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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 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.

  3. #18
    FEAR n GREED JBmurc's Avatar
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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

  4. #19
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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.

  5. #20
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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.

  6. #21
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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

  7. #22
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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; 06-04-2020 at 07:59 PM. Reason: add quote

  8. #23
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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

  9. #24
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    Quote Originally Posted by ynot View Post
    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"
    Certainly... i'm not seeing the fear on people's faces YET. When the lockdown is over, they will wonder why their boss has not called them back to work. Then the fear will really set in... 15% unemployment is unheard of in generations.

  10. #25
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    Ho w about commercial property? Alot of people working at home now will stay there after this crisis is over. Office space will have to diminish. Ive spoken to people who have already had directives from head office about this. Maybe a bonus is folks working from home will be able to get tax deductions for their home office.

  11. #26
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    Anyone that thinks the Auckland property market is going to roll on like this Virus does not exist is kidding themselves. Nothing stays the same forever. Kiwi property will be no exception to what we are in for.

  12. #27
    FEAR n GREED JBmurc's Avatar
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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!
    Not this time ...kiwis ticked up during these low rates was cheaper than renting ..but now with many losing jobs, less hours +lower incomes you can't just walk away and look for cheap location etc ..this will be brutal
    People don't have ideas, ideas have people

  13. #28
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    Quote Originally Posted by JBmurc View Post
    Not this time ...kiwis ticked up during these low rates was cheaper than renting ..but now with many losing jobs, less hours +lower incomes you can't just walk away and look for cheap location etc ..this will be brutal
    As I said before, i'm still talking to those in my circle that are clueless of the impact this virus would have on the economy. Too may enjoying Xbox at home... not a lot of productivity going on but they treat it as a 'holiday'. Well what if at the end of the holiday their job is not there? No one plans ahead, all going on 'hope' while watching the Ms Ardern speech of the day.

    I can't say immigration would be that hot from now on. How will tourism come back to NZ if AirNZ says even after 5 years they will never get back their 'international routes' like they were few months ago?

    There was a short moment back in February where I though to take my money and buy more NZ real estate. The inconvenience of owning more was what put me off and instead, exchanged the vast majority of my cash into USD and set it to my US broker. (I discussed this in another post); the process was not straight forward but hindsight.. WELL worth it - this week I hope to invest the remainder of the cash.

  14. #29
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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!
    Come on Dean, tell me I'm wrong. Sing me that old property can never go down tune again.

  15. #30
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    Quote Originally Posted by SBQ View Post
    As I said before, i'm still talking to those in my circle that are clueless of the impact this virus would have on the economy. Too may enjoying Xbox at home... not a lot of productivity going on but they treat it as a 'holiday'. Well what if at the end of the holiday their job is not there? No one plans ahead, all going on 'hope' while watching the Ms Ardern speech of the day.

    I can't say immigration would be that hot from now on. How will tourism come back to NZ if AirNZ says even after 5 years they will never get back their 'international routes' like they were few months ago?

    There was a short moment back in February where I though to take my money and buy more NZ real estate. The inconvenience of owning more was what put me off and instead, exchanged the vast majority of my cash into USD and set it to my US broker. (I discussed this in another post); the process was not straight forward but hindsight.. WELL worth it - this week I hope to invest the remainder of the cash.
    Slightly off topic but yesterday I spoke to two people working in tourism overseas. One has a whale watching business in the North Atlantic. Last year they (him and others) took our 108,000 customers. They are forecasting 7,000 this year, most of them already done.
    The other one is a pilot in a port in the sub-antarctic where cruise vessels dock for Antarctic trips. They have been getting 110-140 cruise ships between Oct-Apr in recent years. Next season they expect "less than 10".
    Both of the above examples are venture/outdoor type tourists, like majority that visits NZ is. This is the scale we are talking about. A complete collapse for potentially a long time to come.

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