Transcript generated automatically by AI and may contain errors.
Chapter 1: What recent trends are affecting small homes in the property market?
Hey team, it's Frances. Well, there was a very interesting article recently on RNZ that showed some changes in our housing market. We all know that things have been slowing down a little bit in property recently and values have been a bit lower. What you might not realize is that those values aren't hitting evenly. When you look at the types of properties, that are going down in value.
It's 41% of apartments selling for less than their owners paid for them. Now 18% of townhouses and 11% of houses selling for less than their owners paid for them. So that's a pretty big difference and yet the devil is in the detail. Do I think this tells us something about what types of properties people want to buy and sell?
Chapter 2: Why are apartments and townhouses losing value more than houses?
Yes, definitely. But it's a little deeper than what you might think at first glance of those numbers. So what do you need to know and what can you do if you are in one of those houses? Well, RNZ Nights with Emile Donovan asked me to come on and talk about it. They very kindly said that I could share that again with you here. So enjoy.
for a lot of people around the country buying a house may have seemed like an ironclad investment but new data is showing that may not be the case anymore since the property market peaked in 2021 house prices across the country have generally been trending downwards leaving many homeowners in quite a tough position actually and now some new figures show nearly a fifth
of townhouses, nearly 20% are being sold for a lower price than what their owners paid for them, in some cases facing devastating losses in the six figures and above. So how concerned should homeowners and especially townhouse owners be right now? And is this an opportunity for buyers?
Chapter 3: What types of properties are most impacted by the current housing crisis?
Well, finance journalist Frances Cook joins me now to break it all down in a bit of detail. Lovely to have you back, Frances.
Lovely to be here.
So, I mean, how bad is this from your point of view?
I mean, I think it's somewhat expected. We did have the flood of developments, which were very needed, but it all sort of followed one general type of house. There was a real flood of townhouses specifically. And I think when you dive into the details of what's happening here with the house price falls, I mean,
Property is down across the board, but what we're really seeing here is when we have the much smaller townhouses, maybe the two bedrooms, the ones that don't have parking spaces, those are the ones that are being particularly hit hard here. It's not necessarily all townhouses are down.
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Chapter 4: How should first-time buyers navigate the current market conditions?
When you see things like the three bedrooms, they've got a decent backyard and they've got car parking. They're hitting sort of around about the same as the rest of the property market. It is those much smaller townhouses, the cheaper builds that were being targeted by investors or very sort of marginal first home buyers. Those have really been hit and that is really hard for people.
So is this a situation where we have this housing crisis? I mean, in some people's minds, the housing crisis continues. And so we built a whole lot of housing, a whole lot of housing in a relatively short period of time. But it's turned out that the kind of housing that we built, no one really wants to buy or live in.
Yeah, I think it's a really good reminder that property is supposed to be a very long-term bet financially, whether you're thinking of it as an investment or a home. And those two things can be very different financially.
Chapter 5: What advice is there for homeowners facing negative equity?
But either way, it is supposed to be quite long-term. And I think when we're doing things like... skipping the car parks or making it a very small floor plan. One of the other things that often impacts, you know, they're seeing, it's quite interesting, the devil in the detail here, where the townhouses sort of on the ends of a row are often holding more value because they get more sunlight.
And so I think it really comes back to the fundamentals of people don't just want to live anywhere. They do still want good quality housing. And when you have a big bubbly boom, like what happened in 2021,
Thank you.
things went a bit mad and all of those fundamentals were thrown out of the window and people were just trying to buy property, any property. And so some things sold for prices that you look back now with clear eyes, it's so obvious what happened.
Chapter 6: How do market dynamics affect the value of different property types?
It didn't feel that way in the moment. So I do feel sorry for people. I think it's worth remembering though, the median loss here is more around the sort of the $50,000 mark. And that is comforting where there are some big outliers here with some people that have taken... really big falls in value of property, but there are sort of more manageable average figures.
So hopefully people don't panic too much when they look back at those average figures.
I mean, some of those outliers are pretty amazing though, aren't they? There's one example in Rimuera, the person bought it four years ago and they've sold it. They lost 800, they nearly lost a million dollars, 890,000 bucks. Gee, that is just, that's an eye-opener, Frances.
Chapter 7: What strategies can investors use in this changing market?
It is. It is. And I would say like those are coming from places that are really hot property markets. You know, if you're looking at someone like Remy Rader, that is extremely high property values in the first place. So I'd love to know. I don't have the figures there on what percentage that is, but it is eye-watering no matter what.
Do you think, I mean, you mentioned earlier on that the kinds of houses that are losing value, as it were, or that are being sold for a loss tend to be in the sort of property speculator slash marginal buyer kind of demographic.
So do you think that the speculators who would have bought up townhouses looking to make a quick profit, you think that that's the demographic that would be most affected by this?
Yeah, I think there'll be a lot of investors hit by this and that's sort of, nobody ever wants to lose money, but that's sort of part of the risk when you invest, right? So I'm somewhat less concerned for the investors who might be choosing to sell.
Chapter 8: Is there a shift in how New Zealanders view housing types and investments?
I'm more concerned for if it was a first home buyer who maybe was quite a low deposit investor mortgage they will be hit really hard by this and they could be very worried and they won't have much margin for error so that's more the cohort that i worry in a moment like this
Do you think there's maybe an element, too, of New Zealanders having to get used to the idea that this is the type of house that many of us will be living in into the future? And it's not a quarter acre block with a backyard and a white picket fence and a great big double garage. It is a townhouse. These are more space economical. But maybe that's not.
Maybe that's a cultural change that doesn't necessarily get accepted or embraced overnight.
Well, yeah, it's quite interesting because there was also some research that came out earlier this week as well, talking about older generation who usually look to downsize, but also are not that interested in townhouses. And so I do think there's a bit of a crunch point and we're seeing that now in terms of how we envision where we want to live and what people can afford.
What is interesting to me is we are now seeing properties come back on the market and they're selling a little bit quicker than they were before. We've got figures from realestate.co.nz showing townhouses are selling average of 120 days at the moment. Standalone houses, it's around 96 days on average. And that is marginally better than things were before.
So we're getting a little bit of those signs of... buyers and sellers coming into a bit more reality with each other. I mean, let's not sugarcoat it. That is still longer days to sell than things were before, but it's less bad than it was. So I think what we're hitting now is a bit of a crunch point where things have become so expensive for so long. People have held off
trying to make decisions either way, buying or selling. And now we're hitting that crunchy point where people just have to live their lives and they have to make a decision and people are now having to make some quite tough decisions.
I asked in the intro to the program, somewhat tongue-in-cheek, is this a sign of the model shifting to a sort of buy land, not houses kind of calculus, I guess. And I do wonder about your thoughts on this. Even at the peak of the property explosion in New Zealand...
So when you're buying a house for lots and lots of money, are you really buying the house or are you perhaps sort of buying the potential of what you could do with that area of land that you're buying?
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