Real estate, post COVID-19 level 4 (since 2020)

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#3152858 27-Oct-2023 18:18

Im no guru. But I dunno about more demand increasing prices.... just yet.

Im not sure how long the rates are required to deal with inflation? any good expert predictions? I remember when the mega drop occured they were saying rates will get back down by early 24, doh.

Given how well we seemed to do during covid with only a circa 90% GDP largely autonomously, could our property markets survive a serious geo political incident with our largest importer?

If that doesnt occur, I dont see why our markets wont get back to our Nov 21 circa $1.3m high. Over the decade its actually not as grand as it sounds given auck use to travel at around 8-9%PA on avg. That high was 9% over the decade due to the 2017 fall and nothing doing for 4 years. So will be intersting to see how quickly it would recover should inflation resolve.

Lets just hope for no more geo political issues and our mortgage rates fight off the inflation.

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#3152866 27-Oct-2023 19:40

TeaLeaf:

Im no guru. But I dunno about more demand increasing prices.... just yet.

Im not sure how long the rates are required to deal with inflation? any good expert predictions? I remember when the mega drop occured they were saying rates will get back down by early 24, doh.

Given how well we seemed to do during covid with only a circa 90% GDP largely autonomously, could our property markets survive a serious geo political incident with our largest importer?

If that doesnt occur, I dont see why our markets wont get back to our Nov 21 circa $1.3m high. Over the decade its actually not as grand as it sounds given auck use to travel at around 8-9%PA on avg. That high was 9% over the decade due to the 2017 fall and nothing doing for 4 years. So will be intersting to see how quickly it would recover should inflation resolve.

Lets just hope for no more geo political issues and our mortgage rates fight off the inflation.

Inflation is global

The support mechanisms when most countries shut down are the same

Production is shut down. People store money, then when lockdowns end, there is a limited supply, but plenty of demand due to pent up wages

When lockdowns end, great, but Covid still ruled, so you have sick leave galore = less production

You could make it political, or you can make it reality. Reality is, production doesnt equal demand.

For NZ, factor in the Gisborne weather event. A HUGE amount of vege and fruit rots. Unrelated to Covid or global pressures, but add that in.Now with El Nino we wont have that this or next year, but many growers are not re sowing they are re building.

Climate Change, expect more.

Ideally the globe can agree on a joint strategy, but we all know that won't happen, so our global management will be inefficient.

Essentially this is Math 101, the globe won't pass

mattwnz

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#3152936 28-Oct-2023 01:29

TeaLeaf:

Im no guru. But I dunno about more demand increasing prices.... just yet.

Im not sure how long the rates are required to deal with inflation? any good expert predictions? I remember when the mega drop occured they were saying rates will get back down by early 24, doh.

Given how well we seemed to do during covid with only a circa 90% GDP largely autonomously, could our property markets survive a serious geo political incident with our largest importer?

If that doesnt occur, I dont see why our markets wont get back to our Nov 21 circa $1.3m high. Over the decade its actually not as grand as it sounds given auck use to travel at around 8-9%PA on avg. That high was 9% over the decade due to the 2017 fall and nothing doing for 4 years. So will be intersting to see how quickly it would recover should inflation resolve.

Lets just hope for no more geo political issues and our mortgage rates fight off the inflation.

Historically the current rates are still quite low. eg 2000 rates were higher, and I understand the average house price was about 20% of the price the average price is now. eg a 20% deposit on an average priced house in 2000, could buy outright the average priced house back then. So how do we know the current rates aren't a more neutral position. IMO I wouldn't be surprised of house prices remain about this level until 2030 as wages catch up and interest rates remain higher for longer. But anything could happen.

tweake

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#3152950 28-Oct-2023 08:42

mattwnz:

IMO I wouldn't be surprised of house prices remain about this level until 2030 as wages catch up and interest rates remain higher for longer. But anything could happen.

yes, if they are smart, but people are greedy.

Handle9

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#3152952 28-Oct-2023 08:53

tweake:
mattwnz:

IMO I wouldn't be surprised of house prices remain about this level until 2030 as wages catch up and interest rates remain higher for longer. But anything could happen.

yes, if they are smart, but people need somewhere to live .

FTFY

tweake

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#3152958 28-Oct-2023 09:31

Handle9:
FTFY

people can't afford to buy a place to live because sellers are to greedy. then no one buys and the whole lot comes crashing down.

if they are smart they will sell at what people can afford, which means the market will flatten instead of crash.

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Handle9

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#3152966 28-Oct-2023 10:01

tweake:
Handle9:
FTFY

people can't afford to buy a place to live because sellers are to greedy. then no one buys and the whole lot comes crashing down.

if they are smart they will sell at what people can afford, which means the market will flatten instead of crash.

Why would anyone sell something below what it is worth?

A willing buyer and a willing seller determines the worth of a property. If houses are overpriced then prices will fall due to lack of demand, if there is an undersupply in a growing population then the prices goes up.

tweake

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#3152969 28-Oct-2023 10:33

Handle9:

Why would anyone sell something below what it is worth?

A willing buyer and a willing seller determines the worth of a property. If houses are overpriced then prices will fall due to lack of demand, if there is an undersupply in a growing population then the prices goes up.

https://www.stuff.co.nz/life-style/homed/latest/131487950/elderly-couple-gutted-bank-classes-their-polystyreneclad-home-as-leaky-when-its-not

this is a good example. couple buy a bottom end house (all eifs houses are bottom rung) and then try to sell for maximum profit. the bank stops buyer from over paying. they could have taken the lower offer (from anyone) and still make, if i remember rightly, about 200k on just that sale. but no, they public complain and do a sob story to the media to try and get the extra profit. just simple greed.

your quite correct prices will fall if no one buys, but that can cause a crash. hence why i say if they are smart they will sell for what people can pay. but if they are greedy, like that article, they will cause the market to stall, the prices to go down and the market to crash.

Handle9

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#3152972 28-Oct-2023 10:47

tweake:
Handle9:

Why would anyone sell something below what it is worth?

A willing buyer and a willing seller determines the worth of a property. If houses are overpriced then prices will fall due to lack of demand, if there is an undersupply in a growing population then the prices goes up.

https://www.stuff.co.nz/life-style/homed/latest/131487950/elderly-couple-gutted-bank-classes-their-polystyreneclad-home-as-leaky-when-its-not

this is a good example. couple buy a bottom end house (all eifs houses are bottom rung) and then try to sell for maximum profit. the bank stops buyer from over paying. they could have taken the lower offer (from anyone) and still make, if i remember rightly, about 200k on just that sale. but no, they public complain and do a sob story to the media to try and get the extra profit. just simple greed.
.

So you want them to be happy about a bank policy devaluing their house?

I trust that you walk along the street giving money away? By your definition if you don’t you are greedy.

tweake

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#3152977 28-Oct-2023 11:29

Handle9:

So you want them to be happy about a bank policy devaluing their house?

I trust that you walk along the street giving money away? By your definition if you don’t you are greedy.

o no i'm a complete ahole, i want the market to boom like crazy so it will crash trashing the hell out of nz economy. then people might actually think that swiping money from the next generations is not a good way to earn income and actually start to work for a living.

mudguard

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#3153091 28-Oct-2023 15:28

tweake:

Then people might actually think that swiping money from the next generations is not a good way to earn income and actually start to work for a living.

It's really a demand thing. If there were surplus houses available I don't think we'd be in this position. I go to plenty of small towns with For Sale signs on them for numerous months.

All interest rates do is throttle it somewhat. Historically if you are looking at what you can afford you should use 8% as a guide. As to the answer, I bought mainly due to luck, I'm not sure I'd be approved on one income under the new rules now.

The pessimist in me still doesn't really think housing is our actual problem, our ageing population is. Presumably we'll just keep importing people, who will get here and realise, gee, can't afford to have kids here. And we'll be in the same position.

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tweake

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#3153096 28-Oct-2023 16:15

mudguard:

tweake:

Then people might actually think that swiping money from the next generations is not a good way to earn income and actually start to work for a living.

It's really a demand thing. If there were surplus houses available I don't think we'd be in this position. I go to plenty of small towns with For Sale signs on them for numerous months.

All interest rates do is throttle it somewhat. Historically if you are looking at what you can afford you should use 8% as a guide. As to the answer, I bought mainly due to luck, I'm not sure I'd be approved on one income under the new rules now.

The pessimist in me still doesn't really think housing is our actual problem, our ageing population is. Presumably we'll just keep importing people, who will get here and realise, gee, can't afford to have kids here. And we'll be in the same position.

why build new and reduce demand when you can buy 2nd hand and increase demand. which is exactly whats happened house building rates dropped massively until more recent times. add to that lack of govt building homes as well. people can create the demand themselves which increases the price on what they own. same effect with bnb, buy a home and take it out of circulation which increases demand. win win.

ageing population in some ways reduces the demand. eg i have 14 uncles and aunts, but they only had 16 kids overall, which means we need less houses than we normally would have required if they bred the required number to maintain a population.

out of those 30 people only one has built a new house so far. thats why there is big demand, no one built houses for 40 years. even now many have been built only because the owners made so much money of the old houses.

mudguard

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#3153143 28-Oct-2023 16:44

tweake:

why build new and reduce demand when you can buy 2nd hand and increase demand.

I'd assume building new is considerably more involved than buying an existing house. For example the mortgage requirements are slightly different too.

tweake

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#3153144 28-Oct-2023 16:53

mudguard:

tweake:

why build new and reduce demand when you can buy 2nd hand and increase demand.

I'd assume building new is considerably more involved than buying an existing house. For example the mortgage requirements are slightly different too.

obviously not everyone can build new, the point is the people who should have been building new never did. why loose money when you can make money.

mudguard

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#3153145 28-Oct-2023 17:23

tweake:

obviously not everyone can build new, the point is the people who should have been building new never did. why loose money when you can make money.

But who exactly are these people? Someone who works in a bank might be able to clarify as it's been over ten years since I worked in one. But empty land with no services needed 50% deposit, maybe less with services.

Again, if it was easy, it would be being done. Don't get me wrong, the whole thing is at least a generation and half in the making and there's no easy fix. Cranking interest rates has probably been the bluntest tool. But if net migration is 100,000 it doesn't matter if we were world leaders in house building, no one can keep up with that growth. Land is too expensive, we have real opposition to building up, we can't just keep building out.

I don't know what the answer is. Friends have had to choose between kids and a house.

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