ANZ's economists expect house prices to keep falling by just over 1% a month until some time next year.
In their latest NZ Property Focus report, the bank's economists say they are still picking a peak-to-trough decline in prices of about 15%.
"From a fundamentals perspective, we don't see any good reasons why the housing market might suddenly turn a corner over the coming months," the report says.
"Mortgage rates are still lifting, housing scarcity has been greatly eroded, and affordability remains dire (albeit a little better).
"Importantly, if the market does put out any green shoots while the labour market remains too tight and CPI inflation too high, the OCR (and mortgage rates) will very likely need to go higher than otherwise, and for households with a high debt-to-income ratio, that would be particularly bad news."
The report forecasts housing prices to keep slipping by just over 1% a month for the rest of this year - "before gradually finding a floor over the first half of 2023."
The report also reconfirmed ANZ economists' earlier forecast that the Reserve Bank would increase the OCR to 4.75% by the middle of next year.
"If we are right, it is likely that many shorter term fixed rates will start to push above 6%, which is clearly higher than where they are now," it said.
ANZ is New Zealand's biggest residential mortgage lender with total housing loans of $102 billion at June 30.
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125 Comments
The report forecasts housing prices to keep slipping by just over 1% a month for the rest of this year - "before gradually finding a floor over the first half of 2023."
The report also reconfirmed ANZ economists' earlier forecast that the Reserve Bank would increase the OCR to 4.75% by the middle of next year.
"From a fundamentals perspective, we don't see any good reasons why the housing market might suddenly turn a corner over the coming months," the report says.
So the biggest fundamental having an effect on house prices is interest rates which will continue to climb after the housing market has finished dropping?
House prices double every 10 years. It just so happens interest rates also fell when that happened. Coincidence?
It's almost like houses are bought using mortgages, and the interest rates tied to those mortgages have an impact on servicing the mortgage, and therefore how much you can borrow, and house prices.
A bit misleading I think. As house prices increased during an expansionary phase then interest rates also rose.
House prices are likely to rise simply because of inflation and the homes increasing replacement cost. Which is a good thing imo
Meanwhile... Wages go nowhere And mortgage cost and costs of daily living continues to eat away my disposable income.
Why would a physically depreciating asset rising in value be a good thing?
Seems it is affordability + demand multiplied by the overwhelming faith kiwis have in the housing market... We are actually prepared to pour an entire career's earnings (Including interest) into a house. But what is the alternative?
In hindsight, I should've just had rich parents...
Anyone who's built a house knows this is rubbish.
An old house already has 100-200k plus of "service connections" and council fees, new power connection, upgrading main fuse box... every year that figure goes up at 5-10% plus.
Buying an existing house you get all that drama and ever increasing expense covered off and locked in.
A house with a section will never fall to any great degree in any city with a decent population that has a few growth industries to draw in population.
Not to mention incomes are not increasing at rate of house price increases lately. So low income increases, high mortgage rates, increase in inflation and yet house prices according to some will double, its like fairy dust. People don't need money to buy property they just need wishful thinking.
House prices cannot continue to double every 10 years, regardless of what has happened in the past.
If that were to be the case, an average house worth say 1 million dollars today will be worth $4 million in 20 years time, $8 million by 2052 and today's FHB in his 20's making a $15 million profit by the time he's in his 60's.
As Red says in 'That 70's Show' - ' Oh Crap'.
Time tested reasons why residential property market will recover
Borders re-opened, migrants and foreign workers arriving as we speak.
Building cannot keep up with demand, hence there is a shortage of houses, year after year.
Foreign buyers are waiting for the right moment to buy.
Investors are on the sidelines, now, will return when prices firm.
FHB is a constant.
Did I miss anything, yup, a report by RBNZ house prices increased as our population increased.
Soon we will hear FOMO and maybe other new catch phrases, REINZ reporting on positive median prices.
Welcome to NZ.
In a market where demand depends on people's ability to borrow money, it's the cost and availability of credit which determines prices, not the number of houses nobody can afford to buy, or the number of people who can't afford to buy them.
Some of the people coming into the country do not need to borrow money. Nothing surprises me more in this country the number of people floating about with money. Its all just guesswork from the economists anyway but what is certain that house prices are tied to the OCR. If the OCR stops rising then house prices will stop falling. All I'm waiting to see is the pain threshold now from the RBNZ and the point they stop rising the OCR.
House prices are tied to OCR by... the bids or lack thereof of people who need to borrow to buy.
People who buy with cash don't appear to move the purchase price anywhere near as much as those who buy with other people's or made up money
I would be surprised if people with cash were out-bidding others (except for desirable properties). Savvy people far less likely to overpay than some FHB with FOMO.
interesting theory - so when rates plateau, house prices will rise .. lol ...
You’re right on the money, Carlos. 💰
The seasoned commentators are telling us that the housing market will bottom out by mid-2023 - and that seems a pretty reasonable prediction.
What’s certain is that falling house prices are finite. In this case, the midpoint of the decline has likely passed.
Some here are finding it difficult to come to terms with this - as evidenced by their snarky comments above and below.
TTP
House prices go in waves starting with central suburbs and quality homes before moving out to "the next suburb" and the next.
When buyers start to catch on, then it will be too late for their dream homes. They are forced to something in their budget
Those buyers who didn't listen to spruiker drivel since November have been rewarded handsomely and will continue to be for quite some time yet.
A bottom will eventually be reached and prices will level off for an extended period of time. It's delusional fantasy (desperation) that they are going to rocket up again.
The bubble has burst. Bubbles do not become unburst.
Buyers have an opportunity and hundreds if not thousands of smart people are still buying homes every month.
Buying and selling in the same market to service ones needs is certainly a smart move.
Any first home buyers buying this month however are not smart people, by definition.
Good things take time. Just like the cheese ad.
Sorry you are deluded
Whatever you say King Canute.
Houses WILL be cheaper next month.
Only a fool would be throwing their money away.
Yes and no. Thanks Genius
Some houses will be more expensive
The stats already show areas and regions that are increasing. Vis a vis Queenstown. In an upcycle you can't buy there. So the smart buyers are doing their magic right now
One swallow does not a summer make.
"The bubble has burst. Bubbles do not become unburst" ?? It became unburst after 2008 and every other correction before that.
The bubble didn't burst in NZ in 2008. Interest rates were slashed from 9% to near zero to save it.
The opposite is happening now.
NZ, Aus and Can avoided their housing bubbles from bursting in 2008. That is why I think we are sitting ducks for trouble.
Quack. Hows it go? We are all nuts in here ...
The world has gone nuts - as it did in the 1920's. People and countries living beyond their means and expecting someone else will carry the bad debt that can't be supported by the productive capacity of the economy.
Our housing market has many of the same characteristics of euphoria as the asset markets that lead to 1929. As is true with Can and Aus, as well as the US (and NZ) sharemarket.
Is it groundhog day / century
IO always selling fear... you will be a millionaire fear salesman
Oddly all I see is fear in your comments as you're terrified that the price of your housing portfolio might be collapsing.
You think my comments show fear, but I only see fear in the comments of yours and TTP's as you desperately try to convince yourselves and others that what is happening isn't really happening.
Are you the type of person who is always learning (tho I assume you are)
What things interest you IO. From your reading material it just seems to be economic crashes.
Plenty of interests HW....variety is the key to a life well lived.
I've read across the spectrum for many years. A small amount of my reading has been literature by the likes of Shiller (Nobel Prize for asset pricing), Taleb, Akerlof, Dalio, Gladwell, Kahneman etc. At a guess, I would have read more than 10,000 - 20,000 pages of texts regarding finance, economics, markets, psychology etc each of which at times, discuss poor economic decision making and management that has resulted in crashes. (as well how countries and individuals have bankrupted themselves).
But I'd say that would be a few percent of my total reading time over the years. Other times you'll find me reading Tolstoy, or Orwell, or Isaacson as examples. I also quite enjoy a good biography.
You get to know about 2% of my knowledge on a forum such as this - and my interaction with the likes of you and TTP is solely on housing (in NZ) as you don't appear to know anything else about how the bigger system works that influeces the housing market. But feel free to reply to any of my comments on here that aren't specific to the housing market (e.g. the bond market, or equity markets), but you never do.
I could turn your point above around on you using your logic and say that your reading material seems to be limited to oneroof or the trademe property website. But that wouldn't be a fair assessment would it? As I don't know anything about you (other than you and your children's exposure to the housing market - which you have a significant bias to protect, regardless of what the economic indicators are saying).
Great answer thanks. Like I have said to you before you are the big brain intellectual type that likes debating and demolishing others point of view.
You correctly say you dont know much about me. But do yourself no favours with your closing assumptions
Still I am sure your handle is reflective and not disguising your own significant bias.
I was going to add something but maybe that can wait for oneday when you are a bit more open
Cheers
PS would you stoop to read Donald Trump Bob Jones or Napoleon Hill
Edit: afternoon update. after 4 long phone calls this afternoon I might have just had a big turn of luck. I thought you would like to know. A property that I had expected I had lost a large percentage and a big million plus dollar value might be turned around and more. I always had a long term view but it looks like things could be advanced rapidly. The vendor who we bought off and who went around boasting about the sale price is going to be really depressed he sold up. Just quietly, the vendors only care about money and didn't do the right thing to complete the work that they promised and agreed in writing, so it must be karma.
Weird flex....
Mate that's impressive from my point of view (if that actually means anything), I'm definitely a Neanderthal that's a bit like Homer Simpson and I love beer and maybe don't really think to hard on things. At the moment I'm doing a bit of Wing Foiling and trying to learn Capoeira, Calisthenics and some Primal Flow mixed with my other exercise. All my reading and now Youtube is how to get my business going (its hard and complex so is taking quite a bit of time - but fun), after that its mainly exercise and flexibility (cause I'm old). If I were to read it would be comics, vikings, fantasy and sci fi.
But I agree on the unaffordability of house prices, and the simple logic that incomes are to low, mortgage rates are increasing and that NZ is not a silo to the rest of the world. We are a small nation that has been given a hit of cocaine with cheap cash, which has made us high on buying property (low hanging fruit), now we are going to go into withdrawal, its going to be hard and long as there are things brewing in NZ and the rest of the world which is going to impact us. No matter how much wishful thinking is out there. I value your insight and others, as it good to hear different views from mine, other then the views of the back slappers buy now before its to late brigade, which is on repeat all the time.
IO, it's amazing the volume you've read, pity about the conclusions 😁
Even Tim The Pricefixer (TTP) has changed his tune.
Previous broadcasts were that house prices were going to have a soft (flaccid) landing.
Now they've crashed around 20% already and it's changed now to "we are past the midpoint".
It's an admission that a 30%-40% drop from the peak is now a certainty, with the threat of further drops still hanging in the air.
A new disiciple of the prophet is made every minute.
Further to my comment above, the enormous interest in the housing market - as evidenced by blogs like interest.co.nz - tells us that houses continue to be an extremely sought-after commodity…….
No wonder people yearn to own a dwelling - or another one……. Brock Landers (above) is no exception.
TTP
That's like claiming that everyone wants to be involved in a car crash, as evidenced by the number of rubber-neckers driving past...
Wouldn't it be great if we stopped viewing houses as a 'commodity' as TTP puts it. But instead a place where young people can have a home, get established in communities in NZ, have security and start their lives.
As opposed to it being used as some form of financial ponzi with psychopaths involved in the industry spruiking the pricing for their own greedy financial interest, at the expense of the financial and social stability of the country as a whole.
Top comment IO
Lol. The homes we bought end of 2018 and in 2020 would have doubled. They were not bought with that in mind but simply a sound purchase at the time
Now watch them halve.
Be quick!
Wrong... I've got the formula to making it work
That worked while interest rates were falling over the last 30+ years?
No. You think you know everything ... dismiss and keep blinkers firmly in place
Ok - but you have the formula and I don't. So what's the formula?
I don't think I will say that on open forum .... and let you find out for yourself. You obviously think that you should have free access to my 30 years experience
But I don't know what your formula is - but yet I know everything apparently. I don't know what your secret is, so how could this possibly be true?
And now you are trying to hide secrets to financial success from us all.
What a tease!
I said that you think you do. You do know the difference between knowing and thinking you know. So obviously you are being facetious or you are dumber than what I gave you credit
Interestingly, the more I learn the more I realise I don't know much at all. If I knew everything I'd be god!
https://th.bing.com/th/id/OIP.uBB1JiTtPWajY_WZy1EliwHaFj?pid=ImgDet&rs=1
And in a strange twist of fate, it might be that you think that I think that I know everything.
That could be a serious misjudgement and that mistake would be yours, and not mine. It also tells me more about you, than perhaps you are aware of about yourself.
This is like those Property Investment seminars, they said they have a secret formula to share if you go to their seminars and pay small fees.
TBH, if I have s secret formula to make me lots of money, not sure if I want to share it to someone else. Because once I passed it on, it'll no longer be a secret..!
I've been to a few Property Investment seminars over the years so perhaps I do know the secret unless HW has his own secret secret formula that he's being sneaky about.
But unless he tells everyone then who knows. Perhaps he knows how to break all the laws of economic/financial theory (legally - of course..).
Col. Sanders….
Hi chebbo,
With all due respect, the current housing market downturn bears no resemblance to a car crash.
The market is slowing in a very orderly manner - with almost no distress/ mortgagee sales.
in brief, it’s turning out to be a “short and shallow” market correction - which will inevitably culminate in a “soft-landing”.
Enjoy the day.
TTP
I remember all the doomers saying in April 2020 that we faced an unprecedented black swan crash... lol
In response I said it would be a downturn "on steroids", meaning it would be short and sharp and boy was that right on the money
It is a black swan crash.
It’s simply that the crash was delayed by the RBNZ’s actions.
The crash is now well underway.
TTP and HW2 are not doing their co-hort any favors with comments like these.
TTP missed chebbo's point completely and instead followed up with tried and true hollow rhetoric.
And HW2, for the downturn to be short and sharp - it has to have an end. Last I saw the momentum is still firmly downwards with further interest rate rises expected by almost everyone.
To Joneses and Fritz
The current median price is still comfortably above 2020. Lucky for you Fritz or your terrace t/h would be underwater
Have a nice rest of the day
How would it have been a blackswan when the US 2-10 inverted in the middle of 2019? That was the sign that financial trouble was inbound in the next 12 months...and sure enough it was....so a blackswan would be unexpected. Were you not watching the 2/10 in 2019?
And to prevent a financial crisis/deflation, central banks manufactured this inflation by increasing the money supply too much. And now they have an even bigger problem on their hands!
😂
A healthy housing market should not exhibit such massive price rises like those that occurred last year, like $40,000 per month. Similarly prices dropped this year almost as fast as they rose last year. Does that not concern you? Because it concerns me...
Apparently falling faster than Ireland did and look where that ended up, This is just the start of downturn if anyone buys a house today in 12 months time that property will be in negative equity, sure in 10 years time you might be able to sell at same price as it is today, but 10 years of paying for hugely overprice house is not smart. Some people on here find it hard to understand facts we had a good run when central banks lowered rates to almost zero now they have got so many people hooked on cheap debt and they just can’t understand the pendulum has swung the other way and rates are climbing where they stop nobody knows, this puts over leveraged and debt burdened people and businesses paying hugely more for years. Some won’t make it and will become insolvent other will just be paying huge interest debts.
Agreed, I don't think it will be long for the housing market to turn back around and start climbing again - Looking at the Auctions in Christchurch today, prices are still healthy and plenty of bidder around.
I already own a dwelling, but don't yearn to own another.
Businesses are much more rewarding and interesting.
Hi Brock,
My local hardware store has dog kennels available at discounted prices this week. I thought you could live in one while you save for another house……
Send me your delivery address and payment details and I’ll have them dispatch one to you.
TTP
You might want to buy one for yourself, at least he will still have a house....
Thats very kind. My toddler would enjoy a free cubby house. Send it to sunny Queensland. ☀️🦘
Do you think people are interested in property because they have to have shelter. Isn't shelter the lowest part of Maslow hierarchy with food. Pretty sure that would make them interested in property then and that a huge chunk of their disposable income goes toward property, which impacts how much food they can put on the table.
@by tothepoint What a load of tosh .
based on self-interest ?
I think you will find the midpoint has not been reached. Brace for higher interest rates than everyone is predicting. Add 3% to current projections, and start considering 75bp rate rises in the next 2 RBNZ meetings in 2022.
10% mortgages are coming by end of 2023
May well overshoot but at 10% we won't have a construction sector and the death spiral of mortage defaults will probably also require a bank bailout.
Is this the ghost of Jacob Marley, showing us our future in chains of debt?
All cause deaths up 35% since pre-Covid, lots of empty housing. Who would settle in a lockdown, mandated society, forced into taking an experimental gene therapy that we still do not know the outcome. Migrants and foreign workers typically do not have the finances for an overpriced house in NZ. Housing is not 'investing', it is consumption. FHB cannot afford a mortgage and certainly will not be able to through the collapsing kiwi-saver program. FOMO is dead. Welcome to NZ.
"" Migrants and foreign workers typically do not have the finances for an overpriced house in NZ."" That is true for NZ where our low-paid immigrants out number well-paid immigrants. It was not true in the last country where I worked - its govt insisted on pricing a work visa well over the annual salary of a teacher.
The Gov not seeing the expected flood of migrants arrivals. Obtaining labour from closer to home. Not a FHB
"Government announces 3000 additional RSE workers"
You have missed something. 2023 is election year and this Labour govt will be wanting people to feel rich.
... more cost of living payments ... fire up the helicopters .... start the printing presses ... Robbo's gonna gift us more free money ... ooodles of it : Vote for us !
Adrian ! ... shift those levers , put a handbrake on the OCR ... gear up .... get the housing ponzi rebooted ... more credit creation , more more more ....
Let's do this .
These DGM economists could only dream of being as smart as Iceman. They are just jealous of his rental or commercial portfolios.
Don't worry Brock.
I have learnt from the comment section here that any professional opinion on the property market whatsoever, is nothing more than spruikers conning the public.
So ANZ's above predictions of falling house prices can only mean that they have shorted the NZ property market and everything is headed to the moon as of tomorrow.
It's much more likely to mean that they've sold up and are waiting out the crash.
Lol - 'professional opinion on the property market'.
Dis you Bernie Madoff?
Im jealous hes a legend or so he tells us.
What a load of drivel.
"housing scarcity has been greatly eroded" - they say this like it's a bad thing.
It was always a distribution issue, rather than a supply one. Too many people holding property they didn't need, as a specuvestment.
Some places have already dropped 15% and more. ANZ another bank trying to hide true effects of this worldwide downturn. No mention on the fall of NZD and how that will effect inflation. When short term rates go above 6% as ANZ predicted on this statement prices will fall a lot more than 15%. With average house price being around 10 x average wage couples income in Auckland it is way overpriced.
There still are supply issues in a lot of places, that may support prices to an extent. I’m guessing there weren’t people living in motels in the likes of Ireland before their crash. Unlike them I don’t think we have excess supply, maybe we are getting close in Auckland.
Is it supply or is it cost, I know loads who cannot afford cost of rental and price of homes.
6% is getting closer to the long term average. Anyone leveraged up the wazoo banking on lower for ever is simply blind to whats happening. Reversion to mean. Keep stacking the vulture fund...
The long term trend has been down. So the mean changes depending on the time period you look at.
I saw Tony in a recent article for a mortgage broker firm stating economists often have to reconfigure their forecasts and that fixing for longer now may be a wise thing to do based on recent events. This from the guy that only last month said mortgage rates had peaked.
To me it goes to show that we should not put all our faith in one person. Looks like TA is in the ballpark
Nationwide, Prices are already down about 11% from peak.
Do they seriously think nationwide prices only have another 4% to fall???? Especially when they are forecasting the OCR to go to 4.75????
These statements are Just what they want. Pr statements. Advertising.
No one has an idea more so the experts, so......
Some so called expert is saying that market will fall 15% from the peak but t has already fallen in Auckland by appox 15%, if not more, does it mean market has bottomoed out.
20% to 30% fall from peak on average in Auckland is forgone conclusion.
We've seen the UK turn on the money printer, who will be next? The type of thing no econmist can predict. Desperate times call for desperate measures...
Yay. Its Zimbabwe or bust!!!!!!!!!!!!!!!
From the UK this morning:
“Unless we are very lucky and inflation falls much more quickly than predicted, I don’t see any other outcome than a sizeable fall in house prices – possibly 20%-plus over the next two to three years. I’ll be accused of being a doom-monger, but if you use simple maths and common sense, how can house prices not fall? A lack of housing supply won’t help one iota when mortgage rates are somewhere between 5% and 7%....“the decade-long property bubble is about to burst"
5% and 7%. Has it come to that? What happens if 7% becomes an historical low for the immediate future?
And decline in property prices to continue through into summer of 2023, in the meantime, rates keep on hiking. The bubble will continue to deflate.
I remember at the start of the year when a guy from work was pushing out his chest telling everyone he has purchased a property along the lines of purchasing 100k below its value.
It was funny then, and it is even funnier now.
ANZ's economists expect house prices to keep falling by just over 1% a month until some time next year.ANZ's economists expect house prices to keep falling by just over 1% a month until some time next year.
😂😂
Reliable and trustworthy as ever.
ANZ , the YES bank
Average home price 900k. Price falling 1% per month means you lose 9k per month. 12 months of that and you have lost 108k. Your house in now worth 792k. Maybe you are now outside LVR requirements to allow refinancing. You are a mortgage prisoner of your existing bank/lender. You need a price rise of 13% to just get back to break even. Just wait. Keep renting and educate yourself on the market.
You'd lose just over $102k with 12 months of 1% reductions, monthly shifts in house prices don't have a fixed starting point therefore are compounding in nature (well, discounting strictly speaking).
I don't dispute your point though...
Yeah I thought of it that way as well. But the maths was easier my way. Median Average NZ wage/salary for 35-39 age group is 70k per year.
53k in the hand after tax, ACC and KiwiSaver . So you need roughly 2 years of total income to cover the average loss that is being predicted..
Plus the interest cost and other outgoings you will pay over and above the cost to rent the equivalent house.
I like easy Maths
Renters desperate for a housing crash so they can buy at the bottom and make capital gain on the upturn. No different from the boomers they spurn. Hypocrites.
They spin that they care about fhb... tho probably some do
I am a renter.
I don't want to make capital gain, just became debt free asap (that's why low house prices are good).
Also... I am not desperate.
Your comment is despicable
Wow, that's how you view the world? I feel sorry for you, genuinely.
I'm not hoping for a crash, but that's what's happening and it is what it is.I am also looking to purchase property, patiently.
I could try to reduce the buying competition next year by telling FHB's now is a good time to buy and that they should fold their weak hands for mortgage prison. I'm not doing that, because I feel like that would be a lie. There will be enough people hurting financially in NZ in the coming months and I don't see it helping any of us that we throw more on the bonfire.
The older boomers had it good, yes we know. But they will be facing losses as inflation eats their retirement savings, any investments they have are down and could soon drop further. They also are facing retirement with uncertainty with their house price falling rapidly and a healthcare system that is crumbling.
People enjoy capital gains but it is far from the only reason they want their own home. It really is unfortunate that so many overleveraged people will be facing harsh realities and then there will be the coming unemployment.
People are simply frustrated that the greedy vultures are still picking at the vulnerable.
Sure you have spelt your pseudonym correctly ?
A lot of the debate on these pages can be explained by how you answer the following question:
Is the massive increase in house prices over the last 20 years mainly due to fundamentals/market forces? Or is it mainly due to low interest rates and investor-friendly policies that have steered investment away from productive activity into housing?
The correct answer, it seems to me, is clearly the second one. Yet, since both of those factors have recently changed (interest rates are rising and most of the investor-friendly policies changed), those who think we are near the bottom of the property cycle must have a lot of faith that those factors are soon going to reverse again as well. They must think that interest rates have peaked and will start coming down next year, and/or that National will come into power and reinstate all the investor-friendly policies, etc. All of that seems very uncertain, to say the least.
The more plausible forecast is that we're seeing a much needed return to fundamentals -above all, affordability relative to incomes- which suggests that house prices still have a long way to fall.
Our house in Hawkes Bay is already down 30%.
Disappointing commentary today. Too much niggle for me and not enough data driven debate.
Thread needs more Keith Woodward.
I wonder what he thinks of the niggle? Hard to imagine he has ever niggled anyone, anywhere.
seeing the US 10yr rate go over 4% yesterday and then the fall out in the UK, I can't help but feel that this is going to get very messy. Famous historian Niall Ferguson said to a panel of intellectuals, "why can't rates go higher then they did 80s" not single person could answer. The oil shock is worse this time, debt levels are much higher, the west has offshored manufacturing and more recently professional services and we have had a pandemic created supply shock. I'm going to stick my neck out and say retail rates are going to at least 18% within 3 years!
good luck with that million dollar mortgage.
Another prediction, when US 10 yr rate climbs above 4% again (it dropped off last night) watch for something to break somewhere. Like a large company bankruptcy or a institutional bank failing somewhere on the globe. that will likely kick off another bout of contagion. the fan is on full, but the terds somehow missed the blades yesterday, next time, i doubt we will be that lucky.
The key point is that interest rates have risen by an extreme amount but house prices have only fallen by a small amount. A 1 year mortgage went from 2.5% - 5.5%! The next time interest rates fall under 3% house prices will go bananas. RBNZ's inflation targeting is disguising the housing shortage. Ok let me have it...
interest rate hikes work with lag. test it, ask your mates what rates they have on their mortgage. Guaranteed, they give you a nice low number and tell you they fixed 1 to 4 months ago for a year or 2.
A significant amount of residential mortgages are fixed.
This link will give you information on the amount that is coming up for repricing.
40 billion floating
299 billion fixed. 149 billion of that is coming up for repricing within the next 12 months!
https://www.rbnz.govt.nz/statistics/series/registered-banks/banks-asset…
great info, thanks for that
Hi Walkfaster.
I don't think we will see as larger price deductions as many are predicting here.....unless:
-- A large amount of people start losing their jobs
-- Wages stall but inflation keeps steaming ahead
-- Somehow we build a huge oversupply of houses
-- Our mate Vlads presses a large red button
Unless one of these happens I think prices will only fall so far as people won't need to sell.
There are cheap houses at Mangere Bridge... unfortunately for the current owners.
Be quick. You just might have to put up with boom boxes keeping you awake and brawls around the old bridge.
If you explore NZ much, you will see thousands of derelict houses scattered around the pastoral landscape.
Those are the houses abandoned during the depression starting 1929
Expect to see a few thousand more,
I'm not sure it'll get that bad, pretty grim thought though.
Make some popcorn and watch...
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