NZ 1st homebuyers are ScReWeD...

[JBmurc]

And not only RES Property but Commercial property ... talk about a Good beating first COVID shutdowns killing businesses ability to pay leases and now Interest rates spiking 7%+ floating RES rates ...Commercial add another couple percent .. I seen many Commercial properties selling on 4-5% yields ....

[Aaron]

SUCCESS!!!!!

https://www.interest.co.nz/public-po...ory-three-five

Another migration fuelled housing boom not far away.

Should do wonders for the cost of living (inflation) crisis as well.

Not only that but Adrian might be able to pivot and drop rates due to the large numbers of unemployed when the recession makes itself felt.

Then it is off to the races for asset prices again. A great time to be an asset owner, provided we don't want to broaden the tax base with a capital gains tax.

[Bjauck]

SUCCESS!!!!!

https://www.interest.co.nz/public-po...ory-three-five

Another migration fuelled housing boom not far away.

Should do wonders for the cost of living (inflation) crisis as well.

Not only that but Adrian might be able to pivot and drop rates due to the large numbers of unemployed when the recession makes itself felt.

Then it is off to the races for asset prices again. A great time to be an asset owner, provided we don't want to broaden the tax base with a capital gains tax.

Phew! No need to Invest to increase productivity, everybody can continue to pile into housing.

[Logen Ninefingers]

If a property owner faces rising costs as the result of rising interest rates, is it the governments job to supplement their incomes?
Discuss.

[SBQ]

If a property owner faces rising costs as the result of rising interest rates, is it the governments job to supplement their incomes?
Discuss.

That's the whole stupidity of the situation. All this talk about 'cost of living' being so high that all of a sudden, it's the government's job to fix this problem buy ... handing out more $. If people were irresponsible in their borrowing when at a time you only needed 5% down for a 2% pa mortgage, to now where you would need more than 1 income to support the same mortgage, then this is moral suasion. As a tax payer, i'm quickly losing incentive to do any more work and pay little tax as I please.

[Logen Ninefingers]

That's the whole stupidity of the situation. All this talk about 'cost of living' being so high that all of a sudden, it's the government's job to fix this problem buy ... handing out more $. If people were irresponsible in their borrowing when at a time you only needed 5% down for a 2% pa mortgage, to now where you would need more than 1 income to support the same mortgage, then this is moral suasion. As a tax payer, i'm quickly losing incentive to do any more work and pay little tax as I please.

The whole nation is bleating for more money from the government, and they dutifully follow through. If prices rise, the government is supposed to top up your bank account so you don’t notice any effect - this is the ridiculous mentality that the nation seems to have adopted en masse. I talked for years about the fact that by blowing up asset bubbles the central banks were making entire populations ‘too big to fail’, and now we are seeing the result. Very, very scary and dangerous and we simply will not get on top of inflation with this mindset because the Reserve Bank has not moved the OCR above the rate of inflation & the government is engaged in a massive societal bail-out and borrowing $1 billion a week to do so - money that is petrol on the inflation bonfire. If the government is going to pump money at the population like this then there is zero incentive for anyone to curb their spending habits or save.

[Aaron]

If a property owner faces rising costs as the result of rising interest rates, is it the governments job to supplement their incomes?
Discuss.

Was it the RBNZs job to ensure house prices did not drop 10% prior to the pandemic over reaction. To quote Bill Bonner, you need to replace "wall street" with "house prices" for NZ

As it is, the Fed faces a grim choice. Inflate or Die. Either it backs off and allows the bubble economy to die…with a crash on Wall Street, recession, bankruptcies, unemployment, and all of the other nasty things needed to correct its own policy mistakes. Or it protects the gains of the rich and the powerful by continuing to inflate the economy.

The inflation option postpones the reckoning…but it increases the pain. And it destroys the middle class. The poor get inflation-adjusted handouts. The rich have their assets, their hedges, and their hustles. But the middle classes sell their time by the hour. Prices go up. Real wages go down. Jobs disappear. And houses, where the middle classes keep their savings, become debt traps. As prices rise, families borrow heavily to buy them.


Not sure how it ends, but you can be sure inflation will remain part of the solution. I quote Bill again and it applies to America but the Western world is pretty much following the same path.

Remarkably, the Fed’s key lending rate remained under the inflation rate for the whole period 2008–23 to today (excepting a few months in 2019).

You only need to read the latest discussion on the Argosy property thread to see how most "investors" are thinking about interest rates, and they have been right for the last 30 odd years and there is nothing to indicate this will change. Current real negative interest rates will remain and go more negative as soon as it is possible to do so.

[Logen Ninefingers]

Was it the RBNZs job to ensure house prices did not drop 10% prior to the pandemic over reaction. To quote Bill Bonner, you need to replace "wall street" with "house prices" for NZ

As it is, the Fed faces a grim choice. Inflate or Die. Either it backs off and allows the bubble economy to die…with a crash on Wall Street, recession, bankruptcies, unemployment, and all of the other nasty things needed to correct its own policy mistakes. Or it protects the gains of the rich and the powerful by continuing to inflate the economy.

The inflation option postpones the reckoning…but it increases the pain. And it destroys the middle class. The poor get inflation-adjusted handouts. The rich have their assets, their hedges, and their hustles. But the middle classes sell their time by the hour. Prices go up. Real wages go down. Jobs disappear. And houses, where the middle classes keep their savings, become debt traps. As prices rise, families borrow heavily to buy them.


Not sure how it ends, but you can be sure inflation will remain part of the solution. I quote Bill again and it applies to America but the Western world is pretty much following the same path.

Remarkably, the Fed’s key lending rate remained under the inflation rate for the whole period 2008–23 to today (excepting a few months in 2019).

You only need to read the latest discussion on the Argosy property thread to see how most "investors" are thinking about interest rates, and they have been right for the last 30 odd years and there is nothing to indicate this will change. Current real negative interest rates will remain and go more negative as soon as it is possible to do so.

‘Current real negative interest rates will remain and go more negative as soon it is possible to do so.’

————

The crux of the issue is: when will the OCR ‘turn around’ occur that the property ‘experts’ (spruikers) and bank ‘economists’ (paid propagandists) are clamouring for?

I don’t think any store should be placed in any of their ‘predictions’ or ‘forecasts’. From the calls that property prices would double every few years to inflation being only ‘transitory’ to the OCR peaking at 3.5%, they have been totally wrong and should be just as totally discredited by now. But because of the hold that the property industry and retail banks have over our media, the views of these so-called ‘experts’ and ‘economists’ are still eagerly reported.

The government is currently countering everything that the Reserve Bank is trying to do. We just hit 6th gear with the borrowing and spending binge & may now avoid a recession. To me that signals that inflation will remain sticky and the OCR will stay higher for longer. I’ll back my view over the views of people who are essentially paid to trumpet the propaganda of the banks and the property industry. They are trying to shape public opinion, trying to shape the future - and many people are in negative equally and financially under-the-pump as a consequence.

[Bjauck]

Decades of policies that inflate the valuation of the housing market, while forcing companies off-shore to find sufficient capital have created an inflated lop-sided scenario in NZ. So now, interest rates cannot be increased as keenly as they were reduced in the past when inflation showed the faintest signs of falling to the bottom of the target range. Otherwise the collapse of real estate valuations would rapidly put the balance of NZ's investment valuations between productive and non-productive investments to a more internationally comparable ratio.

[Logen Ninefingers]

Decades of policies that inflate the valuation of the housing market, while forcing companies off-shore to find sufficient capital have created an inflated lop-sided scenario in NZ. So now, interest rates cannot be increased as keenly as they were reduced in the past when inflation showed the faintest signs of falling to the bottom of the target range. Otherwise the collapse of real estate valuations would rapidly put the balance of NZ's investment valuations between productive and non-productive investments to a more internationally comparable ratio.

A crazy situation brought about by central banks and governments. The disease of QE and ultra-low interest rates started in the US with the Fed after the GFC, and we’ve just followed them as all nations must do since the USD is the global reserve currency. And now all the chickens are coming home to roost.