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Infometrics now sees 4.1% fall in house prices by mid 2011, but then a rebound to 10% annual growth by 2013
Infometrics, which last year forecast a 24% rise in house prices by 2012, now sees house prices falling 4.1% over the next year because of the impact of tax changes, cautious household spending and higher interest rates.
But Infometrics then expects price growth to return to 10% per year by 2013 as incomes and home loan affordability improve, said QBE LMI in its 2010 Housing Outlook report prepared by Infometrics.
“The New Zealand economy is recovering from the global financial crisis and has recorded modest growth, expanding by an average of 0.5% per quarter over the last 12 months. Sustained demand from China will underpin commodity prices and be a key factor in ensuring economic growth over the next three years," said Ian Graham, CEO of QBE LMI.
“Although property prices are expected to be weaker in the near term, consumer spending is expected to recover and real disposable incomes are forecast to rise by 5.6% p.a. over the next two years. The unemployment rate has also stabilised and is expected to fall to 5.3% by June 2011," Graham said.
“The forecast drop in house prices, combined with employment growth and an expected increase in household income will improve overall housing affordability until late 2011. This will make it attractive for home buyers to enter the housing market, particularly first home buyers. Those buyers that enter the market over the next 18 months are likely to see substantial housing price growth, with a projected lift to 10% p.a. by mid 2013."
QBE LMI would continue to support home buyers and mortgage lenders as the housing market recovered, he said.
"We give mortgage lenders the security and confidence to lend to credit worthy borrowers up to 95% Loan to Value Ratio (LVR ) where they have the capacity to service the mortgage loan," Graham said.
Here is more regional detail provided by QBE LMI below from the full report available here:
Related Topics
Auckland
The Auckland housing market has recorded one of the stronger pick-ups in the country over the last year, but given the significant stock of rental property in the region, a considerable adjustment in prices is likely over the next year, with prices falling 6.4% by June 2011. With property in the region being among the most expensive in the country, rising mortgage rates are also set to have a pronounced affect on Auckland’s property market. Even with a medium-term undersupply of property, house prices in the region are likely to be relatively subdued over the three years to June 2013, rising just 8.4% (which equates to a 3.4% decline in real terms).
Wellington
Central government plays an important role in the Wellington economy, and despite a restrained fiscal position over the last year, government spending has still grown faster than private sector spending, aiding the region’s economy and property market. But a tight rein on government spending, wages, and employment is likely to limit economic growth in Wellington over the next one to two years, a factor that will be reflected in a 7.3% fall in house prices by June 2011. By June 2013, house prices are forecast to be 7% above their current level (but down 4.7% in real terms).
Waikato/Bay of Plenty/Gisborne
House prices in Waikato/Bay of Plenty/Gisborne have failed to rebound over the last year, meaning that property in the region is probably less overvalued than in some other parts of the country. Downward pressure on prices is likely to be reasonably limited over the next year, with a 2.8% fall in prices forecast. In 2012 and 2013, the effect on the housing market of high commodity prices and strong growth in export incomes will become apparent, pushing up property values. House prices are forecast to increase a total of 16% between June 2010 and June 2013 (a rise of 3.1% in real terms).
Christchurch
The Christchurch housing market is expected to perform similar to the nationwide trend over the next three years, with the mix of urban and provincial drivers providing a similar outcome for the region’s economy as for New Zealand overall. Rising mortgage rates and adjustment to the government’s tax changes are expected to lead to a 5% decline in house prices by June 2011. But economic growth is forecast to improve in 2011/12, and combined with some shortage of housing, this will contribute to a forecast 12% rise in house prices over the next three years (a 0.4% decline in real terms).
Otago/Southland
The Otago/Southland housing market was one of the last to slow during 2008 and 2009 and has seen little rebound in house prices over the last year. However, the region’s population growth has been at unusually high levels, and with the prospect of a persistently tight labour market, strong commodity prices, and good economic growth, this population growth may be set to continue over the next three years. Over the next three years, house prices in the region are forecast to be the best-performing in the country, rising 19% in total (or 6.4% in real terms).
Taranaki/Manawatu/Wanganui
Tranaki/Manawatu/Wanganui is another region where population growth has been stronger than normal as a result of international and domestic economic conditions. The region’s population growth is likely to ease as job opportunities start to improve elsewhere, but strong export commodity prices are expected to be a dominant factor in the region’s economic performance. Healthy export incomes are forecast to boost the housing market in the region, with house prices increasing 18% between June 2010 and June 2013 (up 4.9% in real terms).
Provincial Canterbury/Westland
Higher export prices and stronger population growth have led to a rebound in house prices in Provincial Canterbury/Westland over the last year, but this lift is not expected to be sustained as higher mortgage rates reduce buyer numbers over the next year. Following a forecast fall of 3.8% in house prices by June 2011, a recovery in house prices is expected in 2012 and 2013, but the extent of this lift is likely to be limited by good availability of land. By June 2013, house prices in the region are forecast to be up 9.4% on current levels (but down 2.6% in real terms).
Nelson/Marlborough
The Nelson/Marlborough housing market has seen some lift in house prices over the last year, although this increase has occurred primarily in the Nelson area only. Over the coming 12 months, prices in the region are forecast to decline 6.9% in response to rising mortgage rates and the government’s tax changes. However, over a three-year horizon, good economic growth prospects for the region should contribute to a substantial pick-up in house prices, particularly in 2012/13. Between June 2010 and June 2013, prices are forecast to rise a total of 12% (up 0.1% in real terms).
Hawke’s Bay
The downturn in the Hawke’s Bay housing market over the last two to three years has been less pronounced than in many other regions, reflecting the fact that the market experienced less rapid price growth in 2006 and 2007, and so property in the region was not so overvalued. Nevertheless, price falls of 5.3% are forecast over the next year as population growth slows. In 2012 and 2013, strong export meat prices and improving prices for horticultural commodities are expected to boost the region’s economy and feed through into accelerating house price growth. House prices in June 2013 are expected to be 14% higher than in June 2010 (a 1.9% increase in real terms).
Northland
The Northland housing market has been weak over the last two years as the region’s economy has struggled. However, growth is forecast to improve as dairy prices hold up, the region recovers from drought, and stronger export incomes flow through into service sector expansion. Demand for holiday homes in the region is also likely to improve over the next three years. As a result of these factors, house prices are forecast to rise 18% between June 2010 and June 2013 (up 5.3% in real terms).
122 Comments
Can't wait for nest years
Can't wait for nest years report!
" 'Those buyers that enter
" 'Those buyers that enter the market over the next 18 months are likely to see substantial housing price growth, with a projected lift to 10% p.a. by mid 2013.' QBE LMI would continue to support home buyers and mortgage lenders as the housing market recovered, he said."
Now, that's what I call a disinterested observation!
Who prepared the Infometics
Who prepared the Infometics report this year? Was it Gareth Kiernan ( last years spot-on guesser) or someone new having a go?
one of his kids using a
one of his kids using a crayon I reckon...
and they are still wrong....
regards
Actually I seem to recall
Actually I seem to recall they made this call when everyone else was forecasting a 30% fall (prices were still falling at the time). Considering the good reason's for adjusting their view (namely the budget tax changes) I think they did pretty well.
**Test registration**
**Test registration** Nope..... My name is 'Access Denied' The name is already taken etc., even though I've just registered!
Please email
Please email bernard.hickey@interest.co.nz and amir.bashir@interest.co.nz if you registered and then tried to comment and then were locked out.
cheers
Bernard
Weird how they think all of
Weird how they think all of the provincial centres will go up while the big cities will go down (in real terms). I think it will be the other way around...
That assumption would be
That assumption would be based on the premise that the rural sector will lead any recovery as has happened in the past.
Nearly, Jimbo; It's just that
Nearly, Jimbo; It's just that everything is going to go down.
Notice how little response
Notice how little response there has been to this report.
Has it not painted a negative enough picture?
For those that are hoping for prices to drop and continue to drop then you are out of luck aren't you, or do you not agree with it?
Yes sales numbers are down but if you want to ever own a property before prices get too high and Banks won't lend to you, I would suggest having a look at some "Open Homes" this weekend.
No one knows exactly how long the market is going to be slow but there is one guarantee prices will continue to get higher.
We haven't repsonded as we
We haven't repsonded as we can't get in! Have you registered your name yet The Man?
test 6. Nope. *N/A*
test 6. Nope. *N/A*
No and I probably won't. If
No and I probably won't.
If someone else uses it then so be it.
I get bored reading most of the doom and gloom but it has been a real eye opener as to how so many in this country think.
A more positive attitude wouldn't go amiss !!!
We can all improve our lot in life with a bit of effort.
Yet you still comeon this
Yet you still comeon this site all the time with your crap because you are so scared.
A more positive attitude like
A more positive attitude like getting one's A** off idiotic cashflow negative property holdings and doing some actual useful work and investment in actual infrastructure or value adding business?
"Infometrics, which last year
"Infometrics, which last year forecast a 24% rise in house prices by 2012..."
Enough said.
Every fundamental in existence bodes unwell for property.
There are many good reasons why prices shall to continue fall for a long time, but not even a single good reason why they should do anything else.
"There are many good reasons
"There are many good reasons why prices shall to continue fall for a long time, but not even a single good reason why they should do anything else."
Amalgam.. give me 5 reasons why prices will "continue to fall for a long time".
Base your feedback on fundamental reasoning. Not rehashed guesstimates.
How about the following
How about the following reasons?
- Banks aren't lending the way they used to. Since their previous lending levels were the reasons prices climbed so high (because then people could pay any price) there is now nothing to sustain them.
- Housing glut. There is a large amount of property for sale, far more than there are buyers. This is going to increase dramatically in spring.
- Immigration numbers are falling while more Kiwis shoot the gap to Australia.
- Aging population.The ratio of elderly to young workers is steadily increasing. Lots of people will be selling their properties as they chase the increasingly elusive capital gain-funded retirement. More and more oldies trying to sell, fewer and fewer young buyers about.
- Debt. There's a lot of it about, much, if not all, property debt. The days of laughing debt off and caually whipping out the credit card to buy more debt are over.
- Unemployment. High and rising.
- Interest rates. PIs have a mindset of interpreting interest rates - any interest rates - as being "GREAT for property buyers!!!!!!"...but sadly they are almost always wrong.
- The rapidly increasing cost of living. The price of almost everything you can name has gone up a lot in recent years.
- And the clincher, which is directly related to the very first point, as well as most of the others: AVERAGE INCOMES IN NZ HAVE BARELY INCREASED IN A DECADE, IF THEY HAVE INCREASED AT ALL.
Low incomes, reduced availability of finance, high-debt levels, high prices of everything (including property), more leaving the country and fewer arriving, property glut, etc etc etc.
Not looking good for the PI market at all.
-- Banks aren't lending the
-- Banks aren't lending the way they used to. Since their previous lending levels were the reasons prices climbed so high (because then people could pay any price) there is now nothing to sustain them.
Banks reluctance to lend is short-term. They are businesses that must profit.
-- Housing glut. There is a large amount of property for sale, far more than there are buyers. This is going to increase dramatically in spring.
The number of properties for sale today is irrelevant. The number of buyers is irrelevant. As you said yourself, the reason, banks are not lending.
Why will this supposed "housing glut" increase dramatically in Spring?
How do you detemine a "housing glut" when construction has been at a standstill for more than 2 years while the population continues to increase.
-- Immigration numbers are falling while more Kiwis shoot the gap to Australia.
In the past immigration numbers have fallen while at the same time the property market was on the rise.
-- Aging population.The ratio of elderly to young workers is steadily increasing. Lots of people will be selling their properties as they chase the increasingly elusive capital gain-funded retirement. More and more oldies trying to sell, fewer and fewer young buyers about.
Based on what data??
-- Debt. There's a lot of it about, much, if not all, property debt. The days of laughing debt off and caually whipping out the credit card to buy more debt are over.
Provide something substantiative to support this statement i.e. weighting of property related debt in NZ versus other forms of outstanding debt.
Again, the only reason debt is not being flauntered is it's currently difficult to obtain. This will soon change.
-- Unemployment. High and rising.
NZs unemployment rate was 7.1% it's currently 6.8%.
-- Interest rates. PIs have a mindset of interpreting interest rates - any interest rates - as being "GREAT for property buyers!!!!!!"...but sadly they are almost always wrong.
Real estate values in NZ have traditionally risen alongside rising interest rates.
-- The rapidly increasing cost of living. The price of almost everything you can name has gone up a lot in recent years.
The cost of living in NZ has always been high based on median income. Which will continue until there's a drastic change in economic policy.
-- And the clincher, which is directly related to the very first point, as well as most of the others: AVERAGE INCOMES IN NZ HAVE BARELY INCREASED IN A DECADE, IF THEY HAVE INCREASED AT ALL.
In the past decade NZ's median income has risen well above inflation. And many other countries. Annualized between 7-9.5%. Where household debt in the past decade has risen ~4.5%.
-- Low incomes, reduced availability of finance, high-debt levels, high prices of everything (including property), more leaving the country and fewer arriving, property glut, etc etc etc.
NZ's median household income in 2006 (last census) was ~$63,000. In 2004 it was $56,000 and 2008 it was ~$79,000.
Restricted availability of finance is short-term. Criteria will remain a factor over the next 2 years, but rest assured banks follow the same script.
High debt levels are relative. They have not changed in relative terms in 50 years and more than likely will not change.
High prices are relative. What may seem high to you isn't necessarily a high cost of living for everyone. CPI is below 2%.
Immigration always fluctuates which will continue.
Where's this "property glut". Maybe on your street.
-- Not looking good for the PI market at all.
Today it's not good, tomorrow who knows. I haven't seen any data to support the same climate 12-18 months from now.
Have you?
You should get out there and
You should get out there and buy buy buy all the property you can! Don't waste time haggling over the price, just drool while signing on the dotted line!
YA CAN'T LOSE WITH PROPERTY
HOUSE PRICES ALWAYS GO UP, NEVER DOWN!
YA GOTTA GET IN NOW, BEFORE IT'S TOO LATE!!!!!!!!!!
And watch your investment
And watch your investment drop in value by the week but your mortgage payments stay the same like the Fools.
ex ex ex agent. Good
ex ex ex agent.
Good evening.
Green with envy, still I see!!!
Time you get back in.
If you were comfortable with
If you were comfortable with your position The Man you would not be on this site at all. You come across like Olly, very nervous and trying to keep it all going. At least he had the sense to sell all his rentals at the peak. You didn't. Dah.
Anon at 6.32p.m. The truth
Anon at 6.32p.m.
The truth is that I am very comfortable with the position. I have outlined my position previously and still looking at future acquisitions.
But the site has become a bit addictive and I always like to debate something if I don't agree with something that is being said.
I have to wean myself off and I will as weather improves and I can do outside painting amongst other things.
well I cant seem to
well I cant seem to reg....and ive been busy all day...simple, these guys reprted a 24% growth? a few months back....they were gormlessly wrong then and they will be wrong about 10% annual going forward...
My verison, house prices will stagnate for a decade maybe 2, and thats my most positive bet while we have stagflation and thats no better than 20/80....I see an average 4% loss per every year.....or on average, ie 50% lower within 15 years....some ups and downs likely...but a terrible grind down...
Thats the nature of peak oil....ie a negitive oil supply of 2~4% every year while a 2~4% positive demand every year...
Its pretty easy to model...
regards
What planet are these people
What planet are these people from? Property needs to drop by 20% at least before going back to historical norms. 10% per annum growth is ridiculous considering wage inflation is so low. What idiots???
Yes I dont see how that 10%
Yes I dont see how that 10% can be sustained....its just not doable. Or a house doubles in "value" in 7 years.....or so...wages, no way...
I mean wages wont go up by that or actually more to meet that capability, we are already at somewhere like a 7:1 ratio, this suggests way past a 10:1 ratio....way way past...
If I was a betting man I'd say 3:1 way more likely, so either house prices collapse or wages rise by huge amounts due to very high inflation, ie 8~12% per year...that just does not happen.
regards
Although they didn't state it
Although they didn't state it in their scenarios, I can see a scenario where prices could rise 10% and more in 2-3 years. High inflation or hyperinflation would do it. I wouldn't discount this scenario.
I agree it is hard to see this happening in the next 2-3 years but it is a strong possibility further out.
Gee whiz, so there is no
Gee whiz, so there is no need to panic because you'll be making 10% profit by 2013, buy buy buy.
Is the New Zealand public really considered that gullible.
Oh sorry, after inflation that's a 1.something% return.
"Is the New Zealand public
"Is the New Zealand public really considered that gullible."
Absolutely, and with good reason.
Once its starting to go up it
Once its starting to go up it will be hard to catch. Yes we can all hope for the market to crash and then get in, but you'd need to be very good with your timing.
2013 will be like 2003 i guess.
You may think it needs to
You may think it needs to drop, but it won't as interest rates are going to stay low for many years.
The only property that is going to sell cheaply is the property that isn't attractive or the vendors are cash strapped, otherwise business as usual.
Opportunities at the moment which you should be taking up.
Why do you think interest
Why do you think interest rates are going to stay low 'for several years' ( actually I see the OCR going to 0%!). It's because the economy is knackered! No one should have speculative debt; no one. A mortgage on your one and only home, fine, if you can afford it. Other than that, get rid of it!
We have been in recession for
We have been in recession for nearly 3 years which is an incredibly long time, we seemed to be emerging until Bollard stuffed things up prematurely but cant see him being that stupid again until the recovery actually takes hold and is bedded in.
Take into account the tax changes in October and that interest payments attract no GST and the inevitable rebound in confidence (next year) it does look pretty rosy next year. There are some spectacular bargains in Christchurch and its not hard to get a 9% yield here which is great for the long term investor looking to save for their retirement.
I am still upset Weldon was too useless to get Synlait to list.
I'm puzzled by the optimism.
I'm puzzled by the optimism. Are we in New Zealand really immune to what is happening in US and Europe ?
Nah mate, don't ya get it?
Nah mate, don't ya get it? WE'RE DIFFERENT!
This is bollocks. The only
This is bollocks. The only thing I agree with is their prediction of a 4% fall.
As to unemployment being only 5.3% by June 2011 - rubbish. In my view it won't be much lower than now, if at all. Why? Here's why:
1. End of this year we'll get another large bunch of graduates who struggle to land jobs
2. Govt. big project spending is starting to trail off
3. The private development sector is still dead and is likely to be for quite some time
4. Quite a few Auckland Council staff getting the chop in the next couple of months
5. more civil servants getting the chop
6. Retail / service industries still really struggling
As to a 10% p.a. house price rise again by 2013 - also rubbish. Now I'm not predicting anything much more than a 4-5% fall, but I can't see growth being any higher than inflation maximum over the next few years.
As others alluded to, Infometrics cannot be relied upon - their last house price prediction is on a devastatingly wrong path. By 2012 prices are likely to be only up maybe 5% on 2009 prices, rather than their predicted 24%. Out by 20% - that is massively wrong
"Now I'm not predicting
"Now I'm not predicting anything much more than a 4-5% fall, but I can't see growth being any higher than inflation maximum over the next few years."
You haven't factored a key ingredient into your hypothesis - opportunity cost.
There is significant 'dry powder' sitting on the sideline awaiting the green light. If the markets stabilize relative to economic conditions for a solid quarter or two, this capital will be put to work. Which will in turn reestablish liquidity in the global capital markets and confidence in the banking system.
In the US private equity sector alone there is in excess of US$300 Billion committed and looking for a home. Fund managers are under pressure to put this cash to work in order to realize a return, or they risk losing it.
My reference to "relative to economic conditions" means global markets won't be back to normal when the trigger is pulled. By this time sizeable margins (profit) will have been forfeited.
Those who aim for the bottom of any market are typically the underperformers when it's all said and done.
Based on realistic data, not media hype, we expect 2011 will be period of consolidation. By 2012 investors and fund managers will run the risk that they've missed the boat, resulting in a rapid rise in investment activity globally.
Again, a sense of normalcy is not anticipated in 2012, however, real estate and other assets that demonstrate clear capital growth will realize a sharp increase in demand and value.
In terms of NZ's housing sector, I certainly agree any further decline in property values will across the board not exceed 4-5%. In several regions it appears values have stagnated and will not fall below the current median when looking back in 12 months.
In NZ two regions stand out as very opportunistic at this time - the Auckland region and Queenstown district. There are several reasons but it comes back to supply and demand. And if anyone wants to argue this assessment they had better present factual perfomance data to the contrary.
Investors must however stay clear of syndicated transactions and managed apartments offering a guaranteed return (this model has not succeeded elsewhere, and in some countries, including the US, promoting a guaranteed return on such an investment is illegal).
How does opportunity cost as referenced factor into NZ's housing market. In simple terms, as soon as liquidity resurfaces in the global capital markets employment rates will fall, and among other things, interest rates will rise. Banks will loosen their lending criteria to capitalize on an inevitable upswing in demand for mortgages. Or risk profit. Consumers will take the plunge to avoid higher interest rates and missing out on "historic deals". Which ironically will probably be driven by the media.
Don't expect a frenzy of buying in 2011 or maybe 2012, but it will happen. In NZ, the US and elsewhere. And values in some regions will sore above 10% annualized gains for a period of time.
I've read many references on this website to the 70's, 80's, early 90's and great depression. And the reasons why this downturn will replicate or prove worse. The difference between then and now is from an office in the United States we can track offshore trends to identify investment opportunities, updated to the minute, and secure or execute transactions the same day without ever visting the country. The same general principle applies to the many people in NZ and worldwide searching the Internet for property deals and other investment opportunities every minute of the day.
Expect this recovery to have a far more obvious impact when the trigger is pulled.
For those who question my input as a hopeful attempt to encourage rising home values in NZ, for the record, we are not invested in NZ or any housing market. The time I spend monitoring the NZ economy, its markets and the travesties surrounding NZ's finance sector is simply a personal hobby.
Great post ;)
Great post ;)
Matt I think one thing in
Matt
I think one thing in the favour of a 2011 employment jump is the Rugby World Cup - admittedly it will be a temporary effect but don't underestimate the number of hospitality jobs that will be created in the months leading up to that event.
Agree generally with your thoughts though.
Hi BH who is the author of
Hi BH
who is the author of this report please, regards
One flaw in the argument is
One flaw in the argument is rising commodity prices. The MAF predictions are on a US$ of about 50 cents. This is unlikely because the US economy is stuffed. Also when the likes of milk solids increase in price other countries ramp up production. Wage growth will be muted so I don't know where increased prices come from unless we let in lots of foreigners. This of course is of no use to the average working Jo who can't afford a house.
Someone has nicked my
Someone has nicked my name....Scoundrel....
test
test
Well this is my first post.
Well this is my first post. Great site. I am a 44 yr old CEO of a chemical importing co. I have owned investment property but divested in 2004. As investment I now hold mainly overseas equities and term deposits. My take on Nz housing market is it has much more downside than upside if any for the next 10 years. I can not see any increases to prices due to all the points Bernard made a few days ago. I was in the US last year and it appeared to me that not only were house prices much cheaper but the build quality far superior. This in a country that has significantly higher GDP than ours. I feel Nz housing is 20% overvalued and will correct within 1-5 years
Anthony.. we've heard it all
Anthony.. we've heard it all before. Back up your predictions??
Which is it..
"My take on Nz housing market is it has much more downside than upside if any for the next 10 years. "
or
"I feel Nz housing is 20% overvalued and will correct within 1-5 years "
"I was in the US last year and it appeared to me that not only were house prices much cheaper but the build quality far superior. This in a country that has significantly higher GDP than ours"
Your point was?
To Anonymous. Can you not
To Anonymous. Can you not read ?
But to put more simply for you:
I believe property market prices will fall!
I believe that property prices will not increase in real terms for 10 years
I also believe property in NZ is at least 20% overvalued (quite possibly up to 30%)!
I believe that prices will fall by possibly be 20% over next 1-5 years!
Have you even read B. Hickey's latest article on housing prices? Its all in there quite intelligently laid out!
Obviously the point is if a given commodity i.e. housing is cheaper per average unit in the USA and it is also of higher build quality than NZ (i.e. doesn’t rot or leak) then NZ property is even more overvalued than just price / exchange rate comparison.
I am just making observations based on 15 years in investments, including property , deposits , businesses , equities and bonds
Now who are you and what is your agenda ? You seem very defensive about a property market correction? Are you over leveraged?
oh yeah anonymous : all time
oh yeah anonymous : all time record low house sales stats released yesterday maybe, just maybe , back up my outrageous notion that house prices will fall. I know its a very difficult and advanced concept for you to grasp anon but do try. See less demand = lower prices. Its similar to ABC and 123. Surely there is a school near you. Primary education is free in NZ , try it out .
In other words you believe
In other words you believe everything you read.
Your response is certainly not indicative of any experience, period.
Are my comments pro housing, or in support of investing in NZ, No. But the repetitive BS on this website mostly backed by media hype is astounding.
Pull your head out of your ass Anthony.
"Now who are you"
You would be surprised.
The "media hype" was mostly
The "media hype" was mostly around property investment. Think of all those house auction and house fixer-upper shows on TV. Think 'Location, Location, Location', etc.
And of course there were entire sections of daily newspaper devoted to the joy of houses, and to property development, investment and speculation.
What we aren't seeing is much in the way of "media hype" regarding the severe downward correction which must occur (and is occurring).
The media is decidedly quiet on that score, probably because so many within the media believed their own hype and are now over-stretched PIs as a result.
Media hype surrounding
Media hype surrounding forecasts. Bernard included.
I wouldn't call the media
I wouldn't call the media attention hyper; more quiescent
I can't see a huge increase
I can't see a huge increase in house prices in the cities in 2013+ This is because baby boomers will be cashing in and selling off. I can see a demand for coastal retirement areas increasing as, like my parents will probably move to. One house comes into supply in Auckland and one house is in demand at say Cooks beach. And don't forget the boomers who may want to sell their investment properties.
On another note, looking at trade me for Auckland inner west houses recently added seems as there's a lot just come on the market. Most with a fresh look. I wonder why?
DC - coastal retirement areas
DC - coastal retirement areas for boomers sounds good in theory, but surely they lack key medical services that ageing people would want?
Baby boomers will sell!!! But
Baby boomers will sell!!! But only because of the fear i'm spreading through my tabloid of a website. I will use the money i make from the advertising on interest.co.nz to build metalife care facilities in coastal regions. Thanks for the tip.
HA HA HA HA HA.....
Matt in Auck - good point. I
Matt in Auck - good point. I know people who retired to the Coromandel only to find they had to travel to Hamilton for anything other than basic hospital services. They also found that while the beach was a great place to holiday at, it was an expensive and very quiet place to live at. Their kids found it an expensive 'drag' to drive to see them, so they ended up relocating closer to services and family. I also know people who 'retired' to Tekapo and ended up leaving for the same reasons.
Yes all good points - which I
Yes all good points - which I agree with broadly.
A good holiday place doesn't translate to a good place to live full time.
The beaches that are close to reasonable service towns would be more appealing.
Luckily we have a beach house that is on a nice enough beach - not tip top Coromandel - but is only 10-15 minutes drive to a town of 15,000 one way and about half an hour to a town of 40,000 the other.
Fairly bustling during summer, bit quieter during school holidays - DEAD QUIET during other times - almost tumbleweed western style.
That is true so at a guess
That is true so at a guess maybel the retirement coastal area's hub become boom towns providing the services? For example Whitianga would grow to provide services for the surrounds? (Cooks beach, Hahei & Hot Water beach) & Warkworth for the North. (Omaha.....)
I am sure the government is
I am sure the government is keen to build new hospitals near beach resorts!
I am sure the government is
I am sure the government is keen to build new hospitals near beach resorts!
you better study energy.
you better study energy. Ain't gonna happen.
Most of the existing housing stock stays for the duration now. Represents too much embedded energy, not enough left to repace it all.
You don't get growth from here, you get contraction - as presumably do the aging BB menfolk.
Prices may well drop, but so will incomes - they're energy-dependent too.
Theman - if prices went up, methinks Bollard would raise interest rates. Ye cann'ae have both.
O yes, I’m the great
O yes, I’m the great predictor oooweoooweooo
Predicting that I’m doing well oooweoooweooo
I need so much, my predictions are out of touch
I’ve loaned but no one can tell
O yes, I’m the great predictor oooweoooweooo
I drift in a world of my own oooweoooweooo
I play the game and to my real shame
You’ve left me to dream all alone.
"But Infometrics then expects
"But Infometrics then expects price growth to return to 10% per year by 2013 as incomes and home loan affordability improve,"
hahahahaahaa! I take it these people from Infometrics are from mars? Just ridiculous I can't wait, I will save this prediction as I do with all the 'deluded" for 'rub in the face' time like I do with Bollard and the RBNZ
LOL
The people from Infometrics
The people from Infometrics are all good non smoking team players.
Then when the boss says "get the spin going boys..its getting too serious too tell the truth,and because the Government hasn't a ministry of Propaganda ,we will have to stand in for them....Oh and tell the workers their will be free beer tomorow..Tell them also that we realise the price of smokes is too high..and did we make a boo there, because of the appetite suppressants in nicotine ,,they are all dying of Obesity related problems ,and not lung cancer..Yes Yes.. get everyone smoking again because the early onset of that old peoples disease,you know? 'odlstimers disease' which nicotine slows down is cloging up the health system .No! No! Say stupid fat people are cloging up the health system..mmm that should do it i'm off to lunch ".
Their was always a little disorder after a policy change, and by the time the boss poked his head around the door ,just in time for him to knock off for the day ,he smiled as the smell of second hand smoke hit his nostrils ,it was great to see them beavering away long after their knock off time. He thought as his driver picked him up..Boy am I good, I deserved that bonus!.
Where would you live with
Where would you live with petrol @ $4/litre and you had poor health? You have a limited income. You should live near a major town with good medical facilities and public transport. Wellington sounds good. Forget Coromandel.
Ppl in their 60s live out
Ppl in their 60s live out (Kapiti), a decade odd later they want to move next to the hospital....this is why Newton is so popular (apparantly)....
regards
One of Twizel's most
One of Twizel's most notorious rape-'n'-pillage property developers is now demanding that "this bluddy givmint" build a hopspital in Twizel which specialises in care of the elderly.
Why?
Because he's just realised he's a miserable and feeble old bastard living in the middle of nowhere and everybody will dance on his grave when he dies.
The funny thing is that he's the most hated man in the area, and has done nothing for anybody but himself, while destroying many a builder, contractor and all who have the misfortune to deal with him.
Thanks to this man, Twizel is a frozen, windswept dead zone of empty subdivisions, with desolate roads to nowhere, and forlorn streetlights shining down upon little more than some weeds.
Speaking of empty, desolate, forlorn, windswept and frozen...Up the highway, Lake Tekapo village continues to die a slow death, although that's beginning to accelerate these days.
You have to wonder what it was exactly that some people were actually thinking.
Got a name for this dude
Got a name for this dude then?
Clues, if you don't want to name directly?
Yes and im going to buy
Yes and im going to buy Petrol Stations as well... HA HA HA HA
All part of my evil plan for world domination....
Go for it.....petrol stations
Go for it.....petrol stations are pretty worthless without affordable petrol...
The smart ppl should be buying into elec power company shares, and battery makers....
regards
Where can I buy an
Where can I buy an intelligent word processor to interview so I can make predictions just like Infometrics does so well?
Exactly 4.1%? Extraordinary
Exactly 4.1%? Extraordinary to have such a precise forecast .
Interesting to note that the the Dow Jones fell almost as much one day. At that rate there won't be a sharemaket by next month.
I'll stick to property. It may go up and it may go down a few points but at least it's still there for ever and a day.
Poor Olly...you just can't
Poor Olly...you just can't help making yourself look ever more desperate and pathetic.
I just love Infometrics'
I just love Infometrics' excuse that they were wrong because of the tax changes. Bollocks!
Most commentators are of the view that the changes will have only a minor effect. Rodney Dickens (about the only NZ economist that I respect) said the changes were equivalent to about a 1 % hike in theOCR - significant, but not enough to destroy house price growth
The reality is, anyone who wasn't either a dumb, naive or biased economist , a PI or a guy called Ray, could see last year that the only reason housing "recovered" temporarily was due to a major, MAJOR drop in the OCR. Doesn't take a rocket scientist to work that one out.. Nor did it take a rocket scientist to understand that house prices were still way out of whack with incomes. Nor did it take a rocket scientist to realise that the economic recovery would be a very slow grind, offering limited support to house price growth.
Economics really is the dismal science
One does not have to be an
One does not have to be an Economist to see the that cost of living is tough out there.
I hope this does not give property investors the wrong information resulting in an even worse situation for people
The tax changes had a much
The tax changes had a much larger impact on our estimate of fair value than that.
where the hell did they get
where the hell did they get that chrystall ball,i want one
i'm starting to suspect ollyN
i'm starting to suspect ollyN is not the dinosaur we all love to love,namely mantra-chanting olly newland.
identify yourself ollyN or go hide under a bridge with all the other trolls!
'tis me..'tis me . And don't
'tis me..'tis me . And don't forget that dinosaurs reigned for 500 million years so with a bit of luck I will hang around a while yet.
Have to.
Wife and 20 mortgages to maintain.
Olly Newland
Remuera
( the expensive end)
just checked the local RE
just checked the local RE guide in the paper and there's a staggering amount of 4-600K houses for sale with "price reduced" etc and heaps with prices up to 2-300K below their RV.
fascinating to watch...like the smell of smoke in a german nightclub...everyones rushing for the exit..and you know what happens next, don't you?
stop being so cuddly Olly..we
stop being so cuddly Olly..we need to hate somebody and you're a good candidate 'cos we react like a vampire to garlic when we detect any signs of positivity..esp. when it's misguided...like you!
40% fall from in nominal
40% fall from in nominal terms over the next 4 years.
Demand will remain
Demand will remain constrained and prices will stagnate as long as banks are wary about lending and thus restrict the amount of funding for property in the marketplace
If money ever becomes freely available again, if the extremely overpriced inventory has cleared, if inflation moves up a notch or two, then you'll see some upward movement in houseprices.
In about 5 years
I can quite easily inderstand
I can quite easily inderstand the fall, however I do not believe there will be a recovery.
Most prices have fallen and or if not are negotiable. You may see some of ours here in Portugal @ www.livingportugalproperty.com
A friend put a very low offer
A friend put a very low offer on the table for a house in Glen Eden, it wasn't accepted and he's not going to counter offer. It's the only offer the vendor has had on the property since being on the market for two weeks. No other offers at all!
Wow, two whole weeks?
Wow, two whole weeks?
Did you remember to sell the
Did you remember to sell the house today? Aussie
http://www.prosper.org.au/2010/08/10/did-you-remember-to-sell-the-house-...
Interesting paragraph in your
Interesting paragraph in your post HR.
"The Boomers will be financially ruined, their plans of spending a third of a lifetime playing golf erased. Retirement will be spent writing very angry letters to the media and their MP.
Gen X will remain stuck in their starter homes, suddenly worth less than the mortgage.
Gen Y will be able at last to buy. But they wont – because the price falls will go on and on for years.
Who benefits from high house prices? No one really. A price bubble can only leave regrets: ‘If only I had sold at the peak!’
tets.PIN change.
tets.PIN change.
Good news
Good news here
http://www.nzherald.co.nz/nz/news/article.cfm?c_id=1&objectid=10665737
A new carport, verandah and rent rise this weekend
One should use the same
One should use the same paradigm to filter statistics from quasi government bodies as we once used when switching over from Imperial to metric - double it and add thirty.
Oh dear how funny...some
Oh dear how funny...some small minded worm has taken a liking to my name...no matter...an Oh is as good as an Ay. Let's see if "small minded" is up to the task
Did infometrics even think
Did infometrics even think about the crunch of credit when making their predictions?
informetrics accidently put a
informetrics accidently put a dot in the middle.
It's going to be
It's going to be double-dipping recession soon. keep that cash in case you need it.
Yummmmm
Yummmmm Gingerbreadmen...mmmmmm....as for the dip...we are still in the first one
Thta's better! The 'save'
Thta's better! The 'save' button has re-emerged, Thx.
Nope. I'm unauthorised again.
Can't "reply" to your post,
Can't "reply" to your post, Wolly. Had to make a 'new' one.
Oooo...'.edit' ! It's getting better.
yeah it works
yeah it works
yeah, it works
yeah, it works
Testing, Reply option. "The
Testing, Reply option.
"The name you used belongs to a registered user". Better stick to Anon, I guess.
Thx, Bashir. I have used new
Thx, Bashir. I have used new password and got this far! Will keep testing. But there is still no "Save' button to send this reply. What do I press to send? Enter just downs a line; Clicking in the greay area above this comment seems to work, followed by enter.
Trying'edit' and still no "save"
Grey worked again
Interesting problem. Looking
Interesting problem. Looking into it now.
Cheers
Bernard is adjusting to the
Bernard is adjusting to the new fiscal paradigm. Soon there will be but one comment, en masse, at 10 past 10.
Big saving on screen space.
Watch this and a lot of stuff
Watch this and a lot of stuff will make sense....
http://www.youtube.com/watch?v=vT1UnGS91BY
This documentary was made 2 years ago. The FSA is about to ban self-cert mortgages in UK, and by its own estimates, 43% of new mortgages are self-certified. Whoops!
ps...the documentary in
ps...the documentary in continues in 2 extra parts.
Appalling. According to the
Appalling. According to the captions that programme was made in Oct 2003 - 7 years ago! and the madness was ignored. As it shows "Nice ( honest) guys finish last". And we wonder why society has become a dog eat dog one.
http://www.landlords.co.nz/bl
http://www.landlords.co.nz/blog/making-sense-of-current-house-prices
what the land lords are saying
"Looks more like a case of
"Looks more like a case of batten down the hatches and ride out the storm for most of us.". Seems like the posters on that site are getting the message, too!
they won't be biased will
they won't be biased will they.
NA - I've been making yearly
NA - I've been making yearly representations to my local Council (the DCC) since about then - actually since we went past 'Peak Light Sweet Crude', in '05.
There has been a reporter at every one of those submissions, and they (my submissions) clearly pointed out that ratepayers would have trouble repaying debt in the future - in our case, for a stadium. (I don't mind a society needing essentials, water, sewerage, etc, but even debt for those is in trouble. Ego-trip projects simply shouldn't be on the table.
Between the following brackets, is everything the ODT has reported of that, including evaluation, refuting, or straight reporting of what was said. ( ).
Recently, an Associate Prof of Energy Studies, made a similar presentation to the Council-staged 'Dunedin Forum'. Growth is based on energy, energy is in short supply now or soon, better adjust, was the message. The owner and a reporter were present that day, and here's what was reported ( )
If the populace is kept in the dark, how can it adapt? The question is: Is it being kept in the dark while those in certain positions mop up, or are those certain-position folk ignoring the inconvenient?
Information can be witheld from publication for 'good' reasons - Dunkirk for example, or if a meteor was about to obliterate the planet next month - but this is not such a case. We have a dwindling chance of adapting, and they're wasting time. Just what their kids say to them in future years, is an interesting conjecture. I've already apologised to mine.
Essentially, the media kept pumping the game (my home my castle, location location, dream homes, grand designs, pages and pages of properties in the local rag) and as such, is severally culpable. Jointly too, which may explain the euphoria....
Noah probably didn't get all that much publicity either, though. Maybe we're hot-wired for denial.
what is this about a shortage
what is this about a shortage of oil. In the USA they have found 4 times more oil in North Carolina than they had in Texas, this we stop imports in a few years and supply the USA for 300 years . Canada has trillions of barrels of Tar sands that technology will soon make cheap to extract, Iraq has more oil than than they know what to do with etc. So soon there will be a glut of oil. Also within a couple of years the truth will be out about humans causing global warming and we can start digging our coal up.
I'll assume that's a
I'll assume that's a piss-take.
http://www.google.co.nz/images?q=global oil discoveries
The momentum would seem to be fairly emphatic.
After reading so much dome
After reading so much dome and gloom here in regards property prices decreasing I thought I would drop into an auction house yesterday to see how they were fairing. Only stayed for two houses the first hit the reseve at $380,000 and sold at around $425,000 with about 9 spirited bidders. The second hit the reserve at $580,000 and sold for $605,000 with about six spirited bidders. I left thinking the market is cerainly hard out there! The GV's were both considerbly lower than the sale prices.
Yeah, right.
Yeah, right.
You went to an auction
You went to an auction because 'we' are so much gloom and doom? How flattering that 'we' have such an impact. And how come you didn't stay for the other ( pick a number between 2 and 100) properties for disposal on the block of deceit. Give us a clue, Gavin. It's public knowledge after all, and tell us which firm and which office ran the auction.
No your all wrong.
No your all wrong.
I assume that the Matt Nolan
I assume that the Matt Nolan who commented above is the real Matt Nolan of Infometrics.
You might like to answer the following:
1. What is your basis for thinking the tax changes are having such massive influence on house prices when most commentators have suggested moderate influence?
2. Even allowing for this linfluence, shouldn't economists have been anticipating the likelihood of tax changes? They were surely on the radar. And surely these anticipated changes should have been factored into your predictions. And remember the changes were a lot more mild than they could (or should) have been
3. Did you really think the economy was going to recover strongly after such a major financial catastrophe that was propped up by temporary stimulus, and provide support to the housing market?
4. Could you not foresee the marked turnaround in migration which is reducing demand for housing? Some of us on this website were making this call, and we are not economists (although I have done a number a social research and demographics papers)
Back to the "normality" of
Back to the "normality" of 10% per annum increases as quick as poss, happy days. Sounds like the guys on the 4th floor of Lehmann Bros in 2006.
excellent piece here from the
excellent piece here from the Unconventional Economist on China and aus's housing bubbles:
http://www.unconventionaleconomist.com/
Look, these "predictions"
Look, these "predictions" should all be taken with a large pinch of salt because they are all based on one thing and that basically is the global economy, the world getting back on a growth track and who really knows when or if that will ever happen. It might happen in 2013 or it might happen in 2018 or who knows, there are too many unknown factors to accurately predict anything.
These guys at Informetics seem to be trying to keep busy by chrystal ball gazing, cos that is all it is at this stage.
Personally, I think this economic stagnation has a long way to run yet. We are still early days in this story.