Real estate, post level 4

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kingdragonfly

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#268553 25-Mar-2020 16:20

On 25 March, when asked how long people could expect the restrictions to be in place, Dr Clark told Channel One "Breakfast" it could be months.

We need to prepare for the fact it's not going to be next week, and it's unlikely within the next three months

It's looking like longer term... We are going to be in this for the long haul.

There will be a future time when tourists can visit New Zealand again, but now is not that time.

So here's my completely non-expert thinking. There is AirBNB. Also there are some hotels already have a body corporate, private owner, who converted "rooms" into apartments. Also there are apartments that were used by international students.

My guess is a lot of apartments will be on the market. So I'd expect prices to drop well below QV.

Since I'm unemployed, I'm planning on selling my home to give me the flexibility to move anywhere. It's close to Wellington, and I'd expect government jobs are pretty secure, and some may actually increase.

I don't know if people will be looking to invest in houses, as a safe investment, or whether there'll be such a slow down that few will want to move.

I'd expect houses to get cheaper in Dunedin and Palmerston North (less students). I'd expect any city depending on tourism would also have more houses for sale, as unemployed people look to cash out (Rotorua, Queenstown)

Anyone else have an opinion about what the real estate market will look like in May?

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jarledb

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#2446459 25-Mar-2020 16:25

Hard to tell, but I would be very surprised if there is any movement while there is a lock down. There will be no way of moving, as far as I can understand. And going to viewings are risky vs getting the virus.

Given that the economy is going to take a hit, I would expect prices to go down.

BlinkyBill

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#2446495 25-Mar-2020 17:24

Removal services are not classified as essential. It will be virtually impossible to complete a real estate transaction because of this and there will be very few sales completed in the lockdown period (I see agents are talking up virtual tours, phone in auctions etc, but a dose of reality is coming their way).

Live viewing of properties is banned.

My opinion is prices will go up once the lockdown is cleared, due to pent up demand. Lowered interest rates which will prevail for a 12 month term will also drive the market upwards. Cash buyers will swoop in ASAP and further drive the market, on the basis of a rising market. Real estate agents will want income. All of these factors will stimulate the market.

ben28

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#2446508 25-Mar-2020 17:42

My prediction is that prices will drop , maybe by 10% or so , due to oversupply caused by the lack of Airbnb bookings and people having lost their job or being unsure of their future income. If people can afford to do nothing they will.

As I expect overseas arrivals not to return to any normal number for 2 years I dont expect to see any reason for an upturn.

Prices will probably gradually decline from now, and hit -10% by end of 2020 and stay there for 2021.

There will be isolated cases of up to 20% declines which the media will highlight with the usual sob stories.

After 2021 there will be continued wariness and there will be no spectacular increases for years until people forget the pain.

Loismustdye

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#2446589 25-Mar-2020 19:18

kingdragonfly: On 25 March, when asked how long people could expect the restrictions to be in place, Dr Clark told Channel One "Breakfast" it could be months.

We need to prepare for the fact it's not going to be next week, and it's unlikely within the next three months

It's looking like longer term... We are going to be in this for the long haul.

There will be a future time when tourists can visit New Zealand again, but now is not that time.

So here's my completely non-expert thinking. There is AirBNB. Also there are some hotels already have a body corporate, private owner, who converted "rooms" into apartments. Also there are apartments that were used by international students.

My guess is a lot of apartments will be on the market. So I'd expect prices to drop well below QV.

Since I'm unemployed, I'm planning on selling my home to give me the flexibility to move anywhere. It's close to Wellington, and I'd expect government jobs are pretty secure, and some may actually increase.

I don't know if people will be looking to invest in houses, as a safe investment, or whether there'll be such a slow down that few will want to move.

I'd expect houses to get cheaper in Dunedin and Palmerston North (less students). I'd expect any city depending on tourism would also have more houses for sale, as unemployed people look to cash out (Rotorua, Queenstown)

Anyone else have an opinion about what the real estate market will look like in May?

palmy currently has a huge shortage of homes, hence why houses are still attracting multi bid offers and these are regularly $30-40k over asking price, which itself is normally $100k or more over the current CV. One 3 doors from us sold in 2 weeks recently for $170k over CV, which $30k more than what the sellers wanted.
These aren’t houses in the lower brackets either, these are $700k and higher asking prices. Palmy prices might go down a little but I can’t see them dropping more than a few percent, there is simply not enough of them here.

cant comment much on other centres though.

quickymart

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#2455408 5-Apr-2020 22:55

I'd love to see prices in Auckland (specifically the North Shore) drop by 10%. They're way too overpriced as it is - and a good portion of them are crappy homes or a "doer-upper". I'm just looking for a 3-bedroom place to purchase and move into. Anything above a 10% drop would be a very welcome bonus 🤞

https://www.oneroof.co.nz/news/37700

Handle9

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#2455423 6-Apr-2020 05:02

I’d expect to see prices initially drop but then increase, mainly fuelled by inflation. Most of the world will be quantitatively easing and with coupled low interest rates and poor returns house prices should grow, perhaps quite quickly.

I’m not an economist, banker or any kind of expert so take that as you will. I could very well be dead wrong.

kingdragonfly

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#2455432 6-Apr-2020 07:02

I think everyone can agree: you don't want to sell your home in Queenstown, the Bay of Islands or Rotorua.

I think the AIrBNB market has crashed years to come, so hopefully this will shake free bit city apartments.

In Wellington, apartments seem to be already below the QV before the alert. I'm not sure what percentage Auckland has AirBNB apartments, but I'd guess it's significant.

Economist jokes

“We have 2 classes of forecasters: Those who don't know . . . and those who don't know they don't know. “ - John Kenneth Galbra

The First Law of Economists: For every economist, there exists an equal and opposite economist. The Second Law of Economists: They're both wrong.

President Truman once said he wants an economic adviser who is one handed. Why? Because normally the economists giving him economic advice state, "On one hand and on the other..."

Ronald Reagan used to say that if trivial pursuit were designed by economists, it would have 100 questions and 3,000 answers.

How many economists does it take to change a light bulb? Seven, plus/minus ten.

How has French revolution affected world economic growth? Too early to say.

Economic forecasters assume everything, except responsibility.

Economists are people who are too smart for their own good and not smart enough for anyone else's.

Three econometricians went out hunting and came across a large deer. The first econometrician fired but missed by a meter to the left. The second econometrician fired but missed by a meter to the right. The third econometrician didn’t fire but shouted in triumph, “We got it! We got it!”

How many conservative economists does it take to screw in a light bulb? None. Eventually, the darkness will make the light bulb screw itself in.

On the first day, God created the sun. In response, the Devil created sunburn. On the second day, God created sex. In response, the Devil created marriage. On the third day, God created an economist. This was a tough one for the Devil, but, in the end, and after a lot of thought, he created a second economist.

Batman

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#2455447 6-Apr-2020 07:47

very positive thoughts here, I was thinking we're going to have $1 houses like Italy? as mentioned earlier, my brain is frecked. still is.

Involuntary autocorrect in operation on mobile device. Apologies in advance.

Batman

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#2455448 6-Apr-2020 07:49

quickymart:

I'd love to see prices in Auckland (specifically the North Shore) drop by 10%. They're way too overpriced as it is - and a good portion of them are crappy homes or a "doer-upper". I'm just looking for a 3-bedroom place to purchase and move into. Anything above a 10% drop would be a very welcome bonus 🤞

https://www.oneroof.co.nz/news/37700

it may well be your time to shine! make sure you hold on to cash. don't go on a spending spree in the shutdown. live on as little as you can. look for 2nd hand bargains if you need anything.

caveat: some places may drop more than others, i'm not sure how you're placed but you may have to be not so picky about where you buy. eg if some place drops 30-50%, i'd say there's where you want to buy. make sure it's a quality house though, 2005+ is good, newer standards post Chch earthquake ie 2014+ is best. but sometimes beggars can't be choosers so all the best. you've worked hard, now just save up.

disclaimer: me no economist, just another person gone mad from the shutdown, but you really have nothing to lose by saving hard. unless the bank folds then you lose all your savings. so watch the banks closely. kiwibank might be the safest as it should be bailed out by govt even if it needs to fold. anyone?

Involuntary autocorrect in operation on mobile device. Apologies in advance.

alasta

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#2455460 6-Apr-2020 08:17

It is really going to depend on the prevalence of forced sales over the coming months. If the market gets flooded by mortgagee sales then it's entirely possible that we could see price drops up to 20%, but I don't think it's a likely scenario.

Yes, there is a lot of pain out there, but a large chunk of those who've lost their jobs will be younger people on modest incomes who wouldn't have been property owners anyway. In recent times property ownership has been skewed towards older people with lots of equity so they'll just sit tight.

The big unknown is whether property investors are going to start selling up so that they can free up capital.

Handsomedan

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#2455476 6-Apr-2020 08:54

Re the comments on whether houses are currently selling - I have a friend who recently sold a small 3brm house on the North Shore (not an expensive NS suburb, either) for over $800K at a virtual auction.

May settlement/handover, so new owners would theoretically move in after lockdown, if it's actually over by then.

Luckily all viewings were pre-lockdown - only one open home missed, so obviously those that are selling since then will have a real struggle.

Will be interesting to see what this does do to the market though...I am contemplating moving after the lockdown - next time I want to be in a bigger house.

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htbrst

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#2455531 6-Apr-2020 10:05

Loismustdye:

palmy currently has a huge shortage of homes, hence why houses are still attracting multi bid offers and these are regularly $30-40k over asking price, which itself is normally $100k or more over the current CV. One 3 doors from us sold in 2 weeks recently for $170k over CV, which $30k more than what the sellers wanted.
These aren’t houses in the lower brackets either, these are $700k and higher asking prices. Palmy prices might go down a little but I can’t see them dropping more than a few percent, there is simply not enough of them here.

I agree, Palmerston Norths fairly well placed to weather things at this stage - universities tend to do well when unemployment is high as more people look to study, but it will depend on if Massey needs to shed any more courses in the short term due to the impact of no international students. Outside of the university, much of the main industry is agriculture based which will hopefully chug along unimpeded, and a huge proportion of the soldiers based at Linton (5 minutes drive away) live in the city with the army slated to increase in size over the next decade.

Palmy's hardly an international tourist hotspot, and less affected by the decline in tourism. The wider region is also primarily agriculture based, with RNZAF Ohakea also not too far away

dafman

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#2455648 6-Apr-2020 12:14

Factors which will support house prices holding up:

- low interest rates

Factors which will support house prices falling:

- We are entering a global recession, the likes not seen since the 1930's. Less money all around and less people prepared to take a punt with major purchases financed by debt.

- Equity prices, the world's other main asset class, are tanking.

- Significant unemployment, many of which, sadly, will be mortgage holders with high levels of debt.

- AirBnB 'investment' properties financed by high debt will now be unsustainable (I heard Rotorua had over 2,000 AirBnB in the region).

- Lower demand from migrants (read Nil) for the foreseeable future.

quickymart

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#2455659 6-Apr-2020 12:26

As I don't have a mortgage, what happens when someone who has a mortagage loses their job and can't make the payments? Does the bank just reclaim the house and sell it, and the person who has been making said mortgage payments gets nothing?

Batman

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#2455688 6-Apr-2020 12:50

quickymart:

As I don't have a mortgage, what happens when someone who has a mortagage loses their job and can't make the payments? Does the bank just reclaim the house and sell it, and the person who has been making said mortgage payments gets nothing?

in a mortgagee sale:

mortagee gets the balance of : sale price - amount owed - marketing fees. if the number is negative then the bank will try to get back what's owed from other securities. if the number is positive then they get money back.

be aware that in a mortgagee sale you are not buying the mortgagee's possessions. i've heard stories of buyers taking possession to find the kitchen missing, carpet missing, some form of derelict transformation takes place!

Involuntary autocorrect in operation on mobile device. Apologies in advance.

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