Good news Stories

[Ptolemy]

People should be asking, how long will they stay there?

[fungus pudding]

Its that time of year when the banks go hunting for those spring buyers.

BNZ now dropped its variable rate down to 5.59% which begs the question: how low will they go?

It raises the question, but it doesn't beg it. There's a huge difference in meaning.

[minimoke]

It raises the question, but it doesn't beg it. There's a huge difference in meaning.

Having made the assertion there is an interest rate war with no evidence I thought begging the question was the correct term. I stand corrected.

[minimoke]

Sorry NeopoleII heres another soundbite from todays news:

Property values continue to recover
Property values have continued to increase according to the QV residential property indices for September released today.



Nationwide values are now 2.7 percent up from their low in April.


A further market measure, distinct from the index, is the average sale price which across New Zealand also increased further to $387,567 in September from $385,426 in August.

[loofa]

It appears that the influence of more higher priced property is the major influence rather than a general lift.

[neopoleII]

hey minimoke,
you seem to be in the camp of rising house prices being a good thing, and me in the camp of it being a bad thing.
myself being a landowner, rising prices is always good when assessing personel wealth, but, what about community wealth or state of the nation wealth, or the fact we have to live in a community where the spread of haves and havenots is ever widening?

i see these property investors and speculators driving a wedge between different parts of our society. and the fact that the $200 billion residential investment market generates no taxes for the government.....
if tax laws dont change, or arent administered enough, the gap between rich and poor will increase, and in my view, this leads to animosity and general ill feelings in the community. if its let to continue, thing will only get worse.
obviously there are many factors involved, like absconding fathers, domestic violence, laws protecting crims, ease of benifit fraud etc............ but NZ used to be a place where a hard working man ( of whatever creed, skill or inteligence) could get a home.
now it seems that only working families with skilled labour can afford a home and the rest are left to rent....... to make the skilled families even richer, .... and richer still with the tax advantages to boot.
sooner or later, if the system is left as it is, the house of cards will fall simply because of the ever rising debt level.
the smart ones cash out early......... but then what?
move overseas or live in gated communities in luxuary while the rest crumble with debt.

its very true that alot of people live outside their means and live only for today, and they should go down the gurgler, but the majority of folks out there are genuine and are struggling and the biggest issue for them is the cost of housing whether owning or renting.

gees......... im starting to sound like a labour/socialist campainer!.... but im not, im the opposite, i hate free loaders and whingers and lazybu.ms and the "want it all today", and fully agree that if you work hard and plan ahead you shall be rewarded........ and get to keep it too!

but loading up on negative gearing, claiming tax losses, running lac's and the other many numous systems developed of accountants to generate wealth along with a lax govt is causing this country great pain.
for the amount of people living on this land mass called NZ, we should have cheap housing...........
but we dont.

i cant see wages going higher for the general population any time soon.
upskilling the population will take many years.
i cant tarrifs coming in to protect us from cheap overseas labour.
i cant see NZ debt burden disappering soon either.
the property owners are getting older.
more people are finding it harder to get into a home
more people are finding it harder to keep their home.

house prices will come down, one way or the other.
how and when it happens is what thinking and planning is for.

[minimoke]

[quote=neopoleII;277114]hey minimoke,
you seem to be in the camp of rising house prices being a good thing, and me in the camp of it being a bad thing./]
I am in the context of investment and personal asset growth

[but, what about community wealth or state of the nation wealth, or the fact we have to live in a community where the spread of haves and havenots is ever widening/]
Now thats a different story and we need to whole set of new threads to cover that off.

[i cant see wages going higher for the general population any time soon.
upskilling the population will take many years.
i cant tarrifs coming in to protect us from cheap overseas labour.
i cant see NZ debt burden disappering soon either.
the property owners are getting older.
more people are finding it harder to get into a home
more people are finding it harder to keep their home/]

- Agree wages aren't going higher until we lift our productivity
- Cheap labour is what the governement wants - look at who is caring for the elderly in droves.
- NZ Debt also unlikely to reduce
- Many people have always found it hard to buy a home - doesn't mean to say they can't make one from a rental
- People finding it harder to keep a home - not so much due to the value of the home but due to the debt that home is expected to carry: holiday home / new cars flat screen telly etc.

House values will never come down. They have always trended upwards and will continue to do so. Not even the sub-prime suceeded in the long term drop in NZ values.

[Ptolemy]

Neopole, I couldn't agree with you more.

But one thing I have learned from reading these types of sites is you can never convince a NZer in love with property that property will ever go down in price. Property in NZ (and Oz) is special - like no other asset class. Risk free guaranteed gains. It seems that investment fundamentals don't apply to housing because there is never aenough supply to meet the demand (despite no supporting evidence of this).

[QUOTE=minimoke;277121 House values will never come down. They have always trended upwards and will continue to do so. Not even the sub-prime suceeded in the long term drop in NZ values.[/QUOTE]

Ironically MM, it is the very GFC that saved the property market in NZ - property prices in NZ were in fact trending down until the GFC exploded in October 2008. It was then that the RBNZ entered into the most aggressive rate cutting known in NZ history. Interest rates halved in a matter of weeks. Due to relatively tight supply, high employment and a massive dose of liquidity prices were stabilised. The fact that our banks didn't fall over like in Europe and the USA was a huge factor also - the fact property prices didn't drop preciptously was a factor in their stability also.

I don't profess to know which way prices will go, but before I made a bet on prices returning to an upward path I would want to see what they are doing under "normal" interest rate conditions and higher unemployment before I loaded up with debt to buy a few properties. I would also want to see what any gummint tax changes were too (although I have no faith in the gummint to make changes which are good for the economy to the detriment to their own vested housing interests - most of them own properties which they use to rort the entitlements systems.)

[minimoke]

Ironically MM, it is the very GFC that saved the property market in NZ - property prices in NZ were in fact trending down until the GFC exploded in October 2008.

The GFC began in 2007 and the NZ mood in property changed in Jan 07 (evidenced by Shrwedys timely thread). The doom sayers were saying the sky will fall. In fact prices continued to grow into 2007 reaching a peak around Nov 07. This was around the "30% drop" time but it didn't happen. From Nov 07 to Oct 08 there was about an 5% drop in average. Prices continued to fall to an eventual 9.7% drop in Jan 09.

Property is said to be a long term investment and a few months activity may not be enought to measure the trend. Sure those that bought at the peak in Nov 07 are possibly ruing their "losses". But what about those that bought in Jan 02. Well, in Jan 09 when things were at the gloomiest, they have seen an increase of 78% or added $163K to their personal wealth. If they took the snapshot today they be up 94$ or $197.

I don't see NZ property as being "special" but there are certain things that suggest values will continue to go up where as the evidnce for a fall is slim. Not even the worse financial crisis to hit the planet since the great depression managed to but much of a dint in it.

[neopoleII]

"""House values will never come down. They have always trended upwards and will continue to do so."""

this statement has been true for a long time, probably all the time.
but, things are changing, namely the way countries like china et al have come onto the scene in a large way and have drastically changed the way of commerce and industry.
here in NZ we are closing our factories at an alarming rate due to cheap overseas labour, so we are left with agri industry...... which is low order skill and pay and service industry which is also low order skill and pay. the rest make a living out of wheeling and dealing. there is only so much forign exchange coming into NZ, and its not enough to go round, so we borrow to make ends meet. and its this borrowing that has catapulted NZ into debt, and that debt was spent on housing.
the wheeling and dealing has dramatically slowed down, as the flow of funds has.
but we are sitting at the top of a mountain.
people dont have the income to support large debt for much longer, and those that do take on large debt are gambling their futures. a house is only worth what someone is willing to pay or is able to afford.
at this stage, the addiction to debt is still strong and therefore are willing to pay high prices........ in the belief that property always goes up.( just because history shows it did) when the reality sets in that the economy is controlled by outside influences, namely credit suppliers and goods suppliers, and that a home buyer is at the mercy of forign nationals, people will start to think about what is affordable and whether they will have employment in the future to be able to afford these prices of today.
all through the western world house prices have soared though speculation and easy credit. the govts of the western world have avoided catastrophy by borrowing from future citizens. the debt has to be paid, and those future citizen who will be forced to pay it are not going to be happy paying top dollar to current home owners and speculators to get accomadation.

there is only one constance, and that is time.
current home owners will get old and want to sell at some stage.
debt multipled by time increases if not paid.
to pay a debt money has to be saved or diverted.
the value of a home is related to what someone will pay for it.
what someone can pay is related to the value of the income.
income is related to how many widgets are made, sold and serviced.
the western world has pushed its self into a corner by narrowing its manufacturing base,
NZ has fallen through the gaps in the floor boards, and survives by hanging onto its debt balloon.
when it pops, land values will drop, tradesmens rates will drop, construction materials will drop, the economy will drop house prices will drop.

how far it will drop depends on the government, but the higher the debt the bigger the fall.