KEY POINTS:
The housing market is showing its first signs of a slight cooling this year with prices and sales volumes dropping last month.
Rising interest rates and slower winter sales are being cited as major reasons for the marginal price drop and the bigger volume fall shown in Real Estate Institute figures.
Here is the latest selection of your views:
Steven
A house buyer here. Been going to open homes intensively for the last 6 months or so, possibly 3-4 open homes per weekend on average. Compared to the autumn, the Auckland open homes are now near deserted. Our guess is that there's simply too few "last idiots" like ourselves left out on the market with any cash to spare at the today's price and interest rate combination. Hope Bollard slips in a couple more 1/4 per cent increases before the spring season, to prevent any serious demand rebuild. The market may never "burst" the way the sensationalists present, but a couple of years of consecutive negatives should teach the muppets thinking that the property prices never go down better. Check the recent state of US house prices and Auckland between 1998 and 2000, or for more dramatic examples post-Reagan Southern California (1989) or London (1994 I think). New Zealand is not some global freak, same laws of physics and economics apply down under too. The market here will start shrinking sooner or later, if you can keep up your payments you'll be fine in the long run, otherwise you may get fried.
John
This is good news! Hopefully in time this will bring down interest rates and the property market will have a small breather and take off again. I brought shares a while ago and lost money! I brought a investment property house a year ago and have just sold it for a $120k profit! How can you go wrong with real estate!
Fred
I had a 50,000 deposit but didn't want to part with it for an average house in Wellington so I started a small business. It has returned far greater than property ever would and I even got to leave my job great! I rent a house that would cost me 30 per cent more to own. Buying a house makes no sense anymore. Why are we so obsessed with it! I like my rental home and especially the landlord who pays the rates, unblocks the drain and mows the lawn!
Neil Campbell
As an investor, once again I must thank the Herald for making my house prices go up even more. Every time they start their usual nonsense about the decline in house prices, more vendors take their houses off the market or don't sell just now in anticipation of better times ahead. With buyers still looking, we get even better gains. A toast to the Herald, you have made me a rich man.
Craig Love
Two words. Supply and demand. Housing prices will not fall unless either supply is increased or demand is decreased. Currently, the government is to trying to decrease demand with interest rate hikes and sabre-rattling about tax changes. This may work temporarily, but it just bottles up demand. People want homes, and the market for New Zealand property now extends further than to just New Zealanders. To ease housing affordability we'd need to encourage new medium density home building on a largish scale. And for that we need to design attractive communities with integrated facilities and public transport, as well as investing in more and better-trained tradespeople. But that would require intelligent town planning, something we've been so bad at here that we've pretty much given up on it. Or we just raise interest rate again and try and scare people away from owning their own homes.
kent
I read with interest all the different comments that are being made and it just illustrates that there is no straightforward answer. All I can say in my opinion is that NZ is a young, small, attractive place to live (at the moment) in world terms, and should have a positive immigration flow for many decades to come. It's is simply a case of supply and demand,imagine Auckland with 1/2 as much population again and what strains that is going to put on good housing stock in good locations. I do have to emphasise 'good' because sadly much of Auckland's housing stock is sub-standard and almosty unlivable and we haven't even touched the tip of that 'leaky buildings' iceberg. Once this epidemic takes off (which it will), imagine taking out all the suspect houses from the equation as well. This will leave question marks on perhaps almost 40 per cent of the housing stock.It all means that good houses in good areas will continue to skyrocket one reasons why new, well built houses are commanding such high prices.Sadly immigration is mostly to blame but NZ does needs good quality immigrants if it can't keep its own. To do this it needs wages across all fields to increase dramatically, income tax to be reduced, a tax free allowance to increase the poverty gap, more inward investment so exciting R&D opportunities can be created etc etc. This way it won't be an issue if the immigrants push up prices as our own standard of living would also have risen relatively by our own local wealth creation at the moment we are not creating that wealth.
John W
How silly people are. Everyone keeps saying things like 'when the bubble bursts' or 'prices must come down'. Get real you can look at house price data at lots of places on the web and see they have been going essentially up since records started. House prices don't come down (least not for long). They just pause now and again. In my view that's great. An investment opportunity that most people can access and understand, that's sure to increase in value. Just watch. Prices will be slipping up again in the spring. Like they always do.
Austrokiwi
As an ex-pat kiwi I am astounded how out of balance NZ house prices are in relation to average income. In the US and Europe the standard guideline is a property should not be worth more than 3-3.5 times your income. In New Zealand the ratio is more like 7-1, i.e. a house will cost around seven times your income. This is unsustainable. Either salaries will have to go up or property prices down. I would suggest that people read the Bank of International Settlements yearly report dated June this year. In the banks conservative way it highlights risks to the world economy. Issues of debt rate highly in the report. Will the market crash I don't know but the market will turn some time. What is certain is that some will suffer and a few will profit. For those who a feeling the pinch now, was the hire purchase's and the overseas trip that you paid for by borrowing really worth the price you are paying in your day to day life?
Steve
Well I have to say there is a cooling that has started. I have noticed more mortgagee sales in the last few months than previously. Whether you own property or would like to keep your eyes wide open. It will hurt when the market changes.
Barry
I have just put in buy orders for a large amount of cheaply priced NZ shares of companies affected by the high NZ dollar. These companies' fundamental performances are superb but no-one seems to want these shares. I easily contrast this with all the excitement and bubbling in the housing market. The total opposite in market emotion. I have seen plenty of real estate shops popping up but haven't seen a single agency offering cheaply-priced NZ foreign currency driven shares such as Fisher Paykel Healthcare/Pumpkin Patch. I am pretty certain that the housing market will experience a downturn (as all markets eventually do), I am thinking it will get very ugly.
MH
Not only will housing crash but everything else will crash too, worldwide. Being a long time follower of Bill Bonner of The Daily Reckoning newsletter (www.dailyreckoning.co.uk), which has over 500,000 subscribers, the whole world system is in the worst situation ever and is going down because of the housing bubble and credit bubble in America which has sprung a leak.
www.nzherald.co.nz/event/story.cfm?c_id=1500988&objectid=10361395
The Black Horse of Revelation 6 is running and the economy will go down. On December 24, 2005, the Eftpos system "crashed" and the NZ Herald lead article shows a credit card with a "Black Horse" running upside down. Read the article and see how many times the word "crash" is used. Ten. That event was a prophetic sign to the country at that time. Few knew. Few still know. It isn't a matter of wanting it to happen or not. It will happen. If not now, then soon.
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