Real estate, post level 4

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#3101051 7-Jul-2023 18:13

Handle9:

So what if they are foreign owned? Labour force productivity measures value added by the workforce not where the profits go.

Having a few innovative companies doesn't prove much of anything and certainly doesn't show "a lot" of innovation. If you have "a lot" of innovation you rapidly grow productivity and it's displayed in the statistics.

New Zealand has a small, fairly stagnant economy. It is what it is.

It is what it is

If a large company is NZ owned the funds stay here. If not they go offshore. To make my point, lets say the majority of companies in NZ are foreign owned, we could not manage that outflow. We would be leasing land , and poor. Ok, we are poor

quickymart

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#3117075 17-Aug-2023 10:58

https://www.stuff.co.nz/business/money/300951542/reserve-bank-rethinks-where-house-prices-will-go

Oh yay. Prices are meant to start going up again. Woo-hoo. Just what house buyers need. Not 🙄

I fully agree with this guy: “When the Reserve Bank says house prices are around that sustainable level... if that’s sustainable to them, I’d hate to see what’s unsustainable.”

heavenlywild

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#3117115 17-Aug-2023 12:12

House prices won't be going up when mortgage rates are over 7%.

I predict most sales are nowadays owner occupiers so they sell and buy.

As an investor myself (currently without any investment properties) I can't see how I would be able to afford to buy an investment property at current prices and rates. In fact how most would be able to afford to.

A huge deposit + 7k+ a month in repayments in Auckland + rates = bankruptcy or instant noodles 3 times a day. No thanks!

Updated repayment figure from 6-7k to 7k+

tweake

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#3117237 17-Aug-2023 17:04

don't ignore the fomo effect. the real estate industry has been in full swing talking the market up and RB just legitimized it. thats puts a lot of pressure for people to buy even when they can't really afford it.

at the end of the day the RE market is there to squeeze every last cent possible out of buyers, and its very good at doing that. prices will go up until no one can afford any more. for eg people keep suggesting to lower building standards so we can have worse houses, which they claim would be cheaper. but i reality the price would stay the same and they would make more money off it. same thing with national pushing making the housing crisis worse. all so some people can keep making the $$$$.

just look at the talk of them using kiwi saver, to push up the RE market.

mattwnz

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#3117246 17-Aug-2023 17:21

Prices are still dropping in my area. I have quite a few properties on my watchlist and most days ones of them has a price drop, and more and more are have prices on them . When during the bubble very few had prices on them. It is interesting that in NZ, I haven't seen a single article calling it a price crash. Yet overseas, and in Oz, articles are calling the NZ housing market a 'crash'. The price is largely dictated by the interest rates. Increasing rates and the main reason IMO why prices are dropping. It should be a good thing for FHBs, as they won't need as a large a deposit, and the prices should eventually equalise to meet affordability with the current interest rates.

mattwnz

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#3117248 17-Aug-2023 17:24

heavenlywild:

House prices won't be going up when mortgage rates are over 7%.

I predict most sales are nowadays owner occupiers so they sell and buy.

As an investor myself (currently without any investment properties) I can't see how I would be able to afford to buy an investment property at current prices and rates. In fact how most would be able to afford to.

A huge deposit + 7k+ a month in repayments in Auckland + rates = bankruptcy or instant noodles 3 times a day. No thanks!

Updated repayment figure from 6-7k to 7k+

Not unless incomes rise a lot. But it just goes to show the damage the ultra low interest rates caused by getting many FHBs into huge debts during 2020-2022, as well as other borrowers who borrowed 'mega mortgages' at the time. They seemed to think house prices could never fall based on NZs history of house prices. I can't see interest rates falling any time soon, and can see the OCR rising in the future.

tweake

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#3117249 17-Aug-2023 17:29

mattwnz:

Not unless incomes rise a lot. But it just goes to show the damage the ultra low interest rates caused by getting many FHBs into huge debts during 2020-2022, as well as other borrowers who borrowed 'mega mortgages' at the time. They seemed to think house prices could never fall based on NZs history of house prices. I can't see interest rates falling any time soon, and can see the OCR rising in the future.

as long as people can hold on, price will most likely go up in the long term, simply because thats what people want. downside is how long will that take.

people will keep trying to make those untaxed gains, until we get back up to those dizzy heights again and it all crashes and burns the nz economy down to the ground.

Sharesies

Trade NZ and US shares and funds with Sharesies (affiliate link).

tweake

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#3117250 17-Aug-2023 17:36

mattwnz:

Prices are still dropping in my area. I have quite a few properties on my watchlist and most days ones of them has a price drop, and more and more are have prices on them . When during the bubble very few had prices on them. It is interesting that in NZ, I haven't seen a single article calling it a price crash. Yet overseas, and in Oz, articles are calling the NZ housing market a 'crash'. The price is largely dictated by the interest rates. Increasing rates and the main reason IMO why prices are dropping. It should be a good thing for FHBs, as they won't need as a large a deposit, and the prices should eventually equalise to meet affordability with the current interest rates.

its not really a crash. in overseas terms, yes a 20% drop is a crash. but here 20% drop only gets as back a few years. thats pnly a drop in the bucket compared to how much its gone up overall.

the other factor is the price of everything else is going up to meet the housing market. which is fine IF you can get pay rises to match. however i suspect thats not happening soon.

mattwnz

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#3117255 17-Aug-2023 17:48

tweake:

its not really a crash. in overseas terms, yes a 20% drop is a crash. but here 20% drop only gets as back a few years. thats pnly a drop in the bucket compared to how much its gone up overall.

It is a price crash though for those FHBs who purchased at the peak. It is 25% in Wellington. So there will be owners of houses who could be in big financial trouble. Although there are articles in NZ that says the falls have stopped, and that FOMO is entering the market, IMO I can't see this really being the case with increasing interest rates

I can't see how house prices can increase over the long term by any more than wage inflation, because if they do, then less and less people will be able to afford them. We will get two classes occurring, those that own houses, and those that will never be able to afford to own a house. And isn't that what happened in previous centuries in Europe where there were rich people, 'Land Lords' that owned most of the land, and most people were renting on that land.

Handle9

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#3117259 17-Aug-2023 17:54

mattwnz:

We will get two classes occurring, those that own houses, and those that will never be able to afford to own a house.

That happened over the last 20 years. The prospect of someone earning between the minimum wage and the median wage, owning a house in Auckland is long gone.

kingdragonfly

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#3117263 17-Aug-2023 18:06

mattwnz:
Prices are still dropping in my area.

There are a few areas where prices have increased very slightly in the last three months, Christchurch and New Plymouth.

tweake

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#3117275 17-Aug-2023 18:26

mattwnz:

tweake:

its not really a crash. in overseas terms, yes a 20% drop is a crash. but here 20% drop only gets as back a few years. thats pnly a drop in the bucket compared to how much its gone up overall.

It is a price crash though for those FHBs who purchased at the peak. It is 25% in Wellington. So there will be owners of houses who could be in big financial trouble. Although there are articles in NZ that says the falls have stopped, and that FOMO is entering the market, IMO I can't see this really being the case with increasing interest rates

I can't see how house prices can increase over the long term by any more than wage inflation, because if they do, then less and less people will be able to afford them. We will get two classes occurring, those that own houses, and those that will never be able to afford to own a house. And isn't that what happened in previous centuries in Europe where there were rich people, 'Land Lords' that owned most of the land, and most people were renting on that land.

it all comes down to how you game the system.

and yes thats exactly whats happening already. we are very rapidly heading back to "lords and peasants". the catch22 is half the peasants are trying to be lords by making the other peasants pay more for housing. so they want it to continue.

the single biggest mistake labor has done is to soften the crash. if they had left it alone RE would have imploded and taken out half the economy with it. then people would be keen to fix the RE market.

heavenlywild

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#3117282 17-Aug-2023 18:42

FOMO or not but not many people can afford 7-8k mortgage on an investment property in Auckland after paying a 130k deposit plus other expenses.

This is assuming you don't have a mortgage on the family home.

Either way I just can't see FOMO coming back unless National gets elected and adds back interest deductibility.

mattwnz

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#3117283 17-Aug-2023 18:52

heavenlywild: FOMO or not but not many people can afford 7-8k mortgage on an investment property in Auckland after paying a 130k deposit plus other expenses.

This is assuming you don't have a mortgage on the family home.

Either way I just can't see FOMO coming back unless National gets elected and adds back interest deductibility.

There is still interest deductibility on newer houses build after march 7 2020. So is an incentive for property investors to buy new warm and dry homes for their customers (renters). What has historically happened instead is investors have purchased older homes with larger sections, to essentially landbank and get the capital gains, then rent out the old house, which is often cold and damp, which has caused health problems over the years. Yet most don't end up paying capital gains on the capital gains they have got over the years. I have heard some investors saying they would prefer to see capital gains tax come in.
The removal of interest deductibility was supposed to level the playing field for owner occupiers, as owner occupier's can't claim back the interest so it is easier for investors to outbid owner occupiers on the same house. NZ has some of the highest house prices in the world compared to earnings, so this has major knock on effects. Reversing things and relying on migration to increase demand and prices is just kicking the can down the road .

quickymart

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#3117299 17-Aug-2023 19:48

Prices might be dropping, but they still aren't back to the levels they were before the pandemic, and sadly I don't think they'll ever be at what any sane, normal person would call "realistic" ever again.

Sorry, Reserve Bank, but $700,000 for a 2 bedroom house isn't "sustainable" in any way, shape or form for most first home buyers.

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