In this section
Offers for readers
The comment stream
Recent comments
- 1 of 19105
- ››
Editors choice
- 1 of 276
- ››
Finance sector jobs
Successful applicants will have the opportunity to work with this leading Australian Advis...more
Australia
Think Global Recruitment is working with this exceptionally respected Australian Boutique ...more
Australia
Sought after opportunity to move to one of the most beautiful westernised countries in the...more
Australia
The news stream
Latest news
Most commented
- 90 seconds at 9 am with BNZ 116
- Wednesday's Top 10 with NZ Mint 78
- Friday's Top 10 with NZ Mint 28
- Amanda's Take Five for Wednesday 19
- The problems with NZ's energy use 18
- More bank mortgage rate cuts 16
- Govt lifts minimum wage 50 cts to $13.50 an hour 16
- Thursday's Top 10 with NZ Mint 15
- 90 seconds at 9 am with BNZ 14
- Full time jobs fall 13,000 in Dec qtr 14
Most viewed
Interest on Twitter
House sales slump in January to lowest level in 18 years (Update 4)
Total residential dwelling sales plummeted last month to their lowest level in nearly two decades, as seen in figures released today by the Real Estate Institute of New Zealand (REINZ). Real Estate Institute of New Zealand President Peter McDonald says the total figure of 3,666 dwellings sold in January this year was the lowest monthly total since electronic records began in 1992 and was only the second time the total figure had dipped under 4,000. "Activity in the residential property market was quiet last month on the back of uncertainty over what actions the Government intended to take on the recently announced tax working group recommendations," he says. "Hopefully the market will start to pick up now things are a bit clearer after the Prime Minister gave his opening speech to Parliament on Tuesday. He indicated the Government has ruled out proposals to introduce a land tax, comprehensive capital gains tax or new tax on residential investment properties." The total value of residential sales, including sections, in New Zealand in January was $1.53 billion. January's total of 3,666 was 40 fewer dwellings than were sold in January 2009, the first time total dwelling sales fell below 4,000 and 1291 down on December 2009. The breakdown of the values of the properties was 87 for $1 million plus, 395 for $600,000 - $999,999,937 for $400,000 - $599,999 and 2247 under $400,000. The median residential house price rose in 11 out of 12 districts last month (January 2010) compared to the same period the previous year. The national median of $350,000 was up 7.7 percent on the corresponding figure of $325,000 for January 2009, but was $10,000 down on the median price for December 2009. "House values seem to be holding nicely at the moment though and it's becoming a more settled market as times goes by," Mr McDonald says. The largest gains were Otago, up 17.9 percent to $247,500, followed by Taranaki up 12.5 percent to $300,000 and Canterbury/Westland, also up 12.1 percent to $319,500. Central Otago/Lakes was the only region to experience a drop in median prices, down 10.4 percent to $410,000. Auckland residential sales, including sections, accounted for $666 million of total sales in January. Canterbury/Westland and Waikato/Bay of Plenty were the next greatest value at $191m and $183m respectively with Wellington not far behind at $172m. The national median for days to sell in January was 43, 16 fewer days than the corresponding period a year ago but 10 more days than in December 2009. Sales were quickest in Southland at 33 median days and in Auckland where the median days to sell was 36.
Here are the full details in REINZ's release. REINZ Residential Market Statistics - January 2010
ASB economist Jane Turner said the figures showed the market losing momentum as seasonally adjusted sales fell 17% in January.
We remain slightly wary of sales figures around summer, as the housing market is heavily affected by the holiday period over December, January and to a lesser extent February. Adjusting these figures for seasonal effects, days to sell was unchanged at 35 days, still below average levels. The REINZ stratified house price index saw house prices fall 1.6% over January, following the 0.9% decline in December. Monthly data can be volatile and this series is not seasonally adjusted. Running our own seasonal adjustment, house prices remained flat over December and increased 0.3% over January. While the REINZ data do suggest some of the intensity in the housing market is easing, the seasonally adjusted days to sell and house prices suggest the housing market is not yet as weak as some reports over the past few days have implied. Nonetheless, one area pointing to slowing demand has been the lift in the level of housing inventory relative to sales. On a nationwide level, this ratio is quickly heading back toward levels seen during the weakest period for the housing market in 2008 (on a seasonally-adjusted basis). The shift towards more supply relative to demand should see days to sell continue to lift over the next few months, and see house price increases slow or even decline. During January, the Tax Working Group came out with strong recommendations that the Government needs to change the tax treatment of housing. This has introduced considerably uncertainty into the housing market, which is likely to linger for some time. This week, the Government ruled out recommended measures such as capital gains tax or land tax. However, we do expect the Government will make some changes to the tax treatment of property. Two potential options are remaining, the ability to claim deprecation (recommended by the TWG) or ring-fencing tax losses from property so they cannot be used to offset other sources of income. The lack of complete clarity over what the Government will do means the market will continue to be weighed down by uncertainty until the end of May, and could reduce house sales and price pressures over the next few months. Once tax change is implemented, its likely result will be some decline in house prices (or smaller increases). But, as observed throughout the recession, nominal house prices tend to be fairly "˜sticky' on the downside. Many homeowners are often unwilling to sell at lower prices and might still prefer to hold onto a property if possible. This dynamic could reduce the downward adjustment, with house prices more likely to remain at current levels for an extended period. The housing market is starting to slow and becoming more balanced. Due to some uncertainty around tax policy until May the market is likely to remain subdued for some time. This development adds further breathing room for the RBNZ. The pick up in house prices of the second half of last year was surprisingly strong and did present a risk of reigniting unsustainable credit growth and consumer spending, at a time when a focus on increasing savings was needed. Fortunately for the RBNZ, the Government looks likely to step in and help even the playing field. Changes to the tax policy around housing will reduce the amount of work monetary policy needs to do to bring inflation pressures back under control. We now expect that the RBNZ will not lift the OCR until June, and by 25 basis points. The rise in bank funding costs has placed a wedge between the OCR and retail interest rates. This dynamic, combined with an economy more sensitive to interest rates increases, suggests small OCR hikes will have a powerful effect at keeping inflation pressures at bay.
146 Comments
and your take Bernard? regards
and your take Bernard?
regards
Who would buy an IP
Who would buy an IP at such time?
I guess this 3666 figure is mostly first-home buyers and those who upgrade/downgrade?
Any first-home buyer here? will you hold off buying now?
Errr Murray/Bank Manager - perhaps
Errr Murray/Bank Manager - perhaps you would like to re-visit your comments that you made yesterday about interest.co.nz getting their facts right about this story?
http://www.interest.co.nz/ratesblog/index.php/2010/02/11/economist-says-...
Whichever way you spin it that was:
a) a massive collapse in sales volume
b) a big fall in median prices
c) a blow out in days to sell
d) a huge jump in inventory
Anyone for a spot of double dipping?
I a first home buyer
I a first home buyer to be and have no intention of going near the housing market until it returns to long term fundamentals (preferably undershoots ;) )
First time buyers should keep
First time buyers should keep their savings earning interest on deposit and wait for prices to subside.
LQ house price to fall 10-20% over next two years?
Bernard - you should have stuck to your earlier forecast.
btw - the quote from REINZ that the market is becoming more settled as time goes by is a real hoot. Yeah, settled like the Titanic!
Err andy, 2% drop is
Err andy, 2% drop is "big fall" in median price and 7% annual rise is not wort mentioning?
I expect we will get
I expect we will get a statement from the govt very soon...that they intend wasting more money on an advertising push in Europe to encourage more migrants to come to Noddyland. This will be followed by a huge RE load of BS on how the soon to arrive immigrants will cause prices to rise and that fools should rush in to buy now. The poodle media will join in the stupidity and tell the peasants how much better life will be when all the immigrants arrive.
I'm not sure things are
I'm not sure things are going to improve with the government tax announcement of the last few days. Trademe listings in my area are continuing to pile up- each day seems to add another 10 or so properties to the pile. The sell-off not slowed down since the great announcement but seems to be accelerating.
Yes <b>andy</b> there was some
Yes andy there was some rather strong language used yesterday , notably by Aaron , abusing Bernard of his ability and opinions . And yet again , BH appears to be on the munny . Hmmmmmm ?
Not really, Andy. They had
Not really, Andy. They had the wrong figure on sales volumes, but still -
a) volumes down 1% from Jan 2009, hardly a "collapse"...
b) prices up 7.7% from Jan 2009, hardly a "big fall"....
c) days to sell down 16 from Jan 2009, the opposite of a "blow out"....
d) yes, listings are up, I'll give you that one....
cheers
john - a $10,000 month
john - a $10,000 month on month decline is a big fall. I suggest you consult the REINZ figures in the past 24 months to see how often that has happened.
Here is a clue - you wont need the fingers of both hands........
I'm from the provinces -
I'm from the provinces - lower NI, listings on Trade me in our area not going up much. Perhaps more settled here without the boom/bust cycle in main centres. People are pretty cautious out there at the moment though with retail pretty flat.
john, If you conveniently omit
john,
If you conveniently omit to work out what that 2% MONTHLY change means on an annual basis, i.e. 24% drop, then of course you'd be right in saying that property market is fine...
But lets be kind today and say we assume that January was a bit of an unusual month for all previously quoted reasons, it would be reasonable to assume half of the indicated down trend to materialise in coming months. This would still indicate an annualised drop of 12%.
I think this is the
I think this is the dead cat bounce that was discussed a few months earlier when the banks stuffed a bit more liquidity back out to the housing market.
Lack of liquidity plus depn loophole closed plus GST up plus winter coming plus stale listing galore = house prices down.
$1.53 billion in residential sales.
$1.53 billion in residential sales.
Can anyone help me? My calculator can't work out 1,2 and 3 percent of this figure.
I'm just wondering how much of a contribution to the domestic economy this actually means, in terms of real estate commissions.
Presumably this money stays in the domestic economy.
I am still waiting for
I am still waiting for the prices to fall to Dec 08/Jan09 levels, I am in 2 markets, 1.Medium Quality Auckland Apartments which seem to be for sale at prices greater than the above dates.
2. 1st home buyer house market in a Wellington suburb which again seems to be resilient.
I look at 100% of all properties for sale in the Wellington suburb and was getting the auction sale prices from City Sales for Auckland, they have stopped providing this, so a bit more difficult, so I ring and ask auction prices.
Stats don't bear out my experiences, don't doubt them but it shows whatan illiquid market property is, and how difficult it can be for buyers using stats.
i read on this site
i read on this site in oct 09 that jan 2010 listings will increase and buyers will decrease due to a uplift in moragree sales,landlords selling theirbottom of the barrell rentals,less residents arriving,less ex pats arriving and of coarse the huge wake of property investment companys that have riped off the investment mum and dad,high unemployment stipping buying power,wake up reinz,this the goverment will be implimenting is stopping those thieves who are writing of losses on their rentals against their business taxes therefore paying no taxes,well i,m not paying my taxes for these blood suckers of our community
I think it would be
I think it would be wise to wait until February's figures come in.
They will be much more indicative.
I think they will be flat, but when the lower end of the yield curve moves; then we will see trouble.
i'm a first home buyer
i'm a first home buyer and i too have no intention of going near this debt and hysteria driven cluster f**k to the poor-house until house prices come to within spitting distance of long term mkt fundamentals.
The ASB seasonal adjustment is
The ASB seasonal adjustment is interesting - I stand by my comment yesterday ... don't read too much into a January result.
<b>KW John</b> on RE Agent
KW John on RE Agent fees: Presumably this money stays in the domestic economy.
Well, yes. It's also arguable financed by predominantly Australian banks, so I'm not sure its a great net addition.
Did I just read that
Did I just read that Steel and Tube's profit has dropped 85%!
@KW John : Your 10.57am.
@KW John : Your 10.57am. I would have thought R/E commission has negligable effect on the domestic economy as it goes from one set of hands ( the buyer, who pays the commission in the sale price) to the agent. Zero sum game, save that portion garnered from overseas buyers. If it has an effect at all it is likely to be to increase our overseas debt as the buyer has in all likelyhood had to gross-borrow the purchase price which has to be funded from somewhere.
<b>Wally</b> : Yes , half
Wally : Yes , half year result to 31/12/09 . Cashflow was healthy . NTA down a tadge . 3.5 cent dividend . Sales revenue down 19 % , on same 6 month period last year (2008) . ......... No lost time for injuries . Like to see that !
Murray: Year on year comparisons
Murray: Year on year comparisons are meaningless when the market was slumping in January 2009 and near its height around Jan 2008. I'm with IanC; wait till the february or even March figures are out before reading any trend.
For first-home buyers: will waiting enable you to save enough to meet raised deposit requirements by lender?
let's see....Telecom profit down 24%...Steel
let's see....Telecom profit down 24%...Steel and Tube down 85%...!!!!
anyone spot a problem here....
@IanC, Nicholas, Thanks @Wally and
@IanC, Nicholas,
Thanks
@Wally and Roger
- great flanking
Households under mortgage stress would
Households under mortgage stress would be a good one and those who have converted their mortgages to interest only.
Barfoots seem to have been a little quiet in the press of late, what with no traction to be found in the spin machine.
I talk to a lot of people and I smell fear with those who have only the house they live in and no tax loss structure to take advantage of or well heeled parents who can help them up through the bad times.
I would suggest that if you do not have liquid assets of 30% that any first home buyer keep their hands in their pockets for the time being.
Yeah <b>Wally</b> , how can
Yeah Wally , how can a bunch of complete horses arses ( Telecom ) report a smaller profit fall than a team of dedicated honest hard working guys ( Steel & Tube ) .
ruru - "Year on year
ruru - "Year on year comparisons are meaningless" - no, month on month comparisons are meaningless. Comparisons with the same month a year earlier are more relevant, though still not indicative of the overall trend....
I agree with IanC, I would wait for the Feb/Mar figures before drawing conclusions....
Gosh you don't think it
Gosh you don't think it might be an indication the economy is sloooooowing down do you. Are you a supporter of Lockwood changing the religious drivel for the 'Greek' report?
more excellent news. I woudl
more excellent news. I woudl add a few points:
1) if the slow down is purely due to apprehension about tax changes, it shows how much this market is dependant on tax payer largesse
2) at least we have some changes mooted, although unless it includes rinfencing ALL losses it doe not go far enough
3) this is all happening at a time of record low interest rates. Hmmm - what happens when they rise.
4) dont understimate the psychological impact - in a bubble market that is the most important factor.
All it takes is a change in SENTIMENT and this market is kaput. Why would you invest in something costing you 2*+ to own v renting UNLESS you expect big gains. But then if you get big gains the yields will be even worse for the guy you want to sell it to down the track. This process has been going on for the last 8 years, and in my opiniion its coming to an end now budgets are so stretched (EVEN on low rates).
Some houses arent selling because
Some houses arent selling because they are over priced, they are now over priced because flagged goverrnment law changes have devalued a specific housing strata.
Basically the middle class self employed have only just woken up to the fact that they cant shove tax owed to the country, into their private retirement funds anymore- and have stopped bottom feeding on the housing dregs.
Hell you would have been stupid to not have it seen it coming many months earlier though- at least it will put back ocr rises, and once bank ecomists swallow there pride, admit they had their balls crushed by Bollard (who stuck to his word) and Key (the smiling assasin law changer), and lower mortgage rates- housing will become more affordable to those who could only rent before, and we can all move on.
It appears that just about
It appears that just about everybody is saying now is not a good time to buy residential property. As I only take a long term view for investments I think now is a good time to start buying again. The issues in the current market will certaintly be factored into my low offer to purchase.
@Wally: lots of those who
@Wally: lots of those who would move or consider doing so drop the idea when they look at it in detail...Out of the ppl I knew at the time I am the only one to actually move.....and stay....one other couple moved but then moved back 2 years later and made up most of their losses due to the NZD/UKP exchange rate change....they were lucky...
regards
@40 something: long term as
@40 something: long term as in say 2070? the BBs retiring over the next 10~30 years is going to be bad for housing at some point....way too many sellers chasing way too many buyers as the BBs sell off to get money to retire with....the gen X's and gen Ys wont be able to buy and there wont be as many of them...a stat like that surely should be making ppl think that long term isnt looking good..
regards
Be afraid when others are
Be afraid when others are greedy, be greedy when others are afraid?
It is never a good time to buy or sell your home.
I'm a first home buyer
I'm a first home buyer (to be) with a $30k deposit so far. Renting in Ellerslie, Auckland for $325 per week. When I do buy, I should imagine it will be a $450k property. I would fix for 5 years (I like certainty).
If I bought now then my interest costs would be around the $740 per week mark (@ 8.5%). If I keep renting, I can save the difference between interest and rent, $415 per week (over and above what I would be putting down on the loan principle).
My view is that house prices will be flat at best for the next 1 - 2 years. Therefore, I shall continue to be a renter for a while and save the difference (plus principle). Makes more sense to me.
Is a house only ever
Is a house only ever valued as an 'investment'?
Why not just as home?
Strange values indeed.
Build it, live in it, maybe even enjoy it, MAKE it affordable for all - I don't get the obsession with this 'only game in town', landlord/tenant thing.
Do whatever it takes to stop this ridiculous obsession.
What would happen if a political party actually tried to tackle housing affordability?
We should spend money on something else.
If we can't reduce the build cost, then reduce the land cost.
Toooooo much vested interest - toooooo small minded.
Any system will do - prefab it / dump it on affordable land.
I bet the end results could prove better than what we have!
I conclude (hooray you say).
We can't even agree on the vision!!!!!!!!
exactly, o'rourke as they say
exactly, o'rourke
as they say " there's never a good time to give up smoking" and your maxim applies also!
however, this daily surfin' of real estate porn is fun?!
Your could be right, Fairfax!
Your could be right, Fairfax!
"Last night the Societe Generale ...put out a frightening estimate of the real liabilities of western governments. Greece is by far the worst ...Its total net liabilities are about 800 per cent of GDP "“ eight times the official position....Soc Gen's figures for the others (per cent of GDP): US 550, UK 400, Germany 400, France 550, Italy 350 and Spain 250. In other words, the entire western world is insolvent and each country is facing its own day of reckoning.."
http://www.businessspectator.com.au/bs.nsf/Article/The-great-reckoning-b...
Rent vs buying is not
Rent vs buying is not an investment decision it is a lifestyle. You are making value judgements as to the oportunity cost of each at a certian point in time. Personally I like my home, I can change it, landscape it, garden it. These things provide a non financial return which I value more than the monetary tradeoffs of rent vs owning. Yes I could rent and have more free time(less maintenance) and more money, but enjoying my space is for me a better use of this free time and money.
What I meant was, that
What I meant was, that I want to have my own home, but I am comfortable where I am now (renting) to stay a while (1 - 4 year horizon). Especially since it makes financial sense (to me at least).
Will reasses as I go, do want to enter the housing market, but at the best time.
Key point is "at a
Key point is "at a certain point in time" as humans we can justify anything to ourselves to get what we want, thats what makes us so interesting and frustrating and wise and stupid. Hindsight helps us see which of the above we were and therefore what in te future we try to be, which will then add to are we interesting, frustrating, wise or stupid.
I am into thinking of myself as interesting and wise, with the knowledge that I am probably delusional and may be in some of the other categories.
John Agreed, Is it a
John
Agreed,
Is it a choice that should be available to all... or a luxury for the lucky.
I don't know anything at all about Demographia (cross my heart), and I don't want to walk into unexpectedly supporting something I didn't intend BUT 'affordability' on urban fringes sound like a damn good way to 'relieve the pressure'.
The game being played at the moment seems nationally self destructive.
Should 'first home buyer' be able to buy now?
Be aware, your mortgage repayments
Be aware, your mortgage repayments will decrease over time , and rents will increase. I bought 10 years ago, paying at the time more then average rent which has doubled since then, and Iam mortgage free now! OK, still paying rates, insurance etc.but having extra $350/week in pocket
Good question KW. IMHO problem
Good question KW.
IMHO problem is increasing population growth in urban areas, and like building new roads to ease congestion, opening up new land may just get more people to move to the cities, which uses the new roads.
The kiwi dream was based on a country with plentiful land, small cities and low population densities. You could have your quarter acre dream, not sure how we get it now as the dynamics have changed, and the dream is only a pleasant memory. Not an answer but an observation.
andy hamilton - just shows
andy hamilton - just shows that leaked data sources should not be trusted - the figure mentioned in yesterdays item and quoting the idiot from Goldman Sachs was 4,488 yet today the official figure is 3,666.
interest.co.nz should have further investigated the source of the original item.
It could be that the advent of 4 weeks paid leave had an impact on the January result along with the TWG potential tax threat, however despite all of that it is more likely that stretched household budgets and much higher medium to long term interest rates are the real issue.
A 5 year fixed mortgage 12 months ago was 5.99% whereas today it's 8.5% and those that are floating at 5.6% right now will be feeling threatened if/when floating rates march upwards by 3% or 4%.
First Home Buyer - "I
First Home Buyer - "I shall continue to be a renter for a while and save the difference (plus principle). Makes more sense to me."
Absolutely, and good on you. I don't think things are moving anywhere in a hurry, up or down. I disagree though with those that have been predicting 30 - 40% price drops for the last several years - mainly due to replacement cost. If things were selling 40% over replacement cost then it would be quite likely, but around the median they are not.
Of course, if you go out and look at individual properties, some are priced above replacement cost which to me indicates poor value, and some are priced below replacement cost which to me indicates good value.
Anyone making comparisons between Dec & Jan and proclaiming an impending crash, needs to look at Dec/Jan the year before which yielded similar results....
@ First Home Buyer Smart
@ First Home Buyer
Smart dude. Stick to your strategy and the property you want will sell for about $400K in two years time.
And you'll have around $80k to put down (as long as you do actually save in the meantime).
Was it 'leaked' BM? I
Was it 'leaked' BM? I got the impression that REINZ inadvertantly posted it up a few days early. In which case your question remains doubley valid, " Why the change in the figures!"
And @ Murray, doesn't replacement cost only come into it with new construction? Someone who bought, say, 10 years ago, can still sell at below current construction costs for the same dwelling, yet still make a handsome return. I guess that's where the supply/demand debate kicks in, and ones view on over/under supply vs changing demographics.
John The dream is still
John
The dream is still available but it depends on how you personally rank money, status, career, relationships, adaptability, security, leisure time.
There is a view that the bigger the city, the better the lifestyle but it maybe that a smaller income in a smaller city gives a better life.
Quotable Value figures for the
Quotable Value figures for the first quarter might be the best gauge.
@John "The kiwi dream was
@John
"The kiwi dream was based on a country with plentiful land, small cities and low population densities. You could have your quarter acre dream, not sure how we get it now as the dynamics have changed, and the dream is only a pleasant memory. Not an answer but an observation."
As you've suggested - not everyone's dream, and a dream that changes.
Nicholas said it much better than I could.
"I guess that's where the supply/demand debate kicks in, and ones view on over/under supply vs changing demographics"
I've never seen this debated. Hugh Pavletich gives it a go, (with PhilBest smothering the point slightly),
There is a strange 'status quo', An odd circle that everyone seems content with.
A small game. One I don't understand. Can someone explain the rules?
Nicholas Arrand - "doesn’t replacement
Nicholas Arrand - "doesn't replacement cost only come into it with new construction?"
Not really.
When existing houses get cheaper than building a new one, home building virtually grinds to a halt, and the resulting shortage lifts prices back up again.
Conversely, when existing houses are selling for more than replacement cost, home building goes nuts and the resulting oversupply pushes prices back down.
Neither situation lasts for any extended period of time.
I realise this is simplfied, with many other influencing factors - interest rates, availability of credit, proposed tax changes etc etc - but there is still a very strong link between existing prices and replacement cost.
I guess Iook at it
I guess Iook at it from a "why would existing houses get cheaper than a new build" Murray. ie: people pay for what they can afford. Sure, we'd all almost want new vs older, but if new is unaffordable, THEN building stops, as demand dries up. I don't see it as "houses will always have a long term floor at replacement cost", rather houses will always cost what people can afford, whatever their age. If all a person can afford is bread, it doesn't matter what the cost of the ingredients of a cake are?
A big part of the
A big part of the replacement cost is land price, so when the market slump, the replacement cost will go down, too.
And that, Brien, is what
And that, Brien, is what will makes cake affordable to more consumers! However our esteemed leader has a policy for us all on that one ..."No" !
Land price is likely to
Land price is likely to be the biggest contributor to new build cost added to by the self-protection by licencing authorities with wildly excessive consent requirements and therefore costs.
Also there rightly a basis for costing in the 'load' on existing and new services.
However the average house has increased in size and specification in recent years and it is debatable whether any reduced level would be accepted by the new build buyer.
The best hope at the moment is that land holders will be forced into letting go their holdings at lowered prices. Unfortunately the land tax solution has been dropped. A very low land tax with the 'promise' of it being rachetted up over time would have done marvels for making more land available.
I thought there was supposed
I thought there was supposed to be a housing shortage? house listings have jumped 6.5% in one month. A lift in GST and a lower dollar will cause a big increase in floating interest rates because of the resulting jump in inflation, some economists are predicting it could go over 5% add to that ring fencing losses/depreciation and strong employment growth in Australia and things aren't looking that flash for property. House prices have been flat since 2005 for most of NZ thats 4 years (soon to be 5) of negative returns for lots of investors who are only just hanging in there because of tax subsidies coming to an end soon and dreams of another housing boom like the good old days.
KW John, I'm on your
KW John,
I'm on your side. Social ills aplenty. No wonder communities break down when you are not really part of it. I read somewhere, sometime that when people own their houses they're more willing to take care of it, seems obvious to me. Remember street parties? Kids running around etc. Build a deck, knock out a wall, all the fun things.
''Ah no, we actually own you".
Sweet, thanks.
It's the 'build a deck,
It's the 'build a deck, knock out a wall' bit that sometimes a problem. I was behind a young woman, in tears, at the Waimak. Council Offices a while ago, and all she kept sobbing was' But I bought it as a 4 bedroom house" ( Not on our plans, Lady. You'd better get that extension knocked down as it doesn't comply with the planning codes). I know that's what building inspections are for, but at the low end; and it's been there for so long etc.
Interesting how Andy and others
Interesting how Andy and others stick to (usually criticized) RE figures as a most realistic, and QV figures are now ignored. What a spin. When RE figures improve next month will be demonised again...
@Jeff M Thanks, It's only
@Jeff M
Thanks,
It's only one factor in Bernard's 'flee to Australia' argument, but it seems to the one that we should be able to tackle.
@Nicholas
Is that an argument for 'doing it properly'. She should never have been able to "buy it as a 4 bedroom house". I understand what caveat emptor means, but somewhere along the line (building inspection/lawyer/sales agent/mortgage lender etc) it went wrong.
She should not have found herself in that position
two biggest things in predicting
two biggest things in predicting future price movements are
Demographics - births/deaths/immigrants/aging population
Investors - buyers who dont need to own
famillies tend to own a house and stay in the market come rain or shine
Immigrents need a house, older people need a smaller house etc etc
investors leaving the market could have a major effect on house prices, a MAJOR effect, do not underestaimate the headwinds nz property faces
i am familly owner, i used to own 5 houes back in 2005 i sold them all... was a nice run, it wont happen again for 20 years... no chance gummints wont let it
enjoy the debate but its already over, house prices will not reach new all time highs for years, int rate rises will cut that chance off any time it becomes likely...
@interested Hope you're right, 'twas
@interested
Hope you're right, 'twas a silly game, well done to play it while it existed.
Hope you're right.
REINZ President Peter McDonald: “Hopefully
REINZ President Peter McDonald: "Hopefully the market will start to pick up now things are a bit clearer after the Prime Minister gave his opening speech to Parliament on Tuesday."
He's got a point there.
I'd like to think we
I'd like to think we the suckers are suckers no longer.
Maybe common sense will prevail after all. I did have my doubts for a while.
hope you paid your tax
hope you paid your tax interested, IRD on the war path I hear
Hm, some horrible maths being
Hm, some horrible maths being circulated here. First, the monthly fall in percent is 10,000/360,000 = 0.02777 which means roughly a 2.78% fall.
If we extrapolate this to a year (not that i think it will keep falling this much every month for a year, but anyway), we will NOT get 12*2.78%. This is just wrong!
The change in house price over one month is 350,000/360,000 = 0.972 = 97.2%. That is, the house price in january is 97.2% of what it was one month prior to that. To keep this going for 12 months means we will end up at 0.972^12 = 0.713 = 71.3%. So the house will be worth 71.3% of what it was worth a year ago, which is equivalent to a 28.7% drop at an annualized rate.
If we do the same maths, but with half the monthly percentage fall (1.39%) we will end up with a 15.5% drop over the year.
Considering that this Jan 2010
Considering that this Jan 2010 was the lowest sales volume since Jan 1992 - it looks even worse when you factor in that the total housing stock has grown by around 400,000 dwellings assuming around 20,000 homes have been built on average every year since 1992.
Kieran Says - "House prices
Kieran Says - "House prices have been flat since 2005 for most of NZ thats 4 years (soon to be 5) of negative returns for lots of investors"
Sorry Kieran, can't resist calling you on that one.
Jan 2005 median was $265,000 -> Jan 2010 $350,000 = 32% gain or 5.72% compounding per annum.
Jan 2006 median was $300,000 -> Jan 2010 $350,000 = 17% gain or 3.93% compounding per annum.
Not outstanding, but not negative either.
Nicholas Arrand / Brien -
Nicholas Arrand / Brien - yes, land is a big part of replacement cost. Most of the drop in house prices in 2008 was the land component.
Nicholas - "if new is unaffordable, THEN building stops, as demand dries up"
And what happens with a growing population when building stops? You either cram more and more people in to existing houses, or eventually demand picks up to a point where people are prepared to pay what it costs to build.
"houses will always cost what people can afford" - if that were true then everyone could/would own a house, and we'd have $50,000 houses for beneficiaries to buy.
There isn't any room for the cost of building a house or developing land to decrease, the margins are already wafer thin. And the costs will increase 2.2% overnight when GST is raised.
The only way I see for the median PRICE to come down, is for the median SIZE to come down. There does seem to be a trend recently towards developers doing smaller sections and people building smaller houses on them. Council planning could play a big part in designating affordable section & house zones.
Only problem is, most folk here don't want to live in an "affordable" area, they want to live somewhere "nice" - which is fine if you can afford it ;)
ctnz Says: February 12th, 2010
ctnz Says:
February 12th, 2010 at 10:47 am
"If you conveniently omit to work out what that 2% MONTHLY change means on an annual basis, i.e. 24% drop, then of course you'd be right in saying that property market is fine"¦ But lets be kind today and say we assume that January was a bit of an unusual month for all previously quoted reasons, it would be reasonable to assume half of the indicated down trend to materialise in coming months. This would still indicate an annualised drop of 12%"
Interesting, ctnz. Dec 2008 - Jan 2009 prices dropped just over 1%. So using your theory, they should have dropped around 6% over last year, instead they were up 11% by Dec 2009 .....
Volumes & prices usually drop in January, some of us like to go fishing around that time....
From Tony Alexander's latest report:
From Tony Alexander's latest report:
"Real estate Mount Maunganui, monthly sales down to 30 to 40 sales per month down from 140 average 2005,, falling volume and prices, lots of people geared and values down 30 to 40%, all equity lost."
http://www.bnz.co.nz/binaries/w110210.pdf
Jan 2006 median was $300,000
Jan 2006 median was $300,000 -> Jan 2010 $350,000 = 17% gain or 3.93% compounding per annum.
Considering domestic inflation has been running at around 4% for all of that period, thats a negative real return for 4 years.
@ bank manager = whole
@ bank manager = whole BOP has been severly dealt to but mount apartments are being hammered, the 30-40% drop in values is a bit severe but it would be close.
want you thoughts on leasing to HNZ bank manager. got a house in welcome bay 2 years to run on the HNZ lease with a 5 yr option. any views on leased house to HNZ? from my perspective although negative geared and floating at least I have the security of the lease (until interest rates get up to +8% then I'll get a bit nervous). right now looking to ride out the storm over next 2-3 years and break into the sunshine in 4 or so years - biggest risk losing my job and income. thoughts?
Andy M - it was
Andy M - it was briefly over 4% around mid 08, not the rest of the time.
http://www.interest.co.nz/charts/gallery11-10.asp
But yes, if we're talking "real" returns it's not too flash. Same is true though for rents and wages. What is a 2% rise in the minimum wage in "real" terms?!!
bryan - might want to
bryan - might want to read this one...
The tenants from hell - and Housing NZ - mess up
http://www.stuff.co.nz/national/3040637/The-tenants-from-hell-and-Housin...
thanks murray - a little
thanks murray - a little scary for me as I've got a family of 6 in mine. might do some follow up.
one for the lads out
one for the lads out there....
23things that make you feel like much more of a man.....
1. OPENING JARS - nnng, she's struggling. You take it from her hands, open it effortlessly and pretend she loosened it for you. She didn't. Jars are men's work.
2. CALLING SOMEONE 'SON' - Especially policeman, but even saying it to kids makes you the man.
3. DOING A PROPER TACKLE - Another free kick for Scott West? A Barry Hall tackle is the pinnacle of the game, simultaneously winning the ball and crippling the man. Magic.
4. SHARPENING A PENCIL WITH A STANLEY KNIFE - Blunt, is it? Hand it here love. No, I don't need a sharpener, you think I can't whittle?
5. GOING TO THE TIP - A manly act which combines driving and lifting as you thrillingly drop your rubbish into another huge pile of other rubbish.
Noisy destruction = MAN.
6. DRINKING UP - Specifically, rising from the table, slinging your coat on and downing two thirds of a pint in one fluid movement. Then nodding towards the door, saying, "Let's go," and striding out while everyone else struggles to catch up with you. God, you're hard.
7. HAVING A THIN BIT OF WOOD - in the shed, solely to stir paint with.
8. HAVING A SCAR - Ideally it'll be a facial knife wound, but even an iron burn on the wrist is good. "Ooh, did it hurt??" "Nahhhh."
9. HAVING A HANGOVER AND THICK STUBBLE - When sheilas have been partying they just whinge. You, on the other hand have physical evidence of your hardness, sprouting from your face. "Big night?" "Grrrrr, what does it look like?"
10. NODDING AT COPPERS - A moments eye contact is all it takes for you to share the unspoken bond. "We've not seen eye to eye in the past," it says, "but someone's got to keep the little scrotes in line".
11. USING POWER TOOLS - especially ones slightly more powerful than you need or can safely handle. Pneumatic drilling while smoking a fag? Superb.
12. KICKING A FOOTY AGAINST A GARAGE DOOR - Clang-g-g-g-g-g-! "How about that Stewy? I kick so hard I set off car alarms."
13. ARRIVING IN A PUB LATE... and everyone cheers you. It doesn't mean you're popular, it just means your mates are pissed. However, the rest of the pub doesn't know that.
14. NOT WATCHING YOUR WEIGHT - fat is a feminist issue, apparently. Brilliant. Pass the pork crackling.
15. CARVING THE ROAST - and saying "are you a leg or breast man" to the blokes and "do you want stuffing" to the women. Congratulations, you are now your dad.
16. WINKING - turns women to putty. Doesn't it?
17. TEST SWINGING HAMMERS - ideally, Mitre 10 would have little changing rooms with mirrors so you could see how rugged you look with any DIY item. Until then, we'll make do with the aisles.
18. TAKING OUT $600 FROM AN ATM- okay, so it's for paying the plumber later but with that much cash you feel like a mafia don. The only thing better is peeling notes off the roll later.
19. PHONE CALLS THAT LAST LESS THAN A MINUTE - unlike sheilas, we get straight to the point. "Alright? Yep. Drink? Kings Head it is then. Seven. See ya."
20. PARALLEL PARKING - bosh, straight in. first time. Can Schumacher do that? No, because his car's got no reverse gear which, technically, makes you the world's best driver.
21. HAVING EARNED THAT PINT - Since the dawn of time, men have toiled in the fields in blistering heat. Why? So, when it's over we can stand there in silence, surveying our work with one hand resting on the beer gut while the other nurses a foaming jug of ale. Aaaah.
22. HAVING SOMETHING PROPERLY WRONG WITH YOU - especially if you didn't make a fuss. "Why was I off? Oh nothing much, just a brain haemorrhage".
23. KNOWING WHICH SCREWDRIVER IS WHICH - "A Phillips? For that? Are you mad, girl?"
Andy, Hi :) I think
Andy, Hi :)
I think "double dip" is misleading.
I think we will see more of a "y".
See:
"The "Y-shaped" downturn - A Greater Depression?
A more severe crisis is already "Baked in the Cake"
by Michael Hampton
http://neuralnetwriter.cylo42.com/node/2619
;) :)
If I can buy a
If I can buy a house for what I think it's worth I'll buy it. That'll be a lot lower than what some sellers are wanting to sell for. They are giving it a go at a high price, and if they can't get it well they'll probably hang on to it, but the ones that need to sell hopefully will drop to what the house is actually worth. That's when I turn that house into a home and really not worry about what it's worth or how much it'll make me. I'll be in my home. Property speculation is out, living is in.
24. DRIVING A UTE -
24. DRIVING A UTE - preferably an old one , with an assortment of dings . Not that you ever put anything in the back . It's just that real men own and drive a ute , sheilas don't . ( Jeremy Clarkson drove a ute , Michael Schumacher didn't ......... fag ! )
@KW john: "I’m just wondering
@KW john: "I'm just wondering how much of a contribution to the domestic economy this actually means, in terms of real estate commissions."
In reality it means nothing....its a % of paper money...nothing was produced its just blood suckers skimming off a % of never realised wealth from someone's home...
It didnt make NZ richer....in fact the sales mean more debt....so NZ is worse off and even more exposed to a slump/depression.
regards
Hi Steve - Y shaped?
Hi Steve - Y shaped? Thats not one I have heard of yet. Will go and read Mike's article.
@Grant: "admit they had their
@Grant: "admit they had their balls crushed by Bollard (who stuck to his word) "
Be careful you dont read in too early....the game isnt over til the fat lady sings...
So from my point of view, yes I think Bollard read the medium and long term outlook better (I wish he would really say or show why he's were he is that would be fasinating). Also the banks overseas funding got more expensive and at the same time domestically..ie they had to pay higher % on deposits....this encouraged them to talk up mortgage rate increases so punters were prepared to pay more on fixed restoring their margin, I believe.....Anybody who blindly believes a salesman, is asking for their head to be handed to them...IMHO.
Anyway, they will get their balls crushed though by,
a) Punters who believed them and got high fixed terms.
b) The Banks who employ them due to the fall out from a). (however the banks will enjoy a big margin in some mortgages), but their credibility will get damaged (as if it isnt already).
This assumes the NZ OCR has any bearing on NZ of course it might be moot...its quite arguable that once the US Fed and EU is forced to raise their OCR to keep their debt afloat that the effective private wholesale rate moves away from the NZ OCR....
So we might well see a NZ OCR lower than 2.5% but "real" wholsale funding at 5~8%...so mortgages over 10%, which is disasterous for recovery.
This doesnt mean the bank economists will be right, they see the OCR going up due to inflation and not a debt spiral....so they would be right (for the punters) for the wrong reason at best...
I think Bollard's biggest problem is he has to remain positive because what he says can have a big impact on NZ....so if he were to say there is a 50~75% chance of a depression this year and rising external OCRs to get ppl to buy their debt then that would punish us (assuming he believes that) then NZers wallets would slam shut and that would have a huge negative effect....it would be self-fullfilling in effect...
Finally the OCR is a tool to fight inflation.....if we have a depression and deflation logically it approaches zero....but it may get used for other purposes in desperation...
Sooooo many variables......
:/
I have stayed floating so Im "gambling" on sanity ie a low OCR because I see Depression& deflation for 2 years or more (then as we maybe recover, peak oil kills the global economy again).....at best stag-flation....its the insanity that worries me.
So if we see a real depression those with cash look for the bottom of the market and wait....those with assets should really sell and rent...then buy back later at a lower value....thats a huge gamble of course and my balls are not that big....and my wife would hand them to me...
;]
regards
Interesting when you read about
Interesting when you read about spain and its property bubble popping....sitting back and putting NZ side by side is.....shall we say interesting...
"Until the crisis hit, Spain to all appearances was highly responsible on the fiscal front "” more so than Germany. The surge in deficits since then reflects the bursting real estate bubble and the lack, under the euro, of any way short of prolonged, grinding deflation for Spain"
http://krugman.blogs.nytimes.com/2010/02/07/know-your-deficits/
http://krugman.blogs.nytimes.com/2010/02/09/anatomy-of-a-euromess/
regards
steven Says: February 13th, 2010
steven Says:
February 13th, 2010 at 8:49 am
"@Grant: "admit they had their balls crushed by Bollard (who stuck to his word) "
Be careful you dont read in too early"¦.the game isnt over til the fat lady sings"¦"
Even so Im now have doubts about Key....pick another PM ..in a crisis or mode of big change, they where far more aggressive in their actions..be right or wrong...Key now appears to be delay delay, and indesive....hope Im wrong
The rest of your comments ..yeah thats basically what I think, and have for a long time.
People might find this a
People might find this a good read,
http://business.theatlantic.com/2009/12/our_interview_with_paul_samuelso...
http://correspondents.theatlantic.com/conor_clarke/2009/06/an_interview_...
Some juicy bits,
"By the way, I don't want you to think that I think that everything for the next 15 years will be cozy. I think it's almost inevitable that, with a billion people in China wide awake for the first time, and a billion people in India, there's going to be some kind of a terrible run against the dollar. And I doubt it can stay orderly, because all of our own hedge funds will be right in the vanguard of the operation. And it will be hard to imagine that that wouldn't create different kind of meltdown."
"every CEO -- they didn't realize the kind of leverage they were doing and they didn't understand when they were really creating a real profit or a fictitious one."
and these guys are worth their money...right?
B*llocks....
On our current crisis....
"Everybody would still like to retire with a satisfactory nest egg in real terms. And the tragedy of this unnecessary eight-year interlude is that much of what has been accumulated is gone and gone forever. And no amount of pumping is going to bring back into reality what were ill-advised overextensions of bridges to nowhere and housing developments for which there was no effective demand."
Yet ppl still live there.....
and Huge Hendry on China,
http://www.telegraph.co.uk/finance/personalfinance/7219178/China-Hugh-He...
regards
Steps: Key is not indecisive
Steps: Key is not indecisive I believe. The Govt's modus operandi is: Key floats possibilities and plans, then the bloggers blog, the old media opines, and the thinkers think aloud. The micro-polling of defined slices of voters should be going about now -- generally the swingers who will decide key seats and voting blocs. Then the inner circle sit down and figure what can be done without alienating these voters. Then the Budget will be finalised.
National know what they want to do. they probably even know what needs to be done. But they will only do it if they can be assured of being re-elected; theirs appears to be a long game. Is that gutless or pragmatic? And there's always good old TINA if the economy suddenly stutters.
and Ambrose... http://www.telegraph.co.uk/finance/financetopics/
and Ambrose...
http://www.telegraph.co.uk/finance/financetopics/financialcrisis/7216363...
".....Credit Suisse says Greece must raise €30bn (£26bn) in debt by mid-year, mostly in April and May. Greek banks have been shut out of Europe's inter-dealer markets, forcing them to raise money at killer rates. They are suffering an erosion of deposits as rich Greeks shift money abroad. This could come to a head long before April............."Economically, we are in a very risky situation. Greece is close to default. We face systemic risk like the Lehman collapse and unless there is a bail-out for Greece, there will have to be a bail-out for the whole European banking system within two or three months,"....."
Oh yes, 2010 is looking so good......on the road to recovery.....pass the tui....(well actually its pretty naff beer but their advertising is A1!
regards
"The Reserve Bank has more
"The Reserve Bank has more breathing room to keep interest rates low till June, economists say, after house sales volumes in January plunged to their lowest levels in almost 20 years and prices fell 1.6 per cent."
This statement is the lastest load of 'tripe according to James Weir of the Dom post. Clearly the likes of James fail to understand why we have interests rates (OCR) at all so James I will give you a basic lesson.
The OCR is set based on the percieved value of 'currency' at anyone time. 'Currency' James, NOT house prices. If It were based on house prices (the reality is it should be added to the CPI) then in 2001-2006 interests rates SHOULD of gone through the roof!. As we know they did not.
My point is this: why do journalists like James commentate on stuff they know nothing about? I suggest James you compare your grocery bill/power bill etc in 6 months time to see why we have an OCR
@Steptoe: I think the issue
@Steptoe: I think the issue is we are not in a crisis situation...yet....Lange (for instance) did what he had to do....Im pretty sure he didnt do what he did ie slash and burn, Rogernomics, etc he had absolutely no choice the situation was dire....
Jelly Key thinks he has time and space to manoeuvre and pass the "being up against the brick wall (situation)" on to his successor(s) preferably Labour....preferably a decade or more away...I think its this or next term as PDKiwi says you cant beat an expotential curve for ever....(see later comment) and he's also I think gambling it wont happen...I can understand this....the voters would slaughter any party at the next election that voluntarily brought in austerity measures....while evry other Govn fiddled....
For me, reading my just posted links and considering the budget proposals I just dont believe a man who's made 50million(?) is dumb and cant see how dire things could get, he's financial after all......instead he's talking about failed Reagan economics....ie slash taxes for the rich (to stimulate the economy)....we can see that that just didnt work....
(later comment) So....its either
stupiddesperate gambling or its a game plan.....he's setting us up for a situation ie worst case if his gamble doesnt pay off he's choosing the situation rather than being handed one he doesnt want, the lesser of two (or more evils).....and will use it toregretfullydrive through failed idelogical policies (which obviously dont work)....but by then he will have retired to hawaii with a title.....or someone will have lynched him....Maybe instaed of "Jelly" Key it should be "slippery" Key...
@ruru: "theirs appears to be a long game." agree, I think so.
regards
@Justice: "My point is this:
@Justice: "My point is this: why do journalists like James commentate on stuff they know nothing about?"
Who cares what he writes....anyone who bothers to take at face value what a general newspaper journalist says is just as stupid.
Anyway off to play BF2....maybe I'll login as Jelly Key and see who takes me out...
;]
regards
"There is $200 billion invested
"There is $200 billion invested in residential property and the Government effectively pays investors $150 million a year in tax breaks. However, the high earners who face losing property tax breaks may end up no worse off because of personal tax cuts. "
Yes, Gareth is correct here. Those that earned a high enough income to reach the 38cents in the dollar and own rental property will be no worse off when/if the changes are made. In other words the likes of MP's. How ironic
Who cares what he writes….anyone
Who cares what he writes"¦.anyone who bothers to take at face value what a general newspaper journalist says is just as stupid.
regards
Well Steven your talking about 90% of the country! The same ones who still watch TVNZ news or TV3
@Justice: I dont watch TV....I
@Justice: I dont watch TV....I have an ancient 29in inthe spare room I allow my kids selected time on....or to watch a DVD....
"Gareth is correct here. " on the surface yes....but their disposable money now no longer sinks into property, hopefully it goes into investments in the real economy....so it may not all be bad.
regards
With property/land taxes ruled out,
With property/land taxes ruled out, and mortgage rates dropping again, housing market is set to bounce back
We were in our accountants
We were in our accountants office yesterday. He commented on the rush of accounting firms who are now madly trying to "unwind" all the property rorts they got their property investing LAQC customers into.
The wind has shifted.
It is quite clear that,
It is quite clear that, no matter what kind of spin the pro-housing lobby generate, the glory days of property in NZ are gone for a very long time.
A feature article in the Herald today makes it very clear that relaxation of metropolitan urban limits will occur, freeing up the supply of land.
This coupled with tax changes, a likely shift in migration patterns, increases in interest rates, demographic shifts and minimal wage increases over the next couple of years will result in little if any increases in house prices, and possibly significant drops.
@First Home Buyer Don't forget
@First Home Buyer
Don't forget principal payments on the mortgage, rates, insurance and maintenance costs in your figure. Its all part of home ownership and could push your weekly outlay to $1000+ (depending on the state of the house you buy).
The other factor is any deposit money you have will earn you money. Over time this could be enough to cover your rent, effectively making your housing costs free.
Yes some may argue that eventually you pay off your mortgage and get to live for free. Well not really, you still have to pay rates, insurance and maintenance. And yet the house provides no financial return. But money in the bank does.
Wonder if has anything to
Wonder if has anything to do with latest tax (non) changes announcement, PM popularity has reached new highs, according to latest survey
@Matt in Auckland Thanks for
@Matt in Auckland
Thanks for the info:
"A feature article in the Herald today makes it very clear that relaxation of metropolitan urban limits will occur, freeing up the supply of land."
http://www.nzherald.co.nz/nz/news/article.cfm?c_id=1&objectid=10625802
blimey!
Hang on guys...expect the govt
Hang on guys...expect the govt to throw money (ours) at a migrant enticing advert effort in Europe to pork the numbers. They will kill to keep the bubble intact, just you wait and see. Anyone hear Key mention that housing was seriously unaffordable....did he even mention housing????
@Wally, They've all gone.... too
@Wally,
They've all gone.... too much change in one week.
Brilliant.
Wot changed this week ,
Wot changed this week , nuttin' , not even my gruts ! 'Ang on a mo' , it's Valentines day termorrow , bedda make a special effort for her indoors , and tidy up me act . ..................... I'll wash the ute , yeah .......... that should impress her . Cool !
Major Nelson property development faces
Major Nelson property development faces liquidation procedings:
http://www.stuff.co.nz/nelson-mail/news/3324519/Monaco-investors-fear-fo...
You'se just cant lose,
However you choose,
To grab some debt,
For to make a bet,
On the property roulette!
Guaranteed returns of 8%....dont you just wanna grab it?
Major Nelson is in trouble
Major Nelson is in trouble ............ Ooh , I must tell my master .........
Please be quiet - I
Please be quiet - I am enjoying the silence.
1000 apologies oh great testicle
1000 apologies oh great testicle squeezer of the internet .................[...silence ...]
Govt being blamed for housing
Govt being blamed for housing shortage
Saturday, 13, Feb, 2010 9:31AM
Manukau's mayor is blaming the government for delays in addressing a shortage of housing in South Auckland.
A Salvation Army report this week stated that Manukau City needs around 1200 extra homes. Across the Auckland region, there is a shortfall of 6,000 houses.
Mayor Len Brown says there are projects involving organisations such as the Salvation Army and Habitat for Humanity which are all but ready to go.
"There are three or four projects in our city that are awaiting energy and pace and we want to see action from Housing New Zealand and the Government."
Mr Brown says it is crucial steps to fix the problem get underway and he has written to the Minister of Housing asking how much longer the process will take.
Robert - I am sure
Robert - I am sure that Len Brown and other socialists could have hundreds of projects "ready to go". They certainly won't be paying for them, and are only too happy to squander scarce resources on various follies. If there is a so-called "shortage", then let the people work and pay for the houses themselves. Where do people get off thinking that housing my family should be someone else's responsibility other than mine??!! Get real.
The Salvation Army stated that Manukau City "needs" around 1200 extra homes....is this the same as the WINZ definition of a "need" or "necessity of life"? You know...computers, TVs, dishwashers...and on it goes.
Despite my anger, I would be happy for Len Brown and similar thinkers to join the dole queue...they would be much more beneficial to NZ if they would kindly take up that request.
@Kate, why would you start
@Kate, why would you start unwinding your LAQC? it doesn't make sense to me until the gov't says what it will do.
Even then if they ring fence losses, which seems unlikely if they are already going to do depreciation and maybe tinker with other things.
I doubt you would have to move your property out of your existing company anyway, possibly you might need to change it's status to just a QC, but even that seems unlikely.
@KW John, even if land gets freed up, it seems so expensive to build a new house now days, probably more than the average house price, I just wonder how much it can help affordability all that much, although it's probably not a bad thing.
Robert - pretty rich (prick)
Robert - pretty rich (prick) comments coming from Manukau. Their processing of resource consents is appallingly inefficient and pedantic, I know someone who worked on a social housing project there which went through all sorts of hurdles
Brown would be much better placed to free up his Council's overly restrictive planning controls and processes than running crying to the govt for help
I was thinking of voting for Brown in the supercity elections - not so sure now.
I'll probably boycott them
Not being superstitious: however 3,666
Not being superstitious: however 3,666 does seem a little auspicious.
Maybe it's just coincidental that 666 was the low point for the S&P500, but could it be that 3,666 will be the low-point for property sales?
On a serious note, low sales numbers will further discourage new home building, at a time when population growth demands more houses. Market forces need to balance out, if a steep yield curve, uncertainty over tax on property and constrained lending conditions limit the number of home buyers then the pressure will go on the rental side of the equation. Rents do remain low relative to incomes so there is plenty of scope for price movements on the rental side.
Chris_J, maube 666 will be
Chris_J,
maube 666 will be the low point?
Salvaton Army may suggest South
Salvaton Army may suggest South Auckland needs extra homes.
What South Auckland really needs is fewer people.
That applies to the whole of Auckland too.
Somebody please work out a way of making other parts of NZ even more attractive.
Thats why freeing up land
Thats why freeing up land is not the solution, people don't want to live in out of the way places, when asking people what they want they tell you want they think they want, the key to meeting a persons needs is to anticipate what they will really want.
Australia is already starting to
Australia is already starting to reduce the number of immigrants to the country. Those who can't get into Australia would come to New Zealand instead, meaning demand for houses and pushing up prices.
Think feb will be the
Think feb will be the one to watch, friend sold one in 24 hours for good money, agent has sold 4 this week!!! Was the land tax what everyone was waiting for?
can't wait till tomorrow when
can't wait till tomorrow when our fearless leader , BH, dishes us up some fresh R/E porn.
this blog has been going since friday and is now staler than eric watson's brain cells!
Still lots of evidence of
Still lots of evidence of landlords listing places they have had as rentals for many years. I have put on an extra crew just doing pre-sale makeovers. A common situation is the rental was their old house which they kept after they moved to their dream home. All the talk of land tax etc has been the catalyst to save themselves the aggravation associated with being a landlord. Damn shame there still is no sensible discussion from the the powers that be regarding what is to be done to increase the supply of decent affordable homes or lower the over-the-top local authority charges imposed on new builds.
Logical Dave Says "What South
Logical Dave Says "What South Auckland really needs is fewer people."
That's what the whole planet needs, but it ain't gonna happen. The population is increasing exponentially....
buyerinchch - I agree. Spoke
buyerinchch - I agree. Spoke to a few RE agents over a beer, they said Jan was like a ghost town but last fortnight much busier.
Jan is usually the quietest month, but was compounded by possible tax changes & possibly some worried about the "dead cat bounce" after an 11% increase last year.
I'm not saying there'll be another boom anytime soon, but I don't see a crash either.
UK average price is NZ$382,000 AFTER their "big crash", up 10% since April.
http://news.bbc.co.uk/2/hi/business/8497627.stm
compared with NZ average $409,807
http://www.qv.co.nz/onlinereports/propertyvaluemap.htm
Sydney up 12% last year to NZ$763,000 median price
http://www.radionz.co.nz/news/stories/2010/02/01/1247f158badc
compared to Auckland median $450,500 ......
"Think left and think right
"Think left and think right and think low and think high.
Oh, the things you can think UP if only you try!"
"Would you dare to buy
"Would you dare to buy a house?
Or will you stay a squeaky mouse?
Would you? Could you? Would you dare?
Or will you live in constant fear?
You do not like them.
SO you say.
Try them! Try them!
AND you may.
Try them and you may I say."
@ william-9.11pm: Just what this
@ william-9.11pm:
Just what this country needs. The 'hairdressers and restaurant workers' that Australia has decided are the categories that need to be cut back in their immigration intake. They are, however, uping their intake of docotors and engineers. Are they taking more of the people that we want, from not only 'overseas',but from here? Could be that our immigration numbers actually fall if that's the case!
Well I don't feel like
Well I don't feel like waxing poetic :-) when I think of the looming adjustable rate massacre in the US, with many banks around the world, no doubt in New Zealand as well and with sovereign default looming not so long aftersovereign default looming not so long after that.
Sats. are great, Murray @
Sats. are great, Murray @ 11.15pm, especially when the basis declines. A 30% drop in numerical value has to have a rise of 43% just to be back at square one!
Sadly we are soon to
Sadly we are soon to see our nutty govt throwing borrowed money at the declining property bubble, in a pre election bribe aimed at porking some happyness and safety for bankers profits. I would like to see some math on the bank balance sheet impact of 10 and 20% falls in values. I suspect the real situation is being hidden behind many walls. It is clear from the collapsing finance sector that residential values have a long way to drop. Anyone out there got the real math on bank risk?
Here's the only math. you
Here's the only math. you need.
Between them 2 banks, CBA and Westpac, have over 50% of the mortgage lending outstandings in Australia and New Zealand.
There's the reason for any government support of the bank's balance sheets. Granting all those 'foreign banking' licences to stimulate competition has sure worked! And now we are left with our own 'too big to fail'.
And to prevent the failure..we
And to prevent the failure..we will see the govt porking the bubble every which way they can right up to Nov 2011.
Whoosh! Is it a bird?
Whoosh! Is it a bird? Is it a plane?
No, its the inventory of unsold houses shooting up:
http://www.interest.co.nz/charts/gallery12-60.asp
Bet the misery index graph
Bet the misery index graph starts to look like Mt Everest. Love the presentation. Excellent work.
Look at the whole graph,
Look at the whole graph, Andy, more like a rollercoaster.
not back to 2008 levels... yet... ;)
<i>Sydney up 12% last year
Sydney up 12% last year to NZ$763,000 median price
http://www.radionz.co.nz/news/stories/2010/02/01/1247f158badc
compared to Auckland median $450,500 "¦"¦
Just because our bubble is not bigger than someone else's (and arguably the biggest) bubble isn't going to win me over.
What's interesting, if you stop to think about it, is that four Australian banks fund two of the most stretched housing markets globally.
Thing is...while it might mean
Thing is...while it might mean Bollard can work with smaller ocr adjustments...the rising mob on floating also leaves them open to being milked by the banks when the collapse gets going. The banks will have no option but to push the floating higher to cover losses elsewhere on property falling in value. The whole cycle of greed and splurging flips over to become fear and austerity. Those on a floating rate will find rates shooting higher by the week and no safety in fixed. They will be done to a crisp.
And what about the UK
And what about the UK average NZ$382,000 vs NZ average $409,807? No bubble there, apparently...
We've always followed Australian prices historically, with a 5 to 10 year time lag.
If they go "pop" I'll be concerned...
"What's interesting, if you stop to think about it, is that four Australian banks fund two of the most stretched housing markets globally"
What loan/value ratio do those banks have overall? I'd guess it's conservative?
According to the IMF, "estimates suggest that house prices are only moderately overvalued (5-15 percent) and that continued strong immigration and household income growth could increase equilibrium house prices.
Australia's big four banks are so well capitalised that they could withstand a surge in home loans going bad and still maintain their capital levels at the minimum required by regulators."
I'd argue the UK isn't
I'd argue the UK isn't in a bubble any more. They might still suffer some further housing pain though, fo different reasons.
I've read the IMF report you mention, and I know the Australian banks don't have a stretched LVR . I still think Australia is in an untenable position WRT housing in the long term.
Besides, is LVR as a measure really that useful? For NZ (and extremely round numbers), LVR is ~33%, but there there are ~1/3 of houses with no mortgage. LVR on houses with a mortgage is therefore more like 50%.
If house prices fell by 25%, LVR on houses with a mortgage would be nearly 70%. What's the right number? 33%, 50% or 70%? Do you measure LVR against current prices or potential downside? The whole market, or only that which is geared?
If Basle II was being re-written now (and arguably it should be), would it be so easy for banks to get a favourable capital adequacy measure for loans with >80% LVR? Prior to the GFC (ie the statistical environment under which both Basle I and Basle II were conceived), stastically the answer was yes. Since the GFC ... possible no.
"If house prices fell by
"If house prices fell by 25%, LVR on houses with a mortgage would be nearly 70%"
That's the figure I was talking about, doesn't seem that bad...
Houses without a mortgage aren't relevant to the banks balance sheet...
Well, the USA had, from
Well, the USA had, from what I can find having a quick look, not disimilar charactersistics (home ownership rates, pre-GFC total LVR at ~40%, etc). Now LVR is 63%, consistent with the fall in value of the housing stock.
The two countries are wildly different, but I can't simply look at NZ's LVR and be happy.
I'll try explain better. Without,
I'll try explain better. Without, in any way, saying we or Australia are imminently going to go the way of the USA, if you look at slides 13 and 26 of the Freddie Mac pres below you can see the change in equity matching the change in debt as the bubble built (and consequently Freddie Mac's LVRs staying the same), followed by the impact of price falls to LVRs.
http://www.freddiemac.com/investors/pdffiles/investor-presentation.pdf
Basically, focusing on LVR is to me to simply ignore the potential danger which the GFC has highlighted.
Fair enough, Ian. As you
Fair enough, Ian. As you say, NZ & US are wildly different. I think we're more likely to follow Australia for a variety of reasons - partly because we basically ARE Australian ;)
Though I do see a risk of NZ getting "milked" (no pun intended) by too much Australian ownership, not just of our business assets but also eroding our population....
I predict an 'M' shaped
I predict an 'M' shaped bubble.
I predict an $ shaped
I predict an $ shaped recovery.