As we maybe look forward next week to the 'almost normal' level 1, it's a good time to draw breath after what has been a breathtaking first half of the year.
We are now entering what could almost be described as a 'phoney war' period in which we wait to see what happens next.
More specifically we are now in a kind of data 'dead spot' between what we knew was happening with the economy pre-Covid-19 and what is now happening now and more to the point will happen in future.
Of huge vested interest for Kiwis of course is what will happen in the housing market.
Official data releases we are seeing at the moment on the economy in general are mostly covering off the April month when lockdown was king. And while such massacred facts and figures (a personal highlight - if that's the word - in terms of its brutal impact was Air New Zealand's disclosure that in the whole wide world in April it carried 15,000 passengers) make for arresting viewing, they don't really tell us much we couldn't have figured out ourselves.
And the immediate post-lockdown data is not too much help either.
On housing we've already seen now the realestate.co.nz figures, QV and Barfoot & Thompson releases for May.
My reading of those three sets of data was that you can't really read anything into them. It's too early. Things need to settle.
The jobs market is key
The housing market's fortunes over the rest of this year and into next will largely be determined by what happens with the economy at large and particularly how this affects the job market.
I wasn't sure whether I was reassured or actually a bit perturbed by the Reserve Bank figures released in the latest Financial Stability Report suggesting that a 25% fall in house prices would see 21.5% of mortgage stock in negative equity.
I suppose we shouldn't be surprised, given how prices have risen in recent year.
Of course things could have been a lot worse. According to those same figures from the RBNZ (based on modelling developed by the RBNZ last year) if we had not had loan to value ratio (LVR) limits in place since 2013 then based on the mortgage distribution as it could have been a 25% fall in house prices would now see about 45% of the country's mortgage debt in negative equity.
Little wonder then that the RBNZ was so concerned about the way things were going before it introduced the LVRs in 2013.
But no doubt, we are still vulnerable to a large fall in house prices.
Sky-rocketing unemployment could kick things off
The thing most likely to really kick off a big drop in house prices is if unemployment really sky-rockets.
And that's the thing we've really got to watch over the coming days, weeks and months.
I'm not sure about you, but I'm quietly amazed that as of today we have virtually no Covid in New Zealand and we are now moving towards a position where the domestic economy (with of course closed borders) can begin operating almost normally.
If we can get things up and running almost 100% and if we don't have a re-occurrence of the virus (and that is a HUGE IF) it's possible we may not have unemployment figures as bad as might have been imagined.
The key thing will be whether people get out and spend or not.
Saving our pennies
I suppose it should be logic that if people are locked in their houses for days on end they won't spend money. And yet some of the figures coming out around what happened during lockdown have been most surprising - in a good way, I think.
We appear to have been very sensible while we were locked up.
During April we wiped over $1 billion from our credit card balances. It's the first time since 2013 the total amount outstanding on cards has dropped below $6 billion.
And it seems the wage subsidy money is largely being parked in the bank for the moment, with bank deposits having risen by $8.2 billion in March-April.
This does mean many people seem to have prepared themselves quite well financially. Better than I would have expected.
What happens now? Is there room for people to spend some of this money? Or will they hold on to it?
The fear of losing their jobs is likely to be the key deterrent for most.
If they do spend a little that will obviously get the wheels of the economy turning. If they don't, well the wheels won't turn.
Ironically people's fear of losing jobs (so not spending their money) could lead to more jobs being lost if an early post-lockdown flurry of spending gives way to people sitting on their money.
More stimulus?
Of course the Government does have the option of further stimulus - including maybe the famed 'helicopter money' - aimed specifically at getting people to spend. I've already said I think it would be too soon now.
Clearly the more the economy can reach some sort of nearly normal then the fewer jobs might ultimately be lost - and that's where it would become crucial for the housing market.
As long as people have got jobs they can keep servicing the mortgage - particularly at such low interest rates. It's if the job goes that the problem starts. And obviously if people are forced to start looking at selling their houses then so the downward pressure will come on the house prices.
So, the next two or three months particularly are key.
If we can get the economy up and running almost normally (and a trans-Tasman bubble development would be really welcome too) and we can keep the virus at bay (big question mark) then maybe things won't be quite as bad as we might have thought.
But time will tell.
The waiting game is on.
And the house market will be waiting too.
143 Comments
Maybe we'll get $25k to build or renovate like they're doing across the tasman?
https://www.smh.com.au/politics/federal/new-homebuilder-package-aims-to…
"or you do that yourself" - nah. You need to be a Junior LBP in Carpentry to pick up a tool of any description, preceded by a Fake Credential from a Learning Establishment, have done a Risk Assessment of the work environment, erect Signs warning of Site Hazards, wear Approved Protective Equipment, carry adequate Liability insurance, and guarantee that Screw-Wood Interface for 10 years..../sarc
Give me $25K with a stipulation I have to use it to capitalise and I'll add solar panels, a battery bank, underfloor insulation and an extra heat-pump.
Give it to me and cash and it will go straight into a rainy day fund.
Not hard to see who the winners are there in each situation.
I hope NZ doesn't brig this in. If anything was a warning not to put all our eggs in one of a few baskets, the rampant housing crisis and high prices is one of them, and the COVID crisis shows this up. The private debt levels housing now creates due to the escalating prices, which is way out of sync with wage growth, is huge. It may make some people feel rich, but you need a house to live in.
Credit to Jacinda and co for their actions ( it's always going to be debatable re-timing etc ) and the remarkable success that has got NZ to this point. Clearly a virus ( hopefully ) free society/economy has the best chance to get back to normal and that is the advantage we have over the rest of the world.
My best guess is unemployment will stay well within single figures.
We will all know soon enough !
I think there's a moderate chance we will stay single digit on unemployment. But not all because our economy is robust.
Consider:
- Lots of job losses will be people on working visas
- There will be job losses where the partner earns too much for the person losing the job to be eligible for the dole.
What rubbish. The whole point of a work visa is that the worker does not show up in NZ's figures or problem if things go belly up. the whole point of both people in a couple working is that if there is a problem they can survive on one income. Show me an example of this not happening and I will show you a couple who have not done their risk reward analysis properly.
The trickle down effect is only just starting to hit, so we will see what it is like in a few months. I still think Job losses will be in excess of 12% and the real Job losses it will be close to 18%. Speaking to a number of friends, the business they work for are just starting to go through or are talking about restructures to survive the next 18 months. They all thought they were fine as not directly tourism related, but the trickle down effect is starting to hit everyone.
In the US, they expect it to take until the end of the year, and into the new year, before things really start to hit hard. Like NZ, they also have an election, which will change things, as this crisis is now very political. Hopefully it won't cause stupid decisions to be made.,
We have a 310 billion dollar economy, tourism alone contributes over 10% of that.
We almost zero tourism in the short term and the international student sector at a standstill, you could easily estimate that there could be a 10%+ increase in unemployment in the short term.
Its all about when we open the borders and who to, glad Im not making that decision because more level 4 lockdowns will cripple us
"If we can get things up and running almost 100% and if we don't have a re-occurrence of the virus (and that is a HUGE IF) it's possible we may not have unemployment figures as bad as might have been imagined."
What about international tourism?
'Tourism is New Zealand’s biggest export industry, contributing 20.4% of total exports.' If there are multipliers of the lose of that income..who knows what influence that will have. Let alone all the pilots (I know a few) who were on large wages, who are now not. General reduction in spending..
https://tia.org.nz/about-the-industry/quick-facts-and-figures/
We can sit here in our bubble of no COVID, but to lose 20.4% of our exports...that is significant.
Loss of inbound tourism and international education are going to be big hits, no doubt. But it's not quite correct to write off the whole thing -- you'll need the net loss, e.g. factoring how much kiwis aren't spending their tourism $ on the gold coast or in the islands. Still big, yes, but not 20%.
There won't be much of a loss if we do quarantining, and perhaps charge more but cherry pick the best types of tourists to visit.eg the high value ones that appreciate the country the most. Do away with the freedom campers etc.
Tourism was also never going to last forever anyway, as these things tend to run in cycles. Tourism is not sustainable long term due to all the air pollution it creates. Global warming and all the pollution was going to cause problems down the track anyway. Things have to change, but I suspect they won't. People will just want to go back to normal.
I love it when people talk like this. As if these economic matters are something under someone's control (including collective people of a country) and it is a simple matter of "re-thinking". Tourism was thriving under yesterday's condition now those conditions have changed and there is not a shiny prospect for tourism. All the thinking and rethinking are after the facts, thus pointless.
You say yourself that "there is not a shiny prospect for tourism". Then you say it's pointless to rethink tourism. I see a bit of a contradiction here...
If you build your house near a river, and one day the river floods and takes your house with it, will you rebuild your house in the same spot?
why? the conditions are out of your control and have nothing to do with your thinking. No amount of thinking will affect the conditions. The same with a flood, do I have the resources to go anywhere else? is there going to be a flood management in place now? the same with tourism. If conditions are reverted to what they were, your re-thinking becomes irrelevant, and until you know the new conditions, things will change so much that your current thinking will have no place. Developing new conditions will shape the future, not our thinking.
I said, time to rethink the *role* of tourism. If it's one of our biggest exports (20% is a huge chunk), but can be gone pretty much overnight, maybe we should diversify a bit more.
Do you really think it's not worth thinking about alternatives and diversification? Why plan anything then? Why do we have a budget? Developing conditions will shape the actual spending, for sure (see covid-19 budget), but if we don't have targets what steps are we gonna take tomorrow?
Many of these tourists have disappeared anyway. So even if we opened dour borders yesterday, many would not be returning. This is world wide problem. People don't want to go on holiday, and risk getting this virus. Let alone whether they would have insurance cover, and taxpayers don't want to be covering this cost either.
There isn't a problem with tourism if people coming into are tested before leaving their country, and when they get to NZ they quarantine. Potentially there is a lot of money to be made, because many people will want to escape their Covid ridden country for a period. Likewise movies and tv series can be made here if we are covid free. If we can't be covid free, then I can't see many people wanting to travel here, and insurance probably wouldn't cover them either if they get sick from it.
Yes, there is a big lag in timing with these things.
With a lot of these factors, it matters hugely what the correlation/ overlap is between them which will influence what the overall outcome is.
eg What proportion of house owners who end up in negative equity, lose their jobs or can't find tenants willing to pay the stated rent. (= mortgagee sale) This will of course vary between cities.
Along with this are correlations/overlaps too numerous to write down. A sample is:
The above plus how many people in the household lose their jobs.
Young adults who decide not to relocate to another city for education. (Hugely expensive and ultimately a luxury unless the degree is a high quality one like becoming a medical Dr).
Young adults less likely to do an OE. (Again a very indulgent luxury). A step jump of more NZers in NZ. But where will these people live?
Returning expats. Where will they settle? Do they have savings?
Foreigners. All the unknowns about their movements and wealth. (From the media, it sounds like many migrant workers have no wealth whatsoever).
Future pay rates. Some will increase other reduce to the min wage if its not there already. (Oh and of course some migrants charge their migrant workers below the min wage or have "loans" which need repaying. This will continue no doubt about it).
This is just a taste of it. The list is very long. To try to predict what the outcome for NZ is could be analysed ad finitum.
Better to just wait and see and perhaps ignore the people who get rolled out in front of the media to comment.
David's article above is a very good one. It does not make predictions.
If people lose their jobs now, would they rush to sell their homes?
With interest rates being so low it is almost certainly going to be cheaper to stay in your home and maybe just switch the mortgage to interest only for a while.
Anecdotally of course, but at a local level here the job market is doing well. People I know who lost their jobs in tourism/travel have got new jobs easily, especially if they are happy to move into the primary industries which actually has quite a labour shortage with not being allowed to import foreign staff on work visas.
In that hypothetical, how long can they sustain their mortgage repayments without an income? 3 months, 6 months? Look at the hiring intentions in the business confidence survey, plenty of businesses are announcing hiring freezes. Could be a long winter without work.
'Property ownership will continue to rank as one of the best long-term investments.'
Property has done well historically. Unfortunately, no one can buy at yesterday's / yesteryear's prices.
The only relevant question to answer (that can result in action today) is:
Will property purchased today by owner occupiers AT CURRENT MARKET PRICES (using leverage), continue to rank as one of the best long-term investments?
For example,
i) a potential owner occupier buyer in Queenstown, or Wanaka
ii) a potential owner occupier buyer of an apartment in the CBD in Auckland
TTP something you might enjoy very much, from the KPG annual report under the heading of 2021 outlook.
"Navigating the pandemic will be our priority in FY21. We will do this by focussing on three key
themes:
1. Resilient business
2. Resilient strategy
3. Resilient assets"
Have a good night m8
"The housing market will prove far more resilient than many people dare believe.
Property ownership will continue to rank as one of the best long-term investments."
**** WARNING ****
CAVEAT EMPTOR. FYI, there is the risk of potential vested financial self-interest in promoting property transactions here.
"There is always a buyer at the right price."
Exactly.
1) Here is the buyer of an "as is" leaky home.
"Although the property, which was built in the '90s, has an RV of $915,000, it was listed at $649,000 and sold for $612,000. And Scott says the price was the sticking point. "Lots of buyers wanted to pay a lot less than that. "
https://www.stuff.co.nz/life-style/homed/real-estate/121703972/leaky-ho…
2) A couple of weeks ago, here's what some people bought for the same price as an Oreo Cookie or a packet of Sour Cola lollies from The Warehouse
i) https://www.thewarehouse.co.nz/p/oreo-original-cookie-137g/R2193094.htm…
ii) https://www.thewarehouse.co.nz/p/nice-sour-cola-bottles-150g/R2185673.h…
https://www.reuters.com/article/stuff-ma-management-idUSL4N2D60HK
The buyers won't be foreign, as there is a Foreign Buyer Ban.
Can't be investors either, unless they are dumb enough to catch a falling knife.
That leaves us with FHBs - the ones with stable jobs. Which means prices will to fall down a whole lot to meet the market.
Ahh don't worry about that the Brits are ready to offer a helping hand to the Hong Kong people and provide them with a route to UK citizenship.
BBC UK to change immigration rules for Hong Kong citizens if China passes law. https://www.bbc.com/news/uk-52900700
There seems to be an amount of pent up anger from people who are unable to purchase a house, due to the ridiculously high prices. It's contained at present because these same people see potential light at the end of the tunnel. Allowing foreign purchasers of property would be the straw that broke the back for many people.
Given the quantity of folks in rented accomodation it seems the effects of Ue will be as much channelled through rent reductions as through bank repossessions.
The other question is how much banks will scale back their valuations as this is a key driver in the growth of the mortgage market.
Perhaps by September we will have some clarity where it's all heading and how big the changes are going to be.
Unemployment is already well into double figures but my pick will be that they will delay the release of the official figures or fudge the numbers so it doesn't look as bad. The key to recovery will be how fast businesses recover and start re-hiring staff. The issue I see is a very long period of uncertainty where people shut their wallets and button down the hatches and wait for positive signs of recovery and this can lead to a self for filling downward economic spiral.
Carlos
" . . . they will delay the release of the official (unemployment) figures or fudge the numbers so it doesn't look as bad. "
So, who is "they" and "why"?
Seemingly just another ill informed conspiracy theory.
Just note that Department of Stats/ MBIE collect and release such data who are apolitical when it comes to such matters.
Exactly or just make up some new category and call it something cool. Its been done before just reshuffle the deck and put the "Recently jobseeking" in another group. The actual number of those unemployed is always far higher than the official statistic because many people simply don't qualify for the Jobseeker benefit. Its now more and more likely that those loosing their jobs will be one partner and as both are typically working these days the true numbers are hidden.
Correct is wait and Watch.
If unemployment is what it was before lockdown or even rises slightly with same number of businesses operating as before lockdown or if slightly loss than with all the monetary and fiscal measures will come out fast and the damage will not be much in the long run (Except Government Deficit) / Housing market will to get away with small dip BUT if unemployment level rises and many businesses shut shop than worst is yet to come - economically - as government will throw money/dole till elections AS have to win.
So yes we are at cross road and can do nothing but hope for the best.
Sorry but I disagree with wait and watch, almost every day I read wait and watch comments for several years now. I disagree because wait and watch becomes ingrained and it leads to inaction. "Wait and watch for 3 months then we'll know, in 3 months, oh there are some new uncertainties that happened, wait and watch for another 3 month, then of course the same again ad infinitum.
What's wrong with wait and watch, if one's savings and other investments are growing steadily while they wait?
I definitely don't feel like I missed out by not buying a house in Auckland in 2017... and that's 3 years of waiting, not 3 months. Mind you, I haven't had enough for a deposit at the time.
Yeah because we have a Pandemic every 3 months like clockwork. This time is different but I will say that if the housing market stays up without massive government assistance then it can survive anything. By assistance I mean the government just keeps paying everyones wages forever because thats what its going to take to keep the bubble inflated.
"I'm renting a place for $4k a month that was being rented for $45k a month"
Mike1,
Just wanted to reconfirm there is no typo there - so that is 91% lower than previously rented out for?
So, for a 12 month equivalent period, you're paying $48,000 per annum currently and previously the same place was rented out for $540,000 per annum?
Was the property formerly rented out as Airbnb?
That might be an argument in "normal" times.... but right now? That's your advice? Would have it been a good idea to buy a property in Ireland or Spain just as the GFC started?
You need to at least caveat the advice of "buy now" with "only buy now if you have a deposit that can cushion you from possible falls of 10-20%". Because you DO realise that the vast majority of FHB can't come up with anything close to a 20% deposit by themselves don't you? Or are you that widely out of touch?
Key to Future : The jobs market is key.
How many loses jobs and businesses will determine how fast the economy recovers but one should not forget with international borders been closed and with travel restriction not only in NZ but all over the world - it will be while before worst hit Hospitality and Tourism Sector, International Students picks up. NZ economy was fuelled by rising immigrants numbers, which is bound to be hit hard in near future so hard to say what the affect of all this will have on economy besides exports which too will suffer with other economies of the world taking a hit.
This situation has never been experienced before so will have to wait to see and not gamble.
Spoiler alert: there won't be a massive spike in unemployment (read far above 10%) and there won't be a huge fall in house prices (read drop far beyond 10%). But there won't be a V shaped recovery either, we're going to experience a very weak and slow (multi years) recovery if not a standstill
Yvil made $980k profit on a house he sold a few weeks ago so could be suffering/relishing(?) the influence of the wealth effect. His optimism could be reflective of society as a whole, although many who lost jobs or wages over the same period, probably didn't end up with near to one million cash in their bank account so could be more pessimistic about the future of the economy.
The thing that surprises me is that the NZSX50 is less currently less than 7% (today) below its 21 February high and continuing to steadily rise despite all the doom and gloom of business busts and unemployment.
Is this an indication that some of the additional money about and rather than cash investments, investors are looking to assets?
A possible message there for the property market but then that doesn't fit with the majority of posters on this site. :)
its called a speculative bubble.
I thought from the experiences in my lifetime that these bubbles most pop, I now am questioning if it is in fact possible for governments to keep pumping these bubbles into infinity....
If the share "markets" (I use that word very loosely ) can survive this covid crisis intact, they are almost bulletproof
I would say that the levels of the NZX50 (and other indices) are very much connected with QE and easy money. To what extent this applies to housing is a more subtle question, though, because those doing the buying and selling are very different. Shares these days are very much driven by institutional investors and not retail investors; houses, on the other hand, are owned directly by individuals for the most part, and with the bank almost always playing a key intermediating role. It is not clear that the easy money flows through this second pathway anywhere near as efficiently as the first.
Back in the day a flier from Hannover Finance came into my mailbox saying 'Does your business need finance? We can help.' Medium sized financial players are the conduit, those that can access those institutions who can issue the bonds that the RBNZ will buy. I would say there will be a 6-12 month lag (or maybe not even that) before international seekers of bargains will descend on Queenstown to snap up boutique hotels, land and tourism businesses just in time to benefit from the global restart of tourism. Also to take advantage of a possibly reduced $NZ before the inevitable rebound.
The sharemarket is the most easily traded asset market therefore the earliest indicator of how investors will behave. If institutional investors are the main buyers then that is an even clearer sign of how those who have access to professional advice are thinking.
What's happening with the Hong Kong money, where is it going to go?
Correct, and the marginal buyer (see foreign money) was also responsible for the surge in house prices yet with the FBB and money laundering laws implemented this is not as much as an influence. If the banks tighten up lending (as anecdotally seems to be the case) then credit growth falls along with house prices.
"and the marginal buyer (see foreign money) was also responsible for the surge in house prices yet with the FBB and money laundering laws implemented this is not as much as an influence"
FYI, heard stories of a loophole that was being used by foreign buyers late last year...
Agree what is happening in stock market is beyond and hard to understand. Normally whenever their is a big fall, it is followed by a relief rally before testing or breaking the earlier low but now what is happening is hard to understand as a result, risk in stock market is higher today than even earlier, when it was all time high before lockdown as EPS has and will fall as a result selling at much higher PE now than before (even earlier PE was high and a concern) so now is a risky affair and the same also applies to housing as more chances of a fall than rise(even 10% fall, if not more will be good and make lot of difference to FHB, so should wait till Oct/Nov for the subsidies and benefit to run out and can than take a call).
Most probably all this is running based on freebies by government - free and easy money as otherwise how does one justify the rise with all markets/Economy in the world virtually shut.
The thing that surprises me is that the NZSX50 is less currently less than 7% (today) below its 21 February high and continuing to steadily rise despite all the doom and gloom of business busts and unemployment
Take a look at any Smartshares report and see how many NZers are directly exposed to the NZX50 index.
"The thing that surprises me is that the NZSX50 is less currently less than 7% (today) below its 21 February high and continuing to steadily rise despite all the doom and gloom of business busts and unemployment."
Yet, on | 24th May 20 Printer8 wrote
"Likewise; I have already posted that I am cashed up (in neutral gear), watching and waiting.
Got out of property four years ago". Needless to say, given your affection for real estate, the ship has sailed at least around the world if not a number of occasions and left you on the dock each time. Waiting and watching for what?
Cowpat
You are back!
No problems you raising this - I still remember you laughing at me when I suggested a possible upturn in Auckland market last September; proved to be correct but very embarrassing for you.
As you seem interested in my actions, quite happy to outline things but I remain perplexed as to what your point is as there is seemingly not one. :)
Yes, I got out of real estate 2016 because as previously posted mainly for life style reasons (mainly extended travel).
Also as previously posted, since I was using KiwiSaver as exposure to equities and I have have been pretty relaxed about that as things went pretty well since 2016 so, despite your concerns, no real loss there at all.
I posted late February that I was battening down the hatches which involved shifting to cash and that was before the market tanked.
So yes I am cashed up (including TDs), watching and waiting.
Unfortunately and sadly for me, I don't think that there is going to be a significant fall in the housing market of the magnitude many on this site have been quoting; any worthwhile buy will be about a particular opportunity in terms of the nature of the property (low workload) and in particular yield. However, it is not essential I get into property again so quite happy to watch and wait.
Yes, as also previously posted, my wife purchased a property last year here in HB as she was concerned about low returns on TD and figures currently show that property here is fine. However, a short to medium term fall in property price is irrelevant as she is in for the long term and is getting a good yield.
Before you start spluttering about no tenants or tenants being able to able to afford rent; here in HB there is a shortage of rentals to the extent that MSD have been approaching landlords offering to mange their property, guarantee rent and repair of damages all at NO cost - that undercuts property managers commissions of 8 to 10% and new tenant letting fees. So go figure on that one.
So yes, I have been cashed up, watching and waiting and - as previously posted - in neutral gear but I am not too concerned about that in these uncertain times.
It has surprised me that the share market has bounced back, but then NZSX is still about 2 to 3% below where I bailed out when I posted.
So thanks, really appreciate that you are concerned about me, but no problem I am happy as a sandboy. Cheers.
Printer8 , again you mislead 'I still remember you laughing at me when I suggested a possible upturn in Auckland market last September; proved to be correct but very embarrassing for you." It appears pointless asking you to provide a credible link. Thank you for your story though.
Cowpat
Happy to oblige:
by Cowpat | 8th Oct 19, 10:31am
Barfoot auction sales slump 34 percent week on week.
by printer8 | 1st Oct 19, 12:15pm
"Another swallow - while this and other data is not on their own indicators in a upswing in the Auckland market they are at least indicating a growing firmness. "
Of the two of us I am the one that should be getting dementia - not you.
Have a great day.
Love ya
Cheers
P.S. Note the date, 1st October I was pretty early calling a possible upswing - but I had already done so earlier in September.
Happier to oblige, in relation to auctions
by printer8 | 6th Mar 20, 3:45pm (another go at CJ)
CJ
"Neither a considered nor constructive comment.
Where to because of the virus? I am waiting a few weeks to see the extent both of the virus and its impact on property (such as Barfoots auction results which will be the most immediate indicator data).
Oh, and 2016 I was posting that prices were not sustainable and Oct 2016 that there were indicators of the Auckland market was peaking so have not always talked the market up.
During this time there has been so, so many unconsidered and unsubstantiated comments such as yours. Lets see you put a little more thought go into things rather than continuing"
by Cowpat | 6th Mar 20, 3:15pm
"For the "thinking commentator " why would Barfoots auctions provide an indicator in the coming months, "if the virus will not be contained on New Zealand shores.
by Cowpat | 6th Mar 20, 4:20pm
5
up
"Printer8, if as expected WHO calls this current event a pandemic, any "thinking commentator" would appreciate that auctions will be a very rare event in the coming months." ( appears to be somewhat factually correct)
Further, ( please note the dates ) by Cowpat | 19th Oct 19, 1:20pm
"Auctions remain a significant indicator of the underlying strength /weakness of the housing market , and provide a timely indicator of housing sales volumes, given its relationship with the flow of listings .Sales volumes remain extremely weak , on a historical basis , but particularly so given the current financial settings ." and further confusingly
by printer8 | 8th Oct 19, 4:20pm
"Hi Cowpat Yes, you will note that I have posted on a number of occasions - such as the one you identify - that auction data in itself is not a firm indicator as it is largely influenced by what is the preferred marketing option depending on the state of the market, so raw auction data which only represents fraction of the sales is not an accurate reflection of the state of the market.
Who believes auctions are an important indicator ? You or me ? You now have me confused as well as yourself.
And as above , by Cowpat | 8th Oct 19, 10:31am
Barfoot auction sales slump 34 percent week on week. Factually correct. If you wish to dispute facts, do so.
I wasn't sure whether I was reassured or actually a bit perturbed by the Reserve Bank figures released in the latest Financial Stability Report suggesting that a 25% fall in house prices would see 21.5% of mortgage stock in negative equity.
Hmmmm...The RBNZ claims round two thirds of NZ households have no mortgages. But, given the iniquity of the risk weighted asset regulatory capital scheme, around sixty percent of bank lending is allocated to residential real estate for one third of households.
Surely, this means a small fraction of households will be affected adversely.
I think the impacts on the behavior of the 1/3 you identify affects everyone, but I don't have the ability to model it, but neither does the RBNZ. What I can say is that it doesn't take much to disrupt the whole pattern of consumption (key driver of GDP). For ex, right now, we will be seeing much less consumption of 'nice to have' FMCG products. It's very difficult to see what impact that is having, but rest assured, it will be happening. NZ and Australia are right up there in terms of trading up opportunities in FMCG. It's called "adding value" and a desired business goal. More people are likely to be trading down at this time.
Two thirds of households having no mortgage doesn't mean that 2/3rds of people do not live in a house with a mortgage on it, though. Something like 1/3rd of households live in rented accommodation, but according to the stats closer to 50% of adults live in rented accommodation (given that rented households tend to have higher occupancy levels than owner-occupied households). A lot of those rented properties are probably mortgaged.
According to this, only a third of homes are mortgage free: https://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=12…
I am quoting the RBNZ and I have no idea what constitutes a valid description of a household, but it makes a further observation which maybe of interest..
To be clear, I'm not disputing the RBNZ here - just pointing out that there are different things we might be interested in, and one of those things is not the number of households carrying a mortgage, but the number of homes on which there is a mortgage (those being two different things).
I'm having a hard time understanding the graph without context - could you explain why you think it's of interest? Thanks!
The RBNZ posted it in it's May 2019 Financial Stability Report - Link -page 8 (14 of 48). Call them for an explanation.
Also remember, there are people who have maintained their jobs, yet have lower household income.
How?
1) wage earners have fewer working hours
2) salary workers have had pay cuts
3) commission based sales people face lower commission income due to lower transaction volumes. (Real estate agents also face potentially lower transaction values)
Fed will face day of reckoning.
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