The average value of homes in Auckland and Wellington has declined by more than $250,000 since the beginning of last year, with the value declines in most North Island centres also well into six figures, according to Quotable Value.
It appears likely further substantial declines in value will hit the market because the rate at which housing values have been declining is increasing.
According to QV's House Price Index, the average value of New Zealand homes was $907,737 at the end of March, down by $156,028 from its peak at the start of last year.
Over the same period average values in Auckland have declined by $272,969 while average values in the Wellington Region are down by $250,836.
The first table below shows how much average values have fallen in each of the main urban centres since the beginning of last year, with declines ranging from -$37,995 in Invercargill to -$272,979 in Auckland.
The only district to record a gain over that period was Queenstown-Lakes where the average value at the end of March was up by $62,406 compared to January last year, although values in Queenstown have also been in decline since the beginning of this year.
The second table below shows the average dwelling values in all major urban centres at the end of March and the percentage change of the previous three months.
This suggests that further substantial declines in property values could be on the way, because the rate at which property values are declining is speeding up.
In January this year the national average property value had declined by -1.7% over the previous three months, in February the rate of decline had increased to -2,7% and in March it was -3.9%.
"The residential property downturn appears to be gaining momentum once more, with home values making their largest first quarter fall in more than 15 years," QV said when releasing the figures.
"Traditionally you don't see too many home value declines at this time of year due to it being one of the busier periods for buying and selling real estate," QV national spokesperson Simon Peterson said.
"But it's obviously a tough time right now for prospective buyers, who are having to deal with very significant credit constraints amidst an ongoing cost of living crisis.
"It's tough out there for sellers as well, with plenty of stock still available and fewer active buyers than normal, they're having to keep shifting their expectations downward to meet the evolving market," he said.
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201 Comments
Whats the cause, high interest rates or fears of overpaying? The first feeds the latter because at these current prices they are certainly a world from where 90 percent of buyers saw value.
Someone here claimed 95 percent of loan applications are refused. So there is certainly more demand than the number of sales suggests
From Guru Combs latest column:
Rising unemployment will make many people cautious. We are also likely to be somewhat hesitant to spend as we head into the general election in October. By the time the underlying economic fundamentals which I track start to offset the negatives and the economy recovers well, the rate of inflation is likely to be comfortably heading back down towards 2%.
These positives include the acceleration in population growth noted above, the return of Chinese tourists next summer, an improvement in world growth expected for 2024, stronger central government infrastructure spending, and a natural cyclical bottoming out of the housing market probably in fact before the election.
I don't see inflation "comfortably" coming down to 2% and more importantly staying there. 3 to 3.5% will be the old 2%. Inflation is essentially 1/3 goods inflation, 2/3 services inflation (tied to wages). The last 20 years we have had minimal net goods inflation, as many items have fallen in value eg electronics, clothing, shoes etc. So we have really only had services inflation contributing. Now we have goods inflation, that may be in catch up mode, this pushes inflation up to 3%, and given higher underlying inflation, wage rises will be higher feeding back into services inflation.
Property will find it very difficult to enter a multi-year bull phase, due to higher interest rates. Going back to first principles interest rates should be inflation + risk of loss + compensation for foregoing consumption. So even at 2% inflation, we should be at least 4% (2% + 1% +1%). If we have 3% inflation, and banks start having to make decent provision for bad debts we could easily have 6% as the new neutral rate (3% +2% +1%).
I here talk that property prices cannot fall due to the replacement cost of new construction. They can fall as super-profit for materials /trades will disappear, and further falls in property prices will come in the form of a reduction in section prices. There is no reason a section needs to cost 500K, section prices can easily fall in value, due to the fact that they provide no income and even if owned freehold are an expense eg rates and lawnmowing. So when times get tough, selling bare land makes sense, as it provides capital to settle debt and reduces annual expenses beyond interest cost at the same time.
Section prices most definitely will fall. A few years ago that $500k section cost $250k and it will again. One of the reasons why house prices shot up was because developers were paying stupid money for old houses that they planned to knockdown. An empty section down the road from me sold for $1M, that's about the same as I paid for my 4 bed, 3 bath recently built home. When land values go back down, and old houses go back to selling for what the house is actually worth not what the land under it is worth with 8 townhouses on it, then building suddenly becomes economical again.
HW2, if there is more demand than sales figures suggest, why are open homes so quiet? In November 21, someone here suggested house prices would continue rising. Same person who suggested 95% of loans being declined (without evidence) actually means something here..
30 mins of editing
A year and a 1/2 of denial and counting..... 🤡
The last 18 months are all part of the fabric of life. Looking with a wide lens we are still approx 20 percent on precovid values. And comparatively the falls are smaller, down 1.5 per month vs 2 percent (am pretty sure) on the way UP.
PS when using the Jan 22 values the latest drops are quite a bit lower than for just the last 3 months. In other words Auckland has a 4.5 drop, instead of 5.2 drop
Oh I don’t think we are that much up on precovid. Agents are telling me we are back to mid 2020 prices… not list price, but sale price.
Hi Nellbell,
Believing what agents tell you is not a wise strategy, in my view......
Better to use authentic data sources.
TTP
Covid was an average 45 percent HPI lift. Auckland down around 18 on higher base. I dont know what that specifically ends up, if someone can do the math so to speak
"if someone can do the math so to speak"
Is there any reason why you can't?
Coco pops for brekky? You are in one of those math-debating moods again
Lets see
1.45 x .82
1.189
As I said 18.9 percent up from precovid
Are you 'satisfied'
Percentage change = (y2-y1)/y1
In HW2's example there are three data points:
y0 : 100 baseline (pre-covid)
y1 : 145 (up 45%)
y2 : 118.9 (down 18%)
So his statement "18.9 percent up from precovid" is valid based on those numbers.
any one else here seriously believe that their is majic support 18.9% below current printing prices? funny thats where the "waste of everybodys time" offers are coming in........
The decline in house prices still pales in comparison with the price increases of the most recent market upswing.
Further, what's often neglected here is the rental return (or, conversely, the savings made through not having to pay rent). Demand for rental properties has been sustained over the last 12 months and, commensurately, rents have increased steadily in most localities.
As ever, housing remains a top longer-term investment. For the vast majority of people, house ownership is tantamount to peace-of-mind....... If you manage to find the right house in today's market, then you're unlikely to regret buying it a few years down the track.
TTP
Sounds like you're auditioning for a part in a local theater group's production of Glengary Glen Ross TTP
Coffee is for closers!
The housing price crash is still in its first trimester. If you purchased a property today this time next year the same property would cost you 15% too 20% less on a million that’s around 200k so if you’re rent is under $4000 a week your advise is nonsense. Keep your power dry wait until we hit bottom as that is where it will stay for a very long period.
Wondering, is the bottom a single day and how will you know when we are at bottom
I have told you several times, its when the 6 month monthly moving average turns positive and stays positive for 6 months...........
If you need a visual, right now we are falling down the side of the bathtub, then we cross the bottom, at some point on this horizontal journey DTIs will be enacted, its quite some way acrosas before you get to a seriously rising market....
Real Estate agents where very quick to tell people a single down month was not the end of the boom, but use a 3month rolling average, I agree for the bottom of the Market as well.... You keep looking for green shoots , its just noise, kick back, get a hobby and enjoy the glide down. in a tight economic time, learn to all grain homebrew...... find something to pass the time. Waiting for the exact day is useless.
You want to trade the knees to the shoulders HW2, it reduces (not eliminates) the risk of picking the bottom in a falling market
Did you know FOMO is appearing in Australia
Yes already. The data is only showing 2 months of rises on a rolling 3 month model. Potentially the uplift started occurring silenty late last year, and took until Feb to show up in the readings
Australia has flooded the country with immigrants and international students, who are able to buy houses. So they are all out buying houses for themselves, their parents, their friends and family members. Most of it with offshore money not mortgages.
https://www.dailymail.co.uk/news/article-11908543/Canterbury-Melbourne-…
Nobody wants to move to NZ, and they can't buy houses here. You'll know the housing bottom is in when you start to regularly spot two Mainland Chinese bidders going head to head in an auction room.
Lol
We gained net 58,000 people in febuary alone! That would be a high immigration year over 12 months.
The 12 months since boarder opened in NZ don't be surprised to see record numbers as PENT UP DAMAND got push back so we are effectively bringing in the past 3 years of arrivals in one year.
Immigration will be very very big news closer to Oct election
Data to support this? It seems nett was around 100k over last 9 months.I believe feb was a big nett but 58k is a stretch
Some data points o immigration that won’t be reported in the local news:
We attracted 14 high-net-worth individuals in 6 months (since Labour made a policy reset).
Source: https://www.straitstimes.com/business/rich-foreigners-spurn-new-zealand…
Considering that processing times for Investor 1 Resident Visa is ~ 43 months, that's an outstanding achievement.
Source: https://www.immigration.govt.nz/new-zealand-visas/visas/visa/investor-p…
Lol, did you also read the headline and the rest of the article? I love the positive spin you put on it, though. You should be working for OneRoof or ghostwriting for Tony Alexander.
Not the guys I read really ;) If you ask me I think we’re only half way on the way down so I don’t think I’d pass a job interview at OneRoof.
14 is the utter disaster mate ;)
Haha! I see. You got me there.
Utter disaster, yep.
Did you know FOMO is appearing in Australia
Probably due to all the Kiwis who've moved there in the past few months, lol.
its when the 6 month monthly moving average turns positive and stays positive for 6 months
Sounds like thats at least 12 months after the bottom mate
Point is we are not close to end of crash and believe me when we are there even you will know, no rush at this time as any life in the market will take months, the parrot is dead
No one is unaware that older folk born early enough have received much free money from housing/tax policy in years past. Congrats on being born earlier, a creditable achievement.
I think there is heaps of demand, but at the right price. So he's right, but not at these prices.
The positives you list are all possibilities only. I would suggest the probabilities of these all occurring a close to zero…just my opinion. Add in the political landscape in NZ and the damage that would happen should labour, greens or Māori have the balance of power and all bets are off. At this point I would doubt that National can right the ship, even if they do (as they should) bring back interest deductibility.
Why?
Well….co governance for political risk. Interest deductibility- I do not have a rental, and feel for renters but interest is a cost of doing business. Many people have been pushed into rentals to help fund their retirement. I’m sure most are not blood sucking capitalists exploiting vulnerable people. They will be paying marginal tax on profit that may not exist….depending on interest paid. This will further inflate rent. Unintended consequences.
It has the negative externality of making house prices more unaffordable for owner occupiers which we can probably all agree is a bad thing?
Tobacco, alcohol etc all have special treatment to reduce their impact on society so why not rental properties?
Only if you want to prioritise FHB over renters.
The alternative is prioritising investors over renters and FHBs. Most renters would prefer to be FHBs as well, so you’re just saying why should we care about people who are not wealthy
Once a FHB buys a home they are no longer a FHB, but a renter is still a renter.
So if the consequence of no interest deductibility is rents rising then that further penalises long term renters (i.e. the ones who either can't or don't want to buy).
Do rental properties provided to the Public cause seriously illness and huge burden on the health system?
No.
It's a positive essential service that has been wrongly demonized.
I would argue inflated house prices cause material hardship with negative effects on health and wellbeing, probably the prime cause of the current poverty statistics in an economy with very low unemployment.
That argument only holds if you buy into the lie-bour propaganda that investors are the cause of crazy high house prices.
They are not.
They generally would never pay the silly amount owner occupiers pay (particularly those on the ladder and trading up to a "flasher" house to keep up with the jones).
Interest rates and cost to build, and increased overall demand but am inelastic supply response from NZs boutique building industry is the actual reason.
But that's too hard to think about so far easier and more fun to blame "greedy landlords"
Simon,
So 2 buyers at an auction.
Buyer one: Renter looking to buy to occupy,currently paying $650 p/w rent,2 kids,both partners working,scraping together min deposit,does sums with bank,has max amount he can afford to pay.
Buyer two: Investor,using existing equity for deposit,approval to borrow interest only and has rental appraisal for income of $600 p/w and up until recently could count on interest and depreciation deductions from his tax every year to put towards the cost of owning the property...
If push comes to shove,I know which one can afford to squeeze the price up...especially as he could push the rent up if he had too.
Removal of interest deductions has evened out the playing field,we just need limits to interest only loans and DTI's and then landlords will have to do the sums on real fundamentals given the brightline will tax their capital gains as well.
You're not an investor and have never tried to get money from a bank as an investor.
First we need 40% deposit.
Fhb as low as 5%.
Second, rent income is scaled back up to 60% for funding purposes, so if the yield was bad (most have been last 5 years) then you won't pass this serviceability test.
It only works is yields are 9% or so which normally means a dump in a bad neighborhood that fhbs aren't interested in.
Simon,if you are using equity from other 'investment' proprties for your 40%,that is not cash you have to find,you are using untaxed capital gains to purchase your next property.
And big ups for owning up to renting out dumps in neighbourhoods so bad an OO wouldn't touch.
I haven't bought anything in the last 5 years so no I haven't searched for yield by buying ever increasingly risky rentals in bad neighborhoods.
But good on any brave investor who buys a dump AND SPENDS TIME AND MONEY MAKING IT TIDY AND IUP TO GOVT STANDARD again. They have basically added one more HHS property to the supply side. And they're taking on the risk and massive work load (on-going costs if not own work) of renting to lower quality tenants, something only the govt really tends to do but can't so they all end up in hotels or cars.
40% gets through equity gained in any prior holdings very fast.
And just because during covid investor share of lending was up over 25% (think 10% or so now?) doesnt mean they were the marginal buyers will to spend the most due to all their "advantages" which the banks don't considered at all when lending. They could all be withdrawing money to do up existing rentals to meet HHS and improve them for their tenants to maximize rents
Ah yes very clever, I see what you did there. Lie-bour!
Regardless of your political persuasion, this is a simple lever to pull that results in lower house prices (ceteris paribus).
I don't think landlords are greedy, they are just playing the game within it's current rules. I'm suggesting that the current rules are causing unnecessary suffering so they should be changed.
Any part of that you disagree with?
My disagreement is with the way the should be changed. The changed rules are discriminatory against landlords as opposed to any other business. Same with the rules that you have to have an approved reason to evict someone. A bank can cancel your bank account for any reason they see fit, like every other business I can think of, they are risking very little by allowing you to keep it open if they don't let you overdraw it. However a landlord can't say get out of my house for an arbitrary reason even giving adequate notice. Sure a house is necessary to live but so is a bank account, you can't even get a benefit without one. There is also much more competition among landlords than there is between banks.
To me the rules should be changed and maybe even retrospectively so, to show that you have a business plan that shows how your business is going to make a profit. E.g paying down debt, or capital gains, if capital gains is included in that calculation then you should be paying tax that capital gains.
The reason why I think retrospectively is ok is because the rules have always been if you are buying houses to resell you should have been paying tax on that profit. It is just people where dishonest about their reasons and the government couldn't prove it.
Landlording is not a business.
Build to rent is though?
Well, yeah? Build to rent employs trades people, purchases materials, all with GST included. Build to rent produces something.
Taking out a loan, putting your name on the title of a property that has existed for 40 years, and renting it out? Huge difference.
Correct. IRD lumps rental property income under the "Individual" definition. Sure, it mentions "income from business" but it also mentions shares. Owning a portfolio of shares does not define someone as a business.
Individual
Customers not registered for GST or PAYE and not belonging to large enterprises (LE) or non-profit organisations (NPO).
- This includes individual customers receiving income from business (eg, rental property, shares) but not registered for GST or PAYE.
Landlords don't cause suffering.
They didn't cause the price rises.
They were the scape goat but that is wrong.
Their advocacy and voting has certainly caused problems. E.g. the entitled shrieking to prevent a CGT that would broaden the tax base to more fair treatment of earned and unearned income. There's not a complete lack of culpability.
Infact incentivise landlords and you'll get MORE rental accommodation competing for good tenants and good tenants have their power back and can take or leave any rental.
But policy has done the opposite.
Punished landlords do we have less and less rentals for an ever increasing market of tenants.
Supply-demand.
Coupled with huge increase in costs heaped on landlords.
Coupled with immigration taps well and truely turned back on (extra demand on top)
= Rents sky rocket
Ever stopped to think why satisfying the market for those wanting a home and increased demand should be satisfied by landlords and not home ownership?
Just a little matter the landholding mob seem to ignore.
The worst thing that ever happened to NZ society - loss of an ability own a home so you lot can massage your egos. All of us are suffering from your greed.
I'm talking places to RENT not buy.
The only thing us landlords do to the rental equation is help pump up the supply side.
Lately the supply side is shrinking fast and will be a crisis very soon.
Eh? Builders pump up supply, not landlords - builders do actual work. Landlords just use people to pay for a home - and instead of the person who has paid for it owning, the landlord does.
A parasitic role in society however you wish to dress it up.
Landlords supply nothing.
Well see when we leave and no one has a place to rent.
Banks laughing them out the door seeing their application for a mortgage.
You reap what you sow.
Hahaha. Will you take the houses with you wherever you're going?
Exactly - imagine the supply that would be dumped on the market if all of the landlords decide to depart as Simon is threatening above.
Property investors/landlords argued that rising prices were all about supply and demand....well if Simon and his mates all suddenly list hundreds of thousands of properties for sale for FHB to chose from as owner occupiers, because landlords are all selling up....image where the equilibrium price point would be for those houses....it is down down down. House prices would be justified relative to the incomes of FHBs (i.e. lower wages of people in their 20s/30's), not cashed up investors using equity in other properties (people in their 30's - 60's with inheritances, higher wages, and equity in other properties).
Landlords/property investors have been the marginal buyer in the market that helped pushed prices up as they competed with FHB for houses that they didn't need to buy - but out of greed (with capital gains in mind), they purchased and caused an artificial imbalance in the supply and demand for residential houses in the country. They may do the same in reverse if many try to sell at the same time when there are no capital gains and cause excessive supply, resulting in prices to fall further than what would normally be expected under functional/balanced housing market.
Do you think Simon and his peers would evict their tenants before they list the properties too? Or would that also be an idle threat as the current days to sell is around 60, let alone when as you say 100k+ rental properties flood the market. No tenant = no income. Even a mortgage free Landlord wouldn't be that daft to forgo income surely?
It's a silly threat.
But it makes Simon feel like he has the power and control over the rent slaves of the people farming industry - which I have found is a common trait of many property investor types.
You hit a sore point with me as i actually care personally about my tenants why I only sold 1 not 3 during 2020-2021 peak.
If they leave for their own personal reasons (unlikely as im under charging them) then yea I might sell or might turn it into a bowling green + Club (council approval ofcourse) to serve all the recently retired baby boomers.
As a business model Labour has decimated the business of providing rental properties - so no 2 ways about it - we will see dramatic and fast falls of the rental based businesses in NZ - Which means the most vulnerable who banks barely let through the camera + security guarded door let a lone lend 400k to... they all get punished. Crime increases further as their family live in battery cages called motels and cars.
Which area Simon
If they leave for their own personal reasons (unlikely as im under charging them)..
Every landlord I've ever talked to has been quick to point out how they're undercharging their tenants, how they're practically running a charity operation and how they're basically God's gift to society.
On the other hand, I'm trying to remember whether I've ever heard a tenant saying anything nice about their landlord. Hmm, nothing comes to mind. I've only ever heard appalling reviews on NZ landlords.
It's strange how these two sides do not match up, isn't it?
Hasn't happened so far, despite the numerous times over the last decade landlords have threatened it.
I can do whatever I like with my own houses.
Business ventures, mini golf, stores of wealth as an alternative to Gold. (They find more gold, they don't make more land).
100k Plus immigration of people tested for jobs and salaries and net worth - They'l snap them up before any NZ tenant on the bennie or WFF or the other thousands of govt subsidies.
Labour kicking the lower quartile demographic to the curb. How Lie-bour of them.
“Well see when we leave and no one has a place to rent”
Oh yes, please sell up Simon! I’ve been to so many open homes lately in BoP. House is empty or staged and agent says it was a rental but the vendor/speculator landlord is now liquidating. Sitting on market for months while price plummets, waiting for a renter like me to buy at the right price.
One less renter, one more owner occupier. One less landlord! WIN.
Impress me (id be amazed and surprised, anyone can answer this) - What portion of renters have financial histories and current income to allow them to get a mortgage from a bank testing all loans at 9% interest rates? This is critical - you all say "renters then get a chance to buy and we have 100% houses owner occupied" as if there was never any need for some one to rent this shelter service in the first place.
I've been around long enough.
My experience - less than 1 in 20 family units i've personally dealt with could get a bank to agree to lend to them to buy the house they are renting (let alone anything better)
There rent paid might meet mortgage paid but! - RATE, INSURANCE, MAINTANANCE. And paying the 30 year mortgage assumes they hold their jobs over the next 30 years - probability of that is always going to be less than 50% as Poisson distribution would tell you. Esp lower skilled jobs.
These great lifelong tenants are NOT fresh law grads grumpy at the injustice of the price of a first home (these are the ones we hear most about - they can buy but refuse to and argue landlords are scum as arguing is all they know).
No. Infact FHB's are a tiny fraction of NZ whole population (100k people, yet labour do everything to please them). Mostly theyre angry as the high school hot dumb guy who was meant to fail in life became a builder bought 10 houses and is worth 10 mill+ while THEY have a horrific job in a Law firm or simliar (ohh what ? it wasnt like Suits, or law and order!!! /s Ive been fooled again) and;
Earn 120k after 10 years of brown nosing and are still struggling to pay rent as you spend all your money on "looking rich" to impress your buddies instead of investing.
Meanwhile dumb hot guy just buys houses on his 50-80k wage (houses of 200-400k value 8 YEARS ago in the regions) and is worth multi millions, able to retire any day he likes.
Meanwhile dumb hot guy just buys houses on his 50-80k wage (houses of 200-400k value 8 YEARS ago in the regions) and is worth multi millions, able to retire any day he likes
This exact scenario shows why what happened in the past was not sustainable and also why society is angry about the laws and policies that enabled dumb, stupid and lazy guys (and girls, I guess) to become stinking rich off the work of others (tenants).
But anyway, show me the guy/gal on a 50-80k wage who can afford to buy even one house today without support from rich boomer parents? Yep, that no longer happens. Once NZ is rid of the current dumb, stupid and lazy boomers who became millionaires in this fashion (note that I'm NOT saying that all boomers are dumb, stupid and/or lazy - but we all know the ones..), society will be much better off.
If you are suggesting there won't be or shouldn't be house price inflation, then people like nzdan below us won't have anything to crow about. You will take away his proud moment
I'm not worried about nzdan, HW2. He sounds pretty together and will find other proud moments. Perhaps you should rather worry about your own proud moments (if any)?
As for house inflation, I have no issue with that. But it makes sense for a society to reward people who are smart, and contribute skills and value, rather than rewarding those who are hot and dumb. NZ only got away with that while this was a relatively small, isolated island at the a$$ end of the world with lots of sports jocks who outnumbered and sneered at those who were diligent and bright. Nowadays NZ colleges have many smart and diligent children. They typically immigrated here with their parents and you'll find them in a library near you. So, if your kids and/or grandkids are hot, dumb and lazy, my advice would be to try and leave them a decent inheritance (from those crazy housing bubble days) to help supplement their burger-flipping wages someday. Too bad they'll probably squander it.
I mean sure, I like to brag about it. Mainly because the dummy landlord we bought from rushed into the sale and we screwed them down on price. It was a shadow listing with a dodgy tenant who would only allow viewings on Tuesday mornings, the 4th "D" of real estate?
Doesn't mean I agree with the rampant price inflation. The place we bought experienced almost identical gains in dollar terms, having previously sold at a similar time to when we bought our first place. So we could have had less gains, and paid/borrowed less for the next place.
It's cute when you get angry. Your broken English starts to show.
We literally banned immigrants from buying homes. So what you are saying is that we should reverse the Foreign Buyer Ban and let everyone buy houses in NZ, including non-New Zealanders. If not, then those people need to rent somewhere.
The stats (readily available from RBNZ) disagree with you.
Yes, OO trading up well overspent.
But so did investors, and they well overspent by significantly more than FHB for the past decade.
And guess which group were competing with FHBs and pushing the prices up? (hint: its wasn't the OO trading up).
Take your blinkers off.
There is no data to determine if a house was going to be bought by a fhb but they were outbid by an investor.
It's all anecdotal.
And as I said, landlords the perfect scape goat.
Most of them were outbid by developers and Kainga Ora.
To rent a house worth $800k costs $650 per week.
To own the same home (as an owner occupier or landlord) costs upwards of $1100 per week. Assuming 20% downpayment.
Looking forward to the fundamentals returning to reality.
For decades, having a rental or two as a retirement project did almost nothing to "make house prices more unaffordable". So what was different this time? Well, a number of things, not least increasing NZs population massively by a million people over the 2010s (25%) and allowing foreigners access to tax free capital gains. Add in trashing the value of money with negative real returns for holding cash and a manufactured bubbleland is the "unexpected" outcome.
Interest is a cost of (debt) capital in the same way as dividends are a cost of (equity) capital. There is no inherent reason that interest should be deductible alongside business operating expenses and in some jurisdictions it is not or it is capped.
Dividends are paid by companies after interest expense is claimed. I agree it’s a shit situation for renters and the younger generation but this problem is a result of too low for too long interest rates, it’s a government failure. Penalising people who have tried to make their lives better by changing the rules of the game is not the answer.
So retain the status quo and penalise more people? Sounds like a classic trolley problem where you're taking no action at the expense of more lives purely for the perceived moral implications of changing the rules. If that's not the answer, what is?
The solution is to increase interest rates, and look house prices are going down what a surprise! Interest deductibility is the icing on top, if house prices are going up 20% per year what difference does it make if you are speculating on property prices that you loose 33% of the 3% interest you are paying.
You are losing more now that interest are at 7% than any interest deductibility you would have saved.
Interest deductibility is fair because every other business gets to claim it, personally I think first home buyers should also be able to claim it up to a limit (no buying mansions). You need a house to live so you can work, and earn money so why isn't it deductible?
I agree it's not consistent but that doesn't mean we shouldn't do it.
Fundamentally all these rules and laws are in place to help create a society where we are hopefully better off than "every man for themselves" so as long as the rules work I don't see any issue with inconsistency.
The laws should be fair as possible, landlords in general are little players, that is why they can be bullied. All I see that will happen with the suite of laws will drive the little players out of the market, leaving only large companies that can build junk houses that can have interest deductablity or other tricks to reduce tax. Eventually when the majority of small players have left the large companies with their lobbying will come in and change the laws back or worse. We will eventually only have corporations owning property. Have you ever tried to argue with a corporation, there isn't anybody to even talk to. If you go to court with the landlord and the corporations set their lawyers on you.
There are much more fundamental things we that we could do as a society to make it better than this here are a few:
1. Make legal representation free (not able to be paid for) and a right, justice should not be a function of the size of your wallet.
2. The distinction between tax evasion and avoidance should be removed you should not be structuring your tax a fairs in such a way as to get out of paying taxes. Pay your taxes that you should ethically should be paying.
2. Contracts should be fair especially if you are not in a reasonable position to negotiate, also any contract that says that one party can change the terms and conditions unilaterally should be voided.
If you want to stop building of junk houses there needs to be decent standards and enforcement of those standards not leaving it to the moral compass of a landlord, whether small player or corporate.
Sure there are other things that need doing but this was a pretty easy legislative change that I think most people understand will leave the country better off.
If you hire a machine do u get to claim the hire cost as an operating expense?
Interest is the hire cost of hiring money.
It's an operating expense.
Dividends are not an expense at all in the first place they are equivalent to drawings by an owner.
Except for landlords, having access to the capital *is* the job. That's it. Especially in the environment of recent years, where landlords are motivated more by capital gains than by rental income.
If I borrow money to buy lotto tickets, can I claim the interest on the borrowing as an expense for my 'business'?
Your obviously have never been a landlord.
Buying lotto tickets doesn't provide a service and there is no customer/client, so no it is not a business. You lefties are getting weirder and weirder. Really need eco 101 mandatory at high school
You don't provide a service. You inject yourself between the person paying for the property and the bank.
And you end up with the title.
You are part of the problem.
Glad others see it this way as well. I've been bringing this issue up for a long time but it was falling on deaf ears during the housing boom.
Ultimately I see it a fear - people (property investors) who are worried they will never have enough and so feel the need to buy houses that would otherwise be purchased by an owner occupier - and likely would have been at a lower price point because there would have been less demand for the bank credit relative to number of houses available to buy.
What other 'service' provider is willing to provide their service at a loss because they're making capital gains?
What other 'service' provider gets preferential treatment from banks and low cost of capital because their business is seen as zero-risk? Compared to real businesses, landlords get generous interest rates anyway.
You are confused as to what you think you do. You provide no service at all. Ticket clipper, thats it.
Half the companies worth billions plus on the Nasdaq make no money.
Banking on future growth.
"Real businesses"?
Like Cafe pub retail store - all funded on the back of lending that uses the underlying real estate as security.
Can never value with certainty business as at any time they go out of favor and stop selling so become worthless. So it's always real estate that banks need for hard security when lending to these sorts of business.
Someone here claimed 95 percent of loan applications are refused.
This is untrue. According to Centrix before November 2021 (CCCFA) approvals were approx 40% of applications. After November approvals dropped to less than 30%, before picking up again as brokers learned the new rules and submitted their potential borrowers to harsh spending curbs to clean their spending records of excess spending. Towards the end of last year they were back up to 36-37% success rates.
The main difference is that they are being approved to spend less than before as those nasty 8.5% test rates and higher UMI levels hit..
I suspect there is quite a nasty gap opening up between what sellers want and what FHBers etc are approved for....
Also FHBs approved for less, don't just start looking at smaller homes or different areas. In many cases they can smell blood in the water and are going in for the kill knowing there are fewer buyers and anyone listing in a falling market has a stronger need to sell than people just "testing the market" in a rising market.
That is true in the lower end of the market, there may be some like myself where my first home will be in a higher range. Unfortunately the sellers only need to come down around the same dollar amount which as a percentage is less.
Wishful thinking AKA "applying for a loan you can't afford" is not "demand".
Bad news for vendors who are still clinging to 2021 prices and realtors who are still playing the "Negotiation/tender/auction/deadline sale - no price displayed" game hoping for a cashed up boomer to wander in to pay 2021 prices.
Probably still a ways to go yet. The graph is looking like we are reaching the point we would have got to had there been no COVID blip however now we have the much higher interest rates, new tax rules and inflation to contend with. We may only be half way with another 150k to slide down on the national average.
Note this is QV data and 2 or 3 months out. So I prefer the more up to date Reinz these days
Yes, REINZ HPI should be here any day.
Next Tuesday.
How do you know it's next Tuesday? From past releases it seems like it's always some day between the 12th - 18th of the month, but it doesn't seem there's a consistent date (that I can see, anyway).
Do they have some release schedule somewhere?
Only next Tuesday? I was hoping we'd have it by the end of the week. Where did you find the release date? I'd love to know where this info can be found for future reference.
Man you’re shameless, it was only last month you were quoting QV data (ignoring the REINZ data that proved otherwise) to suggest the bottom had been reached.
Moi? Je ne sais quoi
That was not the case last week when you were quoting core logic data.
Does one own the other. For some reason I think that CL and QV are closely related
Used to be - part of CoreLogic used to be part of QV, and QV owned 50% of their shares, but have sold out years ago. Now they operate seperately.
nelson/Tasman still have a way to fall when it comes to this house 65 Quayle Street, Motueka, Tasman, Nelson / Tasman (trademe.co.nz) charming i think but gee it needs everything to be updated probably cost you 150 k that makes it 1 million and you still have a 1970s house cold and maybe damp. Place. Just seems amazing that we throw a million around like its chump change. In my book a million is still a lot money or maybe its not????? maybe i might have to shift my way of thinking.
No a million dollars is a lot of money. The Real Estate industry, followed closely by the building industry have tried to pretend it’s not. I have been looking to buy since the beginning of COVID, knowing that even then prices were inflated compared to New Zealand incomes. A strange thing happened where I was looking once the new COVID low interest rates arrived - people just started buying property with no due diligence and no allowance for the cost of any update or renovation to properties. Just multiple buyers paying more and more for properties. It was crazy.
I am working hard at present to keep my ideas on price up to date, they are moving down very quickly now, but not in the listings. I am finding a big difference between list price and what the agents are saying to me in person.
It was Tulipmania. Prices were (and are) completely detached from the fundamentals.
The only reason to buy quickly was to get in before prices rose again the next month and make virtual money from the rise in prices
It is very much in a state of flux.
There is absolutely no harm in waiting. Any deposit saved (presumably held in term deposits) will start earning good interest as they roll over. Even if they do not keep up with inflation: doesn't matter because house price inflation is negative at the moment! And that is what your deposit money is earmarked for.
Plus at some point it will dawn on all those people who want to sell, that there is nothing to be gained by waiting as prices fall further. I personally don't think there will be any drop in interest rates any time soon.
Hang on in there....
The agents are saying interest is 10-15% below the listed price?
Yeah. Prices are already down 20 to 25% from peak (priced houses) and in many cases they cant sell even offering a hidden 10 to 15% off that.
Serious wealth destruction and we havent yet seen distressed/mortgagee sales
We went to see this property https://homes.co.nz/address/auckland/onehunga/14-hull-place/rxQR during what I guess was the start of the Covid property upswing/madness and speaking to an agent at the time suggested that $850k would probably be the right price to get it at auction (which we thought was still crazy money). Sold for $1.075m. That's when I realised that a million bucks isn't a lot to some(most?) people and took a step back from the market. Since then, from the sidelines, I keep an eye on this property just to see whether the value ever comes back to earth. IMO a million bucks should be getting you a property with golden taps not 100 year old single glaze windows but I am but a mere aspiring FHB so what would I know.
I realise I'm not a sophisticated Aucklander and all, and showing my years, but for a shed on a postage stamp like that, having to pay more than $250000 would be a rip off.
I'd also be wanting a garage along with the gold taps, glad you stepped back and good luck in the future.
You'd have to convince yourself sea level rise isn't a thing living there!
Looks to have been owned by the same owners since being built so hopefully well taken care of but still 150k overpriced considering the location. I agree that the sense of vendor entitlement and REA spruiking in Nelson is still very strong. Shame all the settlements are taking forever due to the large chain of buyers waiting on selling their own houses to make good on their offers. Keep an eye on realestate.co.nz and homes.co.nz for when sale prices come through, and use propertyvalue.co.nz to see if the houses have been listed before, many starting to get relisted that were listed 2 or so times 2022 with no sale and have only dropped asking price minimally. Best of luck :-)
859K with a stainless steel kitchen bench top. Get out the bunting for when I sign, please. Clearly, there are plenty of other delusional clowns willing to walk through that circus door, it's so common.
Remember when economists were predicting 7% peak to trough and a 3% OCR?
https://news.anz.com/new-zealand/posts/2022/02/sharon-zollner-2022-year-of-normalisation
Thanks. The forecasts and predictions of economists, especially bank economists, should be constantly played back to them.
We constantly seem to forget the old forecasts, and then the media reports their new forecast unchallenged as "expert advice".
We need a leaderboard that shows accuracy of their predictions.
The future forecasts matter more. People keep looking back, while forgetting to look forward
Looking back allows one to determine who has any credibility in their future commentary.
On that topic, whats yours. Generally, or more specifically if you prefer (remembering what Chebbo says)
This is the statement of the year
Lol, I am wondering where did the "house prices doubles every 10 years" theory come from then? Wasn't there a graph based on the historical housing price data to back up that theory? Now you are talking about people shouldn't be looking back but should look forward for future forecasts?
Making predictions is a mug's game. I'm not sure why economists (or so many commentators here, for that matter) insist on doing it.
To a certain extent it’s life. You make decisions based on what you think is going to happen in the future…I.e. flu jab. Lots are wrong but some a right. And it’s fun….
Agree HSL.... so is it Chiefs or Hurricanes this Saturday?
Follow the league. Rugby is too woke for me. At least the Australians focus on the game.
What is woke, thats what trump and his supporters say, not sure what it means. And why the animosity against union, did it treat you badly.
Any sport that includes synchronized swimming takes many hours of training and dedication, all sports people have my respect for their commitment. Even if I do not choose to watch all sport.
Not sure I agree. You make decisions based on risk. You don't know whether you're going to get the flu or not, but you weigh up the risk involved if you do.
This is the way to do it. Assign a probability to what you think will happen, and decide on your risk appetite accordingly. Then you don't make that all-in bet that could bankrupt you if you're wrong - or at least you go in with your eyes open and perhaps have an escape plan.
Many people would do well to learn the difference between risk and probability, because they're not the same thing. The risk associated with an event is more correctly understood as the likelihood of it happening, multiplied by the severety of the consequences if it does.
So the likelihood of any given person being exposed to the flu this winter may be very high, but because the consequences of this will not be severe for most people, it can be considered a low-risk event and planned for accordingly.
Similarly, you may think the likelihood of a housing market crash is low, and decide to put all your eggs in the property basket. But even if you are right, the consequences if it does happen are severe enough in this instance that it should be considered a high-risk event.
'you may think the likelihood of a housing market crash is low'
Lol... the probability of a crash in any given year i the last 5 years has been super high.. maybe 75%+. Pretty easy to justify that.
The potential size of the loss is also super high due to the probable size of the over pricing. And as time progresses the potential for, and size of the loss has grown massively. Again easy to justify.
So the the risk has been very very high for some time.
Buying a house in the last 5 years (unless part of a balanced portfolio built over time or as a result of prior equiry) has been akin to hearing that the last 3 people won on roulette and thus betting your entire retirement savings along with a super big loan... on black.
This also applies to the weather. I know a former principal scientist at NIWA who once told me that 7 day (let alone 10 day) weather forecasts are pretty rubbish, and the 2 day forecast is what you should rely on. I asked if that was the case, why did NIWA sell weather forecasts that went out that long?
His reply: Businesses need to plan, and so they use the best guesses of experts.
I guess to reply on guessing with no fundamentals behind it is irresponsible, but sometimes I think the forecasts (of economists) are worse than 50% when asked a yes/no question.
Agreed, I only trust the forecast for 24-48hours. There's only so much that modelling from data can get you and often the forecast changes for 2 days ahead anyway
If you don't know - chaos theory came from meteorology. It's well understood to be predictable for about 2 days, but after that, it enters the realms of what is most statistically likely.
As processing power has increased, we've been able to increase the number of variables that can be tracked, which enables better predictions, but they still represent a tiny fraction of all possible variables.
Printer8 thinks those bank economists are great.
You got uptight when I commented "and the talent" which was in context. "Cry baby" now having digs at Printer
I just stated what P8 thinks. Factual. Oh it was a very gentle dig.
You taunted / abused me in more than a gentle way. And you have done it several times. Saying I have no talent - nice! It’s trolling. The comments policy of this website - meaningless words apparently - discourages taunting and abuse. Aka trolling.
And the tolerance for it means I can’t get behind this site as I would like to.
I am leaving the comments section for as long as I choose to. I am sure it’s ‘ good riddance’ for you and others.
You have mentioned your own mental health challenges. Perhaps you should also think about others’ and how your behaviour might impact on that.
Bye.
🥱 yawn
I am very subdued in what I say, even when you have been angrily foul mouthed toward me and getting in my face.
Be aware I dont wish you any harm, you may have wound me up in the past but not anymore.
I am one random person who reads the comments section who has been concerned for your mental health Housemouse as it has felt to me recently that some commenters have been piling in on you in a negative way. The winners from time spent away from the comments section will be your family and friends and your mental health, best wishes to you.
I'll be advising my eldest to buy soon. Find a motivated seller and buy at a discount, won't matter if prices fall more then. It's a buyers market. Don't let recency bias put you off if you are a fhb. Don't expect capital gain in the short term either but when it comes you'll be ready to trade up. Yes interest rates are higher, but so are wages if you are looking after your career.
The banks are stress testing mortgages at 9% or more, so I think there's still quite a way yet for prices to fall.
In mid 2021 the stress tests were as low as 5.8%. A monumental stuff up by the banks dropping them so low. I guess when they self regulate the test rates, coupled with recourse mortgages, there's incentive for the banks to push the envelope to increase lending amounts (performance bonuses???).
Anyway it's the borrowers that should have known interest rates can't stay low forever, the banks are innocent parties in this affair.
Article posted at 5am, by 7am HW2 has made two posts
- First one "It'll get better"
- Second one "This isn't the best data"
Like any investment proposition this could go either way (with balance of risks to the downside).
Do you choose to, or simply fail to, see both sides of the coin?
Wow it only took you 2 hours to work him out.... He could simply publish his target net yield in the current taxation environment and say I will be buying at this yield...... but he will not as the spreadsheets tell you that you need another 50%+ if things are to stack up cashflow wise, otherwise you are subsidising the tenants rental accomodation....
Then he blathers on about how house prices double every 10 years, look at the value of this house vs in 2000 etc. He fails to grasp that the game has changed, we have a housing cost crisis and that the RBNZ will introduce DTI restrictions....if they insist on a 3% growth rate the rule of 72 says it will take 24 years for prices to double and only if we see income growth over that period....
The biggest mistake you can make in trading is not understanding that the game has changed.
I remember watching the USD fall vs the EUR as QE was announced, it changed everything. Now we are inflation, we have QT and soon we will have DTI. When the house market finds it feet, It will definitely be below the pre covid levels.
National will probably get in, they will reverse interest deduction rules, and this may help it stabilise, but not until re can be cash flow positive after tax and maintenance and mortgage costs ..... any hint that investors are beating FHBers will see re-introducton of tax rules or National will wonder back into the wilderness for another 8 years.
There’s only three certainties in life; death, taxes and HW2’s desperate attempts at trying to polish a turd that is the current NZ housing market.
Am happy to have a bit left over for beer and fishing money. I like having a property that is the best it can be, not looking crap with deferred maintenance, because I know that other people appreciate it. Whether that's friends or tenants or people driving by.
If selling an investment property, yield and cap rates are paramount. As you know, buyers need cashflow. For resi, then other factors come into play.
I am really only a half baked investor, not a laser focused and eagle eyed, multi-simultaneous investor/developer like yourself ITGUY
Then stop telling people that its bottomed based on hope....... every month.....
I think that I have just been relaying what others are saying. Of course I have a leaning.
When the news cycle changes from one direction traffic to mixed messages, it shows a change is about.
Similar to the belief that share investors are 6 to 9 months forward looking. Has the US market bottomed yet IT GUY
https://markets.businessinsider.com/news/stocks/12-charts-economy-full-…
"Our view: Sell the last rate hike. Investors too optimistic on rate cuts and not pessimistic enough on recession. 'Sell the last hike' was correct strategy for stocks in inflationary '70s/'80s, 'buy the last hike' worked in the '90s disinflationary market," BofA said.
"Recessions reliably negative for equities throughout history and insufficiently discounted in advance. Plenty of room for more S&P 500 downside," BofA said.
Keep your kiwi saver in NZ Cash....
Corelogic this week:
Forecast: NZ’s biggest housing market slump will be over by June
House price growth in Australia in March points to end of downturn in New Zealand.
Good old TA this week:
The Reserve Bank has stated it is going to be assessing the economy to see whether the easing of inflation and domestic demand is enough to prevent any further increase in interest rates. It should see what it wants to see as household spending in particular becomes further restrained. That means I anticipate maintaining a positive outlook for borrowers with regard to interest rates.
Is Tony saying, in a convoluted way, that interest rates will be falling before anticipated.
I was very surprised at the Core Logic forecast that things will be over by June, there are just too many houses sitting around on the market for that, at present more and more very good quality homes being listed. Who’s going to buy all this excess inventory?
Much of it will not sell at the prices listed, there are not enough people willing to take on that debt level...... so they sit while incomes rise (in a recession, yeah nah) or they drop their price.... they just may not sell.
Not many sold and went renting... so its really only FHBers and they are not going to buy above the medium price generally, their may be exception...
DoneBizz posted above about advising their eldest to buy. I guess it's a time for the courageous. I'll be hanging back with the cowards.
That shows the stupidity of the the so called experts.
1, NZs economy is not even closely related to Aussies!
2. Over by June 🙄🤣🤣🤣🤣 WTF !?.. supply growing, demand down, winter coming, inflation, new builds not selling, new houseing developments stalled...
The problem with these experts is they look at numbers on the computer ( a set of myopic data points) and fail to look out the window / at real market influences/ relative info ... thay adtually drives buyers away and makes people sell.
The property market is driven by money and profit for sure. BUT it is driven by fear, greed, spin, deciept and survival way before some expert turns on his computer
These experts are not independant, Banks have 100's billions in mortgage lending and Tony is paid by the Spruikers to spruik.....
Listen to the likes Cam Bagrie for sage advice.
Rodneys Ravings are good as well, he has grey hair....
https://www.squirrel.co.nz/blogs/housing-market/rodneys-ravings-history…
SUGGEST ALL READ THAT LINK
Talk about independence and then link an article from a mortgage broker firm lol...
I do not rate anything squirrel write themselves but Rodney is good
Taken from rodneys article.
There are no precedents to suggest that NZ, the UK, US, or Australia can escape the current inflation problems without recessions. This is because monetary policy is a blunt tool, and central banks show no finesse in operating it
Rodney is one of the best.
I was talking to a friend who manages a RE office, most offers they are getting are 20 - 30% below asking, and offers are few and far between. This is in the 1 - 1.5m range.
Is this in the city or in the regions, Sluggy?
Auckland
They call these "wasting every body's time" offers....... funny they are the only offers they are getting,
Soon FONGO will hit and Pent Up Supply will list.
The door has closed on only losing 250k from the top on an AKL home, the bid is clearly about another 15-20% below this and moving lower every month. The buyers are in control and want bargains. They also want insurance that they are not over paying. Not that long ago a real estate agent would laugh if you told them the price would be 25% lower in 18 months..... well in another 18months it may well be another 25 lower again. We are looking very Ireland shaped.
In this same conversation it was stated that he has given his sales people blastings over the offers they are presenting, and they need to step up their game.
Maybe they should up their asking prices, hahahaha
Dilusional manager. He should stop talking up the prices and have honest conversations with the owners about the reality of the market.
RE agents are such briliant but obvious spin doctors!
Whangarei toò...
I am seeing big price drops across many houses in One Tree point, Kamo, tikipunga, morningside, and most areas where there are new overpriced subdivisions.
7 really nice homes , in OTP , have been re listed several times ( in order to redate the listing so as to make it look like it hasn't been listed for months) and the prices have dropped an average of 26% and still not sold. ( Bermudal place, Miami Place, Kapiamaunga..)
Waipu, Marsden cove, are other areas with very slow discounted sales.. yet the dilusional unreal estate agents are still listing overpriced houses that are just piling up.
Trade me and Homes.co.nz are the problem. They are using faulty algorithims to manipulate bad pricing expectations and the RE industry dont care as they creme it with continued marketing charges while the property sits unsold.
The crash has a loooong way to go!
We moved to Whangarei about a year ago and have been keeping an eye on things but waiting for the market to fall. Your observations match mine. Although there are still a lot of nice places on the coast which are still fetching quite good prices. Did you move up from Auckland too or are you a true local?
Welly to Kerikeri to Onerahi to OTP to motorhome and waiting for next deals.
The coast is not that good. Just a better class of loss.
Google TM northland and look at the oldest ((reverse newest)listings from 1M up.. its huge and a stalled market.
Kerikeri is the "canary".. post GFC 300+ listings.... then Down to 90 in 2021 now up to 300+. Listing over 1M not selling.
Kerikeri's biggest industry is RE . The churn of oldies that move there and then leave in 2 years is huge... except in a recession.
Theres a saying... " if you want to be a millionaire in Kerikeri... bring two!".. very clicky and expensive and miles from decent beaches!
Kerikeri is telling me BIG RECESSION.
I see the ATO is getting serious about property income being undeclared for tax purposes. If the IRD isn't already ahead of it, then it won't be far behind.
Banks will be compelled to hand over the data of 1.7 million landlords, including transaction details, as part of a tax office crackdown in search of $1.3bn in revenue lost from residential investment properties. The data-matching program will target people failing to declare rental income or pay capital gains tax, and those incorrectly claiming deductions – including rental property loan interest – to reduce income and negatively gear properties.
Is there a link?
Down down down in Ponzi town.
The paniced stupidity of covid fueled by the cheapest debt in a generation pushed marginal buyers to prices that won be seen again for ages. That things are in free fall with more to come is no surprise.
The speculative purchasing to rinse tax and for capital gains are looking worried, very worried. So... pay your tax, and swallow down that capital loss.
How dem apples.
The stupidiy of the "Covid buy up " is now showing up.
Ive seen numerous properties for sale where the current owner desperately paid too much During covid and now wants to sell and wants too much and will lose big dollars when they eventually sell..
Eg- 2018 CV 60OK, brought 2021 for 1.125M, 2021 CV 1.05M, for sale@ 1.100M
If bought 2018, 2019, then UP 83 pct. $1100/600
Everyone's a winner baby... except for recent buyers now desperate to sell
The paniced stupidity of covid fueled by the cheapest debt in a generation pushed marginal buyers to prices that won be seen again for ages
And quite possibly at a time when boomers have left the mortal coil
Nothing to worry about, it will be over in June:
Forecast: NZ’s biggest housing market slump will be over by June, All things property, under OneRoof
Didn't Adrian Orr say a while back. If houses are too expensive... wait..and enter in the future at a different price point. Sage advice and still applies. Imagine saving for 15 years for a 250k house deposit..only to watch it get incinerated off the bad advice of TA HW2 TTP. I'd hit delete on anything you see from these guys. Old school thinking from old schoolers
Imagine saving for 15 years for a 250k house deposit..only to watch it get incinerated off the bad advice of TA HW2 TTP.
I don't know about that. The 'bad advice' is simply based on the incentives laid out by the ruling elite and can be a way of 'playing the percentages.'
The way I see it at the moment, the sheeple always thought they were going to get bailed out by the gubmint, central and retail banks. But it's not playing out that way.
No, that's not what happened and we know it TJ
I know that you told us that you were keen on buying around sept 21, an apartment or something. But didn't quite get there
Be glad and don't be sad
Whats your plan now
I certainly dodged a bullet on that one. Luckily I trusted my intuition rather than the property bulls huh
In CS Global Wealth Survey 2022. New Zealand adults were ranked fifth wealthiest on average with USD 472k each. Much of that tied up in paper property wealth. Every month 5 - 10 thousand mortgages come up for rate renewal. Every day hundreds of borrowers are confronted with their new reality of mortgage payments substantially increasing along with the cost of living. Any pay increase they may have received is immolated. We are in a recession and we will stay in one until RBNZ is forced politically to cut rates. But this along with the final admission of recession itself will cause a devaluation of the NZD against USD.
In short we will stall be NZD rich on paper . But substantially poorer in USD.
Thats the grerat thing about a floating currency, suddenly we are cheaper for US tourists, and our produce is sold mainly in USD..... this provides a floor to the recession, unless its deep and demand driver globally, then we are prooper f
Until investors return to the market it'll continue to dive.
Real investors will be highly focused on yields. Yields would increase if tax deductibility was re-instated but that a big if. And many are suggesting the NACTs may take the opportunity to introduce CGT were they to re-instate it.
So ... Until yields reach reasonable levels - 7% plus - then there'll be more declines to come. Good thing too - but bad, very bad, if the cost of building doesn't fall too.
Way to go yet. Now we will see the real strength of the rock star economy (with all its eggs in one basket).
4 months into the year, still a large percentage of mortgage holders to refix onto hugely increased interest rates which still continue to rise and record amounts of property for sale. Get the popcorn ready.
"Oh, take that money, watch it burn" ("Counting Stars" ,One Republic)
"Pressure pushing down on me
Pressing down on you no man ask for
Under pressure that brings a building down
Splits a family in two
Puts people on streets" ("Under Pressure" ,David Bowie/Queen)
Yep, hard too see those sitting on a nest egg venturing into RE presently . How long can those "Under Pressure" or their agents cling to prices that are no longer an easy sell. Plenty of silly prices still about if consideration is given to location, age and m2. Winters coming and while it is a very good time to check for weather tightness, I suspect many will be avoiding tangling with RE because even if prices do continue to decline lending costs are offsetting the warm fuzzy feeling of getting a bargain. They would have to decline significantly further to offset the present cost of participation . Those 'under pressure' (facing new higher rates) might find themselves 'burning money' by not considering the lower offers they may have been offered by a potential buyer. If I know RE agents some of them are so stuck in the mud they flatly refuse to entertain or pass on an offer outside of their own expectations and that could be doing their vendor a disservice in the current market. The game has changed and the data shows it... I might suggest it is the agents job to 'condition' the seller to the current environment, not doing so can have negative consequences...the easy sell is over for many agents...if the market further declines where will your vendor be then?
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