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  1. #16
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    Quote Originally Posted by SBQ View Post
    No, what's happened in real terms here in NZ is the standard of living in houses has eroded. New families are buying old houses that are 19th century performance whereas overseas, for the same amount of $ would get you in a modern McMansion size house.

    I don't understand your interest rate example where housing prices are tied to swings in interest rates. Any common sense shows inflation causes prices to go higher. NZ has not experienced deflation so houses never did go down when mortgage rates went high.
    Look at the difference between real and nominal. If you can be bothered researching it you will find a couple of long periods where house prices remained quite flat, while all around other prices, groceries, petrol, daily living costs etc, were screaming up. that equates to falling prices in real terms. Look at those rocky industrial years with never ending strikes resulting in higher wages all round, yet real estate was flat.

    I can assure you if interest rates jumped to, say, 12% tomorrow, you'd quickly see what I'm talking about,
    Last edited by fungus pudding; 26-03-2020 at 06:20 PM.

  2. #17
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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..
    That's a pretty loose theory...
    When interest rates are high inflation is high which is prices going up....
    Higher interest rates are higher loan costs which is less money loaned..people are more willing to take on loans when interest rates are low
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  3. #18
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    Quote Originally Posted by Crypto Crude View Post
    That's a pretty loose theory...
    When interest rates are high inflation is high which is prices going up....
    Higher interest rates are higher loan costs which is less money loaned..people are more willing to take on loans when interest rates are low
    cc
    and how come no one else is mentioning about unemployment figures? It does not matter where interest rates are, if people lose their jobs, so will mortgages going into default. You know the gov't can not keep forcing banks to extend mortgage payments. It's safe to say this crisis is nothing like the 2008 GFC. Rich or poor, everyone is affected and this goes to housing prices. While in 2008, quantity easing was the answer - unfortunately the virus does not discriminate between rich or poor.

  4. #19
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    Quote Originally Posted by SBQ View Post
    and how come no one else is mentioning about unemployment figures? It does not matter where interest rates are, if people lose their jobs, so will mortgages going into default. You know the gov't can not keep forcing banks to extend mortgage payments. It's safe to say this crisis is nothing like the 2008 GFC. Rich or poor, everyone is affected and this goes to housing prices. While in 2008, quantity easing was the answer - unfortunately the virus does not discriminate between rich or poor.
    What many people aren't pricing in is the contagion affect

    Commercial esp. tourism commercial is going to get hammered an those holding will just about always hold Res property ... guess whats going be able to be sold to give liquidly..

    Total annual NZ tourism expenditure is $40.9 billion $112 million per day....thats going to be crushed next 12-months

    Down here in Central Otago =Tourism hotspot we have over 1000 Res. properties on the market for sale if you include all the apartments etc (For stupidly high values Vs local av. incomes) this will increase once we come out of lockdown >>last population I seen for the area came to 57,000-60,000p. Now compare that to Otago largest city that has a population more than double of Central Otago that has less than 300 properties on the market

    properties include res sections advertised etc
    People don't have ideas, ideas have people

  5. #20
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    Makes sense that tourist destinations will have an excess of accommodation, short term and long term. For a few years anyway. But let's not forget #8 wire. There will be other opportunities such as retirement communities, families looking for lifestyle options. Tech firms working remotely. And maybe like Sleepyhead and its community setting up in Ohinewai.

  6. #21
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    [QUOTE=artemis;805222]Makes sense that tourist destinations will have an excess of accommodation, short term and long term. For a few years anyway. But let's not forget #8 wire. There will be other opportunities such as retirement communities, families looking for lifestyle options. Tech firms working remotely. And maybe like Sleepyhead and its community setting up in Ohinewai.[/QUOTE

    Expecting number 8 wire to sell 1,000 properties anytime soon may be a bit of a stretch.

  7. #22
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    I think Auckland will roll on pretty well. If immigrations stops for an extended period the regions will suffer. Rents will drop but only nominally but values could really fall in rural areas where they have exploded unreasonably.

    If you document house price inflation since we kept records, property has doubled on average every 7.8 years including through the 2 wars and the depression. NZ is not that expensive in real terms. It is hyped as expensive in relation to wages and that's true but our actual values aren't high compared to many similar markets. This is what makes real estate so low risk. Safe as houses!
    Stay Safe and Stay Inspired http://www.massiveaction.tv

  8. #23
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    Quote Originally Posted by Dean Letfus View Post
    I think Auckland will roll on pretty well. If immigrations stops for an extended period the regions will suffer. Rents will drop but only nominally but values could really fall in rural areas where they have exploded unreasonably.

    If you document house price inflation since we kept records, property has doubled on average every 7.8 years including through the 2 wars and the depression. NZ is not that expensive in real terms. It is hyped as expensive in relation to wages and that's true but our actual values aren't high compared to many similar markets. This is what makes real estate so low risk. Safe as houses!
    I wouldn't be so sure on that one. A price drop will be driven by unemployment and we are looking at a 15% + unemployment increase.

    "Former [New Zealand] Treasury Secretary Allan Bollard has pointed out
    that this shock is huge by contrast to previous economic crises. The Treasury is estimating a 30‐40
    percent reduction in output and 10‐17 percent downturn in the economy as a whole, and at a speed that is unprecedented"
    Last edited by ynot; Yesterday at 07:59 PM. Reason: add quote

  9. #24
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    Is Auckland like London?
    "for those who have built up mini (or in some cases not-so-mini) property portfolios that rely on a constant stream of guests churning through Airbnb apartments in Bath, Barcelona or Berlin, the prospect of weeks or months without guests spells financial disaster."
    https://www.theguardian.com/technolo...-its-own-homes

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