Property on the rocks

[Winston001]

Just for your information, I bought my house in Invercargill in 1991 for $170,000. Large house, good location. By 1995 the valuation was $145,000.

Today, 16 years on it is worth $350,000. A nice paper gain but insignificant when compared to many other areas of NZ.

[srotherh]

This is part of the statement from the reserve bank yesterday for their Financial Stability Report

quote:"An adjustment would happen at some point, and when it did it would have an adverse impact on the financial sector.

It's a bit like a rubber band. The further a rubber band gets stretched, the more likely it is that you're going to have a sharp correction at some point, Spencer said.

Despite the concerns about riskier lending, New Zealand was probably still conservative by some international standards.

More growth was in loans for 80 to 90% of the value of a house, than in those between 90 and 100%.

Bollard said he had seen some change in bank behaviour in the past few months, so the Reserve Bank was less concerned about the possibility of unsustainably low margins than it had been.

There had been a broader understanding among banks of concerns about an overloaded household debt market, and a realisation that was not good for households, and not necessarily good for New Zealand or bank shareholders.

Today's report said bank residential mortgage lending had shown a resurgence in recent months.

As at the end of December, bank residential mortgage lending was about 136% of personal disposable income, continuing the rise in that ratio. At the end of February, lending to the sector stood at about $132 billion -- 52% of total bank claims.

Household debt had increased by 10% in real terms during the year to December, and was now 160% of household disposable income. In nominal terms household debt was over $150 billion.

Read the last two sentences again
Geez
The rubber band has to snap at some stage??
anyone think this will not correct at some point???
If so post your reasons

[arco]

May 2007

House prices are likely to rise even further as the Government reveals new regulations aimed at making buildings more energy efficient.

In order to use 30 percent less energy, new houses in the South Island and the Central Plateau in the North Island will require double-glazing and increased insulation from November. Tougher insulation regulations for the rest of the North Island will take effect from July 2008. For Auckland and Northland, the date will be October 2008. The new measures will include a reduction of up to $500 on the cost of installing solar water systems and more energy efficient lighting for new commercial buildings.

Prime Minister Helen Clark says creating drier and more efficient houses and commercial buildings is a triple win for New Zealanders' health, the environment and power bills.

"The Labour-led government believes that New Zealand should strive to be the world's first truly sustainable nation."

The Government claims a home built under the new standards will save anywhere from $760 to $1800 a year on power bills.

Building and Construction Minister Clayton Cosgrove has also announced two further proposals for public consultation. One requires domestic hot water systems in new homes to be more energy efficient while the second applies energy efficient standards to heating, ventilation and air-condition systems in new commercial buildings.

But Pieter Burghout, CEO of the Registered Master Builders Federation says the construction cost of a new house will go up at least $5,000 if the double-glazing and insulation measures are introduced. He says that figure will be even higher if solar water heating is installed. Mr Burghout says the measures will have a double-whammy effect as the price of an older house will also increase.

Consultation on the issue will close on June 29, 2007.

http://home.nzcity.co.nz/news/default.aspx?id=72731