Bernard - Real Estate Agents will no doubt be shouting from the rooftops that now is the time to buy. But let's look at the reality, between 2002 and 2007 residential proprty prices went up by 100%. So far they have only dropped about 6%. For anyone who thinks that this is a good time to buy I would recommend extreme caution, as the effects on NZ from the current world debt-defaltion problems are only just being felt - caveat emptor! BTW I still believe that your prediction of a 30% drop in residential property prices will be proven correct.

Another 30% ? I dont see it - if affordability is there, demand will be there - its the kiwi mentallity to own a house.

Im not sure of the medium salary, but say its $40k ($80k for a couple) - say banks lend at 30% DTI, then the max borrowing power is $265k. With a decent deposit, I'd say medium property prices will hold at around $300k. Thats a 10% discount on the current med price of $335k.

In the past couple of years I have known banks to set DTI at upto 50% and no requirment for a minimum deposit - thats what driven property values in my opinion.

AH - I believe that Bernard predicted an overall decrease of 30% including inflation. Therefore assuming that we have had inflation in the last 6 months of say 2% plus the already announced decline of 6% then that leaves another 22% decline to go.

With unemployment starting to rise dramatically and with job security rapidly declining I don't foresee many people wanting to take on $250,000+ mortgages in the short term. How long would it take for that couple to save the 20% minimum deposit i.e. $60,000 that banks now insist upon? Also bear in mind that the $300,000 house that you refer to can be rented for approximately $300 per week, less than half the total cost of the mortgage plus all other house related outgoings. It seems to me that the Kiwi mentality that you refer to comes at a high cost.

AREINZ, I have no doubt that there will be more looking. As to whether they resume the ponzi houseprice frenzy will be interesting. Perhaps the house prices will stabilize. Whether volumes return, which, by your id, I suspect you are hoping for, is again going to be interesting.

NZD dropping again today against USD and Yen (and most other currencies)

Just as well Bollard has the $15 Billion USD backstop arranged.

In the industry I work in, project work has dried up. Contractors have been let go. Don't think too many of them are looking for houses this weekend.

John Needham isn't looking through the same rose coloured spectacles as a lot of NZ people are. From http://www.financialsense.com/asia/danielcode/2008/1120.html

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In New Zealand, together with Australia, challenging UK for the title of highest household indebtedness, the global credit crunch has arrived at the wholesale level but reality has so far failed to morph into the national consciousness. With a national election playing out at the same time as US Presidential elections were being held, the "R" word was not mentioned by either of the main parties. The refinancing crisis that Australia and New Zealand are undergoing has necessitated government guarantees of the Four Pillar's wholesale borrowing arrangements as well as the guarantee of bank deposits by the Federal government.

For Asian and Down Under punters the variance of either acknowledgement or recognition of global problems is occurring at a staggeringly uneven rate. Dislocation between perceptions and reality is immense. Some of this is caused by perception as a function of media cultures and some by real variances in consumer credit structures.

,..... removed for brevity

Watching Bernanke, Paulson, George Brown and now Angela Merkel repeat Japan's doomed experiment of flushing a failed economic model with liquidity which is what created these serial market bubbles in the first place is painful for investors. And there is more to come as the global banking ills have barely touched the fringes of the real economy. The question not loudly asked by those who should, is why would you trust the arsonists to extinguish the fire. The farce of the recent G-20 meeting shows that for many, that is still their hope!
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For anyone who is interested you may wish to check out

http://www.financialsense.com/fsu/editorials/laird/2008/1120.html

"World Demand collapsing" by Christopher Laird.

======== snip ======
World economic demand is now collapsing along with the yearlong credit collapse. Recent news is full of stories about how world economic demand fell off a cliff in October, 08. Every sector is being hit, from new cars to recycled cardboard. In each case, October is pointed to where economic demand fell off a cliff"¦

....

There are stories about ships all over the world stacking up in exporting countries, anchored, and not able to sail because they cannot get letters of credit for the shipments. Hong Kong was mentioned as having rows and rows of loaded but idled ships stuck there.

The same goes for oil tankers, lines of them anchored even though they are full, with no buyers. There has been a screeching halt of shipping worldwide. Products are backing up in Asia.

Many of you have heard about the collapse of the Baltic Dry index, a shipping index for containers. It has fallen from over 11,000 in July to around 800, in only a couple of months!
...
===== end snip ==========

Soooo.... What are the punters going to give more weight to this weekend? Interest rate cuts? Or events outside New Zealand?

'now is a good time to buy' --- coming from an agent should be interpreted as - 'now is a good time for me if you buy'.

http://blogs.nzherald.co.nz/blog/your-views/2008/11/14/do-you-think-hous...

most feedback indicates no

Raro, thank you, thats the graph I have been looking for and lost..thu the one I had was 1970 +
Bernard... we closely agree and the 30% drop for different reasons, the expo lated ave of that graph even from '62 to as Raro says the true start of the boom is 2002 Shows a 'real value around the $220.000...

I also note BHs and my 28/30% drop was at a point at the peak end of 2007, We both built in differently the real drop would be close to but not quite that much
Bernard's real estimate include inflation type stuff
Mine simply expolates the graph and assumes at some point in time in the near future 1 or 2 yrs the price will drop to meet that value at that point in time.

When it does, Affordabilty, will also be close to the traditional 25/30% of income.

The issue that are going to influence are not just a rectification of price, but higher unemployment, debt that cant be serviced, commodity prices, shares etc and all the other stuff others here are mentioning ...