NZ 1st homebuyers are ScReWeD...

[minimoke]

there is only one way for property prices...DOWN..the halcyon days are OVER.

I wonder what April sales volumes will be like. They are pretty much always lower than March. I guess as people have completed their summer rush and put off winter buying until next spring. I reckon there needs to be at least a 20% drop in volume for there to be any hope of a devaluing market. If volumes around 10% less then that’s just pretty well typical for this time of year. Prices also need to drop back significantly. We’ve had an approx 3% growth in the past two months of positive growth. The doom gloom people need this to be clearly a dead cat bounce otherwise their predictions are going to founder.

Over the past few years I reckon the property market has been under extreme pressure – but it is just so resilient. Even Shrewdy would have been a bit better off if he’d made the leap of faith. If the market can’t capitulate under the pressure its been under then what does it need to create the drops others are anticipating?

[The Doctor]

My 6th form economics teachers taught me that when demand exceeds supply prices will tend to rise ....

Immigration up >>> demand up.
Emmigration falling >>> demand up.
New home building consents collapsing >>> supply down.
Real Estate listings down 34% in April >>> supply down.

I'll leave it up to you all to figure it out ...

immigration-down
emigration-constant
bldg consents-down
listings-down

rents-stable
land supply---huge
tradesmens hrly rate-down
availability of funding-down
equity required -up
unemployment-up
living costs-up
govt debt-ott
consumer debt-ott

I'll leave you to work that out.

[Ptolemy]

Over the past few years I reckon the property market has been under extreme pressure – but it is just so resilient. Even Shrewdy would have been a bit better off if he’d made the leap of faith. If the market can’t capitulate under the pressure its been under then what does it need to create the drops others are anticipating?

Mass unemployment. The people who are buying sure aren't those out of a job.

I don't actually think the market has been under pressure except from the media. Your average kiwi in a job with a mortgage of $250k is $10k a year better off than he was 6 months ago.



Pros for property recovery

* Low interest rates
* Allegedly higher net migration (I would like to see stats on that - is it sustainable as unemployment rises)
* Supply of available land for building and low building starts

Cons for Property recovery

* Affordability on a historical basis
* Rising unemployment (and as a result mortgagee sales)
* Interest rates are likely to rise if inflation starts to kick in (watch Oil prices). Also, I suspect bank mortgage rates will also have to rise as foreign lenders are less willing to fund our unproductive debt.

I guess I'm not in either camp in that I'm not sure whether prices will rise or fall. If pushed for a prediction I would say that prices are likely to stay flat or drift lower by 5%. I certainly don't think that prices are likely to suddenly spike up like some are suggesting here, and if they do once interest rates do eventually start to go back up it is then that we may see the slump.

[minimoke]

Mass unemployment.

Many of those currently being made redundant probably aren’t home owners anyway. They were renters, will remain renters in the short term and will probably always be out of the property market regardless of employment status.

Then we have the public service redundancies. These people are leaving with redundancy packages which will see them keeping their mortgage for a while yet. By the time their redundancy pay runs out most will have found alternative work which will keep their mortgages going. So the low paid unemployed aren’t going to impact the demand side and the high paid unemployed aren’t going to impact the supply side.

Unemployment will increase but not I think to an extent that it will significantly upset the status quo.

The exception being the high paid unemployed who over exposed themselves to other properties – we can expect supply to increase here. But given current interest rates the yields for new people entering the investment market look better so there might be a bit of self balancing there.

[The GrandMaster]

My 6th form economics teachers taught me that when demand exceeds supply prices will tend to rise ....

Immigration up >>> demand up.
Emmigration falling >>> demand up.
New home building consents collapsing >>> supply down.
Real Estate listings down 34% in April >>> supply down.

I'll leave it up to you all to figure it out ...

There's a difference between people who WANT to buy property, and those that CAN buy property. This, I would have though, would be more important for demand in the short-to-medium term than simple numbers of people.

[minimoke]

There's a difference between people who WANT to buy property, and those that CAN buy property. This, I would have though, would be more important for demand in the short-to-medium term than simple numbers of people.

Simple number of people is critically important – because they have to live somewhere. Either in a rental owned by someone or in a place they own themselves.

[The GrandMaster]

Simple number of people is critically important – because they have to live somewhere. Either in a rental owned by someone or in a place they own themselves.

And rent is again very much driven by ability to pay. So if ability to pay is less, yield will be less, and this will have an impact on property prices (or should).

[Mick100]

I think some of the property buffs are going to have problems distinguishing nominal prices from real pices.
I'v made this argument before but it's worth repeating
If most things go up in price, including wages and int rates, while nominal property prices remain flat then the real price of property is actually falling.
This is what I expect to see happening in coming yrs - inflation increases but nominal property prices don't keep up with inflation. This is how affordibility will improve for home buyers. Nominal property prices do not neccessarily have to come down to make housing more affordible.

[shambles]

I think some of the property buffs are going to have problems distinguishing nominal prices from real pices.
I'v made this argument before but it's worth repeating
If most things go up in price, including wages and int rates, while nominal property prices remain flat then the real price of property is actually falling.
This is what I expect to see happening in coming yrs - inflation increases but nominal property prices don't keep up with inflation. This is how affordibility will improve for home buyers. Nominal property prices do not neccessarily have to come down to make housing more affordible.

The mortgage and the nominal house values stay the same, but do the rental yields increase with inflation?

Anyone know what the inflation adjusted change in property value's has been over the last ten years?

[Mick100]

The mortgage and the nominal house values stay the same, but do the rental yields increase with inflation?

?

Yes

I expect rental yields will increase when/if interest rates increase