October's house sales volumes up 15.5% versus October last year, while the median selling price set a new record, REINZ says

Photo by Teresa J. Cleveland.

There was a strong lift in housing sales in October and selling prices held their own, according to the latest figures from the Real Estate Institute of NZ.

The REINZ recorded 6791 residential property sales throughout the country in October, up 15.5% compared to October last year, providing a reasonably buoyant start to the crucial summer sales period.

Sales numbers were up compared to October last year in 13 of the REINZ's 16 sales districts, with the exceptions being Bay of Plenty, Taranaki and Tasman, where sales were basically flat compared to a year ago.

Prices also held their ground, with the national median selling price setting a new record of $562,000 in October, although the national median price has stayed within a very narrow band since March, suggesting prices are largely flat. The previous record national median price was $560,000 set in March, May and June this year.

In Auckland 1948 residential properties were sold in October, up 15.2% compared to October last year, while the Auckland median price was $865,000, up $13,000, or 1.5%, from $852,000 in September and $850,000 in October last year. However, that's still below the October 2016 median of $880,000, suggesting prices in Auckland remain mostly stable. The record Auckland median price was $900,000 in March 2017.

In other main centres, strong sales gains compared to October last year were recorded in the Waikato +18.5%, Wellington region +10.4%, Canterbury +28.7% and Otago +23.4% (see the charts below for the full regional sales volumes and median price trends).

'Taking a different path to what we are seeing across the Tasman'

REINZ chief executive Bindi Norwell said the latest figures suggested New Zealand might avoid the slide in housing values occurring in Australia.

"With strong sales occurring [in October], it's our belief that in the current market that New Zealand is taking a different path to what we are seeing across the Tasman at this point in time," she said.

She also said it was unlikely that the jump in sales in October was caused by overseas buyers rushing in to secure properties before new regulations restricting the sale of residential properties to overseas buyers took effect on October 22.

"With Statistics New Zealand's September quarter figures showing the lowest level of foreign buyers since they began keeping records, we're confident that most of October's lift in volume is attributable to the spring lift rather than a rush of foreign buyers looking to get in ahead of the ban," she said.

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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163 Comments

As expected, the housing market is steady as she goes, as will be the case for the next couple of years. Miserable DGMs that have been so wrong for so long to spit the dummy and spew out excuses in 3…2…1…

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BLSH loves company "With Statistics New Zealand’s September quarter figures showing the lowest level of foreign buyers since they began keeping records, we’re confident that most of October’s lift in volume is attributable to the spring lift rather than a rush of foreign buyers looking to get in ahead of the ban"

Why you Spruikers love prostituting your own credibility over some Bindi spin is beyond me. We all know foreign buyers have had a much greater influence than what Statistics NZ has released. Lets see what November stats show for Auckland Central and Waitakere in particular.

C'mon old Poppy-Crusader!

Show us ya crash!

TTP

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22

C'mon Agent show us ya facts. On a global scale, you're still dodging the hard questions. Auckland at 10x household income and you still think prices will continue the upward march from 2021.....

Do you no longer think Auckland is a global city like Sydney? Same tide of cheap international money, same origins and causes. Now, show us your facts.

There's increasing speculation that the Reserve Bank will ease LVR's in the not-too-distant future.

If so, the housing market will have a further stimulus heading into 2019.......

TTP

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Depends on whether you consider the LVR to still be a binding constraint.

I don't think many banks are going to want to be increasing their loan book share of sub 20% equity loans in a volatile, flat market.
Likewise, I don't know any savvy investors who will be jumping at further leverage potential to buy property with sub 5% yields and no capital gain.

That's just me, though.

Hi nymad,

It will likely make a bit of difference at the margin - will remove an impediment for some.

Add it to other changes and it can all have a cumulative impact - which is the nature of markets/economies.

TTP

Here is an irony... If the LVR was/is a "binding constraint".... the constraint is in regards to a "bubble" having evolved.
ie. The speculative boom was constrained from reaching a "bubble" style climax, by the introduction of the LVR.

Before I get attacked by all the " Bubble " people ... compare credit growth in housing historically , with the last 5 yrs....
Affordability does not define a bubble .
Yields are only one part of the puzzle .....
Simply calling something a bubble... does not make it one...

If this truly was a "bubble" we would already be seeing a capitulation to the downside and a profound growth in mortgagee sales, and a spillover into the wider economy ... and lots of fear..

Expecting a "Blackswan " event as a high probability is not evidence of a bubble.. ( in fact..."blackswan" events are a very low probability....by their nature )

just my view..

Roelof,

A now oldie, but a goody - It would suggest that we were in bubble territory before the introduction of LVRs in 2016.
https://cowles.yale.edu/sites/default/files/files/pub/d20/d2004.pdf

Using Phillips explosiveness tests, we do now have really good methods for testing for 'bubbles'. It's pretty easy to define and identify them these days. Retrospectively, of course.

"If this truly was a "bubble" we would already be seeing a capitulation to the downside and a profound growth in mortgagee sales, and a spillover into the wider economy ... and lots of fear.."
That's not at all necessarily true. There's (supposedly) a quote from Keynes himself on that.
A bubble is pumped up by the introduction of capital and optimism. Only once we have seen the peak of that, will we see the peak of the bubble. The length of time is arbitrary here.

thks Nymad I shall read it... It seems a paradox , to me, that one can empirically see a bubble as it unfolds... but I suppose we all define what a bubble is... differently.
For me ,.. a true bubble has to do with the..."madness of crowds"... which cant be measured empirically...as far as I know

You may be interested in this article. Suggests that nominal GDP growth is an important underlying trend factor , in regards to house prices... ie. house prices oscillate around the underlying trend of Nominal GDP growth.

https://repository.digitalnz.org/system/uploads/record/attachment/424/tr...

fig. 1 is a meaningful chart , for me .. I'd love to see an up to date chart..

Roelof,

"one can empirically see a bubble as it unfolds"
Nope - that's why I mentioned "Retrospectively".
As for the madness of crowds, we can sort of measure that - in bubble testing it is generally assumed that the wedge between (traditional) fair value and the market price of the asset is the detection method - It will no doubt become more clear if you read the paper. But this does generally require a revealed preference of the masses, not the minority.

The relationship in that paper is interesting. I don't know what it means, though. It seems to be not much more than a curiousity. Possibly more a representation of the evolution of economic, social and urban policy over time. If that's the case, I doubt trend reversion is to nominal GDP.

It is worth reading that article and then Lowell Mannings article
https://www.interest.co.nz/opinion/64724/lowell-manning-says-problem-hou...

My take on the relationship of nominal GDp to house prices is this:
1/ Nominal GDP is measured in $.. and is therefore a function of the Monetary system ( credit growth ) , in regards to "transactions" ie.. demand = money + credit

2/ The locational value of land , in aggregate , is a function of the "wealth of a Nation ". ( within the context of the 3 other areas of non-productive investment .. ie. being equities, government/ commercial paper, and bank deposits) . Another way of looking at it is that the Locational value of land is a function of the "store of value" depreciation of money ( monetary inflation )

3/ Using household income, to define a bubble, is problematic as wealth inequality grows. eg.. An individual that earns $1 million a yr has the cash flow ability to purchase numerous houses.

4/ If one uses Nominal GDP as the "constant" ( deflator )... then it becomes interesting to compare household incomes , nominal gdp and house prices
( My view is that the CPI is NOT a relevant price deflator to determine "real" prices )

5/ The ratio of nominal GDP growth/ ????? (house prices.... interest rates...incomes.... debt growth...etc) . is a really useful indicator..
eg. a study of financial crises found commonality in this.: private sector debt/GDP ratio. and a rapid growth in that ratio over a period of time ( most likely focused in a particular sector )
https://debt-economics.org/

One might argue that it is household incomes that have not kept up with house prices..??

1 - Yes, GDP is a function of domestic money supply by its very construction.

2 - Yep. And that was perhaps what the graph shows early on during a time before economic liberalisation in NZ. The relationship can't hold in the case of diversified investment opportunities and FDI.

3 - Household income isn't typically used to define property price explosiveness. It may be used as a robustness measure, but it would generally rents that are used as the base.

4 - Yea. Don't do that. Indices are very specific to their application. Using a GDP deflator on household incomes isn't a good idea. Neither is it appropriate for house prices.

5 - Sure, ratios can be a good indicator. But I don't know for what purpose you mean.

"One might argue that it is household incomes that have not kept up with house prices..??"
Well. Yes. All we need to do is look at the growth of price to income ratios to understand that.

I dunno if any of this proves a relationship between nominal GDP and house prices. I definitely agree there could very likely be one. Which way causality flows, I'm unsure. However that graph you provided attests to the fact that the relationship would be empirically very weak post the mid 90s.

I accept that there is a relationship between nominal GDP and house prices
You may be interested in this chart... I'm limited to the data I have.. this uses M3 money and index=100 set to 2010 ( housing index ).
RBNZ discontinued M3 money but the FED still calls it M3..??
Anyway... the chart is meaningful to me , and is one of the jigsaw pieces I use...
https://fred.stlouisfed.org/graph/fredgraph.pdf?hires=1&type=application...

The RBNZ was able to find evidence that over long periods of time all asset classes track GDP in NZ.
https://repository.digitalnz.org/system/uploads/record/attachment/424/tr...
If anything other than this was true then over a long period of time an asset class would either disappear or become the entire economy.
GDP is the fundamental basis of house price (land) growth filtered through affordability. Over long periods of time it is income that sets asset prices, filtered through interest rates. Increased income means you can pay for more for houses etc, assuming interest rates remain flat.
Edit: I see this has been posted already.

I agree...

Laminar. So simple it hurts.

R P, the facts you are requesting are described in the article above, you should read it before commenting. Volumes up, prices steady, these are not opinions, they are facts for the latest data available

Yvil, I did read it. I look at the bigger picture. Where do you see Auckland house prices in two years time? You've made your prediction on interest rates known, what about houses?

Posted by Yvil 04-May 2018 "let the great depression happen, it's the purge the whole system needed. It's much better than the long slow downward spiral we're on now, which will still lead to a depression"

Poppy-Crusader never lets the facts ruin a good crusade.

That's his hallmark.

TTP

R P, and how did I do with my interest rates predictions over the last 3 years?

Yvil, your prediction/s just mirror that of most commentators, the Reserve Bank and many economists in a largely benign inflation environment. Your belief and accompanying narrative changes depending on the article of the day, week or month. It's hard to pin down what on earth you believe to be honest.

Back to my question. Where do you see Auckland house prices in two years time?

It's a shame you cannot be honest, you know I've calling interest rates to go lower for the last 3 years even when all and sundry called for them to rise, I guess memory is short

ha-ha! :) How can you say that? I've only been on here a year and 1/2. In that short time, I've seen enough of your flip flopping and snide remarks to get a healthy grasp of your level of insight.

R P, Auckland house prices in 2 years will be down on today's prices

Yvil, by what percentage? Will the broad based recovery resume in 2021?

Given that you just insulted me on your comment above at 14:53, I will not help you out anymore, go figure it out by yourself.

Yvil, as you've got considerable skin in the property game, your refusal to answer the question invites risk of it coming back to haunt you.

My truthful comment need only be taken as an insult by someone with ill intentions to begin with. In my time on here I have warned FHB's of declines, particularly in Auckland. In this time, many areas of Auckland have already declined, some by double digits.

Please feel free to invest as much time as you like to question my credibility. I can take it and you're welcome :)

R P, thanks for taking the time to comb through my previous posts (I'm sure you could find many predicting lower interest rates too if you wanted)
Yes I did say that the US should have let more companies and banks fail rather than bail them out during the GFC and let the depression happen. It has very little connection with October's NZ REINZ results though

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Just a matter of time old man, put your feet up and grab some popcorn!

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This is not just directed at you BLSH

A lot of discussion on this site regarding the property market is sounding a bit like a game of two-ups; it is just that rather than a “heads” or “tails” guess, it is “market take-off” or “market crash”, but still with fervent belief and unjustified criticism of others’ calls.
Rather than just what are little more than what are coming across as guesses, how about this time having a bit of justified discussion – including one’s rationale or what are considered to be the significant factors – on the future of the market.

But BLSH just as for others including those with differing viewpoints; justify sweeping statements such as "the housing market is steady as she goes, as will be the case for the next couple of years". Otherwise it is just a hollow viewpoint.

I've previously provided reasons for my view that the DGMs are wrong and that housing market will be steady/flat for the next few years.

There are plenty of global risks at the moment, which are getting a lot of coverage in the media. These risks are real, and as a small economy NZ has exposure to this. But the mistake that many here make is to conflate the likes of the US and emerging market economies with the NZ economy. NZ is not China, Australia or America. You folks also seem to think that the fact interest rates are already low means that NZ has no capacity/tools to deal with another GFC, which isn’t true. People won’t sell NZ property for cheap unless they are forced to. In terms of whether vendors are likely to be forced to sell - NZ’s economy has sound fundamentals and Orr has signalled interest rates are likely to remain low. DGMs overestimate inflation in the medium term. Moreover, there is very much still a shortage of housing in our larger centres and rents are rising faster than inflation. While net migration is falling, it is still very high. KiwiBuild will result in more lower quartile houses, but not many net additional units (unless the government makes the most of Universal Development Authority legislation next year, which it won’t). The economy is cyclical and softness won’t last forever - looking at past trends (DGMs absolutely hate to learn from the past - “this time is different you know”) 2021/22 is when the upward phase is due (although upswing unlikely to be as dramatic as 2010-2016)

Good post, BLSH,

Add to that falling unemployment and rising wages - and the economy is doing pretty well.

Housing market is well-placed as we head into 2019.

TTP

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BLSH, you forget that China was our White Knight post 2008. In the event of the next credit crunch, who will our next White Knight be? 70 year low mortgage rates - doing that already. China? They've got their own problems problems grappling with 24% of their houses (50 million) classed as vacant. Australia?, also heavily reliant in China. It's time you and Agent TTP stopped avoiding the hard questions over the wider picture beyond your own letter box. BLSH, you talk about a shortage of housing. That's complete rubbish. There are 35K ghost houses in Auckland. There was also a shortage of houses in Sydney. Now that it's heading down there still is. Why?, because they're still unaffordable. On a percentage basis, Sydney has less vacant houses than Auckland. There is a shortage of affordably priced houses and that's all. Now that our nation's houses have become unaffordable to our own people, that makes them highly vulnerable to correction - period.

Show us ya facts!

Nonsensical ramblings. I’m starting to feel sorry for you. You should find a Chinese or Australian website to post your comments on - they would be more relevant there (Just kidding I do find your grand theories amusing).

You’ve asked for facts. Here are three:

1. Auckland median up 1.8% YOY
2. National median up 6.0% YOY
3. You predicted a 5% drop in median by December - only 1 month away now.

BLSH, I certainly did predict an Auckland wide 5% drop in the median by December. Some areas of Auckland have dropped by more. I warned FHB's of this from the day I arrived. In the wider sense, the median figures are clearly stacked and distorted with an mythical upward bias in this property specific buyers market.

I'll freely admit, I've underestimated longevity of the credit fueled bubble, residual strength in the regions and the ability of Auckland's highly leveraged to hang on. Some pockets of strength pre the Foreign Buyers Ban implementation still remained evident. Again I remind you, don't be blinded by your hard to escape from Papamoa bias, it will not last.

It's worth noting that both you and this cheap credit fueled boom have a lot in common. Its blown on way longer than expected, but when it runs out of puff, I dare say, so will you.

Why not grasp some credibility and address the questions I've put to you instead of trying to create a sideshow? In support of your broad house price recovery post 2021, how will the coming debt crunch by avoided in the interim? With Sydney house prices falling, Auckland is looking more glaringly overvalued and therefore increasingly vulnerable by the day.

And some parts of Auckland are up by 5%. We both know cherry picking is a feeble attempt to save face. The fact that you are now claiming that the statistics are stacked and distorted reeks of desperation. Good though that you are finally starting to acknowledge errors of judgement - but admitting that you’ve underestimated the longevity of the market is an understatement.

Ah yes, sunny Papamoa Beach. Did you notice that Bay of Plenty is up 10.3%?

Auckland is Sydney is Beijing!!!

BLSH, if you read my comment carefully, I've already acknowledged the enduring strength of some areas pre FBB implementation and it has surprised me how long this bubble has endured. Are you suggesting first time home owners haven't already witnessed first hand, Auckland's well documented declines, and felt betrayed by the likes of yourself and Agent TTP?

The REINZ statistics are certainly stacked because of the underlying weakness vendors are experiencing if they cannot offer that something extra in this buyers market. It doesn't reflect a market with strength, just looks good on paper as a spin and that's all. It smacks of financial illiteracy to accuse a financially comfortable person of desperation, simply because they present sound arguments you struggle to respond to.

It's a shame you can't front with the hard facts in support of your 2021 projection. I held high hopes your late foray into property was backed by some insight. Clearly its not.

All the best Sunshine.

Ok Poppet. Oops, Poppy.

;-)

While I get your point on a lot of your opinion the one comment I disagree with is

"People won’t sell NZ property for cheap unless they are forced to. In terms of whether vendors are likely to be forced to sell"

Why would so many Auckland properties be being rushed onto the market when prices are flat to falling, clearance rates are dismal, low sales volumes etc.

People dont generally put their houses on the market to "get a feel", usually its because they want to sell.

Also the vast majority will see good profit takings from capital gains over the past 5 years and wont consider it a "cheap" sale.

Only those that purchased in the last 2 years or so are at risk of making no capital gain or a loss, and depending on how much they "NEED" to sell will determine whether a minor loss now will be preferred to a potential major loss further down the track. The decision for these vendors becomes a crucial one!!!!

theglc,

I think the low auction clearances precisely confirm that vendors will not sell if they don't get the price they want and if they don't have to. That is also why inventory levels rising does not equate lower prices. Vendors will only accept lower prices when they have to and for most, they are not in a forced sale situation.

So whats changed this year?

We had very similar conditions last year but this year the inventories are bursting at the seams?

Did those who didnt sell last year pull their property off the market but this year they are not?

Seems to me to be an eagerness to sell and with so few buyers around the lack of demand must drive the prices lower.

Inventory levels are rising because vendors and buyers are not seeing eye to eye on price, that also explains low auction rates. For now, not many vendors are forced to sell so they can stand their ground. Maybe in the future this will change, if it does, prices will head south.

From the admittedly small sample I saw today at B&T today.. the sellers and buyers aren't seeing eye to eye.. because the buyers eyes aren't there. About half of the offered properties didn't get a single bid with the auctioneer looking for bids at well below RV. Eg, no bid at $500k on a (DGZ?) property with a $800k RV.

What has not changed is Kiwi's get bored of their house and try to sell it. Perhaps someone should come up with the stats on average turn over times. I lived in my old house for 15 years and every house around me changed owners at least twice and up to four times in one of them. Plenty of people putting their house on the market but at the end of the day they are not being forced to sell it, so inventory increasing yes but prices dropping, no.

It's interesting, Carlos we just bought a house in a small community that the recent owner lived in for over 60 years. I think those long occupancies happen more in some small centres and rural communities.

Yes, absolutely agree.

If vendors were forced to sell, we would have higher clearance rates and lower prices. Vendors that list their properties obviously want to sell, but they aren't forced to sell. If they don't get the price they want they are more inclined to withdraw it or leave it sitting on the market for longer. With interest rates low, employment high, the economy reasonably sound and a housing shortage, I don't see this changing. If clearance rates are lower than the historical average, I'd be more inclined to blame tighter bank lending and affordability constraints.

CATGI (can't afford to get in), not FONGO.

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Okay, so you basically described a situation where both sellers and buyers aren't budging.

Let's say sellers want to sell at $900k but buyers can only afford $700k.

If ALL sellers hold steady and insist on $900k, then the house prices will never go down from $900k, right?

Who has flexibility here? Certainly not the buyers because they cannot go any higher than $700k.

But what happens if a seller is forced to sell? Death, divorce, job loss, moving, etc. All very real reasons to be forced to sell. What does the seller NEED to do in order to gain a sale? That's right, move the price down to $700k.

Obviously a simplification, but that's basically where we are now that Chinese funny money has gone.

Yes, your assessment is an over-simplification, and no, I didn't say that neither sellers nor buyers are budging.

In Auckland 1948 residential properties were sold in October, up 15.2% compared to October last year. Sales are happening and the the buyers that are willing and able to meet the market are securing property. Those that aren't are missing out. Most vendors that aren't able to get the price they want are more likely to withdraw or leave the property to sit on the market than settle for less.

There will always be a consistent proportion of vendors forced to sell due to routine factors like death, divorce, job loss etc. This relatively small proportion may well settle for less due to their circumstances, but this is nothing new. Until we see an adverse change in economic conditions or monetary policy, we wont see a higher than normal number of vendors forced to sell.

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from below:

2018 1948
2017 1691
2016 2135
2015 2546
2014 2457
2013 2681
2012 2640
2011 1832

In Auckland, 1948 residential properties were sold in October 2018 which is lower than all Octobers from 2012 to 2016. October 2018 is down 27% from the high of October 2013. Look at the big picture to see the whole story.

China has stopped capital flight, so we're only left with local Kiwis and local salaries to buy these overpriced houses. There are now less buyers with less money available on an increasing number of housing stock. Houses are selling for below CV and this will be the new normal. Those who bought within the last 2 years may choose to hold on to their purchases and ride the correction - that's their choice as no one is forcing them to sell. But those who bought 5 years ago may find themselves selling at a price not much higher than they purchased back then.

Precisely.

Great to see all this discussion with some depth. :)

"and for most they are not in a forced sale situation". True, but it's the ones that are that set the market price expectation. It's a median sales price, not a non-sales median.

Then get out there and find those vendors who 'have to' sell Pragmist, that's my advice to you. I dont want to see you sit here pontificating like an expert without ever experiencing and retaining ownership of a property.

I'm not looking to buy for at least another year, and I don't need to motivate them, natural causes will do that just as it always has.

"at least another year"
I dont know if timing the market works that precisely. Procrastinating definitely will not work. I had a work colleague looking for an investment ppty who tried that from 2009 to 2014 but then gave up when the market lifted higher and faster than he could cope with.

I'm not timing the market, I'm refusing to take a highly leveraged position in an asset with significant downside risk. The longer I wait the bigger the deposit we have and the less leveraged we are. Also, my life is not one dimensional, there are other reasons why even if prices dropped 20% overnight I'd be unlikely to buy before November next year. But of course i'll keep an eye on events and if the situation changes I'll re-assess.

PS:

I dont want to see you sit here pontificating like an expert without ever experiencing and retaining ownership of a property.

You may want to take a seat, I've got news, and its not good :)

You do you, i'll do me.

Thanks for explaining your reasons BLSH, good post

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" Moreover, there is very much still a shortage of housing in our larger centres and rents are rising faster than inflation."

This bit I just dont believe. Rents in Central akl are falling, based on my own and others I know experience. Competition is also lame. Its a renters market right now.
My RE friend has signed up 13 properties in the last 2 weeks, mostly of dubious quality (renters) and hard sells. 2 months ago a friend sold his house for 1m over RV, and another friend 1 week ago 12k over RV. Both left Auckland (white flight).
The housing shortage is a government sponsored statement to justify their own policies, or to do nothing with as per the useless council and nats.
What I do believe is that there are very large tracts of land in akl that are no longer owned by residents here, far more than any government would ever admit to. For this sin we will pay dearly in the future, so enjoy your high house prices and media fed stories while you can. Winter is coming.

Intelligent discussion at interest.co.nz - you must be dreaming mate....

All speculation about the direction of house prices is a speculation as to what the RBNZ will do about macroprudential limits. If RBNZ eases LVR limits then credit will increase and so will house prices.

It is obvious from RBNZ's performance over the last 20 years that the RBNZ has no problem with credit growth being greater than income growth, and credit being directed towards existing assets instead of productive investment, so it is reasonable to expect that they will encourage another real estate party before the inevitable bust.

I totally agree with this comment - rigorous debate seems to be lost in the need to one up by either side.

My thoughts generally on this;
1) The Median House Price figure is a little misleading. The better reference point is the index which you can find at Page 6 of the report. This shows very different outcomes for different areas - the area I am interested in Auckland City has seen a 1% reduction.

2) According to anecdotal evidence from our solicitor there was a flurry of sale purchase agreement with the date of 21 Oct 2018 (day before ban started). The value of this report and its output has to be questioned in all regards based off this temporary impact. I think we need to wait a couple of months (November data in December as a start to try and figure the trend).

3) Macro economic data is far more interesting at the moment as anyone trading the Dow will know. The risk of interest rate increase out of the US is playing on everyone's mind including well known bulls such as Jim Cramer. Interest Rate increase is the biggest risk to the current property market paradigm (residential & commercial) in Auckland as increases in offshore interest rate costs will filter through to mortgage rates in time (there is a lag).

Why do you take it so personally?

I mean I am invested in the S&P 500. I don't call people who are bearish on the S&P 500 "miserable doom and gloom merchants". It's not near and dear to my heart - it's just a different outlook.

Why the deep dislike?

No excuses. Property markets never stay at the current price to household income ratio we are seeing in NZ (and Australia), and a "couple of years" of flat prices are not going to fix that. Of course, wages could rise dramatically as well, but seems pretty unlikely given developed world trends. "Steady as she goes" is exactly what economists were saying in the US before the GFC.

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Industry insider John Bolton recently said
"My view is that prices in previously hot parts of Auckland are off their highs by about ten percent. For now, that translates to an unofficial drop of around five percent."

Well, I guess it is unofficial because the REINZ magic doesn't show much of a drop at all.

According to the REINZ index Auckland is dead flat - show me another market anywhere in recent times where an index was DEAD FLAT for two plus years.

Take Waitakere City for example, the REINZ index is up 0.6% for the last year, although down -1.1% this month. Try telling a vendor who has just seen every West Auckland property get passed in that they should ask for more than last year (more than CV). You'd have to be joking.

The only explanation I can see is that the thin volume that is selling is still selling at a reasonable price, so prices haven't been hit too badly, despite so many properties failing to sell. Isn't it lucky for vendors and banks that home prices aren't marked to market!

Movember is looking like a train wreck.....and price discovery is very much alive and well :)

excellent comment!

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There is a house for sale on Portland Rd with the asking price emblazoned on a large sticker across the ‘For Sale’ sign. If that isn’t a sign of the impending apocalypse I don’t know what is.

($2.95 million if you are interested - half a million below CV and $800’000 below it’s initial asking price when it first went on the market in April).

Indeed 1 house
"with the asking price emblazoned on a large sticker across the ‘For Sale’ sign"
is certainly
"a sign of the impending apocalypse"…
The proof, as so often, is in the number of thumbs up

@Yvil.. indeed one month result!!!

You don't think a market can be dead flat for 2 or more years?

Try Wellington, manawatu , a host of others flat for 5 plus years.

At first people think prices are too high so save and wait for them to fall. (2008-2012) - all the while, as sales are low, the backlog of buyers slowly grows behind the scenes.

Suddenly you have a spring loaded market full of people who have put off buying waiting for a mystical crash (2012-2016 in welly , Palmy etc) - and they realise prices are actually kind of reasonable compared to interest rates and the 40% wage inflation since 2007 - so the loaded spring full of potential buyers is released - then you get 5 years of what some call catch up where not only do all those who have held off finally pile in but new comers bring buying plans forward so as to not 'miss out, result:

20% gains year on year until prices get stupidly high again.

"20% gains year on year until prices get stupidly high again."

Yes. Because putting faith in an index that is based on median sales prices and jumps ~20% in one year is a smart thing to do, Simon.
Definitely nothing dodgy about that figure. Let's go all in on the quintessential sh*t town of NZ; Palmy.

Simon I agree in part... although Wellington was flat for more than 5 years. It didn't really take off till 2015 and by 2016 rapid catch up growth has begun. I think the recent boom in the Wellington market has also been about investors being priced out of the Auckland market (especially since the LVR introduction) and looking for decent yields and opportunities elsewhere, especially when Christchurch has become less of a desirable PI location. A lot of the recent regional booms have been PI chasing yield and affected by the LVR.

Nymad, I simply explained a dynamic, a reality, I didn't suggest going all in or any other advice. I have in 2012-2016 suggested buying in pn and have done so myself - what an idiot I am and anyone who listened eh

Auckland City and North shore both down 5% over last 2 years (ordinary least squares linear fit to REINZ data). Everywhere else in Auckland flat except for slight 1-2% rise in Rodney.

So in real terms prices throughout Auckland are falling, slowly, but steadily. Ideal way for a correction to occur.

Bindi says it's the highest October sales in two years.Factually true.

But what about three years ago......

Not so sure it's factually true. It's the highest October in ONE year, if you go back two years, October was higher.

This 'bouyant start' speaks as much to how poor October last year was (when everyone was saying 'election') than anything else.

Oct 2014 6,599
Oct 2015 7,793
Oct 2016 6,925
Oct 2017 5,880
Oct 2018 6,791

Haha. Nice pickup. As they say, there are lies, damn lies and statistics.

She was just rounding.. it was the highest October in 1 & 11/12ths years. ;)

Bindi is a bullshit merchant of the highest order. I'm sure her employee will be very pleased and reward her handsomely.

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To put things into perspective, that is the 2nd lowest volume of sales in October for Auckland sine 2011

Given that inventories are going through the roof and the FBB is now going to have a huge impact in Auckland, November is shaping up to answer quite a few questions.

When the market is turning downward, it is quite often more about what cant be sold that what can be sold until the avalanche starts ....

As you say, not buoyant, actually near bottom of barrel.
2018 1948
2017 1691
2016 2135
2015 2546
2014 2457
2013 2681
2012 2640
2011 1832

Lets see what happens in November before writing off the foreign buyer ban effect. If sales are still strong through Nov and Dec then maybe I'll believe it. Until then, its just a load of foreign students buying houses for Mum & Dad while they still can.

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BuyHighCryLow -

Auckland October 2018 median still below October 2016 median price. Stock levels are now at 2012 levels with a massive amount of properties coming on to the market. We have less buyers, more stock, slowing migration, tighter bank lending rules, global credit tightening. Do the math buddy!

Adam B NZ, well said. Adjusted for inflation Auckland's poor performance is even more stark in contrast to REINZ spin.

less credit = lower prices.

Lower prices = less credit ?

comparing last Oct with this Oct is not apples with apples - last October buyers sat on their hands due to the delay in an election result and then the shock of the final outcome.

Exactly. But don't let explanatory factors like that get in the way of a good property pumping narrative!

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23 days of 31 where there was a rush to buy before the doors closed. November will show a very different picture I believe.

If you missed it Nic, yesterday I posted that Core Logic updated their 4/11 estimate of 97.4% of CV to 100.4% on 11/11.

Ex Expat, Do you pay for that data or can you derive it from their website?

I don't pay for it. I have an ANZ Flexible Home Loan. On the Go Money App there is an icon below the balance "Your Home Loans" which leads to "Your Property". That lists the security held with an 'estimated property value' then an 'estimated range' and the date of the estimate. It says the value is supplied by CoreLogic. It changes regularly. I guess ANZ is dynamically monitoring LVR exposures with these values. Mine is 0% as the facility is a legacy and it costs nothing to maintain a line in place.

Life's good aye Expat.

I posted the other day that Homes.co.nz values my property at 118% of 2017 RV, or 124% of my purchase price last year.

I don't have access to Core Logic, but I'm sure they too think I'm awesome.

Holy moly! Auckland city (as in, the original Auckland not greater Auckland) is up 15% in 12 months! What is this, maybe foreign buyers doing one last splurge? Or was Oct 17 a month when there was a massive amount of apartment sales?

The only thing that shows is the stupidity in taking any notice of indexes based on small sample median prices - something too many here do.

Whats wrong with the west coast -26.7% median from last year. @165k houses seem like a bargain.

Distant urban green voters have, through instituting various regulations and bans progressively shut down primary industry on the west coast over last 20 years. It's dying.

But...But..that squiggly line for the last 25 years has been pointing in one direction? Some have predicted over the last year that we are going to see 20-30-50% drops.... I personally would not like to see house prices crash that much as the financial system in NZ would take a hammering and that means everyone is going to suffer!! I can't actually see that prices have ever crashed that much in NZ looking at the longer figures from the REINZ. It's not to say it won't happen, but based on historical figures its very unlikely and we have weathered financial collapses, global unrest and recessions etc before. So if you are waiting for this, you may be waiting a long time.

Long term investors nothing to see here.....If you are playing guessing games then by all means punt away!

Excellent post Upside (as shown by the lack of thumbs up)

Thanks Yvil, I don't read or comment on these articles to be liked, but if it's important to you I hope you get some thumbs up.

I wasn't being sarcastic at all, you can quite consistently spot the dumbest comments by the high number of thumbs up and the smartest comments by the lack of thumbs up

So you are saying that the comments of Boatman, TTP, TM2, and BLSH are by in far the smart comments and those of waymad, andrewj, GN, and PDK are the worst?

Something tells me that you might be seeing things the wrong way around, Yvil...

I'll give you a thumbs up for that ; )

Nymad, this just speaks volumes doesn't it?

"People won’t sell NZ property for cheap unless they are forced to."
Quite right, and maybe you've been on the ground in other domains when that has happened and know what happens next? " It's never going to happen here, because..." has been lived by some of us, and as one of them, I'll tell you - it's frightening.
Does it follow that it will happen in New Zealand? No. But there's absolutely nothing that I see about me today that tells me it won't. ( and yes. % rates are going lower - much lower, and as I continually say "That's not good!")

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Are we entering into a dark future where Hamilton becomes more expensive than Sydney?

I am so glad I have noped out of this market. Insanity. An Irish style crash could occur and it would still be overpriced.

Hamilton is well-placed for the future.

Proximity to Auckland and a robust infrastructure make it a good bet.

TTP

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LOL actually trying to convince me that it would make sense for the Tron to be more expensive than Sydney.

Let's go deeper - tell us something about Huntly.

When you come from Palmy, any city is the city of the future.

Don't just stop at Huntly - what about Ngaruawahia as well?

1 million for a 2 bedroom unit, only 30 minutes from Ngaruawahia CBD.

A vision of the future?

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Sounds like the Kiwi dream.

Huntly is the City of the future.

@TTP "Hamilton is well-placed for the future"..not when you have celebrities such as Lisa Lewis as local!

Hamilton does a great job of making Tauranga look like an urbane metropolis.

I am from Hamilton, and while I do like the place, it definitely does not hold its own on other cities around the world. Median price is around the $550k which is way to high for a non productive asset.

Would still prefer Hamilton to Auckland.

Median price is around the $550k which is way to high for a non productive asset

Yeah ; as per the fundamentals of avg income, economic activity and population - Yes you are correct . But as the bankers,agents and their fans say , in this low interest rate era, you just look at the serviceability of mortgage and go for it. The economic activity and income growth could follow later

Great news!
One month's statistic is all you need to predict the long term future of the property market.
At this rate the median price of property will be double in value within then next 5 years.
You can never pay to much for a property you only may have paid too early. ,

Ha-ha-ha :) Well said!

BD,
At the bottom of the article there is a graph about Median Prices, you can scroll the bottom cursor to get data all the way back from Jan 1992, that equates to 321 months of data, should be enough.

Hi BigDaddy,

What utter balderdash you write.

REINZ provides statistical evidence as part of a systematic monitoring process.

TTP

Agent? TTP, I'm open minded to being wrong about you. I'm starting to wonder if you're more an REINZ employee, than an agent. Its one or the other.

The guy is trying to convince us that if Hamilton became more expensive than Sydney it would still make sense to buy in Hamilton.

He 100% has a clear and very transparent agenda.

Its a bit like getting drug related death statistics, from a drug dealer

The Takeaways Food Association (TFA) recently published their own research that eating a huge amount of MSG is perfectly OK.

I think Olly Newland knows a thing or two about property...

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3 out of 19 sold under the hammer at this mornings B&T Shortland St Auction.

Edit: 9 received no bids

Astounding result.. buyers so willing and capable of buying up..

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That's a massive 16% success rate! Looking really positive.

To be fair there were a couple of others that sounded like they had conditional offer buyers waiting in the wings who couldn't bid at auction.. (or it could be a line spun by the RE agent to try to force the price up..).

On the other side of the of the ledger there was a property with a $3.3m CV passed in at $2.4.

All three that sold exceeded RV, one (fancourt st) by a healthy margin, the other two by a small margin.

So what we do now is ignore the reasons why the overwhelming majority of properties didn’t sell and focus on the 3 that exceeded CV.

Of course.. and no doubt the Auckland REINZ HPI won't be mentioned,( I'm guessing it's still as flat as a lumpy pancake since mid 2016?)

For someone not interested in buying a house yet you are attending a lot of auctions. That's researching in advance for sure. Btw how do you like the GAVL app?

Attending a lot of auctions? today was the only day in my life I've set foot in a real estate auction. Got a few more inaccurate observations to throw out?

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Dear Opposing Property Market Camps (DGM's vs Spruikers or whatever derisory names are currently being slung about).

Has it occurred to you that you are all, at least partially correct and that perhaps there is an absurdity over hurling mud at each other when the market is not really giving data to support either of your opinions just yet?

I think we can all agree that markets are unpredictable and that despite Adam Smith's naive assertion that markets would behave rationally, the last 300 years have shown us that markets are anything but rational... sometimes... they are downright hysterical!

So far, in terms of economics, we have not achieved an index, theory or calculation that can provide accurate forecasting. I look at the data on the NZ housing market and can see evidence to support both bearish and bullish opinion but there is evidence that any number of scenarios could play out, and invariably there will also be ones that none of us have even conceived of yet.

I have been guilty of throwing shade, so include myself in this comment... but maybe we can all try and be a bit more civil? Some of the comments lately are no better than the stuff.co.nz ones.

Hey GN, a little quirk about your argument is that in a lot of regions the price is still rising and that 'Spruikers' are justified in their comments. While the data is starting to turn, the positive price outcome is still here.

I do agree that we need to be more civil, the name throwing is getting out of hand. E.g. BLSH > BuLlSHit is just unprofessional and does not contribute to strong arguments or 'good banter'

You analyse too much gingerninja instead of actually buying a house. Have you seen any you like, in your price range?

Houseworks, if only it were that simple! Our finances span a few continents, tax jurisdictions and currencies so it's not just about analysis of the NZ economy or housing market.

We did decide to sell up our old house back in the UK though (the market there is looking a bit dodgy) so we are just waiting on the proceeds of that sale and then we will buy a house.

I tend to analyse the hell out of everything though, so that's still a fair point ;-)

In the long term, property ALWAYS goes up. You used to be able to get a 1/4 acre for a bottle of wine and a pack of smokes. Mind you if they keep upping the tax on smoke you may be able to sell your house and buy a pack of smokes.

But we are talking about the short and medium term, where it has been known to go not-up.. even down. In 50 years, sure it'll be up.

In October sale volume was expected to go up as their would / should have been rush to buy and sell before the ban. Irrespective of what the so called experts says as they believe that 3% foreign buyer is correct.

Important will be November data.

At the end of the day its all about cash flow banks are ultimately cash flow lenders with security attached. If house prices drop and the owners still have a job and can pay the mortgage the banks wont force sales nor with the owners want to sell. In the absence of foreign buyers for prices to rise significantly this will require rising local incomes or strong immigration flows. However if the economy slumps and unemployment rises and house owners loose their jobs and cannot service the mortgage you then you have real problems.

Someone said something along the lines "it's the economy stupid". So long as the economy stays favourable house prices won't change much. Should the economy tank then that is a different matter....

ChCh stats are very impressive aren’t they
People from Interest.co finally listening to the Man and buying!
You won’t regret it as it is growing by the day!

Total for the day at B&T.. 6 sold from 28 offered

Pragmatist, it's not hard to spot the downside bias post FBB. One REINZ spring swallow does not a summer make.

the bayleys auctions had a better result..

out of the 13, only 3 were Auckland properties, of which 2 sold..

What was the Total number sold?

While I was there 6 out of 9

City Sales had the best auction results today..

WooHoo...

A swing and a miss. 0 of 4. Wow.

“Bidders were spilling out the doors today at Bayleys Auckland Auctions as the housing market sprung back into life. Sales were achieved on 2 out of 3 properties giving a clearance rate of 66.6666666666%”.

...Yus folks, definitely a sell out. A listing drought of epic proportions in the making. Good times are just around the next S-bend.

Wow how many people here actually read the article before spouting a load of rubbish in the comments. IMO some people on here have serious issues and need to seek professional help.

I actually just go straight to the comments section. The website actually gives you a link to the first new comment on a thread which is quite handy on a mobile device.

Classic, sure its where the fun reading starts right ? it is a bit of a worry however that the majority of people on this site are clueless. Still I have seen it in real life, people at my age and even older still in denial, repeating the same mistakes, still thinking they are right and never getting anywhere in life.

It is good to be in the majority, right Carlos67?

'Taking a different path to what we are seeing across the Tasman' - Bindi

See? NZ is different.

It would be expected by Interest co.nz if they could NOT accept the spiel from REINZ please!
Could we have an analysis of what is selling and where?
ie by region of Auckland? Not this generic confidence boosting tripe...

Waitakere and Manukau up substantially, NSC and Rodney not.
Sales, by the way, are below 2013 with a lot more stock.
Please define, independently, what you regard as a "good " market and where it is?
I hoped for better.

I agree, we need more doom, not this confident tripe. "Housing Market Worst Ever" would have been more appropriate headline!

Don't look up, the sky is falling!

Bayleys Tauranga Auction results from yesterday:
8 went to auction
1 sold prior
0 sold on auction day.
But don't worry, everything's fine.
*Grabs popcorn