sharetrader
Page 1 of 3 123 LastLast
Results 1 to 20 of 41
  1. #1
    Junior Member
    Join Date
    Mar 2020
    Location
    Auckland
    Posts
    23

    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
    Advanced Member
    Join Date
    Feb 2011
    Location
    Wellington
    Posts
    1,882

    Default

    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
    Legend
    Join Date
    Apr 2008
    Location
    Sth Island. New Zealand.
    Posts
    5,112

    Default

    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.

  4. #4
    FEAR n GREED JBmurc's Avatar
    Join Date
    Sep 2002
    Location
    Central Otago
    Posts
    7,250

    Default

    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

  5. #5
    Legend
    Join Date
    Apr 2008
    Location
    Sth Island. New Zealand.
    Posts
    5,112

    Default

    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.

  6. #6
    Senior Member Entrep's Avatar
    Join Date
    Mar 2008
    Posts
    857

    Default

    It was BOOMING immediately before all this and I think anyone that had the cash/loan lined up will still keep looking/buying and see it as an opportunity over the next 6 months/however long it takes to get back to normal.

    All this just cements for me how lucky we are to live in NZ and what an amazing country it is here. As more $hit happens in the world, more people will want to live here - and we have to be careful about that!

  7. #7
    FEAR n GREED JBmurc's Avatar
    Join Date
    Sep 2002
    Location
    Central Otago
    Posts
    7,250

    Default

    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

  8. #8
    Member
    Join Date
    Nov 2018
    Location
    Christchurch
    Posts
    397

    Default

    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.

  9. #9
    FEAR n GREED JBmurc's Avatar
    Join Date
    Sep 2002
    Location
    Central Otago
    Posts
    7,250

    Default

    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

  10. #10
    Advanced Member
    Join Date
    Aug 2012
    Posts
    2,420

    Default

    Quote Originally Posted by Entrep View Post
    It was BOOMING immediately before all this and I think anyone that had the cash/loan lined up will still keep looking/buying and see it as an opportunity over the next 6 months/however long it takes to get back to normal.

    All this just cements for me how lucky we are to live in NZ and what an amazing country it is here. As more $hit happens in the world, more people will want to live here - and we have to be careful about that!
    LOL. No doubt for some NZ is still the lucky county. For boomers with real estate it had been a rollicking time.

    For companies trying to raise capital, well they have often had to move over to Australia. For the increasing numbers who do cannot raise that first deposit for home ownership, accessing those capital gains is still out of reach.

  11. #11
    Legend
    Join Date
    Apr 2008
    Location
    Sth Island. New Zealand.
    Posts
    5,112

    Default

    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.

  12. #12
    Member
    Join Date
    Nov 2018
    Location
    Christchurch
    Posts
    397

    Default

    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.

  13. #13
    Legend
    Join Date
    Apr 2008
    Location
    Sth Island. New Zealand.
    Posts
    5,112

    Default

    Quote Originally Posted by SBQ View Post
    Not too long ago in 2008 & 2007 mortgage rates were double digits. How come houses have not come down in price?
    Because, interest rates have come down. As one falls, the other will rise. 'The opposite ends of a see-saw'. Read what I wrote in the example I gave.

    Assuming the median affordability is 800 per week, then houses will be rise in price to that level. i.e 500,000 at 8% or at 4% - 1,000,000
    Look with envy on those who moaned and groaned about having to pay 20 to 24% or more. They were the lucky ones.
    Last edited by fungus pudding; 26-03-2020 at 05:08 PM.

  14. #14
    Guru
    Join Date
    Jul 2002
    Location
    New Zealand.
    Posts
    3,205

    Default

    IMHO no ones knows what is ahead in all markets, property included, so , "hope for the best but budget for the worst " !!

  15. #15
    Member
    Join Date
    Nov 2018
    Location
    Christchurch
    Posts
    397

    Default

    Quote Originally Posted by fungus pudding View Post
    Because, interest rates have come down. As one falls, the other will rise. 'The opposite ends of a see-saw'. Read what I wrote in the example I gave.

    Assuming the median affordability is 800 per week, then houses will be rise in price to that level. i.e 500,000 at 8% or at 4% - 1,000,000
    Look with envy on those who moaned and groaned about having to pay 20 to 24% or more. They were the lucky ones.
    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.

  16. #16
    Legend
    Join Date
    Apr 2008
    Location
    Sth Island. New Zealand.
    Posts
    5,112

    Default

    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.

  17. #17
    Guru Crypto Crude's Avatar
    Join Date
    Dec 2006
    Location
    New Zealand.
    Posts
    3,002

    Default

    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
    cc

  18. #18
    Member
    Join Date
    Nov 2018
    Location
    Christchurch
    Posts
    397

    Default

    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.

  19. #19
    FEAR n GREED JBmurc's Avatar
    Join Date
    Sep 2002
    Location
    Central Otago
    Posts
    7,250

    Default

    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

  20. #20
    Senior Member
    Join Date
    Dec 2001
    Location
    Wellington, , New Zealand.
    Posts
    1,121

    Default

    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.

Bookmarks

Posting Permissions

  • You may not post new threads
  • You may not post replies
  • You may not post attachments
  • You may not edit your posts
  •