Real estate, post level 4

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#2667981 4-Mar-2021 23:13

dafman:

It’s a bubble, pure and simple.

What will hopefully happen is that prices vs incomes will reach a point where sales decline. Can't afford it. Prices will ease, its not the magic bullet anymore. More renters less owners but everyone has a house to live in as most of us do now. Govt builds more social housing. Sorted. Rather than bursting and creating havoc it just causes a rent vs ownership divide. In some ways the low wage economy we now live in is probably a saviour in some respects as that drops demand.

mattwnz

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#2667985 4-Mar-2021 23:30

tdgeek:

Yes they do double every 10 years ,always have. But its not linear, if your example has doubled in 7 years, thats ok, its not every exact 10 years, there are mini booms, then stable for ages.

That could then mean in the next 3 years they could be static and people maybe better waiting. But then again that may not happen and they could be up another 50% in 3 years. Noone knows. But the Reserve bank today did have a few warnings. The problem with bubble situations is they can pop.

quickymart

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#2668801 6-Mar-2021 11:33

https://www.stuff.co.nz/life-style/homed/housing-affordability/124418197/is-wellington-a-lost-city-for-first-home-buyers-economist-says-city-unattainable-for-those-on-modest-incomes

This article is specifically related to Wellington housing, but I thought this quote was quite fitting for the current situation:

“An entire generation is getting priced out, and it's going to create intergenerational inequality,” Cherry said. “First home buyers won’t exist because people with houses are just selling to other people with houses.”

Definitely rings true for a lot of first home buyers at the moment.

tdgeek

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#2668850 6-Mar-2021 12:01

Imagine saving a 20% deposit then when you use it, its grown by 8k, ok save another 8k. Ready now, oh need to save another 8k

Only real option is to relocate, i.e. kick the can to the next town, then YOU are now the cause, oddly enough.

We need more stocks. Thats not the builders fault, as you and I will buy a house not build a house. The Government needs to embark on a nationwide building program, as they did in 1930,'s and late 1940's. Build, they will come to buy. Builders can't afford to build build build, they can only afford to build to order. Or somehow make a new build, a no brainer. 1. Add stock, 2. reduce existing home demand.

tdgeek

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#2668851 6-Mar-2021 12:05

mattwnz:

The problem with bubble situations is they can pop.

I can't see a housing bubble pop. There is still demand. Despite a low wage economy. Kiwisaver is a huge help and likely a huge cause? FHB initiatives, equals more demand. If demand drops that wont be overnight. Prices would level off, then drop somewhat.

quickymart

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#2668855 6-Mar-2021 12:12

I wonder where they're going to level off though.

tdgeek

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#2668880 6-Mar-2021 12:24

quickymart:

I wonder where they're going to level off though.

When interest rates start trending up? Thats the thing, we want FHB to buy but the way to reduce demand is to make it harder to buy. Higher interest rates, more FHB are now locked out, yay, less demand, prices level off. But at the cost of more FHB's. Higher wages? No, thats not allowed. Increase deposits, thats more FHB gone. All the things that will help FHB, will fuel demand.

Maybe we forget about house prices, and place all focus on builds. FHB can have better terms for new builds. I mentioned Government national build program. Essentially that wipes most builder companies off the map, they become employees not building business owners. OR, maybe the Government goes on a land buying spree. Forced land purchases, they build the infrastructure, in cooperation with builder companies who will build on the subdivided and infrastructured land?

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BlinkyBill

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#2668929 6-Mar-2021 12:37

Interest rates not predicted to rise until 2025. US Treasury printed $1.5 trillion recently, to stave off rising govt bond rates. Obviously the NZ Govt can’t compete with that.

In lieu of CGT, simply need lots of supply. It’s as simple as that.

quickymart

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#2669593 7-Mar-2021 19:25

Hopefully that 2028 prediction of housing finally meeting demand comes to pass - but I doubt it would drop prices drastically, and Christ knows what the median price will be by that point.

quickymart

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#2675195 15-Mar-2021 22:33

https://www.nzherald.co.nz/business/imf-warns-of-pronounced-correction-in-nzs-housing-market/UYHULKXQXUJPFSJ3UK657HAB7Q/

I wonder what a "correction" would consist of? Still not enough stock to meet demand.

How many houses is Auckland short of, anyway? This article ( https://www.infometrics.co.nz/nz-short-by-nearly-40000-houses/ ) from October 2019 - admittedly, before coronavirus - indicates Auckland was almost 30,000 short back then (Christchurch looked good though). God only knows how bad Auckland is now. Wellington isn't too flash either.

mattwnz

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#2675202 16-Mar-2021 00:49

quickymart:

Hopefully that 2028 prediction of housing finally meeting demand comes to pass - but I doubt it would drop prices drastically, and Christ knows what the median price will be by that point.

I wouldn't be surprised in much of NZ, if we have a lost decade of house price inflation, where house prices just remain reasonably static.

But I wouldn't be surprised to see some more government intervention. Hopefully it won't be to drop the % required by FHBs for a deposit, as that will just likely increase prices more.

tdgeek

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#2675206 16-Mar-2021 06:39

mattwnz:

I wouldn't be surprised in much of NZ, if we have a lost decade of house price inflation, where house prices just remain reasonably static.

But I wouldn't be surprised to see some more government intervention. Hopefully it won't be to drop the % required by FHBs for a deposit, as that will just likely increase prices more.

You could make FHB's buy with a zero deposit. Only if they build. No effect on supply and demand for existing homes, more builder employment. The Govt and local council can force buy land, build the infrastructure and recover that from each build at a zero margin project.

mudguard

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#2675210 16-Mar-2021 06:47

tdgeek:
mattwnz:

I wouldn't be surprised in much of NZ, if we have a lost decade of house price inflation, where house prices just remain reasonably static.

But I wouldn't be surprised to see some more government intervention. Hopefully it won't be to drop the % required by FHBs for a deposit, as that will just likely increase prices more.

You could make FHB's buy with a zero deposit. Only if they build. No effect on supply and demand for existing homes, more builder employment. The Govt and local council can force buy land, build the infrastructure and recover that from each build at a zero margin project.

I don't think the banks would like that. I'd imagine there would be a decent increase in the interest rate for those loans.

tdgeek

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#2675216 16-Mar-2021 07:14

mudguard:

I don't think the banks would like that. I'd imagine there would be a decent increase in the interest rate for those loans.

Govt can underwrite the deposit shortfall. Given that loans are based on ability to pay that's a low risk, or virtually no risk if there was a foreclosure sale.

Interest, lets subsidise FHB builds interest rate with a revenue neutral levy on existing homes. That can apply to all builds

GV27

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#2675220 16-Mar-2021 07:25

tdgeek:

Interest, lets subsidise FHB builds interest rate with a revenue neutral levy on existing homes. That can apply to all builds

So me in my first home paying a massive mortgage now has to pay an additional levy so someone else can get theirs easier? No deal.

There is a more targeted but heavy-handed approach: A structured reset of housing through demand measures (DTI, CGT, stamp duties/rates that scale by number of properties etc) combined with generous owner-occupier funding - possibly even at 0% from the State - to help owner occupiers out of inevitable negative equity. That way we can get house prices back to sane levels (think 4x incomes instead of 11x) and give people a chance at recovering from what will happen when we unwind them.

Unless we do it on our terms, something will happen externally and we won't have a choice. Anything else is tinkering around the edges and as long as credit is cheap and supply is limited, prices will go one way.

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