A review of things you need to know before you go home on Monday; many rate changes, shifting to economic lockdown, NZ QE, swap rates dive, NZD soft, & more

Apologies. I got that wrong. See this.

After the Asia Financial Crisis in HK it took 5 years for property to bottom out. Levels were about 35% of pre crash levels. Things move slowly though, it's the lack of liquidity at the start and the slow realization there is no bid.

If you want to see expectations on pricing here look at Argosy Property and Ryman Heathcare (which is actually a property company) share prices. Both are down about 40 ~ 50% from their highs.

If you don't have a mortgage or are near to paying your mortgage I would be sleeping fine. But if you own multiple properties with significant debt, or a recent buyer, I wouldn't be sleeping well at all. But then again I wouldn't have been the last 5 years given the risk built into the system.

Like a baby, but also like a professional investor.

Agreed the banks will have some defaults for next 24 months and then massive profits.
Also how high do you think they could push interest rates in a few years.
One bright note when my children grow up in 10 years they may be able to buy again.

Foreign Buyer, am sleeping like a baby. Got a paid-for property and liquid assets in three different countries.

Been warning for the leverage trap for like, since I was a baby. Good luck y'all, time for me to leave this site.

You must have missed 1 news tonight stock of houses down and prices up. Everyone still talking up the market.

My Debt to Household income is 133%. My LVR is around 50%. Purchase price in 2017 was $15k more than what the vendor paid for the property in 2007. Mortgage, rates and insurance combined are about 20% less than equivalent market rent in the Wairarapa. My job enables me to 100% work from home, for a company that has been around 100 years. My wife is a teacher. If we were both to lose our jobs, we will still be reasonably comfortable on the jobseeker benefit + all the other wonderful entitlements. But a 50% reduction in house prices would see us with no equity, so we could still be at the mercy of the bank albeit at the back of the queue i imagine.

I doubt they will be allowed to drop that much. The government will just keep pumping cash into the banks and the economy until they take off again.

When this is over?

How does it possibly finish?
Has anyone thought through what people's appetite for spending to refloat the consumption bubble will be in 3 mths/6mths/12 mths...???
Close to zilch
It's a one way street

In Australia they guarantee 250k deposits? They are the same banks as here? Why are we put at risk like this?

Bank shareholders are exercising their concerns. Witness ANZ's share price fall. Surely TD interest rate cuts are not warranted since depositors remain unsecured creditors of what can only be considered a risky venture. Lower deposit rates confirm tighter monetary conditions, in so much, as only the most creditworthy with the most pristine collateral will be extended credit and that excludes the majority of depositors. The RBNZ accepts only the best collateral when extending reserves as an exchange at it's open market operations window.

After the GFC banks have been subjected to a very high level of scrutiny. I can assure you the big 4 banks in NZ are very well prepared for another financial meltdown. Besides, this time it's the airline+tourism industry will take the most hit, Air NZ just got thier 900M package from the govt, I think they will be fine.

Put all your money onto the credit card. Exempt from interest earnings but potentially exempt from bail ins???

I though I was confused about bank runs , its the bankers that actually run.

NAB have to be ruthless, for years they've had the highest overheads of the big four and underperformed their peers. They are running out of investor patience.

Spare a thought for the new house buyers in Pukehina , BOP. Its a small beach town East of Tauranga. The average asking house prices have gone from 300k to over a million in 5 years. Most are second property holiday baches. This town fell the most "by far" in NZ after the GFC as owners scrambled to sell their second home. This will be good market to watch. I certainly wouldnt want to be the local agent who probaly told the new purchasers what a good deal they were getting... ouch!

Could be a good opportunity for those who want to rent these properties at low-ball offers. Chances are they're not going to sell and the owners will be looking to get something.

Yeah, there was blood on the beaches all down the way post gfc, I lived in the region and heard some very sad stories. Banks were way too aggressive calling in loans, I suspect we may hear more and it might pave the way for homeowner debt medition legislation so its possible to prevent the banks turfing you out simply because you cant find work for six months, a rent from the bank till you get a job scenario, then when you get a job resume your repayments?

This is pukehina that's has no local employment so relys on Tauranga, about a hour commute away on a very good day. No schools , or sports or almost anything except houses and a beach.

Yikes!

Edit: looks to me like it was ‘only’ down 15%.

Exactly, this would be the liquid equivalent to peoples' sentiments on property.
But real property transaction values will likely take years to slowly deflate, as those of us who survive the Covid-financial-meltdown wait carefully to figure out just when the property game is ready to start again

Will be interesting to see the Oyster Fund who I have complained about their valuers providing unrealistic ratchet step ups in values at each reporting period. NZ valuers have proven with their Hisco valuation that they can be bought.

Time to see who's naked as the tide goes out.

Fletcher's in an attempt to transfer wealth to the board, and who decided to start buying back 300 million of its shares ( priced between 4.40 and 5.67 ) from September 9 2019, and seemingly pausing on 6 March 2020 , have spent in the region of 150 million with today's share price now down to 3.14 . It's what you get when you become greedy and incompetent.

Actually, if you look at majority of the world's largest indices (such as S&P, FTSE, ASX, Hang Seng, Nikkei), most of them have dropped more than 30% from their Feb Peak. The performance of the fund is just an early reaction of the property market, which I think it will hit in the next 6 months.

When will governments learn that people can't be trusted? Not to self-isolate, not to abstain from panic buying and not to quarantine. The human animal is dangerous and can't be trusted. If you want the populace to do something it must be instructed to do so at the barrel of a gun. We better deploy the army and armed police keep the peace.

How many daughters do you have Andrew? You seem to have one for every occasion.

I have four.

Good old Hastings. I grew up there and traveled for 10 years arround the world and I still think of Hastings as the most violent place I've ever been.

Good comment on Fletchers, I knew they were buying but who would have anticipated this virus? I stupidly bought 5000 just before Xmas when ASB Securities raters, Morningstar, had an 'accumulate' on it.
It just goes to show even purportedly specialist share-raters don't know what's coming from left field.

Good comment on Fletchers, I knew they were buying but who would have anticipated this virus? I stupidly bought 5000 just before Xmas when ASB Securities raters, Morningstar, had an 'accumulate' on it.
It just goes to show even purportedly specialist share-raters don't know what's coming from left field.

JK brought back knighthoods so he could recieve one? It would be the type of thing expected of Xi or Putin. How did NZ turn into this type of banana republic?

I think you mean the supermarket workers, posties, and pizza delivery guys.

They are the ones that are going to be dealing with the anger/frustration, running the gauntlet of being exposed to the virus, and all for minimum wage.

Well put

How not to lesson!

Mismanagement got us to the point where this was the only rational choice. I'm glad they finally did it. But very angry at the non-quarrantining of arrivals that put us in this position

Zach - see if you can get hold of "The Last Ship" tv series.

Was this before or after you said that everyone was overreacting?

Who'd ever book a cruise again?

Zero.

Depends where you sit. Some people are well positioned for this. DGM scenarios are not good for the majority, but they also represent good opportunities for a minority.

My students in China have been doing this for 45 days so far!

Something we agree on. If you look at the sales of shares as a percentage of total securities issued - many are a fraction of a percent. One example is South Port - according to NZX today 256 shares were traded over 13 transactions meaning only 0.0000098 % of shares were traded and yet the price dropped 35 cents or 5.51% (I suspect these were all robot trades). ASB Securities shows there are buyers for 144 shares and sellers for 35,547 and there is a big difference between what people are prepared to pay and what people are willing to sell (40 cents) - this share is most likely an exception in regard to the number of shares sold. Another example is Ryman - 2,434,550 share were sold - meaning a total of 0.0048691% of shares were traded. Again sellers outnumber buyers by a factor of 5 ( and the valuation by Morningstar is $13.00 and was issued on the 20th of March - current price is $6.64). Another Napier Port Holdings $2.52 - just above it's list price lat year) - 0.00102% of shares traded yet the price dropped 31 cents but in this case there are far more buyers than sellers (almost 3 times). There will be countless others. It is the marginal seller that is currently setting the price and they are panicking (it always is the marginal buyer or seller who sets the price). The other thing to remember is that there are buyers - as evidenced by the trades that are being made - the market hasn't frozen yet (turnover today was $286,893,422 according to the NXZ).

I'm still working and will be as I work for an essential service. Working from home, the commute is short - I can dress how I like.

I generally agree with that sentiment about positivity. However, this is a financial website and we should be objective and alive to the real setbacks that this is going to generate.
I don't think this is going to be the end of the world in economic terms. Talks of 50% drops in property are rubbish.
We will probably see minor to moderate falls in Auckland, and large falls (20-30%) in a small number of locations, such as Queenstown.
Some of the small regional cities such as Palmerston North, Napier or Dunedin will also get hit.

Unemployment is going to be a big issue though. Today's announcement will help, but I still think the rate will rise to at least 7-8%. And as I've said before the elephant in the room is kiwis in Aus who lose their jobs. We could easily see tens of thousands return this year, without jobs, and that would make the unemployment rate go higher.

If the govt play this right, they can use unemployed construction workers coming back from Aus to assist them on progressing a massive state housing programme.

We find out at the end, when we see how much of the power is returned to us.

"You are under house arrest."

aha..finally RW surfaces....and indeed it is a bloodletting...globalism and its neolib cohorts have been cornered and gunned down in broad daylight...the corporations have been sent reeling...what will happen next?

no they won't, they will be seized by the state and returned to the populace...

Details about the latest tranche of patients who have tested positive for the coronavirus have been released by the Ministry of Health https://www.nzherald.co.nz/nz/news/article.cfm?c_id=1&objectid=12319178

For the most part New Zealand doesn't have apartment living - that I think would be the worst environment for transmitting the virus - if people use communal areas (think lifts, stairwells etc). While I have neighbours they are far enough away to not be a real issue. Going for a walk where I live I generally may only see one or two people - cross over the road so you can to avoid them - simple.

My neighbours this evening are having a party. They’re in their 40s and obviously idiots. 18-20 somethings aren’t the only problem.

There is a whole heap of people in society like this. They will be the reason we will probably continue with level 4 measures for a few months.

Neither needs Rocket Science. Textiles plus 3D printing for masks, breweries for alcohol-based antibacterials. Feet on the ground.......

Us baby boomers have already given you the flashest toys ever in the history of the earth: computers and Iphones. You're acting now like spoilt children. I admit these distractions allowed us to accumulate property unhampered. But you wouldn't put your Iphones down.

Nonsense.

Higher taxes / levies to support the unemployed through this - I am all for it , will pay my share ( if I am lucky to stay employed myself as seems likely at present ).

Remake the world to fit your socialist wet dream - take a hike.

Poor falla, no more avo smash and latte. We all feel sorry for you, it's sounds really tough. Please tell us more.
No not really. Pull up your socks and get on with it.

Indeed...one wonders at the level of self-absorption even the replies to your comment seem to suggest.

The NZ Security Intelligence Service has had a talk with him.

The NZ Security Intelligence Service has had a talk with him.

Could a case of the average minister.

https://youtu.be/KgUemV4brDU

Keep in mind our Army is only 0.1% of the population - not like some other places. So it's going to have a job on its hands!
And as for house prices falling? Yes, they will - but reluctantly and with a whole heap of propaganda to the contrary so as not to scare the horses.
Tourism areas are in for an extended very bad time. So much so that I doubt you'd even want to consider buying there. What will you do there after you've skied all the trails and hiked all the routes drunk in all the bars (when they reopen, of course!) and have had no job to support that? And as for renting out any aquisition there? Good luck with that! The place(s) is going to be wash with vacant 'homes'. Much better to take advantage of that than buy?
Anyway. Yes. interesting times ahead, and tough times for many. Good times for far fewer and uncertain times for all.

The army and police road blocks and checkpoints cannot be far away. Also the government needs to stagger people arriving at the supermarkets some how. Some sort of id with the day of the week and the time you can shop. Not only will this limit panic buying it will limit numbers in store so you can at least try to maintain safe distance.

Good luck selling or buying. Open homes canned. More importantly, the critical AML / KYC processes needed to legally buy or sell are now impossible (e.g. having a lawyer or JP site your personal ID and verify documents). LINZ to shut no doubt as well. All law firms shut as well. Probably real estate agencies too.

Air BnB market destroyed. Picking a few Queenstown owners soon to learn what "margin call" means.

If you have cash and or protected incomes just wait a little longer. Popcorn time.

I'll assume that's a genuine question, so here's one possible answer:
There's nothing you can do at the moment. Who is going to buy in this market - both physically ( no open homes etc) and economically ( as you are worried about prices falling, so will any potential buyer).
I suggest you calculate 'What will it go for when it all settles down?" - that's your call - Some will say "Higher! Property is the best investment". Some say "30% lower! Who is going to have the ability to pay more?" and list it at what you decide; leave it alone and don't expect any bites. But who knows! You just might, and at least you'll feel like you are 'doing something'..
You have 4 weeks + to watch and see what happens - use the time as wisely as you can....Oh...and Good Luck!

Just wondering, have you got a property mentor to turn to for advice? If so, what are they telling you to do?

In my opinion, property will continue to increase in value. It's Armour plated. There's no "cutting losses", there's no need to leave money on the table, property is a one way bet.

Hahahaha. Hmm. I suppose the returns while AIR BNB were probably spectacular, but not so much if the property is now sitting empty for an extended period of time. Oh the market can be cruel.