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Your home's worth less than you think
By GREG NINNESS - Sunday Star Times | Sunday, 08 February 2009
The housing market may be in worse shape than official figures suggest, with median prices in some New Zealand suburbs dropping by more than a quarter over the past year - and the pain is predicted to last many more months.
Real Estate Institute (REINZ) figures show that the median dwelling price declined by a modest 4.78% between December 2007 and December 2008, but a suburb-by-suburb analysis of REINZ figures by the Sunday Star-Times shows that prices in two-thirds of all the main urban areas declined by more than the national median over the same period and in many places the price falls were dramatic.
In Auckland some of the biggest falls were on the North Shore where the median price in Devonport plunged 23% (-$155,000) over the year and Milford/Takapuna recorded a 16.6% drop (-$92,500).
The wealthy eastern suburbs also took a big hit with the median falling 12.9%, but it wasn't just the upmarket suburbs where prices took a hiding.
The median price in solidly working-class Glenfield slid 20.9% and in low-income Manurewa in South Auckland it dropped 9.1%.
In Wellington the market was more mixed, with the median in the expensive eastern suburbs down a steep 21.3%, while the medians in the Hutt Valley held their own or improved on the previous year.
Christchurch's most expensive suburbs of Fendalton and Merivale also showed a sharp drop of 14.1%.
Other areas to experience severe price falls were the holiday home playgrounds of Thames/Coromandel (-28.7%) and Queenstown (-18.1%).
The price falls were even greater when compared against those of November 2007 when the national median hit an all-time high, marking the turning point of the property boom.
And with figures released last week showing unemployment had crossed the 100,000 threshold, homeowners are being warned to brace for an extended period of market uncertainty.
"It's very difficult to predict which way it's going to go," REINZ national president Mike Elford said.
"I'd like to think we're getting through it [the downturn], but I just don't know. As long as people can retain their jobs I think we'll see some sort of upside on volume in the property market, but I'm not so sure on pricing.
"I think pricing's more stable now than it was three months ago, but I wouldn't like to say where the bottom is," he said.
Economist Rodney Dickens, of Strategic Risk Analysis, said prices were likely to keep falling until the middle of the year.
He said the market could be two-thirds to three-quarters of the way through the current cycle of falling prices.
"And they will keep falling until the number of sales picks up."
About 4000 homes are being sold each month, compared with 10,000 at the peak of the boom.
"It probably needs to get up to 6000 a month before the downward pressure on prices ends."
But he warned that once the recovery got under way, there was a danger that our low mortgage interest rates would overstimulate the economy and increase the risk of high inflation, forcing the Reserve Bank to increase rates again.
And that could kill off any recovery in prices just as it began.
By GREG NINNESS - Sunday Star Times | Sunday, 08 February 2009
The housing market may be in worse shape than official figures suggest, with median prices in some New Zealand suburbs dropping by more than a quarter over the past year - and the pain is predicted to last many more months.
Real Estate Institute (REINZ) figures show that the median dwelling price declined by a modest 4.78% between December 2007 and December 2008, but a suburb-by-suburb analysis of REINZ figures by the Sunday Star-Times shows that prices in two-thirds of all the main urban areas declined by more than the national median over the same period and in many places the price falls were dramatic.
In Auckland some of the biggest falls were on the North Shore where the median price in Devonport plunged 23% (-$155,000) over the year and Milford/Takapuna recorded a 16.6% drop (-$92,500).
The wealthy eastern suburbs also took a big hit with the median falling 12.9%, but it wasn't just the upmarket suburbs where prices took a hiding.
The median price in solidly working-class Glenfield slid 20.9% and in low-income Manurewa in South Auckland it dropped 9.1%.
In Wellington the market was more mixed, with the median in the expensive eastern suburbs down a steep 21.3%, while the medians in the Hutt Valley held their own or improved on the previous year.
Christchurch's most expensive suburbs of Fendalton and Merivale also showed a sharp drop of 14.1%.
Other areas to experience severe price falls were the holiday home playgrounds of Thames/Coromandel (-28.7%) and Queenstown (-18.1%).
The price falls were even greater when compared against those of November 2007 when the national median hit an all-time high, marking the turning point of the property boom.
And with figures released last week showing unemployment had crossed the 100,000 threshold, homeowners are being warned to brace for an extended period of market uncertainty.
"It's very difficult to predict which way it's going to go," REINZ national president Mike Elford said.
"I'd like to think we're getting through it [the downturn], but I just don't know. As long as people can retain their jobs I think we'll see some sort of upside on volume in the property market, but I'm not so sure on pricing.
"I think pricing's more stable now than it was three months ago, but I wouldn't like to say where the bottom is," he said.
Economist Rodney Dickens, of Strategic Risk Analysis, said prices were likely to keep falling until the middle of the year.
He said the market could be two-thirds to three-quarters of the way through the current cycle of falling prices.
"And they will keep falling until the number of sales picks up."
About 4000 homes are being sold each month, compared with 10,000 at the peak of the boom.
"It probably needs to get up to 6000 a month before the downward pressure on prices ends."
But he warned that once the recovery got under way, there was a danger that our low mortgage interest rates would overstimulate the economy and increase the risk of high inflation, forcing the Reserve Bank to increase rates again.
And that could kill off any recovery in prices just as it began.
I would post a link but i'm not allowed apparently
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