Which way will the property market go now?

[Playa]

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

[stoploss]

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 .

[fungus pudding]

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.

[JBmurc]

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

[fungus pudding]

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.

[Entrep]

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!

[JBmurc]

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)

[SBQ]

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.

[JBmurc]

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

[Bjauck]

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.