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Potential adverse effects from coronavirus on NZ property market
Ok guys. Let's assume this virus is going to bite the NZ economy.
What flow on effect, if any, can we expect in the property market ?
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Originally Posted by ynot
Ok guys. Let's assume this virus is going to bite the NZ economy.
What flow on effect, if any, can we expect in the property market ?
If the virus turns out to be a lot worse , there could be more deaths .If this is concentrated in older people maybe a few more houses on the market due to estate sales .
More supply , coupled with a slower economy due to the virus , property prices could dip. Crystal ball stuff though .....
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Member
Originally Posted by ynot
Ok guys. Let's assume this virus is going to bite the NZ economy.
What flow on effect, if any, can we expect in the property market ?
There will be a slowdown in the economy and that will lead to job losses. If these are significant enough then there will be:
1) An increase in people who can't pay their mortgages and being forced to sell (if they can)
2) An increase in people who can't afford their rent and being forced into cheaper accommodation (if they can)
3) Point 2 will lead back to point 1
4) Even if they aren't enough for 1-3 to occur it is likely to dampen peoples appetite for debt so trading up will be off the agenda as well
The key questions are:
1) Will the job losses be significant enough
2) Will they last long enough
I am still doubtful of that but don't think we would be far away from point 4 happening already.
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Yes, I guess I have been thinking more along the lines of a reality check for property. I think at least some of the recent market exuberance has been due to a healthy economy. How healthy our economy will look in 12 months time is another matter.
Last edited by ynot; 17-02-2020 at 08:04 PM.
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Banned
A friend owns 4 Airbnbs in QT, he is rooted and he's far from the only one.
My accountant expects 20-30% of his clients will lose their businesses and go to the wall.
Rents will be the first thing people stop paying, home settlements will start falling over soon causing a chain reaction for the others down the line.
Get ready for the domino's to start falling.
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Originally Posted by Paddles
A friend owns 4 Airbnbs in QT, he is rooted and he's far from the only one.
My accountant expects 20-30% of his clients will lose their businesses and go to the wall.
Rents will be the first thing people stop paying, home settlements will start falling over soon causing a chain reaction for the others down the line.
Get ready for the domino's to start falling.
I agree been trying to get the wife on board to sell our Central Otago home and go and rent(Is up like 70% last few year in value) .. going to be so many Airbnb/bookbach etc looking for income will force rents downwards from its 3-4% gross yields locally to even lower ... will force prices down ... many spec jobs in the works nil buyers ... will be a chain reaction sellers fighting for limited buyers
"With a good perspective on history, we can have a better understanding of the past and present, and thus a clear vision of the future." — Carlos Slim Helu
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Don't forget first home buyers whose chances of buying rest on their decimated Kiwisaver accounts....
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Originally Posted by CatO'Tonic
Don't forget first home buyers whose chances of buying rest on their decimated Kiwisaver accounts....
1st home buyers don't typically use what they've saved in Kiwi Saver. To meet their 20% deposit at the bank, most I see do it with accumulated savings from work income. Because the net 6% of their annual income contribution is not a lot when a house is $500K to $1M pending where you live.
As I mentioned in other posts, the biggest problem is ethics in the Kiwi Saver scheme where managed funds still charge a fee in times when the market crashes. There should be NO reward for that just like in the same way if a tradesman screws some kitchen work, or plumber causes damage, or a mechanic didn't fix the car right ; NO ONE should be rewarded or paid for have underperformance in a managed fund. Likewise, NZ's FIF should not tax these funds on negative paper losses (is that ethically right?).
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Originally Posted by SBQ
1st home buyers don't typically use what they've saved in Kiwi Saver. To meet their 20% deposit at the bank, most I see do it with accumulated savings from work income. Because the net 6% of their annual income contribution is not a lot when a house is $500K to $1M pending where you live.
As I mentioned in other posts, the biggest problem is ethics in the Kiwi Saver scheme where managed funds still charge a fee in times when the market crashes. There should be NO reward for that just like in the same way if a tradesman screws some kitchen work, or plumber causes damage, or a mechanic didn't fix the car right ; NO ONE should be rewarded or paid for have underperformance in a managed fund. Likewise, NZ's FIF should not tax these funds on negative paper losses (is that ethically right?).
I haven’t done a loan for a first home buyer Without a Kiwisaver first home withdrawal , in some cases plus Homestart grant .Wellington region .
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https://www.wired.co.uk/article/airb...navirus-london
https://www.businessinsider.com.au/c...stralia-2020-3
A couple of interesting developments right now in foreign markets. Interesting on what happens after these get pumped onto the rental markets, or into the housing markets and increase supply on that side. Whatever the net effect is, it won't get good on home owners..
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