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Housing report: Credit squeeze creates Mexican standoff in farm and house sales
Watch on our video page here 
Watch on YouTube here Bernard Hickey delivers a housing report in association with BNZ which looks at the 'Mexican standoff' developing in the housing market and the rural real estate market as sellers refuse to accept lower prices and buyers are either unable or unwilling to pay top dollar. The standoff is likely to remain as long as banks are unwilling to force the issue by pushing for mortgagee sales. New Zealand's banks remain well capitalised and are reluctant to push customers over the edge into a mortgagee sale unless they absolutely have to. This implies a long period ahead of very low sales volumes. This report looks at farm sales figures for January from the Real Estate Institute and housing approvals data for the last week from the Reserve Bank of New Zealand. There were just 46 farms sold in January and housing approvals were down 8.7% in the last week from the same week a year earlier. Banks globally are clamping down on lending growth as they prepare for tougher regulations on capital requirements and leverage levels. This is all part of the global de-leveraging that has been unleashed by the Global Financial Crisis in the wake of rising debt levels throughout the developed world. Bank lending to farming in New Zealand fell NZ$315 million in the four months to December, the first sustained fall in 9 years. The REINZ has blamed a lack of bank confidence for the very low sales in January, which are down 76% from two years ago.
60 Comments
It's a game hidden in
It's a game hidden in the spin and BS coming from govt and the banks. It explains the govts gutless approach to carrying out a major operation to save the economy. Bollard will carry on porking with cheap interbank rates but that will not hide the rising cost of foreign loot and Kiwi savers will not put up with being ripped off by bloody banks wanting to cut deposit rates and widen margins. Plenty of ETF options in the UK where rates are set to shoot up. Plenty of quality shares with sound div payouts and potential capital gains. All in all, the banks can't hide from Mr Market. I suspect the RBNZ is closing in on the 'nuclear option'.
The property bubble is the countries timebomb.
Collapse our country won't you.
Collapse our country won't you. Why don't you just piss of to Haiti or Afghanistan and live by their standards. That would generally raise the quality of Kiwi's quite a bit.
Wally wanker.
Robert I'm deleting your comment
Robert
I'm deleting your comment because of its angry and abusive tone. If you have a strong view please put it strongly with some evidence and argument. An abusive throwaway line aimed at another commenter isn't good enough on this site.
Ask yourself the question: Would I say this to someone's face if I had invited them around for a cup of coffee? If yes, please comment. If no, then try another site.
Let's raise the tone.
cheers
Bernard
Bit upset by the truth
Bit upset by the truth are we Robert!...Let's break it down just for you...is there spin? Yes...BS? Yes...is the govt being gutless? yes...Is the RBNZ keeping the ocr low to pork activity? Yes...Will credit be costing more in the future? Yes...Are the banks trying to boost profits with wider margins? Yes...Are there ETF funds in the UK? Yes...Will rates in the UK be rising? Yes.....Are there good quality shares even here in NZ with good divs and the prospect of capital gain? Yes Yes Yes. Will Mr Market do the deciding and not the banks? Yes. Did not Bollard mention the last option was the 'nuclear one'? YES
So what's your problem Robert?
"Big miners dig in against
"Big miners dig in against resource tax February 17, 2010 - 1:15PM
The resource industry has urged the federal government to rule out a new tax on big miners including Rio Tinto and BHP Billiton that would make them among the world's most heavily taxed.
In a submission ahead of the May 11 national budget, the Minerals Council of Australia representing Rio, BHP and Xstrata, said official calls for an increase in mining royalties were a "tax grab" threatening resource investment and growth.
Media has widely reported that Treasury chief Ken Henry has proposed a 40 per cent mining resource rent tax, as well as tax breaks for the four big banks to help draw foreign investment and recast the country as a regional financial hub." The Age.com
Fabulous coincidence...the aussies wanna be a regional financial hub too! Notice the grab for revenue by the Rudd govt. Our turn next I think.
Fully 2500 fewer mortgage approvals
Fully 2500 fewer mortgage approvals in the second week of February compared to the same week in 2009.
First week of Feb. was even weaker:
http://www.rbnz.govt.nz/statistics/monfin/c16/download.html
Last 2 weeks better be darn strong else turnover maybe another dud to follow January - means inventory will climb further.............
Jeeez AH...that's staggering!
Jeeez AH...that's staggering!
46 farms sold. How many
46 farms sold. How many actually put on market? 46?...more?
That chart looked like a
That chart looked like a heart rate monitor on a farmer ready to go flat line........
Where's <b>W.Kunz</b> and <b>Les Rudd</b>
Where's W.Kunz and Les Rudd tonight ? There's nothing on the telly , I's hoping to catch a fight here on " interest.co.nz" .
What's that you say , Bernard , let's raise the tone ? Holy poop Batman , I'm in entirely the wrong place then , aren't I . ............. Bugger .
@RT Spoilsport - I was
@RT
Spoilsport - I was waiting for Iain vs Mr C (short), and then Iain vs Les on Fabian Socialism.
Chuck Mr Hubbard into the Fabian socialism mix too?
Benard I enjoy your site.
Benard
I enjoy your site. can we have some analysis here. The meat and wool board survey indicating few farmers ahve been able to repay capital for a decade, the rising proportion of farm income taken by banks during the credit surge and the likley final price level adjustment actually based on a return on capital. Implications for NZ
Looking forward to some bite here.
Regards
Dave Crabb
<b>KWJ</b> : I have a
KWJ : I have a niggly naggly feeling that the honourable David Cunliffe doesn't like to be referred to as Cunny . I think that I got away with it , but you may not be so lucky .
The all time best stoushes have been either Mark ( the hit-man ) Hubbard vs. anyone in the global warming camp . Or the Mark vs Iain ( poke'm Parksy ) Parker . These guys know how to rumble .
Wally is good entertainment in a fight . Some would say a lightweight . But he does keep and audience spell-bound . So much so infact , that his opponent may have disappeared , but he carries on scrapping solo , and no one can tell anything is up .
W.Kunz is a good amateur . But you have to keep it in context of his earlier bouts .
KWJ, Roger - if you
KWJ, Roger - if you want some entertainment, try these seminars:
http://www.fabians.org.nz/index.php?option=com_civicrm&task=civicrm%2Fev...
http://www.fabians.org.nz/index.php?option=com_civicrm&task=civicrm/even...
I believe they are trying to schedule one for ChCh. See you there Roger.
This is the bit I like on the Fabians' website:
"Economic orthodoxy continues to fail New Zealand. This failure is systemic, not cyclical. Despite this, prevailing political and economic orthodoxy has become almost immune from scrutiny. It seems that policymakers have yet to comprehend that the status quo will inevitably lead to economic collapse."
Cheers, Les.
Huh , think you got
Huh , think you got the wrong Fabian's website there , old pal . Try : www.imdb.com/name/nm0003104/bio Good to see you're a swinger of old , Ruddsy .
Roger, No worries. You comments
Roger,
No worries. You comments use a bit of humour. The one I deleted was just plain mean, angry, personal and lacking in any sort of usefulness.
cheers
Bernard
Sorry Bernard . You've lost
Sorry Bernard . You've lost me there . The comment above to Les , is my first this morning . Unless someone is using my name . Can you track the sender ?
I'm not at all impressed
I'm not at all impressed to be falsey accused of a blog that I did not send . Surely you can check on the sender , via their registration . Until I get some explanation , I shall sulk in a corner .............. calmed by the soothing balm of my yummy gummy bears . Good luck to all who sail in the N.Z.Debtanic .
I think BH deleted the
I think BH deleted the comment from Robert not Roger
RT, I think BH was
RT, I think BH was simply replying to your comment at 9.51pm last night -
"What's that you say , Bernard , let's raise the tone ? Holy poop Batman , I'm in entirely the wrong place then , aren't I . "¦"¦"¦"¦. Bugger"
I think the deleted comment he refers to was the one by Robert....
Go easy on the gummy bears, too much sugar and food colourings could cause paranoia... ;)
Roger the name he referred
Roger the name he referred to was Robert not Roger.
http://unconditional.co.nz/blog/taking-the-property-pulse-of-the
http://unconditional.co.nz/blog/taking-the-property-pulse-of-the-market-...
interest.co.nz is meant to be
interest.co.nz is meant to be a site where we can go for informed and slightly entertaining comment.
lately it seems to be captured by a few posters waffling on about gummy bears and sly digs at each other....appropos to nothing and offering little forward thinking.
i'm with dave crabbe who posted a plea earlier for more reality.
humour and opinion ,yes, but not waffle!
That looks like the slide
That looks like the slide is underway TBM. Wonder what the govt will do to 'save property' like maybe throw some borrowed money at first home buyers...with mortgage subsidies!....or change the tax fiddle changes we are told will come in the budget...no doubt the RE mob and property advertising dependent media will be screaming for govt help already.
Great waffle Rob!
That unconditional posting couldnt be
That unconditional posting couldnt be more explicit - the pressure on house prices is all emphatically on the downside.........
Interesting link, TBM. Not that
Interesting link, TBM. Not that we quite has a double-top ( although I do see a failed retracement to a high in Jan 08), but if we break through that Jan 09 lows of $337k,( I note someone else has highlighted that support point with a line) it could be technically interesting. I don't see a support point on the chart in the link, as it only goes back to 2005.
I'll try and catch a
I'll try and catch a chicken NA....nothing like reading the guts to know the future....
Looks like it's nowhere to
Looks like it's nowhere to hide again ?? Reminded me of the Mexican Standoff in the US about 2 years ago before the real crash came....will it happen in NZ ??
Either way we will be seeing higher rates soon as well as higher taxes too (don't believe goverment BS about revenue neutral tax reform). Every developed economy is in a deep cesspit of debt and recession, plus an ever increasing loss of wealth in the private sector, there is only one way to go....higher interest rates and taxes.
Again, I would like to remind readers...read your IRD rules closely...and buy a good Taxation book to read a bedtime.
rob of the north -
rob of the north - so gummy bears are out, and so are waffles? You're just mean....
Wally the property slide will
Wally the property slide will be dependent of vendors being realistic, until sellers "get real" the mexican standoff will continue - example in our area (Nth Shore) in Auckland house sold only last year for $640k - back on the market now after a quick paint job for $770k, the guys a dreamer but there are immigrants coming in paying these silly numbers; all I want is for good honest Kiwis to be able to afford a house. Like what has been mentioned before JonKey never acknowledges that property is actually unaffordable, everyone on this site needs to bombard the JK&BE or their local MP and maker sure they get the picture and wake up (unless they have a conflict of interest of course)
@Make my Day, everyone on
@Make my Day, everyone on this site needs to bombard the JK&BE or their local MP and maker sure they get the picture and wake up (unless they have a conflict of interest of course)
unless they have a conflict of interest of course
Haaaar, ha, ha.
Primo dude, just primo.
Maybe it was an expensive
Maybe it was an expensive paint job MMday!....yes Tinker is counting on those dumb but wealthy foreign buyers..sorry to report Tinker and Fiddle are running as hard as Helen's red skirts will allow them up a pathway with "bankers only" signs to guide them!
A bit more balanced discussion
A bit more balanced discussion on NZ Herald today - rather than the usual one-sided debates
http://www.nzherald.co.nz/opinion/news/article.cfm?c_id=466&objectid=106...
If cashed up immigrants are
If cashed up immigrants are still buying at high prices they must be mad due to the NZD being so strong at present. If the flow of cashed up immigrants stops when will sellers get real?
The situation is precarious and
The situation is precarious and that is why John Key is taking a careful approach to tax change.
It is amazing that BH and some others who currently decry Key can not seem to appreciate what they propose would tip the whole economy into a tailspin of major proportions.
Could be the result of
Could be the result of loosing to much money in the shares market and/or investment firms - they need somewhere to vent their frustrations
Muzza its a case of
Muzza its a case of iacta alea est - the economy can take the hit now or it can take it at some point in the future - nothing the Johnkey or anyone else can do will ultimately stave it off. Debt based instruments (property included) are for the chop.
That surge in listings tells me a fair few property investors (the wiser ones) are starting to work it out.
gingerbreadman_muzza_DanC.......I am frustrated at the
gingerbreadman_muzza_DanC.......I am frustrated at the housing market in that we have been renting for 4 years because we refuse to get into an eyeball load of debt (got a big deposit) to pay someone for an overpriced place to live, the light at the end of the tunnel is still very distant.......do we sit and wait and hope the train de-rails ??
Thankyou <b>Sean / Andy M
Thankyou Sean / Andy M / Murray for correcting Bernard's appalling mistake . And to rob of the north , point well made . Henceforth I shall be totally serious . No more fripperies . No sirree , Jim-Bob . Serry-Arse all the way ........................... Jeepers creepers , Hickey's scoffed all the red gummy bears . Scoundrel ! Now that is serious .
@ Make my Day: agree,
@ Make my Day: agree, I was in the same sitiuation as you. At the end of the day, it's about the choice I have to make to house our family, somewhere we can call home. Now with some adjustment in our spending habbit we moved on with our lives in our own home. It's entirely your call.
i think a group hug
i think a group hug is in order
My name is Gingerbreadman and
My name is Gingerbreadman and I haven't touch a copy of property Press for four months!
@ Make my Day Maybe
@ Make my Day
Maybe see if your current landlord wants to sell?????
@Wally: "Plenty of quality shares
@Wally: "Plenty of quality shares with sound div payouts and potential capital gains." The problem I see is lots of good shares/companies will get tarred with the bad ones so a run on the NZX or Dow see's an unjustified run on all shares..."good" ones are not immune...ppl panic. Can you show me some of these good ones with a sane P/E ratio? bet its hard...then consider the way our economy is inter-linked, a good company might be reliant on one or more "bad" ones...so its shares and earnings go bad through no fault of its own...
If you decide there is a crash coming then I would suggest the idea is a savvy investor moves into "cash" ie safe and liquid and waits...
regards
@Wally-10.06am. Doesn't matter what the
@Wally-10.06am. Doesn't matter what the chicken entrails say. Just that enough people do watch where the chicken often goes; and decide where it will go next, based on where it went last time; and act. Charting is just behavior analysis; a trigger for some people to act.
Steven..try fph. NA...there are no
Steven..try fph. NA...there are no rich chicken guts readers...it's worse than getting your palm read. cnbc once had the guts to compare two guts readers on the same data and they had pole apart conclusions. Funny as. Much safer to rip out a goats entrails and read them.
@Makemyday: Arrange your finance, sit
@Makemyday: Arrange your finance, sit and wait. The banks aren't always honouring the pre-arranged finance offers they've made in such a volatile market, so be wary with any offers you make. Also insurers are tightening up on what they'll insure, so a dunger do-up might be hard work to get insurance for, therefore mortgage not available.
@Wally: Flock of headless chooks coming; you could just count the detached heads for the week's indicator.
@Make my Day: if it
@Make my Day: if it makes no sense to you, dont buy, personally I would not if it was me but that's up to you. For me its a gamble and there is considerable risk IMHO....house prices could go up, stagnate or down or down a long way, the first I dont see.
Negative side: So which way do you want to risk losing money? If you buy and houses dip or drop then some or all of your deposit is lost, the bank may even ten force you to sell or put more money in if they think you are now negative, or force an "insurance surcharge" on you to cover their potential loss....if you hang on and prices start to rise you lose some of the gain or cant afford to buy....which is worse? I'd suggest the former.........
Positive side: You continue to rent...House prices drop or plummet to the earnings to value mean of 3:1....you then buy with a lot less mortgage....Or you buy now and see your asset appreciate....
So which is the most likely? today after last month's sales figures the disaster that is M3 in the USA let alone everything else I think only the very brave would buy even if the agreed price is 15% down....just reading the news its all bad and looking forward 6months~2years its no better if not worse.....
regards
A bit more balanced discussion
A bit more balanced discussion on NZ Herald today "“ rather than the usual one-sided debates
mmm...I think that his conclusions based on the Irish market in comparison to ours were all wrong. His proposition that rents will rise if depreciation is chopped was based on an Irish property market in boom mode. I betcha if they did the same now the results would be quite different.
@Wally: For me the frightening
@Wally: For me the frightening thing is we could allow a "professional" to read chicken entrails on the future on our behalf....or we could read what the [bank, etc] economists are saying on the future and I have no confidence the latter would be more accurate...but the crazy thing is ppl will believe them.....
... My name is martinv,
... My name is martinv, and I try to avoid walking past the local estate agent on Thursday, so that by the time I do walk past, all the copies of Realtor are gone. Just got to keep on, one week at a time... Baby steps...
@Make my day; in exactly the same position with the same thoughts. My biggest concern at the moment is that before house prices can adjust that inflation hits; that could erode our deposit big-time. In that case an investment that hedges against inflation might be a wise choice (if it looks like happening - and lower taxes for all, combined with a GST rise screams YES!).
@KW John; chances are the landlord has an substantially different idea of the worth of the property than we do. Where I live the CV is in my opinion way over the top, yet the town house down the back from us (identical) sold for slightly more than CV (Asking price was CV+9%). The fact that someone is still willing (and able) to pay that means we need to wait some more.
I do wonder though; every day we wait without buying is one less day that could be used to prepare the house for the future when things get tough; installing better insulation, passive solar house extensions, preparing the garden for food production, planting fruit trees. With renting you're really stuck with not being able to get ahead and do any of these things you think might be really worthwhile for the future.
My partner's been reading a book 'how to make your garden feed you' (or similar). It's actually from WWII and is part of a series on 'making do'. The interesting thing is that they have recently started up publication again, so the copy we have is new...
An uni professor once said
An uni professor once said in our lecture - predicting the future as an economist is an art of driving a car where one judging the road ahead by looking at the passing road in the rear vision mirror! and we all know what's going to happen next!
@steven there was a study
@steven there was a study carried out in Germany last year; they had a parrot choose a selection of blue chip companies for the purpose of investing. After running the experiment the results showed that the parrot was no better and no worse than the results achieved by the average financial advisor.
... hmm, maybe parrots are smarter than we think! Or, maybe not... :-)
Ah, GBM, but if that
Ah, GBM, but if that same economist has been down that same road before, or many times, he stands a far better chance of getting the next bend right! He stands an equally good chance of arriving in tact, if he reads the chart he made of the last trip he did.
Actually, martinv, the parrot was entirely right! Any asset price will ALWAYS incorporate all price affecting components at any given time- otherwise they would be differenty priced. Hence the parrot is right that it's 50/50 on which way the price will move in the future.
fair comment. But if the
fair comment. But if the economist came out alive after his/her first trip.... he/she could gave up and do something more useful in life.
LOL.
LOL.
Make my Day.... I hope
Make my Day.... I hope so, aren't houses 30% over priced and incomes to low? To get a home seems too much to ask for these days. If you want an investment well then that's fine and excepted, but a home, nope. Especially for us generation X crew. I think we are just expected to rent? Move over baby boomers? Onto a completely different topic, what would happen to NZ if all baby boomers stopped working and retired? Not talking about the strain on the state regarding pensions or the lack of income tax generated from workers, but businesses? Are baby boomers keeping money spinning around in the economy?
Before I answer your question,
Before I answer your question, DanC. I'll ask you one. I am 57; my daughter is 11; I choose not to do formal work because I 'did the hard yards' 20 years ago back when wealth was created from effort, not asset price escalation; my wife is 54 and is a full time student, embarking on a new career; I rent and own no real estate. Am I what you see as a 'Baby Boomer', just because I was born in 1953?
So my answer to your question, about 'BB's all retiring', is that we are all different! If you imagine that all BB's are D/SINK couples; owning their own home outright and sitting on a few rentals, then I'd say that probably some are, but not all. Of those people that I know who resemble the steriotype, retirement isn't an option for them, as the retirement of their debt precludes it!
Nicholas Arrand, yes too true
Nicholas Arrand, yes too true baby boomers are all different. I do agree. I guess what I am trying to get here is do the general baby boomer generation think that generation X (me, born 1977) is capable of taking over the reins of NZ? And when baby boomers do retire what will happen to the businesses that are owned by baby boomers?
DanC I was born in
DanC I was born in 76 and manage a baby boomers business, most of my friends are in the same situation. Baby boomers need us for our hard work and fresh ideas to keep up! I wouldn't buy the business, dont see the point when I could set up exactly the same thing (even take all the good staff)