Kiwibank follows rivals' with big cuts to long-term home loan rates

Posted in News July 5, 2010 - 12:08pm, Gareth Vaughan

Kiwibank, which led its rivals in cutting two-year fixed home loan rates last week, has now followed them by reducing its three, four and five year rates.

Kiwibank said it had dropped its three-year rate by 45 basis points to 7.25% per annum from 7.70%, four-year by 65 basis points to 7.55% from 8.20% and five-year by 75 basis points to 7.75% from 8.50%.

Last Thursday morning Kiwibank cut its two-year rate to 6.99% from 7.30%. Other banks followed by also cutting longer term rates. The cuts to fixed rates come after falls in long-term swap rates. (See our chart below).

Sister banks ANZ and National announced a 75 basis point cut in their five year mortgage rate late on Thursday, triggering moves in response by BNZ, ASB and Westpac on Friday.

Their five year mortgage rates are now grouped around 7.75% to 7.85%, a significant flattening of the mortgage rate curve. However, these rates remain well above the 5.9% rates that most are charging for their variable rates. See all bank mortgage rates here.

112 Comments

by Nicholas Arrand | 05 Jul 10, 12:14pm

The Govt. and the RBNZ have

The Govt. and the RBNZ have got this market on a string! Well done Dr. B and Bill E.
Who's going to fix long now with long term rates on the down?
Nobody!
Let's herd the last of the fixers into the floating paddock, and we've got complete control.
This is the last piece of the jigsaw puzzle that leads to complete controll of proerty prices by the authorities.
Remind me, again. Where did Bill E say prices could well be off to?!

by Matt S | 05 Jul 10, 2:01pm

No need to worry NA, floating

No need to worry NA, floating and short term rates will also be heading down before too long. Bollard may just get one more hike in before the double dip arrives.. maybe.

by Tribeless | 05 Jul 10, 12:17pm

So one arm of government is

So one arm of government is trying to collapse the price of the property stock through taxation, while another branch of the government is trying to support property prices by offering the lowest priced mortgages.

Nanny shouldn't be in the markets, distorting them all over the park like this: it's silly. Just give me my taxes back please Mr English.

by Chris | 05 Jul 10, 12:59pm

Kiwibank is not an arm of the

Kiwibank is not an arm of the Government. You sound like a conspiracy theorist wacko.

by Tribeless | 05 Jul 10, 2:34pm

Who owns Kiwibank? Who

Who owns Kiwibank?

Who created Kiwibank?

by Tribeless | 05 Jul 10, 2:35pm

And what was the rational

And what was the rational behind 'the government' creating Kiwibank, Chris?

by Tribeless | 05 Jul 10, 2:43pm

Kiwibank is a SOE Chris,

Kiwibank is a SOE Chris, that's 'State Owned Enterprise'.

Note that: 'State Owned'.

As an SOE Kiwibank has a Minister, currently Simon Power, who has the power of life and death over it.

Not an arm of government?

It must be one of the legs.

by Anonymous | 05 Jul 10, 2:54pm

do you often talk to

do you often talk to yourself?

by Chris | 05 Jul 10, 2:58pm

It's OK to admit that you

It's OK to admit that you don't know much about governmental structure, Tribeless. KB is NOT an arm of the government - as you said it's a SOE. The minister has no authority in the operation of the business.

by Tribeless | 05 Jul 10, 3:03pm

What's the governmental

What's the governmental rationale behind the existence of Kiwibank - that is, why did the last government set it up?

by Tribeless | 05 Jul 10, 3:14pm

Quoting from the State Owned

Quoting from the State Owned Kiwibank's very own site:

Kiwibank Home Loans are guaranteed to save you money on the overall cost of your home loan over the first six years compared with any equivalent home loan from the big banks**

So, the government given Kiwibank mission is to provide lower cost mortgages to Kiwi homeowners.

What is the point of the government setting up and continuing to own Kiwibank otherwise?

Thusly, to repeat the words of a wise man:

Nanny shouldn't be in the markets, distorting them all over the park like this: it's silly. Just give me my taxes back please Mr English.

by Steven | 05 Jul 10, 4:36pm

He's a libertarian, an even

He's a libertarian, an even smaller fringe fundie than a "wacko"

regards

by Tribeless | 05 Jul 10, 4:46pm

Argue the case Steven. Not

Argue the case Steven. Not the man. Unless you have no argument.

by Wally | 05 Jul 10, 12:26pm

Clearly they are having a wee

Clearly they are having a wee bit of difficulty flogging new mortgages and the merry go round the banks which promises a steady stream of 'break fees' for all...just isn't happening...
The peasants are slow to learn but once they catch on to having been rorted..that's the end of the game folks.

by Chris_j | 05 Jul 10, 12:32pm

Finally a 5 year cut

Finally a 5 year cut headline. Just 3 days late.

(Now everyone has cut Hike-it Hickey couldn't keep it under the carpet).

by Nicholas Arrand | 05 Jul 10, 12:36pm

This is bad news for the

This is bad news for the property market, chris_j.
No long term borrowers; banks cut the price of money to try to shift it whilst they can. Frankly, rate rises would have been a boost for the market; panic the buyers etc. But this ?

by Chris_j | 05 Jul 10, 1:58pm

Hilarious desperation

Hilarious desperation NA.

Have you lost your mind? Low long-term rates = no long-term borrowers?

Ah-well, consistent with the rest of your logic I guess.

Buy quality at a solid discount today from a stressed vendor (while you still can) and lock in a fair chunk for 3 or 4 years and you will never look back.

I wouldn't opt for the 5 year rate because you would need the cheapest rate to be knocking 9% in 4 years time to be better off with this, which has only happened for a few brief periods in the current interest rate era (post 91).

A quality property with a solid return at or above your total outgoings will serve its owner well over the next few years as inflation is the most likely mid-term outcome.

As an example, one property I bought at an 8% return in 2005 (for about 75% above its 2000 value), now returns about 14% on its purchase price and it valued at about 75% above what I paid, that's despite the market ups and downs.

Buy quality at a discount and never regret it.

by Anonymous | 05 Jul 10, 2:03pm

They are now offering these

They are now offering these rates BECAUSE there are so few borrowers around at the moment.

by Nicholas Arrand | 05 Jul 10, 2:06pm

Thx, chris_j. Each to their

Thx, chris_j.
Each to their own. I've always noted that of all the porpetyr advocates that post here, you have at least done a huge amount of work and analysis. You have made your choices. So have I. They are different to each other. Diametically opposed. If I'm wrong; it won't affect me that much, probably you either. But for most, it will be financial annihilation.

by Accountant | 05 Jul 10, 3:06pm

Where in NZ is your property

Where in NZ is your property ? Did you actually get above 75% above what you paid or was it just a valuation

by Chris_j | 05 Jul 10, 8:27pm

Accountant, that property was

Accountant, that property was 400m from Otago uni.

Paid $190k in end of 2005 settled 2006. Was rented at $300pw, re-rented 2006 at $430pw, now $525pw, not a single day vacancy since I rented it the first time. Will probably try $540 for 2011.

Yields are 7-8% in that area at the moment which gives a current value at $350-400k on $540pw. But I won't be selling it.

It's not the best returning deal I've done, but it does show how a good straight forward investment purchase can be very successful.

(By the way, the highest (rental) return I've had on a straight purchase without doing anything major, is an 80%PA return (today) on a 2001 purchase - the property has already paid me back about 4 times the original price and it's still paying me which of course is the power of property investment).

by Steven | 05 Jul 10, 4:42pm

"as inflation is the most

"as inflation is the most likely mid-term outcome."

Depends on what you mean by "mid term"....for me I see at least 5 years of flat or more likely down (deflation) followed by another 10 down more or scraping along at that bottom...but it cold be 20 years....

Put it this way, IMHO prices are not likely to rise much for at least 1 year probably 2...and are far more likely to drop in that time, therefore selling out and jumping back in later doesn't seem a huge risk of loss...staying in does....

but its good ppl can make that choice.

regards

by dick | 05 Jul 10, 8:01pm

It is valued about 75% above

It is valued about 75% above what I paid. Have you ever heard such rubbish. It is only worth what the market will pay at any given time and you need to get an unconditional offer settled on it today before you can even hazzard a guess. The market is in seriously bad shape as evidenced by the B and T figures put out today. They can only get worse so forget about self valuing your properties. Funny how PI's talk about return but always mention worth. That is their true focus as they will have to sell one day and the worth is diminishing by the day.

by Chris_j | 05 Jul 10, 8:45pm

dick (well named), Property

dick (well named),

Property does have an inherent value, 75% above for that particular property is fairly conservative.

As a developer/trader (a tax payer) as well as investor I sell a fair amount of property and am totally realistic in my pricing. Others may not be, and others still, may price their assets unrealistically low, which leaves me the opportunity to "arbitrage" those assets and turn a profit.

A value 75% above purchase is actually most unremarkable. The highest capital gain I've had (registered valuation versus purchase price) was 6333% for a piece of waterfront (I'm sure that will get some heckles). The highest capital gain on a property that I have sold was 1084%.

by Anonymous | 05 Jul 10, 10:25pm

This commentator is really

This commentator is really The Man/RichpT just trying to stir things along. We would all have to be on drugs to believe this nonsense.

by Chris_j | 06 Jul 10, 12:05am

Afraid not anon. They are

Afraid not anon. They are bona fide examples, and not particularly extreme examples either.

For instant the waterfront property (Otago Harbour) was purchased for $3000 in 2003 and valued at $190,000 in 2007. I know that there will be people out there who picked up land for under $1000 (particularly in Otago, Central Otago and Southland who achieved similar gains). That type of purchase isn't the basis of sound property investment, but when people are virtually giving you a nice block of land it's hard to refuse.

Purchasing good income producing houses with strong positive cashflows are the basis of sound investment.

I was telling people (friends etc) back in 2001/2002 how fantastic it was buying properties particularly in the South (even ChCh) at 20-30%PA gross (cashflow) returns.

Rents on those types of properties (if maintained) doubled and yields at least halved, giving not less than 4 fold increases in value.

Personally I'm not buying that type of property now as better quality properties are often capitalised at not much lower yields.

The moral is to buy value, but target quality. Only consider growth assets (land etc) if it's at a reasonable price. All very much like equity investing.

by 28 (now 29) year old | 05 Jul 10, 12:44pm

Got to love the interest rate

Got to love the interest rate wars

by Anonymous | 05 Jul 10, 12:51pm

Yes. When nobody is buying

Yes. When nobody is buying property the banks have to do SOMETHING to con the punters into taking out their rip-off mortgages.

And with all the property set to go mortgagee soon, the banks need as many suckers as they can get out there looking with hot new mortgages in their sweaty little hands.

by Anonymous | 05 Jul 10, 2:10pm

My view is that the banks

My view is that the banks want to lock in some of the punters who are enjoying the floating rate by dangling a half decent carrot. Don't expect to see these rates hang around for too long.

by Wally | 05 Jul 10, 2:14pm

I reckon most of the punters

I reckon most of the punters want to lock up the bankers and dangle them from meat hooks!

by CuriousJoe | 05 Jul 10, 2:38pm

Is this what they call

Is this what they call "DEFLATION"

by Chris | 05 Jul 10, 2:59pm

No. Not at all. Are you

No. Not at all. Are you serious?

by jwood | 05 Jul 10, 3:01pm

So far all Bernard’s

So far all Bernard’s predictions went terribly wrong, he is looking good for another annual “dickhead crystal ball award”

by Steptoe (Steps) | 05 Jul 10, 3:48pm

by Anonymous " My view is

by Anonymous
" My view is that the banks want to lock in some of the punters who are enjoying the floating rate by dangling a half decent carrot. Don't expect to see these rates hang around for too long."

I agree, its about marketing and market share.

by jwood
"So far all Bernard’s predictions went terribly wrong, he is looking good for another annual “dickhead crystal ball award”

A guy gets thing pretty close to the mark most times in a volatile market, gets it a bit wrong once in the while , which is to be expected by any reasonable person...and you think THEY are a "dickhead" ?

"insults are when one runs out of intelligence"

OK so what where your predictions? Did you even have the gumption to publish them?..Did you even have any?...

Warning before you come back and ask about mine...do some homework before opening you mouth to change feet.
Im pretty good at being right over the last 40 yrs.. not 100% either, thats why we are only coming off our 5 yr 8.5% term end of the yr..on the other hand the screw up has cost us under 3K over that period of time...Pocket money.

by Brent | 05 Jul 10, 7:06pm

I am very disappointed that

I am very disappointed that Bernard Hickey banned one of the bloggers on this site.
I found The man to be very pro property but he seemed to know what he was talking about and his comments were always amusing and worth reading.
I am sure that interest.co will be the worse for his early demise.
Is Interest.co only for people who agree with you.
You may wish to read the other bloggers on your site to see the abuse that is being directed at people who invest in property.
ARE THEY GOING TO BE BANNED AS WELL?
BRING BACK THE MAN.

by paulr | 05 Jul 10, 9:09pm

5 year slashed by 75 base

5 year slashed by 75 base points
This seems to be biggest single reduction ever. Just when there is glimmer of hope that house prices might come down a bit, banks again come to rescue

by Middleman | 05 Jul 10, 9:33pm

paulr Wouldn't get too

paulr

Wouldn't get too depressed just yet. Time used to be when a fall in the cost of money would bring buyers back to the market but we live in uncertain times and people are extremely cautious - with good reason. Fear of price increases used to pull in the punters and trigger silly buying decisions but now it's fear of price falls that has people scared and staying away. She's a new world order and if people don't agree they might like to ponder the unique phenomenon of banks and politicians, normally heavily invested in the status quo and deeply committed to avoiding anything even hinting at a downside , openly rattling the house price deflation cages of their own constituencies. Albeit mildly, but tellingly, for all that.

by G.A.B. | 08 Jul 10, 9:57am

It's going to take a lot more

It's going to take a lot more than that to get the punters gambling on houses again. That old magic is GONE. After a couple of years of hearing all the bad news and unpleasant facts, the majority are trying to clear their debts and build up some savings. Also, they have heard Bludger Billy state for the record that he thinks house prices are just too damn high and they've seen this government make moves towards cooling the market.

The whole investment housing fad is dead. Those crazes never last all that long anyway. In my opinion the only thing which could get people out buying up property once more is if we all get big pay rises and what do reckon are the chances of that happening in this life? Only the bloody idiots are still spending money they don't have like there's no tomorrow because everyone knows now that it's already tomorrow.

by wood | 07 Jul 10, 12:28pm

National ANZ just dropped

National ANZ just dropped term deposit to 4.7%. It's all downward again, and mortgage sales are up. Seems like a good time to hunt for a property bargain again.

by Anonymous | 07 Jul 10, 12:35pm

Yes, let's all be morons like

Yes, let's all be morons like you!

by Wally | 07 Jul 10, 12:43pm

Tisk tisk...remember the rule

Tisk tisk...remember the rule anon...
... and listen to others, even to the dull and the ignorant, they too have their story....

by Alan | 07 Jul 10, 12:41pm

Not according to their

Not according to their website.

by Anonymous | 07 Jul 10, 12:49pm

Interesting claim because I

Interesting claim because I haven't found any corroborating evidence for it.

Plus it should be borne in mind that if you have $250k or more in savings you can negotiate a much more favourable rate.

by Brucie | 07 Jul 10, 12:52pm

At ANZ it's above $100,000.

At ANZ it's above $100,000. But I think it is $250,000 at National.

by wood | 07 Jul 10, 12:38pm

Wally, you could at least use

Wally, you could at least use your own name

by Wally | 07 Jul 10, 12:41pm

Who said I didn't!...

by Wally | 07 Jul 10, 1:30pm

you said

by Wally | 07 Jul 10, 2:00pm

What a Wally

by barry | 07 Jul 10, 1:40pm

Morons are people like you,

Morons are people like you, who are waiting since 90s for house prices to come down, full of envy and no sense of humour

by amalgam | 07 Jul 10, 1:55pm

House prices are coming down

House prices are coming down and will decrease even more.

That's because current prices are completely unsustainable.

Savvy people knew it was coming.

The residential property market was talked-up and then the only prop it had -- out-of-control mortgage lending -- was kicked out from under it.

See, the people so enthused with the housing bubble were mostly the same people so against "socialist ideals" such as a fair wage in the time of ever-increasing prices.

You morons quite simply shit in your own nest in so many ways.

It's why the rest of us are pissing ourselves laughing at you.

by Anonymous | 07 Jul 10, 2:07pm

Fair to say they will be

Fair to say they will be dropping like a stone and the pace will accelerate as time goes by. The smart ones were those who bought early and sold by 2007 and reinvested the cash in TDs or even just left it in a regular savings account. Even people who are mortgage free are going to be burned simply because the value of their property will eventually fall back to those of the '90s and will stay there for a long time. Retiring baby boomers hoping to cash out bigtime on their property investments are going to be totally shafted.

by poor loser | 08 Jul 10, 12:06am

This seems to be most bizarre

This seems to be most bizarre comment ever, and I’ve seen a lot!

by Anonymous | 08 Jul 10, 9:46am

Your user name is entirely

Your user name is entirely appropriate.

by Gareth Vaughan | 07 Jul 10, 2:25pm

Attention Barry, Amalgan,

Attention Barry, Amalgan, Anonymous and anyone else calling people morons,

Let's please stick to playing the ball and not the man or woman.
Cheers.

by Anonymous | 07 Jul 10, 2:46pm

HE STARTED IT!!!!!!!

by steve | 08 Jul 10, 8:43am

We all know what effect

We all know what effect interest rates have on house prices, and rates are free fallin'...

by gordon | 08 Jul 10, 9:21am

Spoke to a Harcourts agent

Spoke to a Harcourts agent yesterday in a thriving provincial capital and he said the housing market had gone completely dead in the last three weeks. Spoke to a Westpac lending manager on the weekend and she said the lending was slow. BNZ has laid off some staff here also. There is no point in banks having their money sitting in the Bank itself. If it is slow, make it more attractive by making it cheaper to borrow and it might then get busier.
This is just the beginning of a long slow drop in values as confirmed by Westpac last week.

by Wally | 08 Jul 10, 9:28am

You're on to it gordon..the

You're on to it gordon..the peasants have finally realised the economy is going nowhere fast for a very long time and property is heading down down down...so why borrow to buy when the stuff will be cheaper in 12 months...it does take a while for the truth to sink in but once it has the attitude will harden into a "bugger it I'm pulling me head in" position.

by steve | 08 Jul 10, 10:01am

Westpac confirmed last week

Westpac confirmed last week we have serious housing shortage

by G.A.B. | 08 Jul 10, 10:07am

And then later Westpac

And then later Westpac claimed housing prices were going to fall. (And they are falling, but they were falling before Westpac finally admitted it!)

There is no housing shortage at the moment and I'm pretty certain there has never been a housing shortgae. Right now there are a lot of houses for sale but no one seems interest in buying any of them, not now that almost everyone is more intent on paying down debt and building up some savings.

The government has made it pretty clear they plan to cool the housing market which means all the tax-grab incentives will eventually disappear. So we have lots of property on the market at high prices but noone willing to buy them and banks like Westpac unwilling to loan money like they used to and then there's the fact that most people's incomes have not been keeping up with the COL. So who is going to buy these houses?

Shortage? I'd say there's a surplus! And it's only going to get bigger for quite a long time.

by Anonymous | 08 Jul 10, 10:14am

Agreed. Nowhere have I seen

Agreed.

Nowhere have I seen any evidence whatsoever to support the claim of a residential property "shortage".

What I do see is solid evidence - bordering on proof - of a residential property glut.

Have these people making claims of a "shortage" even talked to anybody besides their pet mortgage broker and real estate agent?

Absolutely *nobody* other than the most rabid PI is interested in "investing" money into property any more, even if they had or could get the money to do so.

The residential property bubble has burst. Maybe the pop was so loud that it instantly deafened those closest to it, which is why they can't hear anything anymore, including the raucous laughter.

by Anonymous | 08 Jul 10, 10:09am

"by G.A.B. | 08 Jul 10,

"by G.A.B. | 08 Jul 10, 9:57am

=====================================================

Best comment yet.

by Just Looking | 08 Jul 10, 10:15am

Went to Orewa yesterday, for

Went to Orewa yesterday, for the first time this year. Most of the properties we ran a ruler over last year are still for sale! This time though, the Real Estate office windows don't say "Auction' or "Price on Application", many now have prices next to them...some twinked out, and a new one overwritten.

by Anonymous | 08 Jul 10, 10:59am

Maaaate, ya gotta get in

Maaaate, ya gotta get in quick, before it's too late!!!!!!!11

LOL!

by Gavin Jones | 08 Jul 10, 11:02am

There is a lot of talk on

There is a lot of talk on this site about house prices falling or from the other viewpoint house prices rising.
However houses in themselves long term always depreciate, it is only the land that they sit on which increases/decreases in value. That is why after a period of time many houses get demolished as the land has increased in value to such a point somebody will buy it to build a new home.
Apartments will normally not share the same increases in price as a stand alone house simply because they have less land.
With the current increases coming through in building specifications, building materials, GST etc I fail to see how the cost of building a house is going to decrease. Therefore all this talk about the prices of houses should actually be about the price of land which currently I would agree has decreased aprox 50% in the Auckland market.
However Land is something that there is not a lot more being made and with an increasing global population in the long term I still beleive property is a great investment, however you need to be very wise in the amount you borrow to purchase it.
Personally I will watch to see what prices are in ten years time. Again I expect them to have at least doubled. Comments on house prices/values have been around for years and the fearful continue to do nothing untill it is to late. Property has failed to let me down over 50 years.

by amalgam | 08 Jul 10, 11:32am

Aaaaand again with the

Aaaaand again with the imbecilic spruiking from desperate PIs and RE parasites...

Fundamentals need only apply.

*Average incomes unchanged for years relative to CoL.

*Property prices at all-time highs (although they are rapidly falling now).

*Banks no longer lending funny-munny mortgages.

*Immigration way down, possibly negative.

*Rapidly-aging population looking to downsize property portfolios, or simply dying off.

*Govt/MoF determined to end PI rorts and (re)balance the economy.

*DEBT TOO HIGH.

So you have an indebted population on low average incomes facing a growing surplus of property that is still overpriced and with few, if any, borrowing options.

The only things which can alter the current state of affairs:

*Massive positive immigration spurt growing demand. (Highly unlikely.)

*A return by banks to the unconstrained and almost criminal lending practices of the bubble era. (Again unlikely.)

*Huge income increases across the board which exceed the CoL's bite. (So unlikely it can be said to be impossible.)

*Govt/MoF going mental and creating ludicrous new PI tax rorts. (Highly unlikely, although you never know with politicians...)

*Kiwis paying off all their debts and growing vast piles of savings. (It has to be said that NZers are working toward this goal now, but it's a long way off for most.)

*Prices falling so far and so fast that almost everybody is able to afford a home of their own once more. (This looks a lot more likely.)

Spruiking just doesn't cut it anymore.

Only the fundamentals (see above) count.

The fundamentals are HEAVILY loaded against what's left of the bubble, and indeed, caused the bubble to burst.

But you just go on telling yourself and anyone you can trap in a room with you that "THERE'S NEVER BEEN A BETTER TIME TO INVEST IN PROPERTY!", and "YA GOTTA BUY NOW, BEFORE IT'S TOO LATE!" while we sit here and quietly chortle.

by Gavin Jones | 08 Jul 10, 11:41am

Amalgan: I disagree with you

Amalgan: I disagree with you in regards immigration. With our ageing population, and may I add current high abortion rate, one of the components that we will be seriously short of is workers.These will have to be imported and we will be competing against many countries that will actually be in a worse situation than ourselves. (Just look at Europe)

by Anonymous | 08 Jul 10, 11:46am

LOL! And no doubt you are

LOL!

And no doubt you are praying for a war or disaster somewhere overseas to cause a flood of wealthy refugees to land in NZ and buy up all our property.

Instead of constatnt spruiking and wishful-thinking, how about you try a dose of logic and reality.

by Pussy | 08 Jul 10, 11:44am

Perhaps The Man was right

Perhaps The Man was right after all!

The Crockers Market Research Report for July, just out, says in the article "Rental prices go their own merry way"..."the May figure for three-bedroom rentals (is) rising especially strongly."

After some comparisons with the rest of New Zealand, the article states "...Does this indicate a shortage of rental properties in Auckland? At Crockers we would be inclined to agree that's what the market is telling us, as recently the number of vacant properties available in our portfolio reached an all time 6 year low of 0.83%".

by Anonymous | 08 Jul 10, 11:49am

You should refinance all your

You should refinance all your investment properties and then race out and buy more! more! more!

What could possibly go wrong?

LOL!

by Pussy | 08 Jul 10, 12:48pm

I'll ignore the sarcasm and

I'll ignore the sarcasm and suggest Crockers report could indicate a turning point in the residential rental market.

Some commentators have been saying for months now that there is a shortfall in the number of houses are being built; perhaps the Crockers report is now showing this.

An early indication perhaps?

Regards.

by amalgam | 08 Jul 10, 12:55pm

The only people claiming a

The only people claiming a shortage exists are those who will benefit if people believe them.

There is no shortage, and never has been.

The growing number of available properties on the market suggests that rents will actually have to decrease, if landlords are to get and keep tenants.

The fact is that the very fabric of the "investment" property fad is fast unravelling.

Refer to that list of fundamentals above if you *still* cannot figure out why it's happening.

by Pussy | 08 Jul 10, 1:20pm

Thank you for your reply

Thank you for your reply amalgam.

One of the "fundamentals" in the report is that their vacancy rate is low. Does that not indicate that what property there is available to rent is, almost, all taken up and there isn't much spare capacity.

Rising rents at the same time further suggest that the market for rentals is under-supplied.

by Anonymous | 08 Jul 10, 1:24pm

If you think the current

If you think the current property surplus is high, you ain't seen nuthin' yet. Lots of people selling, nobody buying. Come spring time there will be a lot more people trying to sell, and even fewer people interested in buying.

by Your name: | 08 Jul 10, 5:13pm

I thought listings were

I thought listings were dropping?

by Gerald | 08 Jul 10, 11:45am

The thing that most people

The thing that most people are missing in this market is the pass is not a precusor to what is going to happen in the future...Just look at the demographic problem in the west. We have had 50 years of high inflation that pumped up prices, but what new generation people can pay a million dollars for a property or average price on the shore of $500k evn if they can save the deposit, which i don't think they can, they cannot service the debt, with new property less will be built as we are seeing and cost of new property does not necessarly equal value.
we are going to see less family formation people staying with parents or sharing houses as groups. The out look is not good for the future for prices to be pumped up, that game is over.

by Mickey Savage | 08 Jul 10, 11:45am

People are paying over

People are paying over $500,000 for single house sites in central Auckland suburbs then removing/demolishing the old decripit bungalow and building new!

Housing NZ plan to build hundreds of new homes and sell off one third of their old ones - Govt are the biggest residential landlord with 69,000 state houses and also biggest farmer with 100 Dairy farms owned by Landcorp. On top of this Govt spending billions bailing out leaky home owners and insulating homes on a subsidised basis. Where is all the money coming from?

by Wally | 08 Jul 10, 11:52am

Billion a month Doubledip is

Billion a month Doubledip is the 'sauce'. It's a contest Mickey to see if he can get Noddy into the gunsights of the bond vigilante army. My munny's on Bill dropping us in the swill.

by Anonymous | 08 Jul 10, 11:54am

As long as Dippers gets

As long as Dippers gets richer, he'll be happy.

by Gerald | 08 Jul 10, 11:47am

Deflation is on the

Deflation is on the way>>>>>.!

by Gerald | 08 Jul 10, 11:49am

Yes remember the Govt is the

Yes remember the Govt is the people money, we will see socialism come again as individual cannot afford houses on there on, people will become tenants in their own land..............?

by Gerald | 08 Jul 10, 11:53am

Taxpayer Lol

Taxpayer Lol wakeup!...........Lol

by Gavin Jones | 08 Jul 10, 12:12pm

Considering most things rise

Considering most things rise or fall on supply and demand, what are you trying to tell me. That the population will decrease globally? As there will be very little extra land built (obviously some will be reclaimed)and if a population continues to increase, just where are they going to live? If a demand returns for land (It always takes the biggest hit in a market like this, but recovers very rapidly)how can prices not again rise?
You just need to make a choice. Do you want to be a renter or an owner. I'll stay with the owner!

by Leslie | 08 Jul 10, 12:45pm

What they're trying to tell

What they're trying to tell you is that the game has ended.
You're oinning much of your hopes on immigration, even as recent figures indicate that fewer people are moving to NZ and many of those that are have little money. On top of that many people are _leaving_ NZ for whatever reason (probably because there's little future for them here) and if they own property here it's now on the market adding to the glut.
Kiwis love to believe that everyone else wants to live here but it really isn't true and we have to get over ourselves.
All the other points made about the fundamentals are spot on too.
Prices are too high even if they are falling and they certainly appear to be doing just that but they are still too high.
Our incomes in NZ are very low (that's one reason why so many are leaving!) and they are way too low to pay for houses at the prices still being asked by the dreamers.
What hasn't gone up in price in NZ? Not much that I can think of so there's even less spare money about when you remember that incomes for most people are still not far from what they were quite a long time ago.
And yes try and get a 100% mortgage without a deposit from any bank now. That was the only way most people could buy the property they did between 2003 and 2008 but you just won't get those deals any more. Besides with property prices falling why would you even _want_ to knowing that prices will fall much further before long?
If the govt is serious about tackling the absurd NZ economy which is so out of kilter and skewed towards houses then that's another reason not to end up owing money on houses.
But the best point made I think is the one about debt! How many people ahve no debt today? Not just mortgages but hire purchase agreements and credit card debt and overdrafts. We're swimming in debt almost drowning in it.
Really I believe most people now are sick of the debt and they found property investment wasn't the magical thing the real estate industry made it out to be and so they just want to be not working so hard just to keep up with debt.
My goal is to become debt free and save until I know I can survive comfortable no matter what happens and the last thing I want now is even more debt. Every one I know feels the exact same way about their own situation.
Buy property? No thanks.

by Wally | 08 Jul 10, 1:03pm

"how can prices not again

"how can prices not again rise"...ask Mrs Tokyo and you will have your answer GJ.

by Anonymous | 08 Jul 10, 1:12pm

"...how can prices not again

"...how can prices not again rise?"

Who said they wouldn't?

The question you should be asking is "When will prices rise again?"

The fundamentals and the facts all suggest that prices will not be rising again for a long time, especially considering they've only just begun to fall and have a long way to go yet.

Many of those who recently bought property as an investment will be dead before it recovers to the point of being a sound one.

by Steptoe (Steps) | 08 Jul 10, 12:15pm

by Anonymous " ..... Even

by Anonymous
" ..... Even people who are mortgage free are going to be burned simply because the value of their property will eventually fall back to those of the '90s and will stay there for a long time. Retiring baby boomers hoping to cash out bigtime on their property investments are going to be totally shafted."

That has to be rubbish...an ave house in the 90s (and rem that was a very depressed market) advertised around 105K and one would pick up between 80/90K
That same home late 07 valued at 425K, would now sell for 320K
To drop back to 80/90K ....thats a 75% drop from todays value, and an 80% drop from nov 2007...I sdont think so.
If one takes the long term ave at nov 2007 this fundimental indicated the 425K was approx 30% over valued..corrected about 300K... If one takes into account the last 3yrs and the gentle rise in the long term ave, that value would now be around 310/315K.
Which indicates the current sale price only around 20K over valued...either the market will drop a couple more % or remain relatively stable and the long term ave will come up over the next couple yrs.....or a bit of both.

by Wally | 08 Jul 10, 12:21pm

But steps, what would 100K in

But steps, what would 100K in the 90s be in 2010 munny?

by Gavin Jones | 08 Jul 10, 1:24pm

Wally. Yes that's a very good

Wally. Yes that's a very good point. House prices continue a longer term upward trend, simply because money continues to devalue. Money is no longer linked to anything tangable and Governments continue to print it in abundance.
So property prices increase in many cases simply because money devalues meaning that you need more of it to buy a simple house.
However unlike other items that you can buy which also gives increase (like silver or Gold)a house will also generate rental from it.
My Children buy houses and rent them to others while they choose a house they like and rent it for themselves. It simply makes sense.

by Anonymous | 08 Jul 10, 1:51pm

Your whole life is just one

Your whole life is just one big fantasy, right?

by Bob Builder | 08 Jul 10, 1:46pm

House shortage is big problem

House shortage is big problem and will became even worst as it is still quiet in building industry. It is widely expected rates will start diving again which will help improve situation in a short term. Builders margins are already reduced, there is no more room to cut costs. GST is going up, construction material, timber in particular, Council fees and Code requirements also add on.

by Anonymous | 08 Jul 10, 1:49pm

Bollocks.

by Anonymous | 08 Jul 10, 1:52pm

Anonymous why just say

Anonymous why just say Bollocks. Give some reasons for disagreeing with Bob Builder

by Anonymous | 08 Jul 10, 2:01pm

Can't you READ? Have you seen

Can't you READ?

Have you seen any of the other replies in this thread, and many others, which spell it all out in minute detail?

There has never been a housing shortage. There is no housing shortage. There is unlikely to ever be a housing shortage.

Desperate PIs, speculators, mortgage brokers, builders and everyone else who has hitched their wagon to the residential housing bubble are desperately determined to convince people of an looming housing shortage crisis because they believe it's their last ditch chance of reinflating the rapidly-deflating bubble.

For specifics, please refer to any of the previous 87 million responses to the ludicrous "ZOMG!!! UNLESS EVERYONE BUYS MORE HOUSES THERE WILL BE A HOUSING SHORTAGE! ZOMG ZOMG ZOMG!!!!!!!!11" claims.

by Pussy | 08 Jul 10, 3:03pm

Anonymous, I read the Crocker

Anonymous, I read the Crocker report which seems to show a shortage of property to rent. Rent prices seem to reflect that.

I agree with Bob Builder.

by Anonymous | 08 Jul 10, 3:06pm

We currently house 2.55

We currently house 2.55 people per household in New Zealand. If that ratio goes up to 3 people per household, we will have an excess of about 100,000 houses, untenanted, using the same logic.

by Anonymous | 08 Jul 10, 3:12pm

We already have a surplus of

We already have a surplus of property.

by Pussy | 08 Jul 10, 3:27pm

Sorry Anonymous, but

Sorry Anonymous, but constantly restating that we have a surplus of property does not make it true.

Analysis of the situation is clearly showing things are changing.

by Your name: | 08 Jul 10, 3:45pm

We have a surplus of property

We have a surplus of property in places no one wants to live. In South Auckland there are plenty of bargins and surplus properties in places like Manurewa, Flat Bush and Mission Heights. Go to places like Remuera or Epsom and it's a different story.

by Anonymous | 08 Jul 10, 3:56pm

The property market shill's

The property market shill's interpretation of data will always favour the property market, as we see here.

The fact that their interpretation flies directly into the face of ALL FUNDAMENTALS AND FACTS doesn't appear to concern property market shills.

Of course, that's because you shills have spent the better part of a decade convincing yourself that you can wish a market into the stratosphere.

At the end of the day it doesn't matter what you hope and choose to believe, because there's very little hope of reinflating the property market bubble, and those nasty fundamentals will always prove you painfully wrong.

by Anonymous | 08 Jul 10, 2:05pm

Here's one: "by amalgam | 08

Here's one:

"by amalgam | 08 Jul 10, 11:32am