Housing sales volumes this summer should be up on last summer but don't expect big movements in prices, says Greg Ninness

OPINION

By Greg Ninness

The real estate industry has every reason to be optimistic as it heads into spring, with early signs suggesting sales will be more buoyant over the spring/summer selling season than they were last year.

There are several reasons for this.

Firstly the interest rate outlook is now more benign than it was 12 months ago.

At this time last year mortgage interest rates had been slowly rising and the long term outlook was for them to increase more significantly.

But instead they have declined, with the average two year fixed mortgage rate dropping from 4.82% in August last year to 4.63% in August this year.

And although they are expected to start rising again at some stage, most forecasters have pushed out their predictions of when that will be to either to later next year or some time in 2020.

And in the meantime there could be further cuts.

So the worries over mortgage interest rates have eased.

And it is now almost 12 months since new tenants moved into the Beehive, introducing changes to the tax treatment of investment properties, restricting the ability of overseas buyers to purchase residential property and putting more emphasis on the supply of new housing through the introduction of KiwiBuild and plans to introduce an Urban Development Authority.

Coming on top of a crackdown by the Chinese Government on the ability of its citizens to take money out of China, which had already dramatically curtailed a Chinese buying frenzy in Auckland's residential property market, it's not surprising that the market was more than a little unsettled 12 months ago.

Facing an uncertain market, buyers and sellers both tended to do did what they always do in such situations and sat on their hands.

Sales volumes declined and the big price gains of the last few years started drying up as prices flattened.

But the market didn't crash.

Instead we got a market that was quieter but relatively stable.

But it has left behind a growing pool of latent demand from both buyers and sellers, people who might otherwise have bought or sold a property but put off making a decision until they had more certainty over the market's direction.

With interest rates now less of a concern and prices relatively stable, the advent of spring will probably tempt more of those people back into the market.

If it does, we should see new listings, attendances at open homes and eventually sales, all rise to levels above where they were 12 months ago.

Picking which way prices will go is more difficult.

House prices are like a fault line in the earth's crust.

Over the last 12 months lower interest rates and demand that continues to outstrip supply have been trying to drive prices up, while affordability constraints have been trying to pull them down.

As they grind away at each other we've had small slips, with prices tending to move up or down slightly each month.

But there hasn't been a major earthquake.

That's likely to continue.

While lower interest rates could feed into higher prices, we are unlikely to see the huge price gains that were being achieved two or three years ago.

Overseas buyer activity has been curtailed and loan-to-value ratio (LVR) restrictions and changes to tax rules mean local investors are being much more cautious.

While demand for properties still exceeds supply, particularly in Auckland, the speculative element has largely gone form the market.

Buyers aren't expecting rapid and substantial capital gains and remain cautious and vendors are being more realistic in their pricing.

In short, the market has adjusted to the new normal.

There could still be a major price correction in the market at some stage.

A sudden sharp rise in interest rates or a major economic event that tipped the country into recession could have severe consequences for the property market.

But in their absence, the gradual increase in supply and the gradual lessening of demand via decreasing migration gains that we are starting to see, should make for a gentler rebalancing of the market.

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194 Comments

Ha, I just commented in another thread that this is what I think too. I think prices for premium properties are going to firm up a bit. You will not get an absolute bargain in Auckland's desirable suburbs of which there are many.
A house in my area of interest went to mortgagee auction the other day and got what I think is a premium price. To me it was a sign:

https://www.uprealestate.co.nz/UPH11437

Sold for 1102k RV 1260k however sold for 750k in 2012

Such a sale should be the canary in the coal mine however it still earned the mortgagee $1100 a week for six years straight.

Greg's update is right on the money.

Notably, it's exactly what I've been saying here since April 2017.

Despite the enthusiastic predictions of many here that there was "about to be a major price correction", that was never actually going to transpire.

Instead, prices have held pretty stable, fluctuating within a narrow band.

People have now largely adjusted to reality. For a number of predominantly structural reasons (outlined here on many occasions) NZ has now become a high-price property market in terms of international comparisons.

As a country to live, work and play in, NZ has risen in desirability.

TTP

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Hi TTP

I think that it is very nice of Greg to have painted such a rosy picture for all those boomers planning their future on the 'possible' equity they might have (or might have had). I have a strong belief that things will pan out quite differently as we follow other property markets down the slide. But from out loftier height the speed of decent could be somewhat faster. Sentiment plays a huge part in these things (beyond a solitary focus on what interest rates may do over a 12 month period) and while it may reduce pressure on some of the over-leveraged, I don't think today there is the same appetite for the level of mortgage debt necessary to underpin the bubble. Which is what the last 4 years have been. Sentiment and appetite for risk are now on downside and persuading people to buy a depreciating asset becomes a lot harder to do.

Time will, quite simply, prove you wrong.

With respect to previous comments of yours, I actually think it already has.

Let's see shall we. I've been an interest member for 5 months and can't see that any of my predictions have been wrong so far. Falling prices, depreciating NZ dollar, Australian housing woes. Let's see in 12 months time where we are before you go patting yourself on the back old chap.

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There has been talk on here of the Australians being a foreign force in the NZ real estate market. Given that we can hear the air hissing out of their housing market from over this side of the ditch. I think they may well be too busy at home to be investing over here in any large numbers. Another headwind for our housing market?

If the Australians have been large buyers in NZ and are owners of a large amount of property in NZ, then there is something else to consider.

If for some reason they are experiencing financial pressure at home in Australia (credit contraction in bank lending, cash flow losses on their Australian property portfolio, interest only loans becoming P&I loans, economic recession, etc) then they might decide to sell their properties in NZ to remit the cash proceeds back to Australia.

I recall a story where this happened during the Asian Financial crisis - a South Korean based owner of NZ property decided to sell their property in NZ and use the funds back home.

What any market observer with common sense would call flat, you call falling. The market will still be flat in 12 months time, while you continue to insist the end is nigh. No doubt you’ll then insist we wait another 12 months.

At some point there will be another recession, but as far as the likes of you are concerned, it’ll be a case of even a blind squirrel finds a nut if given enough time. Nic ‘blind squirrel’ Johnson.

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Growth will turn negative in the first quarter of next year and NZ will be in recession by the end of the second quarter (2 consecutive quarters of negative growth). Australia will be suffering a similar fate and before Q4 of 2019 one of the Australian banks will be trying to tap its government up for funds to shore up its capital ratios (My money is still on Westpac because they've been bleating the most inconsistency over the last 4-5 months, albeit CBA could also pose an issue because of the size of their loan book). Interest rates will be rising by Q4 2019 to hold up a heavily sold NZ dollar. There's a few predictions for everyone that I'm quite happy to have on record. Sound nuts? Maybe, but this old squirrel has seen what happens when a housing market dominates an economy and where banks have leant too much interest only debt and too many high multiple mortgages at the top of the cycle.

Interesting that your musings don’t mention what is going to happen to property prices...

Okay let's carry on then. Unemployment will hit 6% by Q2 2020 rising to a peak of 7.4% by Q4 2021. Reserve bank rate will be 2,5% by Q4 2020 and 3.5% by Q4 2021. prices will fall 15-20% at the lower end of the market 25-35% in the middle and 40-50% at the upper/luxury end of the market. The bottom of the market will be 2023/24 a couple of years later than your prediction but ready for your next upswing. In essence a heavy top down correction because of tighter credit from banks and lack of cash from foreigners at the margin, many of whom will be forced to flee with big foreign bank losses.

Lovely. Looking forward to your excuses when these property price predictions don’t eventuate. However, most likely will hear nun but crickets.

Can't help but picture you will your fingers in your ears singing "No to won't happen"! Very loudly.

Ahh well here's the reality of the situation. If the Oz property market is starting to tank (which it is) then ours will go down twice as fast.

Can’t help but imagine you with your fingers crossed and a creepy smile - “Oh please implode!”

OZ property prices are going to keep falling for good reason but I'm not convinced NZ property will follow suit. The only reason I'm given is the OZ banks own the NZ banks, yes so...

CJ099

Tis going to be very interesting to watch. Some poor buggers will never recover from this correction, others will be sat on their houses for years reminiscing about the heady days of 2017, when if only they'd sold out they'd have had a wonderful retirement with cash to play with!.

Most of the top end of the UK market is still lower today than it was in 2007 and having never recovered is now bracing as the next correction which is well under way, to dash their dreams again.

…and many will regret terribly in 2027 that they didn't buy now (just like the people who couldn't imagine that prices could be any higher than in 2007) and they will blame that they weren't born at the right time

10 years from now prices may just have recovered to where they were in 2017 but they are going much lower in the medium term. Bottom is 2024 - see my previous prediction of where the greatest falls will occur and its going to be much harder to access credit for the next few years even if the rates are lower. Have a super Monday!

Do you think in 2027 average house prices will have performed another exponential increase against average incomes? In 2002 the Median Multiples were 4 in Auckland, 3.5 in New Zealand. Beginning of 2018 they're 9.6 AKL and 6.2 NZ. In 2027, what do you think they will be? 13 in Auckland and 9 in NZ?

Yes. House ownership already is for the "elites" in many countries and it is going to be so in NZ as well. I'm not saying this is morally right or just but it is happening. It is simply a consequence of ever increasing population on a finite land mass.

In those countries with 'elites' it's probably still legal to live in a tent by choice....you get told to move on here by big brother....then the average tax paying worker (tax from working incomes...) has to pay to put the person who wants to live in a tent, into a government funded motel...great times. Or we could use capital gains tax to pay for the motels perhaps for those people who can't afford houses and want to live in tents?

and we'll have negative interest rates by then right?

Good on you Nic for having the courage to stick your neck out and make concrete predictions (I assume you are being serious)

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Yep. I consider us to be the next Ireland. Credit boom, lots of immigration to shore up prices, the economy turned and everyone left! No one left behind had any money to buy houses. 'Celtic Tiger' has a similar ring to it to 'Rock Star'

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Nic, my concern is that normally a house price correction would come about due to a slowing economy or recession, falling incomes increased unemployment etc. This correction is a different animal because it's caused by a huge increase in debt/money supply linked to asset prices, it's a bubble like we have never known before.
The potential damage especially if it's a global slow down falling commodity prices etc, it's going to lay waste to our economy. It's going to look like an economic Nagasaki.
%70 of workers are in the service sector, only %20 were in the last depression, we have hollowed out our manufacturing sector, we don't make as much as we used to and we have a lot of debt associated with commodity dependent industries as well as a highly indebted society, from credit card and student debt to housing. Hard hat time.

looks like world wide contraction.

https://pbs.twimg.com/media/DmpFhPSWsAA4ojE.jpg

Prices in the US are falling again. Over 300,000 repossessions so far this year and the media are desperately trying to talk it up. I've just got back from 10 days over there and with the exception of the West Coast the market is really struggling. Cheap money pumped it back up and saved the market but the fundamentals (earnings and wages) just cannot sustain it an even slightly higher interest rates.

We now have to ignore conventional thought of recessions causing housing market declines. The modern recession is caused by credit growth slowing and hence housing becomes the cause of the recession, rather than a symptom of a recession.

"We now have to ignore conventional thought of recessions causing housing market declines. The modern recession is caused by credit growth slowing and hence housing becomes the cause of the recession, rather than a symptom of a recession"

You are absolutely right Nic. So where are the interest rates heading then ? Down, because no government wants to induce a recession.

Yvil

Don't confuse interest rates with credit supply... contraction of the supply of credit is the big risk we're facing now not the cost of that credit. I explain lower down why the reduction in mortgage rates that we've seen recently is not a positive sign at all, it is likely to mean the banks feeling they have to compete for a decreasing size of market.

Nic

I tend to agree Nic - with a bunch of construction underway with a lot of young people leaving for greener pastures overseas.

Rbnz new mandate on employment when considering ocr moves might make your scenario very unlikely Nic Johnson. Tourism, thanks to JK in part, would absolutely cream it with a collapsing NZD; not to mention foreign students and milk powder.

There are so many balancing forces and factors - buffers and safety stops, a floating currency being a big one.

Also Ireland is not comparable to nz as they over built, the building boom itself fueling the economy and providing the influx of immigrants (Polish mainly) who were only there to build and left as soon as the building stopped. Dispite labours attempt to artificially create a similar dynamic the nz construction section isn't driving bugger all - tourism, food production (for many rapidly developing countries eg China where greater and greater quality proteins are demanded / consumed) are main stays. As Buffett said when asked about buying Coca-Cola stock (and not Microsoft in late 90s) ; in 10 years people will still be drinking Coke (consumer/brand not going anywhere), he didn't know about Microsoft back then at height of.com bubble and only recently bought Apple due to its consumer/brand dominance which he considers similar to Coke I.e people will still value highly the apple brand in 10+ years (I'm not as sure about this one myself eg Kodak and major tech advances )... Nz is one of the world's most beautiful places and as a brand I'm confident in 10 years it will still be a sought after place to visit and live - and unlike tech companies no one will ever invent a way of replacing land, if anything government will just make it rarer and harder to ever own personally as we are seeing around the world - while Auckland is due for a slower patch, nz property won't crash and if you still haven't bought anything by 2024 you'll look back at these days and wish you had, especially in smaller but growing places playing catch up to Auckland which are far more likely to be up another 50% by then than fall at all.

Too simple Simon.

Prices in the regions will not continue to play catch up with Auckland because local incomes don't support price rises on rent. Just as rents are now falling in Auckland the fundamentals for growth definitely don't stack up anywhere else, so a steady decline in prices over a number of years is inevitable.

You talk tourism. A weaker dollar will be great but when the world economy 'credit' tightens, holidays are a luxury 'discretionary' spend and I think that you'll find our distance from the major markets may well impede that growth as holidaymakers stay closer to home and spare the cost of travelling 'expensive' long distances.

I went to the States recently and they have pretty much everything we have in terms of landscape, but with better food, service and facilities, particularly hotels and all offered for a much lower price for a couple of weeks (even given recent appreciation of the US dollar).

I think those that continue dream about our asset prices holding up have forgotten how uncompetitive and expensive NZ has become relative to other competing markets.

Disclaimer: Written by someone heavily invested (recently) in property.

Bought Kodak at the wrong time then.

Didn't buy it at all - Digital technology meant film/analogue tech of Kodak become worthless rather quickly; a cheap smart phone now does what Kodak specialised in ("capturing the moment"). They had a strong brand but weak 'economic moat'.

Back to the main point; in 10 years who knows what technology advances can do similar to any company, even those not highly tech heavy at present thanks to automation and AI - In 10 years there will still be high (and growing) demand for NZ land. It will become harder and more expensive to buy not cheaper.

Yes, and world population will without any doubt be higher (I'm not saying it's good) and people will need to live somewhere

Nic, I don't think Greg is trying to paint "a rosy picture" as you say, he calls it as he sees it. Your views are simply more bearish than his, but they are your personal views.

Hi Zachary.

Did you not question the fact that a premium home was going to mortgagee auction? So there was enough that the banks could get their loan back, but not enough of a buffer for an owner to weather a small change in the weather. That's a bit of a concern at the start of a downturn and you would have hoped that those borrowing at the luxury end would be more sensible to plan for a change of circumstance. Or perhaps not.

That house is ugly as

Agree.

“Overseas buyer activity has been curtailed”
You could drive a truck through the new foreign buyer legislation
I know foreign buyers who’ve recently purchased not only houses but land holdings in NZ & see little obstacles ahead either.
Foreign buyers help prop up the Kiwi dollar & this government has deliberately left loopholes in place
As for property prices the market is merely in a state of flux and untested yet

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I suggest this is revisited after the foreign buyer ban actually takes effect.

Will do, shall we say November 2018 (straight after the 22 October ban) or March 2019 (to give it 5 months after the ban) ?

I don't think we will see much by Nov 18. Should see if it has effect by March 19 for sure.

I've put a reminder in my calendar for mid April 2019 (when the REINZ figures for March come out).

Reference point for me is the current Core Logic value of my home at 101.3% of the 2017 CV as at 2/9/18.

You shall have to ask Core Logic to buy it off you when the times comes to sell?

Got a better suggestion how to work out where the market is then? What’s your bench mark and why?

The market is wherever you want it to be. It's 100% subjective.

Expa,
It's pathetic that:
1 - You paid $50 for an estimate by CoreLogic.
2 - You seem to be happy with an estimate with a standard deviation of ~13%. To put this into perspective, the 95% confidence range on your $2.5mil property is +- ~ $650k.

Textbook poor understanding of statistical reasoning on your part to believe that your property is anywhere near 101.3% of 2017 RV with any degree of certainty.

But hey, if that's what helps you sleep at night.

I don't pay a cent. It's information attached to the home loan facility on my banking app. No doubt they have their algorithm to arrive at the figure based on similar sales. I take their general valuation with a pinch of salt as they have no records apart from the 2009 purchase price. Even then it's of cursory interest as assuming my children don't want the property it will be sold sometime in the 2040s.

"Blue skies and not too many clouds on the horizon for the property market this summer"

That's a brave headline Greg, I mean brave given the view on houses of the majority of commenters on this site.

Let's hope Greg is right. Because New Zealand, among many countries, is now in a position where any significant variation to property prices IN EITHER DIRECTION will spell disaster for the economy - in differing ways.... And for those who have ever tried to hold anything steady, you'll know that doing so is the hardest of all things to do over any length of time.
So given where we are, the question that needs an answer is "What if Greg IS wrong", and if so, which alternative change in price is most likely to occur? Is it more likely that we will 'push on' from a height in prices, or fall from it?

"...any significant variation to property prices IN EITHER DIRECTION will spell disaster for the economy"
Why? Do you want to elaborate?

Even a 'modest change' of, say, 20% to prices either up or down will either (1) leave many current owners crippled by existing debt, or (2) future owners likewise by even more unpayable debt.
If productivity ( as illustrated by general wage rises commensurate with asset price rises) was a 'way out' that would have happened over the last 10 odd years. That hasn't, and won't now, happen. Real wages rises have been static at best. ie: We are no more productive than we were 10 years ago, or 20 or 30!
Now, if that 'modest change' transpires to be either 50% down or 100% up ( the same) then what?!

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Why are we lacking in productivity? Lack of investment in small/medium businesses. Why because property is a safer bet and generally not taxed if you are a winner; other reason is big foreign banks prefer an almost safe bet on a house than a risky bet on a business.

How about say a 25% to 50% drop in house prices? Puts them at a ratio to earnings similar to other countries. No pain to home owners - they still own their house. Pain to property investors; massive pain to foreign banks; not fun for retired oldsters like myself with all my savings tied up in property but I would survive but just leave a smaller inheritance.

Lapun exactly right
For as long as I can remember NZ accountants have told clients to invest in rental property in Auckland
Taxation on property has been a sacred cow no political party would tackle and hence skewed investment dollars away from more productive areas in the economy.
Worse still past governments failed to address foreigners flipping NZ homes & repatriating the tax free capital gains home.
What a banana republic

If there is a 20% increase in house values, it will be because of further drops in interest rates, therefore there will not be a worsening of the servicing of the debt. It's all about cashflow because that's what's real to us, as it comes into and out of our pocket (bank account) regularly. The change in house values is simply a consequence.

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If there is a 20% increase in house values - then it will be either gold found in Auckland or all native Kiwis replaced by aliens.

Aliens was Nationals plan. Wealthy overseas buyers who big noted housing without having paid a cent of tax in NZ.

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If there is a further 20% increase in house prices (without significant wage inflation) expect the brain drain to return to the highs of the 80s, any intelligent qualified young professional would be a fool not to depart these shores for greener pastures. Mortgage servicabilty may stay the same, but the 5+ years to accumulate the deposit would continue to increase. The govt woud resort to wholesale immigration and the place would turn into a low wage third world shithole, with inequality increasing.

"Prediction is difficult, especially about the future" Niels Bohr.

Excellent piece. Acknowledging the new status quo (flattish prices) but the potential for a major correction with an external shock.
I still think we'll see a bit more of a dip though, especially in low to middle value locations

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Pressure at the pump, pressure on the exchange rate, pressure in the supermarket, pressure from the removal of the wealthy foreign buyer whose impact and cash gets passed through a series of subsequent transactions, pressure on the Australian banks whose practices have yet to be disclosed to the New Zealand public. I think it would be wise to look beyond interest rate expectations for the next 12 months to make a call, it's not that simple I'm afraid.

Yeah. Those factors are why I think there might be some further dips in the low to middle value market. Throw in many potential first home buyers who might have traditionally looked to the low to middle value market are in no hurry and are holding for Kiwibuild.

Don't be afraid Nic, it IS actually that simple but few realise it

Good luck with that economic model Yvil.

Thanks MTP, I've used it for 25 years and I've done very well out of it. Yes it is that simple, house values go in the opposite direction of interest rates, period. Then there is all the noise to confuse the novices and academics, (foreign buyers, ring-fencing losses, Kiwibuild etc…) I have refrained from sharing this on Interest until now since it took me many, many years to understand it, but I think it actually doesn't matter if I share this, I think people are too set in their ways/beliefs to learn from others. Most will rather be right than wealthy or happy

Nic, look at Australia, credit problems and rising floating rates = dropping house prices. NZ no credit problems and stable interest rates = steady prices. IT IS THAT SIMPLE.

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Credit problems besetting the parent banks of NZ's banks?

Having friends in the banking sector, I cannot imagine that Australia's banking issues will have zero fallout in NZ.

I reckon this is one of those "watch this space" areas, to see what effect it may have.

RS, please ask you banking friend how, precisely, the OZ banking problems will affect the NZ banks they own. I'm not being sarcastic, I'm willing to listen, I have just not yet been given an accurate reason why it will affect NZ banks except "because they own them"
Let's have an honest discussion about it.
Thanks

Okay. If the Australian based banks end up in a bit of strife due to a large number of defaults on their books, do you think it’s unlikely that they’ll want to push up interest rates in NZ to help stem some of the losses? I’m sure their banking regulator would see no issue in that.

Agreed the OZ banks could push up interest rates in NZ banks but by how much? I put it to you that if they are limited to max 0.5% higher than Kiwibank and HSBC or they will start to lose significant amount of marketshare. I know I would certainly move my mortgages if I could get 0.5% cheaper interest rates and I could do it quickly since my mortgages are all for 1 year fixed with staggered renewal dates.

Banks reducing rates on mortgages is a problem. They're not doing it out of the good of their hearts, they're doing it because they're worried about 3 things.
1. The size of the pool of potential borrowers and needing to attract those borrowers to them
2. The size of the debt burden on current borrowers who may default at higher rates
3. The contraction of business lending and the need to replace that lending with something, either new housing debt or existing housing debt (trying to attract a larger slice of the re-mortgage pool) because they are unsure of where the growth is coming from.

Lower rates are not a positive sign on the future of credit availability as much as some here seem to think it will be.

It's been a good 25 years to benefit from the government exiting completely from working to foster the supply of affordable housing, turning it into a windfall for those born at the right time. That's for sure.

We're all "born at the right time", stop blaming factors out of your control (i.e. when you're born) and focus on what you can improve in your own life, you will get amazing results.

This you Tony Robbins?

I wish, try reading his short book "Notes from a friend", instead of making fun

Personal empowerment. Nice

I'm in a pretty good position. Have recently sold a property, actually.

But I'm also happy to acknowledge NZ's history and our obligation to work for affordable housing in NZ given our expectation that the young pay the pension to the old. There's a level of quid pro quo we should be having.

Great balanced piece Greg, well done!

An entirely reasonable assessment Greg.

I’m picking that the Auckland market will be flat for quite some time. Personally I’ll be looking for good deals before the upward phase of the cycle starts in 2021/22. Any downward pressure on median price until then will likely come from more appartments and terraced units coming online, not a drop in values.

I think that technically speaking, demand (in the economic sense of the word, i.e willingness + ability to buy) is currently equal to supply in Auckland given that prices are flat.

Yes steady as she goes really for a few years to come. Don't think there will be any significant gains in prices the market will be in a holding pattern taking a more "Wait and see" approach. I guess some will see it as stagnation but you have to take a pause while climbing the Everest like increases of the last 3 or 4 years.

"But you have to take a pause while climbing the Everest like increases of the last 3 or 4 years.

In auckland perhaps and some of the main centres which have already had a good run. Bear in mind that the market is not uniform so there are still areas incl paihia which have not recovered to 2007 levels. I can think of a few prime underrated areas, one of which is Thames. Also the kapiti coast. Maybe I am biased due to vested interests.

Has anyone else seen the recent movie based in Thames and the waikato, Mega Time Squad? It was quite funny and worth catching

I agree its finely balanced and could go either way. Personally still bearish and on the fence.

I still think the main factor that drove prices upwards was people paying $4m for a house that used to be $2m. These were not NZ tax payers. That in turn created immense equity for the existing investors leading to leveraging on more houses, and motivated a lot of part timers to jump on the bank wagon all boosted by record low interest rates. Auckland and Queenstown were the main overseas targets, but this trend has spread over the rest of the country.

I have wondered why overseas money would pay so much more over the going rate. NZ was not alone in being targeted. Is thirteen years of free education and healthcare (tax remains overseas with business activity) really worth that premium?

All the DGM's have run for cover now the sun has come out.

Hi Carlos,

Notably, there's been marked attrition within the ranks of the DGM over the past 9 months or so.

That particular majority is fast shrinking - or should I say sinking........

TTP

Lucky you're able to keep fighting the good fight there TTP! Somebody has to do it right, for without your reasoned arguments, house prices would certainly fall!

Fear not, DGZ will be along shortly with a comment such as. "Market nose diving." That should make you feel better Carlos67.

Just a reminder: a DGM scenario for a property investor means working class people being able to afford houses like they could back when the investor got in the game, instead of having to pay through their nose in rent.

House prices may go up or down, but one things for sure - landlords truly do profit from human misery.

I just wish to correct a wrong perception, people who rent for life has been a given since Adam was a boy. The best it's been in nz there was around a quarter of all households. Now there is a third. Worrying trend, but the govt as well as the last govt are taking steps to correct that. Govts from decades ago also assisted and promoted house building and home supply schemes so this is not new.

A quarter of the population in the past when there was a growing young population seems fairly normal, all those people in their early twenties, and some of the older ones that for whatever reason are between permanent residences, plus a very small minority who for various reasons (disability, the unemployable, and a few who never wanted to own) that would never own. This is not the case anymore, now there are significant numbers in their 40s and even beyond who are reduced to renting. This is not healthy for the NZ economy.

Some good points. Also driven by the breakdown in relationships, have you checked the stats for numbers occupying a home and seen how one person households feature strongly and I was astounded to see so many.

Watch "Brotherhood Of Man - United We Stand, divided we fall (The original group from 1970)" on YouTube
https://youtu.be/i3ScvoMvBK8

I remember back in the 80s my sister bought her own house at the age of 19 and that it is was very rare for single folk to do that at the time. I never considered buying something alone at the time although probably just an excuse not to commit. These days there are a lot more single people about although I guess they can easily buy apartments, single bedroom units or larger houses if they can tolerate flatmates.

Divorces must put considerable strain on people to buy houses. Not so bad for those in the leafy suburbs who have a lot of equity although if you do the sums the options are pretty bleak for those that live in Auckland.

Banks are now playing ball with the governments efforts on affordable and FHBs. They have moved their focus away from investors, gone are the days of speculation

Reality is that if first home buyers are not buying, then investors are going to be doing very well.
ChCh. market is going very well for investors, and I have been very surprised by the number of people looking for a rental at this time of year.
Prices are very stable and more people coming into Chch to live.
Things are looking very lromising for established property investors in Chch.
Sharemarket too high and Term Deposit rates are near enough to zero.

Reality is, nobody wants to live in Christchurch by choice.

Things are looking very lromising for established property investors in Chch.

This word Iromising is not known to me, however sounds foreboding.
Once the rebuild work is complete the tumble weeds will blow around the CBD as you realise that anyone with the ability has moved away.

About 400'000 people want to live in Chch.
I think "Iromising" is a typo and should be "Promising"

Millions of people live in Syria, it doesn't mean they want to live there.

I though you would have heard that a few have left Syria. Chch was hit by a big EQ 7 1/2 years ago, the population now is still the same. If people didn't want to live there many would have left after such a major disaster

Dp

Cobblers. The Chch population continues to grow.
People who live in Auckland and think it is the place to live, need to take their blinkers off.
Never lived in Auckland and never would, but have been there a few times and does nothing for me whatsoever.
Different strokes for different folks as they say.
CHCh is growing by the day and the opportunities are here!

MTP, a little known fact is that if Christchurch was vacated entirely and nobody lived there, the crusaders would still be top of the comp and win the super rugby :)

Wow, thanks for sharing that.

I think it is wrong to say that term deposits are near enough to zero. In Auckland you could buy a house for 700k and rent it out for $500 a week which is $26,000 gross. Or you could put 700k into an ASB 5 year TD at 3.8% and get $26,600 gross. Remarkably similar.

Of course the more TDs go down the more desirable houses will be.

Also CHCH probably has much better figures for rental returns making housing look like the better deal.

What about rates, maintenance and purchasing costs?

What about the insurance cost of your house when you rent it out ? What about the periods its not occupied and worse still occupied and the tenants are not paying the rent ? What about them trashing the place when you finally do get them out ? I did all the math and your better off putting the money in the bank. The only time the rental is a good return is when property prices have been increasing at the rate they have been in past years but there is no guarantee that going to continue. Your not making the serious money collecting the rent, its just paying the bills, the serious money has been coming from the capital gains.

Or you could put it into a SME and make considerably better returns. Sure you actually need some business nous and an appetite for risk, but the returns, if done right, wipe the floor.
The only issue with my idea is banks wont lend you money easily unless you have some security, usually property.
The whole system is stacked up around houses, which is why so many are happy with 3% and less, because they can see and touch it. Which really is the reason this country is economically destined for eternal doldrums.

The THRIVING METROPOLIS of Christchurch must be straining by the seems. I haven't been there for a few years now, I fully expect a Manhattan-esque skyline to greet me as I look towards Riccarton from the CBD.

Despite the thread, Christchurch is a thriving and active market. It's because it is, to over-egg the pudding, a far more betterer perfecter 'market' than is Awkland. Consider:

  • Plot prices start with a 1, house plus plot prices with a high-3/low-4
  • This comes about because the Old Plannerz Utopia of constrained demand, rising plot and subdivision costs, restricted supply and intransigent Councils, was comprehensively kicked into the weeds by a happy coincidence of Gaia, the LURP, a benevolent dictatorship (Brownlee), intense inter-TLA competition for the new builds, and money from insurance and EQC in the pockets of the buyers. This ain't gonna happen elsewhere, for reasonably obvious reasons.
  • The initial rebuild S-curve has reached the asymptotic top, so that there is plenty of Supply (land, house+plot in various areas, configurations of H+P ranging from shoeboxes in the Old CBD to rancheros out in Lifestyle/LifeSentence Block country) and this has led directly to a remarkable stability in house prices. No crash, no bubble.
  • Christchurch itself is beautifully balanced in terms of living: it's 20 minutes to a beach from anywhere, a little over an hour to mountains, skifields, tramping, hunting; has a very high proportion of greenspace to suburbs, and is the natural agglomeration-point for the entire South Island.
  • This is all clearly borne out by Preference - the antidote to Plannerz when able to be freely expressed. The population is stable, the choice of where and how to live is wide, and there is still great competition between localities to entice residents, ratepayers, businesses and revenue streams. This is the very definition of a well-functioning Market

(Awklanders, please dont let those tears of envy fubar your keyboards)

The problem is your isolation and the weather waymad hence your small population. It will never come to much. Despite its problems people prefer Auckland. I live in neither city mentioned but if I had to it would be Auckland as I prefer a warm climate.

It's not hard to imagine lower interest rates providing some short term support for the housing market but, its just delaying a long overdue return to sound fundamentals (a time of reckoning). I still say rising global risks are threatening to turn this into a nightmare scenario. One brighter spring does not herald another decade of prosperity.

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Yeah and Greg rightly acknowledges those risks, which are significant.
The bulls seem oblivious to them.

I see risks. And where I see risk, I see opportunity.

You have good eyesight

Likewise. Risk taker, money maker.

It's in their nature. They are the property worlds version of Creationists. Ignore the science and cherry pick a few facts that fit your narrative.

Above I mention that now could be a good time to sell.

Don't you start drinking the DGZ Koolaid.

Agreed

Hi The Man 2,

With regard to term deposits, the returns are so low that I'd rather leave money on-call. What I mean is that rates "near enough to zero" (as you say) are inadequate compensation for locking up money for a period of time.

Undoubtedly, the banks do very well through depositors locking up their money. But, in terms of opportunity cost (sacrificing the right to have your money available if/when you need it), depositors are getting a raw deal at current term deposit interest rates.

I've got particular empathy for elderly/retired people, who rely on term deposit returns for their livelihood. It's a real worry for many of them - as my friends down at the bowling club often confirm.

TTP

Well your friends down at the bowling club shouldn't have been reckless with their finances, they've had plenty of years to get themselves sorted. They should have bought themselves a few houses and sold them at retirement, everybody knows houses only go up.

I'm thinking interest.co should sponsor a game of Bowls with TTP and Pops on opposing teams. I should imagine a bit of sledging would go on between ends.

Hi Nzdan,

The reality is that there will always be the poor and disadvantaged among us.

Many of them never have an opportunity to invest (or work) so as to provide sufficiently for their senior years. As a caring and inclusive society, I believe we ought not ignore their basic needs......

Call me an old-fashioned socialist if you wish, but I'd rather we acknowledged the plight of the underprivileged and made sure they enjoy a reasonable standard of living and wellbeing.

TTP

Auckland's median peaked March 2017, at 900000, having now fallen to 835000,failing to exceed the prior peak prices will continue to decline thru the end of this decade. Median prices will not exceed the 2017 peak until at least middle of the 20's, perhaps the roaring 20's.New Zealand ,ex Auckland will follow.
Patterns arise time after time.

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The first mistake is calling realestate an industry

Hi Greg
While discussing market forces, one of the most important factors that you have overlooked is that of the role of the NZRB’s influence on the housing market. Clearly, the NZRB want to see economic stability in which a stable housing market prices is required in achieving this.
In maintaining the low OCR the NZRB has not only assisted exporters through a low $ND (they have long been crying out), but also low interest rates for manufacturers (to encourage investment) and continuing low rates for mortgage rates (as a sudden rise would result in a correction of the housing market with negative effects for the wider economy).
While the OCR and interest rates remain low, the RBNZ will use LVRs to ensure that there is no rapid increase in house prices for both the financial stability risks it would pose and social reasons (housing affordability issues). Adrian Orr stated sometime ago that he sees house prices increasing by 2 to 3% annually which will continue to support investors and enable FHBs an opportunity for catch up.
In the future, due to the RBNZ use of LVRs we are unlikely to experience similar sustained rates of house price increases that we witnessed over the past decade. Nor are we likely to see a significant correction of 10 to 12% plus of the housing market unless there is a significant external event with implications that were beyond the RBNZ control.
If there is internal (market) risk of a market correction as you suggest, the RBNZ will be taking action through the OCR and LVRs to minimise this. It is for this reason I see Adrian Orr stating that any future change could be either up or down. While Adrian Orr hasn't stated it, I suggest that he would not be comfortable to a correction of more that 5 to 8% or so.
The RBNZ actions - along with continuing historically rates of immigration - are ensuring continuing support in maintaining house sales and prices at their current levels.

"(RBNZ) want to see economic stability in which a stable housing market prices is required in achieving this." Maybe. But that was true in 2012, just as it is today, and look what happened! 'Stability' by the RBNZ is going to be a trick worth watching! For instance, that low NZ$ you mention? Let's see how competitive our exporters are ( what's left of them!) at +$3 per litre for fuel. Not to mention how our households' consumable disposable dollar is hit. That's what's coming if the OCR is dropped in the name of 'stability'.

Keeping any market 'balanced' is not a remit that the RBNZ, or any Central bank, is good at over an extended period. There are always winner and losers; it's a tradeoff they try to make, and often they get it horribly wrong. Do we reckon the CBs of Argentina and Turkey, for instance, didn't try to keep their economies stable? Of course, they did! And what tripped them up? The same thing as always - debt.

IMO what tripped them up is corruption

bw
Some good comments.
Couple of things:
Arguably government and NZRB were initially slow to act on house price inflation and quite likely it was seen at the time as a positive for ensuring spending and therefore economic stability. As such we didn't require QE as in US, nor the personal grants as in Australia. When the overheated heated house market posed a risk to stability the RBNZ did introduce LVRs - some would argue too slow and possibly too little in doing so.
As for continuing low OCR and $NZ - yes lots of pros and cons. Yes a low $NZ mean petrol prices and cost of imported goods are a negative, however the effects on tourism a definite advantage with positive effect on inbound with increased economic arrivals and a negative on outbound travel so advantageous to the NZ economy in many ways.
However, I am quite sure that RBNZ will be currently undertaking lots of modelling and there will be far ranging discussions in their "think tank" meetings.
Two positives: NZRB have the added tool in the LVRs to influence the housing market in the future, and I have a lot of confidence in Adrian Orr (a far more astute man than I, and probably you too).
Cheers

...and let's not forget the RBNZ is dead-keen to get DTI, debt-to-income, ratios added to its arsenal. 4.5 isn't it?

Tourism? Egypt and Greece were reliant on tourism for their economic health. Have a look at them today! Tourism is fickle in so many ways, and the exchange rate rarely is a determining factor as to whether people go to a particular place or not ( does it influence you or is it the experience that you look for?). New Zealand is many miles from nowhere if things get tight. The 35-hour plane trip from Europe, say, could then likely sway a tourist from the waterways of Fjordland or the same sights in Norway, 35 minutes away.

Time will be the judge as to whether Adrian Orr warranted your confidence or not. You'll have gathered that mine is lacking in a man who, not that long ago, was on breakfast TV as the economics spokesman for Westpac. The banks have a different agenda to me, and probably you, and that is unlikely to be a good thing in the longer term - if it isn't negative already!

Yes, while not wanting a command economy, DTI could possibly be a worthwhile additional tool in the future. At the moment with a stable housing market and, as reported by interest.co last week, the number of bankruptcies and consequently few mortgagee sales, there appears little imminent need.

Re Tourism. Accessibility is not just measured in terms of distance and travel time; cost is also a factor. There is little we can change about distance travel time; however accessibility cost is both changeable and can be influenced. Pacific Rim our biggest market, however low airfares to Europe and increased numbers of Kiwis visiting Europe illustrate the potential as to how lower travel cost can have a significant influence.

As for Adrian Orr; different job, different goals. Subsequent job with NZ Super Fund excellent. As for the RBNZ I think that our current situation (a stable housing market, low $NZ, stable economy etc) indicates that they are making the right decisions. Adrian desire and skills in communicating to public great. His musings as published on interest.co yesterday showing good economic sustainability, and social and environmental concerns all good.
I am interested to know as to what you think the current errors of his ways are.

bw, you've added Egypt and Greece to Argentina & Turkey, hmmm I'm still calling corruption.

Also your travel times are a bit off, 35 hours to go to Europe from NZ… Norway 35 min from where ? Sweden & Norway? For the fastest expanding tourism nations, NZ is no further than Europe. I imagine you know which 2 nations I'm referring to .

In many area property is already down by appox 10%.

As per this article house price is only influnced by interest rate so will not fall.

Have doubts.

Consider the local real estate & share markets rapid inflation more of a by product of quantitative easing & globally low interest rates set by the Fed. This is yet to unwind although it's started in the US and the implications are unknown as it's a first. The RB can fiddle with the bank rules and make announcements to hold rates etc etc but ultimately the outcome is out of our hands and in the hands of the ones which control credit supply and that ain't little ole NZ.

10000 kb houses in Mt roskill

Go for it. A good mix of neighbours.

Thanks might see you there

We will be buying for investment so it doesn’t suit for that purpose (too much supply). We’ll look closer to our existing home in 1071 where there isn’t much choice right now.

Indeed, there is nothing wrong with the area, particularly once a few hundred kiwibuild buyers move in, and assuming the public sale ones are prevented from being sold to investors it should be a nice development.

Good interview with William Strong (http://www.longfordcapital.com/leadership) on shorting the Australian and Canadian property bubbles. Of course, if Australia goes, would be no surprise to see NZ go given the strategy of the Aussie banks..

https://www.youtube.com/watch?v=0lrdxpKPocY

I would love to have an honest and intelligent discussion about "if the OZ banks struggle will the NZ banks struggle", beyond the obvious reason that NZ banks are owned by the OZ banks

Sure, You might want to start with the premise that the NZ bubble has been driven by bank credit and argue for and against. You might also want to think about what the Australian-owned banks might do in the NZ market to protect their margins. Futhermore, a property crash in Australia would not be good for NZ exporters, particularly in the food sector. You might want to think about the impacts that could have on the NZ economy.

Thanks J.C.
1) Agreed, the NZ house price increase has been due to plenty of cheaper credit. So will the troubles in OZ affect NZ credit and why?
2) Well would OZ banks raise rates in NZ if they get in trouble at home? That's the central question really. Possibly, by how much can they raise rates in NZ before losing too many customers to Kiwibank and or HSBC? Personally I would certainly shift my mortgages if there was an interest rate differential of 0.5% or more and my mortgages are fixed for 1 year with staggered renewal dates, so I could move quite quickly. I think a lot of customers would switch banks
3) Not convinced a property crash in OZ would hurt NZ food exporters, people still need to eat but maybe there could be other ramifications?

Brilliant 10,000 homes over 15 years, and this Government won’t even be in next time.
Doze state homes, build new ones for people that don’t deserve them?
Alongside we build very modest to say the least KiwiBore homes for 650k and they are going to be very popular aren’t they!
Then other market properties amongst this lot, gee capital gain will be amazing!
Twyford is grabbing anything he can get, this was a National initiative
A helluva lot more to get to 100,000 I would say.
Totally out of their depth and just haven’t got the necessary abilities to run a country , so out they will go,

Yes, they will be popular. I'll put my name down for one.

Pragmatist, you clearly have very low standards then!

Quite the opposite, fully (like actually really fully) insulated, double glazed, modern construction, probably a 10year masterbuild warranty, enough room for the two of us and a spare room in a decent location. What's not to like.

Good luck getting any resolution from any claims with any issues on a masterbuild guarantee if there are any issues. Sad, but this is a case of all bark no bite.

Better to forget about kb Pragmist, and just get on the property ladder now. You'll be streets ahead by the time any worthwhile kb come into existence

Nope, I've been looking, and nothing in Auckland proper is worth the price being asked. For now we'll stay in this rental and let the landlord lose money on his investment, until my partners family situation resolves itself. Then we'll re-assess.

Australia is about to have a house price crash, might find something decent over on the sunshine coast in a few years.

Change the search criteria, but keep looking, that's my advice. If you only look at new or fully renovated properties I don't believe you will find a true bargain. Secondhand there is usually always something which is much better value than everything else. You will know it when you see it. Maybe with hidden potential that no-one else sees, maybe something not advertised well or just with bad photos. Even this last year we got a total do up and it's now worth millions almost. People just cannot believe what we paid and what a great property we have now. Don't buy monoclad, leaky or not, that's not hidden potential its hidden danger

Housework’s, you are correct, but the problem is that people who don’t own property currently aren’t prepared to do any work on property.
I used to be a real estate agent and I know this from first hand knowledge.
The people that get ahead financially generally are ones who are prepared to work while the ones that don’t get ahead are in the pub.
It is not hard to make good money in property providing you know what you are doing or get advice from successful people in property.
Many on Interest.co are not wanting to improve their position financially, they would rather just moan and groan about prices!

So you want tenants to do work on landlords properties on their behalf now as well? (tongue in cheek)

Hey, we need to practice for when we become owners apparently... that wall doesn't look structural to me ;)

Good comment TM2, we've got to the stage now where we have the resources to employ others to do the work for us. Faster results and much easier. I like it. Would you ever consider doing something different either going back into real estate sales or maybe construction company?

Housework’s, our rentals are all positively geared and give us an excellent income.
No need to do anything else.
We also now don’t do anywhere near the amount of work we used to do on the properties.
Plenty of fat in thecsystem.

Holy sheeit, thats a leap of faith mate. From rLandlord to Construction expert ? This I gotta see. Id suggest sticking to your crochet.

I think I heard them say on one news the kb target has been dropped to 70,000. How long before it's even less?

Totally out of their depth and just haven’t got the necessary abilities to run a country

On that note, who does have the necssary abilities to run NZ? Could you give me the who and why? Sorry anyone but the Labor party will not be accepted as a robust answer.

Anyone but the Labour Party! You only ruled out the Labor Party.

So you're saying that nobody has the abilities to run NZ?

Bill English was the unluckiest man in nz, he ran a good campaign and increased np share of the vote

Two times the biggest loser, you think it is bad luck?

The myth that National increased its support last election, often gets repeated by bitter National voters.
The fact is that National consumed Act, UF, and the Maori party and still polled lower than when they were the minority government.

Jacinda mania consumed the greens and almost wiped them out. Cant see it repeating as the shine has come off and bill identified that early. So expect jacinda to go for photo ops like the pacific islands forum wherever possible. Cost is irrelevant to her.

Less Jacindamania and more Turei-aversion, from what I saw. It's up to the Greens to build their support back up in the next few years, if they can be sensible enough about it.

Maybe she will time her next pregnancy just before the next election.

Nobody is talking about the possibility that the housing market could go up on average, but at the same time some areas could get slaughtered. There are vast swathes of Auckland where the average price of the houses on the street is say 1.6 mil, and that is over 20 times the average Auckland income of $76,232.

Affordability is based on the ability to pay, which is both equity and income. The relevance of your example is suspect.

I would say equity and borrowing power, the latter is a function of income.

Wake up every one, welcome to the world of negative equity; That unfolding Australian house price crash
https://ftalphaville.ft.com/2018/08/20/1534766447000/That-unfolding-Aust...

Well we all know who broke our property market: https://www.danzigercartoons.com/cartoons/the-china-shop

Naivety = lack of wisdom, experience, judgement or just plain common sense.

Toronto: Prices clearly peaked in early 2017. Prices are now down 3% vs last year.

Syndey: Compared to last year, prices are now down 5% and supply has ballooned 22%.

Stockholm & Vancouver: Over a recent 6-month period, prices in the luxury property market fell 9% and 7.6%, respectively.

New York City: In Q1 2018, prices were down 8% YoY and sales were down 25%. NYC's luxury properties fared even worse.

San Francisco: After hitting a record price high in January, the city has seen a rare spring decline in prices, while rents across the SF Bay Area are starting to "cool off"

BUT THE ABOVE WILL NEVER HAPPEN IN NZ..... Once more..Naivety = lack of wisdom, experience, judgement or just plain common sense.

So you are saying that you are smarter than property investors/owners? Why didn't you buy a property when you had the chance?

Haha, well put

I have bought homes when it was time to buy, and have sold when it was time to sell.

I'm in agreement with PatrickW. In a declining market, or even a flat market, it makes no financial sense to own a home when the potential net rental returns are lower than even a short term TD.

hmmm, the problem I have is that ALL the properties I have sold over the last 25 years are worth more now than when I sold them, every single one of them!

I just checked, and trulia.com has the last property that I sold back in 2006 now being 17% higher value than what I sold it for in 2006. Yes, it is a higher value now, No, if I had kept it, it would not had meaningful returns, I have done far better via NZ term deposits as well as investment in the utility shares that were unfortunately sold to the public a few years ago.

This example suggests that just because a property is currently worth more now than when you sold it, it doesn't mean that you made a mistake by selling it. Far from it. Do the maths first.

If a property you sold in 2006 is nominally worth only 17% more today, after years of massive appreciation, you must have sold hell of a dog, in a truely awful location… or you are making up stories

It wasn't in NZ IIRC, so probably in a market that rolled over and died in the GFC. Not surprising its just recovering now.

*Stamps feet and gnashes teeth*. "Diffrunt, we're diffrunt!!!" :)

Agreed PatrickW, NZ prices will probably also fall by 5-10%

By Christmas.

… 2019

One of my clients is a central city property manager. She reported that central. Auckland weekly rents are in decline. That is in the leafy fringe streets of cbd. It is a leading indicator.

One possible reason as to why this is happening is that some people that would normally be selling are instead putting the house out to rent while the RE market is soft. I took great advantage of this phenomenon a decade ago in the US. The white hot RE market slowed down in 2006, and time to market started increasing, and the number of homes on the market started to increase. We sold at that time and ended up renting a home that the owner wasn't willing to sell at the market value so put it out for a rental. At that time it was valued at $1.1M, with a 180 deg full view of Morro Bay. We rented it for $2400/month. Mortgage interest rates were around 7%, the property tax was around $15k, and who knows what the insurance was. I was very happy to be a renter in that circumstance! That house did finally sell a year later after we moved to NZ, for around $950k.

Yes, rent decreases can be a leading indicator.

Yankiwi ....I always laugh when I hear the words "rental return" from an Auckland property investor. Sold my Auckland property March 2016 where the gross rental return was 2.84% ..... have properties in Maryland, where on one of them, I'm getting over 14% ....nuff said.

Like I said earlier your not in it for the"Rental Return" your in it for the capital gain which right up until recently has been phenomenal. The rent may be $600 a week but the capital gains have been twice that. Property investors have made a killing, end of story. The only difference between most of the people on this website is the level of RISK they are prepared to take.

I almost agree with you. From some of the comments, many are refusing to acknowledge that the market has changed. Buying in Auckland 8 years ago has an entirely different amount of risk than buying in Auckland now.

The fun part is that the risk factors are very location dependent. For example, buying investment property in Hawkes Bay 8 years ago had an entirely different amount of risk than buying in Auckland. Buying an investment property in Hawkes Bay 8 years ago was a stupid thing to do, whereas buying in Auckland was a low risk action. Similarly, buying in Auckland 2 years ago was stupid, whereas buying in Hawkes Bay was a low risk and high return investment.

Any tips on the Morro Bay area for a tourist?