ANZ Bank says house prices are likely to drop more than previously expected this year.
In its latest NZ Property Focus report, the bank says it now expects house prices to decline by around 7% this year, more than double its previous forecast of a decline of around 3%.
The latest forecast comes just a day after ANZ said it expected the Reserve Bank to lift the Official Cash Rate to 3%, up from its previous forecast of 2%.
The OCR is currently set at 0.75%.
ANZ's report points to higher mortgage rates, affordability constraints, tighter credit conditions and housing policy changes as the main drivers of a fall in house prices.
However the report says ANZ's economists still regard a 7% fall in house prices as a soft landing for the housing market.
"A very severe contraction in house prices would likely require a significant household income shock, forcing the sale of properties," the report said.
"That's always a possibility, but it's not our central forecast."
The report also pointed to housing demand and supply moving closer towards being back in balance.
"The closed border alongside gangbusters construction activity means New Zealand's housing deficit is closing to the tune of around 6000 houses per quarter," the report said.
"Supply continuing to outstrip new demand limits the likelihood that house prices will get wind in their sales again any time soon."
The report also suggested that borrowers consider fixing their mortgages for longer rather than shorter periods.
"The one year [fixed mortgage] rate remains the lowest rate, but if the OCR reaches 3%, one year mortgages are on track for around 5% and that could make for some very expensive rollovers," the report said.
"It thus may be worth fixing for 2-3 years."
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142 Comments
Love the picture on the article. This is what happens when things are done in a hurry and the end result is a crash. If the people in the government and bureaucracy are listening, you guys rushed the policy changes during covid and the end result will be a crash just like in three picture. If would have done better planning, we wouldn't be in such a situation.
Planning, government, and bureaucracy, surely you jest. Most people working in the public service wouldn't be able to get it together to plan or estimate demand at a child's sausage sizzle fundraiser.
I wouldn't trust these guys to run a bath
I read comments on here all the time about how the government has done nothing for housing affordability and have made things worse. Now that they have done things that might actually making housing more affordable people like you complain they have done too much before any improvement in affordability has occurred. They can't win.
As a future first home buyer with a very large deposit, I'm happy to stay on the sidelines and watch this play out for a year or two :) I'm happy I didn't FOMO into the market recently. I'm watching listings go up very fast in my town at the moment after they got very low it the middle of last year.
But that's the problem, the government rushed in the CCCFA with changes not thought through and this is an unintended consequence along with any other personal lending i.e cc, retail & motor vehicle finance. They did not plan on bringing house prices down with this change. Some will say it is a blessing in disguise and others will argue it will create a credit crunch which you can see it already is having that affect.
If you think this will help you in the long run it won't, you will be hit hard just like everyone else who needs the banks help to get into a house, upgrade, reno's etc. If you don't need the bank then yes it may help you.
They didn't say that they wanted it to bring prices down.
But that's just media.
banks were well consulted on this change, over a year for responses and debate, and all the banks flagged that it would hamper lending. It was not rushed through.
So either which way it was still implemented. Best thing of all from a govt perspective is that it is not thier fault when things go pop, it's the banks now reducing the supply of money to say 25% of potential borrowers (the most risky).
This combined with interest rates now going up, will 100% reverse the market. At least that's my view. I think it was going to reverse on rates alone.
I think your missing the point though that it does help us, we don't need any more debt. More debt, for whatever purpose is just going to make the hole deeper. We need to understand that unless we want to run the money printer indefinatly (MMT BS) we need to let debt cycles do what debt cycles do. Embrace the bear, the bear brings just as many opportunities as the bull.
As a first home buyer I would be very happy. The reality is that over the next 30 years your interest rates over the full course of the loan will be what they will be, that's not changed. They were always going to do what they've done (you just didn't know). And now there is a very real prospect of correction of prices to long term averages.
So what's to lose for you? Why are you in a rush to load up on a likely depreciating asset? Do you really need your reno now?
Keep an eye on sales volumes and inventory. As long as these keep expanding so do your potential options.
The property prodigy Ashely Chrurchill doesn't think so, market still going to be hot in Auckland... BE QUICK
Opportunist would be a better description
The problem you my not see ahead, is that when the prices 'correct' the banks may go into OBR mode, and the person bailing out those loans in negative equity will be you, the guy with the handsome deposit waiting on the sidelines.
So at the point the market corrects and becomes more affordable your hard saved cash may be gone, and your opportunity to jump in on the cheap end of the cycle might also be gone with it.
Don't keep all your eggs in the one place.
I find it hard to see any winners, only losers during a correction (except maybe the banks as usual, happy to keep us all gifting them money in one way or another).
Best bet could be to split it between multiple banks ($50k in each) and perhaps some Kiwibonds if planning for that. At least noise has been made about taxpayers bailing out $50k per depositor, even if nothing's yet been done.
We should trade OBR for equity in the banks obviously. Not that we will...
If you are approved you may be best to buy now not later.
We had these same predictions of property crashes in 2009/2010 and they didn’t eventuate.
There may be more risk of a financial crash which will really prevent house buying then!
You're comparing to the predictions in 2020 which similarly didn't eventuate. Low interest rates saved the markets both times.
But this is after a huge spike up in prices at the start of a new inflationary environment with increasing interest rates, high levels of building and low immigration. I'm not calling a crash but seems like if there is ever a time to sit back, it's now.
'Low interest rates saved the markets both times'.
Exactly!
True. Waiting is betting that the Reserve Bank and government won't spring up with more welfare to rescue property prices should hard times hit once more. It's thinking that the market is a market not a welfare scheme.
Risky bet.
I admire your cynicism.
More realism than my previous respect for market fundamentals.
If there was ever a time to sit back and wait was what everyone said at 2020 and then time before that and time before that. At what point would you enter the market? what do you need to see to convience you the time is right? If you and everyone sat on the fence and waited and then got back into the market at the same time you would then be fighting everyone for the same thing which will drive the house prices back up and create that FOMO.
If there was a crash then you will still wont be in a better position that if you are now. Banks will still not lend anymore than what they would now
Having other investments takes the pressure off the timing and being caught up in FOMO. Sure with leverage the gains recently have been crazy but things do somewhat revert overtime and on balance from here, it's hard to see how the party can continue like it has. If there was a crash I'd be able to buy a house with my current deposit so I wouldn't need to talk to a bank. Overall I'm more of a stocks person who tends to move cities a lot so owning property hasn't been a priority.
I'm in the same boat as you Jesse. Listened to my own judgment instead of everyone around me. It was hard but looks like it might pay off.
That's the attitude we had. At some stage you just have to get on with life and not worry about "what if". We bought a house in Auckland (1250 sqm in Mangere Bridge) with a large mortgage in October of 2021. Would I have preferred to pay a lower price for the home, you betcha, but unfortunately there is no crystal ball to tell you when house prices will correct. We bought the home because it was the right property for us as a young family, we intend to live there for the next 30 years, we didn't want the added uncertainty of renting and despite the large mortgage we could afford it comfortably. Brock and others will label us stupid but I can wear that.
I don't think people here will label you as stupid at all given the background story. Sometimes it's time to buy a house regardless of the market. Congrats on getting a place for your family.
The writing is on the wall for those who choose to read it.
It's more of a neon sign. The noisy, flickering type.
House prices are up 25% in the last year alone. So if they fall 7% or even 10% your very large deposit would have been far better put into a property and you could also have fixed a at much lower rate than what’s on offer now.
I've done well in equity investments during the last year, without leverage I haven't done as well as property, so in hindsight property would have been the way to I totally agree with you. But that's the past and getting it wrong in the past doesn't mean I'll keep getting it wrong in the future. Property isn't everything to me like most so I don't get the FOMO.
With respect, that’s quite irrational.
Generally, you’re taking on a higher risk reward premium with shares and shouldn’t be in such an investment if you’re going to liquidate in a short time for the deposit.
So I should instead leverage up into property after it's gone up 40% in 18 months? Is that rational?
I actually cashed up most of the higher priced tech stocks late last year based on the future interest rate situation and it's proved to be a good move so far. I don't normally trade much or hold cash but I think reducing risk right now is good if holding long duration assets that are highly sensitive to changing discount rates like high multiple tech stocks, and it would also include property if I had some. Still holding other stocks.
You're supposed to leverage up into property before it goes up 40% in 18 months.
Yes.
As I have pointed out if you had bought late last year when you cashed out of shares you’d be in a far better position even if by some miracle there’s are 30% decline in prices.
Just sit and wait Jesse I think ANZ are way out and it will be more like 30% to 40% over next year just depends on inflation and interest rates a lot of people are so over leveraged if it starts to unravel could go back to 2015 levels.
Yea good luck waiting for a few years. They will be waayy cheaper then 🙄🙄
Whatever, a housing market crash 💥 is a weak possibility.
In any case, central Govt and RBNZ would intervene to avoid such an event.
TTP
Government and RBNZ can’t do a anything.If US start raising rates we will just follow suit or NZD will just tank even more and inflation will go sky high. You know this TTP why are you giving bad advice.
It's not bad advice. It is called delusional wishful thinking, or self-serving real estate agent-like propaganda.
You are absolutely right, once the Fed starts rising rates there is absolutely nothing the RBNZ can do to counter the global effects of global rates rising as a result, including NZ.
We a drop in the bucket of global finance
FONGO replacing FOMO in 3..2..1.......
So based on economists predictions in the past, its a guaranteed house price rise in 2022 then ? Prices are going nowhere until the OCR starts taking big jumps and interest rate rises get set in concrete. RBNZ back in February, should be interesting.
So based on economists predictions in the past, its a guaranteed house price rise in 2022 then ?
Be careful with how you think and behave. If Granny Herald and Ashley Church say that "house prices in Nu Zillun can never fall", is that a 'guarantee' that house prices will actually crash?
Being able to think for yourself instead of listening to the 'experts' is a fulfilling pursuit.
Interest rates are going to be pretty much double for an awful lot of people coming off low 2% one year rates over the next 6-9 months. I don't think the OCR has to actually move much higher the big jumps have already happened.
Interesting...
So if these predictions are correct and you want to lose 90 grand this year... rush out and buy the median Auckland rotbox. Only a "DGM" would do otherwise.
Be quick!
Well thats the problem Brock, they have been as accurate as flipping a coin.
Less accurate.
At least flipping a coin is close to 50% accurate.
So your house valuation went from 800k to 1.1 million over the last 15 months.
Now it might drop by 75k.
This year yes, next year probably more as the rollovers and mortgage stress really start to bite those overextended folks.
Yep and a year later its back to $1.1m the second they open the immigration floodgates. I think I have come to the conclusion there really isn't any tools in the economic toolbox other than a couple of big hammers, interest rates and immigration
Yep and a year later its back to $1.1m the second they open the immigration floodgates.
Oh yes. 100,000 IT engineers from India will fix it. Blind faith.
A large proportion of the people we import can't afford to buy housing here.
They can with ~12 people in a 3 bed.
Very rare and that won't get through with CCCFA in place.
Maybe the CCCFA asking banks and brokers to put their money where their mouth is is actually quite important and good, in that regard. Preventing / reducing liar loans.
The NZ borders are never going to open up.
This is it. And if you want to move to Australia then hurry before Labor take over in Aus and also close the borders.
And so they change their predictions in order to look less ridiculous in 6 months time.
I wonder what they really think but cannot publish?
And so they change their predictions in order to look less ridiculous in 6 months time.
I wonder what they really think but cannot publish?
Believe it or not, their modelling is not as sophisticated as the sheeple think it is. For that very reason, the bank economists never share their forecast modelling or methodologies with the public.
Ah yes, the very reason you never look into your favourite sausage recipe,,,,, Worked in a bank JC?
Nope. But I have worked in industries where modelling and forecasting is used and the behaviors are similar behavior takes place. As I said, the forecasting and modelling is not that special. It is not something that is beyond the comprehension of many educated people. The only complexity will be mathematical and computational.
So they are saying 7% which is on a average house, right? So the houses which are above average and they rose in valuations more than the average would be failing more, right? So a 20% fall in top end of the market, multiple of Millions dollar houses.
Good work. Somebody who can understands a measure of central tendency is not a distribution.
I like people who can think like this.
The above average 2-4m 4-5 bed homes on decent sections in good locations will continue to creep up for lifestyle reasons (race for space). The current 800k-1.4m 3 bedrooms (many currently rented) and terraced townhouses will fall 10% and this makes your overall 7% drop.
The above average 2-4m 4-5 bed homes on decent sections in good locations will continue to creep up for lifestyle reasons (race for space). The current 800k-1.4m 3 bedrooms (many currently rented) and terraced townhouses will fall 10% and this makes your overall 7% drop.
Do you measure this? Or is just a 'hunch'?
lol...
I might be delusional but my opinion is that math is math
annual interest rate - loan amount - years - monthly payment amount
2% 710,000 30 2,624
3% 620,000 30 2,614
4% 550,000 30 2,626
5% 490,000 30 2,630
6% 440,000 30 2,638
7% 400,000 30 2,661
8% 360,000 30 2,642
9% 330,000 30 2,655
10% 300,000 30 2,633
11% 280,000 30 2,667
I am not impressed by an up 30% when we cut rates from 4% to 2%
I will not impressed if it goes in the inverse direction
everything else looks to me "opinions"
I am not impressed by an up 30% when we cut rates from 4% to 2%
I will not impressed if it goes in the inverse direction
Are you aware of Chris Joye in Australia? Very smart cookie who was behind the Rismark house price indexes among many other acheivements. Here's his thinking.
Two simple examples illustrate the lurking risks. Aussie house prices have appreciated more than 30 per cent since mid 2019 simply because mortgage rates declined by 100-125 basis points. If mortgage rates return to their mid 2019 marks, one should expect house prices to do likewise.
https://www.afr.com/wealth/personal-finance/be-afraid-the-zombie-econom…
I have never read his stuff but this is pretty much what I was saying yesterday and getting rubbished by a certain individual.
I have never read his stuff but this is pretty much what I was saying yesterday and getting rubbished by a certain individual.
Chris has been an uber-property bull for many years. Even his writings for AFR can be a challenging read. This is simple stuff.
Yep very simple indeed.
Funny then how it bypasses most people including economists.
Incompetence? Bad models? Or bias (conscious or unconscious)? Or all of the above?
Conformation bias.
MSM media saturation.
Every one wants more than what those before us had.
yeh, that's my exact point. Not a surprise at all.
unfortunately I can't read that article cause I am not a subscriber :D, but the mention says all
The staircase going up is also the staircase coming down.
In other markets it's usually the staircase up, the elevator down.
But housing in NZ exists in some parallel universe.
When I take out a mortgage I always ask what it would cost me at 10% interest. Most banks laugh at me but at least I can sleep at night knowing that I can survive a moderate shock. There is always a chance of it going higher, but you can only plan so far.
sound wise
Amusing how strong the correlation is, but yet so many refuse to believe it will hold up on the downside.
lol, true
Then your math is problematic.
As always, it's not what you know that gets you; it's what you don't know.
well... the beauty of it is that is not "mine"
Repeat that math for interest only terms. Then Realise 40% of investor loans are on IO terms.
ahaha, yeah, "brace for impact"
This is nuts
Then contemplate the withdrawl of interest deductibility.
Yup.
And the final answer to the equation is '.........'?
Facebook Investor 12/1/22:
Hi fellow investors. The bank has suddenly sent me letters advising that all my 4 mortgages will come off interest only immediately and a 5 year period is up with no notice. 2 mortgages in my personal name cannot be interest only. 2 Mortgages under my business to get them back to interest only they will need to go through an application process looking at income etc. it looks like without notice all my mortgages have moved to principle and interest. This is a massive financial change, is anyone else experiencing this and how have handled it? I checked with my broker and there don’t seem to be other options.
And many renters can change their living situation. Downsize to get cheaper rent, move in with relatives or others etc.
Newflash to the speculative, the term of the mortgage is just to lock in the borrower, not the bank. The banks contract allows them to change whatever they want at the drop of a hat. At face value the above is an example of this = Speculator Margin call.
And now just add in the punch of negative equity as well, and the desperate rush to try to sell when the market is on a dive and all the buyers are standing back waiting for the thud at the bottom of the cliff.
Now your getting it - this is 100% correct - as interest rates rise people can borrow less so can bid less - so house prices fall to meet what people can afford.
The only missing piece is wage increases do buffer what people can borrow - usually for every 10k somebody earns they can borrow approx 60k - so interest rates rising 2% may mean they have 200k less borrowing power if their salary increased 10k last year they only now have 140k less that they can borrow
The word is "maths" in english
noted, thanks... but that doesn't change it.
again beauty of it is that is not "english" :D, but wont mispell next time
I won't be surprise if ANZ repeats their performance for ANZ's 2020 house price forecast.
Would buy Zollner and her team flat whites if they manage to repeat the show.
The banks have a real knack for predicting things after they happen. Anyone watching Auctions since December can see a drop is already a reality. Another shocking set of results at the B&T auctions today. Only way is down unless credit is eased or the border opens fully.
The banks have a real knack for predicting things after they happen.
Something they share in common with the sheeple. They're human after all. Remember, at the end of the day, they're talking their book.
Borders won't open until the next election at this rate.
And people with the skills we need (ie nurses. IT developers) won't support higher prices.
I think in most part the housing marketing will go flat or slight decline. Houses that tick all the right boxes in the main centers will be ok. Anything thats a heap will suffer and buyers will become picky. Regional towns, beach towns i.e Coromandel where people have bachs etc will feel the price pressure aswell. If people have to sell for whatever reason with a deadline then they will too feel the pressure, but if people are not getting what they want then they wont sell and will just create stagnant market because people don't want to run the risk of not being able to buy or sell their property for the right price.
The Government will tinker with the CCCFA regulations and finally at some point immigration will start again which will keep the market going.
It may adjust to the usual sales activity that we experienced 6 to 10 years ago but it may feel like its all doom and gloom since its been so long where everything slowed down and took a breather
Papakura dropped 6.7% in December -discuss....
care to share the info on this 6.7% decline and what it was made up of? were they crap boxes or people aiming for the moon? was this average sale price compared to what? 1-2 bd etc
It's not physically possible for house prices to go backwards.
But a lot of people WILL need to sell - divorce, death, financial pressures, loss of job etc.
yeah but what numbers are we talking about here? I think alot of factors will need to come into play before someone must sell. Yes divorce or death is something that you generally cannot work around but financial pressure and loss of jobs can - alot of things need to happen before people are forced to sell. People will tighten their belts as much as they can if it means having a roof over their heads. Job losses happen all the time even in good times and bad.
Just because some people are forced to sell may mean that individual does take a hit, but it dosn't mean the whole market must then follow suit.
I suspect a lot of investors will be forced to sell due to financial pressure, given all the legislative changes, much higher interest rates and limited ability to increase rent.
There are certainly going to be a few of the more recent investors that will discover they are going backwards significantly when they come off low interest rates and prices aren't going up to compensate
yes I can agree to that, some will cut their losses and just sell, some will fight tooth and nail to keep ahold of them because of all the years they have worked for them, but I guess it still comes back to numbers and how many that might be. I have already seen alot of investment properties come on the market but they are not family homes or the nice to have, they are pretty average ugly ducklings that while the market was hot would sell pretty well, but would not now without taking a loss.
I still think that it won't cause a big drop in overall prices but will stay flat or slight decline.
Fair enough, I disagree on your house value predictions but you are entitled to your opinion.
People forced to sell create the comparables for e-valuers and registered valuations. In flat markets banks are very insistent on valuations before writing loans, as they don't have the prospect of a hot market to reduce the LVR every quarter. This is also compounded by registered valuers getting conservative and kicking for touch with valuations on the low side. This restricts credit, and the prices able to be paid even for desirable properties. Properties with any problem become virtually unsaleable.
In a downturn the property market seizes up, when I was buying properties in 2001 (I was in my mid-20s) on the Kapiti Coast. Dead market as a new Labour government in power. The indices showed minimal decline in prices, but I was buying properties 15-20% below registered valuation. Mostly absentee landlords sick of tenants, and they took the low cash offers with settlement in less than a week. As the property was worth more than they purchased for 5-10 years earlier, and they could get rid of a headache. Then go buy a new car that weekend, with the proceeds of the sale.
lots of real life experience right here.....
With a huge helping of BS
I would have thought divorces require more houses. Maybe 1 house for sale, but 2 people now looking for somewhere to buy or rent.
What will next week's forecast be?
The tail has been pinned on the donkey at minus 7%. If ANZ form is factored in it could be plus 7%. Where's that coin again?
Trust me, they will revise upwards again within a couple of months.
Would be interesting to know how far they think prices fall by the time the OCR gets to their forecast level of 3% in 2023. 10-15%?
They forecast the OCR at 2.25% by year's end.
Cost of debt rising and forecast to rise more, more building supply, restriction on debt access, real queries on rolling existing loans (75% of loans this year), very limited immigration, no tourism, record building consents, Govt buying and building state houses asap.
Sounds like a perfect storm ...but not the one that has been rolling for the last ten years.
Still significant supply chain issues on building products along with significant price increases which mean that new supply of housing is going to cost more and take longer than expected so not all one sided
The ANZ article discusses financial constraints and costs.
Given 30% or so of the NZ residential real estate stock is owned by investors as an asset then there is another variable that is much more difficult to predict and that is behaviour.
At what point in the decline of an asset value off its peak will investors start to pivot out of property? You can't sell half a house, so unlike shares it's impossible to hedge in very small increments. If the market has dropped by 5%, by the time you get a property to market, that might look like 10% so then there's an urgency building too. That's a perfect scenario for a run to start.
I don't know what the threshold will be, or if we will reach it, but if we see a drop of 10%+ things will get very interesting to watch from afar.
Excellent post.
There are far too few behavioural economists.
Interesting perspective, another slant on it though is it is less like an asset like shares which is more intangible where it is far more hard wired in NZers to invest in property, they always double in value every 10 years and it feels lower risk as you can physically touch it. So it likely would need to be a significant drop to influence behaviour, particularly because most of that 30% of stock would be sitting on significant capital gains
Feel like these are just PR statements to pressurize RBNZ & Govt, to either not act or repeal legislation i.e. CCCFA...
Fool me once, shame on you. Fool me twice, shame on me.
I'll believe it when it happens. So far all these "forecasts" have been wrong almost 100% of the time. I also noticed these forecasts keep blowing with the wind and can change on a whim. That's not called forecasting. That's called following the crowd and changing your position after the situation has occurred.
I also remember this "house prices are crashing" comment several times. Forecasts of double-digit declines in housing. Once the situation didn't happen as they planned it, they immediately said "banks forecast it to GROW double-digit" lol. A bunch of jokers these are.
To be fair, the housing market is far from based on fundamentals so difficult to forecast. It's emotional and totally irrational at times, idiosyncratic and full of vested interests. All you can take from any forecast is a bias towards markets rising or falling.
We're not still taking the banks economists' forecasts as gospel, are we? I thought they had been well and truly discredited.
Recently, Keith Woodford complained on this site that the equations used by economists are out-dated and overly simplistic; another words they are not fit for purpose.
I recently watched a youtube lecture by David Tong, one of Britain's (and the world's) leading mathematics and physics theoreticians. His specialty is quantum mechanics.
The lecture was a sort of 'state of the play' as to where we are at regarding our scientific and mathematical knowledge of quantum mechanics, the study of the ultimate constituents of the universe; he showed on the screen a longish mathematical equation that contained all the solutions to all areas of current scientific knowledge.
But even this august fellow made a joke at the expense of economists and their simplistic equations with the implication, to my mind, that they were on par with astrologers.
Citing the pronouncements of our economists is merely perpetuating the myth that they are somehow infallible prophets.
the answers don't always lie in mathematics. Markets are driven by fear and greed and a myriad of other factors. bayesian formula are as close as you will get, but when the poop hits the fan, its very difficult mathematics to work out where the splatter goes.
in a highly leveraged market, its the margin clerks who accept the worst prices, not the original borrower
2021 Backyard BBQ conversation: "How many do you own?"
2022 Backyard BBQ conversation: "When did you get out?"
Jacinda will stop us having those BBQs soon, don't worry...
Do you have some sort of fetish...? Completely out of context comments...
Massive fetish Rick, glad you asked and are keeping it in context.
If house prices fall, it will be much more than 7%.
In Flatbush - Auckland, one of those matchbox houses that were planing to sell at $978000 is now been offered for $889000 and think will be negotiable, specially if finance is not a condition.
I wonder if it is more pressure on the developers getting financing though, which potentially just impacts supply. Saw some in Henderson Heights being offered for $100k discount on a $780k property if a c.20% deposit was paid
I agree. We are a long way from fundamentals.
With capital gains turning to capital losses its probable we will see a rush for the exits.
Be quick!
Any links to such a sale?
Does LIKELY have the same meaning as WILL
I won;t likely bee a year older this time next year,i will be,
If covid or some rapid demise doesn't finish you first.
You can't be sure you will be a year older, and I can absolutely guarantee you that there will sometime be a year where you won't become a year older.
Nothing stays the same forever.
having recently paid my home off, I'm looking to buy a rental property, but seeing what the most important rate on the planet is doing (US 10yr bond rate ), I'm very nervous. Happy to sit this one out. Its going to get messy, very messy. . . . . .
Any "Market" participant knows that a market on a decent tare for 20 years can give back a few years in a correction no trouble, unless you are a margin borrower or lender.
Price discovery starts once speculation stops.
Banks and economists have been predicting a fall in house prices every year for the past decade or more. I don't see how this year is any different.
Hahahaha.
Exactly. It's just fear mongering.
Let it burn! This housing ponzi pandemic of the mind has to end.
All those people that have signed up for unconditional on 'off the plan' developments will be in for a shock when they go to confirm their finance prior to settlement.
At best they will have to find a lot more deposit, at worst they will have no funding.
They will have to walk away from their deposit, which the developer will only allow if he thinks there is a bigger fool he can immediately sell onto, or if not, then the original purchaser will be sued for specific performance.
Domino - effect.
oooo 7%? Scary stuff. (Sarcasm). After rising almost 50% in the last 18 months. How will those fragile investors cope with such injustices?
Well if the above is true and banks are forcing those on interest only home loans to also now paying the principal back AND interest rates go back to 7% then clearly investors will be in the crapper. Basically their current repayment amounts will triple/quadruple so yes there will be house sales because of it. Investors will be forced to sell to pull their equity out and drop their total mortgage. This would have a massive effect on the market. I suspect the banks are smart and going after the highly leveraged on interest only to reduce their own exposure to a downturn. Interest only mortgage repayments should never have been allowed in the first place, its just another piece in the jigsaw as to why we are in this mess in the first place.
Interest Only Loan will never stop in NZ as most investor, if not all are surviving because of interest only loan.
Remove it and house will fall apart, which everyone who should know are aware and this same people in power are all for supporting the ponzi so will never touch IO Loan.
Banks should know better after 2 years of Covid that Covid currently dictates the market, not their predictions.
Omicron's arrival may have just dated this report.
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