New Zealand housing market “weak and getting weaker”

Prominent economist Tony Alexander has released new survey datasets on New Zealand’s housing market, which have been summarised below.

Alexander believes New Zealand housing is “weak and getting weaker”, with more price falls likely over coming months.


New Zealand’s housing market is weak and getting weaker. The number of sales in June was down 38% from a year earlier. The average number of days taken to sell a dwelling was 13 longer than a year before. The stock of properties listed for sale at the end of the month was 104% higher than a year ago.

House prices so far have fallen by 9.5% from their November nationwide peak and they probably have further to go.

The results from my various surveys all show that we should expect weakness to continue over the next few months.

For instance, from my monthly Spending Plans Survey we see that a record net 4.5% of people are planning to pull back on plans for buying a house to live in.

Net spending intentions

A record net 12.5% plan spending less on an investment property…

Intentions to buy an investment property

And from my monthly survey of residential real estate agents undertaken with REINZ we can see a net 66% say prices are falling in their areas.

A net 51% say that fewer people are showing up at auctions and a net 47% say that fewer are showing up at open homes…

Like most of our other indicators, this tells us quite clearly that the market is weak and in favour of buyers. But, like a handful of our other measures, this one is becoming less negative. That does not mean the market is improving — just that the intensity of new weakness appears to be easing off…

Home buyer demand

For the third month in a row, only a gross 4% of real estate agents have reported that they see buyers worried about missing out on a purchase. FOMO essentially disappeared in February and is showing no signs of returning as yet…  A net 69% of buyers are reported by agents to be displaying FOOP (fear of
over-paying). But like a reasonable number of our measures, this gauge is becoming less negative…

Buyer FOMO versus FOOP

Real estate agents continue to report declining numbers of first home buyers in the market. But, at a net 36% reporting so this month, the result is the least negative since October just before the credit crunch hit…

A net 60% of agents report that they are seeing fewer investors in the housing market as buyers…

There continues to be less and less interest in New Zealand property coming from outside the country. A net 55% of agents this month have reported receiving fewer offshore enquiries…

The thing which most concerns home buyers are rising interest rates (reported by 82% of agents), followed closely by access to credit — 78%. A high 69% of agents report that buyers are worried about overpaying for their property. This FOOP reading (fear of overpaying) is down slightly from a peak of 73% in May…

It all looks pretty grim, especially in the context of

  • near record low levels of business and consumer confidence,
  • above average mortgage rates,
  • the biggest hike in the cost of living since 1990,
  • net migration outflows,
  • collapsing developers, and
  • a soon to start collapse in the number of consents being issued for new dwellings to be built…

Overall, the survey results show that the residential real estate market around New Zealand remains weak. However, the degree of that weakness is showing early signs of pulling back. It will be interesting to see how things develop in the second half of the year as mortgage rates potentially start edging lower

Unconventional Economist
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  1. Hugh PavletichMEMBER

    Collapse in residential construction sentiment highlights another gloomy ANZ Business Outlook Survey … David Hargreaves … Interest Co NZ

    The number of new homes being built in Auckland down about 10.6% from last year’s peak … Greg Ninness … Interest Co NZ

    Latest labour market data showing ‘severe capacity constraints and intensifying wage pressures’ prompt change of view and perceived need for the Reserve Bank to do a little more against inflation … David Hargreaves … Interest Co NZ

    Gib (plasterboard) shortage ‘over’ due to construction industry slowdown … Daniel Smith … Stuff NZ

  2. Hugh PavletichMEMBER

    … from late July …

    Builders report 80% to 90% slump in new home inquiries and fear another 2009/10-style bust … Bernard Hickey … Interest Co NZ

    Construction slowdown: New build inquiries drop by up to 80 per cent, more companies could go bust alongside job losses … Carmen Hall … NZ Herald

  3. SkepticviewerMEMBER

    House prices could fall 25% and they would be overpriced and unobtainable, if JA gets rolled, whiteannted or removed and mass third world immigration restarts as Luxton bangs on about then the prices will rise to the roof. Don’t think a few % points mean anything other than a blip.

    • kiwikarynMEMBER

      Mass third world migration is happening under Labour, in fact its even easier to obtain residency in NZ under Labour than it was under National. Under Labour (pre-Covid) a record number of immigrants entered the country. Both parties are equally as bad on this front, only difference is that Labour lets them stay permanently.

      • SkepticviewerMEMBER

        JA has attempted to make a stand on this and has made several press speeches on the need to hold NZ wages and bring in immigrants that add value as opposed to the uber driving mob. Unfortunately, I think the pressure to override JA’s position is intense. Luxton the Pentecostal has been banging away with- open the borders, open the borders- long before Covid was even under control. Imagine how that will go if he gets in, oh yes he used to run an airline just in case no one knew.
        From my inspection, there is nowhere in NZ that a house is really affordable to an average NZ resident not even down south. If arriving with a village supporting you until they can all come you can do it or if arriving from parts of the UK and having sold a house for 2 mill pounds you can buy three of four, still can’t beat Chris’s seven. If an average person in NZ, or a young family then it is not doable. Prices will not drop, JA will be rolled and mass third-world immigration will restart at full pace, in fact, there was boasting in the Dom post stating NZ could bring in 250,000 skilled immigrants in the next year to help restart business,, I guess they’re definition of skilled and mine are worlds apart – if you can walk and leer you’re in, skilled as bro..

    • kiwikarynMEMBER

      Christchurch auctions this week were pretty healthy, with most properties selling now, and some that were passed in had conditional offers already on them (hence vendors weren’t motivated to negotiate out the back of the auction). Prices seem to be holding steady, albeit at still ridiculously high levels compared to 2 years ago. (eg. A property that was advertised for offers over $429k in 2019 is back on the market at offers over $669k).

  4. Hugh PavletichMEMBER

    Hundreds of Wellington first-home buyers who bought at market peak now in negative equity … Geraden Cann … Stuff NZ

    Auckland Council rates hikes shock city residents … Ben Leahy … NZ Herald

    • I haven’t looked into it too much, but it seems the yoy rates increases by councils in NZ in percentage terms are astronomical. At least going by the headlines.
      And this is with an inflated property value from which to determine the rates due, what on earth is going to happen when these values are in reverse and the population can’t afford the quarterly bill?
      They say renting is expensive, but if you look at council rates alone, it’s hundreds of dollars per week. So do you ever actually own your property, or rent it from the bank+council?
      Something has to give here surely?
      And what is this money spent on, when I look at NZ cities I don’t exactly see gold-plated infrastructure?

      • SkepticviewerMEMBER

        It’s worse than not gold plated I have been working up to 3 am this week as we try and patch it up, it’s so backwards and run down it’s not funny, the same equipment is in place/service as when I was an apprentice here – and now I’m ready to retire. Although finding a house back home isn’t easy either.

  5. Hugh PavletichMEMBER

    Auckland …

    Overall sales rate of just 15% at Barfoot & Thompson’s latest weekly auctions … Greg Ninness … Interest Co NZ

    Activity continues to bounce along the bottom in Barfoot & Thompson’s auction rooms as the market remains on its winter lows.

    Auckland’s biggest real estate agency offered 71 residential properties at its latest auctions, 30 July to 5 August, which was a slight tick up from 59 the previous week, but exactly the same number as the week before that.

    Of those, just 11 were sold under the hammer, giving an overall sales rate of 15%, down from 22% the previous week. … read more via hyperlink above …

    • Heres what I don’t understand, do the numbers really mean anything when so few houses in a city – of what 2 million? – are sold?
      Looks like everyone is largely sitting tight, only people selling will be those who need to for various reasons.

    • SkepticviewerMEMBER

      To put this simply Hugh – Auckland city has suffered a setback to mass compressed housing development because the sewer systems in multiple suburbs cannot handle extra housing, and development approvals have been stopped. The result will be that those existing properties become more exclusive and valuable. The supply of dog boxes close to the city is becoming limited or should I say the supply of places to put dog boxes are limited.

  6. Hugh PavletichMEMBER

    New Zealand shows how a housing crisis can become a catastrophe … OPINION Justin Giovannetti … The Globe and Mail (Canada)

    New Zealand and Canada’s housing markets have much in common. They both have some of the least affordable homes in the world and both saw prices explode during the pandemic.

    When my fiancée and I decided to announce we were leaving New Zealand to return to Canada, I prepared myself for awkward conversations. I needn’t have worried. Most of our friends beat us to the punch with their own plans to leave, turning the first months of 2022 into a long going-away party. For those who remained, the conversation boiled down to one question: “It’s the housing, isn’t it?”

    I arrived in New Zealand’s capital of Wellington in early 2020 with my fiancée, a New Zealander, to buy a house and start a family. We knew that the Pacific country’s overheated housing market would be a challenge, but we’d lived in Toronto and Vancouver. We considered ourselves prepared. We’d soon learn that New Zealand’s housing problems are similar to Canada’s, just much worse. … read more via hyperlink above …

  7. Hugh PavletichMEMBER

    NZ economy ‘hitting the wall’ in terms of employment growth … David Hargreaves … Interest Co NZ

    The average build cost, excluding land, for a new stand-alone house increased by $75k in the June year … Greg Ninness … Interest Co NZ

    ‘Cheaper than carpet’: Huge blocks on the market for housing developments … Kate Green … Stuff NZ

    New hope for children at risk of New Zealand’s most iniquitous disease … Eva Corlett … The Guardian

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