NZ Housing Bubble said to be on verge of collapse

New Zealand’s over heated property market is set to fall according to a news report on stuff.co.nz and following a surge of listings as homeowners and investors run for the exit.

The Chief Executive of property website realestate.co.nz, Alistair Helm, reports there were 15,129 homes listed for sale in February, an increase of 47% over January, saying the surge in listings was “exceptional”. This, coupled with fewer homes being sold is creating a huge inventory of properties.

According to Mr Helm, it would take 48 weeks to clear all the homes listed on realestate.co.nz. In December the was 34 weeks of inventory.

New Zealander’s appetite for debt is drying up. In March 2007, household debt was rising by $2.1 billion a month. In the months of November 2009 to January 2010, household debt is accumulating by $400million a month.

» House prices set to slide – Stuff.co.nz, 7th March 2010.




5 Comments

  1. I think it would be truer to say that the NZ property market which has been stumbling around for over a year after an initial 10% price collapse is struggling to come to life.

    Sales volumes are still down over 30% from long term average which was hit 5 years ago. Prices peaked in Nov 2007 and are still 5% below that, so to say NZ property market is overheated is not true and not likely to collpase. It is more likely to continue to struggle.

    Alistair Helm
    Author of the NZ Property Report – monthly report on the NZ Property Market published on http://www.unconditional.co.nz from the data of the Realestate.co.nz website.

  2. Are there any signs of this spreading across the Tasman?

    What is the current inventory stock listed on Realestate.com.au ?

    The Henry Tax Review is signalled to recommend ending negative gearing for investment properties – but howcome this hasn’t kept Australian investors out of property?

  3. NZ will no doubt start doing as cousie bro Australia is. ie: allowing foreign purchases of homes,
    maybe starting/increasing first home buyer grants..ect ect.
    What about increased inflation for NZ…?

  4. J Hill, it is the same across the Tasman. Sydney’s Domain East last weekend was 184 pages the Domain North & Beaches was 200 pages. Apparently they are the biggest issues since their respective launches.

    The SMH said in summary “But any oversupply could cool house prices even without the Reserve’s efforts. “

  5. It’s interesting because there has been quite a lot of Real Estate agents in Melbourne (Tim Fletcher springs to mind) on current affairs shows telling people how strong the market is, and how there isn’t enough properties to meet demand.

    These messages provide encouragement for people to put houses on the market – especially when there are many many examples of properties going for $100k+ over the reserve.

    However, the financial crisis showed that most Australian’s had a ‘buffer’ and were not forced to sell property at the bottom of the recession. This was mainly caused by the banks not forcing repossesion and sale, but instead asking occupants to pay whatever they could, and add the rest to the mortgage amount to be repaid later.

    A report in mid-2009 suggested that the Commonwealth Bank had come to such arrangements with close to 700 mortgage holders in the belt from Toorak, South Yarra, to Malvern East (say inner south east Melbourne). It was not in the banks interests to reposses and sell, as this would increase risk to a business.

    My thoughts are that now the market as rebounded, first through the first home buyers grant, and now through the investment boom, the banks are now ‘forcing’ the sale of many of these properties. The banks are well ahead now, because instead of potentially losing $200k forcing a sale at the bottom part of the cycle, they wore an extra $20-30k liability by allowing people to ‘pay whatever they could’, and now things are rebounding, they are selling..

    It’s amazing that the behaviour of the banks in regards to this isn’t more well known.

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