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

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Master Geek
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#2584351 14-Oct-2020 14:57

tdgeek:

Fix the supply demand issue, you fix the price. Imagine if there were 45,500 houses excess in the market? Opposite to what we have right now.

Imagine all the investments 😂

But seriously, supply/demand isn't the only problem. We need to stop incentivising people investing in property. The number of times I've gone to a viewing and heard people talking about the house as an investment... it's f!#$ing frustrating. We've basically given up for now as FHBs, and that's as a couple who has a fairly high budget.

tdgeek

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#2584353 14-Oct-2020 15:09

aspett:

tdgeek:

Fix the supply demand issue, you fix the price. Imagine if there were 45,500 houses excess in the market? Opposite to what we have right now.

Imagine all the investments 😂

But seriously, supply/demand isn't the only problem. We need to stop incentivising people investing in property. The number of times I've gone to a viewing and heard people talking about the house as an investment... it's f!#$ing frustrating. We've basically given up for now as FHBs, and that's as a couple who has a fairly high budget.

I could say that its one house per person, sorted, easy as. Spare houses everywhere. But where are the rentals? There are none now. We want people to buy extra houses as rentals, rentals are needed for a variety of reasons. But we have more people wanting houses than we have houses. Thats ok, I will pay want 15k more for this place because they are flocking to me to buy. But if we had a glut of houses, the prices drop because there are so many houses out there competing with mine. Interest rates dont help but in fact they allow more people to graduate to be FHB's, thats a good thing.

We need more houses built

wellygary

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#2584354 14-Oct-2020 15:11

aspett:

tdgeek:

Fix the supply demand issue, you fix the price. Imagine if there were 45,500 houses excess in the market? Opposite to what we have right now.

Imagine all the investments 😂

But seriously, supply/demand isn't the only problem. We need to stop incentivising people investing in property. The number of times I've gone to a viewing and heard people talking about the house as an investment... it's f!#$ing frustrating. We've basically given up for now as FHBs, and that's as a couple who has a fairly high budget.

But its not just NZ, even a 2 month lock down has failed to dent Melbourne's stubbornly high real estate prices..

With interest rates set to go even lower, you basically have the choice of the Financial markets or housing....

Housing a) gives you tangibility, and b) leverage.... its pretty hard to argue against it...

tdgeek

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#2584356 14-Oct-2020 15:23

wellygary:

But its not just NZ, even a 2 month lock down has failed to dent Melbourne's stubbornly high real estate prices..

With interest rates set to go even lower, you basically have the choice of the Financial markets or housing....

Housing a) gives you tangibility, and b) leverage.... its pretty hard to argue against it...

Yep, as in an article today why did everyone say they will drop 5 to 15%. Interest rates are part of it for sure, but also houses are reliable. They always go up over time, rock solid. Plus if I was a FHB I better hurry up for the same reason

What about we encourage rentals investment?? We usually complain about Boomers having rentals, so lets make it rewarding to own rentals?

BUT THEY HAVE TO BUILD THE RENTALS, then they get very rewarding financial benefits, tax breaks and such like. Go and buy a rental investment, no, you will be penalised cos we don't want that.

We need to build more houses.

dafman

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#2584357 14-Oct-2020 15:26

wellygary:

With interest rates set to go even lower, you basically have the choice of the Financial markets or housing....

Both of which are massive bubbles, both of which are based on sentiment not economic fundamentals, both currently being sustained by central banks around the world printing new money at levels never seen before.

We are in one big global financial experiment, the likes of which we haven't seen before.

wellygary

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#2584360 14-Oct-2020 15:31

tdgeek:

We need to build more houses.

Agreed, There needs to be major encouragement to attract corporates into the build to rent sector...

The problem is that at the moment there is so much uncertainty about rental standards and requirements its would very brave to plonk millions into it...

But because this needs to be done in volume, it is either out or up, both of which have planning issues....

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mattwnz

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#2584367 14-Oct-2020 15:58

tdgeek:

wellygary:

But its not just NZ, even a 2 month lock down has failed to dent Melbourne's stubbornly high real estate prices..

With interest rates set to go even lower, you basically have the choice of the Financial markets or housing....

Housing a) gives you tangibility, and b) leverage.... its pretty hard to argue against it...

Yep, as in an article today why did everyone say they will drop 5 to 15%. Interest rates are part of it for sure, but also houses are reliable. They always go up over time, rock solid. Plus if I was a FHB I better hurry up for the same reason

What about we encourage rentals investment?? We usually complain about Boomers having rentals, so lets make it rewarding to own rentals?

BUT THEY HAVE TO BUILD THE RENTALS, then they get very rewarding financial benefits, tax breaks and such like. Go and buy a rental investment, no, you will be penalised cos we don't want that.

We need to build more houses.

It was the banking experts who said it could drop 15%. So these were experts. But to be fair, it was based on us becoming like the UK, with widespread infections, as at that stage our policy was suppression.

The problem in NZ is the lack of things to invest in. Our sharemarket is tiny compared to other countries. Plus those alternative investments, many people have been burnt badly op. eg The sharemarket crash in 1987, or the Finance company collapses in 2007-8

The thing is, what happens when interest rates rise, or supply exceeds demand. Maybe we need to look at what has happened in Japan, where they have also gone negative with their interest rates, and their house prices have supposedly flatlined for decades after huge growth.

If the government can't build new homes with kiwibuild, then there are massive problems in the building industry, as governments have a huge amout of power to get things done. eg What happened to 'lets do this'? Lack of competition, overpriced materials, very high land prices and artificially constrained supply etc etc etc.

Kiwibuild wasn't going to cost tax payers anything,(except possible admin costs) yet it still failed. Why would a developer develop kiwibuild homes, when they can make more money from normal developments, and also have less hassle of not having to deal with government departments? Those that were built seems to be shoeboxes. An apartment development I have seen, the apartments allocated for kiwibuild are under 50sqm, yet most banks don't seem to lend on anything less than 50sqm.. Whereas their normal ones are bigger, and aren't much more. I would buy a normal one over a kiwibuild one.

No parties have any ideas on actually solving this housing crisis (disaster), partly because why do they need to? It is creating wealth for their voters. Also the RB want property prices to keep rising, as it encourages spending. But if the bubble pops, and history has shown bubbles pop, then it could also be a financial disaster. We do need to remember that NZ is seen as having the biggest housing bubble in the world.

quickymart

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#2585638 14-Oct-2020 23:30

I think I read somewhere (Stuff?) after the earthquakes in Chch, the council(?) basically exempted new builds from the RMA, and as a result a heap of new houses were built very quickly.

This may explain why pricing there is quite reasonable, compared to Akld's prices which are essentially heading for the moon.

If I find the article I'll post the link. Could it work here though?

halper86

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#2585642 15-Oct-2020 00:00

quickymart:
I think I read somewhere (Stuff?) after the earthquakes in Chch, the council(?) basically exempted new builds from the RMA, and as a result a heap of new houses were built very quickly.

This may explain why pricing there is quite reasonable, compared to Akld's prices which are essentially heading for the moon.

If I find the article I'll post the link. Could it work here though?

Dead on, supply outweighs demand. With all the building that was going to happen (or went on) they had to do something fast as: a) the council would have been flooded with RC’s and no staff to process them, b) affected families would have been ready to leave the city (or left) as a result of delays in decision processes. On the other hand, exempting new builds would have caused an increase in building and having a flow on effect such as increase in rates revenue, population growth etc...

mattwnz

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#2585645 15-Oct-2020 00:22

quickymart:

I think I read somewhere (Stuff?) after the earthquakes in Chch, the council(?) basically exempted new builds from the RMA, and as a result a heap of new houses were built very quickly.

This may explain why pricing there is quite reasonable, compared to Akld's prices which are essentially heading for the moon.

If I find the article I'll post the link. Could it work here though?

Is it more to do with less people wanting to live in Chch, and they potentially have a far larger supply of houses? I think what has happened in Chch is quite complex, and would need better analysis, as to whether it could be a solution to NZ housings crisis. I do however recall that prior to the earthquakes, houses in Christchurch were quite cheap compared to much of the rest of the country. Then after the EQs they got very expensive, especially in areas that weren't damaged.

But I know that one of the big problems in NZ is a lack of land available to build on, and that is because land is drip fed onto the market.If you want ot build in a town or city, there are few options to buy land, it seems to be very restricted, even though NZ has a huge amount of land. If land owners were forced to sell their land, and we do big scale kiwibuild developments, like we did in the state house building days, we could easily get this hosing crisis resolved. But the government doesn't want to pay to subsidize housing, and too many people have vested interests in the housing market rising. IMO the bubble will keep inflating until something happens, if it ever does, as it maybe too big to fail now.

mattwnz

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#2585646 15-Oct-2020 00:56

tdgeek:

According to a stuff article a few years ago, apparently there are well over 100,000 empty houses in NZ which people have purchased as an investment but would rather keep them empty than deal with tenants. Having Ghost houses is not good. t could be even worse now. That is a huge number of houses that have been taken out of our housing stock. Potentiality it could help solve the housing crisis of those people were forced to either rent them out or sell them. Then they are a lot being used for Airbnb etc. So much could have been done to solve the housing crisis but instead they have wanted the bubble to continue to inflate so people feel richer, so that people will spend. History has shown around the world that bubbles pop. So if it does happen, it is not a though it will be unexpected , and who will be most affected by it?

Sept 2019 According to the latest Census data released by Statistics NZ, there were 1,855,929 dwellings throughout New Zealand in the 2018 Census, with 191,646 (10.3%) of them unoccupied. That was down slightly from the 10.6% of homes unoccupied in the 2013 Census.

We did also have a housing crisis in 2013, with the same problems. So things haven't improved. So even though we now have more houses and a larger population, the percentage maybe about the same, which is logical.

But we don't actually know how many are empty and not being lived in (eg with non local owners, or people who don't want to be bothered with tenants), because there are no stats on it. Same as there weren't previously stats on who was buying NZ houses. But for 10% to be empty on census day sounds a lot.In Auckland, much of the value of a house in some places is the land, so if someone has a 900k CV house on an 1000sqm piece of land, and they can sell it for 3 million in a few years to a developer, why bother dealing with tenants?

I do wonder how they can find out how many are actually not being lived in. It could at least be one solution to this mess. As this is a housing crisis, the government could force those owners to do something. eg tax them an empty house tax.

Any house that is removed from NZs housing stock by an investor, who is sitting on it and the land for capital gains, is creating the need for a new house to be built to replace it.

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tdgeek

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#2585664 15-Oct-2020 07:16

mattwnz:

No parties have any ideas on actually solving this housing crisis (disaster), partly because why do they need to? It is creating wealth for their voters. Also the RB want property prices to keep rising, as it encourages spending. But if the bubble pops, and history has shown bubbles pop, then it could also be a financial disaster. We do need to remember that NZ is seen as having the biggest housing bubble in the world.

The bubble wont pop as there is no housing bubble. Interest rates will be low for a long time. A boom in building will stablise prices, but that will be slow. When and if, housing sticks equal demand, the upward pressure stops but thats gradual as stocks would take years to catch up

kingdragonfly

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#2585686 15-Oct-2020 07:52

We are in a recession, and our major trading partners the US, UK and Europe are becoming unpredictable.

Even though China seems to have stabilized, they're a push on from their trading with the US and Europe.

It wouldn't take much a pin hole to pop our real estate market.

While we currently have COVID under control, we are getting blasé. I'd certainly feel better if we were doing more random testing.

And there's always wildcards, like any number of introduced agriculture bugs/diseases, such as “pig ebola”

mattwnz

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#2585959 15-Oct-2020 16:14

tdgeek:

mattwnz:

No parties have any ideas on actually solving this housing crisis (disaster), partly because why do they need to? It is creating wealth for their voters. Also the RB want property prices to keep rising, as it encourages spending. But if the bubble pops, and history has shown bubbles pop, then it could also be a financial disaster. We do need to remember that NZ is seen as having the biggest housing bubble in the world.

The bubble wont pop as there is no housing bubble. Interest rates will be low for a long time. A boom in building will stablise prices, but that will be slow. When and if, housing sticks equal demand, the upward pressure stops but thats gradual as stocks would take years to catch up

You are kidding aren't you? The New Zealand housing bubble even has it's own wikipedia page. https://en.wikipedia.org/wiki/New_Zealand_property_bubble

The question is whether it will pop, or be allowed to pop, or if it has been allowed to get too big to pop. Many people also didn't think finance companies could fail prior to 2007, or the stock market crsah in 87. There is a lot of greed and FOMO.

Here is an article today about the bubble. Even the reserve bank expected a -8.9% fall by March 2021, according to their monetary policy statement in August

Stimulating a housing bubble

https://www.interest.co.nz/opinion/107532/much-huge-financial-stimulus-being-pumped-economy-seems-though-it-being-pumped

mattwnz

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#2585961 15-Oct-2020 16:19

kingdragonfly: We are in a recession, and our major trading partners the US, UK and Europe are becoming unpredictable.

Even though China seems to have stabilized, they're a push on from their trading with the US and Europe.

It wouldn't take much a pin hole to pop our real estate market.

While we currently have COVID under control, we are getting blasé. I'd certainly feel better if we were doing more random testing.

And there's always wildcards, like any number of introduced agriculture bugs/diseases, such as “pig ebola”

I know someone trying to sell their house in London, and normally it would sell easily and for a lot. But due to Covid, they are really struggling. Think it has been on the market for about 6 months. People are really cautious over there. Considering it is a really good part of London and quite a big stand alone house on a bit of land, it actually looks reasonably priced compared Aucklands prices. But they are also a lot more picky over there when it comes to things like bedroom sizes. All bedrooms must take queen sized beds for example, as children now sleep on queens sized beds.

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