New Zealand housing market indicators implode

The Real Estate Institute of New Zealand (REINZ) has released its June survey of licensed real estate agents.

The report is wall-to-wall bearish, with fewer people attending open homes and auctions, collapsing buyer demand from investors and first home buyers, widespread price falls, alongside buyers displaying FOOP – the ‘fear of over-paying’ and seeing prices fall after they buy.

Below are some of the key indicators presented in the survey.

First, a net 65% of responding real estate agents said they are seeing fewer people attending auctions. In fact, the withdrawal of attendees at auctions has been strong ever since the tightening of Loan to Value Ratio (LVR) lending rules in November and the much tighter requirements of the revamped Credit Contracts and Consumer Finance Act (CCCFA) introduced by the Government at the start of March.

Net auction attendance

In a similar vein, a net 60% of agents have reported seeing fewer people at open homes since November last year:

Open home attendance

A record 70% of real estate agents are seeing prices decline in their areas of operation. This is a sharp turnaround from seven months ago when a net 60% of agents reported that prices were rising:

Survey of house prices

FOMO (‘fear of missing out’) has virtually disappeared with only 4% of agents reporting that they can see buyers displaying FOMO:

FOMO in housing market

Agents are also reporting a huge loss of buyer interest from first home buyers and investors:

Overseas buyer interest has also tanked:

Overseas buyer interest

Finally, rising interest rates are by far the number one concern of home buyers according to agents:

Main concern of property buyers

The Reserve Bank of New Zealand’s ‘forward track’ guidance suggests that the official cash rate will rise from its current level of 2.0% to 3.9% by June 2023.

If this guidance comes to fruition, then housing sentiment will collapse further and prices will crash.

Unconventional Economist

Comments

  1. Even 4 weeks ago, the press etc were awash with the obvious warnings to Kiwis about what was happening.
    But today? It’s all gone pretty quiet – back to the way it was earlier last year (and before!), when any hint of a correction to the property market was not really mentioned, let alone openly discussed.
    What should we read (or not) into that?
    Tony Alexander – ex bank economist – has always been one of the cheer leaders of the ‘property always goes up’ brigade, and you’d have to say he’s doing a “Macobusiness’ – a bit of reverse psychology to try to avert the inevitable.
    Whatever it is, it’s gone quiet.
    Let’s hope that doesn’t continue, or whatever gains the RBNZ has made might are at risk of evaporating.

  2. Hugh PavletichMEMBER

    ‘Dropping $50K a week’: Prices slashed on thousands of listings … Nikki Preston … OneRoof / New Zealand Herald

    https://www.oneroof.co.nz/news/41594

    Across the country listings can be found with significant price reductions.

    The prices on almost 5000 listings have been slashed in the past three months as more owners get realistic about their property’s worth in the current market.
    The owners of a property on Stanley Road in Glenfield, in Auckland, are so committed to selling their house that they are slashing the price by $50,000 a week until it is sold. The price has already dropped by $350,000 since it was listed for $1.949 million at the end of April.
    And it is not the only house price being marked down – almost five times more real estate listings have had their price altered by an average 3.95% in the three months ending May 31, 2022 compared to the same period last year.
    Real estate agents made changes to 15% of all residential listings on OneRoof during the same three-month period with almost 50% of those corrections relating to Auckland properties, OneRoof analysis shows. … read more via hyperlink above …

  3. Hugh PavletichMEMBER

    UPDATE … New Zealand housing market indicators implode …

    Foop (Fear Of Over Paying) alert: Buyers worried by ‘faster than expected’ house price falls … Susan edmunds … Stuff New Zealand

    https://www.stuff.co.nz/life-style/homed/real-estate/300608852/foop-alert-buyers-worried-by-faster-than-expected-house-price-falls

    New Zealand’s housing market has softened faster than anyone expected, one economist says – and it could be the middle of next year before buyers shake off a fear of overpaying.

    Tony Alexander runs a regular survey of licensed real estate agents throughout New Zealand, asking them about the conditions of the property market in their areas.

    He said it was noticeable that a fear of over-paying, or FOOP, had taken hold. Now, 73% of agents were seeing it, compared to 19% in October. … read more via hyperlink above …

  4. Hugh PavletichMEMBER

    First Sleepyhead, now Saito – why Auckland companies are moving south … Sharnae Hope … Stuff New Zealand

    https://www.stuff.co.nz/waikato-times/news/128880708/first-sleepyhead-now-saito–why-auckland-companies-are-moving-south

    Tiny towns with lots of space are attracting big smoke industrialists.

    The latest is an Auckland-based labelling manufacturer Saito, which has started work on a $4 million sustainable factory and a co-ownership housing plan for staff in Kerepehi, in the Hauraki Plains. …

    … “The economics stack up. The cost of building in Auckland is ridiculous and even finding the land in Auckland these days is near impossible,” Hodder said. …

    … Bayleys Waikato commercial manager David Cashmore said a commercial section in Hauraki is on the cheaper end roughly $200-$250 per square metre, while Morrinsville is $350-$500 per square metre and Hamilton $600-$1000.

    The rates will also be ten times cheaper than in the city.

    “Our rates in Auckland for about half the size of what we are building is more than $38,000 a year … while my rates in Hauraki will be $8000 for the whole section,” Hodder said. … read more via hyperlink above …

  5. Hugh PavletichMEMBER

    RBNZ to Begin Five-Year Exit From QE Bond Holdings Next Month … Bloomberg

    https://www.bloomberg.com/news/articles/2022-06-08/rbnz-to-begin-five-year-exit-from-qe-bond-holdings-next-month

    ByMatthew Brockett+Follow
    June 9, 2022, 10:18 AM GMT+12
    New Zealand’s central bank is to begin selling the bonds acquired during its quantitative easing program and intends to gradually dispose of all its holdings over the next five years.

    Starting next month, the Reserve Bank will sell bonds back to the Treasury Department’s debt management office at a rate of NZ$5 billion ($3.2 billion) per June year in order of maturity date, beginning with the longest maturity, it said in a statement Thursday. Sales will continue in a “gradual and predictable manner” until holdings have reduced to zero, which is expected to be in mid-2027. Shorter-maturity bonds will mature without reinvestment or sales.

    New Zealand bonds fell across the curve after the RBNZ’s statement today, with the yield on 10-year debt hitting its highest level since June 2015.

    The RBNZ bought NZ$53.5 billion of mostly government bonds during its so-called Large Scale Asset Purchase program, which was a key feature of its response to the pandemic. It ceased purchases in July last year, with just over half of the NZ$100 billion program completed, and began raising interest rates in October as it became clear the economy was overheating. … read more via hyperlink above …

  6. Hugh PavletichMEMBER

    Gib crisis: Auckland developer importing four containers a month from Bangkok … Anne Gibson … NZ Herald
    … behind paywall …

    https://www.nzherald.co.nz/business/gib-crisis-auckland-developer-importing-four-containers-a-month-from-bangkok/X6BJK732QUALYSHKYILKUHX5SY/

    An Auckland builder/developer is so frustrated by the lack of Gib plasterboard supply here that he is importing four containers of alternative products from Asia each month in an attempt to break the supply chain deadlock.

    Shane Brealey, managing director and chairman of Simplicity Living which is building 334 new Point England and Oranga homes, is buying plasterboard from GM Gypsum, Thailand. …

    … Prices were cheaper, even with high freight costs.

    “For standard board, it’s 20 per cent cheaper and for moisture-resistant, it’s around 40 per cent cheaper when we buy in the larger volumes we are.”
    Standard Gib is $25/sheet, whereas Thai plasterboard is $19.50/sheet, including $11.75 freight.

    Standard Gib aquiline is $30/sheet whereas the Thai equivalent is $19/sheet, including $11.25 freight.

    “We’ve been forced to find an alternative source to keep our supply of affordable homes. … read more via hyperlink above .