sense. I am certain of nothing. Any prediction I make is very likely wrong. It must be nice to be certain even when you stand on such wobbly ground.

by Laminar | 15th Aug 18, 5:19pm 1534310390

Your post is so long and meandering that ill reply only to one point.
Exporters earn in offshore currency. If the NZD drops then when they exchange that FX they get more NZD. Thus relative to revenue their local costs fall. Compliance costs in NZD do not change but in FX they drop, thus even things like compliance costs fall for an exporter when the NZD falls.
I hope it is clear to you now why a drop in the NZD leads to more profitable exporters.

by denature | 16th Aug 18, 6:13pm 1534399987

I never said it doesn't make exporters more profitable. I understand their products look cheaper so they sell more.
But that is not the whole story. And it is not good for NZ as a whole.
Your comments all follow a linear process. You don't address the other side. Their costs don't fall relative to revenue because all of their NZD costs go up. They are exposed to the imported inflation that everyone else is. They still shop at the supermarket. They still pay there workers in NZD. The still buy their gas at the pump. The price of all those things goes up if NZD falls.
It's fair enough if you didn't read it it is long it is a weakness of mine.
But the idea that a falling currency makes us better off is a fallacy. A currency is effectively our share price. A fall in it reflects belief that NZ is not in good shape. It also probably represents re-shoring of foreign money. This is also not good for us.
You also don't address the fact that most people in NZ do not export they import. So how is an increase in import costs good for them? Or the wider country?
We are a debtor nation. Foreign ownership of NZD assets outweighs NZ ownership of foreign assets by 50%
So as the dollar falls the value of our assets for foreigners goes down. As they begin to sell this will push the value of our dollar down further. It's how a currency crisis could begin. It's what is probably happening already.
Downward pressure on NZD will force rates to rise, to shore up our purchasing power. NZD is down 10% against USD already this year which is a very large move in currencies.
We may not be in trouble but we may be in serious trouble. It's worth considering.

by Hardly | 14th Aug 18, 3:57pm 1534219047

Increasing interest rates will be an option. If you think the reserve bank will sit on its hands while the inflation rate goes over 3% you are dreaming. Combine massive public sector wage increases with imported inflation due to exchange rate/petrol costs and its plausible that inflation could climb rapidly.

by ham n eggs | 14th Aug 18, 12:24pm 1534206247

"There will be inflation and it will take off suddenly ..."

I agree with what you describe in general, but not this conclusion.
Inflation (in terms of the underlying cost of producing stuff) is well and truely here. (Its also been somewhat apparent in house prices) .... And it will get worse.

But the deflationary pressure is in WAGES and INCOMES. They arent budging. The surplus in the system simply doesnt exist for wages to increase. Discretionary spend will only keep pace if we add more IOUs = 'MORE debt ... so Interest rates cant go up. Its a race to the bottom.

The US$ will strengthen as periphery countries like NZ get squeezed ... producing more (for export) but watching our living standard deteriorate as our $$ buys less.
Thats what the big boys do when the pie is shrinking. Its their game board.

by denature | 14th Aug 18, 1:09pm 1534208973

Yes but wages are always the last part of the inflationery puzzle.
Teachers are going on strike tomorrow, nurses have just been on strike. Bus drivers are on strike in the Waikato today.
The government plans to move the minimum wage to the living wage point in the next year. This will push up wages everywhere.
Wage disinflation has largely been caused by the increase in cheap unskilled labour via immigration. Immigration is slowing so the wage disinflation is slipping there. China had been hugely disinflationery but that is largely drying up. Wages there are also picking up.
Like much of the economy wages are based on perception. What will people perceive to be a fair wage increase when they see this industrial action and it's positive results for the workers there? What will they perceive to be a reasonable pay rise when the cost of everything is going? And where do these perceptions fit in statistics? Perceptions change. Beliefs change. It may well not be now but at some point there will be a tipping point and wages will go up quickly. Workers will remember capital needs them just like they need capital. If they don't show up to work both sides are screwed.
Wages could be held down if we had up to date and efficient infrastructure and technology. But instead of investing in those things or lending our money to the local sharemarket to invest in those things we all bought houses off of each other.
And the surplus does exist it's called profit. Profits in companies will fall here and globally as wages take a larger proportion. There has been a steady decrease in the amount of profit going to labour and an increase going to shareholders, since the early 80's. But this trend is starting to reverse, as it should. There has to be a tight relationship between labour and capital as they both need each other. But capital has been winning our for too long and it is why we have such marked inequality.
If you are looking at current statistics they won't tell you much about where wages are going because they aren't remotely forward looking. It's the same thing as inflation generally, wages won't appear to be budging...and then suddenly they will. Just because they haven't much for the last 30 years it doesn't mean that pattern will continue for the next 30.
Sorry I don't agree with you there.

by ham n eggs | 14th Aug 18, 2:07pm 1534212458

"And the surplus does exist it's called profit"

Its actually deficit spending and QE. Thats where the "profit"is coming from.
If you strip it all back the engine of the world economy (=oil ) is heading for a supply crunch at these current "low"prices which means Oil prices are going to need to rise if Oil cos require profit...
(this despite the fact that prices are in reality already far higher than what was 20th century normal of around US$20 a barrel).
eg https://www.strategyand.pwc.com/trend/2018-oil-gas

We are heading into coffin corner.

by denature | 14th Aug 18, 2:46pm 1534214788

Yeah. It always comes back to too much cheap credit for too long.
Everyone seems to forget it's just spent future earnings. But they still expect the future earnings anyway.

by RickStrauss | 14th Aug 18, 3:15pm 1534216551

Or they expect that someone else banking on those future earnings will buy their assets off them and leave them with plenty of cash whenever the ship hits the flan.

by Carlos67 | 15th Aug 18, 9:26am 1534282009

One of the most sensible and logical comments I have seen on here for ages denature.

by saving_for_aus… | 14th Aug 18, 11:52am 1534204332

I still have no idea why someone would buy in this country. I suppose if you're from the third world and you couldn't get into the US or Australia it's decent. But almost all of us can live and work in Australia, and a great deal of us have European passports. What's the point? The rest of the world has beaches, mountains and farms as well. It's not that special.

by Stealth | 14th Aug 18, 11:52am 1534204379

Import prices will rise given the lower exchange rate, good for exporters. inflation in the range and RBNZ won't lift rates the move on the downside in the future. Property owners won't sell for a loss unless forced to.

by denature | 14th Aug 18, 12:09pm 1534205340

But hardly anyone is an exporter!! Most people work in services like hospo. How will higher petrol prices help them and how will better export prices help them? They are already struggling.
If interest rates rise, then property owners will be forced to sell especially if at the same time the cost of their fuel and food and everything else has gone up because of inflation.

by Chairman Moa | 14th Aug 18, 12:00pm 1534204818

Before anyone start comparing, please don't compare Auckland vs Sydney. It's like comparing Hunter Plaza in Papatoetoe vs Sylvia Park Shopping Centre. Auckland is a hick town compare to Sydney.

by saving_for_aus… | 14th Aug 18, 12:03pm 1534205030

I think Melbourne must be cheaper than Auckland at this point.

But all Melbourne has is 2.5 times the population, higher wages, better transport and cheaper food. It's not a fair comparison at all.

by Ex Expat | 14th Aug 18, 12:23pm 1534206187

Haven't you saved enough to move yet?

Here's a challenge for you. Take my NZD 2,500,000 home and tell me what I can buy in Melbourne or Sydney for the sale value, exchanged into AUD and less stamp duty. You have AUD 2,150,000 to spend.

Absolute requirement is that it's better than my current home. So you need to find:

Standalone house on elevated full section of ~ 700m2
North facing, all day sun, with small harbour view that can't be built out.
No more than 500m walk to an inner city beach
25 minutes bus or train ride to CBD with frequency of no less than 15 minutes at all times until midnight.
300m2 with the usual bedroom and bathroom numbers.
Internal garaging. Fully zoned gas heating and air con.
etc etc etc.

by saving_for_aus… | 14th Aug 18, 12:33pm 1534206797

Aussie stamp duty isn't an issue for FHBs.

Is there a way to edit these user names? I didn't realize it would be truncated when I registered. there's a 'house' at the end of it. One user name per email it seems.

by Retired-Poppy | 14th Aug 18, 1:09pm 1534208975

Ex Expat,

Step one, make a hard copy of your comment and pin it to your fridge next to the latest spot valuation.

Step two, stand back and ask yourself "why did I just do that?"

by Ex Expat | 14th Aug 18, 2:49pm 1534214967

I get spot valuations from two sources. 1. The Bank assigns one to the revolving facility we never use 2. Homes.co.nz because I like a counterpoint to the DGM skewed figures being used here.

Zachary does a regular review of > 30 auction results and is largely ignored because it doesn't reflect what you want it to.

by Chairman Moa | 14th Aug 18, 1:48pm 1534211323

Ex Expat, you missed the point and stop comparing, Auckland will never be in the same league as Sydney or Melbourne.. may not even Brisbane.

Btw, are you in Point England?
Actually 2.5 mil will buy you a house in Sydney and it will not leak!

by Ex Expat | 14th Aug 18, 2:58pm 1534215532

Did I? What is the point? I've done my expat days and have enough experience to know that Auckland, more specifically the Eastern Bays is where I want to spend the rest of my life. I travelled extensively to all Australian cities bar Darwin and Adelaide, in my working days. If I had to choose a city in Australia it would be Sydney's Northern Beaches, because I wouldn't be able to afford much else that has the attributes important to me. Your mileage may vary,and given you've previously said you'd move to Dunedin, we are clearly on different pages.

BTW I'm not in Point England, that's postcode 1743, apparently.

by Chairman Moa | 14th Aug 18, 3:53pm 1534218835

Yes your house is definitely bigger than mine. Anyhow, I have done my dash at postcode 1052.

by tothepoint - d… | 14th Aug 18, 4:38pm 1534221487

Hi Ex Pat,

Agree with the point you make.

I was recently in Melbourne and looked closely at house prices there.

No question that Melbourne prices are way more expensive than Auckland.

I like Melbourne and Auckland - both fantastic cities which have strong "buzz" factor. Nonetheless, I'd pick Auckland first - but for mainly personal reasons.

TTP

by Retired-Poppy | 14th Aug 18, 5:03pm 1534223031

Sydney overvalued against income by 50%, Auckland by 75% here; https://www.oneroof.co.nz/news/35261/?ref=nzhhome

Although, Melbourne isn't mentioned.

by CN | 14th Aug 18, 6:00pm 1534226454

75% over valuation for Auckland based on income levels is just crazy.
Gross rental yields in some Auckland suburbs less than 2.0-2.5% is just crazy.

Yet when you compare asking property prices of those listed for sale in Auckland on trademe.co.nz with the recent comparable sale in the same area, then they look reasonable. This is how most house buyers estimate whether or not the property they are purchasing is fairly valued.

Different valuation benchmarks lead to different conclusions about whether property prices are cheap, fairly valued or expensive.

by tothepoint - d… | 14th Aug 18, 12:13pm 1534205636

So much for all the gloomy speculation. What's new around here?

What I do find interesting is that the Shortland St, CBD auctions have consistently higher clearance rates. In the list today, the figure is 54.8% (compared with 42% for all auctions).

That's not too surprising. It's not easy to find good property in Auckland's inner-city suburbs - especially "fee simple" 3/4brm houses with drive-on and good sun. Auckland's vexing transport/traffic issues are making these properties increasingly desirable.

TTP

by Retired-Poppy | 14th Aug 18, 12:21pm 1534206098

TTP, your story of a buoyant Auckland is getting smaller by the month. Soon you'll be left with just sea water. At least its value is stable and you could argue that it "oscillates" ;-)

by PropertyPrices2Fall | 14th Aug 18, 12:25pm 1534206327

Are you rubbing your hands in glee awaiting the foreign buyers ban. .

That will further boost the sale rate. . Downwards

by sammnz | 14th Aug 18, 12:43pm 1534207386

That won't do anything.

If the OCR drops, prices will rise. If the OCR stays stable, prices will rise, albeit slowly. In order for prices to drop the OCR will need to rise.

by Nic Johnson | 14th Aug 18, 1:54pm 1534211667

sammnz

Be interested to hear how you would you interpret this chart provided by our good friends at interest.co.nz? Tap the tab to 'change value in YonY approvals.' Would that not suggest tightening of credit availability irrespective of rates?

https://www.interest.co.nz/charts/credit/mortgage-approvals2

by Pragmatist | 14th Aug 18, 2:13pm 1534212798

Data appears to have stopped around Jan 2017.

by Nic Johnson | 14th Aug 18, 4:46pm 1534221962

Sure it's just a technical glitch, maybe we can ask interest.co.nz to update it for us?

by Pragmatist | 14th Aug 18, 1:56pm 1534211817

Prices are already dropping in Auckland, barring any policy changes/economic shocks they will continue to slowly slide for at least the next two years.

by Eco Bird | 15th Aug 18, 1:21am 1534252888

REINZ numbers are few days away .. Patience is a virtue

by theglc | 14th Aug 18, 1:11pm 1534209117

Hi TTP

There have been 2 articles on this site in the last month reporting that Auckland clearance rates this winter have been more or less the same as last winter.

Time to take you head out of the sand, your observation is not relevant.

by tothepoint - d… | 14th Aug 18, 1:54pm 1534211699

Hi thegic,

Auction clearance rates for Auckland are now considerably higher than they were in the earlier part of 2018. That point has been made several times since June 2018.

If you don't like it, then too bad.

TTP

by Tui12 | 14th Aug 18, 12:58pm 1534208307

I will take your AUD 2,150,000 ex expat and buy a nice Paddo Terrace for AUD1.5 I'll put the rest into a Fund. I will take my AUD 190k salary a year instead of NZD120k at Air NZ. My Wife will also double her Doctors salary. We will also take our 9.5% min Super contribution on top. No Stamp duty for an AU FHB btw.

I'll take the 25 min train to the Airport while you sit in traffic for over an hour from Orakei. I will also take Sydney's 10 months of glorious weather a year over AKL's 2 (3 if you are lucky) and I'll take any beach in Sydney over anything in AKL (although the West coast beaches are special). I'll take SYD harbour over AKL and the SYD CBD over AKLs dump of a CBD. The Coromandel and Northland are fantastic and the GA flying around NZ is the best in the world I will give you that. But in terms of the rest no comparison. But for a blow in at your age I understand SYD may be a bit too happening for you, oh and it doesn't have Selwyn College of course.

by Mrs The Point | 14th Aug 18, 1:06pm 1534208785

Tui12. I'd like to argue against this, but most of it is true. One thing is for sure, driving around Sydney is no better than Auckland.

by saving_for_aus… | 14th Aug 18, 1:31pm 1534210266

Depending on where you work in Auckland Airport there's a good chance I've met you...

by THE MAN 2 | 14th Aug 18, 1:39pm 1534210742

The housing market is just not AUCKLAND!
Opportunities are abundant in NZ at the moment and the ones that act now will be sitting a helluva lot better off financially in a year or twos time.
I am attending an auction this week and I am pretty confident I will buy this property that will be positively geared plus there is plenty of upside with it at the right price.
The ones on here that seem to continually think that they are right and gleefully think that investors are going to get a hiding need to get something else to excite them.
Try getting into buying investment property that is positively geared and you will get the bug and progress financially in life.

by taimaiakka0 | 14th Aug 18, 1:46pm 1534211172

Will be interesting to see what the result will be, If the government does pass the bill in this session of parliment.

Will it fall as many feels or is it just a perception of many who have missed the party.

Wait and Watch.

by Hardly | 14th Aug 18, 1:46pm 1534211208

I’ll post this here.

https://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=12…

The fear factor is increasing in the media.

This statement struck me as dubious logic:

“If the market were to slump harder than expected the Reserve Bank could loosen the LVR (loan to value) rules currently making life tough for investors and some first home buyers.”

Technically they could but if the market starts dropping quickly then bank lending criteria will tighten faster than.....

I also doubt that any interest rate cuts on the Reserve Banks behalf would impact interest rates here. They seem uncoupled at this point.

by denature | 14th Aug 18, 1:53pm 1534211627

I think you are right hardly.
The reserve bank doesn't matter. If defaults increase the banks will raise interest rates and shut up shop, regardless of what the reserve bank does.
And then when things go really bad they will ask the taxpayer to bail them out.
And the cycle will continue.

by Zombie ponzi | 14th Aug 18, 2:08pm 1534212494

Exactly!

Of the last few 25bps RBA cuts, only 10-15bps were passed on from memory. The same could be the case in New Zealand. Throw in a touch of wholesale market tightening (also happening in Australia) and you get no drop in retail interest rates.

Re: the Herald article - that absolutely must have been a heads-up from the REINZ giving the herald a chance to release a wee primer article. Odds on for a miserable data release tomorrow?

by Eco Bird | 15th Aug 18, 1:48am 1534254499

My Goodness ... why are you people so Gloooomy ? ... chill guys!

You are all discussing the economy of the day after WWIII started ... and that it will happen so fast that we will turn instantly to inflation ashes !!!

Cheer up lads, you are living in one of the best countries in the world - what is wrong with you ? ... enjoy what you have and live your life !

Nothing will happen in the next 2 years , apart from stagflation ... NZD is being caught in the silly "Trump and Co" Financial and Power games creating storms in tea cups ... these will soon lose their glamour when people get used to his nonsense and find out that he is hurting his own people.

I think we have seen the bottom of NZD FX... The vultures will pick it smart fast, already over 66c as I write this ...and markets around the world are bouncing back ..." as Turkish currency worries take a breather "

As to AUS, its a matter of taste and fancy ... there are pluses and minuses everywhere, I like Melbourne but I prefer it here, much less aussies and mossies ...

by Averageman | 15th Aug 18, 7:37am 1534275425

Stagflation. If the period in the 70s are any guide then interest rates will go up as well.

by Eco Bird | 15th Aug 18, 11:23am 1534288992

It has to, but all in good time