The number of homes sold last month was the lowest in September since 2011 but prices remained flat

September was a terrible month for the residential real estate industry with just 5506 homes sold throughout the country, the lowest number in any month since January when the market is traditionally on holiday, and the lowest for the month of September since 2011.

According to the Real Estate Institute of NZ  the number of sales in September declined in every region of the country compared to August, and were down in every region except Waikato, Marlborough, Canterbury and Southland when compared to September last year.

REINZ chief executive Bindi Norwell said the low number of new listings in July was to blame.

"Traditionally there is a lag of about six weeks between significant movements in listings and sales results," she said.

"With July's listings down by 5.4% year-on-year and an all time low level of listings in seven regions, it's little wonder that September's sales volumes were so low."

However, while sales volumes were down, prices held up reasonably well.

The national median selling price increased to $556,000 In September from $549,000 in August and the median price was up compared to August in eight regions, down compared to August in six regions and unchanged in two regions.

The monthly price movements, whether up or down, were mostly reasonably small and prices have tended to remain within a fairly narrow range that has been evident recently, suggesting the market is flat overall (see charts below for monthly sales and price movements in all regions).

The flattening of prices has been particularly evident in Auckland where the median price was $850,000 in September, exactly the same as it was in August and in September last year and barely above the Auckland median of $845,600 in September 2016, suggesting prices in the country's biggest housing market by far have been stable for the last two years.

However there are signs that housing market activity will pick up as we get closer to the peak summer selling season, with Realestate.co.nz and individual agencies reporting a strong lift in new listings in September, which should start to feed through to stronger sales in October and November.

Median price - REINZ

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Volumes sold - REINZ

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

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145 Comments

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and I see that Trade Mes Auckland listings are up 500 in a week to 12333. I'm sure everything's fine...

All that pent up demand is going to chew through those listings in no time at all. If you are new here, you should know that doomers have been predicting a property crash since 2010, if not earlier. Being wrong just makes them scream louder ;)

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12

Posted by skudiv 09 Oct 2011; "I agree Steven, deflation is coming. It is how credit bubble's burst. If a bubble creates inflation then the bursting will bring the reverse"

https://www.interest.co.nz/property/55608/opinion-david-whitburn-argues-...

Well said skudiv!

Wonder if he meant to call himself Skewed

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11

Skewered, perhaps.

Yeah, exactly my point, I was wrong and have moved on.

Well done skudiv, very few on this site have the courage to admit being wrong

For clarity, what data point are you using to indicate the low sales volume is related to unmet demand, as opposed to unrealistic asking prices and/or difficulty getting credit?

If I recall, the available listings were still historically quite high?

ONe day they'll be right and they'll scream "I told you so". Ignoring the previous 6 years!

The records on this page go back to 1994 and there has never been a crash, and there never will be. People can say it's different this time, but no, this time is the same.

I'm not silly enough to say "There will _NEVER_ be one." But any downturn in price will be overcome with time.

That's my belief and I'm happy to stick to it.

Really. I hope your sarcasm lock is stuck on.

The market remains flat...... but prices are holding.

What's new?

TTP

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12

TTP, you are incorrect - again. 50 Auckland suburbs are now valued less that their 2017 CV. After FBB, the rest will surely follow.

https://www.stuff.co.nz/business/107694820/auckland-christchurch-propert...

With the backdrop of escalating Global issues, its best you change your "copy-paste" script to something real.

Read the article before commenting RP.

"The national median selling price increased to $556,000 In September from $549,000 in August and the median price was up compared to August in eight regions, down compared to August in six regions and unchanged in two regions"

"The flattening of prices has been particularly evident in Auckland where the median price was $850,000 in September, exactly the same as it was in August and in September last year and barely above the Auckland median of $845,600 in September 2016, suggesting prices in the country's biggest housing market have been stable for the last two years"

Hi Yvil,

You are absolutely correct. (Retired-Poppy is wrong.)

As usual, Retired-Poppy seeks to mislead and deceive.

TTP

While it's true RP was posting a comment not directly related to this specific REINZ article (and associated spin), he was making an observation on your comment, using a different and verifiable data source.

Are you sure that makes him 'wrong, as always?'

According to that stuff report, 50 Auckland suburbs are valued lower than 2017 CV

""Approximately 50 Auckland suburbs are valued less than their current CVs, highlighting how the capital valuation for a property can become out-of-date,"

The fact median sales price on a subsection of that stock (REINZ) was flat to the sales price previously does not negate the fact that large parts of Auckland have gone down in (paper) value. Keep in mind, it's these valuations that drive buyer expectation (they are transparent and free to see) and are often the same or similar to valuations the bank will use to lend on the security.

It's perhaps this dynamic that sees listings increase and sales slump - if Auckland sellers was 1.x times CV when the market is prepared to pay 0.x times CV.

Just wait for 'a warm summer's evening'

https://www.youtube.com/watch?v=kn481KcjvMo

3-5 years Auckland went up, nothing else did - Now the balancing is happening where Auckland stays still while the regions catch up ; equilibrium restored.

While volumes were down around many parts of the
country, the reverse was true from a price perspective,
with 14 out of 16 regions experiencing an increase in
median prices when compared to September last year.
Of those 14 regions, 4 achieved record median prices
and 1 region equalled a previous record median:
• Gisborne: +26.9% to $342,500 (up $72,500 from
the same time last year)
• Nelson: +23.1% to $592,000 (up $111,000 from the
same time last year)
• Manawatu/Wanganui: +18.9% to $321,000 (up
$51,000 from the same time last year)
• Northland: +12.2% to $505,000 (up $55,000 from
the same time last year)
• Hawke’s Bay: +13.5% to $445,000 an equal record
with August 2018 (up $53,000 from the same time
last year).

Next phase Auckland falls behind.

'you have five thousand new messages'

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14

Price trend has been broken long time ago. Soft landing is a myth. The longer the price is ‘stable’ - the more tension builds up and the stronger the upward or downward move. The problem has started with ‘stable’ prices as in people no longer being able to use their houses as ATM’s > less spending > declining business confidence > et cetera. Tipping prices will deepen the spiral and will put people’s assets ‘under water’ which banks hate to see (in Aussie risky investors are being asked to sell their properties or move to another lender which they can’t as lending restrictions do not allow large number of existing bank customers to refinance). Happy days. Sold 2 years ago, renting and if I want to I could currently buy a fancier house in the same area, better street, one or two additional bedrooms. In those 2 years RE agents have told me i would fall off the property ladder…

Finally, FHB will get a chance right? No, because at the bottom of the market they will be laid off and banks won't have confidence in the market and hence not supply mortgages. The smart investors are sitting on the sideline with cash and jump in at the bottom, selling at the top to the silly FHB's and other 'investors' suffering from FOMO.

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17

I've heard they play "everything is awesome" on an infinite loop on the REINZ headquarters sound system.

"Everything is awesome.....
Everything is cool when you're part of a team
Everything is awesome......when we're living our dream"
https://www.youtube.com/watch?v=9cQgQIMlwWw

The low number of listings in July is the reason 5,506 properties out of the 34,800 for sale right now sold in September? Sounds legit!

If you're wondering why the other 29,000 properties didn't sell I'll tell you.....repeat after me....."everything is awesome!!!...."

I heard they're working on something like this:

https://www.youtube.com/watch?v=JOkQJm_UGM4

I love their logic that listings are a leading indicator of future sales. Someone needs to talk to them about the different between correlation and causation.

You must have also heard that asking prices are up,

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10

All signs pointing to price falls

You have been consistent in your message for 8 years and 2 months. Remarkable persistence in the face of the actual market doing the opposite.

I kinda get where he's coming from. For the same amount of time I've been telling myself every morning that today is the day the boss is going to hand me the keys to the business in recognition of my years of hard work and dedication. 2018 baby!

Haha love the straight face joke

Help - if Expat's comment below is correct that you have been predicting a crash for 8 years and 2 months just imagine how much money you could have made if you had bought back then ????????

My current investment is doing reasonably well, couldn't afford any more debt

On paper only, all that money will be wiped out when the housing apocalypse happens next month/year/decade/century.

See who's laughing then!

If one clicks on the Canterbury segments, it's possible to see that both prices and volumes are relatively stable over the past few years. A much-expanded land supply, leading to good elasticity in housing supply, is the main driver of this happy state. Now, go click on the Awkland ones......

You can't tapper a Ponzi scheme. The property lobby need to lobby hard for more building restrictions, more immigration and high cost building materials. If all that fails they need to demand the government surplus is given to property speculators to prop up prices.

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Well, the government are doing their best. Immigration is still at 60,000 plus per annum. Kiwibuild supports the high cost of building materials. All we need now is a special scheme to lend more to FHBs. That and combining Lotto into Kiwibuild.

Let me see, what else would help? I know, a tax break on mortgage interest for house buyers. A special grant for FHBs. A mortgage guarantee scheme so the banks can lend to infinity and sell the loan on to a government agency. A way of making student debt forgiveness part of Kiwibuild.

The trouble is, everything you do to help FHBs tends to capitalise into higher house prices, not lower ones. As you say, increased building, stopping net immigration, and getting rid of all subsidies would help bring house prices down, but we wouldn't like it.

Comment of the day and probably week

You have really hit the nail on the head there, Roger.

Written down it makes this mess we have gotten into seem not so hard to solve, but I doubt National or Labour has the guts to tackle the problem at it's root.

Unsustainable excessive immigration has made us become addicted to the temporary boost of GDP that comes with it, even though we pay for it tenfold in the long run with the massive costs on infrastructure it entails.

Here I was thinking we had a chance with ol' man Winston and his pre-electon promises, but fool me once shame on you, fool me twice, I'm not ever going to vote for NZ First again...

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11

There doesn't seem to be a party that has its head screwed on the right way around. Both the Clark and Cullen and the Key and English governments swallowed the "House price rises and immigration are good" pills. Hopefully something will change, there is certainly a widely felt sense that things are messed up, even if the causes aren't agreed on. With time the people who have already shone a light on some of the mechanisms, like Michael Reddell, will be taken more seriously. At the moment we seem to be stumbling about in the dark, waiting for someone to turn on the light.

RW for Prime Minister, he knows so much better!

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18

"REINZ chief executive Bindi Norwell said the low number of new listings in July was to blame."

That makes me laugh!!!!

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I know right. What a bunch of bullshit.

Wonder if bindi and nzdan are the same person..

They try their best to be funny..

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13

NZdan has his moments, Bindi is just paid to polish a turd.

A lot of my comments are just there to bait a reaction, I'm not really in any teams or camps as far as politics or housing is concerned. Often i'll jump on a bandwagon just to see what replies I can get, people are quite precious on here.

I've already got a cheerleader, PropertyPrices2Fall. Haven't got the uniform sorted yet because they don't make them in her size..

All good, you are good for a laugh, you throw out the odd line that gets a bit of a laugh.

Swap? you can have BLSH, or sav4au, your choice.

He has a soft spot for HeavyG

so thats a G-spot?

Thank you, thank you, i'll be here all week :)

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Lots of stock coming on to the Auckland market with less buyers will equal prices starting to decline. Lending is going to get tougher as the risks increase. The Global stock markets are all in bear territory now with the US being the last to join the pack. The next global downturn is on the horizon with multiple countries now facing massive economic problems. Get your house in order now if you haven't already.

Economists predicted 9 of the last 2 recessions - Good luck if you're money is on another GFC happening anytime soon - once bitten twice shy; we are in a period that will be unusually long before another reset happens due to the GFC being the biggest event since the great depression - And even then housing, which was directly in firing line of GFC due to reliance on borrowed money, hardly fell in NZ during that time - And if you followed listing number back then they were in orders of 5x current listings - So a 10-20% increased in stock aint nothing and is more aligned with a flat, stable market from a price point of view

Sounds like you have absolutely no idea. Go and do your homework Si.

You're not one of these crazies like Nic Johnson that thinks after watching a Martin North YouTube clip you have some sort of secret knowledge (he has an Arts degree and has a following of morons who think because he uses lots of numbers he must be smart)

Three degrees actually, none in the arts though!

Sorry Nic was referring to Martin North who lists Oxford as his education, then when you track him down further you see he did a BA there - So its unusual he has any credibility (he even offers probabilities on various price fall scenarios as if he has an underlying model which I can assure you he hasn't; although to the moron journalists on 60 mins he probably seemed legit enough

According to linkedin, he did the BA at Bristol, and his Masters at Oxford. And then you neglect to mention his experience in the banking industry of course.

You mean his experience in IT and media? Or anything else he likes to say about himself?

His masters was media focused.

It's almost as if he's used his media knowledge to figure out fear sells and if only he could figure out a way to turn YouTube views into money he'd be rich - watch this space that will be his next trick

Hi Simon - Just run some numbers on Palmy which may be of interest. It would appear to be more of a gamblers den than a long term investors market.

Palmerston North - A snapshot of a property crash about to hit New Zealand. It's time to call bullshit on this market.
I have just looked at the 175 Listings on Trademe for Palmerston North and uncovered the following:
45 Listings are New Builds or Plots, most that have been built will have been financed for top of market prices. (25.6% of the market)
3 Listings were bought in 2018 and are already back on the market (1.7%)
11 Listings were purchased in 2017 (6.2%)
25 Listings were purchased in 2016 (14.3%)
7 Listings were purchased in 2015 (4%)
8 Listings were purchased in 2014
7 Listings were purchased in 2013
7 Listings were purchased in 2012
8 Listings were purchased in 2010/11
22 Listings were purchased between 2000-2009
6 Listings were purchased between 1990 -1999
5 Listings were purchased pre 1990
There is no data on either Tradme or QV for 21 listings.

If anyone needs any help working out how exposed Palmerston North is following the speculation in the market then please call the helpline 0800 WHAT A BLOODY PICKLE.

Geez you do have time on your hands don't you.

And what are new builds going for in PN?

Compared to the 390k median price from last month's sales?

In Auckland you have houses in average areas valued at well above replacement value - I know for a fact (insurance requires replacement costs to be calculated) almost all second hand houses in PN are still valued at below replacement value.

(Think your buddy Martin north even drew a little pic of this concept to show how apartment prices in Sydney and Melbourne are over valued - I agree with him on this point but didn't see the need to draw a picture about it...)

You've shown 3 houses are on the market as flips - where tax will be paid under bright line test - Am not sure how this can be used to infer market strength /weakness or otherwise. I'd say a strong market would see an increase in flippers and they are essentially swimming with the current.

I'm sure with your 3 degrees you can tell me how the data you've provided shows actually anything at all? Maybe if you tracked that metric over decades then some info may be able to be inferred but likely more correlation than anything.

How long did that take you by the way? Nice work anyway

Glad you appreciated it. I reckon I know what happens with all this now. The guys who run the seminars go to some armpit place and buy a few properties on the cheap. Two years later they sell one to a mate and then send out an investment snap shot to all the lemmings about wonderful capital gains to be had. As the lemmings start buying they offload their stock into a frenzied market of fools who all think they've got the inside track.

Took me 30 minutes to get the data, but it was worth it for your reaction!

Around 50% of buyers in places like manawatu are first home buyers. They can use kiwisaver and get grants from the government (5k each I think) - so with PN having 90,000 people you have a huge 'buy side' of the ledger - basically all people who don't own a house yet but have been working for 5-10 years will have 30-40k each sitting in kiwisaver without the need to save - so everything under the 400k price cap is getting revalued higher.

Before kiwisaver human nature meant lots and lots of people with ZERO savings / deposit ; so many people live pay cheque to pay cheque. Kiwisaver has turned thousands of renters who live like this into potential home buyers. The pool of potential buyers in PN is large and still plenty are lining up who have just recently cottoned on to the fact that prices are going up so local FOMO kicks in - mind viruses - they have a cusion, a work mate, Facebook friends who have just bought and it spreads throughout the community - higher prices feeding higher prices with kiwisaver the fuel that feeds the fire and places a permanent base price under property values.

'Social learning' the experts call it - funnily enough on the project right my #MyBelief apparently if you know how to use hash tags.

Buffett and the rest of worlds best investors all have one thing in common - all freakishly good at understanding human behavior - as it is humans after all that collectively make up the market and determine what "value" something is through this weird form of collective thinking.

Simon - Human behaviour is also in full force on Waiheke Island. Lots over-paid and now they cant sell!

Stranded on an Island deserted of buyers - Welcome to Waiheke - thought we should look at somewhere nice after our visit to Palmy. 2 sales in 3 months and here is the reason why! There are 160 properties for sale but on Waiheke the canny buggers know how to hide their sale price history but here are the other 118 sellers (some of whom have already had over a year trying)
New builds - 2
Previously purchased in 2018 and back on the market already- 1
Previously purchased in 2017 - 5 (4.2% of identifiable stock)
Previously purchased in 2016 - 13 (11%)
Previously purchased in 2015 - 23 (19.5%)
Previously purchased in 2014 - 6 (5%)
Previously purchased in 2013 - 8 (6.8%)
Previously purchased in 2012 - 8 (6.8%)
Previously purchased in 10/11 - 7 (5.9%)
2000-2009 -35 (29%)
1990-1999 -5 (4.2%)
Pre 1990 - 5 (4.2%)
There are 42 others but the details are so well hidden including them would disrupt the reality. Why do such a large portion of sellers want to leave within 3 or 4 years? Or has Waiheke been pumped and dumped!

You will actually find historically over all on NZ around 5 years is the median hold time, people upgrade generally as soon as equity increases to allow them to. The old "property ladder". So half hold for less than 5 years, and as prices rocket up people can upgrade after 4 years, 3 years etc. To be real kiwi you would of had to have built a deck and placed 100% of the increased value on the new awesome deck you built.

What your data really shows is Waiheke with population of just 9000 has similar level of listings (the supply side that counts when price setting) compared to a similar level of listing in PN with its 90,000. Sure waiheke has rest of Auckland as potential buyers but a 10 fold increase in supply (when looking at listing per capita) does scream waiheke has had a good run since 2011? And is now at a ceiling where prices are prevented from going higher by the share size of unsold inventory.

So your right - and in a few years PN might be 550k median price (same as Napier currently is) and I'd imagine at that point the buy side would be near exhausted and balance would be firmly with the buyers having perhaps 800 listings to pick from (2009-2011 palmy had such levels, prices dropped maybe 10% max, similar fall Auckland got).

PN has always lagged Auckland and even Wellington - lower hutt already over the 500k mark when historically PN prices had been similar to lower hutt - the banks then move to the next region and exhaust that - some call it the ripple effect - but it's just money flowing to yields on a safety first basis until the safe place is so expensive it is no longer safe.

I think you are about to see people moving a lot less frequently...not because they don't want to, but because the debts have trapped them.

No, I'm not crazy. Please go and do your research as it sounds like you really have no idea.

Happy to. Please direct me to the research materials you are referring to

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No need to worry Simon, Balmy Palmy will be immune to any downturn. After all it's got high wages, great beaches, wonderful communities, architecturally stimulating landmarks, large volumes of tourists, a healthy local economy, lot's of attractions, theme parks, history, cultural relevance. It'll be fine!

..and within commuting distance to Foxton. Palmy makes Wanganui look like Tauranga.

Ahhh foxton where all the good schools and nice family friendly neighborhoods are

Correct. Defence (biggest army base in NZ, airforce base with Auckland squadrons moving down there shortly and Singapore also), Healthcare (mid central located in PN), and universities (massey main campus, IPU) are all very sound defensive plays if a downturn did happen. Research also a big part of palmy mainly in farming foodtech, and freight (more online shopping anyone?). So agree PN will be fine, and it's why during the GFC places like wanganui rotorua etc fell big time but palmy held up very well.

..you need to change the 'if' to 'now a down turn is happening' ..or haven't you noticed? (hint - you won't see it in the rear view mirror).

A lesson for all about how a bubble grows and what happens when it stops.......

Bill buys a 2 bed flat for $250k he puts $50k down and takes a mortgage of $200k at the beginning of the cycle.
4 years later Bill's flat is worth £300k he decides to move on up and takes the 100K he now has in equity(mortgage was interest only) and uses it to buy a 3 bed shed for $400K with a 300K mortgage (25% equity).
4 more years on and Bill's shed is somehow worth 500K (he's still earning the same money as before plus 2% per annum rises) but he now has 200K equity. Bill trades up and buys a house for 800K with a 600K mortgage. All is good in the world he has a great house and who cares that he'll never pay the loan back in his lifetime..... The banks feel secure they've got a 25% buffer.

Then the market changes... Bill's house goes down to 700K (not a lot) but his equity position is now 100K, back to where he was when he owned his apartment 8 years before..... Then Bill get's shitty with the whole situation, never has any cash to go out, wife is miserable too and then Bill makes the mistake of shagging a colleague from work..... Bill's on the market at a terrible time but life has to change he takes the 650k offer - removes his 50K equity but can't start again because his wife gets that in the settlement. Bill is back to zero.

Equity is a dangerous game to play if you keep magnifying your exposure.. What has happened in NZ and Aussie over the last 10 years is just a replay of the 2000's in the rest of the world. Mortgages are for life, not just for Christmas (in fact you get a shorter sentence if you murder someone).

There endeth the lesson.

I'll tell you about Ted in the next lesson. He was a really silly bugger and really leveraged up on the equity he thought he had... And when the market changed, well let's just say that Ted will never be able to borrow money again.

Core Logic has my home value estimated at 98.67% of CV, as at 7/10. I'd happily see it and the economy drop from here if it means the COL are out in 2020.

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Core Logic has my home value estimated at 98.67% of CV, as at 7/10. I'd happily see it and the economy drop from here if it means the COL are out in 2020.

Then what happens? A new gubmint will make your house price go up? Turn off talkback radio for a while. The Rotary Club could have been the ruling party in NZ since the GFC and your house price would still have gone up. Anything and everything has gone up. Not because of the gubmint, but many other factors, particularly the monetary ecosystem that enables it.

Ex Expat, being youre a paid up member of the National Party, is this one of their core wishes? If so, stick with your pack of sore losers. People come first, easy equity on a platter, last.

RP, I speak for myself with the above comments. Watching the COL is analogous to a spendthrift inheriting Mum and Dad's 40 years of hard earned savings, then blowing it on rubbish spending, like private jets . My desire is that the spendthrifts have their cash supply run dry and have to live like their parents, watching every dollar to make sure it's well spent. I believe this country needs an economic reset and that the productive people must prevail over the non productive.

I believe this country needs an economic reset and that the productive people must prevail over the non productive.

Many of us have been arguing in favour of that.

However non-productive people out breed productive people 4:1 and we live in a democracy which is tyranny of the majority.

I suspect you and Rick might have different definitions of who is productive..

Well, yeah in fairness, we spend over 60% of our social welfare budget on old folks regardless of need (including the very wealthy), we subsidise property investors and company wage bills, and we incentivise investment in property instead of business...

Quite why we do all that and then focus on the money being spent on efforts to give kids born into bad situations a better chance at life as the area of wasteful spending, that's something indeed. Unless we're just trying to make sure the likes of John Key and Paula Bennett as beneficiary-kids-made-good never happen again?

@Ex Expat, IMO the perception from the normal Joe Blog citizen (not those in the game of property investing) is that this coalition govt has managed to achieve a lot more than the previous Nat govt. So don't be alarmed if they are in control again after 2020.
How do I know this? If you follow JK and JA on their Facebook pages and Instagram. Judging on the number of positive comments on JA is really overwhelming.

You must have excellent vision considering you are observing it all from Brisbane. Pray tell what are the COL achievements?

BTW I don’t follow many pages on FB and Instagram and certainly don’t follow the show pony as my friends would be appalled. The Lefties treat SM as a free form of advertisement. It’s full of fake profiles and people spinning. In the real world I can’t find anyone to admit that they support the COL. Bring on the next official poll.

Sounds like you're planning on becoming an expat again.. Bon voyage my pal..

With the age of internet and social media, the rest of the world is only a click away. You must be living under a rock for not realising it.

That is also the lowest number of sales in Auckland since 2010.

Meanwhile Auckland residential listings on realestate.co.nz are now at 13140 and on trade me 12335

Now that the crazy foreign money is gone, Its just a matter of time before vendors will need to shift their price if they want to sell

A metric the RBNZ will be watching is sales/stock. It is now below 4 percent nationally , concerning, given the historically low interest rates and population growth. Aussie bank stocks following a similar glide path.

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I will say it again .....for all you Auckland "property investors" ...if you are negatively geared and you are putting money in, over and above your rental income, while you have been living by the mantra "property never goes down" and use the "value" of your properties, as an "ATM machine" you are losing money ....this is what happens when greed takes over rational thinking.....

Many "property investors" analyse the property market using a "property market fundamentals" framework and have come to a very different conclusion to those that analyse the property market using a "macroeconomic and credit fundamentals" framework.

Many that use the "property market fundamentals" framework believe that there is a shortage of housing,
1) due to population growth,
2) inward migration as
a) Auckland is a desirable place to live for foreigners
b) housing in Auckland is cheaper than other big international cities like London,

which will lead to pent-up demand and will result in ever rising property prices in Auckland.

In addition there is insufficient new supply coming on board to address the housing shortfall.

Meanwhile the cost of construction is rising, so it is seen to support ever rising property prices.

Future inflation is also expected to continue and this is a reason to expect ever rising property prices and very little price falls.

The small property price fall in the Global Financial Crisis in 2008 / 2009 in Auckland gives property investors confidence that property prices do not fall very much in nominal price terms. Historically, property prices in Auckland have not fallen very much in nominal price terms in over 50 years - on average property prices in Auckland have doubled every 10 years. Many property investors expect this historical rate of growth in property prices in Auckland to continue for many more years (some even decades), and have willingly bought properties using negative gearing in anticipation of future property price increases.

Many in this camp dismiss the naysayers. The naysayers have been claiming a fall in property prices since 2003, whilst property prices have continued to advance. So given that the naysayers have been wrong to date, they have been dismissed like the boy who cried wolf too many times.

That is their perspective. That is their rational thought process. It is a very compelling argument.

.... unless they also understand the macroeconomic and credit fundamentals framework, where a possible long term super cycle credit bubble can lead to a credit and liquidity crunch and the macro-economic circumstances of that scenario ....

CN ....great synopsis ! thank you

.... unless they also understand the macroeconomic and credit fundamentals framework, where a possible long term super cycle credit bubble can lead to a credit and liquidity crunch and the macro-economic circumstances of that scenario ....

"Long term super cycle credit bubble" is an understatement. However, if you understand NZ and Australia's place in this Anglo-driven monetarist hegemony, it should really be no surprise.

Imagine a wave with peaks and troughs. Now imagine you are in the trough. What does the world look like and how does your limited vantage impact your view of what the trend is? The last 40 years is not a trend that can be extrapolated. That is one cycle based on one off factors - expansion of credit. You are missing the bug picture because you think 40 years = forever. Spoiler - it doesn’t.

Sorry I just realised you spent 90% of that post stating other people’s arguments and then refuted them in the last paragraph.

Actually Auckland is in a position somewhat unique since there are structurally increased land costs which may well cushion the initial impact of any macro-economic reversal. Simply Auckland has risen faster than macro conditions can account for by themselves and so is not merely vulnerable to macroeconomics.

However:
- if left intact the high costs will inhibit future growth and cause extreme long-term stagnation for Auckland.
- if removed cause a price fall irrespective of macro-economic conditions.

No surprises here. The signs are everywhere of a major downturn. If you're geared up, pity you.

The innocent victims will be owner-occupiers in Auckland who have used lots of leverage and bought in the last 2-3 years - they will be potential mortgage prisoners for a number of years or collateral damage who potentially lose their financial security as they are unable to hold on through the downturn until the economic recovery (and are forced to sell in a very weak market or in a mortgagee sale). These households could face significant financial, psychological and emotional stress.

Similar to the pain and agony of those owner occupier households in Ireland in 2008/2009, in the US in 2008/2009, in Spain in 2008/2009.

Caused by profit incentives for bank managements and a focus on asset backed lending (for residential real estate) by banks on ever rising property prices / valuations in Auckland, on the back of a belief that property prices do not fall by much ...

"The innocent victims will be...forced to sell in a very weak market or in a mortgagee sale"
Who are they going to sell to?
Self-reinforcing Cycles are easy on The Way Up. Buying-and-selling, as prices rise, is effortless. But doing it on the way down is not only harder but for a while damn nigh impossible. hence your " they will be potential mortgage prisoners for a number of years" Perhaps decades rather than years?

The number of innocent victims will be a function of the unemployment rate - obviously the higher the unemployment rate, then there will likely be more forced sellers, leading to a lot of listings of property for sale.

Add to those property listings for sale, the forced selling / mortgagee sales of highly leveraged "property investors" - especially those with large portfolios. There are also underlying and unseen property portfolio fault lines as many residential property investors in Auckland moved into residential property in other geographical locations in search of properties with lower price points than Auckland (such as Hamilton), positive cashflow properties (such as Hawkes Bay), and into commercial real estate.

Who will buy? The buyers will be those who are cashed up and need very little bank financing to purchase properties. There will potentially be a large supply / demand imbalance initially, however there will be an equilibrium of supply / demand at much lower price levels. There will be a price which is sufficiently low that will attract buyers - imagine an extreme scenario where residential properties in Auckland are valued at a price to income ratio of 1.0x - a number of buyers will come flocking! Cash buyers will make absurdly low ball price offers to forced sellers, and get great long term investment opportunities. I imagine that some of these potential buyers are readers here. Some are potential owner-occupiers, some are property investors. I know of several property investors with large portfolios of residential property who sold up several years ago and they now have cash to buy. After being in the residential leasing business in Auckland since 1995, I sold up 18 months ago in anticipation of upcoming opportunities and have cash available for such opportunities. Some buyers could also be NZ expats living abroad, or foreign buyers exempt from the foreign buyers ban such as cashed up Australians, and cashed up Singaporeans. Saw this with the US in 2008 / 2009 - had a friend who was a US expat at the time, buying residential properties in his hometown Phoenix during that time. In a panic, one needs cash but also gumption to act - witnessed this first-hand during the GFC in 2008 / 2009, where fear prevailed and many didn't act.

The future outcome and rate of recovery does depend upon policy actions of the government and central bank (compare Europe with the US, post GFC or Japan post 1990's). When the economy stabilises and banks start lending again, property prices are likely to recover (just as in Ireland, and the US, post GFC). Unemployment will fall, those who gain employment will more likely get credit from the banks to purchase property. Property prices will recover and more buyers will emerge as they extrapolate the historical trend in property prices ...

Have you guys actually read the article? It clearly states that prices are flat.

"The national median selling price increased to $556,000 In September from $549,000 in August and the median price was up compared to August in eight regions, down compared to August in six regions and unchanged in two regions"

Hopefully the number of 'innocent' victims won't be as bad as we think. A lot of FHB's were priced out of the this market years ago so are still sat in rented. Many of those that did get in too late when the bubble had developed, will be those who refinanced parents houses or got a helping hand so can hopefully call on mum and dad to get them out of the shit as well. As for the rest of them, 'well stupid is as stupid does.' it should have been a warning to all when the banks started letting substantial draw down occur on existing assets because the wise (not to say some won't have done well till now), would have realised that that was a massive warning signal that the market was running out of first home buyers.

At this rate the "Blame Game" will soon kick off.
Frustrated sellers, reluctant buyers, and softening prices will lead to who is to blame? Speculators are gone. Asians are gone, renting rules have exiting investors getting out, new investors will be gone because of new tax threats, first home buyers hesitate as "affordable" homes are hopelessly unaffordable.
So who is left to blame for the tanking market?
There is only one.
Guess who?

Trump?

Top answer!
But the answer, of course, is "us'. We did this to ourselves by electing successive Governments who bribed us with the tantalising promise of wealth-from-nothing. There's a place for property investors WHEN the maths make sense ( what was it? 7% return after all costs? Well those days disappeared about 25 years ago!). No. We were special and could make ourselves rich without actually producing anything in aggregate. Now we'll reap what we have sown...

Ourselves for being so pig ignorant.

Gubmint? TVNZ for dumping The Hosk?

Its always someone else fault... yeah right, clearly its the fault of borrowers suffering risk blindness.

No one put a gun to investors heads and said take the risk, interest only, no ones making any more etc. The leveraged have lorded their investment greatness when prices are on the lift, but if Australia is anything to go by leverage can work both ways. Banks will eventually look after number one. Aussie banks have started already, and last time I looked they owned most of the banks here.

On a bright side it could be a great time shortly to secure a very cheap ex RE Agents lease car, just like in the GFC.

National, for letting things get to the ridiculous situation in the first place.

The Volumes Sold graph for Wellington is very interesting (if move slider all the way across to the left). It's like a graph of two halves.

Apart from 2 spikes in May 2016 and 2017 the volumes are still GFC levels.

I don't know what to make of that.

I emailed kiwibuild to find out how many people threw their names in the hat for the Kiwibuild homes at Papakura:

Hi Pragmatist

The ballot is currently progressing. First ballot has been drawn and further ballots will be drawn throughout the week.

We currently donot have the measure of how many people entered the ballot of McLennan homes but we can confirm 192 people were pre-qualified.

Not quite sure I believe they don't know.. more like the higher up were embarrassed by the low numbers.

The Papakura properties just don't worth the asking price. Simple. I am with you on that there has not been a significant level of interest in these properties. The cap price concept is fundamentally flawed for obvious reasons. If (and when) KB starts to build houses cheaper than private sector (instead of buying from them) and asks for a return on capital that is less than the PS, then KB will help to force the market prices down. Until then, it will be either a lottery (i.e. a below market price property unfairly given to a random FHB) or stupid (i.e. Papakura).

If there was no such political urgency to show some results, the first few years of KB should have been invested in increasing construction capacity and getting the building plans right. Starting with building few building complexes for HNZ to get some experience and a more realistic sense of issues.

I'm not sure there isn't a case for selling houses below cost. Why aren't we selling the existing State housing to existing tenants at a slight discount and then building another two houses? Yes, I know it sounds daft, but the effect is transformational on the buyers. They become model citizens overnight, with pristine front lawns completely lacking in old washing machines. They become fully paid up first class members of the house owning citizenry, no longer seeing themselves as second class citizens. Well worth the cost.

Perhaps we should have a more experimental approach, give Shane Jones private vote buying fund to local projects to try different things.

Let me see $1,000,000,000 per annum divided by 10,000 houses per annum equals $100,000 subsidy per house we can easily afford. Much better than letting Jonesy waste it. 10,000 young families get the benefit, every year. Why not?

Roger: the existing state houses are often on a 1/4 acre section, so at least here in Auckland a slight discount would be a $1.2+m property. No state house tenant should be able to service a mortgage on those.

So instead they are bulldozing them and building 3 or 4 houses on the same sections. And yes, I agree that there should be some sort of rent to own scheme, even if slightly subsidised to get state house tenants into housing, although maybe have to wait for that till they actually have built enough houses to house everybody.

You are quite right, of course. I've been drinking from that half full glass again. Just trying to stir up some new thoughts rather than going around the same old mental track. Perhaps I should just get my usual half empty tankard out.

Selling houses below cost is a terrible idea because it gives arbitrary gifts to some people and it limits the ability to build more houses. If anything the houses should be sold for a more profit becuase that would grow the budget (being cycled) and increase the rate of building.

This government is all about arbitrary gifts, isn't it? If a jobs worth doing, its worth doing well. I'd much rather young families got a billion NZD than Shane Jones' crony projects. Time to try some new ideas seems to be the flavour of the month. Yet instead we get recycled failed ideas from decades past.

KB does not sell houses below cost.

Today's version of Housing Corp loans below the market rate (and other such measures), eh. Helping boost the home ownership rate again as was done in the past. A viable road on which hardworking Kiwis could progress.

Hi Bindi, sweetheart, I hear there is a shortage of Listings.... Let me help you out love, Oh I've just found em darling .... They're all here down the back of the couch.
https://www.realestate.co.nz/residential/sale?by=featured&ql=20
34869 of them, is that enough and have we found everything that you thought you were missing sweetheart. At a sales rate of 5506 a month, that's stock for over 6 months of sales already available in the market place. Let me know if you want me to find you any more!

13146 properties for sale in Auckland (realestate co nz). 1616 sold last month. That is 8.13 months worth of stock. And that is (according to link below) generally regarded as a 'buyers market' the point where prices generally start to fall seriously. https://www.rebgv.org/sites/default/files/2017-01-January-Stats-Package.pdf

That's pretty crazy - maybe not indicator of a crash but prices wont be heading higher until a lot of clearing of stock has been done - i.e a couple of years of positive buying can happen without increasing price just to clear the market.

Compared to PN that has 170 properties listed and selling 140 a month - not much more than a months worth of stock there with prices up 16% - this will continue while this sort of imbalance remains

Historical inventory levels can be found here - https://www.interest.co.nz/Charts/Real%20estate/Housing%20inventory

Seems to be a wild disconnect between the ~4months (17 weeks) that graph shows currently based on REINZ claimed number of properties for sale of just 22,847, when both trademe and realestate.co.nz are 32-35000.

REINZ are claiming average 35 days to sell nationally, 39 in Auckland. And just 8740 properties for sale in Auckland (13199 on real estate nz). Who should we trust?

Wow the listings are surging up, ~0.5% in one day!

Notice that the chart is for housing inventory.

In your search on trademe.co.nz and realestate.co.nz, remove sections and land only from your search to get properties which have houses on them.

There were a large number of sections for sale in Auckland in the suburb of Flat Bush. I think a couple of other suburbs on the outskirts of Auckland but unable to remember them offhand.

It's all rosy out there and I got this from my trusty RE in Ponsonby:
Yes it's spring time again, the listing is up but so is the number of buyers. Get in now before you missed out!

Bindi next Christmas...

'December 2019's rollover jackpot has now reached 60,000 New Zealand Listings' And I'm delighted to say that we have 4 Lucky Winners this month, I mean 4 sellers who have been able to find a buyer, the good news is that prices still aren't falling and Auckland median, where one of our lucky winners resides, has remained at $850,000 now for 4th year running'

'We wish you all the best of luck in next months Property Lottery buyer draw.'

NJ - May I ask are you in the property market and if so for how long ?

A property that he describes as “house, cottage and land”. My guess is that it is so far out in the wop-wops that it doesn’t have an address. Ay Nic?

BLSH

Now now, be nice. Let's just say I don't own on Waiheke Island, so won't be getting stranded there!

Did you ever hear about all those sellers that got stranded on Waiheke Island? - thought we should look at somewhere nice after our visit to Palmy. 2 sales in 3 months and here is the reason why! There are 160 properties for sale but on Waiheke the canny buggers know how to hide their sale price history but here are the other 118 sellers (some of whom have already had over a year trying)
New builds - 2
Previously purchased in 2018 and back on the market already- 1
Previously purchased in 2017 - 5 (4.2% of identifiable stock)
Previously purchased in 2016 - 13 (11%)
Previously purchased in 2014 - 23 (19.5%)
Previously purchased in 2014 - 6 (5%)
Previously purchased in 2013 - 8 (6.8%)
Previously purchased in 2012 - 8 (6.8%)
Previously purchased in 10/11 - 7 (5.9%)
2000-2009 -35 (29%)
1990-1999 -5 (4.2%)
Pre 1990 - 5 (4.2%)
There are 42 others but the details are so well hidden including them would disrupt the reality. Why do such a large portion of sellers want to leave within 3 or 4 years? Or has Waiheke been pumped and dumped!

Nic , I will disagree with your opinion about Waiheke, it has become part of Auckland given the transport links Listings are actually extremely scarce ( down from 7-800), land or sections are few in comparison to the past decade, new building has been consistently increasing, ( there is even a Placemakers ) and it has become a bolthole for very wealthy individuals. Properties that offer no sales history , most likely have no sales history given the demographics and often have not changed hands for decades. Like all of Auckland , some properties have been recently renovated and may have been relisted. Prices paid in relation to QV are all over the place. I visited two weeks ago, the ferries were unable to cope with the numbers . It has changed, not to say prices paid will not.

Hi Cowpat....

My apologies, I was just looking at the data and using as a comparison of somewhere nice as a contrast to Palmy. I'm sure you are right but there are a lot of places that have been on the market for a very long time already. I do fancy a visit there this summer so I should probably stop antagonising the locals. My point was that there are a lot of buyers from 2014 onwards as a proportion of the market that are already on the way out of the market and are effecting prices paid (and not being paid now) the concern being that the idea of a home being a home has vanished - the flippers and specuvestors having dominated the market, even on Waiheke..
I guess with Waiheke, the nice thing is the number of long term owners now looking to move on (for community sake) compared to Palmy.

I have a little experience..

Yes, very little experience. But obviously lots of time on your hands, good grief!

BLSH

I do have a bit of time it's true, it's one of the great joys of not having to worry about the mortgage(s). I hit my best round of the year so far today as well. 82... not been there in a very long while...bit more practice and who knows, I may yet qualify for the seniors tour? Still too young for it at the moment so I've got time.

Golf and keyboard warrioring all day. Sounds lovely, good on you.

Congratulations on the 82. Was it for 9 holes lol?

Greg, is there a reason you don’t mention the REINZ house price index?

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We would love to, but only if we get the full perspective of longrun data. Unfortunatley, REINZ only release that in chart form, and data points only occassionally. The data is only available if we buy it from them (which we can't afford) and we would want to release the data items in a chart, which isn't permitted. We understand and respect the REINZ position, but there is little point in us reporting details about this very good index if we can't independently drill into and verify the perspectives.

I understand their position David. Data ownership of that nature would be very valuable and they will also want to keep control of the narrative.

I see, cheers David.

All good stuff. I see Nelson and Tasman down here take the prize for the highest property price outside of Auckland. Even higher than Wellington. Of course the trend line is headed down and the three month moving average of corelogic might say something else. The numbers for sale on Trade Me are holding steady. I better snap up some more flats before Phil figures out there is life and not slime south of the Bombay's.

I find it hard to take anyone with the name 'Bindi' seriously

There's an element to discussions like this that I always find interesting. Why are the property investors here are so unwilling to discuss the possibility of house prices going down hill? We're getting some pretty strong signals that the markets in a bit of trouble (I didn't say 'crash'), but I don't see any comments of people here sharing their contingency plans. What are they? Do you have them?

I feel like a lot - not all - NZ property investors are in their own universe. They don't look at what happens around the world, or what historically happens in housing bubbles (which by all definitions this is). They just know for as long as they've been around houses have eclipsed wage growth, so it must be a law of nature like gravity.

If your whole investment strategy is "invest in this asset that has been going up for a long time because it will always go up", you are not well-prepared.

"If your whole investment strategy is "invest in this asset that has been going up for a long time because it will always go up", you are not well-prepared."

This has happened in other assets where upward price momentum has attracted inexperienced investors fueled by greed and envy, only to leave a trail of financial destruction ...

1) tulips during the tulip bubble
2) shares during the South Sea bubble
3) shares circa 1929
4) internet shares circa 1999
5) bitcoin and other internet coin offerings
6) oil circa 2008

There are many many more ...

Articles like the one below is going to drive people to buy properties.
https://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=121...