So what's leading to the increase? Because we keep hearing that times are tough, but first-time buyers are managing to get a deposit together and get a house?

Yeah, that's right.

I mean, we only know when they become a successful first-time buyer.

We don't know how many people are trying and not succeeding.

And not saying it's easy to be a first-time buyer, but right now, yeah, people are proving pretty successful.

And as I've said, it's, I guess, a little bit less competition from other buyer groups.

But other really important things, I mean, low house prices, massive help.

Are all kinds of, are all the other kinds of buyers down or are there other areas where, you know, other types of buyers grabbing a bigger percent or is it only the first-time buyers that are going up?

This is a continuation of a trend now, isn't it?

Oh, absolutely, yeah.

We've seen this trend in place, if you want to look really long-term, for about 10 years, but the big step up has come in perhaps the last two to three years.

Obviously, with house prices lower, that's really helped.

Mortgage rates have snuck up a little bit lately, but of course they're lower than they were two or three years ago, as well as access to KiwiSaver.

and also plenty of low deposit money available at the bank.

So it's clearly a good time to be a first-time buyer.

Does your location depend on whether you're buying standalone or buying apartment?

This is a continuation of a trend now, isn't it?

Oh, absolutely, yeah.

We've seen this trend in place, if you want to look really long-term, for about 10 years, but the big step up has come in perhaps the last two to three years.

Obviously, with house prices lower, that's really helped.

Mortgage rates have snuck up a little bit lately, but of course they're lower than they were two or three years ago, as well as access to KiwiSaver.

and also plenty of low deposit money available at the bank.

So it's clearly a good time to be a first-time buyer.

Does your location depend on whether you're buying standalone or buying apartment?

I think those days are over.

Yeah, I tend to agree.

I mean, there's been some fundamental forces that have driven up house prices.

I've already talked about interest rates, but you've had perhaps restrictions on land supply, which helped.

You've had a relatively favourable tax system.

We had a shift to two-income households as well, which you could argue is a little bit circular.

Did that push up house prices or did house prices rise? So people had to have two incomes to afford it.

But will it get, because that was artificial anyway, but will it get to a kind of, I mean, with a reasonable kind of values? Like, I think they were overvalued and now they're massively undervalued, aren't they?

I think those days are over.

Yeah, I tend to agree.

I mean, there's been some fundamental forces that have driven up house prices.

I've already talked about interest rates, but you've had perhaps restrictions on land supply, which helped.

You've had a relatively favourable tax system.

We had a shift to two-income households as well, which you could argue is a little bit circular.

Did that push up house prices or did house prices rise? So people had to have two incomes to afford it.

But will it get, because that was artificial anyway, but will it get to a kind of, I mean, with a reasonable kind of values? Like, I think they were overvalued and now they're massively undervalued, aren't they?

What's driving this?

Well, I think the main thing really is that it's still a buyer's market.

If you think about the sort of balance of power out there, it's still in favour of buyers.

Now, those buyers have to be confident about their job and be able to secure finance and all of that sort of stuff.

But if people can satisfy those criteria, then there's still a lot of listings, still a lot of choice.

People know that, well, if I don't get this place, there's probably just one down the road, pretty much the same that I can buy.

So, The pricing pair is still with buyers.

markets like

What's driving this?

Well, I think the main thing really is that it's still a buyer's market.

If you think about the sort of balance of power out there, it's still in favour of buyers.

Now, those buyers have to be confident about their job and be able to secure finance and all of that sort of stuff.

But if people can satisfy those criteria, then there's still a lot of listings, still a lot of choice.

People know that, well, if I don't get this place, there's probably just one down the road, pretty much the same that I can buy.

So, The pricing pair is still with buyers.

been a little bit softer

Do the fundamental reasons involve immigration and supply? And if they do, don't they change? And by the time you get out to 31, you're starting to guess? Yes.

Yeah, well, I mean, migration is obviously a driver in the housing market, but I think the big shift we've seen in the past four or five years, and yes, it's slowed down lately, but we have seen a big shift in housing supply, and both parties now have committed to keeping that going, and that is a big change from what we've seen historically.

Who knows? That could always fall away.

But right now, supply does seem to have lifted to a higher sort of equilibrium level, which would argue for slower house price growth in the future.

So we'll have to see how it plays out.

But right now, that does seem to be a reality.

Does it move money and intention and interest away from housing on the investment side of the equation if this is the new normal?

Yeah, well, you'd have to think it would.

Do the fundamental reasons involve immigration and supply? And if they do, don't they change? And by the time you get out to 31, you're starting to guess?

Yeah, well, I mean, migration is obviously a driver in the housing market.

But I think the big shift we've seen in the past four or five years, and yes, it's slowed down lately, but we have seen a big shift in housing supply.

And both parties now are committed to keeping that going.

And that is a big change from what we've seen historically.

Now, again, who knows, that could always fall away.

But right now, supply does seem to have lifted to a higher sort of equilibrium level, which would argue for slower house price growth in the future.

Does it move money and intention and interest away from housing on the investment side of the equation if this is the new normal?

Do the fundamental reasons involve immigration and supply? And if they do, don't they change? And by the time you get out to 31, you're starting to guess?

Yeah, well, I mean, migration is obviously a driver in the housing market.

But I think the big shift we've seen in the past four or five years, and yes, it's slowed down lately, but we have seen a big shift in housing supply.

And both parties now are committed to keeping that going.

And that is a big change from what we've seen historically.

Now, again, who knows? That could always fall away.

But right now, supply does seem to have lifted to a higher sort of equilibrium level, which would argue for slower house price growth in the future.

Does it move money and intention and interest away from housing on the investment side of the equation if this is the new normal?

That could create a lot of internal downward pressure on the prices of those houses.

Yeah.

It, it, it certainly, it could.

Um, and that's something-- That's a question we've, we've had a lot lately.

[chuckles] You know, you go through the cycle and s- y- you find that there's really popular questions at a point in time, and that question changes.

One thing we've had a lot lately is, "Oh, are townhouses oversupplied and are values collapsing?" And, you know, we've really looked into this really, really closely.

We've cut our data in multiple different ways.

Um, and maybe not looking under the hood quite enough because you, you kind of want to see what- You see what you want to see? Like, uh, what is, I suppose, your general advice to a first home buyer, um, with, I suppose, there are tripwires around.

Does it have the – because we've spoken about this many times, but does it have the possibility to increase the prices at the lower end if there are more buyers going to be available for competition?

Potentially, potentially.

But I think when you look across the housing market right now, there's just so many listings of all types and in all locations.

There's still a lot of new builds coming through.

So I think that's a pretty low risk.

I think really here it's about helping those individuals into those properties.

um yeah i think that politically obviously looks pretty good and and you know won't necessarily sort of transform the housing market as i say we already know first-time buyers are really strong anyway lots of choice so exactly i don't think too much of a price impact

at a time like this is it a solution looking for a problem

does it have the pot because we've spoken about this many times but does it have the possibility to increase the prices at the lower end if there are more available more buyers going to be available for competition

oh potentially potentially but but i think when you look across the housing market right now there's just so many listings of all types and in all locations there's still a lot of new builds coming through so i think that's a pretty low risk i think really here it's it's about helping those those individuals into those properties and So yeah, I think it politically obviously looks pretty good and won't necessarily sort of transform the housing market.

As I say, we already know first-time buyers are really strong anyway, lots of choice.

So I don't think too much of a price impact.

At a time like this, is it a solution looking for a problem?

Well, some might argue that, some might argue that.

I'll stay pretty neutral on that.

I mean, I just think there's things that obviously political parties want to do.

Does it have the – because we've spoken about this many times, but does it have the possibility to increase the prices at the lower end if there are more buyers going to be available for competition?

Potentially, potentially.

But I think when you look across the housing market right now, there's just so many listings of all types and in all locations.

There's still a lot of new builds coming through.

So I think that's a pretty low risk.

I think really here it's about helping those individuals into those properties.

So yeah, I think it politically obviously looks pretty good and won't necessarily sort of transform the housing market.

At a time like this, is it a solution looking for a problem?

How far into negative equity are these people, do you think?

Well, I mean, you might be looking, in percentage terms at least, the dollar values will be different depending on obviously what they paid.

But, you know, if you put in 20% deposit and you live somewhere like Auckland or Wellington where values are down 25, well, you'll be sort of 5% in negative equity, which, you know, very quick figures off the top of my head, based on average values, I mean, that could be, $40,000, something like that.

So it's not trivial.

If people are paying the debt, it's going to be manageable.

it'd

be highly stressful.

It slows down.

How far into negative equity are these people, do you think?

Well, I mean, you might be looking at it in percentage terms.

At least the dollar values will be different depending on obviously what they paid.

But You know, if you put in 20% deposit and you live somewhere like Auckland or Wellington where values are down 25, you'll be sort of 5% in negative equity, You know, very quick figures off the top of my head, based on average values, I mean, that could be $40,000, something like that.

So it's not trivial.

If people are paying the debt, it's going to be manageable.

Would it be?

Yeah.

it'd

be highly stressful.

It slows down.

guess any future decisions too you you sort of probably feel to some extent stuck where you are and you might still be paying the debt and the banks if you're doing that the bank will be happy but but yeah it does slow down your future decisions you might not want to move because you've lost equity on the current place and so there's definitely some challenges that and based on where house prices are going right now which is not very far at all uh it might take a while for that negative equity to be sort of recouped again too so yeah definitely some people in a tough position

Would that be going a bit far?

I think probably just on the basis of negative equity alone, I think that's probably going a bit far.

But that is a mindset that seems to be coming through a bit more for people.

If you look at possible tax changes, if you look at the rise in housing supply, some of these big picture things are probably going to slow down the rate of capital growth in the future.

Would it be?

Yeah, I mean, I've been fortunate to not be in that position, but I can imagine it'd be highly stressful.

It slows down.

I guess any future decisions too.

You sort of probably feel to some extent stuck where you are.

And yes, you might still be paying the debt and the banks, if you're doing that, the bank will be happy.

But yeah, it does slow down your future decisions.

Would that be going a bit far?

Uh, uh, uh, have we got past that whole edgy Adrian Ore age in which we need so much money we can't get into a house in the first place, and we're settling back down to what we once knew?

Yeah, I, I think we are.

I mean, um, the banks have plenty of money to lend, certainly at that low deposit level.

The LVR rules, uh, have been raised, and there is a bigger allowance there.

But also we've already seen house prices fall so far that I just think those risks of negative equity have pretty much disappeared.

You know, house prices are unlikely to fall much further, so even getting in with a low deposit, you're unlikely to go underwater, I suspect, at this point.

And if you remember what Albanese did with his tax treatment the other day on houses in Australia, he goes, "The first home buyer market's at 30% and that's not good enough." So it's all how you interpret these things, I guess, isn't it?

Yeah, I guess so, and it depends on your, on your sort of long-run averages, what's normal for a particular market.

Uh, i- i- i- have we got past that whole edgy adrenal rage in which we need so much money we can't get into a house in the first place and we're settling back down to what we once knew?

Yeah, I, I think we are.

I mean, um, the banks have plenty of money to lend, certainly at that low deposit level.

The LVR rules, uh, have been raised, and there is a bigger allowance there.

But also, we've already seen house prices fall so far that I just think those risks of negative equity have pretty much disappeared.

You know, house prices are unlikely to fall much further, so even getting in with a low deposit, you're unlikely to go underwater, I suspect, at this point.

And if you remember what Albanese did with his tax treatment the other day on houses in Australia, he goes, "The first home buyer market's at 30% and that's not good enough." So it's all how you interpret these things, I guess, isn't it?

Yeah, I guess so, and it depends on your, on your sort of long run averages, what's normal for a particular market.

So Kelvin, how would you describe the state of New Zealand's housing market right now?

Well, I mean, more of the same as a phrase that comes to mind.

You know, we've seen really since the big downturn in property values that came through in 2022 and 23, it's been pretty flat ever since.

If you look at property values, yes, they sort of go up and down month to month, and some regions have been weaker than others.

But generally, for the last three years, we've had very stable property values after a big boom and then a big downturn.

They've been pretty flat for, as I say, about three years now.

So, So, yeah, each month we get the data in and it's kind of more of the same on that value side of things.

How long do you think first home buyers, for example, have to make up their mind on where they want? Do you know what I mean? Like, when are we going to see that curve go back up?

So Kelvin, how would you describe the state of New Zealand's housing market right now?

Well, I mean, more of the same is a phrase that, that comes to mind.

Uh, you know, we've seen really since the big downturn in property values that came through in 2022 and '23, it's, it's been pretty flat ever since.

So if you look at property values, yes, they, they sort of go up and down month to month.

In, in some regions it'll be weaker than others.

But generally, for the last three years we've had very stable property values after a, a big boom and then a big downturn.

They've, they've been pretty flat for, for, as I say, about three years now.

How long do you think first home buyers, for example, have to make up their mind on where they want? Do you know what I mean? Like, when are we gonna see that curve go back up?

Um, [inhales] 'cause we thought there would be life this year, and it appears in this late July morning there isn't.

Yeah, well, I mean, going back to the start of the year, things were looking more optimistic.

Then, of course, the, the, the big unexpected events come along and, and I guess changed that around.

And yeah, the thing that's lacking from the market at the moment, I guess, is a little bit of confidence about the economy, about where interest rates are headed.

And, you know, when people are uncertain, they just sort of shut up shop a bit.

They're off to the races, aren't they?

Yeah.

A bit of growth in house prices in those markets.

Um, [inhales] 'cause we thought there would be life this year, and it appears, in this late July morning, there isn't.

Yeah, well, I mean, going back to the start of the year, things were looking more optimistic.

Then, of course, the, the, the big unexpected events come along and, and I guess changed that around.

And yeah, the thing that's lacking from the market at the moment, I guess, is a little bit of confidence about the economy, about where interest rates are headed.

And, you know, when people are uncertain, they just sort of shut up shop a bit.

They're off to the races, aren't they?

Yeah.

A bit of growth in house prices in those markets, and Invercargill is probably, you, you'd probably call it the strongest market in the country really.

What about the rental market? Uh, a-a-as, as, as the, the, the cost of buying a house falls, is the cost of rent matching that fall?

Yeah, it has come down.

So, um, I mean one thing we've seen over New Zealand in the last sort of four or five years is that we have actually ramped up our housing supply.

So there is physically more houses than, than there used to be.

And some degree of, uh, I mean, I'm not saying it's fully balanced.

I'm not saying there's, there's, you know, we're oversupplied or anything.

I think there probably are still shortages in some areas.

How's sales activity? Uh, what, what are we looking at in, in sort of year on year in com-- in comparison, uh, for sales numbers?