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

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#2744060 14-Jul-2021 14:07

tdgeek:

GV27:

There's a huge difference between 'have always risen' and 'shot up by 30% in 12 months' when you're trying to get a deposit together. I feel that's kind of important in terms of context as well.

And also no, after the GFC, prices walked back a little bit, but nowhere the bloodletting we saw in other countries.

Whose fault is it they rose 30% in the last 12 months?

Government. They could have brought in emergency taxes last year when the PM said that 'house prices just can't keep rising like this' But they did. They also could have given out helicopter payments to everyone to get people spending. Instead the money went into pumping up all home owners equity, to make home owners feel rich and get them spending, and we now have massive inflation. It was a K shaped recovery To unroll the damage from these house price rises is going to take many years.

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#2744062 14-Jul-2021 14:13

tdgeek:

House prices have always risen, and affordability has been slowly decreasing, not a lot has changed. What you say also applied in the past. Why is it an issue now?

Except, in the past, if you were in your 20's and starting out employment, you did so with the goal of being able to save enough to put the deposit down on a house, which you could then pay off with an affordable mortgage.

Today, the only opportunity 20-somethings have for eventually buying a house is if they are lucky enough to have parents with equity to pass onto them. And with over 50% of children growing up in rental properties at present, the odds of that aren't great for many.

Apart from that, I agree with you, not a lot has changed.

tdgeek

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#2744063 14-Jul-2021 14:18

mattwnz:

Government. They could have brought in emergency taxes last year when the PM said that 'house prices just can't keep rising like this' But they did. They also could have given out helicopter payments to everyone to get people spending. Instead the money went into pumping up all home owners equity, to make home owners feel rich and get them spending, and we now have massive inflation. It was a K shaped recovery To unroll the damage from these house price rises is going to take many years.

What about the decades before this?? That what so many ignore, its been building up, and only when the damn leaks you forget the long past that has brought us to this point.

No, the money hasn't been sent to you and me, Ive seen nothing. Its gone to businesses, which means it has also gone to employees who retained their income. House prices have inflated many due to farcically low interest rates brought on by QE, as other countries also used as a tool to "get people spending"

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#2744066 14-Jul-2021 14:23

dafman:

Except, in the past, if you were in your 20's and starting out employment, you did so with the goal of being able to save enough to put the deposit down on a house, which you could then pay off with an affordable mortgage.

Today, the only opportunity 20-somethings have for eventually buying a house is if they are lucky enough to have parents with equity to pass onto them. And with over 50% of children growing up in rental properties at present, the odds of that aren't great for many.

Apart from that, I agree with you, not a lot has changed.

In the last it was supposedly easier. Its gradually got harder. And harder, so that to make it very doable, thats easy, the two of us will work, one salary for the savings, and have kids later. Good plan. But what that idea did, was 1. make buying doable, 2. kick the can down the street. That's now caught up. It was a problem in 2016, but Covid and its low interest rates have all but screws the market for new buyers. Unlucky to have a crisis and another crisis at the same time exacerbates it.

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#2744085 14-Jul-2021 14:29

mattwnz:

Key wasn't in government in 2000.

House prices over the very long term may rise, but in shorter terms they can drop or flatline. It is similar to the sharemarket, except the the volatility in the sharemarket is far more immediate and volatile. Partly because house sales take weeks to months, not seconds.The pricing of houses currently is relative to the record low interest rates and peoples wages. People seem to think the government will keep the housing market propped up, and that house prices are like a ratchet, that one they go up, they can't then unwind again. But history , even in NZ has shown house prices have dropped. PLus house prices have never risen like they have in the last year. Up over 60% in Palmerston North in just a year is beyond crazy. But if people aren't able to, or willing to spend the same.

The system seems to be setup to turn more and more people in to renters. Even banks are now buying houses to rent out in the UK, and we are seeing the professionalism of rentals over time to improve them.

I have noticed that the stats in the media are being carefully cherry picked at the moment. Prices last month seemed to flatline last month, although there is very low volume being sold. But other articles I saw stated that prices have continued to rise over the last 12 month to record high percentages. Both are likely correct, but it depends what the narrative of the story is. But I am seeing agents reducing some prices of the last month, partly because many are trying it on with very high prices to see if anyone will pay them. When someone does, it sets a precedent, and then agents expect all properties can achieve that amount, because another property did. Buyers also buy into this, which is one reason for this problem. IMO we should sell via set prices or by auction. None of this BEO or tender / deadline sales, as they help push prices even high as it sets up secret multi-offer bids.

I never said he was. They shared that concern in 2000.

The Govt doesn't prop up the housing market. Buyers and sellers do.

The system? There's no system, its an open market, supply and demand. Almost zero interest is a HUGE help, thanks Covid. Article today staled about housing stick, but he wasn't referring to physical stocks, he was referring to less sellers in the market. That is low. Why? Covid and its economic uncertainty for the masses, will make the masses hold back. If fewer are selling, then buyers will compete, thats normal. It is a perfect storm of events, due to a 1 in 100 year event that happ[ened to tack on to a housing price boom. Unlucky

mattwnz

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#2744086 14-Jul-2021 14:30

tdgeek:

mattwnz:

Government. They could have brought in emergency taxes last year when the PM said that 'house prices just can't keep rising like this' But they did. They also could have given out helicopter payments to everyone to get people spending. Instead the money went into pumping up all home owners equity, to make home owners feel rich and get them spending, and we now have massive inflation. It was a K shaped recovery To unroll the damage from these house price rises is going to take many years.

What about the decades before this?? That what so many ignore, its been building up, and only when the damn leaks you forget the long past that has brought us to this point.

No, the money hasn't been sent to you and me, Ive seen nothing. Its gone to businesses, which means it has also gone to employees who retained their income. House prices have inflated many due to farcically low interest rates brought on by QE, as other countries also used as a tool to "get people spending"

Different situations. In the 80's we had double digit interest rates, massive inflation, and house prices were 3-4 times wages. Now they are 10+, but money is now cheap to borrow. When there is a boom, there is often a bust. When supply or inventory on the market catches up with demand, then it will become a sellers market. Higher interest rates mean that people cannot afford to pay as much, so prices would have to decrease. It will be the reverse of what has happened with the rates dropping.

They haven't given you folding money, they have given you increased wealth in equity. So on paper most people with a house are now worth a lot more. This then allows you to borrow more against that increased equity. Some will release it with equity release mortgages, or sell up and downsize and move to smaller cheaper towns etc.

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#2744111 14-Jul-2021 14:41

Govt doesn't prop up the housing market, but if they did print billions of dollars, people used those billions to buy houses.

wellygary

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#2744121 14-Jul-2021 14:58

Batman: Govt doesn't prop up the housing market, but if they did print billions of dollars, people used those billions to buy houses.

The Printing stops next Friday,

"The Reserve Bank will halt additional asset purchases under the Large Scale Asset Purchase (LSAP) programme by 23 July 2021"

quickymart

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#2744141 14-Jul-2021 15:59

Do people agree that this is a housing bubble, or are house prices really headed for the moon?

Personally I wouldn't mind if I bought and just afterwards the price dropped (along with all other property prices) - I'd be happy just to be in my own place. Negative equity wouldn't concern me as much as getting into my own house to begin with.

GV27

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#2744158 14-Jul-2021 16:18

quickymart:

Do people agree that this is a housing bubble, or are house prices really headed for the moon?

Personally I wouldn't mind if I bought and the price dropped (along with all the others) - I'd be happy just to be in my own place.

I'd be over the moon if prices dropped back to where they are when I bought.

The 'next home' I'd buy for my growing family would be acres more affordable as a result, and it would mean less debt in real terms.

Given it's likely increasing in price faster than my current home, and my income doesn't increase fast enough to breach the gap, then it just means bigger and bigger mortgages.

Clear and present danger to future spending power and the future effectiveness of monetary policy as a tool.

mattwnz

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#2744165 14-Jul-2021 16:41

Batman: Govt doesn't prop up the housing market, but if they did print billions of dollars, people used those billions to buy houses.

A significant proportion of people voted them in, and switched from National, because they promised no new taxes, including around property, and to keep the greens out. They have already said that peoples houses are their biggest asset and is where most people have their wealth stored so they aren't going to want to do anything to negatively affect this. They also said they only want house price growth to slow. They haven't said they want house prices to fall. People seem to think house prices in NZ are like a 'ratchet' that will always rise, and can never fall.

I was looking at trademes property insight map across the wellington region last night, and the vast majority of properties have an estimated value of 1.x million dollars. It is insane.

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mattwnz

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#2744210 14-Jul-2021 17:44

wellygary:

Batman: Govt doesn't prop up the housing market, but if they did print billions of dollars, people used those billions to buy houses.

The Printing stops next Friday,

"The Reserve Bank will halt additional asset purchases under the Large Scale Asset Purchase (LSAP) programme by 23 July 2021"

About time.

Good news for FHBs. Commentators also possibily expect interest rate rises in August. I think NZ is one of the first countries to stop money printing, and maybe the first to rise interest rates.

I have already seen in the last month house prices stagnating and some falls in expectations the mood around interest rates fall. Although some houses still selling for crazy amounts, but some are cashed up buyers.

mattwnz

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#2744213 14-Jul-2021 17:50

quickymart:

Do people agree that this is a housing bubble, or are house prices really headed for the moon?

Personally I wouldn't mind if I bought and just afterwards the price dropped (along with all other property prices) - I'd be happy just to be in my own place. Negative equity wouldn't concern me as much as getting into my own house to begin with.

Back earlier in the year the Deputy PM announced changes which was supposed to prevent housing becoming a bubble Since then house prices have increased substantially. So whether it is a bubble, I guess we will find out sooner or later.

Banks tend to be concerned about negative equity. But one problem causing FHBs to pull back from buying is FOOP. Fear of over paying. It is not such an issue if buying and sellng in the same market at similar specs

GV27

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#2744225 14-Jul-2021 18:31

mattwnz:

Good news for FHBs. Commentators also possibily expect interest rate rises in August. I think NZ is one of the first countries to stop money printing, and maybe the first to rise interest rates.

Low interest rates have been one of the few things in favour of accessibility for FHBS in recent months.

If we believe that houses only ever go up like some insist here, then all this is going to do is make it harder for them to pass a stress test and then service a mortgage, on the chance they might actually get one.

Rising interest rates HAVE to result in lower prices for it to work out for FHBs, but that's bad for consumer spending at a time when we are struggling to stock shelves due to technology and shipping issues.

tdgeek

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#2744226 14-Jul-2021 18:34

Batman: Govt doesn't prop up the housing market, but if they did print billions of dollars, people used those billions to buy houses.

Where is mine?

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