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  1. #1
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    Default Which way will the property market go now?

    We are about to sadly have mass redundancies and increased unemployment.At the same time record low interest rates.People don't want to leave there money in the bank as they get nothing,they are taking there money off the table in the share market.Will all that money find its way to the property market and send prices higher ? they need to find a home for the money somewhere. Or will it crash with people out of work unable to pay mortgages.I remember the time of the GFC was the start of big increases in the Auckland market

  2. #2
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    Quote Originally Posted by Playa View Post
    We are about to sadly have mass redundancies and increased unemployment.At the same time record low interest rates.People don't want to leave there money in the bank as they get nothing,they are taking there money off the table in the share market.Will all that money find its way to the property market and send prices higher ? they need to find a home for the money somewhere. Or will it crash with people out of work unable to pay mortgages.I remember the time of the GFC was the start of big increases in the Auckland market
    Governments and banks joint mortgage package probably buy some people a bit of time .
    That story in the paper today about all the Air BnB's being converted in Queenstown to long term rentals might be the answer to our housing shortage.
    Lending currently a bit tighter with the volatility we are experiencing and certain job sectors would struggle to get a mortgage ..... Main bank rates are basically all time lows that's a big positive on servicing but until they drop the test rates it doesn't make it any easier to get into a house .

  3. #3
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    Quote Originally Posted by Playa View Post
    We are about to sadly have mass redundancies and increased unemployment.At the same time record low interest rates.People don't want to leave there money in the bank as they get nothing,they are taking there money off the table in the share market.Will all that money find its way to the property market and send prices higher ? they need to find a home for the money somewhere. Or will it crash with people out of work unable to pay mortgages.I remember the time of the GFC was the start of big increases in the Auckland market
    Low interest rates = high real estate prices
    High interest rates = low house prices.
    That is why the best time to buy real estate, or assets in general, is when interest rates are high.
    However with great uncertainty in world markets r.e. prices could bounce around a bit for the next year before finally settling a bit up from present prices. Having said that - the big bargains over the foreseeable future should certainly be in the share market, about which I know nothing, so I have no idea which ones.

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    Quote Originally Posted by fungus pudding View Post
    Low interest rates = high real estate prices
    High interest rates = low house prices.
    That is why the best time to buy real estate, or assets in general, is when interest rates are high.
    However with great uncertainty in world markets r.e. prices could bounce around a bit for the next year before finally settling a bit up from present prices. Having said that - the big bargains over the foreseeable future should certainly be in the share market, about which I know nothing, so I have no idea which ones.
    When do you think we will ever see high interest rates ?? I think we are all turning Japanese and Low rates will be around for decades just look at the last 12yrs so called Booming rockstar economy and rates when nowhere but down
    People don't have ideas, ideas have people

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    Quote Originally Posted by JBmurc View Post
    When do you think we will ever see high interest rates ?? I think we are all turning Japanese and Low rates will be around for decades just look at the last 12yrs so called Booming rockstar economy and rates when nowhere but down
    I agree with longish term, but wouldn't go as far as decades. Maybe one decade, say 10 to 12 years - but it's really no more than a guess.

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    FEAR n GREED JBmurc's Avatar
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    Quote Originally Posted by fungus pudding View Post
    I agree with longish term, but wouldn't go as far as decades. Maybe one decade, say 10 to 12 years - but it's really no more than a guess.
    Yes depending on household income inflation as Kiwis incomes haven't at all grown with Homes values ... Personal I've watched locally homes increase by 50% since 2016
    with floating and Fixed rates decreasing certainly helping keep afloat these insane values aka $700-$800k for average family home in areas where tourism makes up the backbone of the local economy (thats now collapsed)
    People don't have ideas, ideas have people

  7. #7
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    Quote Originally Posted by JBmurc View Post
    When do you think we will ever see high interest rates ?? I think we are all turning Japanese and Low rates will be around for decades just look at the last 12yrs so called Booming rockstar economy and rates when nowhere but down
    Japan's problem of high debt to GDP is due to inflation in the 70s and 80s. They Yen got too strong due to high productivity that it rendered their country uncompetitive. 20 years later and they still struggle with getting their debt down to be comparable around the world.

    Low interest rates = high real estate prices
    High interest rates = low house prices.
    Not a strong believer in this statement. You need to look at inflation figures for which IMO, inflation in NZ has been way to high for the past 30 or 40 years (notably caused by excessive high housing prices). The Keynesian move to adjust interest rates won't apply anymore with record low central bank interest rates. Look for the unemployment indicators from this COVID crisis ; if we were to hit 30% unemployment, watch out! the NZ gov't can not borrow indefinitely to keep the banks holding long. Pretty much ALL banks in NZ (except Kiwi Bank) are foreign owned and they hold the mortgages. When mortgagee sales start flooding, it doesn't matter what level interest rates are.

  8. #8
    FEAR n GREED JBmurc's Avatar
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    Quote Originally Posted by SBQ View Post
    Japan's problem of high debt to GDP is due to inflation in the 70s and 80s. They Yen got too strong due to high productivity that it rendered their country uncompetitive. 20 years later and they still struggle with getting their debt down to be comparable around the world.



    Not a strong believer in this statement. You need to look at inflation figures for which IMO, inflation in NZ has been way to high for the past 30 or 40 years (notably caused by excessive high housing prices). The Keynesian move to adjust interest rates won't apply anymore with record low central bank interest rates. Look for the unemployment indicators from this COVID crisis ; if we were to hit 30% unemployment, watch out! the NZ gov't can not borrow indefinitely to keep the banks holding long. Pretty much ALL banks in NZ (except Kiwi Bank) are foreign owned and they hold the mortgages. When mortgagee sales start flooding, it doesn't matter what level interest rates are.
    Yes I agree >> bloody scarer >> well known NZ has a huge amount of AIRBNB +booknbach properties ..a high amount of NZ pop. employed in the property construction+sales business
    that could slowdown on the back of Retail commercial property+Tourism property crash .. so many negatives .. going be really hard to keep NZ property at current values...

    Then you have the Aussie banks with enough issues at home(with bubble property market also looking like falling) will NZ get the backlash
    Last edited by JBmurc; 26-03-2020 at 12:37 AM.
    People don't have ideas, ideas have people

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    Quote Originally Posted by SBQ View Post
    Japan's problem of high debt to GDP is due to inflation in the 70s and 80s. They Yen got too strong due to high productivity that it rendered their country uncompetitive. 20 years later and they still struggle with getting their debt down to be comparable around the world.



    Not a strong believer in this statement. You need to look at inflation figures for which IMO, inflation in NZ has been way to high for the past 30 or 40 years (notably caused by excessive high housing prices). The Keynesian move to adjust interest rates won't apply anymore with record low central bank interest rates. Look for the unemployment indicators from this COVID crisis ; if we were to hit 30% unemployment, watch out! the NZ gov't can not borrow indefinitely to keep the banks holding long. Pretty much ALL banks in NZ (except Kiwi Bank) are foreign owned and they hold the mortgages. When mortgagee sales start flooding, it doesn't matter what level interest rates are.
    Using round figures, $500,000 at 8% costs the same as $1,000,000 at 4%. Second hand house prices will always settle around the median weekly affordable figure. Therefore doubling the interest rate will over-time, halve house prices. Halving rates will double prices.*
    *Principle repayments will mean this is not strictly accurate - but it's a good rule of thumb.

  10. #10
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    Quote Originally Posted by fungus pudding View Post
    Using round figures, $500,000 at 8% costs the same as $1,000,000 at 4%. Second hand house prices will always settle around the median weekly affordable figure. Therefore doubling the interest rate will over-time, halve house prices. Halving rates will double prices.*
    *Principle repayments will mean this is not strictly accurate - but it's a good rule of thumb
    .
    Not too long ago in 2008 & 2007 mortgage rates were double digits. How come houses have not come down in price? Have you not considered the basic principle of "Time Value of Money" ? When you factor cumulative inflation over the years, houses in NZ have still become unaffordable.

    The key reason money is kept in the NZ housing market is the tax free capital gains investors enjoy.

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