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  1. #1981
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    Quote Originally Posted by fungus pudding View Post
    Your comparing just the right front leg of a centipede with one of the other 99. ....It was hardly like the same planet. Rear vision-mirrors are highly prone to fogging-up.
    Things do change. I am sure that no-one is suggesting that first home buyers should make do with long-drop toilets and no electricity.

    I guess to compare by how much house price inflation has surpassed income inflation we should just compare the inflation in the land value for a property. Of course today's older urban first home buyer will have to settle for a significantly smaller slice of land - goes without saying?
    Last edited by Bjauck; 07-03-2020 at 12:10 PM.

  2. #1982
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    Thank you,
    Christchurch property market is still very very cheap ... we have a brand new city now and can still pick up not bad properties at all for around $300,000... I'm looking around $350-400k for a real decent place and have solid 100k plus deposit...
    Yeah if I knew what I knew back in my 20s I'd be retired now lol ....
    Oh well been a super fun ride and enjoying life and my lifestyle so onwards and upwards...
    For me the most important thing is not being locked into a lifetime loan so if I couldn't finance the loan to pay down faster then I still just wouldn't be doing it...

    .^sc
    Nakamoto means of Central origin ...

  3. #1983
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    Quote Originally Posted by Bjauck View Post
    Things do change. I am sure that no-one is suggesting that first home buyers should make do with long-drop toilets and no electricity.

    I guess to compare by how much house price inflation has surpassed income inflation we should just compare the inflation in the land value for a property. Of course today's older urban first home buyer will have to settle for a significantly smaller slice of land - goes without saying?
    And don't overlook the main cause of house price increases - i.e. interest rates at about 20% of previous levels.

  4. #1984
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    Quote Originally Posted by fungus pudding View Post
    And don't overlook the main cause of house price increases - i.e. interest rates at about 20% of previous levels.
    True. If you can raise the deposit, you may be able to afford a stonking great mortgage for a much smaller section with dwelling. Who knows what will happen if negative interest rates come along. Just make sure your livelihood is not in an industry exposed to less benign resolutions to the CV situation though. NZ may not be immune from negative equity situations.

    ShrewdC with a good sized deposit, has a greater protection against any housing market downturn than many first home buyers.
    Last edited by Bjauck; 07-03-2020 at 02:25 PM.

  5. #1985
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    Quote Originally Posted by Bjauck View Post
    True. If you can raise the deposit, you may be able to afford a stonking great mortgage for a much smaller section with dwelling. Who knows what will happen if negative interest rates come along. Just make sure your livelihood is not in an industry exposed to less benign resolutions to the CV situation though. NZ may not be immune from negative equity situations.

    ShrewdC with a good sized deposit, has a greater protection against any housing market downturn than many first home buyers.
    With such a decent down payment, I would not stop at buying ONE house, he should look to leverage more because low interest rates are going to stay around for a very long time. If we go negative rates, then the banks will be forced to charge interest to cash deposit holders which IMO is a very bad scenario.

    Negative interest rates are already causing problems in the EU. NZ gov't has already imposed laws similar to the EU in the area of AML, FMA, & CRS because the word is the EU has already experienced their 'flight of capital'. The wealthy moving their liquid cash to America where the investing environment is more favourable. I speak from experience under AML where my bank manager made queries and I spoke with my accountant and the issue of IRD, and all around the AML issues for sending funds abroad. The US is going the other way in terms of regulations, on the other hand NZ is following the ways of the EU model by restriction people on what they can do with their $. One thing that is certain, with negative interest rates you're basically saying as a whole country, 'we would like to borrow $ but don't want to pay interest on it'. So the only thing that goes unscathed is... owing the hard assets like real estate. But if there's an exodus of NZ leaving the country, then that would be the only driving factor to cause housing prices to stay long for the long run.

  6. #1986
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    Quote Originally Posted by SBQ View Post
    With such a decent down payment, I would not stop at buying ONE house, he should look to leverage more because low interest rates are going to stay around for a very long time......
    If the negative interest rates are caused by recession, you would have to hope that you would keep your source of income to keep servicing the mortgage as there will be large amounts of capital requiring repayment.

  7. #1987
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    Quote Originally Posted by Bjauck View Post
    If the negative interest rates are caused by recession, you would have to hope that you would keep your source of income to keep servicing the mortgage as there will be large amounts of capital requiring repayment.
    Depends on which school of thought. In my view, the western nations are using MMT (Modern Monetary Theory) in macro economics. The rules use to be that interest rates were used to control inflation but that no longer applies because from time to time, recessions continued to occur as we've seen a gradual lowering of interest rates in the past 40+ years. In the mid 70s, mortgage rates were in the 20s. In the past 20 or 30 years, mortgage rates didn't hit double digit and this kinda applies for both in Canada / Aus / and NZ. Under MMT, we are going to see that no matter how much interest rates drop or go negative, the controls to stimulate economic output (to avoid a major recession) is not going to work like it use to. Why? Because low interest rates have already depressed the value of money. All significant funds of large size have moved abroad to places where economic returns are higher with far lower risk (hence, the US economy). Why? Because those with the money base their investment decisions on the prospects of growth and NOT on the cost of money (ie US businesses instead of NZ business). It will come to a point here in NZ that if you want the country to prosper and avoid recession, it would ultimately be dependent on how much fiscal spending the NZ gov't does - yep, the NZ gov't will just dial in a figure and spend it. Debt doesn't matter under MMT (and on most part, debt didn't matter before MMT as deficit spending always occurred or simply... just print $$$). We already have a banking system that creates $ out of thin air though issuing loans. With negative interest rates, the banks (and central banks) will have the ability to 'double dip'. Instead of paying interest on cash savers, they will charge them interest while at the same time, issue more mortgages. One would think why doesn't the bank pay people interest to their clients with mortgage loans? Well because banks are greedy or in the EU, the banks there need the extra profit so will simply pocket that interest difference under a negative interest rate environment. Deutsche Bank is not going to go bankrupt.

    So if the economy does dip into a recession and people lose their jobs which they may lose their home.. this would not be a long term situation as the gov't will always... ALWAYS save the day by spending and creating $ out of thin air and stimulate the economy regardless. After all... look how high Auckland prices have risen in the past 40 years? A time when you had to see a solicitor to get a loan to buy a house (and the solicitor was responsible for making the loan deal arrangement with the mortgage lender... to today.. the banks are screaming they want to lend you money at 2.8% interest).

    The US 10 year treasury bond is sitting at 0.77% pa. Only fools are the ones that don't borrow which is why I tell others to don't stop buying their 1st home, go on to their next one.

  8. #1988
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    SBQ. You say some interesting things. With respect, your posts would be easier to read if they were divided into more paragraphs. My apologies if this seems nitpickish!
    Last edited by Bjauck; 08-03-2020 at 10:04 AM.

  9. #1989
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    Quote Originally Posted by Bjauck View Post
    SBQ. You say some interesting things. With respect, your posts would be easier to read if they were divided into more paragraphs. My apologies if this seems nitpickish!
    No offense taken. Yeh sometimes there so much in my mind that I find it hard to put it all down in an orderly fashion. I agree grammatical errors are my shortfall ; I recall at uni I missed out getting an A+ because of a few written mistakes as our prof told us, we all had done great research for our papers and had to resort to grammar to separate the As from the Bs.

  10. #1990
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    Quote Originally Posted by SBQ View Post
    No offense taken. Yeh sometimes there so much in my mind that I find it hard to put it all down in an orderly fashion. I agree grammatical errors are my shortfall ; I recall at uni I missed out getting an A+ because of a few written mistakes as our prof told us, we all had done great research for our papers and had to resort to grammar to separate the As from the Bs.
    That must have been galling. However I guess good communication is important. I am not sure if Morecambe and Wise made it to Canada. I saw my parents old video of a skit they did which is sort of on this point! The relevant bit is at 1:49

    https://www.youtube.com/watch?v=uMPEUcVyJsc

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