"Finance Minister Bill English has spoken in parliament about how as many as 10,000 households on high incomes have been able to significantly reduce their taxable incomes and how the government’s budget on May 20 aims to remove the loopholes to make the system fairer."
May's going to be interesting!

The Kiwisaver withdrawal available from July 1 will prop up the first home buyers <300k price range, same as happened in Australia

...That subsidy has to get the chop frankly the more I think about it. Sorry Matt in Auckland.

The ability to withdraw your contribution may keep demand up though.

Fairfax - sorry I don't understand why you are sorry to me!!!????
I am looking in the 450-500K price range, way over the 300K limit!

Nicholas - the Govt is certainly talking the right language, and with each statement affirming tax changes, greater fear will be etched into the minds of the property investors shaking in their boots

The dreamers still dream.
Howick property asking $689k with cv $530k 09/2008
Yes I know the cv can be that far out.
Or can it really?
The $189k difference is for a buyer to claim because the bank doesn't give discoumts on its share.

Logical Dave - indeed!
I guess they are free to dream, and if someone is willing to pay a stupid price then thats their choice!
It won't be me though!
I think I have a good handle of what fair values are in the current market, and won't be prepared to pay higher than that

"said Interest .co.nz Editor Bernard Hickey."

Bernard - did you interview yourself for that story ?

But they could, depending upon who your boss is (unbeatable you say!), send it off to add to the stuff that Thodey is looking after in the UK? What's it's nominal value? $18 bill... Shovel any bad debts into a bad bank, and let's get on with it. But I'd agree; its the thing to do, to do a bit of pulling back at the moment. Cheers. ( Is it that time already.....)

zedy Says:
"How many of these households are over extended and relying on these tax breaks to meet there mortgage reypayments

thats when its going to get interesting"

Yep..or put another way, they are living beyond their true means.. more homes up for sale/auction another small rectification back to true long term ave price, and affordabily.

Read a sob story in the herald thing it was, Oh brought with a 120 000 deposit with a 250000 mortgage, cant afford the mortgage and no life style...
Really? didnt cross their minds their egos got in the way for a flash new home?
Wounder why they dont have a 120K deposit and 200K mortgage..
Stupid people and stupid reporters who wrote the sob story and couldn't see this.

been looking for a family home in central auckland for a fair while, the expectations of vendors has changed hugely since the end of last year.
Property press is twice as big now and it seems most vendors would be very happy with current GV where as they were going for 50k plus late 2009.
There has been a big change in market sentiment, not many buyers scared of missing out anymore.... quite the opposite

It does seem that the NZ Herald reports when house prices are going up due to increased demand putting fear into the regular Joe. When it's the other way around, nothing. Huge supply exists at the moment but little mention of it.

Sellers are being stubborn at the moment, hence the large over priced supply. I don't know how long that's going to last. When they do drop, it'll be interesting to watch and maybe read that article in the NZ Herald. I think some home owners / sellers are in for quite a shock. Three bedroom bungalow for sale in Mt Albert for $749k? (see trademe) take off 10, 20 + % ??

With regard to Govt tax changes the market will find it's own level again once the fuss has died down.
But there sure has been a lot of people out there enjoying seeing landlords squirm

Why does everybody bag landlords?
If being a Landlord was so good, why haven't most people done it?

It's just typical to see people taking pleasure in the hardship of landlords.
The assumption is that we have all got incredibly rich - by extorting money from our tenants, and now apparently robbing the Government of tax.
Here's the common reality: Average people working hard to get ahead and provide for themselves in retirement. Sacrificing weekends and evenings to renovate houses - taking risks. Putting up with tenants ripping them off and wrecking their homes.
Many of my tenants are earning more than me in their day jobs. They choose to spend their money - I choose to invest it.
Ten busy years later, I'm better off.
People shouldn't bag anyone with the courage to work hard and take calculated financial risks.

i posted this elsewhere but worth repeating here imho...
there is also the phenomenon of negative latent demand. the loose credit of the last few years sucked demand from future years by drawing in to the market people who normally would have waited a few more years before buying a property. it’s something that has been well noted here in california and adds weight to the question – where is all the new demand for houses going to come from?

@The BM: but interest rates will (marginally) rise going forward I suspect....the OCR might drop....be interesting to see what happens in the next few months to prices, days to sell and inventory keeps rising how long can that continue....if the May budget is where I suspect it will be (rorts etc stopped) its dip time....even if you are a gambler on capital gain I cant see how that's a dead cert for a few years...

@curtissd: the drop via fundimentals would dictate a large drop to the 3:1 price to wages ratio....so say 2.5:1 worst case allowing for an over-shoot....but if deflation / depression hits then wages will drop, making houses even more over-valued.

regards

Values are all over the place, agents say my 5 bed home in birkenhead is worth less than the 530k cv yet my neighbour with a half size property brought 3 months ago for 310 and a gv of 355 has put in on the market for low - mid 500,s after doing a quick reno.

We'll get lower interest rates only if:

- NZ's economic performance gets significantly worse, causing the RBNZ to further drop the OCR to try and stimulate the economy; and
- through some sort of magic, this economic performance not only doesn't make NZ a more risky place for foreign funds (to fund our debt), but it in fact makes us LESS risky, so the NZ risk premium reduced.

Then we might see lower rates - sound likely?

So who's the smart one there, OS. The buyer or the seller?

Good answer. But I'll reserve my opinion until May 20th.

Property sells for about 10-20% above 2009 GV out our way.

It shouldn't have any relevance, but there does seem to be a correlation at the moment. We live in smaller wealthier area of Manukau- so what you say is probably true.

Nice to see some have their heads screwed on.

But we actually need to look at "land" values, not "house prices". The relatively stable "house price" is masking the true extent of the real "bubble" we have. Take the house values out of your graphs and then see what the slopes look like.

Steve Keen is right about the Aussie Govt throwing "grants" at first home buyers. All this did was inflate the bubble a bit more and a bit longer. It has to blow, and it will be bigger when it does.

REINZ are part of the problem. People often suggest there should be penalties for financial advisors on Wall Street who made money out of selling investments that collapsed in value. Why not do the same for Real Estate Agents, they're just as guilty. If they knew they were going to be liable after the bust, they might be a bit more careful firstly about doing their own analysis and secondly, about how much bubble cheerleading they do.