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  1. #16
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    Sth Island. New Zealand.
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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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    Join Date
    Dec 2006
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    New Zealand.
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    2,909

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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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