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  #2476178 4-May-2020 10:45
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If unemployment increases one scenario I see is some people opting for early retirement. For various reasons some of these people may decide to sell up in the city and move to a regional town buy a nice house and have money left over which they will add to their retirement nest egg. This may help maintain property values in the regions to a greater extent than might otherwise be the case.





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  #2476192 4-May-2020 11:09
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Technofreak:

 

If unemployment increases one scenario I see is some people opting for early retirement. For various reasons some of these people may decide to sell up in the city and move to a regional town buy a nice house and have money left over which they will add to their retirement nest egg. This may help maintain property values in the regions to a greater extent than might otherwise be the case.

 

 

Yes. But possible offsetting scenario is regional unemployment, inability to service mortgages, greater supply over demand, price falls.


 
 
 
 


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  #2476212 4-May-2020 11:35
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dafman:

 

Technofreak:

 

If unemployment increases one scenario I see is some people opting for early retirement. For various reasons some of these people may decide to sell up in the city and move to a regional town buy a nice house and have money left over which they will add to their retirement nest egg. This may help maintain property values in the regions to a greater extent than might otherwise be the case.

 

 

Yes. But possible offsetting scenario is regional unemployment, inability to service mortgages, greater supply over demand, price falls.

 

 

I would suggest regional unemployment may not be to too bad, there's been skill shortages in the regions (need to import labour from overseas and this isn't currently an option) and agriculture (primarily dairy) will be what pulls New Zealand through the tough times ahead.





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  #2477250 5-May-2020 20:25
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Would it be unrealistic of me to expect to see house prices in Auckland drop to $450 000 (or below) at their lowest, a la "the good old days", or is that merely a pipe dream?


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  #2477251 5-May-2020 20:27
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quickymart:

 

Would it be unrealistic of me to expect to see house prices in Auckland drop to $450 000 (or below) at their lowest, a la "the good old days", or is that merely a pipe dream?

 

 

IMO if they do you will have 40% unemployment - I'd suggest there would be other problems at that point.


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  #2477253 5-May-2020 20:28
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Technofreak:

 

I would suggest regional unemployment may not be to too bad, there's been skill shortages in the regions (need to import labour from overseas and this isn't currently an option) and agriculture (primarily dairy) will be what pulls New Zealand through the tough times ahead.

 

 

It never seems to work out that way - in previous recessions the regions get hit the hardest. In most small regions you have very few medium sized employers. If one of those goes to the wall you end up with very high percentages of people unemployed.


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  #2477347 5-May-2020 22:05
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Handle9:

 

Technofreak:

 

I would suggest regional unemployment may not be to too bad, there's been skill shortages in the regions (need to import labour from overseas and this isn't currently an option) and agriculture (primarily dairy) will be what pulls New Zealand through the tough times ahead.

 

 

It never seems to work out that way - in previous recessions the regions get hit the hardest. In most small regions you have very few medium sized employers. If one of those goes to the wall you end up with very high percentages of people unemployed.

 

 

Yes the regions have done it tough at times when any recession has involved low prices for primary produce.

 

The regions I'm thinking of don't rely on one or two medium sized employers. That's part of their resilience. Generally any medium to larger employers in those regions are directly related to processing primary produce. 

 

This time I think it will be different. Primary produce is what's going to carry us through. Having lived in the regions over the years I have seen the regions doing quite OK while the metropolitan areas have suffered. I grew up in a regional centre, I didn't know what poor really meant till I went to other parts of New Zealand.

 

Even during the level 4 lockdown many smaller regional centres have just kept quietly trucking along providing support to essential primary industry players.





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  #2477409 5-May-2020 23:08
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Handle9:

 

quickymart:

 

Would it be unrealistic of me to expect to see house prices in Auckland drop to $450 000 (or below) at their lowest, a la "the good old days", or is that merely a pipe dream?

 

 

IMO if they do you will have 40% unemployment - I'd suggest there would be other problems at that point.

 

 

Okay, I don't want that...that wouldn't help anyone!

 

Most of the predictions I've seen are around 10% or more price drops, which will help first home buyers (like me).


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  #2481628 12-May-2020 07:15
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I did see an article on Oneroof saying this situation isn't like the GFC in 2008 - apparently at the time that happened there were something like 80,000 listings nationwide, when coronvirus struck there were less than 20,000. Mind you, some commentators are saying it's going to be "a buyer's market" now, but I don't see how that works with numbers like that.


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  #2481739 12-May-2020 10:20
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Further to what I said earlier about the regions leading the recovery there is this article from the Taranaki Daily News from a few days ago.

 

No doubt some of it could be put down to parochial optimism but the guy from Massey University sums it up in a nut shell.

 

https://www.stuff.co.nz/taranaki-daily-news/news/121380493/the-coming-groom-boom-and-the-future-of-business-in-taranaki

 

 





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  #2482288 12-May-2020 23:31
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Oddly, I saw a property listed last week with a specific asking price, that I know is quite a bit more than what it was sold for last year - go figure. So prices (so far) appear to be going up, not down.

 

By the way, average house prices used to be around the $450,000 mark from the late 1990s to the end of the 2000s, and I don't remember 40% unemployment anytime then?


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  #2482304 13-May-2020 00:59
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quickymart:

 

By the way, average house prices used to be around the $450,000 mark from the late 1990s to the end of the 2000s, and I don't remember 40% unemployment anytime then?

 

 

 

 

You're talking about a crash vs inflation/demand.

 

If property crashed causing prices to drop more than half, thats because people can't afford their property anymore and there is a massive over supply.

 

For that to happen you would have to assume it's due to a lack of income on mass, or mortgage rates have gone through the roof like the 87 crash. They hit somewhere in the low 20% mark at that time. I get that if you don't currently have a house that a crash sounds fantastic, but there is a good chance if a crash like that happened like that then most people still wouldn't be in a position to buy.

 

BTW i know nothing about economics, this is just how i see it.


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  #2482308 13-May-2020 02:34
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quickymart:

 

Oddly, I saw a property listed last week with a specific asking price, that I know is quite a bit more than what it was sold for last year - go figure. So prices (so far) appear to be going up, not down.

 

By the way, average house prices used to be around the $450,000 mark from the late 1990s to the end of the 2000s, and I don't remember 40% unemployment anytime then?

 

 

 

 

They always have to try and sell them for more, because you have to add on that agents fees, which could be $30k plus. If they try to sell it for the same amount, they paid, then they would be making a loss. It will be interesting though if prices hold up, because even banks are saying they expect a 15% drop, which only takes prices back 2 years. So not major  for what they predict. Job losses will be a big factor IMO, and lack of new people coming in, as we appear to have grown the economy partly by significantly increasing our population over the last decade.


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  #2482316 13-May-2020 05:02
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quickymart:

Oddly, I saw a property listed last week with a specific asking price, that I know is quite a bit more than what it was sold for last year - go figure. So prices (so far) appear to be going up, not down.


By the way, average house prices used to be around the $450,000 mark from the late 1990s to the end of the 2000s, and I don't remember 40% unemployment anytime then?



Umm sure. Average wages were lower, the population was smallet, interest rates were higher and that's the way inflation works.

Put very simply why would anyone sell a house for 50% of what they paid for it unless they had to? The only reason to cause that sort of massive deflation would be a massive drop in demand or significant oversupply. The cause of this massive drop in demand or over supply would be mass migration, mass unemployment or banks calling in huge numbers of mortgages.

I'm not trying to be unkind but if you have $450k to spend on a house you are not buying that house in Auckland. You need to either accept that you will rent for the foreseeable future or move. I honestly have no idea how I would be able to buy a house in Auckland if we were starting out.

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  #2482403 13-May-2020 07:45
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Yes I guess that makes a bit more sense - the population was a lot smaller then, and there were more houses too "available" to a smaller population.

 

So hypothetically if some "magic" building company popped up overnight and managed to build something like 500 000 houses across the country (but probably mostly in Auckland) in a very short time that would herald a significant price drop? Have I got that right? I know it won't happen, I'm just trying to get my head around the justifications real estate agents make for the high prices, or calling a $1.4m house "cheap" (yes I have heard that before).


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