He was very excited PoP :)

Banks must be stoked too.... let the market take care of the L-V-R so there is less impairement for those that are struggling to pay. This insures the balance sheet holds and less impairement is flushed through the profit and loss

I must admit I was very surprised by the opening paragraph - the content of which I would have to challenge:

1. House sales have risen sharply - certainly true, but off an all time low base - they fell 50+% to the low of an annualised 53,000 in Jan 2009, they are now at an annualised 64,000 that is a rise of c. 22%. They have still another 45% rise before they are back to long term average. during 2006 - 2008 the average annualised sale volume was 100,000.

2. The long run average is based on dwelling number shows that we are still below the lowest points of the last 2 decades - long term the average is 6.3% of all dwellings being sold each year. the 12 months to September shows a figure of 4.3%.

3. The number of listings have not fallen - the NZ Property Report for October show inventory is rising again. http://www.realestate.co.nz/blog/category/nz-property-report

The house price can not keep rising regardless what it worth. We have to leave it alone to let the market to do correction job. Anything govement trying to do will make things worse. The market will soon be balanced by buyers and sellers and then the house price will be flat or fall.

I think we're well past the time the Nanny State should inflict a death blow to curb this sort of irresponsible activity. People buying houses out of their own volition: it shouldn't happen in civilised countries. I recommend a 100% income tax on builders: that'll stop the buggers building all these houses, and stop it outright. Who on earth do they think they are putting these structures up all over the show on private property. Arrogance. 100% tax on the building industry: mark my words, that'll sort it out (and we'd get to save Bollard's salary as his wagging finger would no longer be required). And note I've just solved the leaky building problem as well. All this, in just five minutes after lunch.

Good for you Mark..new you'd buy a red tie sooner or later.

"Sceptics are advised to stand aside" .. well at least he got one thing right, sort of. I think he meant to say "anyone with any common sense are advised to step aside".

I just can't bring myself to believe prices can just keep on rising. They are already unaffordable compared to average wage - who is buying them. Is it just investors/landlords? Will most common folk just rent from now on?
The downside no 'mum and dad' see is that it is great for prices to keep rising for their pension, but who can afford to buy it.

As JC said - it is a bit of a plug for westpac mortgages. I guess the other bank surveys will now follow.

Rising house 'prices' (but not real values) serve two purposes. Firstly, by bidding up everything from mansions to dog kennels the bankers get to lend ever more fiat money (created under a system of fractional reserve) to Joe Public. On that 'debt money' he must then pay tribute via interest (we used to call it usury). Within this its worth noting that not even Adolf Hitler et al expected interest when they created all that Pound Sterling via Operation Bernhard. I guess the idea of wrecking the British economy was sufficient - perhaps people were less greedy in those days?

Secondly, rising house prices create conditions of 'national stupor' in which the population is rendered crapulent and undiscerning. So intoxicate is Joe Public - on the opium of 'something for nothing' - that he fails to see government removing his liberties, flooding his nation with 'replacement' population from countries more used to authoritarian rule, eroding his quality of life, and mortgaging his kids forever.

All this is a key reason why bankers and politicians hate gold (although make no mistake, the 'banksters' will have plenty for themselves). Put simply, if you measure house prices against gold (historic and unimpeachable money) then housing looks much more like what it is - something to live in, raise your kids in, and enjoy your life in. Adam Smith derided the idea that countries can get rich via housing speculation several centuries ago - politicians and bankers know this, but they also know that Joe Public does not know this!

The report does contain a couple of pearls:

If inflation rises above 3% on average, buying a house now could turn out to be the best financial decision you ever made. If New Zealand were to spin into Japan style deflation, buying a house now would be a decision to regret.

You don't even need deflation for it to be a decision to regret. I think that would apply even at low (1%) inflation.

Westpac favours 2.8% inflation while to me it appears an increasing weight of leading opinion (central bankers don't meet this definition) is expecting deflation.

Westpac considers 2.5 people per house to be crowded. The number of persons per house is going up, but the analysis suggests that means higher prices to follow. Maybe when NZ has caught up with Australia. In the meantime it signals a much lower need for new houses - if the tend continues perhaps by 25-30 percent.

My brother in law works at Westpac looking after high net worth customers. He's told me several times that he and the others there take a contrarian position to what their own economists say. He can't believe how consistently wrong they are.

You'd have to be brave or stupid to load up on large amounts of debt right about now. We've had the bounce - 2010-11 will bring a retest or break of the lows earlier this year in the equity markets, commodities and the NZ dollar. Property won't be far behind. Like 2008 there'll be nowhere to hide. I fear like Ireland and Iceland, NZ will crack in a matter of months and John and Bill will be flogging off everything they can get a few bucks for.

Wally, unfortunately true.
So, this is a PR crazy govt and likes control and spin, this is a popular blog/website - how closely do you think they monitor this? Is there a govt paid employee blogging in spin and can we out them?

On a side issue - I am looking to buy a home to live in at some point, but frankly the prices put me off, don't fancy 50%+ of my wages going to pay 1 debt.
I have seen a few auctions that Harcourts prefer and nothing sells, they all have a high reserve.

I thought 'you were the mole', Novo!

Harriet,
I might be, 'they' may be controlling my thoughts and I don't know it.

Let the speed accelerate further, property prices up up all the way, the faster the better. If this is what news are reporting, then so be it. Perhaps, time will tell if there's a bubble growing as fast each day. I look forward to read more good news on house price rising and rising and rising, the faster the better, why not. Thanks to all these reportings, cheers.

Trudy I don't think it is a house bubble problem, it is more like a construction material cost problem.

Stevek - In my view Iceland was first 'hyper-geared' then busted because the EU was not prepared to have a small, prosperous, cohesive, independent nation embarassing it at the periphery. I believe it is also of potential strategic importance to Russia and one tends to the view that the EU have arranged things in order to grab this little jewel - irrespective of the impact on its people. Ireland, I would suggest, was 'hyper-geared' and then effectively busted - and a 'gun' put to its head - to force it to drop opposition to the Lisbon Treaty. This delivered fruit for the EU a few weeks ago and now 'Lisbon' is reality. People may wish to do their own due diligence on what this is going to mean!!!

Further 'busting' looks probable in terms of some of the more Eastern EU Members where places like Latvia have been (you've guessed it) 'hyper-geared' and are now totally beholden to the banks.

I'm still trying to work out the probable rationale for a 'busting' of New Zealand but all the warning signs are there.

If Malcolm is right, Trudy, then we should all be borrowing until our eyeballs bleed, and just buy anything. As usual, the prudent, sensible, honest people will all get punished.

Malcolm - "I'm still trying to work out the probable rationale for a "˜busting' of New Zealand but all the warning signs are there."

Because they can. Cheap fire saled property, public utilities and other govt owned or regulated assets, resources (especially in conservation estate) and a cheap and indebted labour force.

New Zealand has been a boom and bust economy reliant on Australian capital in particular since its inception. Nothing's changed really in 170 years

Harriet - "If Malcolm is right, Trudy, then we should all be borrowing until our eyeballs bleed, and just buy anything."

Why don't we all borrow to the max to buy the house of our dreams and fill it with everything we desire, and then collectively as a nation, perhaps on Dec 21 2012 declare since the world is about to end, we are as a nation refusing to pay any of it back. Australia go f*** yourself. Ralph might not get to be PM after John but hey, be a team player.

stevenk,
Wow, what is the significance of that date you quoted, soooooo symmetrical with that 1 and 2 arrangement. Tell us about it..... oh, is that a movie?

Who cares about growing Grain, when Bread is at the table ? What an economy we have - crazy !
We all should be in the Real Estate Industry - selling- buying- buying- selling- buying and selling, selling and buying.

...we are slowly running out of money, moving into a society of Renters of apartments and....

Federer or some NZ sailers = B. Butterworth

Rob, do you think it should be fair that if you or anybody else invested in a house instead of another area, that you should be taxed the same as any other investment type? No rorting, etc.

You guys should lay off the plonk. Your posts are running away with the holes!

Novo Says:
November 12th, 2009 at 4:00 pm

Rob, do you think it should be fair that if you or anybody else invested in a house instead of another area, that you should be taxed the same as any other investment type? No rorting, etc.

I think all 'investments' should be taxed in the same way. That is only fair, and is one reason why property has been so attractive. Basically it is just closing loopholes, and the next budget will see changes to this, albit too late. NZ is great at fixing things, way after the horse has bolted and people have been hurt. Whether the house you live in is treated in the same way, is debatable. Probably not, but very hard to govern.

Harriet Says:
November 12th, 2009 at 4:23 pm

What's so different about the family house, Rob?

That would be political suicide for any government, that is what is different. NZ culture is all about home ownership, as it is a right of passage, and part of our culture. However I wouldn't disagree, and wouldn't mind seeing it taxed across everything.

Good to hear you Rogie,
Do you prefer we adopt the guillotine or the fun of a free swinging headchopper , Walter ? ( scarfing the wine gums by the truck load , Wally . )

Why not ask Harawira first ?

"...VENDORs will not be happy. Especially the absentee vendors as they had to fork out for the Advertising."

Sorer-loser - the agencies like Barfoots put big mark ups on all their advertising packages so although the agent might not get his commission, the company is continually raking in advertising revenue. I used to provide big photo signs to the RE industry for about $225 installed on the property. One agency was charging their vendors $750 for the sign. And they were always complaining about my prices! Same with the Herald etc. They charge vendors inflated retail rates and pay wholesale. Multiply the markups by the number of advertising packages each month and you're talking serious coin.

stevek Says:
November 12th, 2009 at 4:54 pm

Sorer-loser "“ the agencies like Barfoots put big mark ups on all their advertising packages so although the agent might not get his commission, the company is continually raking in advertising revenue. I used to provide big photo signs to the RE industry for about $225 installed on the property. One agency was charging their vendors $750 for the sign. And they were always complaining about my prices! Same with the Herald etc. They charge vendors inflated retail rates and pay wholesale. Multiply the markups by the number of advertising packages each month and you're talking serious coin.

That is called price gouging, and I don't think it is permitted. eg. the price you pay should be 'fair and reasonable' under the CGA. You can get those signs printed online for about $120, in full colour and to that quality through a printing business on trademe. I got a couple printed my self, and they are fantastic. A real estate comapny that charges that sort of money, well that is one reason why people real estate agencies have a bad name. Not only do they charge such a huge fee of the sign, but they plaster their own advertising over it, hence promoting their company.
The commission these agents make, is only a part of the money they get from advertising fees. It is a no lose situation for them.

who's down with O.P.P?
[crowd] YEAH YOU KNOW ME!!
who's down with O.P.P?
[crowd] YEAH YOU KNOW ME!!
who's down with O.P.P
[crowd] EVERY LAST HOMIE!!

Rob you are on the money with the blunt truth. Kiwis invest in housing because its safe haven from sharemarket wide boys, finance company spruikers, dodgy ratings agencies and and other vested interests. Why should landlords be taxed more heavily for simply investing wisely.

Did you see a local commentator came out with this today,

"[The website www.interest.co.nz rated Bridgecorp AAA under its misleading
SQP methodology, resulting in dishonest or brain dead advisers selling
Bridgecorp as AAA, a rating enjoyed by Rabobank, but not by
dishonestly-run, under capitalized, bottom tier companies like Bridgecorp
who sponsored websites.]"

Bridgecorp AAA - theres was as much quality control in that rating as in Crafar Farms calf pen.

Thanks for the INFO guys, most of which I knew, but it needs spelling out to sum.

Pity it is not spelt out on the WEB in big bold HYPE...or is that type.

A bit like never have a HANGOVER, from a HANOVER deal.

I never ever trust..... a never ever...GET ...REAL...ESTATE ...guy as far as I could thow a hissy fit, or a giant RANT..

Nor a shon-key finance company either for that matter.

Just amused and bemused by little ole New Zealand investments........rorted and shafted at every step, if not careful.

Definitely a mine field here....and they all think that every thing is theirs....if they can screw me.....NOT MINE.

I can never understand why people pay for a house sold by REAL TESTES..and REAL TARTS.as they could have bought it much cheaper privately, especially these days if you have the CASH, or a pre-approved mortgage.

It is their money they are literally GIVING away.

When will these buyers learn that they are paying way too much....but also way to much, including those rorting AGENTS fees.

I had hoped we had killed a few off in the past few months.

Every time they turn around....and spin their little rorts and hype....it costs the punters buying and selling some more, no wonder prices are hyped, no wonder they want Auctions, No wonder they want to shaft their clients.

Way to easy....they should teach basic finance in schools.

I have never paid an agent for something I can do myself....and that includes BUYING right and selling right.

Screw a MUG house-holder.....

Come to think of it....

A bit like a BANKER...anker....

a bit like a WOLLIE POLLIE...

They all like SCREW the TAXPAYER...eh JOHN.....far too LUCRATIVE to keep the GOOD OLE BOYS in POWER....and the rorts ticking over nicely.

And maintain the TRIPS for the BOYS and the EXPENSES rorts.

No one will see...the FIDDDLES....

GREEN AS GRASS......all way too BLIND and busy doing up the HOUSE.

more bollocks from bank economists. A toss of the coin would have given better predictions than what they have dished up these past few years.
WASTE OF SPACE

@ Wong

You are 100% spot on. This is the idea which i"ve been trying to get across on here.
Saves me from typing again, I'll just copy and paste what you've said again.
My god, finally some one sees the real picture, makes me wanna cry.

"NZ's ruled by wealthy people, and politians.

They all have A LOT of property (who's want to get wealthy working 80 hours a week starting a profitable business, property has always been the way to go!).

They will make SURE prices keep going up and up and up."

Mind you, its not just NZ, the whole world is like this.

Small Kev - obvious as balls on a dog, read this:

http://www.interest.co.nz/ratesblog/index.php/2009/08/05/have-your-say-h...

But who cares enough?

The rule is simple:

If you can't control the game then join the game.
If you can't, don't want to or can't afford to, then you are truly stuffed, tough luck really.
No one cares, its a sad world :D

I'll be blowed if I can understand who can afford to buy all these over inflated properties.
Not exporters.
Not retailers.
Not tourism operators.
Not Architects.
Not engineers.
Not surveyors
Not builders
Not restauranteurs (all of the above have, generally, been hit pretty hard by the recession)

Not teachers.
not nurses (al of the above don't get paid enough)

Tell me one industry thats booming right now (OK maybe real estate!)
And, at least in Auckland, rental yields remain generally miserable.

Immigration is not booming - net migration has largely increased because fewer kiwis are leaving

Unemployment is rising and will rise further (I know several companies that have struggled to hold on but can hold on no longer and will be laying off lots of staff soon , not to mention all the grads who won't get work)

If someone can enlighten me as to WHAT is driving house demand at the moment I would love to know

Matt,
Oh yes, you might have missed out - maybe Real Estate Agents, those in Banking sector, and Property Speculators...can afford. Does it sound possible?

If someone can enlighten me as to WHAT is driving house demand at the moment I would love to know

Unfortunately - I think its DINKYs (dual income no kids) - like the young couple on TV last night. Away wih the fairies in terms of the real estate get rich quick idea. They had x2 rentals + an empty section in a new development purchased off plan - for a grand total of just under a million dollars in mortgages. They could not account for $30K of spending on their after tax income in the last year - yet clearly it had gone on renovations, furnishings, etc. for one of the 'do ups' on one of the houses... and to top it off, they were living in this newly renovated asset, rather than renting it.

The section they bought 4 years ago at $298K was now worth (possibly) $190K (but more likely less, and that's IF they could sell it). The dopey RE agent who was trying to help them - suggested they sell the section at a loss (which within three months they had not been able to do) - and keep the other two properties PLUS spend another $30K fixing that one up!

Frankly - they should have liquidated their entire property portfolio then and there - to minimise their risk of potential foreclosure on all of them - as they simply did not have the income to support the mortgage on the section which they were soon going to have to settle on!

And I suspect there are alot more DINKYs out there who are following the advice of over-zealous real estate agents and mortgage brokers. And the banks seem to be relaxing their deposit requriements as well - so there's alot of second home buying - no deposit down as secured against the unrealised capital gain on the value of the first property.

Dumb and Dumber.

"If someone can enlighten me as to WHAT is driving house demand at the moment I would love to know"

Greed and stupidity. And credit.

Fabulous comment stream today guys. Keep it up!

FWIW I don't think there is any conspiracy. Markets can be irrational for longer than you'd rationally think is possible. There are plenty of stupid people out there blinded by their greed.

"If you can't control the game then join the game. If you can't, don't want to or can't afford to, then you are truly stuffed, tough luck really."

Sounds like something from Robert Kirosaki or some other property bullshit spin
.
actually, if you don't join the game and property crashes then you are NOT the one that is truly stuffed

"actually, if you don't join the game and property crashes then you are NOT the one that is truly stuffed"

Believe me if property crashes really bad one day, everyone will be stuffed.
Banks will go down and people won't be able to get their hard savings out of banks even if they don't hold any mortgage. Unless people stop putting their money in the bank.

The game is the game.

Personally I'd suspect there are a load of boomers & developers & real estate weasels trying to liquidate crappy portfolios/properties onto unsuspecting investors/LAQC type punters.

Will the boomlet continue? Depends on whether the economy picks up and people keep jobs, if the answer is yes the banks will keep lending to those who can and want to borrow.

However if the end of the summer sales season see's f.all inventory shifted and rates on the way up then you'd have to expect demand & prices to fall.

IMHO.

When I got out of University in the 1980's, interest rates were north of 20%. Banks ended up owning more houses than people in some places. Student loans sky-rocketed. It took 10 years to rectify wages with debt. And that was in an economy where we still made stuff. Today's disconnect with reality is truly astounding. If Hanover and the sea of other tier2 lenders can't hold their heads above water in a wading pool, then how in the name of god will they do so when the damn breaks and all this pent up global capital goes looking for hard assets to buy. Deflation or inflation - implosion or explosion; the result is the same for anyone in the first trimester of home ownership.

The same article states:

"Figures expected to be released today would show sale prices for October to be the highest they had been in 10 years, he said."

"House sales had dropped from 10,000 a month in better times to about 4000 at the market's worst. They were at about 6000 last month, Mr McDonald said."

6,000 sales for October 2009 would be the second worst October result this century!

See the full stats at:

http://www.reinz.org.nz/shadomx/apps/fms/fmsdownload.cfm?file_uuid=93856...

Stuff website gave the Westpac release a different headline:

"Westpac warns on over-valued housing market"

In 2010, Westpac expected interest rates to rise.This could negate the market's short-term strength and possibly cause another brief period of housing price decline or a longer period of house price stagnation.

Westpac said it has the downturn pencilled in for late 2010, but the timing was extremely difficult to pick.

So if you can cash up now not a bad idea then buy back in later in the downturn.

This is one of the most revealing comments I've seen on this site for a long time.
It's from 'Small Kev'

"If you can't control the game then join the game.
If you can't, don't want to or can't afford to, then you are truly stuffed, tough luck really.
No one cares, its a sad world:)"

It explains how many New Zealanders really think. It is profoundly depressing and reeks of the selfishness and shortsightedness of many property investors and (sadly) politicians.

No wonder our best and brightest are buying one way tickets to anywhere else.

cheers
Bernard

Bernard - re. your comment about Small Kev's thinking, I agree, "It is profoundly depressing and reeks of the selfishness and shortsightedness..", but what do we expect when the constraints and rules of the game are as they are? Small Kev and many like him, like us all, are only doing what we all do - following the lowest energy path of a survival instinct within the rules and constaints of the environment in which we exist. Change the constraints and rules, and people will change behaviour, and survival will be and look a lot less ugly and morally illegitimate.

The real problem is with our politicians and so called leaders. To a degree I believe it's also exacerbated by MMP, our electoral system/cycle and parliamentartians panderering to 'our' tax-subsidised collective (co-)dependency we call property investment - BUT, ultimately it is up to our parliamentartians who we elect to LEAD, and regarding change to the relevent constraints and rules of the game, in the last 12 months we have seen no more LEADERSHIP than we saw in the nine years prior. Yes, it's depressing.

Don't get depressed, take a swig of expresso and keep on, keeping on - you and the Int.co team are doing a good job in helping promote positive change.

Cheers, Les.

(Roger - send Bernard and the team some gummy bears.)

Don't get too depressed the very presence of this and other threads continues to promote hope over experience.

Don't blame the individuals they are responding to the policy settings, we get the behaviour policy demands.

Wonder when the mainstream media will listen "“ there are quite a lot of hard questions to be put too our leaders and most of them are here.

Unfortunately I agree...with BERNARD....who by the way is still living here.....we all either move overseas....

OR....alternatively...and collectively..... how about FIXING the damn problems...

That is our OVERHEADS...and that includes our COSTS and OVER-RUNS like 1.7 million DEPENDANTS and rising....and all of those with their SNOUTS deeply buried. as is their RIGHT TO RORT.

A Crafar in every business plan. A Politically Incorrect Party at every trough.

Maybe like BERNARD, we live here in in HOPE and MAYBE the REAL-ity would have been a 30%+ drop like the UK...but we have vested INTERESTS who prop up a flawed system, with YOUR money. Future or otherwise.

Either way I win...there is always another home overseas. It is a GLOBAL VILLAGE.

I go for 5 months every year.

My problem is not that I cannot, it is these crazy idiots do not ENCOURAGE me to stay, but encourage me to invest wisely overseas, not in NEW ZEALAND....

I have seen all the rorts come and STAY, not come and GO.

I pity the poor deluded suckers who think we are CLEAN and GREEN and HONE-st here.

Not a CLEAN man or WO-MAN in Finance or Parliament, nor a GREEN altruistic bone in their bodies. Self-interest, not even return of INTEREST on that leaky home or investment you bought for your retirement pension.

Hanover a case in point .Blue Chip....we ain't.

It is the GREEN overseas investors who will be CLEAN-ed out if not careful....because our Robber Barons think they are there to be robbed systematically to prop up THEIR lifestyle, until they learn the awe-full TRUTH.

As it is FRIDAY the 13th....I think a really scary TRUTHFULL story should be TOLD.

As I tell all my overseas VISITORS who come here, before they come, beware of the average NEW ZEALAND Investment potential, because we are all systematically robbed and rorted daily, those of us who lived & reside and invested here...until you learn the TRUTH about PARADISE.

Very much like GORDON BROWN's UK...or OBAMA's USA.......then they get the PICTURE.

EXPECT TO BE ROBBED. CRIME does PAY.

FRIDAY THE 13TH.

The potential for your INVESTMENT.....HA HA....isn't a little INTEREST.... it is like elsewhere... more likely a TOTAL LOSS, not CAPITAL GAIN...as we may very soon see.

Working around any system is easy if you know how....and have VISION and do not get SUCKED in by rhetoric.

I used to OWN a FIAT....and that was a heap of JUN-KEY, way back then.

GOD DEFEND NEW ZEALAND....cos sure as HELL-EN and OUR current RAPISTS...it will not be the VESTED interests.

Tis the KIWI way......HONE-STLY.... like MOTHER...like son. Learn to take...not to GIVE.

I thought all the CROOKS were TRANSPORTED to AUSTRALIA...from the UK.

But they sure learn fast here TOO to RAPE and PILLAGE with impunity....and STAB YOU IN THE BACK.

Didn't they used to TRANSPORT people for less than our current encum-bents....get away with.

Tis FRIDAY THE 13th.....so maybe just a PLOT.

We need a NEW PARTY....folks.

@Bernard - so true. Why these people are so intent on creating such a wide gap between the haves and the have nots is beyond me. You only have to look at countries such as South Africa and Zimbabwe to see that such a wide gap actually doesn't work the advantage of the 'haves' in the end! We all have to live in the society we create, and at the moment the one we're creating isn't looking that great...

@ Matt in Auckland. I was at the Barfoots auction the other day (watching the auction for a house we had looked at for our first family home -went for more than $100k over CV - needless to say, we didn't purchase...) and 90% of the 150 odd buyers in the room were foreigners, all spending large sums.. It's certainly not ordinary NZers who are buying up large at the moment.

Maybe all is not well in the "Lucky Country" -

http://www.news.com.au/business/money/story/0,28323,26343965-5017313,00....