I.In one neighborhood, the first metric was a mailbox: a thickening shell with ads “For Sale”, which killed the mail. “Almost daily spam advertises homes for sale,” said Greg, who lives in New Plymouth in the heart of the North Island. Then he noticed that everything was changing on the street. “Every house on our road that was sold after we moved three years ago was sold within a week,” he said. “But now the house on the road is on the market for about a month with no signs of relocation.”
The same flow of symptoms is becoming visible in many cities across New Zealand: sales signs that stand while lawns grow around them, auctions that pass by without bids, pages with lists that appear on real estate sites. For years, the country’s housing market has been on a seemingly steady upward path, with homes in major malls costing an average of more than $ 1 million. New Zealand is now in the midst of some of the biggest downturns and slowdowns since the aftermath of the global financial crisis. Some banks predict a 10% drop in 2022.
The Guardian Readers asked to share how they felt the fall in the market, and found a mixture of anxiety, relief and hope.
As economists warn of “monster” inflation that could spur mortgage payments, some of New Zealand’s blocked home buyers are hoping they will be able to pick up the pieces.
“I’m partly thrilled with this, any changes in the real estate market over the last two years are a potential‘ in ’for me as a first-time home buyer,” said 35-year-old Megan, a design director from Wellington. “However, I’m also afraid of the coming recession and what it means when I first deal with mortgages, as well as new costs such as insurance and rates.”
For some, this is the first opportunity to own real estate. “My partner and I believe that the fall in prices means that we can buy a house this year,” said Shina *, an IT employee from Wellington. “We’re going to wait a few more months to see if it goes down a little more. We are lucky to be in a happy situation: we have double the above-average income and potential help from our parents – I think we would really fight if it weren’t for these factors, but let’s see what happens. “
“Honestly, it’s a relief,” said Will, a civil servant in his late 20s.
An urgent social problem
These fears are widespread: a perfect storm of rising interest rates, tighter lending legislation, inflation, high cost of living and falling prices. Consumer emergency a poll published last week found that only 16% of New Zealanders thought that February 2022 was a “good time to buy”, compared to 25% in October 2021. Conversely, 58% thought it was a bad time to buy, which is 8 percentage points rose. New Zealanders were increasingly concerned that the house might not retain its value – more and more believed that the value of homes would decline over the next year, and less thought it would rise. 83% overall believed that the housing market was still either “overstated” or “out of control”.
This means that many new buyers are worried about going beyond their means – and some who bought when the market was at its peak may be in trouble.
“I’m torn between trying to buy a good house at a good price and fixing a reasonable interest rate for a couple of years to try to get out, or just sitting for the next 6-9 months to see which way to go,” Megan said. “Spending $ 27,500 a year on rent is incredibly painful, but at least now I’m only facing a rising cost of living – if I get a mortgage, I have to add to that the pain of high interest rates.”
The housing market in New Zealand has long been seen as one of the country’s most pressing social problems, creating and perpetuating both class and generational inequality in wealth. So for some who already have homes, change is bitter: happiness that their peers or the next generation may climb stairs, coupled with the anxiety of watching their own homes lose value. “I’m glad it’s slowing down,” said 36-year-old Tracy of Hawke’s Bay.
Her mood was echoed by 44-year-old Jess, an education consultant from Vaikane. “My partner and I have our home in a small town, and its value has grown from $ 340,000 to $ 1.03 million in eight years. It’s funny. We have no idea how ordinary people can get their first home and how impossible it is for low-income people. We will be happy if our value decreases – it means that a fairer New Zealand is possible. “
“I’m glad it happened,” said David, a 52-year-old Auckland business owner who sold his own home. “We have failed, and hopefully it will help young home buyers. [I’m] sad for those who bought only last year, and hope not too many have suffered greatly from it. “
* Shine’s name has been changed to make them anonymous.