House sale slump eases in October as drop in turnover slows

REINZ chief executive Bindi Norwell said "The data is evidence that the LVR restrictions have done their job of slowing the market"

New Zealand's housing market perked up last month as sales volumes fell at a slower pace, having slumped in the lead-up to the September general election.

A total of 5,689 properties were sold across the country in October versus 6,759 in October a year ago, the Real Estate Institute of New Zealand said. The 16 percent decline from October 2016 compared to a 26 percent year-on-year slump in September. Still, the market remains downbeat, with just two of the 16 regions reporting an increase in sales.

The median number of days it took to sell a property increased to 34 from 32 in October 2016, while the number of auctions, which is generally an indicator of a heated housing market, fell 42 percent on the year but rose 4 percent from September. Auctions now represent 15 percent of all sales nationally.

Moves by the central bank to clamp down on the level of high loan-to-value ratio mortgages amid concern rising prices were a risk to the nation's financial stability have taken the steam out of the property market and REINZ reiterated its time for them to be reviewed.

"It's clear that the volume of properties sold across the country is still significantly lower than it was this time last year. Therefore we welcome the Reserve Bank's comments last week that they will make an announcement later this month around reviewing the restrictions and criteria they would adopt for the removal of LVRs," chief executive Bindi Norwell said.

At last week's monetary policy review, acting Reserve Bank governor Grant Spencer hinted the bank is looking at winding back its loan-to-value restrictions now the housing market is cooling. "We are certainly reviewing the restrictions and the criteria we'd adopt for their removal," and will discuss the LVRs at the financial stability review later this month, he said. The financial stability report is scheduled for Nov. 29.

"The data is evidence that the LVR restrictions have done their job of slowing the market," said Norwell. REINZ has repeatedly called for LVRs to be reviewed, in particular for first-time buyers.

The REINZ house price index edged up 0.2 percent in October from September to a fresh record of 2,708. Seven regions reached new highs during October "indicating strong value growth across most of the country," the institute said. The house price index considers the mix and value of the property sold, not just the sales price. Only three regions - Northland, Waikato, and Canterbury - registered a decrease in the index month-on-month.

When compared to October last year, the highest value growth was recorded in Gisborne/Hawke's Bay, up 16 percent, Tasman/Nelson/Marlborough/West Coast, up 11 percent and Southland up 11 percent.

The number of properties available for sale increased 4 percent to 24,307 on the year. In the Auckland region, the number of properties for sale jumped 17 percent to 8,465 while outside Auckland inventory fell 2 percent to 15,843, highlighting the impact the country's biggest city has on the nationwide data.

The median house sale price lifted 3.9 percent to $530,000 versus a year earlier. Excluding Auckland, the median price rose 8.5 percent, while Auckland's median price fell 3.2 percent to $850,000, the biggest drop since December 2010.

However, the decrease in Auckland is largely due to a large number of apartments being sold in the old Auckland city boundary, which brought the median price down for the entire region, REINZ said. The only other region to experience a fall in the median price year-on-year was Nelson, which saw a decrease of 6.8 percent to $447,500, the biggest drop since April 2012.

(BusinessDesk)


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Oh dear. First it was moving on from using month-on-month date to year-on-year when sales slumped. Now they can't even use that!

Been watching the RE listings for the Auckland Bubble on Trademe climb rapidly over the past few weeks as reality hits. Specuvestors looking for the tiny exits and "quick" escapes imho!

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I take from your comments that you would 'rejoice' in a property crash? Do you even know what that would do to kiwi families let alone Mom & Pop investors? Very sad but not surprising as there's quite a few of your ilk out here.

Don't get me wrong the asset inflation here and in other western cities is concerning but things are calming down which is good - some investors who have stretched too far might lose and that is always the risk with property.

First home buyers need to continue to be PATIENT and SAVE, their time will come where the market will adjust and they'll be able to buy.

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I, for one, would rejoice in a property crash. It won't change much for a family owning one home - sure, they might be in a negative equity position depending on when they chose to enter an over-inflated market, but it's not going to change how long it'll take them to pay off their mortgage. All it does is give them fewer options to move whilst they still owe money on their property. As far as 'Mom and Pop' specu-vestors go, they have contributed to the very situation that would be going through a correction - I'm struggling to drum up any sympathy for these people, especially when I consider that they are simply on a different side of the same coin as those who have been priced out of the market.

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Incredible that you would say that but again, not surprised. You clearly don't have any concept of how the conversation will go with the bank when your property falls into negative equity! Do you really think a crash will get people into property? Answer is no, the banks will be hurting and will turn away from new lending.

Property prices have been going up due to a) Demand exceeding supply - you can thank local government for that, & b) historically low interest rates globally.

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Having spent almost a decade in banking, I'm somewhat familiar with how the conversation will go. The reality is that a bank would rather keep someone in their home paying down the mortgage, even in a negative equity situation, rather than crystalise the loss in value.

Tell me, with the current downturn in prices, has supply suddenly increased? Have interest rates suddenly increased? No. Your simplistic view of the market fails to take into account the speculative component that has been baked into the values of NZ's housing stock - that is the expectation that owners will make future capital gains. It's the same reason stocks like Xero have people back them - their worth is not today's value, it is the expectation of future growth. Remove the expectation of growth, see values decrease.

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I don't think Jase has a simplistic view of the market at all. But I do think that you have a spiteful and vengeful one that is clearly clouding your thinking about it, ex-banking experience or not.

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When looking at our inflated housing market, and choosing to exclude the fact that many New Zealanders (and, until recently, anyone on earth) can treat our housing market as a vehicle for speculative investment returns as a cause, is to take a simplistic view. Plain and simple.

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I'll give you the benefit of the doubt re your banking experience although I disagree that the banks would simply allow people to pay down the mortgage without any further consequences, particularly if property prices 'crash' while you are busy basking in their misery.

To answer your question, no supply hasn't suddenly increased (again, thanks to local govt red tape) and interest rates are on hold for now thanks to a Labour/Greens/NZF driving a lot of uncertainty.

I'm not saying the problem is simple to fix, if it was easy something would have been done by now. But welcoming a property crash? Come on

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Welcoming a correction, you mean? Like returning median house prices to within reasonable debt-to-income ratio levels? Sounds like a terrible idea.

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I would not "rejoice" in a property crash - it would involve recession, unemployment and misery. Problem is, you cannot lay it on those who are attempting to correct decades of mismanagement. You need to lay that at the doorstep of those who let this asset class become VASTLY over inflated to benefit fewer and fewer people, at the cost to many.

I rejoice at housing finally being seen as a human necessity and not a speculative play toy. Massive difference!

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I would understand if some did rejoice at a crash. After all, many in the older generations gave no regard at all for the effect on young people of the spiraling house prices caused by turning NZ's legacy of carefully nurtured affordable housing into an investment vehicle instead. At that point, the effect on others didn't seem to matter too much. Instead, young Kiwis were lambasted for being lazy, smashed-avocado-eating spendthrifts - despite the fact they've been saving at a higher rate than their forbears. The ilk of those selfish folk...well...

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As the good book say, Basil, (Matthew 13:12) "For whosoever has, to him shall be given, and he shall have more abundance: but whosoever has not, from him shall be taken away even what he has."

Herein endeth the lesson.

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Nothing like basing one's wisdom on a old desert scrolls cobbled together and altered by various committees. Sounds like a fantastic, empirical basis for policy and society.

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Rather luckily for boomers, the previous generations were a little less self-centred than they.

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House prices are starting to rise again in Auckland for family sized homes above 250m2.
When you have a family you need space to live and expand.
Labours 90m2 house slums and the old state house boxes are too small for New Zealand
families.

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Yeah, but what young families are in a position to buy a 250m2 house in Auckland???

Even double income professionals in their early 30s balk at current prices.

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Easy payments for a couple of $780pw at one mill borrowing. 200k from combined kiwisaver plus savings as deposit average income times two equalls 140k.

Eg teacher income 70k truck driver income 70 k plus overtime.

Buy a 5 bedroom in Albany or Karaka. Rent out a couple of rooms to students $600per week.

Easy with 3 rooms left to play with and a double garage.

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A Five Bedroom home used wisely will only cost $180 per week by making tax free student or boarder income, which makes good financial sense.

Always buy a house that has income potential. There are plenty of 5 bedroom houses for sale around 1.2 m where you can utilise 2 bedrooms for income to half your mortgage payments .

Never buy a 2 or 3 bedroom home that is only slightly cheaper but is totally reliant on waged income.

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Ridiculous really. Young Kiwis would be better off attacking the speculation-driven bubble at its source via policy. It was NZ's history of policies fostering affordable housing that created such a high ownership rate by the 1980s - no reason they should accept having to play by the boomers' rules just to protect the boomers' speculative investments.

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yeah thats what they said 5 years ago. head in the sand stuff

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There will not be an overall property crash in Auckland and here's why.

The council revalues property upwards on periodic intervals in order to get increases in rates revenue. The councils debt is secured by rates revenue. The property value increases are so baked into the system it's effectively printing money. But that's NZ for you. We are an infant economy and we turn to our natural resources - predominant of which is land - in order to get offshore capital and debt.

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According to the CEO of one of Auckland's largest RE agencies, Asian buyers have been virtually non- existent in their auction rooms over the last few weeks..... interesting times as we head into 2018.

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Never trust what the RE agencies say. They don't have skin in the game, they work on turnover. They just want to create optimism or pessimism to encourage buyers to either buy or sell now vs later Vs focusing on fundamentals.

Remember they're sales people, not valuation experts. Ie you don't ask your mortgage manager for interest rate advice. They're incentive's don't align with yours.

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Give it up for the RE salespeople, who've guts this out.

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There'll be a bunch of blank billboards and lots of late model European cars for sale pretty soon methinks.

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