$37 Million a week

[macduffy]

Agreed see post #51, I have come to the conclusion it will be more of the same until something breaks. Leverage will be my way to invest the trend as it should have been all my life. I suppose it is a matter how much debt is too much with low yields.

It's a bit more serious than "getting it in the neck from exporters...." though. NZ can't do its own thing monetary policy- wise when the rest of the world is busy dropping interest rates.

Good luck though with your new investment philosophy. Let's hope it's not too late to put it into practice!

[Bjauck]

Maybe there will be a currency crisis rather than a correction in asset prices? The money might disappear but real assets will remain. The end goal is inflation to clear the debt this means low interest rates while prices shoot up.

Also there is a global currency war, so the idea of a strong and stable currency has gone by the wayside as money printing is the easy answer to all the worlds problems.

In a period of hyper-inflation the money in the bank earning minimal interest will have its purchasing power eroded, so it is better to own or have a share in a plot of land and bricks and mortar (or admittedly less so in NZ, in a productive business.). However it is arguable that the current asset inflation/supply constriction has inflated real estate relatively more compared to wages/incomes and productive assets. So any correction may affect real estate more than other assets.

[Aaron]

In a period of hyper-inflation the money in the bank earning minimal interest will have its purchasing power eroded, so it is better to own or have a share in a plot of land and bricks and mortar (or admittedly less so in NZ, in a productive business.). However it is arguable that the current asset inflation/supply constriction has inflated real estate relatively more compared to wages/incomes and productive assets. So any correction may affect real estate more than other assets.

Really is it arguable, I would have said it is a stone cold fact that real estate has gone up more compared to wages for the last 20 years at least and it is becoming more noticeable recently. You are right I have doubts and my timing will probably be a signal for a top as always. That could be why I am procrastinating a bit.

[Aaron]

It's a bit more serious than "getting it in the neck from exporters...." though. NZ can't do its own thing monetary policy- wise when the rest of the world is busy dropping interest rates.

Good luck though with your new investment philosophy. Let's hope it's not too late to put it into practice!

Way to late, 30 years ago was the time to start now I can wipe myself out close to retirement. Someone did say they have been talking to immigrants from Zimbabwe and they felt as long as you had a house the hyper inflation was manageable.

[westerly]

The accommodation supplement is a bit like a first home buyer grant, pouring more fuel on the fire to make up for the fact that monetary policy is driving up the price of housing beyond what a lot of people can afford.

A bit pointless arguing about monetary policy, if the central bank raised interest rates in response to rampant house price inflation they would get it in the neck from exporters and owners of property whose house price has gone down instead of up. An Arts student will always take the easy option as will most people.

It is how it all ends that I should be focusing on instead of whining about the apparent stupidity of it all. I guess it will happen as it has throughout history, hopefully we can avoid a war at the end of it all.

We have nearly run out of interest rates to cut and the amount of money printing is so large it is incomprehensible to the average joe bloggs like me but rather than prices rising it is more a matter of dollars becoming worthless. Any real asset will be an inflation hedge and debt will be an asset if monetary policy gets rid of it for you.

That is why I am looking to leverage up on a house purchase, although still holding on to the faint hope of a pull back or crash first as I am unsure what sort of property to buy. Why complain about a govt subsidized industry when you can join it.

Also still waiting to hear which party???

Debt is never an asset. Agree that the amount of money being printed is astronomical but it is printed to avoid a financial crash.
At some stage the crash will happen (in my view) and there will be financial chaos. Interest rates maybe low but I would rather lose a money on a term deposit than buy shares at prices way above their actual value .
As for housing, the withdrawal of Govt. Finance for first home buyers following the 1987 and later changes left the supply of new housing in the hands of developers who realized there was far more money to be made building for the top end of the market and the basic 3 bedroom house on a bare section disappeared. Replaced by the up market, fully landscaped and fenced expensive offerings of today.

westerly

[Bjauck]

Really is it arguable, I would have said it is a stone cold fact that real estate has gone up more compared to wages for the last 20 years at least and it is becoming more noticeable recently. You are right I have doubts and my timing will probably be a signal for a top as always. That could be why I am procrastinating a bit.

I guess it could be looked at as a bubble that has been inflating for decades.

If you don’t think it is arguable, don’t you wonder:
How much lower can interest rates fall? Or will Ardern and future PMs ensure interest rates go negative to keep on inflating house prices?
How much longer can the constriction on new residential land be kept up?
For how much longer will the shortage of tradies last?
For how much longer will the stamp duty/tax onus be kept light on the gains from leveraged investor housing?

[artemis]

...
As for housing, the withdrawal of Govt. Finance for first home buyers following the 1987 and later changes left the supply of new housing in the hands of developers who realized there was far more money to be made building for the top end of the market and the basic 3 bedroom house on a bare section disappeared. Replaced by the up market, fully landscaped and fenced expensive offerings of today.

Westerly

What I see in Wellington is old house demolitions replaced by multiple unit terraced housing, and apartment blocks on larger sites. Still expensive and probably a decent buck to be made. Friends in Auckland say similar there. Other locations, don't know.

[Aaron]

Lots of building in my town as well but mostly large houses for boomers leaving Auckland and retiring.

[Logen Ninefingers]

“Ultimately, I can’t see house prices slowing while we have record low interest rates or ‘free money’ as buyers are telling me every day.

– Hamish Walker is a former National MP and real estate agent based in Queenstown.

https://i.stuff.co.nz/business/opini...ave-free-money

[Aaron]

“Ultimately, I can’t see house prices slowing while we have record low interest rates or ‘free money’ as buyers are telling me every day.

– Hamish Walker is a former National MP and real estate agent based in Queenstown.

https://i.stuff.co.nz/business/opini...ave-free-money

Do you see the free money solution changing anytime soon? Maybe buy a house if enough people do it the govt will probably provide some sort of handout to property owners in the event of a crash, the current free ride with tax free capital gains and central bank monetary policy (let inflation take care of the massive debt) won't be enough particularly just prior to an election.
More views but affected by my confirmation bias.
https://www.interest.co.nz/opinion/1...se-prices-much
https://www.abc.net.au/news/2021-02-...-soar/13154220