NZ 1st homebuyers are ScReWeD...

[fungus pudding]

Weasel words from our venerable property investor.

Immigration played no part? Outrageous monetary policy has played no part?

Targeted inflation has played no part?

Just got to build enough houses according to FP.

Spare me! - do you not realise demand is affected by immigration and monetary policy/interest rates/targeted inflation? It is common to speak of supply and demand without writing a book or making a three hour speech on the factors driving these things. And yes if shortage or under supply is the problem then building or increasing supply is a necessary part of the cure.

[Logen Ninefingers]

Weasel words from our venerable property investor.

Immigration played no part? Outrageous monetary policy has played no part?

Targeted inflation has played no part?

Just got to build enough houses according to FP.

Why the demand for housing though? He says 'not enough houses being built' so there must be a reason for a demand for all these houses. The NZ birth rate is not shooting off the scale - it's the reverse actually, we have an ageing population. So the demand must be coming from somewhere to provoke this outcry for more supply and of course you are right: it is due to the huge influx of immigrants, it is due to the tax advantages that come from owning property, it is due to the extraordinary low interest rates and ultra-loose monetary policy of central banks, it is due to the deficit spending of the government that is pumping cash into the economy. Every factor has lead to extreme demand, to that I would think under the prevailing circumstances no amount of supply would ever be enough.

Up until recently, no property owner or property industry advocate was really prepared to suggest that the issue was anything other than a supply problem. If you go into print admitting that ultra-low interest rates and accomodative monetary policy are the most influential part of the picture - as become starkly evident during 2020 - then that is an admission that raising interest rates will cool the market. And what property owner wants higher interest rates? What real estate agent wants to see a cooling market? These people are shaping their official views according to their own self interest. No turkey is going to vote for Xmas.

But now it has been taken out of their hands. Rising inflation means that interest rates have to go up. And government has to ensure that borrowers are sufficiently financially robust to weather the coming storm. But of course you will see push back from the industry and vested interests. They will fight the incoming tide with all their might.

[Sideshow Bob]

Recently came across this.

Credit Contracts and Consumer Finance Act (CCCFA).

Govt recently brought this in.
Apparently it's wide sweeping and effects any borrower. not just first home buyers.
It explains why a couple of individuals I know who usually have no bother raising bank mortgage have hit a brick wall when wanting to raise funds against their property.
Could it be one way govt is attempting to stop increasing property prices ?

Good article explaining about this, and some of the problems on both sides.....


The Impact of the CCCFA on Business Lending | Business Finance Solutions | Finance New Zealand (financenz.co.nz)

[Aaron]

Spare me! - do you not realise demand is affected by immigration and monetary policy/interest rates/targeted inflation? It is common to speak of supply and demand without writing a book or making a three hour speech on the factors driving these things. And yes if shortage or under supply is the problem then building or increasing supply is a necessary part of the cure.

Please forgive me, from your original post I thought you were saying we just need to build more houses, a simple supply issue not worthy of further thought.

Obviously I have to read between the lines more.

[Logen Ninefingers]

- Auckland property prices rose by $6,700 a week last year.
- According to the latest Knight Frank global house price index, NZ house prices posted the fastest increase globally over the last five years.
- As of January New Zealand’s median house price is now higher than $1 million, a first for the nation, according to CoreLogic.
- House prices nationally were now 12.4 times the average wage as at 1 July 2021 Massey University analysis revealed.

Given the extraordinary house price rises - far outstripping average wages - and the pressure of rising interest rates, the government would be negligent if they did not ensure that a 'sub prime' situation was not developing in NZ. Of course, it may already be too late. It may be that the CCCFA implementation and subsequent outcry are highlighting that mortgage brokers and banks have been far too cavalier with their standards and that a great deal of dangerous lending has been going on. After all, with the comissions being earned and the need to compete for market share, the property industry is reliant on a constant supply of new buyers coming forward. There must be a great temptation to have this continue, no matter what.

There also seems to be an assumption that fewer first-home buyers and investors are 'coming forward for a mortgage' due to CCCFA changes, when I would have thought that extreme prices and higher interest rates were the logical reason.

Are the mortgage brokers worried for first home buyers out of the goodness of their hearts, or are they now losing income from the decline in the pool of buyers?

If the CCCFA is actually dampening demand from both first home buyers and investors, why isn't that a good thing? I thought we had a housing crisis and moreover a housing affordability crisis? So why isn't an easing of demand a good thing?!

https://www.newshub.co.nz/home/money...er-survey.html

Over half of the survey respondents report seeing fewer first-home buyers and investors coming forward for a mortgage, at a net 52 percent and 57 percent respectively.
Independent economist Tony Alexander told Newshub while loan-to value ratio restrictions, debt-to-income ratios (applied by certain banks), and interest rate rises, are affecting borrowers, the CCCFA changes are having the biggest impact.
"Largely, it's the CCCFA changes that are preventing home buying by a great number of people," Alexander said.
In the survey results, one adviser said the CCCFA changes were having a bigger impact than the LVR restrictions and the removal of interest deductibility for investors.
"Banks are now taking a forensic look at client's expenses: trust has been eroded between the bank and client around how they should live their lives," the comment reads.

[fungus pudding]

Please forgive me, from your original post I thought you were saying we just need to build more houses, a simple supply issue not worthy of further thought.

Obviously I have to read between the lines more.

Ask and thou shall receive. Thou art forgiven.

[Logen Ninefingers]

NZ housing situation is so screwed its beyond repair.
Only the potential crash that I suspect Labour is trying to engineer will bring prices back to affordable levels.

Only the potential crash that I suspect Labour is trying to engineer will bring prices back to affordable levels.

They are definitely not trying to engineer a crash. Jacinda has already acknowledged that Kiwi's expect to see their house gain in value. She knows the will of the electorate. She has talked about manageable house price increases, rather than the large rises we have seen - or words to that effect.

What we have seen to date from the government and central bank has been a passive bail-out of the housing market. Back in 2020 when house price falls were predicted they went into overdrive to support the market. Of course the measures were intended to prop it up (orbail it out in other words) rather than over-heat it. Of course your average Kiwi see's interest rates being slashed to the bone and doesn't think "hmmm...they are propping up the market", they think "corrrr....look at interest rates; I better get e another house!" or "I better get me a better house". So you got the unintended consequence: massive price rises.

You see a lot of comments on line about 'ha ha ha ha...the experts were predicting house price falls - instead they went up massively. Those idiots don't know what they are talking about".
These comments are dumb. Prices would probably have fallen without the heavy handed intervention of the government and the central bank.

It's a bit like observing a burning house, without intervention it will burn to the ground.
Is that observation wrong? No, of course it isn't.
But here comes the fire brigade. They put out the fire.
The circumstances changed. And the original observation was still correct.

[Logen Ninefingers]

https://www.stuff.co.nz/life-style/h...up-for-renewal

Roughly 60 per cent of home loans will need to be refinanced in the next year and for many borrowers, that will mean their interest rates doubling, according to CoreLogic’s latest Property Market & Economic Update.

CoreLogic chief property economist Kelvin Davidson said during the middle of last year, fixed-term interest rates were between 2 per cent and 2.5 per cent, and by mid-2022 they would probably be between 4 per cent and 5 per cent.

With fixed-term periods generally evenly spread throughout the year, Davidson said as much as 20 per cent of fixed-term borrowers could be hit by that doubling as well as those on floating rates.

Davidson said the change in interest rates could have a “significant impact on household budgets” and this would be another factor reining in house prices, or even contributing to house price falls.

[Logen Ninefingers]

Probably people will look back and say "so people on average incomes were buying an ordinary house in an ordinary neighbourhood for $1.2 million?! What were they thinking??"

Total speculative mania and a national delusion.

Poeple paying for ordinary bog-standard houses what would be paid for a farm not so long ago.

[Logen Ninefingers]

https://www.stuff.co.nz/life-style/h...up-for-renewal

Roughly 60 per cent of home loans will need to be refinanced in the next year and for many borrowers, that will mean their interest rates doubling, according to CoreLogic’s latest Property Market & Economic Update.

CoreLogic chief property economist Kelvin Davidson said during the middle of last year, fixed-term interest rates were between 2 per cent and 2.5 per cent, and by mid-2022 they would probably be between 4 per cent and 5 per cent.

With fixed-term periods generally evenly spread throughout the year, Davidson said as much as 20 per cent of fixed-term borrowers could be hit by that doubling as well as those on floating rates.

Davidson said the change in interest rates could have a “significant impact on household budgets” and this would be another factor reining in house prices, or even contributing to house price falls.

405 comments on this article and many of them are blaming the banks or successive governments. Typical. The people who actually did the buying and put themselves in the position where they took on huge debt won't blame themselves. Human madness.