Real estate, post level 4

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Mad Scientist
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#2682855 30-Mar-2021 07:11

GV27:
I still like the idea of the government offering a retail product with low or no interest loans to help those who are hit hardest by prices unwinding, and then making a point of unwinding prices to the point where houses are actually affordable again (5x etc).

The issue was those hardest hit didn't see the money while business owners pocketed free cash

sbiddle

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#2682857 30-Mar-2021 07:25

dafman:

mrdrifter:

... ideally without a massive crash that leaves half the country bankrupt.

Flip side of the same coin. Without a massive crash, the other half the country will never own a house and will be unable to afford market rents when they retire, leaving them homeless.

That’s the real mess we are currently in ... any which way, one half of the population are in dire straits.

The problem is a "massive" crash can no longer happen. Even a 25% drop in house prices right now would have truly massive implications for the country.

And a 25% drop wouldn't even take us back to pre Covid days. In the Hutt Valley for example house prices have more doubled since the end of 2017, pretty much delivering 33% growth for those 3 years, and now they're still going up. In the 10 years prior to that prices only went up by 30% over an entire 10 year period.

We need to be back at those late 2017 levels to make housing affordable, but the simple reality is that won't ever happen because the financial impact of such a correction are simply too great to fathom.

Social inequality in this country has growth at a truly astronomical rate in this country over the past 3 years, and I'm not sure how this is ever going to be fixed.

Fred99

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#2682858 30-Mar-2021 07:29

Handle9:

mrdrifter:

I'm not saying it's good or bad, simply that the government likes to point fingers at everyone else be that the reserve bank or landlords and the result is continuing and significant social division (both sides of the aisle do this).

The social division is quite real now. It's not a political construct, it's between the landed gentry (of which I am one) and those who can never afford a house.

The city I live in was designed around principles of perpetuating class division, so was once very much a religious/political construct.

The church of course took a cut, and they're still doing it.

tdgeek

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#2682860 30-Mar-2021 07:46

mattwnz:

I don't think there needs to be a crash but more of a deflation of the bubble. If prices dropped 25 percent, that would only take prices back to pre covid 19 prices. So only those who purchased in the last year will likely go into negative equity.

Neither will happen. Its still bouyant thanks to covid induced super low interest rates. If investors start leaving the residential market and if interest rates start heading back to the 5% mark, that will help reduce demand and increase supply, but it wont do much more than level off house prices.

Fred99

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#2682900 30-Mar-2021 08:58

tdgeek:

mattwnz:

I don't think there needs to be a crash but more of a deflation of the bubble. If prices dropped 25 percent, that would only take prices back to pre covid 19 prices. So only those who purchased in the last year will likely go into negative equity.

Neither will happen. Its still bouyant thanks to covid induced super low interest rates. If investors start leaving the residential market and if interest rates start heading back to the 5% mark, that will help reduce demand and increase supply, but it wont do much more than level off house prices.

It won't actually increase supply, just tweak the dynamics a bit against rental property investors, maybe a bit toward owner-occupier buyers.

The "crash" that we're probably going to experience some time probably won't be triggered by a local event (possible exceptions something like foot and mouth disease) but a sharp unexpected global economic shift. Trying to avoid that is why central banks are printing money like there's no tomorrow, and have been since 2008.

They used to think doing that (printing money) must automatically result in high inflation/stagflation. Better pray that the economists who are now saying it won't are right.

quickymart

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#2686480 5-Apr-2021 07:19

I have a question, what is (or was) the point of a Government Valuation (or might be CV) - at least I think that's what they're called?
I've seen places with "GV = $345,000" but it will sell for nearly double that price. Is it a pricing guideline of some sort? If so it doesn't seem to be a particularly useful one.

Handle9

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#2686481 5-Apr-2021 07:20

quickymart:
I have a question, what is (or was) the point of a Government Valuation (or might be CV) - at least I think that's what they're called?
I've seen places with "GV = $345,000" but it will sell for nearly double that price. Is it a pricing guideline of some sort? If so it doesn't seem to be a particularly useful one.

It's used to calculate the rates. That's all it's good for.

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dafman

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#2686502 5-Apr-2021 09:17

For most of my adult life, CVs were a reasonable indication of value. It’s just that the world’s now gone mad.

Batman

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#2686574 5-Apr-2021 10:32

Apparently over 50,000 NZers have returned home for to the pandemic. I read this somewhere

Journeyman

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#2689965 9-Apr-2021 14:32

I bought my townhouse last year, shortly after level 4 lockdown ended. I've been looking at house sale prices in my complex since then and comparing them to what I paid. Some houses are done up, some are not. Mine was not done up. I'm looking at similar condition houses with the same floorplan and while the sale prices were slow to rise at first, the most recent to sell with only minor renovations sold for $100,000+ more than what I paid. A larger version of my house with some nice renovations went for over $1million.

The landed gentry in me is quietly pleased with this, but I feel bad for anyone on the rental hamster wheel. I don't think anything will improve much for renters and it makes me feel just slightly sick tbh.

wellygary

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#2690012 9-Apr-2021 14:51

Batman:

Apparently over 50,000 NZers have returned home for to the pandemic. I read this somewhere

Yeah, but a bunch (some NZ citizens, but mostly work permit holders) have also left....

The big thing to watch now will the TT Border encourage more departures of NZers going to OZ, (now that they can come back to visit)

Annual net migration in the year ended January 2021 is provisionally estimated at 33,200, based on 68,800 migrant arrivals and 35,700 migrant departures.

In the 10 months from April 2020 to January 2021, net migration was provisionally estimated at 6,500. This was made up of a net gain of 14,100 New Zealand citizens and a net loss of 7,500 non-New Zealand citizens.

https://www.stats.govt.nz/news/new-zealand-citizens-drive-net-migration-gain

quickymart

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#2691171 12-Apr-2021 08:35

This guy on The Spinoff says Kiwis should look to Australia if they want to purchase a property (which in some respects may not be such a bad idea):

https://thespinoff.co.nz/money/12-04-2021/fed-up-with-nzs-out-of-control-housing-market-come-to-australia/?fbclid=IwAR1aY4_HWiekxybksiZs2DSHYw9oho9--HqHeqbr2ZVsYLGuweNeUwvOuQU

Also an economist (linked from that same articles) believes building more houses won't make much difference to prices:

https://www.interest.co.nz/opinion/109051/economist-brian-easton-says-building-more-houses-will-not-reduce-house-prices-much

(What's the difference between a stamp duty and a capital gains tax? Are they the same thing? Would a stamp duty work here?)

elpenguino

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#2691182 12-Apr-2021 09:13

A stamp duty is a transaction tax and is usually a flat fee e.g $25k for every house sale, no matter what.

Most of the posters in this thread are just like chimpanzees on MDMA, full of feelings of bonhomie, joy, and optimism. Fred99 8/4/21

ANglEAUT

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#2691630 12-Apr-2021 17:39

sbiddle:

.... And a 25% drop wouldn't even take us back to pre Covid days. ...

We need to be back at those late 2017 levels to make housing affordable, ...

Maybe even go back to 2000?

Taken from The Spinoff: https://thespinoff.co.nz/society/the-side-eye/25-03-2021/the-side-eyes-two-new-zealands-the-k-shape/

Please keep this GZ community vibrant by contributing in a constructive & respectful manner.

quickymart

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#2691776 12-Apr-2021 22:01

Sounds good to me but I think the economy would suffer a lot if that happened.

Hell, even 2011 prices (only 10 years ago) would be awesome.

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