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Linuxluver

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#196697 9-Jun-2016 17:27
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Will this make any difference? I was under the impression the money used was most often borrowed overseas at a much lower rate than available locally....

 

Some have even said that cash from illegal activities elsewhere is being laundered through property purchases elsewhere.....including NZ. That might explain the 'any price is OK' approach of some buyers. They can sell the house for clean money and maybe make some money by pumping up the market through such an approach. 

 

There would have to be a lot of dodgy money around......oh wait.....there is. 





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DjShadow
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  #1568836 9-Jun-2016 17:33
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Might make a small dent, RBNZ is also talking about Debt to Income ratios as the next step


Linuxluver

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  #1568842 9-Jun-2016 17:43
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DjShadow:

 

Might make a small dent, RBNZ is also talking about Debt to Income ratios as the next step

 

 

I realised the two banks out of the gate first are Australian...and these are the same policies they have just implemented in Australia, where the issue of foreign buyers is a lot hotter then here. Just keeping their process ducks lined up, I guess. 

 

 





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mattwnz
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  #1568843 9-Jun-2016 17:43
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I can't see it making any difference. And if the governments stats are to believed where they claim hardly any foreigners are  buying NZ houses anyway, it won't make any difference whatsoever. The low interest rates are one of the main things causing prices to rise. But then you have other things, like the lack of supply of land and houses, monopolies and duopolies in the building sector etc, meaning it is so expensive to build a quality house. But I think this is a good thing in terms of the banks, because I really do worry about our banks should the housing bubble burst, as they seem to be very exposed. Should a bank fail, it will be the mum and dad depositors in these banks that will take a haircut first. Which is stupid really , because a bank deposit isn't really an investment, it is a place to store money and hope it makes enough interest to keep pace with inflation, so should be almost zero risk for them . A really great incentive to save ...not!


Fred99
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  #1568844 9-Jun-2016 17:50
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DjShadow:

 

Might make a small dent, RBNZ is also talking about Debt to Income ratios as the next step

 

 

 

 

They're also talking about changing LVRs again - to tighten up on investors using equity to buy more houses.  That's a very wise move IMO, combined with the above debt:income ratios where no investor in their right mind would be buying in the Akl market for rental return - the only alternative is that they're buying for capital gain.

 

Next big impact is when it sinks in about the impact on the market of projected falls in net migration from >70,000 now to ~11,000 in 2019.  That (net migration driving demand) has been the rallying cry for property price optimists who've talking up the market.


MikeB4
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  #1568845 9-Jun-2016 17:50
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I watched the interview with Nick Smith about this and my thoughts cannot be repeated here.

mattwnz
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  #1568846 9-Jun-2016 17:51
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DjShadow:

 

Might make a small dent, RBNZ is also talking about Debt to Income ratios as the next step

 

 

 

 

Will be interesting to see what they will set those to. The governments policy with forcing Auckland to open up more land, was a D/I of around 9, which is really far too high IMO. But it is already nearly at that figure, so that is probably why they are wanting to set it so high. But I believe in the UK it is around 5, which would make the most someone could borrow in Auckland around 500-600k ish. If that happened, it really could cause a market crash, when the average selling prices are now nearly double that (completely mad price for a shack and small piece of land). I am just amazed that banks are lending so much money out to a couple to buy a house.


mattwnz
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  #1568847 9-Jun-2016 17:54
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Fred99:

 

DjShadow:

 

Might make a small dent, RBNZ is also talking about Debt to Income ratios as the next step

 

 

 

 

They're also talking about changing LVRs again - to tighten up on investors using equity to buy more houses.  That's a very wise move IMO, combined with the above debt:income ratios where no investor in their right mind would be buying in the Akl market for rental return - the only alternative is that they're buying for capital gain.

 

Next big impact is when it sinks in about the impact on the market of projected falls in net migration from >70,000 now to ~11,000 in 2019.  That (net migration driving demand) has been the rallying cry for property price optimists who've talking up the market.

 

 

 

 

I can't really understand why we allow so many people into NZ, especially when housing is in such short supply. They are far stricter overseas. We really do need to reduce immigration to help NZers. But people selling want high immigration, as it means more demand for houses, and more money for them.


 
 
 
 


mattwnz
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  #1568848 9-Jun-2016 17:55
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MikeB4: I watched the interview with Nick Smith about this and my thoughts cannot be repeated here.

 

 

 

I didn't see it, but I can just imagine.


Linuxluver

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  #1568862 9-Jun-2016 18:23
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mattwnz:

 

I can't see it making any difference. And if the governments stats are to believed where they claim hardly any foreigners are  buying NZ houses anyway, it won't make any difference whatsoever. The low interest rates are one of the main things causing prices to rise. But then you have other things, like the lack of supply of land and houses, monopolies and duopolies in the building sector etc, meaning it is so expensive to build a quality house. But I think this is a good thing in terms of the banks, because I really do worry about our banks should the housing bubble burst, as they seem to be very exposed. Should a bank fail, it will be the mum and dad depositors in these banks that will take a haircut first. Which is stupid really , because a bank deposit isn't really an investment, it is a place to store money and hope it makes enough interest to keep pace with inflation, so should be almost zero risk for them . A really great incentive to save ...not!

 

 

When the government talks about "only" 8% being sold to foreigners - nationally - they are trying to avoid two things: 

 

1. Auckland is a disproportionately large portion of the 8% 

 

2. 8% of 11,500 homes is about 920 homes...and pushing the price up on those absolutely will affect the rest. It's 920 homes no one else could buy at a lower price. 

 

That is far from trivial. 

 

 





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Linuxluver

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  #1568863 9-Jun-2016 18:26
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mattwnz:

 

 

 

I can't really understand why we allow so many people into NZ, especially when housing is in such short supply. They are far stricter overseas. We really do need to reduce immigration to help NZers. But people selling want high immigration, as it means more demand for houses, and more money for them.

 

 

Neo-liberals think the market will provide. That it provides too much to a small group of already privileged people is just icing on their cake. That's them.

 

Anyone who doesn't get that needs to get it.

 

These policies aren't good for most people...and aren't meant to be.

 

 





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Fred99
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  #1568876 9-Jun-2016 18:45
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mattwnz:

 

Fred99:

 

DjShadow:

 

Might make a small dent, RBNZ is also talking about Debt to Income ratios as the next step

 

 

 

 

They're also talking about changing LVRs again - to tighten up on investors using equity to buy more houses.  That's a very wise move IMO, combined with the above debt:income ratios where no investor in their right mind would be buying in the Akl market for rental return - the only alternative is that they're buying for capital gain.

 

Next big impact is when it sinks in about the impact on the market of projected falls in net migration from >70,000 now to ~11,000 in 2019.  That (net migration driving demand) has been the rallying cry for property price optimists who've talking up the market.

 

 

 

 

I can't really understand why we allow so many people into NZ, especially when housing is in such short supply. They are far stricter overseas. We really do need to reduce immigration to help NZers. But people selling want high immigration, as it means more demand for houses, and more money for them.

 

 

 

 

Two reasons.  One is return of NZ residents, mainly from Aus.  The other is that by not changing entry criteria for non-residents to offset resident migration it's boosted NZ GDP, creating the illusion of a "rockstar economy" in headline GDP growth - despite GDP per capita having been in or close to recession. 


Linuxluver

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  #1568900 9-Jun-2016 19:23
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mattwnz:

 

DjShadow:

 

Might make a small dent, RBNZ is also talking about Debt to Income ratios as the next step

 

 

 

 

Will be interesting to see what they will set those to. The governments policy with forcing Auckland to open up more land, was a D/I of around 9, which is really far too high IMO. But it is already nearly at that figure, so that is probably why they are wanting to set it so high. But I believe in the UK it is around 5, which would make the most someone could borrow in Auckland around 500-600k ish. If that happened, it really could cause a market crash, when the average selling prices are now nearly double that (completely mad price for a shack and small piece of land). I am just amazed that banks are lending so much money out to a couple to buy a house.

 

 

Changing it to something like 5 would just be a huge discount for cash buyers and would blow the brains out of borrowers. It would be stupid. (Update: I'd be a cash buyer if I was buying. I'm not buying.). 

 

The most sane thing would be for the state to build housing for people who can't afford any and own and operate it. But instead we pay benefit supplements to private landlords and get nothing for it. This govt is crazy.   

 

I say that as someone with tenants whose rent is partially paid out of tax money....to me. That is also helping to drive rents up: govt cash transfers to landlords. It's SMPs all over again....for anyone who remembers those. 





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gzt

gzt
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  #1568919 9-Jun-2016 19:39
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Headline should read 'two out of five major banks'. Many times more made no change at all. Why will it make a difference just go to another bank.


Fred99
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  #1568931 9-Jun-2016 20:01
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gzt: Headline should read 'two out of five major banks'. Many times more made no change at all. Why will it make a difference just go to another bank.

 

 

 

Even if the other local trading banks follow, mortgage brokers will arrange finance from second tier offshore lenders in the same way they have been doing to get around LVR restrictions.  At least there's a positive side to that - when it comes (and it will) then those lenders will fail first, however it's optimistic to expect that it'll stop there.

 

 

 


JimmyH
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  #1568937 9-Jun-2016 20:08
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Assuming Stuff has got any of the facts right (which is always a pretty heroic assumption), I doubt it will have much impact on house prices. It looks more like two banks trying to reduce the risk of their own loan books in a market bubble, by not loaning to a class of people that they have deemed to have particular risks associated with them.

 

Credit worthy buyers will presumably still be able to find money - from the other banks, from overseas banks and from non-bank lenders, so I doubt it will make much difference to buying pressure. I'm old enough to recall how most lawyers had profitable nominee company businesses, privately matching clients who had money they wanted to lend with people wanting mortgages, back in the day when Muldoon restricted interest rates and bank lending growth. If there are willing borrowers and willing lenders, the market tends to find a way to match them up - irrespective of bank or government restrictions.

 

But if it improves bank credit quality and reduces their risk then, IMO, it's a good thing.


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