The housing market is stagnant and the Reserve Bank is likely to raise interest rates twice more this year, according to ANZ New Zealand's economists.
"The housing market looks stagnant," they state in their latest New Zealand Property Focus Report.
"While house prices were stronger than we expected, sales were abnormally soft, listings continue to rise and days to sell are back near their 2022 peaks, especially in Auckland."
The report said that housing sales are normally soft in January as buyers, sellers and agents all take a Christmas/New Year break.
But January's sales this year were "abysmal" ANZ said.
According to the Real Estate Institute of New Zealand, 2995 residential properties were sold last month meaning January's sales at their second lowest level in at least 32 years.
Even after accounting for the usual post-Christmas lull, this year looked unusually soft, with the second weakest sales since 1992, only outdone by 2023, when house prices were falling," ANZ's economists said.
And the outlook is for the market to get worse.
"If it was just a one-off soft month for sales, we would put it down to noise, but that's not the case," the report said.
"House sales have been on a mild downwards trajectory since mid-2023, with the latest data just another piece of the puzzle. Over that time house prices have gone broadly sideways."
"Growing inventories are matching this story, as sellers see signs of a rising market, while buyers remain choosy. Inventories can remain disconnected from prices for a while, as sellers choose not to accept a lower price to secure a sale," ANZ's economists said.
"The same story is playing out in days to sell, especially in Auckland. Days to sell in Auckland are back near their 2022 peak, with the average home taking around 48 days to sell. The rest of the country is a touch more vibrant, but the trend here has turned too."
"High inventories and long times to sell houses can't last forever in an environment of soft sales because some homeowners always need to sell quickly," the report warns.
On top of that, ANZ's economists are expecting the Reserve Bank to lift the Official Cash Rate twice this year, to 6%, pushing mortgage costs up even further.
"We are expecting the Reserve Bank to lift the OCR two more times to combat increasingly stubborn domestic inflation," the report says.
"Homeowners should be conscious that mortgage rate cuts in the near future are not a sure-fire bet."
ANZ is New Zealand's biggest mortgage lender with more than $105 billion worth of exposure.
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121 Comments
Never touch stagnant water, you’ll get sick.
Il n'est pire eau que l'eau qui dort
Currently stagnant, downhill soon...
Banks profits are down, so no more harboring rise in bad debts..
Desperate for higher TDs.
I’ve got a feeling you’re a property developer looking for cheap entry points.
thats easy just circle the current property developers still clinging on by their nails.... there IS NOTHING CHEAP about current asking prices
I'm still amazed no-one has asked ANZ whether they stand to benefit from their market-shaping hawkery.
Surely they would be much better off with low interest rates and a buoyant house market.
They would indeed.
But for now they too have to play the cards dealt by the RBNZ.
Do you think they would be better off in aggregate? There are a lot of things to weigh up, and who knows what positions they have on what assumptions. Their analysts have had easily the most hawkish predictions - maybe they have bet on that?
Note sure what you mean by "better off in aggregate"?
But I'm pretty sure the economic view they hold privately will be quite different to what is presented publicly.
Perhaps they are setting the scene to finally start dealing with their delinquent loans? Can’t help anyone letting mortgage payments to not be paid for years.
You got a reply last week on that case but you are choosing to ignore rational reasons and spread rumours instead. Good luck on your house hunt
Yeah but they might as well talk a few more people into fixing long before rates drop later this year. The bank always wins
So if house prices are not feeding inflation, what is?
Or are they acknowledging that a flat real estate market is actually a good thing?
Labour ramping up the minimum wage over the last few years, and all the flow on effects from that.
My 16 year old nephew just bout a $10k car with money he saved from his part time job. Madness.
Which bit is the madness? I say well done him.
Good for him, probably worked hard for it.
You are right but to be fair the inflation of cars at the bottom level is pretty high. Gone are the days where a decent one will set you back only $500-2k. Now for a base level hybrid (and with these petrol prices you are going to want to reduce the cost if you need to travel to get to work) going to around $8-10k for a lowest $ market secondhand one at the end of its life is common. People are living further from workplaces and often they are required to ensure the reliability of their transport. You cannot keep coming in late blaming the bus for not stopping or train failures.
It is madness that also he will likely need to buy a private phone especially for work and banking needs which will be a set back of at least $500 every couple of years for a half decent one (forced obsolescence of tech forcing device failures & if they also need to have security features, battery and enough data so it does not crash like a brick when you do need to do banking transactions, pay bills & do remote work). In engineering we were required by one company to buy (at our own cost) a recent model phone for testing as well for contact & remote operations in case something went wrong after hours.
Sadly though gone also are the days when you could buy a house with $20k deposit and that was only 10 years ago. Nowadays he will likely need $200k and it is easy to see why some people have given up on that aim entirely.
Rates have only one way to go.
Only wishful thinkers were propaganding otherwise.
from this article
https://www.stuff.co.nz/money/350185907/anz-7-ocr-possibility
"While these OCR increases will be painful for some households, especially those who took out large mortgages at low interest rates at the peak of the 2021 housing boom, the average household will still pay much less in interest costs as a proportion of their income than they did in 2007, when the OCR increased to 8.25% in order to contain inflation."
I call bull dust
Are they saying the ginormous increase in house values since 07 has been largely paid by prudent savings courtesy of wage increases ... rather than ever increasing mortgage mountains?
Ginormous increase were fueled by artificially suppressed interest rates and the greed chasing tax free capital gains.So its mortgage mountain were people looked at the payment not the total owed. The weight of the mountain is about to crush people...
Will the banks act of will extend and pretend continue...?
Now the rose tinted glasses are coming off,folk are realising how massive a figure is when you have to pay back a $700k++ mortgage.
Over $1,000 per week on a P and I mortgage and rates/insurance on top of that
7 years ago partner and I were swinging a 1200k mortgage a week, (short sharp burst over a year to get into a good position & equity to move) and that was with incomes twice the median wage each. Geez we thought that was hard.
Nowadays the median wage has not changed that much and everyday families are trying to push through 600k+ mortgages... yikes that does sound crazy.
and the absolute crap house you bought for 900k
I resent this comment, it is charming.
Charming is a cottage in Devon, not a shitebox in AKL, funny I remember saying as Manurewa property went through 1 mill, you best to sell buy GBP and buy 500k in devon..... I was correct.
Yeah but then you'd be surrounded by degenerates who put cream on their scones before the jam *shudders*.
Much better to head to Cornwall where they might be all inbred but they at least know how to eat a scone properly.
Most houses resemble that comment, hence the charm
You either need lower interest rates or higher income to support rising house prices. The era of very low interest rates appears to be finishing so all eyes should be on wages.
…and with record immigration of young penniless people, expect wages to be stagnant for the foreseeable future. Which means NZ property = poison (stagnant water, don’t drink)
…and with record immigration of young penniless people, expect wages to be stagnant for the foreseeable future. Which means NZ property = poison (stagnant water, don’t drink)
You have learnt well young Jedi
Wages never keep up in this country, not even close. Most jobs still paying what they were 3 years ago, you would have needed a massive pay rise over this time to support house prices and mortgage rate changes.
yes this can just continue to happen forever... wait a minute.
I wonder what test rates the banks were using back in 2007? It's certainly possible to have low retail rates while maintaining consistent test rates.
But nahhhh, something about wolves and hens houses....Bait and switch, expand the loan book size by chasing the OCR down while claiming to be "helping borrowers", and ratchet up again when the OCR goes the other way. Extend and pretend when borrowers are in distress, "means tested repayments" with the balance added to the principal amount. All going to plan, they can capture subsequent wage increases over time.
"It's certainly possible to have low retail rates while maintaining consistent test rates. "
Remember the following economic conditions in 2020 (when stress test rates got as low as 5.8%):
1) deflation (i.e falling prices)
The country's set to see its largest quarterly fall in inflation for at least five years, but possibly the biggest fall since 1998, when Statistics New Zealand unveils the June quarter Consumer Price Index on Thursday (July 16). (For the record a -0.5% fall would be the biggest quarterly drop since the fourth quarter of 2015, while -0.6% or more would be the biggest fall since the fourth quarter of 1998.)
https://www.interest.co.nz/news/106023/plunging-fuel-prices-have-contri…
2) Expectations of a double dip recession
ANZ economists are raising the prospect that the country might see a 'double-dip' recession from the end of this year and into next year.
https://www.interest.co.nz/opinion/106356/economists-countrys-largest-b…
3) OCR at 0.25%, talk of negative OCR due to a possible double dip recession
"If New Zealand enters a dreaded double dip recession, or W shaped disaster, then negative rates may go from being possible to probable."
https://www.interest.co.nz/opinion/105997/kiwibank-chief-economist-jarr…
https://www.interest.co.nz/opinion/105694/our-central-bank-might-have-d…
4) mortgage interest rates of 2.55%
https://www.interest.co.nz/personal-finance/105935/anz-cuts-all-its-spe…
Under those economic conditions, in that economic environment, how does mortgage stress test rates of 7.5 -8.0% (i.e. current mortgage interest rates) seem?
Many people would be complaining about their inability to access credit. It might lead to further economic contraction.
If one bank chose to have a stress test rate of 5.8%, and the other banks had a stress test rate of 7.5 -8.0%, then the bank with the lower stress test rate would have a very large market share of new loans being issued. Borrowers would be able to get more credit and some borrowers would only be able to get credit at the bank with the lower stress test rate.
Bank management and shareholders of the bank with higher stress test rates would experience a significant drop in their market share of new loans. That might be bearable for a short period, but after a while, they may be less competitive due to a reduction in revenues and the impact of operating leverage and financial leverage.
I guess it's a case for DTI's then huh? Legislate something rather than letting banks recklessly set test rates to whatever will sell them the most mortgage dollars and then ruin naïve borrower's lives through greed.
A mortgage interest rate of 2.55% when everybody is being tested at 7.5% - 8% is doable. Why wouldn't it be? I get the banks would be itching to eat into that headroom, but for what purpose other than to blow asset bubbles and make a killing on a larger loan book?
Debt to income is a macro prudential tool to address financial stability of the banking system.
Consumer protection is done through legislation such as CCCFA.
If you want to change the existing rules on mortgage products for consumer protection, then go ahead.
Totally agree, we had a $400,000 mortgage at that time and that was considered large.
Wow perspective though. $400k mortgage in Q1 '07? Would be equivalent to $611k now (CPI inflation adjusted=).
Oh jesus. I was expecting this to make me feel better but now my FHB loan of $770k looks HEINOUS.
WE ACCEPT HIGHER HOUSING COSTS, WE ACCEPT LATER LIFE ACCOMPLISHMENTS (FHB as 32yo),
WE ACCEPT NO CHILDREN.
1. Family
2. Family Home
You can choose either but not both.
Too true for the latest generation, either have kids or a house because if you wait for a house before you have kids you will be too old to have kids safely and the medical risk to both mother and child can be significant.
And we all know what followed 8.25% interest rates in 2007… And now we are seeing the results of their QE.
The lack of accountability on the part of the RBNZ is quite breath taking.
Stagnant, more accurately stagflation - everything costs more and assets have no option but to fall. Inflation still roaring and everything costs more. It a long way back to income vs price yields stacking up.
Who can afford to fly ponzi airlines when the rocket booster of low interest rates run out of fuel?
Interesting QV shows house price shave ticked up slightly over the last couple of months but anyone who thinks they'll get 2021 prices are dreaming, interest rates just won't support that.
Tidy renovated houses are in short supply in Auckland. Anything that is tidy (not a diy bunnings makeover) is easily achieving 2021 prices. Most 5 - 10% over.
I'm actively in the market at the moment around the 2m mark and have lost a few auctions at over CV prices.
Nah. No more OCR rises, if they do they're idiots. House prices will rise slowly of course.
Rising rates, shrinking immigration - only solution is foreign buyers.
Let's do this !!!!
Winston has shut that door.
Interesting to see what Luxon and Co have planned to save us from a deep recession. The ocr may well rise to quell inflation... they cant lower taxes without worsening inflation (and tax rates are low due to the down turn anyway).
I wouldnt have picked labour for the next election..but have a feeling Luxon has nothing but 4 years of bad news for the punters.... Chippy must be chuckling.
Best election to lose in living memory.
"they cant lower taxes without worsening inflation" - Tax cuts aren't inflationary. Doesn't matter whether the government spends the cash or you spend it, it's still sloshing around in the economy. Argument for tax cuts being slightly deflationary as the government usually spends more of every dollar it earns than the average private individual.
Chippo won't be chuckling, he got beaten so badly in the election, he'll be spending his spare time job hunting.
I noticed petrol has gone up quite a bit recently.
Inflation is way better than it was, but I don't think it will return to 2% as quickly as I thought, so I don't see a cut this year and a rise is possible.
Fuel companies are slowly raising fuel prices,so they can effectively pocket the tax when it is removed...pollies will be schooled on "unintended circumstances"....again.
Probably more demand for petrol. The new government has made large petrol cars more appealing again. I always thought that it made a lot of sense (as a country that imports all of its petrol and generates lots of renewable electricity) to encourage widespread use of smaller vehicles. Good for balance of payments and the environment.
Wait till Nationals public chargers are built /s
The pic reflects west Auckland re-build post flooding - like it! All will be well……. BYOB!
Weren’t they talking the market up late last year?
I guess there’s only so Much turd polishing you can do before you lose all remaining traces of credibility
"Weren’t they talking the market up late last year?"
For the record, no property price forecaster is expecting property prices to fall in 2024 - 2025. These price forecasters don't see the important dots or haven't connected the important dots. They don't see the house price risks that many commenters here can see.
Here are the current property price forecasts:
Capital Economics is forecasting 7.0% average house price growth (in nominal terms) in NZ in 2024.
FYI, for the record, a summary of economist's forecasts for house price growth in 2024 can be found here
https://youtu.be/p-jSj3a5Dko?t=226
The median is +5.2%, with the range from +2.0% to 8+.0%
Tony Alexander forecast +10% growth in house prices in 2024.
https://www.oneroof.co.nz/news/tony-alexander-expect-10-house-price-gro…
REINZ median house price for NZ at Dec 2023: $779,830 - https://www.interest.co.nz/property/125955/auckland-market-led-house-pr…
REINZ median house price estimates at Dec 2024 based on following house price change forecasts:
1) +5.2% increase (median forecast): $820,381
2) +2.0% increase - low of the range: $795,427
4) +10.0% increase - forecast by Tony Alexander: $857,813
Meanwhile price extrapolators continue to extrapolate.
Tell em’ they’re dreamin.
Aka “spruiking”…..
jousting stix? how much do they want for them?
🤣 Too much
Lol, Opes
I was a bit unfair on ANZ this time, I thought their call for 2024 was +7% but it was a more subdued +4%
Opes has their own self motivations - remember that they're a profit oriented business.
From ANZ's Property Focus report - forecast for annual change in house price ending Dec 2024
Forecast made in the month of:
1) June 2023: +3.4%
2) July 2023: +2.3%
3) Aug 2023: +2.3%
4) Sep 2023: +5.8%
5) Oct 2023: +5.8%
6) Nov 2023: +5.4%
7) Dec 2023: +4.0%
8) Jan 2024: +4.0%
9) Feb 2024: +3.0%
https://www.anz.co.nz/about-us/economic-markets-research/property-focus/
ANZ took on too much bad business during “good times”, many businesses are now struggling that’s why ANZ wants as many people to fix for as long go as possible.
The ANZ game: Scare the punters then lock em into a high rate for 3 to 5 years
You only have to look at what happened just before the 2008/9 credit crisis...OCR was a lot higher and inflation wasn't as high then. I actually agree with the advise that the OCR will be shifting northwards. Its the only tool in the arsenal that the RB has.
The 40 year run of making squillions off the backs if forever cheaper debt by bidding houses into outer space ended, dead cold, in 2021.
Not comming back.
As I warned to all in 2021, property in NZ will drop 40 to 50%.......we are but part way on this journey.
So it comes to pass in time.
As was before, will happen again. Bigger drops than the 1970s are on there way.
ANZ JUST GOT THE MEMO!
Not going to happen. You are not paying attention to what is currently happening in the world and its only going to get worse from here. New Zealand is going to be the #1 go to destination in the world.
Agree! Putin and Trump will come to the rescue of the New Zealand property market!
You forgot the cheap money fairies and Popa Smurf!
Maybe looong term, but not right now
You really think with inflation still running away and everything getting more expensive that somehow property is going to half in value?
That's a bold move cotton, let's see how that plays out.
Property has been absolutely terrible during times of high inflation!!!
Its already dropped in many places by 30%, in nominal plus REAL terms.
Look at the massive REAL losses sustained during the high inflation 1970's.
Some people have now idea on history and how it relates to the current situation. Blinded by their own echo chambers and recency bias.
Ohh well, fools and their money or holding the wrong assets/liabilities, will learn tough lessons.
Inflation has been about 7% p.a. since Nov 2021. Did leveraged property keep up with inflation?
Here is what the property promoters with their vested financial self interests don't tell you and don't want people to know.
Here is an example of how a potential buyer was saved by their lender. This guy didn't realise it then, but being rejected excessive credit from the bank was actually a blessing in disguise. Being declined for a large mortgage was better than getting approved to buy a house when house price risks are extremely elevated.
Nov 2021 - https://www.newshub.co.nz/home/money/2021/11/first-home-buyer-not-very-…
So what would have happened if this guy bought in Nov 2021? Let's take a look at what could have happened.
A) buying a house
Nov 2021
REINZ median house price in Auckland: 1,300,000
Mortgage at 80% LVR: 1,040,000
Equity: 260,000
Jan 2024
REINZ median house price in Auckland: 975,000 (-25.0%)
Mortgage: 1,040,000 (assumed to be interest only to illustrate impact on equity) - note that the LVR is now over 100%
Equity: NEGATIVE 65,000 (-125% of initial equity, negative equity position)
B) keeping money in bank, and continue saving for a house
Nov 2021
Time deposit: 260,000 (same as house purchase)
Jan 2024
Time deposit with interest (after tax of 33%): 271,000
Now that deposit can be used to buy a house at the current price. This results in a smaller mortgage (704,000 vs 1,040,000 if purchased in Nov 2021), reduced total interest payments over 30 years.
REINZ median house price in Auckland: 975,000
Equity 271,000
Mortgage : 704,000 (LVR of 72.2%)
So from an equity perspective, keeping money on time deposit at the bank was a far better outcome than buying a house in November 2021.
Haha you are so keen on a crash that you are trying to manifest one. Are you really suggesting that all homeowner's now sell-up and go renting?
Market's will fluctuate, always have and always will. No chance of a 50% drop.
"No chance of a 50% drop."
When people haven't experienced house price falls personally, they believe it can't happen - that's human nature.
https://youtu.be/4edtq9d1gY0?t=4087
Remember back in November 2021 when most property commentators were saying that house prices in NZ couldn't drop by more than 10%? Well they've dropped more than that.
What do people not know that they don't know?
Here is something that most people don't know, and don't see. (And the property promoters with their vested financial self interests won't tell you).
On an inflation adjusted basis, price change from the peak REINZ median house price in the following areas:
1) South Waikato: -40.6%
2) Porirua: -43.0%
3) Kawerau: -43.8%
4) Central suburbs of Auckland: -45.0%
4) Buller: -47.0%
6) South Wairarapa: -48.8%
Remember, this is before the impact of leverage.
This is exactly want the banksters want .... to extract as much wealth out of the middle class as possible and to drive that wedge ever further between that top 5% and the rest of us.
All part of the plan Stan ....... if they do reduce interest rates, the NZD will crash and consumers will pay even more for imports ie petrol ....and if they increase interest rates, those with mortgages will pay even more and landlords will try and put their rents up etc ...so with both scenarios MORE inflation.
There has never been a better time to get out of ALL debt and starve these banksters of their cashflow.
And if we are going to have the accommodation supplement, advocate for rent controls and get the friggen' govt and landlords hands out of my pockets !
Smart people use debt to get rich, they're also contrarians who buy when the market's depressed. In a few years time people will look back and regret not taking a punt.
According to RBNZ data, the CPI has increased by 16.4% in the 2.5 years between the 2nd quarter of 2001 and the last quarter of 2023. If the RBNZ has achieved its mandate of the mid-point CPI inflation of 2.5% pa over the same period, the CPI would have "only" increased by 6.4%. In other words, there has been 10% "excess" inflation over these 2.5 years and consequently we are now all paying 10% more for consumer items than we would have had to pay if the RBNZ had done its job.
As far as I am aware, there have been no explanations, apologies or resignations of anyone from the RBNZ as a consequence of its dismal failure to do its job. Why not?
RBNZ's job is to look into the future, and its impossible to get it right 100% of the time, especially due to Covid.
Ten quarters and counting is a long period to get it wrong. When there are no consequences for poor decisions people are much more likely to make them.
The housing market is stagnant and the Reserve Bank is likely to raise interest rates twice more this year, according to ANZ New Zealand's economists.
Today's TBill tender recorded the 12 mth rate at 5.67% versus the 6mth rate at 5.755%.
These wholesale rates are a red herring I think. Unless ANZ (as an example) is lending 80%+ of their loan book using international debt then really who cares what these rates are? I understand the bulk of funding in NZ is from deposits.
Totally incorrect, nz does not have enough savings to fund the housing ponzi so banks borrow from offshore...... hence banks like to fix 6m 12m 2y etc and do not offer longer term 10Y or 20Y as there is no offshore market willing to lend to NZ on these long dates, they back to back lending locking in rates and managing risk.
“Totally Incorrect”
Not according to the RBNZ: https://www.rbnz.govt.nz/financial-stability/about-the-new-zealand-fina…
20% of lending is from overseas, the rest is local deposits.
On the photo, the old sign says:
"House rules, there ain't none, there never were any, there won't be any"
A few trees across, there's a bright yellow sign warning:
"NO TRESPASSING"
Oh the irony, lol.
Sounds like the Act party's liberal policies...
Of zero surprise to many of us.
Leading housing market indicators Rymans and Oceana share prices are getting hammered - again.
For those with their eyes open, this will come as no surprise whatsoever.
They are 100%, the best forward looking, Housing Ponzi market proxy.
Where they go, so does the biggest NZ PONZI:
Resi Housing.
It’s looking like this will be the worst first quarter for the NZ real estate market sales volume in the last 30 years
"It’s looking like this will be the worst first quarter for the NZ real estate market sales volume in the last 30 years"
There is a standoff between buyers and sellers. Who will blink first?
The force is strong with the vendors obe-one-konobe .... they will only move unless they absolutely have to, as they can't stomach the fact, especially with the MSM and "vested" bank economists et al over all these years, saying property is a one way bet and that it only ever goes up..... until it doesn't.
The word on the street is that banks are pretty relaxed when it comes to mortgage holders who are struggling. I guess it comes down to share numbers - if they are all struggling on your books, what ya going to do. Suck it up I guess. If you force the sale and flood the market, where there’s no buyers, you’re looking at bank loses. Gulp!!
"If you force the sale and flood the market, where there’s no buyers,"
There are buyers at lower price levels. e.g drop the price by 50%, the number of buyers is likely to increase.
I know of a property that has been listed for sale for over 12 months at a fixed price. At the vendor's selling price, the number of interested buyers is ZERO. The seller is not under pressure to sell. If they were under pressure to sell, they might accept the only offer that they receive which could be below their fixed price (in real estate jargon - meet the market).
Here is a comment from another person on another thread:
"I have property up for sale in Rotorua low turnout at first two open home but I ain’t having a fire sale. It can sit on market until sensible offers come in. "
Hence we have a standoff between buyers and sellers.
Million dollar mortgage now cost $1700 per week to service, average household take home income is $2100 per week. Obviously only a matter of time before huge financial stress takes down this housing market. The million dollars would only buy you a average 3 bedroom home in Auckland even with the 20% crash from high’s already seen, over next couple of years I expect another 20% crash minimum.
Absolutely, they’ll drop another 20% minimum.
Half your income goes to the cost of living - food, rates, power, water, transport etc etc etc.
If it starts to fall now - and that is increasingly likely - it will be carngage. The govt and RBNZ have no means to protect the economy.
We cant have more immigration without smashing infrastructure (and who wants to come here if the economy is getting hammered). We cant lower taxes or the ocr (and govt cant launch huge infrastructure projects) without increasing inflation.
Our 3 way government wont let foreign buyers in to prop the market up (winston is rightly anti), instead they wills squabble about how to reset divisive policies and roll back all labours policies with no real vision or ideas of their own that they can agree on.
Over the last couple years the smart kiwis exited for Oz... and we imported a ton of unskilled workers.. all on the back of a massive asset and borrowing bubble fueled by a crazy rbnz and unrestrained govt spending (on nonsense).
Nope ... it highly likely we are gonna be forced to take our medicine and reset the economy. House prices will drop a long way, jobs will go and people will realise our wealth was all a ponzi that collapsed.. our kids will move overseas .. like ireland
I would love to know how and why it would possibly suddenly all go right.
"House prices will drop a long way, jobs will go and people will realise our wealth was all a ponzi that collapsed."
The bigger the party, the bigger the hangover.
Your logic is flawed, people with a million dollar mortgage are not taking home only $2100 a week. Take out all the people that don't even have a mortgage then those that have very little left to pay and only a very small percentage of people are affected. Have mortgagee sales taken off to the moon ? no. Sure the next 6 months will see a rise but its hardly the end of the world for most. The average mortgage was in print here a while ago. I recall it being $260K.
Many people borrowed to the max when rates were on emergency levels this is still a ticking bomb, and the only people who can afford the 3 bedroom box on a small section in Auckland wouldn’t want to live there so who is going to buy them.
I am job smacked that you think there are many in AKL who have recently purchased or even intend to regarding a 260k mortgage, maybe invercargill?
Most people have a misunderstanding, or a lack of understanding of the linkage between house prices and the 2 types of demand.
Many of these people don't know what they don't know.
Owning a million dollar house outright is still costing people 6%(60k/year. 48k after tax or basically $1000/week in a term deposit)
all that money tired up in a house is still dead money, because the house sure isn't going to be making any capital gains with 6%+ interest rates. It doesn't matter the size of the mortgage or freehold house, it's all the same, the capital isnt working for you but against you with these interest rates
So all you mortgage free people are still paying rent in my eyes! If kiwis had clarity and could see it like that, the love relationship with property and mortgages would be over!
My money is free and producing well for me! While I live nicely in Asia on $1200 a month...
That's only true if you paid $1mil for the houses that is currently worth $1mil. If you paid $300k or even less 20 some years ago your return at 6% is well below $48,000. In fact the house we live in would likely rent for $900 wk--lucky we are not paying that rent to live here. Same house rented for $270wk in '02.
But your house 'right now' is worth 1million, and that equity is doing nothing for you, probably going backwards plus your not getting the 48k. PLUS your paying 20k in rates/insurance/maintenance just to have that house so your going backwards fast because rates are high. Real estate and interest rates are inversely related.
So while your 300k investment 20years ago has made 700k over 20 years, say 7% per year minus costs (which frankly isn't amazing and could have been made with a term deposit). Right now your money is tied up in something that's putting you backwards. Sell house and put money in bank, if you have the ability. Easy money with no costs involved
The key to all this is to have the 1million capital to play with I guess, which most kiwis don't. That's what the banks take advantage of. Fortunately I'm not one of them
I think the way you win the system, is you get a high paying job fast, young, live cheap and save hard, probably not in new Zealand. avoid mortgage handcuffs, they are a prison sentence. Save the capital then your done, money makes money.
Housing is a play thing and manipulated by the banks because that's their big money spinner. Look at all there nice fluffy TV ads promoting mortgages and most main stream media never talk negatively about housing, it's always hush hush, up up up. Well that games up, it's a slow death by a million cuts, you don't see it happening but be sure about it, the game is over, prices are down! Real estate can't win with high rates. It's either high house prices or Zimbabwe/Argentina, pick which you want
And live where in the meantime and pay what rent? Even assuming your numbers are correct, you'd still have to pay rent to rent an equivalent house and that's likely to eat up any and all the income from your term deposit.
I've got a 500k mortgage that's costing me about 900 a week P&I, Renting the equivalent house would probably be $1200-$1300 a week... giving me $300-400 a week to cover rates/insurance/maintenance, which is about right. And that's before you put a value on the "intangibles" of home ownership (stability, ties to the community, privacy etc).
Of course you're right that if I released the equity I've got in my house and invested it, I could probably be doing slightly better, but that's a snapshot of today..... the amount of time where the average home owner would spend in a situation where their low-medium risk housing investment is being outdone by very low risk term deposits is perhaps 5-10% of their home ownership tenure
Yup I rent... In Vietnam. I have a very nice modern one bedroom apartment in hanoi that costs 10million dong a month (666nzd) power bill is like 50nzd a month. Food is dirt cheap here, all up I spend say $1200nzd a month for me and my gf. I allow myself $1500
And no that doesn't eat up my term deposit investment income. After tax I clear just over 4k so saving around 2.5k a month roughly
If I wanna work I contract in the mines in Oz for a month or two when can be bothered and the weather's nice
Just shows you there are other ways to skin a cat, don't need to sign up to a big mortgage with a bank, f that. I'll never pay them interest on a big mortgage
Can you see that house is pissing away 50k of your after tax money per year? ($550 a week in interest and 20k in rates, insurance maintenance, I didn't include your principal payments) I hope it's worth it mate. I personally would see it as a 25year life sentence and get rid of it. But it's the kiwi love affair with housing that thinks they are better off. It's almost like a bank scam that's been ingrained in our way of the thinking for many years. When I shared my view you initially thought I was crazy because it was outside the norm haha
If enough people get burnt perhaps this way of thinking will change??...
If ANZ generally believed this their carded interest rates wouldn't be inverted. Chill out everyone. Rates aren't going up.
Sorry housing isnt the priority any more mate, it's protecting the purchasing power of the nzd. Lose that and everything hits the fan. Rates will rise more, turn off your chill mode
Stagnant shtagnant..
Two of my neighbours (Torbay) sold their houses two weeks ago, almost 10% above what they paid in 2023
10%, so after real estate fees they were lucky to get out
"Two of my neighbours (Torbay) sold their houses two weeks ago, almost 10% above what they paid in 2023"
So they owned their property for less than one year? That is a short period for owner occupiers. Why the short ownership period? Were they property traders?
In a nutshell, ANZ is forecasting their own balance sheet to de-leverage. ASB is already there:
"Overall lending fell 1 percent to $108 billion, with housing demand affected by tougher competition, and subdued agricultural and business demand."
"Abysmal" sales and rising interest rates paint a concerning picture for the NZ housing market. While I understand the usual January lull, these trends combined with growing inventory are worrying. Are we heading for another price correction like 2023? Time to buckle up!
Auckland house sellers are in denial about how weak the market is, and agents still rattling off high asking prices / expectations as its a given the house is worth that much - and assume incorrectly that people can actually get finance to pay high prices.
As the US Fed chairman J Powell said recently. "Higher, for longer."
Even in a stagnant market there are still certain properties and certain areas that will outperform, you just have to do the homework.
And drive a hard bargain. Some are going to make fortunes out of this downturn. Buy when there's blood in the streets.
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