Real estate, post level 4

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253 posts

Ultimate Geek

#2888069 18-Mar-2022 11:06

Gurezaemon:

My mortgage is up for renewal - what are everyone's current thoughts? My (crappy) understanding of the economy is that we're expected to be in for a long period of high interest rates, so I'm thinking I should fix it for as long as possible?

Current rates from my bank include 4.55% for 2 years, and 5.09% for 5 years.

I'm usually doing 2 years for the amount I'm 100% sure cannot do anything with in 2 years, maybe 70-80% of the loan depending on the amount

Do 1 year fixed for about 10 percent

Do revolving credit for the remaining 10 percent, paying money here instantly offsets the amount.

Once the 1 year fixed expires, move it to revolving credit, assuming the revolving part is already paid off.

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irpegg

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Master Geek

#2888075 18-Mar-2022 11:11

Personally I'd lock in 2 years with a 10/20% off-set. I think we're at a stage where we will only see continual rises in the next 24 months, rather than drastic drops. That way you'll have consistent payments for 2 years to weather any storms, and an off-set to work towards if things go really bad.

Geektastic

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#2888081 18-Mar-2022 11:14

Last year we fixed about 80% for 5 years. We knew we’d not pay that off and had decided on an ownership review of the property we were buying at that point to decide whether to sell or hold. If we sell we will pay off all of it.

The remainder we split on revolving, 1,2 and 3.

quickymart

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#2890339 22-Mar-2022 21:54

https://www.stuff.co.nz/life-style/homed/real-estate/128126300/im-not-paying-that-anz-economists-expect-10-house-price-drop

More of the "prices will drop" line we heard in 2020, but I think this time things are a little different.

engedib

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Ultimate Geek

#2890343 22-Mar-2022 22:44

quickymart:

https://www.stuff.co.nz/life-style/homed/real-estate/128126300/im-not-paying-that-anz-economists-expect-10-house-price-drop

More of the "prices will drop" line we heard in 2020, but I think this time things are a little different.

It will not make any difference from the affordability point.

Just do the maths :)

Mid last year:

$1M property, 20% deposit (200K), 2.5% loan (800K) for 30Y - $1,458.36 / fortnight

Mid this year when the price drop "might" be happening, assuming another 0.5% interest rate increase over the current 4% fixed for 1Y :

$900K property, same 200K deposit, 4.5% loan (700K) for 30Y - $1,869.95 / fortnight, so it's an additional $200 / week even the property price has decreased by 10%

quickymart

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#2891100 24-Mar-2022 08:43

https://www.oneroof.co.nz/news/41118

A house price drop of 43%?? That (to me) would be good, but then this article explains that a lot of people would (somehow) lose their jobs, I'm guessing from the attached recession involved.

GV27

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Uber Geek

#2891161 24-Mar-2022 09:13

Yes, everyone assumes housing affordability would improve if house prices halved, but no one usually considers whether they would have a job or not.

quickymart

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#2891165 24-Mar-2022 09:20

I know I would personally be okay, as I work in an essential role that wouldn't disappear, but I know a number of people out there probably wouldn't 😕

quickymart

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#2892326 26-Mar-2022 07:40

https://www.nzherald.co.nz/nz/revealed-the-auckland-home-worth-just-59000-and-no-its-not-an-apartment/MSWMPMOXAFAUOVHA4QLTLN764A/

Housing need not be so expensive, if you want to live a bit rurally :D

quickymart

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#2896706 4-Apr-2022 11:55

https://www.newshub.co.nz/home/politics/2022/04/new-zealand-infrastructure-commission-research-finds-accelerating-house-prices-were-not-inevitable.html

Interesting look at what may have lead the housing market to where it is today.

tdgeek

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#2896715 4-Apr-2022 12:05

quickymart:

https://www.newshub.co.nz/home/politics/2022/04/new-zealand-infrastructure-commission-research-finds-accelerating-house-prices-were-not-inevitable.html

Interesting look at what lead the housing market to where it is today.

A little bit simplistic IMO

Today's high prices are caused by Covid. Countries around the world used QE to support economies, leading to uber low interest rates, that causes more demand and happy to pay more. Then we have inflation and shortage of building products, more cost inflation. Article on CNN last night, rents in the US are way up, as are house prices as are the price of building products. Same here.

Prior to all this though, yes the prices crept up silently for a couple for a couple/few decades. Was it was avoidable? Technically yes, just do this or that, but thats in hindsight. It was no secret back then, yet no Government was interested, so perhaps it was not avoidable.

quickymart

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#2896717 4-Apr-2022 12:13

tdgeek:

quickymart:

https://www.newshub.co.nz/home/politics/2022/04/new-zealand-infrastructure-commission-research-finds-accelerating-house-prices-were-not-inevitable.html

Interesting look at what lead the housing market to where it is today.

A little bit simplistic IMO

Today's high prices are caused by Covid. Countries around the world used QE to support economies, leading to uber low interest rates, that causes more demand and happy to pay more. Then we have inflation and shortage of building products, more cost inflation. Article on CNN last night, rents in the US are way up, as are house prices as are the price of building products. Same here.

Prior to all this though, yes the prices crept up silently for a couple for a couple/few decades. Was it was avoidable? Technically yes, just do this or that, but thats in hindsight. It was no secret back then, yet no Government was interested, so perhaps it was not avoidable.

I agree, if the Government had been more vested in the early 2000s re the housing market (like the article says it was in the 50s, 60s and 70s) and just kept on building, I think the situation today would be closer to what it was like in 2003, as opposed to now.

tdgeek

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#2896724 4-Apr-2022 12:28

quickymart:

I agree, if the Government had been more vested in the early 2000s re the housing market (like the article says it was in the 50s, 60s and 70s) and just kept on building, I think the situation today would be closer to what it was like in 2003, as opposed to now.

Yep. Dont upset the voters. Ive always favoured that immigrants cannot buy a house, they can rent or build, and be well incentivised and supported for the build. Kiwisaver drawdowns need heavily biased support for builds not buys. Too late now, but had any similar measures been drip fed to the market over time, we would have many more houses.

We have the Reserve Bank as an independent manager of the employment/inflation rate. Maybe we need an independent Housing system that tracks population, house stocks, rental sticks, wage comparison to house price, and can tweak things slowly over time. That removes the voter from the equation

afe66

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#2896765 4-Apr-2022 14:01

And interest write offs only apply to new builds otherwise its just driving the market up preferentialy for landlords as tenants can't write off interest of buildings they live in...

Batman

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#2896834 4-Apr-2022 15:46

quickymart:

https://www.stuff.co.nz/life-style/homed/real-estate/128126300/im-not-paying-that-anz-economists-expect-10-house-price-drop

More of the "prices will drop" line we heard in 2020, but I think this time things are a little different.

i have heard "prices will drop" since the day i started having an interest in property, that was in 2002.

if the economists stick with their prediction eventually they will be correct, 20 years and counting.

house prices will fall 20-30% was what he said during level 4 lockdown in 2020.

is 2022 the year they will be correct, who knows

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