Real estate, post level 4

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#2677488 20-Mar-2021 07:44

mattwnz:
quickymart:

I thought so too, kind of like a why house prices in NZ are so high for dummies.

I think you said supply was the biggest thing, and I agree with you - especially the bit he talks about the big apartments in Sydney and Melbourne, which sounds like that helped a lot. Just a pity governments appear to be too scared to act on it - I can see homeowners jumping up and down if their house drops in value, but at the same time that does nothing for first home buyers.

House values dropped in the early 90's over a number of years and also in the 2000's, and I don't think people with a house jumped up and down about it. People re buying and selling in the same market, so it shouldn't really affect people unless they go into negative equity due to overpaying. But anyone who purchased soon before a drop, are likely going to be worst affected, and that is why it is important to not pay too much for a house. The vast majority of house owners should not be affected by a significant drop, especially as house prices have risen more than 20% in just a year. Too many people are getting carried away at the moment due to FOMO and frustration, and there has been no warnings from the government on paying too much, nor have I read anything in the media. I mean what happens if there is a global financial crisis and the bubble pops? Or is NZ different?. Just because someone buys a house for 800k in 2020, when the new 2020 RV maybe 600k, doesn't magically make the house worth 800k in the future. It may drop back down based on other properties in the area.

The government s aren't scared, there is just no political motivation to do anything, and too many vested interests IMO

Yeah I have been grown up enough to follow the politics and the trends since about 2003. Nobody is actually interested in fixing anything. Or too incompetent to fix it. Every single official from regional to national is implicated.

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#2677492 20-Mar-2021 08:36

mattwnz:

There aren't the builders to build them at the moment, with big waiting lists and many construction companies appear to have recently hiked up their prices due to so much demand. It is ironic, because they were talking during last years lockdown how building would drop off and builders would be in need of work. But the opposite has happened.

Land also has dramatically risen in price this year, as investors , speculators and other people are buying sections en-mass and land banking. It is totally crazy out there at the moment, as there is pretty much no new land supply in my area. Most are resales by land bankers. Land that was selling in one town I am looking at was selling for 250k prior to the lockdown last year. The same land is being resold by speculators and construction companies that purchased the land, between 450-500k. All are being sold by deadline sales and auctions. Can be 8 other buyers trying to buy the same piece of land. Some developments I have seen are even being marketed towards land bankers as being a good investment.IMO it is a terrible situation that NZers treat other NZers like this to make a quick buck. When we should

IMO land bankers in this situation are not much different to ticket scalpers, who are hoping to resell the land for a quick easy profit without doing any work. A piece of land in a new estate I am interested in buying, sold in November last year for about 300k. It is being resold by that buyer and the agent is expecting high 400k and wouldn't be surprised if it surpassed 500k. Agents are also pumping up the prices and giving seller high expectations, based on a few previous high sales. But the problem is a few outlier high prices become the new normal price, and each money they just keep rising. But NZ has plenty of undeveloped land, and towns are often surrounded by farmland which is perfectly suitable for housing. But it seems that councils don't want to enlarge the area of the town. It seems some people really want land supply restricted to keep prices high.

Your right. As you say there is plenty of land, a Govt can force buy it, infrastructure it, bring builders in. Build, we will buy. This farmland, developed at zero margin for the sole purpose of housing will see reduced section prices that would help drive down the private owners. Builders? Train them

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#2677493 20-Mar-2021 08:40

mattwnz:

Handle9:

This is a very good article on how successive governments have deluded themselves, and the public, from Bernard Hickey.

This is also very scary for the stability of the market and shows how much of this is driven by speculation.

I think 2021 is going to be the year that Labour could get hammered by this. They can't wait until the next election before they do something major about it. I get the feeling they expected to just coast through this next term, being voted in on their Covid response, and their promise of no new taxes, or property taxes etc, resulting in many National voters switching sides. I expect we will see a new Prime minster before the end of this term, before some serious changes are made, as the problems caused by the increased inequity, largely driven by the housing crisis and the knock on effects, are too big to ignore anymore. Someone I was speaking to on this expects a new Prime Minster before the end of the year.

I still remember the Prime Minister last year saying that these huge property price rises can't continue. Yet they have only gotten significantly worse since she said this.

Housing has been an issue for a long time as per the Hickey article. Govts have promised in that long time, nothing has been done. Its not a Labour Govt problem, but for them, the housing crisis has reached a tipping point in their term, yet both of them have done nothing in the past and wont do anything in the future, apart from newsworthy ideas.

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#2677496 20-Mar-2021 08:58

Why did Kiwibuild fail so badly anyway? I've never really understood why it fell over. The 100,000 houses was a great idea but something failed somewhere along the way.

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#2677502 20-Mar-2021 09:09

quickymart:

Why did Kiwibuild fail so badly anyway? I've never really understood why it fell over. The 100,000 houses was a great idea but something failed somewhere along the way.

IMO

1. Too late. Build 100,000 houses when the prices are already out of reach

2. They didn't build, they just took over other builds. Which would have happened anyway. Mainly.

3. They should have land grabbed large plots and developed them. Like everyone else does

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#2677560 20-Mar-2021 11:59

Thanks for explaining that. I thought it was just the builds were happening too slowly, but it seems like it wasn't. And on point 1 - I remember $650,000 was the price they were touting in Auckland, which (IMO) is still out of reach for a lot of people anyway.

I doubt there will be a housing bubble like there was in the late 2000s any time soon, the GFC was what drove that price drop, and today demand is still far outstripping supply anyway (which wasn't necessarily the case in 2009).

alasta

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#2677569 20-Mar-2021 12:29

I bought a small one bedroom unit off the plans four years ago for $450k. Late last year I had it valued at $536k and an identical unit next door was advertised for sale for "offers over $600k". I just found out that it sold for $763k. Frankly I am gobsmacked.

It makes me think that people are getting intoxicated on all the cheap capital floating around, and consequently tendering some silly offers.

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#2677573 20-Mar-2021 12:57

alasta:

I bought a small one bedroom unit off the plans four years ago for $450k. Late last year I had it valued at $536k and an identical unit next door was advertised for sale for "offers over $600k". I just found out that it sold for $763k. Frankly I am gobsmacked.

It makes me think that people are getting intoxicated on all the cheap capital floating around, and consequently tendering some silly offers.

Agree. Interest is a lot of the new mortgage payment, less interest can buy higher. They aren't paying $800,000, they go by the monthly mortgage I'd say.

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#2677618 20-Mar-2021 14:52

alasta:
I bought a small one bedroom unit off the plans four years ago for $450k. Late last year I had it valued at $536k and an identical unit next door was advertised for sale for "offers over $600k". I just found out that it sold for $763k. Frankly I am gobsmacked.

It makes me think that people are getting intoxicated on all the cheap capital floating around, and consequently tendering some silly offers.

Yes imo this is partly what is happening, mixed with FOMO.

There are a lot of investors and speculators buying. Land is a big. Many are people who had money in the bank earning interest but since the interest rates dropped, have had to move their money into other things. A lot of people could get themselves into trouble imo if they end up over paying and the market changes.

The amounts being offered are crazy, but many are cash buyers I have found. So buyers aren't even putting any conditions on their offers. I was told by an agent that any offer I should not have any conditions on it otherwise it probably otherwise it probably wouldn't be accepted

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#2677620 20-Mar-2021 14:58

tdgeek:
quickymart:

Why did Kiwibuild fail so badly anyway? I've never really understood why it fell over. The 100,000 houses was a great idea but something failed somewhere along the way.

IMO

1. Too late. Build 100,000 houses when the prices are already out of reach

2. They didn't build, they just took over other builds. Which would have happened anyway. Mainly.

3. They should have land grabbed large plots and developed them. Like everyone else does

Aren't the amounts that kiwibuild homes can sell for, fixed. If you look at kiwibuild homes for sale in their website, the amounts seem very low now, based on how much inflation had gone up with houses

Why would any developer want to build kiwibuild homes when they can make far more on other houses. Why doesnt the governemnt subsidie kiwibuild homes.

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#2677623 20-Mar-2021 15:05

mattwnz: The amounts being offered are crazy, but many are cash buyers I have found.

If this is true then the change to investor LVRs is going to make bugger all difference!

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#2677625 20-Mar-2021 15:18

mattwnz:

Aren't the amounts that kiwibuild homes can sell for, fixed. If you look at kiwibuild homes for sale in their website, the amounts seem very low now, based on how much inflation had gone up with houses

Why would any developer want to build kiwibuild homes when they can make far more on other houses. Why doesnt the governemnt subsidie kiwibuild homes.

Yes and yes.

They are trying to sell affordable homes, not what the market will bear, but they are often not that affordable for many

Basic houses have not much profit, you need a bigger house to add in more cream

I doubt we would want to subsidise, thats more money from the coffers to pay people bills. You could tell the banks that builds get a cheaper interest rate, paid for by increasing existing homes interest rate for purchases from the start date of that plan. Low low deposit on builds for under a certain price range, Govt can underwrite that. Govt can buy up DIY specials, reno them, sell as Kiwibuild houses. But forget kiwi build its about getting all Kiwis to build than buy. If incentives kicked in and there was a house building boom, you're adding to the lack of stock and you are tempering demand for existing homes.Yes, you will need to market interest in building trades, but this incentivise a building boom is a long term strategy. Land, Govt goes land grabbing. These "builds" and their incentives could also include renos especially in low to average locations, they should be cheaper. FHB finds a DIY special, signs up, Govt buys it and reno's it, sells to the FHB, thats should be affordable.

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#2677645 20-Mar-2021 15:52

Batman: m

The housing crisis can only be fixed by the government. They have already tried to shift responsibility onto the Reserve Bank, but they have served it back to the governemnt as their responsibility. So unless there is a global financial event, not much can change without government making changes. They can say that these prices can't continue to rise like they are, but that just becomes a challenge which has now been exceeded.

So in the future months people on this thread are likely to continue to complain about the average house price in NZ reaching a million dollars etc. But there are now people in the media who are keeping the housing crisis as a top story. IMO this is the most important topic in NZ due to the enequity and knock on effects it causes. It creates a huge wealth gap and has only accelerated since lockdown ended, partly due to emergency low interest rates which has had major knock on effects pushing more investors into buying houses and land.

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#2677682 20-Mar-2021 16:49

I'm surprised we haven't had a GFC already, given how the world economy is shrinking (at the moment, anyway) with coronavirus.

mattwnz

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#2677687 20-Mar-2021 17:12

alasta:
mattwnz: The amounts being offered are crazy, but many are cash buyers I have found.

If this is true then the change to investor LVRs is going to make bugger all difference!

It isn't expected to make much of a difference to the high prices we now have. Plus they closed the barn door after the barn door after the horse had already bolted. They should never have removed the restrictions last year because it did have a big effect on increasing prices.

In terms of people paying these crazy prices. Basically any good house should currently get multiple bids, due to a lack of houses on the market, compared to demand from mum and dad investors, FHBs, people wanting to move etc. If people are going to invest in putting in an offer, they don't want to waste their time offering an amount that isn't likely to buy the house. So often the people paying the crazy prices are the ones that end up buying. People offering what would be considered a good price during non pandemic times, are missing out.

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