Geekzone: technology news, blogs, forums
Guest
Welcome Guest.
You haven't logged in yet. If you don't have an account you can register now.
View this topic in a long page with up to 500 replies per page Create new topic
1 | 2 | 3 | 4 | 5 | 6
11467 posts

Uber Geek
+1 received by user: 3679

Trusted
Subscriber

  Reply # 1449151 12-Dec-2015 12:24
Send private message

It really is a two speed market though.

 

 

Our house has been on the market since November 2014...!





4956 posts

Uber Geek
+1 received by user: 1318

Trusted
Microsoft

  Reply # 1449152 12-Dec-2015 12:33
Send private message

the govt is going to keep on allowing immigrants to pump into NZ, partly to keep the Ponzi scheme going

what goes up can and does go down.  it is not a one way bet.  anyone saying prices can't fall is an idiot.

3962 posts

Uber Geek
+1 received by user: 673

Trusted
Subscriber

  Reply # 1449154 12-Dec-2015 12:35
Send private message

As long as everyone is buying and selling in the same market there is probably no limit to how high prices can go. As soon as you have enough new supply to introduce a reasonable number of new entrants into the market then the market has to rationalise.

It will be fascinating to see how National's 'special housing areas', or Labour's 'Kiwibuild' might ultimately affect the overall market.

14097 posts

Uber Geek
+1 received by user: 1788


  Reply # 1449162 12-Dec-2015 13:02
Send private message

alasta: As long as everyone is buying and selling in the same market there is probably no limit to how high prices can go. As soon as you have enough new supply to introduce a reasonable number of new entrants into the market then the market has to rationalise.

It will be fascinating to see how National's 'special housing areas', or Labour's 'Kiwibuild' might ultimately affect the overall market.


Labour would need to get in first and that is unlikely with their vanilla leader, who sends people to sleep just listening to him. They also flip flop on unpopular policies, which turns voters of them. The housing problem is largely due to lack of land being released and people land banking. Also very little competition in the building materials market, and he compliance costs, which leads to ugly replicated building designs, due to them being cheaper to get through council. Some people are making a lot of money from all this.

The price people able to pay is largely dictated by the amount they can afford to service on a mortgage. Many people have borrowed up to their limits. I don't think it is any coincidence that as interest rates have dropped to less than half of what they are, that house prices have more than doubled. Just wait until interest rates go back to normal historic levels. I fear a lot of people have not taken higher interest rates into consideration. There will be people out there waiting to buy cheap distressed houses when this happens. The reserve bank hasn't helped, as they have just dropped rates again, which is only going to fuel the fire, due to people being able to now service a bigger mortgage. It is like a slow car crash.

Would I buy a million dollar shack in Auckland, probably not. Expect if it is likely I will make a big tax free capital gain, which I an guessing is what is motivating a lot of people who are buying.if u I have look at the first see as in of the block, all 4 of those houses are going to be bulldozed for an apartment complex, so suspect the owners of those houses got good money for selling. So the value is the land, not the house.

14097 posts

Uber Geek
+1 received by user: 1788


  Reply # 1449166 12-Dec-2015 13:20
Send private message

nathan: the govt is going to keep on allowing immigrants to pump into NZ, partly to keep the Ponzi scheme going

what goes up can and does go down.  it is not a one way bet.  anyone saying prices can't fall is an idiot.


I don't know why they are letting so many people into NZ and allowing them to settle in Auckland, when there aren't enough houses already for NZers already here.

2165 posts

Uber Geek
+1 received by user: 357


  Reply # 1449173 12-Dec-2015 13:33
Send private message

Get Len to cut some of the red tape in the building consent process and people could actually build the houses auckland is short of
 

14097 posts

Uber Geek
+1 received by user: 1788


  Reply # 1449174 12-Dec-2015 13:38
Send private message

tdgeek: Whats a crash? House prices in AKL drop by 30%? Thats probably more a correction but no doubt the media will headline it as a CRASH. Given the market there, I doubt that it will suddenly correct quickly. Demand may ease, prices stop rising or ease. Interest rates won't suddenly race upwards. As demand decreases, interest rates start edging up, people can re assess. Yes that will cause less demand, more supply. Owners can re finance to longer terms while they consider moving away. Take in a border or homestay. Assuming negative changes don't occur overnight, its a natural thing. The Govt could step in and update statutes or regulation to allow easier long or longer term financing to lessen mortgagee sales. 


30 percent would be a crash becuase it would mean many people would owe more than the house is worth, even deducting a 20 percent deposit. If that happened I suspect banks will be under stress, as people will owe more money in some cases than,the bank could get selling the house. So they would become be out of pocket in a distressed sale. The knock on effects through the economy would be huge.

14097 posts

Uber Geek
+1 received by user: 1788


  Reply # 1449175 12-Dec-2015 13:39
Send private message

Wade: Get Len to cut some of the red tape in the building consent process and people could actually build the houses auckland is short of
 


It can't be done at a local level. It is the building code and RMA, which councils can't override. If they try, then negatively affected people could take them to the environment court

12526 posts

Uber Geek
+1 received by user: 2217

Trusted

  Reply # 1449182 12-Dec-2015 14:07
One person supports this post
Send private message

mattwnz:
tdgeek: Whats a crash? House prices in AKL drop by 30%? Thats probably more a correction but no doubt the media will headline it as a CRASH. Given the market there, I doubt that it will suddenly correct quickly. Demand may ease, prices stop rising or ease. Interest rates won't suddenly race upwards. As demand decreases, interest rates start edging up, people can re assess. Yes that will cause less demand, more supply. Owners can re finance to longer terms while they consider moving away. Take in a border or homestay. Assuming negative changes don't occur overnight, its a natural thing. The Govt could step in and update statutes or regulation to allow easier long or longer term financing to lessen mortgagee sales. 


30 percent would be a crash becuase it would mean many people would owe more than the house is worth, even deducting a 20 percent deposit. If that happened I suspect banks will be under stress, as people will owe more money in some cases than,the bank could get selling the house. So they would become be out of pocket in a distressed sale. The knock on effects through the economy would be huge.

How huge?

Person A buys, now sits on 200,000 paper profit. Thats no value to the economy. Prices drop, his 200,000 paper profit now turns to a 100,000 real loss. His salary is unchanged, his equity has radically changed, he continues to pay his mortgage.

Say he was forced out. House sold, he loses all equity as the bank took it all. The bank lost 200,000. His scenario is sad, but it wont affect his salary, or me. The bank will take a loss, written off, Govt takes a 45% hit on that tax wise. The bank 55% in the effect on Reserves.

I dont see this as a huge effect on the economy, no more than if interest rates rose without having much effect on foreclosures, less money into the economy. Individuals will wear that huge cost individually. Individuals could lose most or all of their equity, and have to start over. I also feel the Govt would step in, allow high increases to the loan period to reduce payments, and they would underwrite future equity losses for the banks. The aim being to keep people in the houses, and localise the losses from real losses, to hardship for a period, in terms of mortgage payments. If you lose equity but have the house, thats better than losing both and starting from scratch. Over time this will catch up once house pricing increases as it always does, but in a less frantic manner.

3962 posts

Uber Geek
+1 received by user: 673

Trusted
Subscriber

  Reply # 1449183 12-Dec-2015 14:14
Send private message

mattwnz: The price people able to pay is largely dictated by the amount they can afford to service on a mortgage. Many people have borrowed up to their limits. I don't think it is any coincidence that as interest rates have dropped to less than half of what they are, that house prices have more than doubled. Just wait until interest rates go back to normal historic levels. I fear a lot of people have not taken higher interest rates into consideration.


I agree - a lot of financially naive young people have got themselves up to their eyeballs in debt because they have a strange desperation to own the house that they live in. These people are likely to end up in major financial distress at some stage, but I'm not entirely convinced that they represent a significant proportion of residential property owners - I suspect the majority of people will be fine because they bought their first house long before things started to get out of hand.

1086 posts

Uber Geek
+1 received by user: 176


  Reply # 1449690 13-Dec-2015 15:49
Send private message

A 'crash' can of course happen but Auckland is a very desirable place to live. 4th most desirable city in the world at some point according to some ranking, I believe. If that's even remotely close to reality that's a big deal. So unless immigration (to Auckland) drops then I think prices won't go backwards.

I think one of the biggest levers the gumit could pull world be to mandate that new immigrants MUST settle outside of Auckland for at least 5? years. But that would need a holistic approach to support the immigrants and the economies where they settle becuase it will be a bit bumpy to begin with (jobs/infrasturcture etc). Unfortunately the current National gumit is very short sighted in my opinion and is unlikely to have the vision to pull off something like that.




12526 posts

Uber Geek
+1 received by user: 2217

Trusted

  Reply # 1449694 13-Dec-2015 15:57
Send private message

mcraenz: A 'crash' can of course happen but Auckland is a very desirable place to live. 4th most desirable city in the world at some point according to some ranking, I believe. If that's even remotely close to reality that's a big deal. So unless immigration (to Auckland) drops then I think prices won't go backwards.

I think one of the biggest levers the gumit could pull world be to mandate that new immigrants MUST settle outside of Auckland for at least 5? years. But that would need a holistic approach to support the immigrants and the economies where they settle becuase it will be a bit bumpy to begin with (jobs/infrasturcture etc). Unfortunately the current National gumit is very short sighted in my opinion and is unlikely to have the vision to pull off something like that.


The Gumint is better off to assist AKL to get a better housing situation so that there is no excess demand over supply, rather than bandaid the core issue as you suggest. Move the problem elsewhere and allow it still to remain in AKL, not a solution. 

1086 posts

Uber Geek
+1 received by user: 176


  Reply # 1449695 13-Dec-2015 16:00
Send private message

I don't think pumping up the economies in our regions is a bandaid, I think it would be beneficial to the entire country.




586 posts

Ultimate Geek
+1 received by user: 194


  Reply # 1449696 13-Dec-2015 16:00
One person supports this post
Send private message

Have followed Tony Alexander's posts for several years now and find his commentary informative and pretty balanced:

http://tonyalexander.co.nz/


He has also provided some useful commentary on the housing market and reasons why it is the way it is - esp in Auckland, which is worth a read:

http://tonyalexander.co.nz/wp-content/uploads/2015/05/Sporadic-8-May-12-2015.pdf


Importantly he is also the first to point out that neither he nor any other economist has predicted rate rises very well at all since the gfc - so he doesn't pretend to know it all:

"When will the rate go up? Don’t bother asking. There is not a single forecaster any of us can point to and say they have got their predictions on interest rates generally right since 2007. We have all proven that as yet in the post-GFC environment we have not regained the ability to predict sustained interest rate changes. The chances are that low interest rates will be around for a large number of years."


And finally in his last commentary - nor have any of those predicting 40% crashes in the last 30 years as a result of affordability been right either:

http://tonyalexander.co.nz/wp-content/uploads/2015/12/WO-December-10-2015.pdf

12526 posts

Uber Geek
+1 received by user: 2217

Trusted

  Reply # 1449702 13-Dec-2015 16:12
Send private message

mcraenz: I don't think pumping up the economies in our regions is a bandaid, I think it would be beneficial to the entire country.


You suggesting to decide which regions to bump up, and that AKL is to have its economy downgraded. Which region or regions? Slippery slope. 

1 | 2 | 3 | 4 | 5 | 6
View this topic in a long page with up to 500 replies per page Create new topic

Twitter »

Follow us to receive Twitter updates when new discussions are posted in our forums:



Follow us to receive Twitter updates when news items and blogs are posted in our frontpage:



Follow us to receive Twitter updates when tech item prices are listed in our price comparison site:





News »

Microsoft Dynamics 365 Business Central launches
Posted 10-Jul-2018 10:40


Spark completes first milestone in voice platform upgrade
Posted 10-Jul-2018 09:36


Microsoft ices heated developers
Posted 6-Jul-2018 20:16


PB Technologies charged for its extended warranties and warned for bait advertising
Posted 3-Jul-2018 15:45


Almost 20,000 people claim credits from Spark
Posted 29-Jun-2018 10:40


Cove sells NZ's first insurance policy via chatbot
Posted 25-Jun-2018 10:04


N4L helping TAKA Trust bridge the digital divide for Lower Hutt students
Posted 18-Jun-2018 13:08


Winners Announced for 2018 CIO Awards
Posted 18-Jun-2018 13:03


Logitech Rally sets new standard for USB-connected video conference cameras
Posted 18-Jun-2018 09:27


Russell Stanners steps down as Vodafone NZ CEO
Posted 12-Jun-2018 09:13


Intergen recognised as 2018 Microsoft Country Partner of the Year for New Zealand
Posted 12-Jun-2018 08:00


Finalists Announced For Microsoft NZ Partner Awards
Posted 6-Jun-2018 15:12


Vocus Group and Vodafone announce joint venture to accelerate fibre innovation
Posted 5-Jun-2018 10:52


Kogan.com to launch Kogan Mobile in New Zealand
Posted 4-Jun-2018 14:34


Enable doubles fibre broadband speeds for its most popular wholesale service in Christchurch
Posted 2-Jun-2018 20:07



Geekzone Live »

Try automatic live updates from Geekzone directly in your browser, without refreshing the page, with Geekzone Live now.



Are you subscribed to our RSS feed? You can download the latest headlines and summaries from our stories directly to your computer or smartphone by using a feed reader.

Alternatively, you can receive a daily email with Geekzone updates.