Final bullet into a dropping property bull?

[Jess9]

Floating rates almost breaching 10% (Westpac 9.95%), and one assumes fixed rates likely to head higher in sympathy. Has the the exit sign just begun to flash? Are overleveraged investors edging towards the door?

If we see a continued trend down in net migration, and possible mini recession next year - driven by dual figure interest rates and an over valued Xrate...the slump will finally bite!

If interest rates stay where they are and cap growth drops below 10%,...hmmme how likely is that in the near future ; ), then a big reason to invest for leveraged cap gain disappears, and capital loss looms.

Let the fun commence!

[Crypto Crude]

Yes I agree...
seems like my time is just around the corner it seems...
lets dance, when the bear appears he will be in a ravenous mood after along time in hybernation
[8D]
.^sc

[Halebop]

I'm not sure you need to get too excited. A correction, if coming, is likely to be no more than 10% and will worst impact developers, traders and the over geared. I suspect the most likely form any bear market takes will be slowly strangling years of under performance rather than a more exciting crash. The jury's out on the impact of 10% floating rates just yet. The psychological impact will be interesting to watch though - Bollard has finally grown cojones so may well hit again if the market doesn't take pause.

[Halebop]

...Keep in mind the impact of interest rates on the share market too!

[SEC]

quote:Originally posted by Halebop

...Keep in mind the impact of interest rates on the share market too!

Not to mention more income from all that cash you hold Halebop!

Come to think of it, if I was limited to NZ investments only, I would be holding 100% cash too.

SEC

[trackers]

quote:Originally posted by Shrewd Crude

Yes I agree...
seems like my time is just around the corner it seems...
lets dance, when the bear appears he will be in a ravenous mood after along time in hybernation
[8D]
.^sc

Haha, funny - Yep your time to pick up a house at a 5% odd discount is almost here - good luck paying it off @ 10%

I agree with halebop, we're most likely looking at a period of negligable returns for the next couple of years, then when interest rates drop I suspect we're back on (Tony Alexander - BNZ economist predicts 2 yrs for interest rates to start seriously coming down, and that sits about where I was thinking). In addition to traders/developers/overgeared people, first home ownership is now near impossible imo - the high house prices people could just struggle with, but 10% interest on top of that has really put the nail in the coffin as far as I'm concerned.

[Jess9]

Negative gearing pain for between 5-10 years, ouch, thought the idea was to reduce reliance on alternate income. NG - all OK if the market is rising quickly, just buy and buy I guess especially with virtually free access to finance, then sell a few to pay down "over" gearing of the remainder, into passive cashflow states to wait out such a flat period. I guess its the old game of pass the parcel, getting quicker and quicker, however the last holder really will get the surprise, when the music stops [B)]

[Crypto Crude]

quote:trackers
quote:
--------------------------------------------------------------------------------
Originally posted by Shrewd Crude

Yes I agree...
seems like my time is just around the corner it seems...
lets dance, when the bear appears he will be in a ravenous mood after along time in hybernation

.^sc

--------------------------------------------------------------------------------


Haha, funny - Yep your time to pick up a house at a 5% odd discount is almost here - good luck paying it off @ 10%

I agree with halebop, we're most likely looking at a period of negligable returns for the next couple of years, then when interest rates drop I suspect we're back on (Tony Alexander - BNZ economist predicts 2 yrs for interest rates to start seriously coming down, and that sits about where I was thinking). In addition to traders/developers/overgeared people, first home ownership is now near impossible imo - the high house prices people could just struggle with, but 10% interest on top of that has really put the nail in the coffin as far as I'm concerned.

Hey trackers... whats up...
I would argue that prices will fall further than 5%... ... although prices MAYNOT fall dramatically but remain in limbo for many years, around 10-15% drop could be expected... last house price recession lastest 15 half years...
Halebop posted a graph on 1st home buyers are ScReWeD thread on page 29... have alook at the length of time of last recession...have alook at graph characteristics...
read my post below his great picture... market would have to break 45 years of data to only fall in a small manor, for a short period of time...
probabilty wise, beating dollars would be in my favour buddy...

intuiatvly after housing recession bank rates willnot be 10% ...in 4-5years rates will be alot lower as in 4-5 years likely for me to get in on current market situation... It is looking like its the beginning of property recession....OCR is close to peaking to then start a down trending cycle IMO over time....

you go onto to say that first homebuying is now near impossible........
not with abit of shrewdness buddy... if all falls into historical patterns, and in 5 years that 300k house fallen to 250k... interest rates around 6.5-7% then outlook on future loan payments will change my life forever... only way I can think of breaking away from being that 52 year old man... only way possible for me buddy..
I cannot be a 52 year old man with house only, even if that house is worth a mill...
hope you are around here in five years to see who is correct...
I have no other choice but to risk it, and at the same time going against what many posters have told me, and at the same time going against what family and other wise people have told me...
goal-loan target decrease from 30years to 10... simple strategy...
lata tracker...
[8D]
.^sc

[trackers]

quote:Originally posted by Shrewd Crude
you go onto to say that first homebuying is now near impossible........
not with abit of shrewdness buddy... if all falls into historical patterns, and in 5 years that 300k house fallen to 250k... interest rates around 6.5-7% then outlook on future loan payments will change my life forever... only way I can think of breaking away from being that 52 year old man... only way possible for me buddy..
I cannot be a 52 year old man with house only, even if that house is worth a mill...
hope you are around here in five years to see who is correct...
I have no other choice but to risk it, and at the same time going against what many posters have told me, and at the same time going against what family and other wise people have told me...
goal-loan target decrease from 30years to 10... simple strategy...
lata tracker...
[8D]
.^sc

Hey shrewdy how are ya?

First home buyers, right now, are completely screwed... In addition to this, mortgagee sales are right up there, people going broke because they can't afford the payments.....Finally, we have renewed interest in the dollar due to the massive interest rates (bad luck exporters)

So what right? Well my point is, that shouldn't the government be trying to look after everyone's best interests? Certainly doesn't seem like that's going on here...To me it almost looks like Bollard raised the OCR just because he was sick of people saying he didn't have the balls to do it...

You may think I seem a little affected by all this...funny thing is I'm not, at all. I'm fixed for 5 years, my house has gone up around 40% and would have to fall a looong way before I was ever hurt in the pocket... I just think the actions by the Reserve Bank are bordering on irresponsible, and are certainly not helping the majority's situation one bit

[minimoke]

Lets not loose sight of how the government is continuing to fuel the property market.

By continuing massive growth in the public service with lots of well paid office workers who don’t add any productivity to the economy but who are in a position to afford better and better housing – driving demand.

By giving the reserve bank one tool (interest rates) to control inflation. Funds flow out of savings (which get taxed) into areas where a greater return can be made – like capital gains on property

By having tax rules which let property investors purchase property where there is no chance of a decent financial income – but great non taxed capital gains on sale.

By having a Working For Families programme which floods money back into families pockets which they can put into increase mortgages at a faster rate than can be offset by interest rate increase.

By forcing all home builders to comply with “leaky building” standards – forcing up building costs, raising the value of new homes which has to be reflected in the value of older homes.