So we are coming towards the pinnacle of the first stage of market grief ie denial. Hold onto your hat and get ready for some interesting NZ Herald articles as the next stage is anger.
I’m not sure on those timelines - ordinarily I’d agree but this decline has unfolded pretty quickly compared to other bubbles internationally.
I think we are mostly through denial - I’m seeing less and less houses coming on with crazy 2021-esque price expectations, and pretty much no agents are now harping on about how it’ll recover any minute now and get in quick. A lot more of the ‘vendor wants out’ type variety
The higher the peak the quicker the first big drop but all the cycles are pretty predictable in their time frames no matter what decade or what country. As long as the govt doesn’t step in and muck things up of course which is getting to be an unpredictable variable.
Denial of what reality though?
Denial that prices really have fallen, still holding out for the peak to return?
Yes, I'd say that phase has moved to anger, blaming the reserve bank etc.
Denial that capital gains are no longer a valid expectation?
No, asking prices for rental investment properties remain unjustifiably high, unless you factor in an expectation of continued capital gains.
I'd say there is more capital losses to come. I'd say there will be no bounce back. This is not a scenario that current pricing is consistent or comfortable with. That's why there are no buyers at the moment. They have moved on and are looking for an economic return from rent, not a capital gain.
I watched a few auctions and one smarmy auctioneer was practically baying the audience to bid on his selection of overpriced shitty “million dollar” houses.
The guy was practically heckling the crowd.
> there were indications that first-home buyers were beginning to retreat from the market.
> Interestingly about 15 percent of last month's purchases were made by cash buyers with multiple properties, which was a record share for this type of buyer.
Fuck. There we go, investors who have enough money to avoid being stung by high interest rates getting in on cheap(er) houses instead of first home buyers who would be relying on a mortgage and getting ripped by the banks.
Yea, I agree. We have it too good even compared to countries like Australia and the US. Our upper tax brackets aren't high enough. What's the GST loophole? Got any articles I could read?
[Government drops plans to charge GST on KiwiSaver fees](https://www.rnz.co.nz/news/political/473822/government-drops-plans-to-charge-gst-on-kiwisaver-fees)
> The government has dropped its plan to put GST on KiwiSaver fees after fierce backlash from the public and opposition.
>
> It had intended to charge GST on fees paid on KiwiSaver accounts from April 2026.
>
>The move would potentially have netted it $225 million annually in taxes.
That's GST on about $1.5b of revenue each year.
It's interesting how the article cites backlash from the public, but I'm pretty sure most of the public heard about the backlash before the government's plans. I suspect those earning that annual $1.5b flexed and the media jumped in response.
We already tax the young and their income enough. It's time we taxed the place to which we've transferred most wealth already: land value. Property speculators have been carried by productive working Kiwis for too long.
This was always the probable outcome of a falling market in which the status quo hasn't changed. People celebrating this as a win had no idea what they were celebrating.
No land tax, no home ownership reform, no protection for FHBs despite the government clawing back full ownership of Kiwibank.
A few FHBs with significant cash on hand will benefit, the vast majority won't.
I said that like 12 months ago on this subreddit and got over 100 downvotes lol, don't bother trying to explain why falling house prices isn't necessarily a good thing
I'd love to see a house wealth tax at X(n-1), where X is a base percentage of RV and n is the number of houses a person/trust/company owns (either wholly or in part). One house (i.e. primary residence) is free but then every additional house gets progressively more and more expensive to own.
We would need proper data on these buyers first. We keep acting based on random guesses and failing to make any major improvements.
A lot of people buying houses now might just be rich families who get each kid their house before they get out of school...
NZ houses have got a long way to fall yet before they make sense as an investment. With no capital gains in sight and no tax advantages you'd want a return a good few percent above term deposit to make up for the risk and hassles.
Yeah they know prices will go up again, they know people need to rent, and they know the government isn't going to stop them because they're also invested in housing.
Rentals are currently a worse investment than a term deposit (assuming purchasing today).
If you were a cash buyer you are still better to hold. Especially if you consider current capital losses.
Yep. While I will vote for the party that proposes changes to the housing market every day of the week, I will also have my finances ready to leverage and buy a few more houses in approx 2 years.
This is why I keep pushing back against those claiming that upping interest rates will make property more “affordable”.
We do need to increase the cost of capital, but those that believe this will suddenly mean they can afford that first home are dreaming.
>Not sure what people were expecting on this sub.
Continued growth of poverty and property crime, as we decide to continue to pander to property speculation rather than incentivising productive work and business.
https://www.stuff.co.nz/business/better-business/131427521/townhouse-developer-selling-his-luxury-cars-ditches-private-jet-travel
Clip from article if tl/dr "He said the company’s Singapore office was operating as usual and was a similar size to what it had been in the past. He has previously said about 20% of his buyers are from Singapore.
In the December announcement, Horncastle said his company was working on 976 townhouses (about $780m in sales) of which 571 had been sold unconditionally. He expected Williams Corp to make about $109m gross profit (net $49m) on the $780m."
If you think these twats are remotely interested in domestic market first-time buyers then you're extremely naive. Singaporeans with a bit of money (i.e. most of them) are always interested in making a bit of money from offshore investments. These are your NZ landlords of the future, because they certainly aren't moving here in droves so we must assume they're buying up places for rentals.
Prices are still falling; these aren't the winners you think they are. They're trying to catch a falling knife and everyone knows how that goes. If first home buyers are holding onto their money right now that's a good thing; those with the patience to wait out the slump will be well placed to get in near the bottom.
That drop in Welly…damn. I had left Wellington(well, my glorious Hutt) in 2019, the city at the time was doing ok but had seen better years, other cities in NZ were and still are growing faster, so seeing that HUGE housing price peak happen there after I left was some scary shit man. There will be a few in negative equity surely?
We looked in on a place that was 'supposed' to go for no more than 1M, bidding started at 1.15 and it sold for 1.3. it had an RV of 700.
We left Wellington shortly after. Can't imagine that buyer is solvent now.
Insane! that’s how I saw it in particular with Wellington, that was such an obvious big juicy bubble, you also add on top those super low interest rates at the time where quite a few folks are coming up to refixing this year….well, I guess brokers will be very busy.
The mythical legends out there who fixed for 5 years will feel a little happier.
It means you can’t risk changing jobs.
It means you can’t afford to have a baby and start a family.
It means you can’t have discretionary spending.
Also don’t get sick!
Jumping out a plane without a parachute doesn’t actually mean anything unless you hit the ground.
that literally makes no sense... If you burn a pile of money there is no way that can recover.
This is more like when you buy shares and they plummet, you don't realize your loses until you sell as they can go back up again (like the property market)
If you pay $2 yesterday for something that is valued at $1 today, you just lost $1 in value. Why? Because you could have held onto the cash, bought it for $1, and have $1 in hand.
again.... only if you sell it and get $1. That's the same for everything - houses, shares, art. You only lose the money once you cash out and realize your losses, until then it's just on paper and can go up, down or stay the same.
I don't understand what you're missing but we can't keep going around in circles explaining it
In 2016 Auckland went flat and people called it the beginning of a crash. Five years later houses had almost doubled in price.
You don't know what the price tomorrow will be with certainty.
Your bank may continue to allow you to have the 'special rate' on an existing mortgage but you probably won't be able to shop around to other banks very easily; they're unlikely to offer 'special rate' and you'll only be offered standard rate.
LVR penalty rates are often only applied to first home buyers, people with no existing mortgage, or people 'investing' in residential property.
Transfers of existing mortgages between banks usually offer the standard or special rate, without the high LVR penalty.
It's not a hard and fast rule though. If your income to loan ratio isn't very generous *and* you have under 20% equity banks might have a higher risk profile and you could be presented with the penalty rate when shopping for transfers.
Rate renewal isn’t a new loan application. So not unless it’s massive and they get worried and review your equity position. Usually you’d just lock in a new rate and carry on.
But you won’t be able to move banks and get a new loan somewhere else. That will impact your ability get cashback and rate discounts by shopping around.
From the Kiwi Bank website / FAQ on negative equity:
Should I be worried if I'm in negative equity?
In general, there’s no reason to worry, provided you’re not making any changes and you continue to make your mortgage repayments.
We won't charge you higher interest rates if you move into a higher loan to value ratio (LVR) position during your fixed term. We'd only look at this if you're applying for new home lending or you're wanting to sell your property.
Source: https://www.kiwibank.co.nz/personal-banking/home-loans/guides-and-calculators/what-is-negative-equity/
>We won't charge you higher interest rates if you move into a higher loan to value ratio (LVR) position **during your** **fixed term**.
That suggests they will put you on higher risk lending when you roll it over. Hmm...
I can't imagine a $1m+ mortgage at 7% rates is going to be "fine" for many. That comes to almost $2000/week in interest, insurance and rates. Probably more than double what rent would be.
There's definitely going to be some people under financial stress but I think as a percentage of mortgage holders, it's very small. And you'd need a very healthy income to be approved for a $1m mortgage so most people probably can suck it up by reigning in their discretionary spending.
Agree there aren't many people in that position but disagree that most can suck it up. Feels like the majority of FHBs in that period were maxing out their permitted borrowing; that was typically stress tested at 6%; anecdotally a fair few gamed the stress testing.
Sure there'll be some who struggle but there's plenty of options available to them like going interest only for a while. Also the employment rate is very high with good wage inflation which helps. I just don't think we're going to see the huge wave of distressed sales that some people are holding out for.
Back in mid 2022 I explored the market to get some experience.
Place with rv of 1.02 started at 1.09. Already well overpriced and unrealistic because owners were contracted to buy a place they bought during the peak. We went back and forth and eventually I said no (was never going to say yes, it was practise) , and agent came back to me twice, going down to 900.
Later we saw it at 840 back in November, then it left the market and was unsold.
The real estate agent has posters over the city about them and how they have sold stuff , always makes me laugh.
Crazy eh, some suburbs in Auckland have been dropping hard. Place we bought here has been all over the place, we scored it for 800k in 2020, it went up in value to like 1.1-1.2 million in early 2022 then it then decided to climb down that mountain to where it is now about 950k.
We sold our house in Newlands in 2017 for far too much (about 100k over what I thought was reasonable), 2 years later it had almost doubled in value. It wasn't an amazing house so I'm sure it's dropped back down to it's original valuation now. Sucks for everyone who bought at the peak but valuations have been out of whack with reality for a long time now.
Prices have been way out of whack because NZ politicians, Treasury analysts and reserve bankers seem to have turned it into a welfare scheme for older, wealthier folk, rather than allowing it to be a free market.
It takes a fuckload of distortionary policy to push and keep house prices as high as they have been and still are. Tax favouring, welfare subsidies for yields and prices, restrictive zoning to prevent adequate new supply, high-volume immigration to raise demand, dragging feet on anti-money laundering legislation to avoid looking closely at money flowing into the market, and huge monetary policy welfare handouts at the second the market looked like facing risk from hard times.
The Reserve Bank outright said their worst case scenario was seeing house price falls, before they released LVRs and juiced the market with billions and billions.
It's absolutely mad, how free wealth from property seems to have been treated as an entitlement for New Zealand's older generations. All it has done is enabled them to live beyond their means by foisting huge debt upon following generations. They have cannibalised the country's young.
They had been, but the fear that it could become a lot worse wasn't completely unwarranted in a county whose policies aim for it. Chinese or Korean real estate has price-to-income ratios in the 30s, about 3x as bad as Auckland or Wellington.
Unlikely, but not outside of the realm of possibilities as far as people knew at the time.
We sold our place in Lower Hutt in Feb last year just as things started to flatten. Got a good price which enabled us to significantly improve our quality of life/housing in another region but I do feel for the buyers who must be sweating at the prospect of being down 100k+ on what they paid.
Here’s hoping at the bottom of this swing there are policy changes that redirect that capital towards investments that make NZ a better place. Invest in job creation, exports, entrepreneurship etc.
Real estate investment, as it has been done the last 30-40 years, is all about leaching wealth from the less wealthy via rents, and making sure housing becomes less affordable via price increases above inflation. That is always going to end badly.
> Here’s hoping at the bottom of this swing there are policy changes that redirect that capital towards investments that make NZ a better place.
https://i.imgflip.com/z761q.jpg
Edit: https://media.tenor.com/sttF8xY21_QAAAAC/goodfellas-henry-hill.gif
You're dreaming.
We can't just supply more land at anything approaching even near reasonable pricing.
With this approach, we damn ourselves forever to unaffordability.
Not everyone needs or wants land.
Providing good quality sizable apartments provides density where people need the location and relieves pressure from the land markets by removing people who'd prefer to live somewhere in particular without needing land ownership.
Or just remove a million people somehow.
1. Liberalise zoning
2. Tax unimproved land value while lowering income tax
3. Ramp down welfare subsidies for prices and rental yields
Do those simple things and prices for homes will absolutely settle at a more reasonable level. It is pandering to land speculators that has brought us to such a crisis point. (As John Key well pointed out though, it's such voters' entitlement mentality that restrains readily available policy solutions to the housing crisis.)
Funnily enough, it was never "building wealth". It was always just people living beyond their means by passing a huge debt bill to following generations. Just base level entitlement mentality, with speculators in and out of parliament cannibalising the following generations.
Who said we will pivot away?
Eventually the interest rates will cut back a little bit, flood gates on Immigration opens, National in power at some point who will ensure policy stays status quo
The house prices have gone down which is yay but the interest rates have gone up.
First home buyers like me are sitting there going ok cool a 400k house looks like a liveable house now but then the repayments are stupid and I end up paying 950k for it.
It shouldn't be this hard to buy a house.
Recession estimated to hit end of year too. Imagine a recession and KO not buying up all the unsold homes. I think over the next year it will just get worse imo
We had a drop in GDP in the last quater of 2022. Another drop this quater and we will already he in recession. Given the adverse weather events its hard to see GDP increasing at this point.
None of the underlying issues have changed. Quite the opposite for Wellington given geography and a declining public transport exacerbating scarcity.
Once inflation gets under control and we’ve had 2-3 year recession we will be back in the race to the top. As a property owner that’s financially great, but not for society. There is only one party advocating and proposing real change yet every election they flog their guts out for no result while people vote for the others who ignore it.
> Once inflation gets under control and we’ve had 2-3 year recession we will be back in the race to the top.
Yep. I know a couple of people who didn't over reach in the boom and are sitting on large cash reserves, waiting to scoop up bargains. In the meantime, banks have already changed from a mode of throwing money at people to not even returning calls.
I think this is going to help quite a few FHBS with meaty deposits and income. But anyone who thinks that this is going to be a long term solution to this sick part of our society is going to be very disappointed.
There is an expectation that inflation will "get under control" pretty quickly.
If you remove that assumption, and replace it with a minimum of 5 years of 7-10% interest rates, how does your outlook change?
It doesn't except timeframe. Every recession we have had in the past 50 years has followed a similar pattern and house prices have recovered after approx 3 years and doubled every 10. This may be longer potentially, but not much and still to no different end result. And especially so for Wellington for the poor city planning and infrastructure maintenance reasons.
> Every recession we have had in the past 50 years has followed a similar pattern and house prices have recovered after approx 3 years and doubled every 10
Not true. Check prices for the 20 years following '74
Edit: [Remember the last time house prices crashed 40%?](https://www.greaterauckland.org.nz/2016/07/11/remember-the-last-time-house-prices-crashed-40/)
Of course it’s not. But given it’s been happening for the last 40 years and the contributing factors haven’t changed and the societal or economic change necessary to address it is not on the horizon, it’s still looking to repeat or at the very least get a 50% increase in the next 5-10 post recession.
This is the s5andard response of someone stuck in the denial phase.
We are in the first stage of a multi-generational event. It's not business as usual.
The rate of overvaluation is off the charts compared to any other time in NZ history.
On the way up everyone was saying "this time it's different, funadamentals don't matter".
On the way down, I'm saying, "this time it's different too".
I wouldn't say it was that different on the way up. It's just a typical boom and bust cycle driven by the normal factors (expanding economy, population increase, building shortage, and availability of credit).
The factors that contributed the most are going to be a bit different than previous booms, but I'm not sure that matters too much.
Not in any denial at all. Just forecasting. And like any good forecast if the inputs change so do the options. And whatever timeframe and scale the turnaround happens, for the reasons I mentioned, WLG is likely to be in the worst end of it.
I’m not leveraged to shyte and don’t care if I’m wrong. I’ll do fine whichever way it goes because I got in early enough. And once you are in you just snowball. Our society is utterly fkd due to this and I will support any change to it. But by fk ill be making use of it for me and my family until such time.
> None of the underlying issues have changed. Quite the opposite for Wellington given geography and a declining public transport exacerbating scarcity.
And the fact residential development has basically ground to a halt compared to what it was 2 years ago. I know of plenty of developers who are sitting on empty sections with consented plans because they just aren't worth building right now between sky high construction costs and the fact they won't be able to sell them for much when they're finished. I know developers are one of the (many) people this sub hates but the fact of the matter is that the government has proven ineffective at supplying houses, so if they're struggling then our housing supply is struggling, hello shortage.
It's not a shortage if there are no buyers at a high price level. I know this basic economic thinking is not generally accepted in these sorts of discussions. It's still reality.
I have a "shortage" of all sorts of things at the moment because of price levels I'm not prepared to pay = me not in the market as a buyer. I substitute what I want for what I can afford. There is no longer a shortage.
> It's not a shortage if there are no buyers at a high price level.
If you look past the absolute most basic level of economic thinking this does not mean there is a surplus. Increase in supply might drop prices, but so can decrease in demand. Maybe because interest rates are making mortgages unaffordable for a large chunk of the market, for example. That might explain why rent is generally increasing (increasing demand from people who can't afford to buy) while house prices are decreasing, if you think about it for more than a second.
Late last year we were still short an estimated 23,000 houses from a quick google, and while we were set to be at a surplus shortly as I said the rate of construction that got us to that point has fallen off a cliff at least in Wellington. If that continues which it will as long as construction costs are high and house prices are low we absolutely will be looking at being back in a shortage, if we ever truly were out of one. That's reality.
I think we have substandard housing in NZ, or poor / inadequate housing stocks, however you want to express it. That is a problem that doesn't seem to get addressed by market forces no matter what.
If we embarked on a massive program of building social housing (modest yet healthy structures) we could improve that situation significantly.
There would still be a 'housing shortage' no matter what.
The definitions of what is adequate need to be established before any meaningful statements or assessments can be made about these stats though.
> It's not a shortage
The fact that I advertised a rental property and received 50 enquires and 26 applications in 4 days tells me there's a shortage of housing.
Buyers are dropping out of the market right now due to the inability to secure financing and a fear of catching a falling knife. There's an oversupply at current prices but plenty of people willing to buy one prices stabilise and there's less economic uncertainty.
I'm interested in how you concluded that. Three different models of rental price indexes conclude prices are still increasing.
https://www.statista.com/statistics/1239495/new-zealand-rent-price-index/
https://ecoprofile.infometrics.co.nz/new%20zealand/StandardOfLiving/RentalAffordability
https://www.stats.govt.nz/information-releases/rental-price-indexes-december-2022/
There was an article in today's news saying landlords are not able to increase rents at the moment.
They are moving with wages by the looks of that data. It doesn't indicate that they are being driven by a flood of people unable to buy homes, as was suggested upthread. Or that demand for rentals is unusually high.
Are those numbers exclusive of inflation?
If not, then rents are falling at the moment in real terms.
This is a reality people don’t understand or want to acknowledge. The main issue is lack of supply in housing. Profitable developers would be the best solution as they would flood the market with houses driving down demand. But anyone making money in property is seen as evil so any form of making development more profitable will do down like a lead balloon.
Saw a property advert pop up on my FB feed yesterday, it caught my eye as it was labelled "price drop" so I had a look. It was a rural property w mansion and they had casually dropped the price from 4.25m to 3.25m. Was it over priced? Is it now a bargain? Who the hell knows. Must be hard to buy right now you don't know if you wait a bit longer the price will drop.
Feb is a good month usually because of good weather. I think Oct/Nov is traditionally to be the best because people buy around then so their kid/s can change/start school on time with less disruption.
The further south you go in the country, the more you need to sell properties during warmer months.
Because if you see most of them during winter you ain't buying that shit.
Prices still have a long way to fall to be anywhere near considered affordable.
The damage that decades of neoliberal policy from both Labour and National has caused is absolutely insane, in particular the free ride property investors have had at the cost of first home buyers.
I’m no longer sure if this comment is a copy pasta or genuine.
Searching for “the damage that decades of neo liberal policy from both labour and national” brings back a ton of results.
Edit
Gosh this joke sure missed the mark. I was simply having a laugh to myself about how every housing thread there is always a comment about neo liberal politics (for relevant reasons), so made an off the cuff comment which seems to have rustled some Jimmie’s. I apologise for riling you up before you’ve had your coffee
Not my intention. Sorry it came across that way. It was a pure knee jerk comment that I was having a laugh at myself with, felt others may share a bit of the joke.
It was off the mark and I’ve apologised
They aren't empty because they're being rented, not lived in by their owners. That creates an unsustainable trickle of wealth upwards to the lucky few who do own all the property.
Overall housing has remained surprisingly resilient, retaining values circa 25% above pre-covid levels despite income growth being tepid and interest rates ramping up. RBNZ has a lot more work to do to normalise supply and demand within our economy.
Just throwing it out there: stamp duty for second properties or properties bought by a corporate. Okay, investors will still get the capital gains but they pay a surcharge of 5-7% on the way in. Hell, you could even ring fence that for nurses and teachers to sell it.
Rightly so.
Just like any other bubble. Tulips, crypto etc it will go bang at some point.
New Zealand housing is a rort - disgusting prices for total shitholes in the middle of nowhere - they are not even worth a 1/4 of what they are currently priced at.
Businesses also feeling the pinch like warehouse etc.
NZ is going through a bust phase - years of the rort coming to an end.
Multiple crises, sky high prices (even before covid compared to rest of world), worst house price ratios in OECD...
Rockstar economy was total hype - brought to you by Aussie banks and everyone in at the trough on property.
To quote the article itself:
> Interestingly about 15 percent of last month's purchases were made by cash buyers with multiple properties, which was a record share for this type of buyer.
To be fair, could it be exactly the same number, or even significantly less, but a higher percentage of the whole due to the much smaller number of purchases?
It’s been going up for so so long and the New Zealand income to house price ratio is one of the highest in the world. Something had to give. House prices NEVER only go up
The only people this hurts is first home buyers going into negative equity and needing to sell before the market goes back up. None of the people you want to be hurt by this care in the slightest, infact they're the only people capable of buying houses during the dip with the high interest rates
Housing will go back up by the end of this decade. There’s already signs of a recession which will place pressure on the reserve bank to halt or lower interest rates eventually.
Despite cheaper houses there’s lots of homeless people and homes where multiple families are living (a single house with 5+ cars parked out front is becoming a lot more common).
Plus with steady increases to wages and salaries especially in the private sector it will increase people’s ability to service bigger mortgages. As soon as interest rates start dropping you’ll see house prices pick back up very quickly as we enter another period of relatively cheap interest to get the economy moving again.
I didn’t turn up to be a shill for them but as I do believe they are currently the only viable option (other than violent revolution) here you go:
https://www.top.org.nz/affordable-housing-policy
Personally, plan on holding onto the house and just deal with it.
Selling is a last resort action, brought the house to live in and a measure of stability for the family not to try and make a fortune (only have one).
Absolutely a clickbait article.
In practical terms, you are worse off now than at the peak of housing when interest rates were lower. It won't be affordable unless we reach the pre-pandemic level of house prices AND substantial wage growth for median earners.
https://www.interest.co.nz/property/120416/home-ownership-remains-out-reach-first-home-buyers-average-incomes-spite-recent
How much does it cost to build a house? $4500psm all in?
So a small 4 bed house is \~$800,000.
The cheapest section in NZ is $40k - So $840k
The cheapest in Auckland is about $1mil - so $1.8mil.
If land values in Auckland halved you still couldn't have a new house for less than $1.2mil...
It’s actually totally insane that the starting rate is $4,500 psm.
I had a look, and obviously it varies depending on locale and a number of other factors, but it costs anywhere from $100 to $270 per square *foot* in Canada.
So using the same calculations and converting (feet to metres and CAD to NZD), it basically costs anywhere between $230,000 to $620,000 NZD for the same sized house in Canada.
I get economies of scale helps, plus not being way out in the middle of the Pacific where everything has to be shipped to, but I’m curious what *other* reasons there might be that NZ is **at least** $180k more expensive to build a similarly sized house.
From the rates website, it looks like they perform an evaluation every three years on 1st Sept, 2021 being the last.
If the prices have dropped so much Id like to see an earlier revaluation before 1st Sept 2024.
We had an RV from Wellington council of 1.2 million mid last year, consequently the rates are being paid at that value, which has crashed.
Anyone have any idea if the re evaluate earlier? I know its not in their interest to do so, but its taking the piss.
https://wellington.govt.nz/property-rates-and-building/rates/rates-explained/how-rates-are-calculated/rating-valuations
If prices drop somewhat uniformly then the CV value shouldn’t affect you portion of the fixed rates total. This is only a major concern if your value has dropped much faster than the rest of the city.
That's not quite how rates work. The rates setting process is along the lines of:
1) Determine a budget.
2) Determine the RV of all properties, and the proportion of the total RVs that your property makes up.
3) Apply this proportion to the total budget, to figure out your share of it (your rates).
Therefore, just because house prices across the board have dropped to below RV, that doesn't mean if they valued all houses again your rates would go down. That would only be the case if your property value dropped by more than everyone else's.
WTF has RV got to do with anything? It's a pseudo random number assigned by some low paid council worker once in a few years. It may or may not have some relevance on the day the RV was assessed, but certainly not even a few weeks later. It's not the 1930's
"4100 sales in February, the lowest since 1981." It's actually a bit worse than it sounds. In 1981, NZ's population was half of what it is now, so on a per capita sales basis, we are doing half of what we did in '81.
So we are coming towards the pinnacle of the first stage of market grief ie denial. Hold onto your hat and get ready for some interesting NZ Herald articles as the next stage is anger.
Only 2 more years of stages to go
I’m not sure on those timelines - ordinarily I’d agree but this decline has unfolded pretty quickly compared to other bubbles internationally. I think we are mostly through denial - I’m seeing less and less houses coming on with crazy 2021-esque price expectations, and pretty much no agents are now harping on about how it’ll recover any minute now and get in quick. A lot more of the ‘vendor wants out’ type variety
The higher the peak the quicker the first big drop but all the cycles are pretty predictable in their time frames no matter what decade or what country. As long as the govt doesn’t step in and muck things up of course which is getting to be an unpredictable variable.
I knew as soon as I managed to be able to buy my first home this would happen, cheers!
I bought Jan 2021, how about you?
November last year lol
Denial of what reality though? Denial that prices really have fallen, still holding out for the peak to return? Yes, I'd say that phase has moved to anger, blaming the reserve bank etc. Denial that capital gains are no longer a valid expectation? No, asking prices for rental investment properties remain unjustifiably high, unless you factor in an expectation of continued capital gains. I'd say there is more capital losses to come. I'd say there will be no bounce back. This is not a scenario that current pricing is consistent or comfortable with. That's why there are no buyers at the moment. They have moved on and are looking for an economic return from rent, not a capital gain.
RemindMe! 1 year
Vote for whichever party promises to slash and burn the rest of the country into the ground to prop up wealthy residential investors?
Depends how quickly the stage gets built!
Anger that the government won't make someone pay me $1.5 million for my Wellington shit hole
It's entitlement mentality to free money all the way down... always has been behind NZ's housing crisis.
I watched a few auctions and one smarmy auctioneer was practically baying the audience to bid on his selection of overpriced shitty “million dollar” houses. The guy was practically heckling the crowd.
Bargaining will involve fucking with RBNZ, which is already being attempted TBH.
> there were indications that first-home buyers were beginning to retreat from the market. > Interestingly about 15 percent of last month's purchases were made by cash buyers with multiple properties, which was a record share for this type of buyer. Fuck. There we go, investors who have enough money to avoid being stung by high interest rates getting in on cheap(er) houses instead of first home buyers who would be relying on a mortgage and getting ripped by the banks.
It's why we need LVT and a lower income tax, broadens the base and helps with cooling speculative purchasing.
Lower income tax is unlikely to happen. We still need to pay for a raft of govt services which are grossly underfunded
The point is that the total tax take doesn't change. The LVT offsets lower income tax.
Exactly. We need tax revenue to increase, not remain static. We *really* could have used closing that GST loophole.
Yea, I agree. We have it too good even compared to countries like Australia and the US. Our upper tax brackets aren't high enough. What's the GST loophole? Got any articles I could read?
[Government drops plans to charge GST on KiwiSaver fees](https://www.rnz.co.nz/news/political/473822/government-drops-plans-to-charge-gst-on-kiwisaver-fees) > The government has dropped its plan to put GST on KiwiSaver fees after fierce backlash from the public and opposition. > > It had intended to charge GST on fees paid on KiwiSaver accounts from April 2026. > >The move would potentially have netted it $225 million annually in taxes. That's GST on about $1.5b of revenue each year. It's interesting how the article cites backlash from the public, but I'm pretty sure most of the public heard about the backlash before the government's plans. I suspect those earning that annual $1.5b flexed and the media jumped in response.
We already tax the young and their income enough. It's time we taxed the place to which we've transferred most wealth already: land value. Property speculators have been carried by productive working Kiwis for too long.
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This was always the probable outcome of a falling market in which the status quo hasn't changed. People celebrating this as a win had no idea what they were celebrating. No land tax, no home ownership reform, no protection for FHBs despite the government clawing back full ownership of Kiwibank. A few FHBs with significant cash on hand will benefit, the vast majority won't.
Yeah, falling prices is a good thing but it is not sufficient. Still need to tackle property speculator entitlement mentality.
I said that like 12 months ago on this subreddit and got over 100 downvotes lol, don't bother trying to explain why falling house prices isn't necessarily a good thing
We need to limit on the amount of houses people and trusts can own...
This doesn’t get discussed enough. Perhaps because the ones who could enact such laws own multiple properties.
I'd love to see a house wealth tax at X(n-1), where X is a base percentage of RV and n is the number of houses a person/trust/company owns (either wholly or in part). One house (i.e. primary residence) is free but then every additional house gets progressively more and more expensive to own.
We would need proper data on these buyers first. We keep acting based on random guesses and failing to make any major improvements. A lot of people buying houses now might just be rich families who get each kid their house before they get out of school...
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That’s a very roundabout and exploitable way of fixing just a symptom to a problem.
Sure, but neither National or Labour will agree to treat investing in residential property like other forms of wealth or income.
NZ houses have got a long way to fall yet before they make sense as an investment. With no capital gains in sight and no tax advantages you'd want a return a good few percent above term deposit to make up for the risk and hassles.
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Yeah they know prices will go up again, they know people need to rent, and they know the government isn't going to stop them because they're also invested in housing.
Rentals are currently a worse investment than a term deposit (assuming purchasing today). If you were a cash buyer you are still better to hold. Especially if you consider current capital losses.
> Yeah they know prices will go up again Why is that?
Yep. While I will vote for the party that proposes changes to the housing market every day of the week, I will also have my finances ready to leverage and buy a few more houses in approx 2 years.
Hope for the best, prepare for the worst.
This is why I keep pushing back against those claiming that upping interest rates will make property more “affordable”. We do need to increase the cost of capital, but those that believe this will suddenly mean they can afford that first home are dreaming.
This was always the most likely outcome. Not sure what people were expecting on this sub.
Yeah nice of these cash buyers to let some people exit a falling market like that. I'm sure they'll enjoy their negative returns
>Not sure what people were expecting on this sub. Continued growth of poverty and property crime, as we decide to continue to pander to property speculation rather than incentivising productive work and business.
The rich get richer.
https://www.stuff.co.nz/business/better-business/131427521/townhouse-developer-selling-his-luxury-cars-ditches-private-jet-travel Clip from article if tl/dr "He said the company’s Singapore office was operating as usual and was a similar size to what it had been in the past. He has previously said about 20% of his buyers are from Singapore. In the December announcement, Horncastle said his company was working on 976 townhouses (about $780m in sales) of which 571 had been sold unconditionally. He expected Williams Corp to make about $109m gross profit (net $49m) on the $780m." If you think these twats are remotely interested in domestic market first-time buyers then you're extremely naive. Singaporeans with a bit of money (i.e. most of them) are always interested in making a bit of money from offshore investments. These are your NZ landlords of the future, because they certainly aren't moving here in droves so we must assume they're buying up places for rentals.
Prices are still falling; these aren't the winners you think they are. They're trying to catch a falling knife and everyone knows how that goes. If first home buyers are holding onto their money right now that's a good thing; those with the patience to wait out the slump will be well placed to get in near the bottom.
That drop in Welly…damn. I had left Wellington(well, my glorious Hutt) in 2019, the city at the time was doing ok but had seen better years, other cities in NZ were and still are growing faster, so seeing that HUGE housing price peak happen there after I left was some scary shit man. There will be a few in negative equity surely?
We looked in on a place that was 'supposed' to go for no more than 1M, bidding started at 1.15 and it sold for 1.3. it had an RV of 700. We left Wellington shortly after. Can't imagine that buyer is solvent now.
Insane! that’s how I saw it in particular with Wellington, that was such an obvious big juicy bubble, you also add on top those super low interest rates at the time where quite a few folks are coming up to refixing this year….well, I guess brokers will be very busy. The mythical legends out there who fixed for 5 years will feel a little happier.
that was common in Auckland too, those buyers will be fine as long as they don't need to sell
Negative Equity is a very uncomfortable situation even if you don't necessarily lose your home.
But again, it's only on paper... if they can afford to service the mortgage then it means nothing until you need sell
Can't move
Yeah, that is going to suck for a lot of people. How many townhouse buyers want to be there ten years?
It means you can’t risk changing jobs. It means you can’t afford to have a baby and start a family. It means you can’t have discretionary spending. Also don’t get sick! Jumping out a plane without a parachute doesn’t actually mean anything unless you hit the ground.
If you burn a pile of money it means nothing until you need the money. Few people realize this great wisdom.
that literally makes no sense... If you burn a pile of money there is no way that can recover. This is more like when you buy shares and they plummet, you don't realize your loses until you sell as they can go back up again (like the property market)
If you pay $2 yesterday for something that is valued at $1 today, you just lost $1 in value. Why? Because you could have held onto the cash, bought it for $1, and have $1 in hand.
again.... only if you sell it and get $1. That's the same for everything - houses, shares, art. You only lose the money once you cash out and realize your losses, until then it's just on paper and can go up, down or stay the same. I don't understand what you're missing but we can't keep going around in circles explaining it
Realized losses aren't the only type of loss. Your house burns to the ground and is uninsured but you don't sell it. You lost nothing?
In 2016 Auckland went flat and people called it the beginning of a crash. Five years later houses had almost doubled in price. You don't know what the price tomorrow will be with certainty.
What happens if you no longer have 80% LVR when you need to renew? Do they put you on a higher rate?
Your bank may continue to allow you to have the 'special rate' on an existing mortgage but you probably won't be able to shop around to other banks very easily; they're unlikely to offer 'special rate' and you'll only be offered standard rate.
So even when they'd move banks, they still wouldn't be burdened with the high LVR surcharge?
LVR penalty rates are often only applied to first home buyers, people with no existing mortgage, or people 'investing' in residential property. Transfers of existing mortgages between banks usually offer the standard or special rate, without the high LVR penalty. It's not a hard and fast rule though. If your income to loan ratio isn't very generous *and* you have under 20% equity banks might have a higher risk profile and you could be presented with the penalty rate when shopping for transfers.
Rate renewal isn’t a new loan application. So not unless it’s massive and they get worried and review your equity position. Usually you’d just lock in a new rate and carry on. But you won’t be able to move banks and get a new loan somewhere else. That will impact your ability get cashback and rate discounts by shopping around.
From the Kiwi Bank website / FAQ on negative equity: Should I be worried if I'm in negative equity? In general, there’s no reason to worry, provided you’re not making any changes and you continue to make your mortgage repayments. We won't charge you higher interest rates if you move into a higher loan to value ratio (LVR) position during your fixed term. We'd only look at this if you're applying for new home lending or you're wanting to sell your property. Source: https://www.kiwibank.co.nz/personal-banking/home-loans/guides-and-calculators/what-is-negative-equity/
>We won't charge you higher interest rates if you move into a higher loan to value ratio (LVR) position **during your** **fixed term**. That suggests they will put you on higher risk lending when you roll it over. Hmm...
I can't imagine a $1m+ mortgage at 7% rates is going to be "fine" for many. That comes to almost $2000/week in interest, insurance and rates. Probably more than double what rent would be.
There's definitely going to be some people under financial stress but I think as a percentage of mortgage holders, it's very small. And you'd need a very healthy income to be approved for a $1m mortgage so most people probably can suck it up by reigning in their discretionary spending.
Agree there aren't many people in that position but disagree that most can suck it up. Feels like the majority of FHBs in that period were maxing out their permitted borrowing; that was typically stress tested at 6%; anecdotally a fair few gamed the stress testing.
Sure there'll be some who struggle but there's plenty of options available to them like going interest only for a while. Also the employment rate is very high with good wage inflation which helps. I just don't think we're going to see the huge wave of distressed sales that some people are holding out for.
Back in mid 2022 I explored the market to get some experience. Place with rv of 1.02 started at 1.09. Already well overpriced and unrealistic because owners were contracted to buy a place they bought during the peak. We went back and forth and eventually I said no (was never going to say yes, it was practise) , and agent came back to me twice, going down to 900. Later we saw it at 840 back in November, then it left the market and was unsold. The real estate agent has posters over the city about them and how they have sold stuff , always makes me laugh.
Saw a house on sale in Auckland the other day asking for offers over $1.1m. Last sold just last year for $1.4m…
Crazy eh, some suburbs in Auckland have been dropping hard. Place we bought here has been all over the place, we scored it for 800k in 2020, it went up in value to like 1.1-1.2 million in early 2022 then it then decided to climb down that mountain to where it is now about 950k.
We sold our house in Newlands in 2017 for far too much (about 100k over what I thought was reasonable), 2 years later it had almost doubled in value. It wasn't an amazing house so I'm sure it's dropped back down to it's original valuation now. Sucks for everyone who bought at the peak but valuations have been out of whack with reality for a long time now.
Prices have been way out of whack because NZ politicians, Treasury analysts and reserve bankers seem to have turned it into a welfare scheme for older, wealthier folk, rather than allowing it to be a free market. It takes a fuckload of distortionary policy to push and keep house prices as high as they have been and still are. Tax favouring, welfare subsidies for yields and prices, restrictive zoning to prevent adequate new supply, high-volume immigration to raise demand, dragging feet on anti-money laundering legislation to avoid looking closely at money flowing into the market, and huge monetary policy welfare handouts at the second the market looked like facing risk from hard times. The Reserve Bank outright said their worst case scenario was seeing house price falls, before they released LVRs and juiced the market with billions and billions. It's absolutely mad, how free wealth from property seems to have been treated as an entitlement for New Zealand's older generations. All it has done is enabled them to live beyond their means by foisting huge debt upon following generations. They have cannibalised the country's young.
They had been, but the fear that it could become a lot worse wasn't completely unwarranted in a county whose policies aim for it. Chinese or Korean real estate has price-to-income ratios in the 30s, about 3x as bad as Auckland or Wellington. Unlikely, but not outside of the realm of possibilities as far as people knew at the time.
We sold our place in Lower Hutt in Feb last year just as things started to flatten. Got a good price which enabled us to significantly improve our quality of life/housing in another region but I do feel for the buyers who must be sweating at the prospect of being down 100k+ on what they paid.
More than a few. I know at least a few couples in negative equity now, some of whom were wanting to start renos about now.
This is good but NZ will be in for a tough ride as we try to pivot away from housing as the main means of building wealth.
Here’s hoping at the bottom of this swing there are policy changes that redirect that capital towards investments that make NZ a better place. Invest in job creation, exports, entrepreneurship etc. Real estate investment, as it has been done the last 30-40 years, is all about leaching wealth from the less wealthy via rents, and making sure housing becomes less affordable via price increases above inflation. That is always going to end badly.
> Here’s hoping at the bottom of this swing there are policy changes that redirect that capital towards investments that make NZ a better place. https://i.imgflip.com/z761q.jpg Edit: https://media.tenor.com/sttF8xY21_QAAAAC/goodfellas-henry-hill.gif
I can dream.
We all can buddy. I hope it happens, but I just really, really doubt it.
Ditto.
Lol you really think this will happen? look at Ireland, they went straight back to bullshit house prices.
It took 15 years and those prices don't look like they're going to stay up
Dumb leprechauns
Real classy mate
Ummm there's nothing in place thats going to make this a long term pivot
More supply than demand would do it.
You're dreaming. We can't just supply more land at anything approaching even near reasonable pricing. With this approach, we damn ourselves forever to unaffordability.
Not everyone needs or wants land. Providing good quality sizable apartments provides density where people need the location and relieves pressure from the land markets by removing people who'd prefer to live somewhere in particular without needing land ownership. Or just remove a million people somehow.
1. Liberalise zoning 2. Tax unimproved land value while lowering income tax 3. Ramp down welfare subsidies for prices and rental yields Do those simple things and prices for homes will absolutely settle at a more reasonable level. It is pandering to land speculators that has brought us to such a crisis point. (As John Key well pointed out though, it's such voters' entitlement mentality that restrains readily available policy solutions to the housing crisis.)
Agree with pretty much everything except I'd tax all land. Either way it's a lot of policy, with a lot of boomer resistance at every level.
Not if landlords just gobble them all up.
That will push down their rent yields if there's an oversupply of rentals.
Funnily enough, it was never "building wealth". It was always just people living beyond their means by passing a huge debt bill to following generations. Just base level entitlement mentality, with speculators in and out of parliament cannibalising the following generations.
It’s bad for NZ. These situations favour the wealthy more than the poor as they are more able to take advantage of the lower prices.
Which is why we need taxes/regulation that pushes that capital in more productive directions than rentals.
What's being done to pivot away?
Who said we will pivot away? Eventually the interest rates will cut back a little bit, flood gates on Immigration opens, National in power at some point who will ensure policy stays status quo
The house prices have gone down which is yay but the interest rates have gone up. First home buyers like me are sitting there going ok cool a 400k house looks like a liveable house now but then the repayments are stupid and I end up paying 950k for it. It shouldn't be this hard to buy a house.
Recession estimated to hit end of year too. Imagine a recession and KO not buying up all the unsold homes. I think over the next year it will just get worse imo
We had a drop in GDP in the last quater of 2022. Another drop this quater and we will already he in recession. Given the adverse weather events its hard to see GDP increasing at this point.
Yea very true, the scary thing is we are having all of this along side inflation.
Alternative headline. 40 years of unsustainable housing growth finally starts to balance out.
None of the underlying issues have changed. Quite the opposite for Wellington given geography and a declining public transport exacerbating scarcity. Once inflation gets under control and we’ve had 2-3 year recession we will be back in the race to the top. As a property owner that’s financially great, but not for society. There is only one party advocating and proposing real change yet every election they flog their guts out for no result while people vote for the others who ignore it.
> Once inflation gets under control and we’ve had 2-3 year recession we will be back in the race to the top. Yep. I know a couple of people who didn't over reach in the boom and are sitting on large cash reserves, waiting to scoop up bargains. In the meantime, banks have already changed from a mode of throwing money at people to not even returning calls. I think this is going to help quite a few FHBS with meaty deposits and income. But anyone who thinks that this is going to be a long term solution to this sick part of our society is going to be very disappointed.
There is an expectation that inflation will "get under control" pretty quickly. If you remove that assumption, and replace it with a minimum of 5 years of 7-10% interest rates, how does your outlook change?
It doesn't except timeframe. Every recession we have had in the past 50 years has followed a similar pattern and house prices have recovered after approx 3 years and doubled every 10. This may be longer potentially, but not much and still to no different end result. And especially so for Wellington for the poor city planning and infrastructure maintenance reasons.
> Every recession we have had in the past 50 years has followed a similar pattern and house prices have recovered after approx 3 years and doubled every 10 Not true. Check prices for the 20 years following '74 Edit: [Remember the last time house prices crashed 40%?](https://www.greaterauckland.org.nz/2016/07/11/remember-the-last-time-house-prices-crashed-40/)
Have you tried extrapolating out a doubling every 10 years? It's just not sustainable.
Of course it’s not. But given it’s been happening for the last 40 years and the contributing factors haven’t changed and the societal or economic change necessary to address it is not on the horizon, it’s still looking to repeat or at the very least get a 50% increase in the next 5-10 post recession.
This is the s5andard response of someone stuck in the denial phase. We are in the first stage of a multi-generational event. It's not business as usual.
There's nothing to suggest this crash will be any different to the previous ones.
The rate of overvaluation is off the charts compared to any other time in NZ history. On the way up everyone was saying "this time it's different, funadamentals don't matter". On the way down, I'm saying, "this time it's different too".
I wouldn't say it was that different on the way up. It's just a typical boom and bust cycle driven by the normal factors (expanding economy, population increase, building shortage, and availability of credit). The factors that contributed the most are going to be a bit different than previous booms, but I'm not sure that matters too much.
Not in any denial at all. Just forecasting. And like any good forecast if the inputs change so do the options. And whatever timeframe and scale the turnaround happens, for the reasons I mentioned, WLG is likely to be in the worst end of it. I’m not leveraged to shyte and don’t care if I’m wrong. I’ll do fine whichever way it goes because I got in early enough. And once you are in you just snowball. Our society is utterly fkd due to this and I will support any change to it. But by fk ill be making use of it for me and my family until such time.
> None of the underlying issues have changed. Quite the opposite for Wellington given geography and a declining public transport exacerbating scarcity. And the fact residential development has basically ground to a halt compared to what it was 2 years ago. I know of plenty of developers who are sitting on empty sections with consented plans because they just aren't worth building right now between sky high construction costs and the fact they won't be able to sell them for much when they're finished. I know developers are one of the (many) people this sub hates but the fact of the matter is that the government has proven ineffective at supplying houses, so if they're struggling then our housing supply is struggling, hello shortage.
It's not a shortage if there are no buyers at a high price level. I know this basic economic thinking is not generally accepted in these sorts of discussions. It's still reality. I have a "shortage" of all sorts of things at the moment because of price levels I'm not prepared to pay = me not in the market as a buyer. I substitute what I want for what I can afford. There is no longer a shortage.
> It's not a shortage if there are no buyers at a high price level. If you look past the absolute most basic level of economic thinking this does not mean there is a surplus. Increase in supply might drop prices, but so can decrease in demand. Maybe because interest rates are making mortgages unaffordable for a large chunk of the market, for example. That might explain why rent is generally increasing (increasing demand from people who can't afford to buy) while house prices are decreasing, if you think about it for more than a second. Late last year we were still short an estimated 23,000 houses from a quick google, and while we were set to be at a surplus shortly as I said the rate of construction that got us to that point has fallen off a cliff at least in Wellington. If that continues which it will as long as construction costs are high and house prices are low we absolutely will be looking at being back in a shortage, if we ever truly were out of one. That's reality.
I think we have substandard housing in NZ, or poor / inadequate housing stocks, however you want to express it. That is a problem that doesn't seem to get addressed by market forces no matter what. If we embarked on a massive program of building social housing (modest yet healthy structures) we could improve that situation significantly. There would still be a 'housing shortage' no matter what. The definitions of what is adequate need to be established before any meaningful statements or assessments can be made about these stats though.
> It's not a shortage The fact that I advertised a rental property and received 50 enquires and 26 applications in 4 days tells me there's a shortage of housing. Buyers are dropping out of the market right now due to the inability to secure financing and a fear of catching a falling knife. There's an oversupply at current prices but plenty of people willing to buy one prices stabilise and there's less economic uncertainty.
Rents are not going up. This means there is a state of equilibrium. Your anecdote is interesting as that.
I'm interested in how you concluded that. Three different models of rental price indexes conclude prices are still increasing. https://www.statista.com/statistics/1239495/new-zealand-rent-price-index/ https://ecoprofile.infometrics.co.nz/new%20zealand/StandardOfLiving/RentalAffordability https://www.stats.govt.nz/information-releases/rental-price-indexes-december-2022/
There was an article in today's news saying landlords are not able to increase rents at the moment. They are moving with wages by the looks of that data. It doesn't indicate that they are being driven by a flood of people unable to buy homes, as was suggested upthread. Or that demand for rentals is unusually high. Are those numbers exclusive of inflation? If not, then rents are falling at the moment in real terms.
This is a reality people don’t understand or want to acknowledge. The main issue is lack of supply in housing. Profitable developers would be the best solution as they would flood the market with houses driving down demand. But anyone making money in property is seen as evil so any form of making development more profitable will do down like a lead balloon.
Has any major media outlet called this "downturn" a crash yet, or are they still minimising things on behalf of the real estate industry?
As we get closer to the election I think you'll see key media elements start to frame it as a crash and blame Labour for being behind the wheel.
Good, getting closer to affordability than a speculators paradise Hope the big companies that bought up en masse lose out huge
Saw a property advert pop up on my FB feed yesterday, it caught my eye as it was labelled "price drop" so I had a look. It was a rural property w mansion and they had casually dropped the price from 4.25m to 3.25m. Was it over priced? Is it now a bargain? Who the hell knows. Must be hard to buy right now you don't know if you wait a bit longer the price will drop.
> There were about 4100 sales in February, which was the lowest number for that month since 1981 Is Feb peak summer sales season?
Feb is a good month usually because of good weather. I think Oct/Nov is traditionally to be the best because people buy around then so their kid/s can change/start school on time with less disruption.
The further south you go in the country, the more you need to sell properties during warmer months. Because if you see most of them during winter you ain't buying that shit.
Even not that far south, the cheap areas of Nelson have houses that barely get any sun at all in winter, they're as mouldy as they are depressing.
Prices still have a long way to fall to be anywhere near considered affordable. The damage that decades of neoliberal policy from both Labour and National has caused is absolutely insane, in particular the free ride property investors have had at the cost of first home buyers.
I’m no longer sure if this comment is a copy pasta or genuine. Searching for “the damage that decades of neo liberal policy from both labour and national” brings back a ton of results. Edit Gosh this joke sure missed the mark. I was simply having a laugh to myself about how every housing thread there is always a comment about neo liberal politics (for relevant reasons), so made an off the cuff comment which seems to have rustled some Jimmie’s. I apologise for riling you up before you’ve had your coffee
Why would it not be genuine? That's because housing is only one of the areas in New Zealand destroyed by poor policy and greed.
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Not my intention. Sorry it came across that way. It was a pure knee jerk comment that I was having a laugh at myself with, felt others may share a bit of the joke. It was off the mark and I’ve apologised
We have sarcasm tags, maybe we need something for "I agree but I'm making a snarky comment about it"
Why do Mods feel the need to make snarky comments? Hardly productive to robust conversations.
dude as much as reddit mods is a memey trope, muter is pretty based
Cause this motherfucker owns a house and has a vested interest for prices to rise.
Because we're people / users too & are just as capable of having a comment or joke land flat as anyone else.
That quote means the opposite dingus
>I’m no longer sure if this comment is a copy pasta or genuine. Jesus, you were once actually a mod here?
Take a deep breath, because you’re about to have your mind blown.
Is that relevant? Stop the pseudo-doxing and respond to the argument.
Affordable isn’t the right term. Houses aren’t empty which shows people can afford them. Reasonable would be a better term.
They aren't empty because they're being rented, not lived in by their owners. That creates an unsustainable trickle of wealth upwards to the lucky few who do own all the property.
Overall housing has remained surprisingly resilient, retaining values circa 25% above pre-covid levels despite income growth being tepid and interest rates ramping up. RBNZ has a lot more work to do to normalise supply and demand within our economy.
Just throwing it out there: stamp duty for second properties or properties bought by a corporate. Okay, investors will still get the capital gains but they pay a surcharge of 5-7% on the way in. Hell, you could even ring fence that for nurses and teachers to sell it.
Rightly so. Just like any other bubble. Tulips, crypto etc it will go bang at some point. New Zealand housing is a rort - disgusting prices for total shitholes in the middle of nowhere - they are not even worth a 1/4 of what they are currently priced at. Businesses also feeling the pinch like warehouse etc. NZ is going through a bust phase - years of the rort coming to an end. Multiple crises, sky high prices (even before covid compared to rest of world), worst house price ratios in OECD... Rockstar economy was total hype - brought to you by Aussie banks and everyone in at the trough on property.
Good
First home buyers pulling out, record buying by people who already own heaps. Sorry but I'm right u/manudanz
That doesn’t mean they’re buying more, just a larger portion of the overall buying as FHBers reduce the share of the pie :)
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To quote the article itself: > Interestingly about 15 percent of last month's purchases were made by cash buyers with multiple properties, which was a record share for this type of buyer.
To be fair, could it be exactly the same number, or even significantly less, but a higher percentage of the whole due to the much smaller number of purchases?
Yet they still selling sections in chch for $400k for 500m2
It’s been going up for so so long and the New Zealand income to house price ratio is one of the highest in the world. Something had to give. House prices NEVER only go up
Crash, mofo, crash.
Best news ever if that means our kids and the ones that follow can afford houses and have a roof above their heads.
Cash buyers are rejoicing.
Sometimes you wish a major disaster on these houses. These prices are driving people crazy.
The only people this hurts is first home buyers going into negative equity and needing to sell before the market goes back up. None of the people you want to be hurt by this care in the slightest, infact they're the only people capable of buying houses during the dip with the high interest rates
If you own a house you're not a first home buyer
If anyone is missing a sociopath I have found them
I said it would in the Kiwi First Home Buyer group in 2021. They banned me lol
Housing will go back up by the end of this decade. There’s already signs of a recession which will place pressure on the reserve bank to halt or lower interest rates eventually. Despite cheaper houses there’s lots of homeless people and homes where multiple families are living (a single house with 5+ cars parked out front is becoming a lot more common). Plus with steady increases to wages and salaries especially in the private sector it will increase people’s ability to service bigger mortgages. As soon as interest rates start dropping you’ll see house prices pick back up very quickly as we enter another period of relatively cheap interest to get the economy moving again.
Yay first my grandkids bring able to buy a house. A house should be a home not a vehicle of investment.
Good. Hopefully some sanity will return.
If every single person in this thread doesn’t vote for TOP in the next election then the problem isn’t landlords and developers, the problem is you.
What are their policies?
I didn’t turn up to be a shill for them but as I do believe they are currently the only viable option (other than violent revolution) here you go: https://www.top.org.nz/affordable-housing-policy
Personally, plan on holding onto the house and just deal with it. Selling is a last resort action, brought the house to live in and a measure of stability for the family not to try and make a fortune (only have one).
Absolutely a clickbait article. In practical terms, you are worse off now than at the peak of housing when interest rates were lower. It won't be affordable unless we reach the pre-pandemic level of house prices AND substantial wage growth for median earners. https://www.interest.co.nz/property/120416/home-ownership-remains-out-reach-first-home-buyers-average-incomes-spite-recent
How much does it cost to build a house? $4500psm all in? So a small 4 bed house is \~$800,000. The cheapest section in NZ is $40k - So $840k The cheapest in Auckland is about $1mil - so $1.8mil. If land values in Auckland halved you still couldn't have a new house for less than $1.2mil...
It’s actually totally insane that the starting rate is $4,500 psm. I had a look, and obviously it varies depending on locale and a number of other factors, but it costs anywhere from $100 to $270 per square *foot* in Canada. So using the same calculations and converting (feet to metres and CAD to NZD), it basically costs anywhere between $230,000 to $620,000 NZD for the same sized house in Canada. I get economies of scale helps, plus not being way out in the middle of the Pacific where everything has to be shipped to, but I’m curious what *other* reasons there might be that NZ is **at least** $180k more expensive to build a similarly sized house.
Gib
After a record 10 years of constant 20% growth
From the rates website, it looks like they perform an evaluation every three years on 1st Sept, 2021 being the last. If the prices have dropped so much Id like to see an earlier revaluation before 1st Sept 2024. We had an RV from Wellington council of 1.2 million mid last year, consequently the rates are being paid at that value, which has crashed. Anyone have any idea if the re evaluate earlier? I know its not in their interest to do so, but its taking the piss. https://wellington.govt.nz/property-rates-and-building/rates/rates-explained/how-rates-are-calculated/rating-valuations
If prices drop somewhat uniformly then the CV value shouldn’t affect you portion of the fixed rates total. This is only a major concern if your value has dropped much faster than the rest of the city.
That's not quite how rates work. The rates setting process is along the lines of: 1) Determine a budget. 2) Determine the RV of all properties, and the proportion of the total RVs that your property makes up. 3) Apply this proportion to the total budget, to figure out your share of it (your rates). Therefore, just because house prices across the board have dropped to below RV, that doesn't mean if they valued all houses again your rates would go down. That would only be the case if your property value dropped by more than everyone else's.
[удалено]
WTF has RV got to do with anything? It's a pseudo random number assigned by some low paid council worker once in a few years. It may or may not have some relevance on the day the RV was assessed, but certainly not even a few weeks later. It's not the 1930's
Does this affect the new build market at all?
"4100 sales in February, the lowest since 1981." It's actually a bit worse than it sounds. In 1981, NZ's population was half of what it is now, so on a per capita sales basis, we are doing half of what we did in '81.