New Zealand house prices continue to sink

New Zealand’s June house price results were a complete wipeout.

For example, REINZ’s House Price Index, which is a preferred measure of the Reserve Bank, posted a sharp 5.4% fall over the June quarter, with all major urban districts declining in value. In a similar vein, the Trade Me property index registered a record a 1.9% fall in the month of June amid “skyrocketing supply”.

Yesterday, property website realestate.co.nz reported more losses, with asking prices tumbling and the number of new listings remaining above pre-pandemic levels:

At the end of July realestate.co.nz had 26,358 residential properties available for sale, more than double (+108%) the number it had available at the end of July last year.

The meant the number of properties available for sale was at its highest level for the time of year since 2015…

Inevitably there has been downward pressure on asking prices, with the national average asking price of properties listed for sale on realestate.co.nz declining from its January 2022 peak of $994,885 to $907,411 in July, down by $87,474 (-8.8%).

The Auckland the average asking price has declined from its January 2022 peak of $1,279,330 to $1,127,236 in July, a decline of $152,094 (-11.9%).

Average asking prices in all regions have fallen from the peaks set late last year or early this year…

“The market has started to shift,” realestate.co.nz spokesperson Vanessa Williams said… “Buyers now have the edge”…

Meanwhile, auctioneer Barfoot & Thompson had one of its worst July’s ever for sales, selling just 611 properties in the month, down 49% from July last year. The average and median selling prices of properties sold also continued to fall:

Barfoot’s average selling price was $1,122,575 in July, which was down $156,072 compared to its December 2021 peak of $1,278,647.

The median selling price was $1,110,000 in July, down $130,000 from its November 2021 peak of $1,240,000.

The Reserve Bank last month said that it would continue raising interest rates to fight inflation, which hit a 32-year high 7.3% over the June quarter. Therefore, New Zealand house prices will continue to plunge.

After experiencing one of the world’s biggest house price booms over the pandemic, New Zealand housing now faces one of the biggest busts. The writing is on the wall.

Unconventional Economist

Comments

  1. Median Average Salary, Auckland – NZ$108k
    Mean Average Salary, Auckland – NZ$74k.

    Barfoots have over 80 branches and 1,600 salespeople in Auckland, so on average the July sales of 611 dwellings means that averages less than 2 per week per branch office.

  2. Hugh PavletichMEMBER

    … Not just the housing market …

    Unsold $200m+ Auckland commercial precinct: Why are buyers so reluctant? … Anne Gibson, Property Editor … NZ Herald

    https://www.nzherald.co.nz/business/unsold-200m-auckland-commercial-precinct-why-are-buyers-so-reluctant/3KSM2RKRUJT7GAH36RNS6RY7CM/

    Around 2000 people work there, it’s close to the motorway on and offramps, has 11 big buildings, solid international tenants and nearly 2000 car parks – so why isn’t it sold after nearly a year.

    That’s the question some in the commercial property sector are asking after one of New Zealand’s largest office parks remains unsold for months, despite strenuous marketing attempts.

    Central Park in the Greenlane/Ellerslie area has offices for more than 2000 people spread across its 4.8ha 11-building $200 million-plus campus-style site, car parks often outside office front doors, near a train station and the Ellerslie/Penrose motorway onramps.

    “Super-sized business park,” went the marketing.

    But super-sized interest rates and borrowing costs, difficulty getting access to capital, the pandemic, delays engaging consultants and shut borders are just some of the reasons cited for such a big asset not selling, those close to the deal say.

    “If it had been two years ago, it would be gone by now,” said one consultant who specialises in top-end sales like this. … behind paywall … read more via hyperlink above …

  3. I’m in Wellington, it is an interesting market here.

    I’ve noticed a trend of high end homes, and living in one of the small pockets where they are concentrated anything outstanding for sale still sells in a flash and at a high price.

    Where things have been marked down the most is investor fodder. That low end crap your typical first home buyer wouldn’t even aspire to buy it is so rubbish. Some of these homes would be down 30-40%.

      • I think Wellington is a fundamentally different market.
        Lots of very wealthy people here. However they tend to have fancier second homes than their Wellington bases, as really nice homes don’t often come onto the market.

    • kiwikarynMEMBER

      If they get low enough the flippers will be back. Buy some rundown ex-rental, spend $100k on it, then sell it to a FHB. Thats how you improve housing quality in addition to building new houses. But the prices of the do-ups had gone through the roof due to developers buying them for the land development opportunity, not the value of the house, and thus paying twice what the property is actually worth. When the heat comes out of the development market, the prices for low end homes will fall back to earth. Which is a good thing.

      • I honestly think there is even more money to be made in the $2m plus market in Wellington, but the risk to execute is a lot higher.

        I’m investing a lot in my own home, but I feel it’s relatively low risk as long as you execute well. I estimate I’ll be up $500k including a generous contingency. I’m fortunate to have a few neighbours who are already likely $3m plus however.

        We are talking paper money in reality though as we want to stay long term.

  4. Hugh PavletichMEMBER

    Auckland rates: ‘Just shocked’ – dramatic increases start landing in inboxes … Julia Gabel … NZ Herald

    https://www.nzherald.co.nz/nz/auckland-rates-just-shocked-dramatic-increases-start-landing-in-inboxes/PJQ7DWOEASSHBTE2T45RE5VCYU/

    Homeowners have received some confronting emails from Auckland Council this week as invoices for dramatically increased rates begin to land in inboxes.

    One pensioner the Herald spoke to had his rates increase nearly $500 per quarter compared to this time last year.

    There are two factors behind this year’s rates increases. … read more via hyperlink above …

  5. Hugh PavletichMEMBER

    United States: Is Florida Governor Ron DeSantis the likely Republican Presidential Candidate in 2024 ? …

    … ‘ The War On The West ‘ author Doughlas Murray explains on Sky News Australia …

    Reason why Donald Trump ‘won’t run’ in 2024 … Douglas Murray on Sky News Australia … Youtube

    https://www.youtube.com/watch?v=9XPMxq_Q8LY

    Former US President Donald Trump will not run for the 2024 presidential election if he does not believe he can win the Republican nomination, author Douglas Murray says.

    “He’ll run if he thinks he can get the nomination and then win and if he doesn’t think that then he won’t run,” Mr Murray said.

    Mr Murray said Mr Trump has a “main challenger” in Florida Governor Ron DeSantis for the GOP primary.

    Mr DeSantis is “now on an even pegging with Donald Trump among Republican voters and in some polls he’s actually shown superseding Donald Trump,” he said.

    Ron DeSantis – Official Website

    https://rondesantis.com/

    Ron DeSantis – Wikipedia

    https://en.wikipedia.org/wiki/Ron_DeSantis

  6. Hugh PavletichMEMBER

    Biggest fall for residential property values since the GFC, CoreLogic says …

    Average housing values in Auckland down by more than $85,000 since March … Greg Ninness … Interest Co NZ

    https://www.interest.co.nz/property/116996/average-housing-values-auckland-down-more-85000-march

    The average value of New Zealand homes fell by $33,599 over the last four months, while the average value of homes in Auckland declined by $85,452, according to the CoreLogic House Price Index.

    The Index tracks the value of all of NZ’s developed residential properties, excluding vacant land, based on sales data over the previous three months.

    It shows that the national average value has declined in each of the last four months, to $1,009,662 in July from $1,043,261 in March.

    In the Auckland region the drop in value has been greater, falling to $1,434,889 in July from $1,520,341 in March.

    The table below shows the current average dwelling values in all urban areas throughout the country and how much they have changed in percentage terms compared to three months ago and 12 months ago. This shows dwelling values are now in decline in most of the North Island and also the top and bottom ends of the South Island. … read more via hyperlink above …

    New Zealand House Prices Sink Most Since Global Financial Crisis … Tracy Withers … Bloomberg

    https://www.bloomberg.com/news/articles/2022-08-02/new-zealand-house-prices-sink-most-since-global-financial-crisis

    • Hugh PavletichMEMBER

      Dairy prices fall … again … Interest Co NZ ‘Breakfast Briefing’ …

      https://www.interest.co.nz/business/117000/dairy-prices-fall-again-low-demand-us-retail-rises-us-job-openings-fall-china

      … extract …

      … Overshadowed this morning by that Pelosi trip to Taiwan, the dairy auction delivered another weak result, down another -5% from the prior event. That means overall prices are now down -27% from the peak in March. The WMP price fell -6.1% and more than the fall expected. The SMP price fell -5.3% and also more than expected. Butter also fell -6.1%. Despite global reductions in milk supply, this auction didn’t bring a respite from falling demand. Farm gate payout forecasts will now need to be pared back as this run of price declines is now well embedded and prospects for a turn higher seem to have faded. Expect analysts to start this trimming adjustment later this week. Today’s decline was the fourth in a row, and the ninth of the past ten.

  7. Hugh PavletichMEMBER

    Statistics New Zealand says the unemployment rate has risen to 3.3% from 3.2%, while private sector hourly wages have risen 7.1% … David Hargreaves … Interest Co NZ

    https://www.interest.co.nz/business/116980/statistics-new-zealand-says-unemployment-rate-has-risen-33-32-while-average-weekly

    Unemployment has unexpectedly risen – albeit only by a fraction to 3.3% from 3.2%, according to Statistics New Zealand.

    Wages have risen by more than expected, with private sector hourly earnings up by some 7.1%.

    Statistics New Zealand said that the unemployment rate as at the end of the June quarter was 3.3%.

    Economists had expected a continued fall in the rate, with predictions it may get down to 3% or even lower.

    While the rise in unemployment might actually provide the Reserve Bank (RBNZ) with some sense of relief, the increase in wages will not.

    Westpac acting chief economist Michael Gordon said for the RBNZ, the “strong wage inflation outcomes” will likely be the most significant part of Wednesday’s reports.

    “The risk for the RBNZ is that wage pressures provide an avenue for the recent bout of price shocks to turn into sustained inflation over time. We’ll review our OCR forecasts later today, but the risks are clearly towards a higher peak than the 3.50% that we have been forecasting for some time,” Gordon said.

    Stats NZ has a number of measures for wage rises. It said wage inflation, measured by the labour cost index (LCI), was 3.4% in the year ended June 2022, while average ordinary time hourly earnings rose 6.4%. … read more via hyperlink above …

    Dileepa Fonseka: The meeting that shows why housing is broken and never gets fixed … Stuff NZ

    https://www.stuff.co.nz/business/129448651/dileepa-fonseka-the-meeting-that-shows-why-housing-is-broken-and-never-gets-fixed

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