Here's our summary of key economic events overnight that affect New Zealand, with news Australia may be facing a new wave of small business failures as their recovery misses the mark for many.
But first in the US, personal income fell -7% in February from January, after the +10% stimulus-boost it got in January. Of course there is the current additional stimulus going out so it will get a March boost as well. Personal spending fell -1% in response in February after the +3.4% January rise. We will be seeing distorting stimulus changes for a few months yet, so it will be hard to tell the background progress, if any, they make in household incomes or spending.
US PCE inflation is essentially unchanged in February from January, but it is up +1.6% from a year ago and that is a rising pace.
The more current surveys of consumer sentiment are quite positive, with the latest UofM survey up more than +10% in March from February, and now to its highest level in more than a year.
The American merchandise trade deficit for February came in at -US$86.7 bln, its worst ever. Exports fell -7% year-on-year and imports rose +8% year-on-year. This means they are running their goods trade deficit at the rate of -US$1 tln per year. Of course they have a trade surplus in services, and the net of the two is equivalent to -3.2% of GDP.
The Fed's balance sheet swelled by another US$26 bln last week to US$7.7 tln, although this latest rise is actually small in the perspective of recent changes. Since the start of 2021 their 'assets' have risen +US$356 bln or almost +5%. The US Fed balance sheet is now at about 35% of US GDP. For comparison, the RBNZ balance sheet is 'only' 24% of NZ GDP, even after all our pandemic support operations. In Australia it is just on 20%.
While dramatic, the Suez Canal blockage will have a global impact, especially on shipping issues and costs. But it is a crisis that will affect Europe the most (and play heavy in their media). It will have a much lesser impact on us.
China’s economy is expected to increase +8.1% this year, after growing +2.9% last year, according to a new upgraded forecast by the World Bank.
To help keep up the momentum, China announced 24 new measures to boost new types of consumption, including accelerating "new infrastructure" construction, and rollout of pilot programs for the sovereign digital currency, all as part of efforts to drive domestic demand.
ANZ analysts say they expect Chinese steel output to rise slightly by +2.3% in 2021. With demand for steel moderating, the risks of over-supply are rising. As a result, steel prices may face a soft patch following the current boom. Over the longer term till 2025, China’s intention to consolidate the steel industry capacity and to increase self-dependency for iron ore will pose downside risks to its iron ore imports, but the impact will be gradual. Current iron ore prices are holding high.
South Korean consumer confidence is rising in March and faster than was expected. Especially encouraging for them was the indication consumer spending is about to rise even faster. This is the first time sentiment is net positive there since before the onset of the pandemic.
Singaporean industrial production continues to expand at a fast clip, up +16% year-on-year although some of this is because the 2020 base was pandemically low. Still, the February result was higher than expected.
Australian household net worth hit a new record high in Q4-2020 according to official data. It was pushed up by property prices and their superannuation accounts, rising +AU$½ tln in just three months to AU$12 tln and an average of NZ$510,000 per person. Obviously, it is not evenly spread. Household assets values rose +5.3% to AU$14.6 tln but liabilities only rose +0.9% to AU$2.5 tln. New Zealand's Q4-20 household net worth will be reported by the RBNZ on Tuesday, March 30, 2021.
But things are not so positive in the small business community there. Business insolvencies are expected to spike in the wake of JobKeeper’s end with credit analysts Equifax warning the end of the subsidy was one of a number of factors that were about to trigger a wave of 300,000 to 400,000 business failures across Australia, with the pain felt overwhelmingly among small and medium firms. And especially in Victoria.
Wall Street in their Friday session is up +1% in early afternoon trade and heading for a +0.9% gain for the week. Overnight, European markets did better, rising on average about +0.9%. Yesterday, Tokyo, Hong Kong and Shanghai all rose +1.6% in each of their sessions. That means Tokyo ended the week down a net -2.1%, Hong Kong was up a minor +0.4% for the week. The ASX200 rose +0.5% yesterday to end the week +1.7% higher. And the NZX50 Capital Index fell -0.3% yesterday to cap a week where it declined -1.3%.
The latest global compilation of COVID-19 data is here. The global tally is rising and at a faster pace, now 125,747,000 have been infected at some point, up +762,000 in one day. Global deaths reported now exceed 2,759,000 and +12,000 in one day. Vaccinations in the world are rising fast however, now up to 509 mln and in the US almost 40% of their population (132.1 mln) have now had this protection (+2.8 mln) as they achieve a very fast rollout. The number of active cases there actually rose yesterday to 7,034,000 (+13,000 in one day), as they get an unwelcome spike in infections.
The UST 10yr yield is up +4 bps at 1.66%. The US 2-10 rate curve is much steeper at 152 bps. Their 1-5 curve is also steeper at +79 bps, while their 3m-10 year curve is steeper at +165 bps. The Australian Govt 10 year yield is also up +4 bps at 1.72%. The China Govt 10 year yield is unchanged at 3.22%. But the New Zealand Govt 10 year yield has risen for a second day, up another +6 bps to 1.65%.
The price of gold starts today back up +US$4 in New York at US$1732/oz. Gold has meandered in a tight range all week.
Oil prices have overcome yesterday's sharp drop and are back up +US$3/bbl and are now at just over US$61/bbl in the US, while the international price is now just over US$64.50/bbl. More well are being brought back into production in the US.
The Kiwi dollar opens today with a small recovery to 69.9 USc but that leaves the weekly devaluation at -2.4%. Against the Australian dollar we are holding at 91.6 AUc. Against the euro we are also firmish at 59.3 euro cents. That means our TWI-5 opens today marginally firmer at 72.4.
The bitcoin price will start today at US$53,759 and down a bounce back of +5.1% after yesterday's sharp drop. But for the week, this crypto is down -8%. Volatility in the past 24 hours has been moderate at +/- 2.7%. The bitcoin rate is charted in the exchange rate set below.
The easiest place to stay up with event risk today is by following our Economic Calendar here ».
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144 Comments
Suez is a classic example of sacrificing resilience/capacitance
As advised by economists.
https://www.amazon.com/Collapse-Complex-Societies-Studies-Archaeology/d…
Looking more prescient by the day
Gummy here a much better title
https://www.amazon.com/Alchemy-Curious-Science-Creating-Business/dp/006…
Not busted by relying on flawed economist view.
And on a Humourist podcast.
https://youtu.be/C8lfBQ7W47Q
For comparison, the RBNZ balance sheet is 'only' 24% of NZ GDP, even after all our pandemic support operations. In Australia it is just on 20%
Central Banks Don't Do Quantities of Money Because They Can't.
The most that can ever be tied to QE is “helped” “reduce yields.” That’s a curious way to sound about what’s supposed to be its chief (meaning only) contribution; helped?
In other words, falling rates correlate with QE’s if only because rates are already falling by the time central banks get around to conducting these programs. And if yields are already dropping as things get bad enough to convince central bankers to unleash their psychology, what good are even lower interest rates than the low rates bad things have already brought up?
Circling back to New Zealand, this is just their argument for the idea in 2021:
“The evidence shows LSAP proved effective in providing much needed support, lowering long-term interest rates and exchange rates, and underpinning economic growth and inflation. Studies found the government bond purchases worth 10 percent of GDP have, on average, lowered 10-year government bond yields by around 50 basis points.”
Understand what, after two decades of experience, central banks worldwide are attempting to claim here. I recently summarized this view in this way:
“The official response – in public – is that, yes, rates have dropped on their own but QE made them go (a relatively tiny bit) lower than they otherwise might have. This is the monetary policy equivalent of ‘jobs saved’, a manufactured counterfactual attempting to salvage something more relatable (to the average person) than the even-more-made-up term premium argument.”
As I also noted, in private they wonder aloud why the central bank is buying government bonds that the market is already bidding up. The only answer is to signal some sort of made-up accommodation somehow supposed to cancel out the negative factors already driving up those market bids for the same assets; that rates going lower because of troubling monetary viciousness are magically transformed into virtuous stimulus because a central bank (arguably) made them go a tiny bit lower than they would have anyway.
It's not circular logic; just plain illogic, flat out stupid.
Graphic depiction of the Japanese experience
But the Bank of Japan remains dogged in it's pursuit of failure.
The whole thing is a farce - it really is time to stop pandering to the speculative, detached from reality, value extracting financial market.
This may interest you
Van Metre explains why he believes the Fed's policies have actually caused banks to tighten their lending standards rather than loosen them as the Fed intended.
Large US banks have taken to extending credit to purchase government debt because capital demands for these risk free assets are compared with other asset classes.
Freed from the physical constraints of actually holding cash, Basel essentially moved reserve requirements from the asset side of the banking system’s balance sheet to the liability side. Banks were no longer limited to multiplying credit from their reserves of national currency on hand. They could now produce credit and deposits from their store of equity capital. And a large segment of equity capital is retained earnings, meaning banks could multiply their own ability to create credit and leverage through using leverage on their own profitability. The status quo of the banking system has become one in which banks themselves control the levers of money creation – it is the wildest fantasies of the banking system come true.
But in depending so much on leverage, the banking system has become overly dependent on collateral. Collateral provides the lowest cost short-term operational funds while at the same time, depending on the particulars of each class of collateral, affords a reduction in the equity capital charge via regulatory definitions of “safety”. A repo transaction for a bank is a collateralized loan where a bank can fund assets at that lowest cost. In terms of the overall quantity of those assets a bank can ultimately hold and turn into profits, the securities that adhere to regulatory definitions of safety lead to the lowest capital reserve charges, and therefore provide both regulatory and funding leverage.
This accounting trick of regulatory safety meant financial innovation was needed to not only transform risky assets, but to mass-produce them as “safe”. Securitization of mortgage debt was one innovation widely used to create AAA-rated securities that were readily accepted as low haircut repo collateral, while at the same time using up as little equity capital as possible. The interest rate paid by the underlying mortgages and the traditional concept of risk/reward were secondary and tertiary considerations to how much leverage could be obtained and applied. Quality of assets was hardly considered in the pursuit for ultimate quantity. Link
https://i.stuff.co.nz/business/property/124653065/investors-sleepless-n…
Fantastic. Go do something productive.
Oh . . . and we haven't had a couple of one-sided upset vocal minorities on the site? :)
Glad to see the Government action especially for FHB, but also to all including serious property investors, homeowners and the inherent risks to the wider economy as housing increases were unsustainable.
As to recent investors as referred to the article, I don't have much sympathy as it was obvious that increasing prices were unsustainable and that either the Government or RBNZ were going to need to do something. So poor decision on his part and needs to live with that as part of risks with investing. That investor's action was akin to hearing of a really great varsity party but by the time they got there the party was over; like the alleged Rockefeller quote "When my shoeshine boy is advising me it is time to get out". When everybody is talking about it is time to be cautious.
Crypto is a bit like that currently. It's very easy to say it was obvious after a crash but as Karl says property has been popular with shoeshine boys for 40 years now.
Governments do seem to have worked out that by manipulating interest rates they could avoid recessions or worse however it also means, and this seems to have only recently dawned on them, that they could avoid runaway asset prices as well. Well that's my take on things.
Zachary
Agree with you that RBNZ has been manipulating (reducing) interest rates for economic stability reasons for over a decade and that powder is now seemingly in short supply . . . hence other tools like FLP. Presently I am picking that the RBNZ May Monetary Statement won't be looking at taking any further actions affecting property such as DTI and interest only loans until the effects of this Government action on property is clear . . . a wait and see by them.
loveyourwork...yes Stuff have proven to be very much like their idol Jacinda. They pretend to be the champion of the poor and minorities ( through grandstanding on minor issues for their own virtue signalling agenda) while doing everything possible to ensure our society remains exclusive and inequality of outcome based on race remains. "House scalping" is one of the biggest factors contributing to racial inequality in NZ.
Those investors who don't want to sell a holding losing money because they will have to pay the CGT (bright-line tax) are nuts! What they don't seem to understand is that if you are paying any CGT, you are still making a capital gain!
I suspect they'll spend months/years losing money while holding off (to avoid a tax) and then when the bank forces the sale - they'll lose even more - and the debt will stay with them on an asset they don't own. The only reason this didn't happen in the US post-GFC is because they have non-recourse loans there. Imagine the mess we'd be in if we get a US-style GFC house price crash.
gnx..I doubt you have been to Mumbai, Joberg or Manilla or you would not be wondering. The quality of life in a NZ farm prison would be better than a life (as a poor person) in any of those places. However, a number of the immigrants that we genuinely do need may leave. The more the migrant fits the description of "net negative migrant" the less likely it is they will leave and vice versa.
How many are really going to get into trouble ? You don't get all those houses overnight so I don't really think the big investors are going to care if they have to sell a house or two and of course we are only talking "What if's" as there is simply no guarantee house prices will fall.
Carlos67...I agree long-time investors will be fine as they will have a ton of equity built up over years, and as you say, they can just sell a house or two. And I agree there is no guarantee house prices will fall but the chances just got a whole lot higher that they do. With last weeks actions we are now entering a place that we have never been, which is why I have mocked "the evidence of the last 40 years" (infamous AC comment) so often.
If there are big falls and the recovery is long then it will be (some) newer investors who have borrowed 100% of the purchase prices of their investment houses (using equity from another home) and are on interest only loans who may be in trouble. If I were in that position interest rates (increases) would be my biggest concern.
I am guessing that you are in a similar position to me where we will probably never buy another house again and will stay in our existing freehold homes till we move to a retirement village(or worse). And if so, what happens to house prices will have no effect on our lives at all. It is just a game we can watch unfold, a game where I can root for the poor to win or maybe just hope they are not beaten as badly as they have been in the past. Hopefully it is time for the greedy investors to be the ones feeling a bit of the pain (renters and FHBs have felt) for a change.
"I wouldn’t have bought the property if I had known such a change was coming."
or to put it another way, "I wouldn’t have bought the property if I had known I could lose money"
And that....is why the changes have been brought in.
To do just as this buyer will do next time - think twice before buying a speculative asset.
Even better!
All these stories are adding to the deterrent factor of "Don't do it!' that the Property Investors Association is trying to calm.
They are cutting their own throats with every article that they sponsor.
My question , friend : Sir Robert Jones ( hallowed be thy " No Punches Pulled " website ) is our richest property investor ... mega $ billionaire ... yet , he's not pilloried in the public forum of discount tent ..
... do we save our opprobrium for house investors ... and give the commercial guys/gals a free pass ?
Indeed, some of the big guys actually see the problem and want to do something about it. Ian Casssls in Wellington for instance has said its now his mission to create affordable housing.
Seems like all the sob stories have shown the government has got step one right, targeting the "sure investment" unprofessional investor group that have been piling in. These complaints are like they are saying they don't have any options - you could sell your property you know?
Exactly - must be rough going from the paradigm of ‘you can’t lose with property in NZ, mate’ to actually look at the spreadsheet again without interest deductions and think ‘in many of the possible outcomes, including rising interest rates and rent caps, that this investment now stinks’
Gummy...being a big admirer of Sir Bob I would suggest the strength of his moral compass would never allow him to invest in residential property. He is a champion of the poor, although you will not catch him shouting from the rooftops about it. If we had people even close to the caliber of Sir Bob running the place we would not be in this housing crisis now. He would have never allowed it.
We allow the sale and purchase of all types of drugs that do not harm society while legislating against the sale of heroin and meth. There are good reasons why we differentiate between different drugs in the same way as we do for property.
Goodness I hope those predictions for up to 40,000 lost jobs in Melbourne alone don't eventuate. That's massive. A bit like what we are seeing/have seen in the US. Time to brace for winter. Hope the politicians are up for managing an economy in a deep recession. So much COVID relief funds to date already spent. What a mess.
I'm actually working in Melbourne and we are just about to let 30% of the staff go. this is more than 30 people. I guess it will be one of many. Many manufacturing businesses are slowing down. It was kept afloat and in the meantime the money is pumped into property market ...
I really do not see HOW if can be 'all good' in the next months....
Did I miss this? https://fred.stlouisfed.org/series/M1
Discontinued. Is that exponential line getting too scary?
And on the Bitcoin front... A giant step, again for NZ https://t.co/VUgyGIgBhK
Great links, particularly the last one for explaining the illusion;
In short, if they can make you think they, or the banking system, is printing money then they believe you’ll act in anticipation of expected future inflation even if no effective money (on net) ever gets printed.
More of the same. https://youtu.be/Rd3r8xN2QJY
(from your link) " A few years ago he was shooting a documentary in Zimbabwe, about hyperinflation. He said he saw a guy that had a wheelbarrow full of cash. He asked the guy if he was worried about someone stealing his money, and the guy replied, "No, I'm worried about them stealing my wheelbarrow."
I know we are all being conditioned to expect Inflation!!! but do we think about what that would mean for 90% of the population of the planet?
If we did, we'd realise that whatever "Insurrection!!!" we saw on the steps of the Capitol is going to pale into insignificance if it ever arrives, never mind about what will happen in (pick your favourite hotspot).
Inflation!!! is the last thing"they' need. But they do need an environment that wants to buy everything they own from them, and leave them with liquidity - cash, to start the whole thing over again.
The way to get the sheep into the last paddock at the slaughterhouse is to make them more scared of you than whatever might be in that big building over there......
A few weeks back I posed this question to a fellow commentator ( Zachary?):
"Are you brave enough to sell everything and covert it into cash?"
In rough terms the answer was, "Are you mad!"
But given the Government changes to property this week, what would they say now?
And this is only in Little Ol' New Zealand.
What's going to happen when the big economies start down the same track as us?
Absolutely would not. The changes aren't as extreme as people make out. Things have returned to how they were just a couple of years ago regarding rent yields. Pitiful to non existent on an Auckland property even with a 100K of your own money thrown in. The very low interest rates made things much more attractive and kind of a no brainer. It was bound to enflame the market.
Fair enough.
But what about if they return to what they were 10 years ago; give back the last 'doubling' - that's not much after 7 or 8 of them over the last few decades. Housing was just as Unaffordable 10 years ago, after all.
And then, perhaps, the one before that?
Like all things, no one makes a loss looking back.
And as Kate wrote this morning "At what stage do those who hang on decide to give up?". It's human nature to cling to what has worked.
All I'm suggesting is that whatever we had is going to change. If you think it will be for the better for asset values, hang on. I'll just suggest our Government, for one, is indicating that's not going to be the case.
There's one thing cash gives you, it's instant choice.
I'm not sure what rent levels will do. There are no hard and fast, guaranteed levels of property value/rental income.
Rent isn't just about "the alternative cost of buying". Most importantly, it's about the ability or willingness to borrow to do so. It's also about freedom of movement - for jobs etc .
Rents could go up, down or sideways and have less bearing on property re-sale prices than we may all think.
If someone thought property prices would fall 50% in the near future, would they buy or rent today, regardless of the calculations?
But what about if they return to what they were 10 years ago; give back the last 'doubling' - that's not much after 7 or 8 of them over the last few decades. Housing was just as Unaffordable 10 years ago, after all.
Brad Olson from Infometrics was quoted on TVNZ saying that incomes need to increase approx 120% or house prices to fall 55% for housing in NZ to be affordable.
This is a big bubble, even compared to those of the GFC. Furthermore, even during Japan's epic bubble, h'hold debt to GDP was never as bad as it is in NZ.
... you know that weird farty sound a balloon makes after you inflate it , then release it to bounce around the room .... well , theres gonna be alot of that about if house prices go into reverse .... alotta soiling of de nappies in de suburbs of this fine land , girt by debt ...
... and , why wouldn't prices keep rising ... sure , Robbo's severely punched property investors below the belt ... so , if that frees up a few more houses for FHB's ... then there's been no change at all in the supply/demand imbalance ..
Nothing's been done to increase supply ... apologies for being a Croaking Cassandra guys , but Robbo has hoodwinked you ...
See article below, we are running out of timber as house building is so high. They are going up everywhere. Will take a while till they are all completed but I think an oversupply is the likely outcome. Not that I think that is a bad outcome, but it should make prices nosedive.
All business ventures generally require your own capital. Smart businessmen can sometimes convince others to provide the seed capital but often these types are con artists.
Also Kate we had a situation where if you only put in 200k of your own money into a 1M rental that 200k would return something like 4% just on rent yield. Much better than a term deposit. That wasn't the situation until fairly recently. It was no wonder at all that it became compelling.
This is why people hate property managers. From Mary Holm's latest Herald column:
"For the second tenant, we used a property manager, and I can happily report that they respected our wishes not to raise the rent, even though their policy was to review rents on an annual basis. In fact, when their system automatically raised the rent by 10 per cent, a refund was provided to the tenant at our request."
Beggars belief that the property manager is being painted as 'good' for reversing something that should never have happened in the first place. And what kind of business has a system in place which just 'automatically' raises the prices by 10% on an annual basis? Bloody hell.
And then Victoria Short comes out and reminds us that half of kiwis have less than thousand dollars in their account
Yes. And if those h'holds are renters, it's very difficult to see where these rent rises are coming from if there's no money to pay the rent. Furthermore, based on the ASB data, you can infer that 83% of NZers have
They are fkin criminal and i hate them with a passion - what amazes me is that those that have rental properties managed by them dont hate them also... they take 10% monthly from you.... they only need 10 properties on their books to be taking the equivalent of full rent of a mortgage free home every month - for doing very little in my experience. And their practice of saying we'll increase your take by 10% each year - no they are increasing their take of 10% each year - and you are taking all the risk.
I dont own any property btw - just causes me acid in my mouth evry time i walk past a Quinovic office.
I have a close friend who did this for a job before having children - she advised me not to rent with her because her boss would actively try to get every penny out of you as a tenant he could - tenants were to be wrung out at every opportunity in his eyes
Clemente...my Mum got an agency to find a tenant 2 months ago and they charged her 2 full weeks rent. The new tenants have already given notice and leave soon. What a joke. I have a strong suspicion many of them are in cahoots with tradies as well. I have never used an agency and never would.
They used to find tenants free for landlords and demand payment from the tenant but I think that is illegal now.
Yes, they were called 'letting fees' for payment by tenants and they were usually charged at one weeks rent. They have been banned on the tenant side.
I wonder, was your Mum planning on having them manage the tenancy as well (i.e., were they going to get an on-going cut)? If not, that could be why she was charged an upfront fee to find tenants - and it does seem ridiculously high given the high demand for tenancies - surely they did not need to advertise her property separately? One would think they'd have people 'on their books'.
And it seems to me like a 'recruitment' fee, and that should be refundable (or new tenants replaced FOC) should the tenant not stay for a specified period. That's what happens in the personnel/job recruitment industry.
Am I missing something – but there seems to be in people’s minds an almost absolute certainty that you simply buy another property, rent it out and away you go.
I’ve experienced rental markets where properties can be vacant for months – market rent and quality is fine – it’s just that there’s so many compared to demand.
I think many players – especially in Auckland, have never really witnessed this – it can be quite brutal.
As the construction tap turns up in Auckland – and population inflow slows dramatically – I do wonder.
“Most NZers will never own a single BTC”
Although it seems they might do indirectly – through KiwiSaver funds.
(Something similar was posted earlier)
https://www.stuff.co.nz/business/124637257/investment-or-speculation-ki…
Although it seems they might do indirectly – through KiwiSaver funds.
No. Currently, less than 3% of BTC owners have 1 or more Bitcoin. Even when prices were less than $1000, most NZers never owned a single BTC. A Kiwisaver fund having a small exposure to BTC has nothing to do with it.
There are currently 8 ETF applications for Bitcoin with the SEC at the moment. It is only a matter of time before a wave of Wall Street money starts to flow into this emerging asset class. Those who move early will hold control over the hardest money ever created and get to own part of the financial network of cyberspace. Don’t choose horses over motor cars.
The new processing facility (Red Stag) mentioned was a PGF fund recipient;
https://www.growregions.govt.nz/media-centre/news/financial-support-for…
And here are some other PGF fund recipients in that sector;
https://www.growregions.govt.nz/media-centre/news/boost-for-timber-proc…
https://www.growregions.govt.nz/media-centre/news/more-support-for-wood…
Much of the PGF work was a step in the right direction. I think we'll recognise that more and more as the shipping industry faces these disruptions.
Not just timber. Supply of other construction components are also suffering from the compound effects of shipping dislocation and the building boom. We have been forced to significantly expand our warehousing capacity as simply having stock available is often now the key determinant of getting the order. Higher margin long term customers get priority, tight arsed tradies whose business model is to cherry pick suppliers for the cheapest price are feeling a tad lonely.
And this is exactly why we need people like Mike Greer to go out and find innovative ways of building houses. But no we still hammer nails into expensive pieces of wood with little or no appetite to innovate!
Housing: Carter Holt Harvey cuts timber supplies to Mitre 10, Bunnings, ITM
https://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=12…
Visited with these guys last week. Whizz bang Swiss timber house building technology transplanted into Cromwell, Central Otago. Awesome
https://hector-egger.ch/he-nz/#sitemap
I have no sympathy for the couple who paid over a million dollars for a property in the Hutt Valley as mentioned on Stuff today. She is highly pissed off with the eventual purchase price which is way higher than what she hoped to pay for it. She did not have to buy it. No one put a gun to her head. They have a huge loan to pay off over many years. Two things are obvious. Interest rate rises will come along in due course as economies recover. Jacinda will implement more measures if the policies implemented this week do not work. When she leaves office for greater things she will not want to be remembered as a failure like John Key in terms of housing and poverty. Those who have bought in the 9 months or so are at risk of seeing their equity go backwards in varying amounts.
ex agent. I do have some sympathy for them. I've been helping young family FHB members in their unsuccessful attempt to buy in Wellie for a lengthy period. The shark tank frenzy of grey greedies paying crazy money for rotting dumps, the aggressive domination of western city land and house package transactions by 'investors' of other demographics, the thinly disguised dismissiveness of preening RE agents and all the other characteristics of an obscenely bloated RE market induce a desperation that you need to be involved with, to understand. It is a wretched experience to witness the shattered hopes of so many younger folk chasing a declining pool of often poor quality housing. I quite understand why this couple have ended up where they have. The people for whom I have no sympathy are those speculators who ignored the numerous warning signs that the party was going to come to an end once our timid prime minister belatedly worked out her back was to the wall and now face their day of reckoning.
Have witnessed tears in auction room and buying a house for FHB is a nightmare. Even if they do manage by paying a bomb premium are stuck with debt....not normal but in extreme under FOMO.
Remember that million dollar last year is still a million dollar but have heard so many time and casually that it seems peanuts but has the earning capacity changed so much.....doubt.
Agreed - one of the worst things about the housing market recently that few have mentioned is that it gave real estate agents license to treat you like something nasty that they trod in, which is particularly galling when you're attempting to spend eye-watering sums of money. At least people my age are used to it from years of dealing with landlords, I suppose. Property managers in particular seem to take great pleasure in treating tenants like they are scum of the earth - especially Quinovic.
We are pre approved to what I thought was an insane amount of money. In no way do we want to use the amount cause I honestly don’t think we could afford the payments (even if the bank thinks we can).
We’ve had agents say “hahah good luck” when we have called saying our budget. It’s horrid. I haven’t yet had an agent follow up with me in the last 6.5 months except for one who is a newbie.
At this stage we aren’t even bothering looking. I’d rather rent then live beyond our means in a damp shit box.
Keep in contact with your bank to re-confirm that pre-approval. The best metric for a FHB to my mind is a 5:1 house price to income ratio. At the moment NZ averages an 8:1 ratio. Fingers crossed for you that prices move downwards and this whole mess starts to come right. Kia kaha.
Why are you helping FHBers when you knew that he reckoning was coming. I agree it is coming. I am glad your young family members have been unsuccessful. The housing market has been insane. Fuelled by greed and low interest rates. All markets move up and down. Now is the time to wait for the move down as a result of government intervention and the eventual interest rate rises.
You're being pretty unfair. You have to remember that for anyone under 40, housing - whether renting or buying - has almost always been a stupidly stressful, ridiculously expensive nightmare. I've never been to either a flat viewing or an open home that didn't have dozens of desperate people there. You also have to remember that not only have several significant world events (the GFC, the pandemic) failed to make a dent in affordability, but that for at least the last decade politicians of all stripes have talked and talked about the housing crisis, but done nothing except pour petrol on the flames, or engage in ineffective tinkering (KiwiBuild, foreign buyer ban, extending the brightline test - the list goes on). Up until last week, there was no indication that it would be any different this time. And up until very recently the consensus was that interest rates would stay very low for a long time.
NZherald confirms that announcement made by Queen has had lot of notice but no affect on real housing market
https://www.nzherald.co.nz/business/buyers-and-vendors-unfazed-by-new-h…
What is it that Queen and her knights waiting for to act on controlling Interest Only Loan, which is the best option to to take speculative demand in low interest scenario.
Even interest.co.nz is silent with no article or importance of containing speculative demand by targeting Speculators source of cheap and easy money.
Government has to act with RBNZ on interest only loan if it really wants to target speculative demand as interest only loan is mostly used by speculators otherwise will keep on adding to woes of FHB in one form or the other.
https://www.newshub.co.nz/home/money/2021/03/governments-housing-polici…
Interested to hear from current or ex property investors on the appeal of new build townhouses as an investment, given the government's announcement last week.
By my deductions, new build townhouses in Auckland are typically providing a gross return or circa 4 to 4.5% - not high by historic standards, but given current term deposit rates, not bad.
Further, as new builds one would expect limited maintenance requirements over the first 10 years.
Thoughts?
Maybe this is win win - still opportunity for investors, on housing that will be much better for tenants (ie. Built to current code, so well insulated etc)
Fritz..indeed. Property investors who build new homes should be applauded and supported. They are the exact opposite of their kin who buy existing dwellings. From this day on everything needs to be done to ensure that the foundation of property investment is based on new builds rather than the historically destructive practice of "house scalping".
This politicans elected to serve, when do not act in the interest of the people of the country should be......
Will fill in the blanks when the time comes but time is near for bloody revolution on the street of Auckland, if speculators can unite, why fhb who are really screwed not act.
Realising the Wealth from Houses, means someone else has to borrow heavily. It is called a Ponzi Scheme, if I did it.
It is called inflation, if the Banks and Governments do it.
It is called stupidity when everyone believes in it. It means someone has to coin a phrase...print munny.
That is called Fraud, if you and I do it.
Do have a nice day, you are being controlled by the biggest Fraudsters in History.
Why work, be happy.
Sell up, go to cheapest country in the World. Eat like a king ...or Queen Jacinda......for peanuts.
At a quarter of the price in Sunny NZ....where 3million are Lauds and Panhandlers.....sweat equity....be blowed.
I have nothing against anti-racist demonstrations, I think it's great.
It's just I find it amusing that young people aren't up in arms about housing.
I think it's a class thing. It seems like middle class kids are the most mobilized to protest, on housing they are probably generally comfy, living with ma or pa or able to call on the bank of mum and dad.
But there's not much ma and pa can do about climate change or racism.
Fritz..found that Asian girls comment on TV bemusing. Offended at "you are hot for an Asian". She should be flattered rather than looking to play the fashionable victim. I regularly get "you are in good shape for an older guy" or even occasionally "you are good looking for an old guy". My reaction? I am flattered. You speak Mandarin Chinese well for a foreigner. Insulting and racist? Where are we going with this rubbish.
Fritz..I personally find Asian women hotter than Western women. I even married one of them. But I think the reality is that most Western guys do not find Asian women attractive in the same way most young women do not find old men attractive. Maybe it an insensitive comment that should not be made but IMO is not racist (or ageist) to qualify your comment. My kids speak English well for Asian born kids. Racist? She has got a big chest for an Asian. He is well endowed for an Asian. Racist or just unfashionably honest? He is a fast runner for an old guy? Ageist? She is strong for a woman? Sexist? Or as I said to my mate I recently visited in Welly, "that is the nicest vege garden I have ever seen, at a straight mans house". Homophobic or funny? All just a matter of opinion I guess. Personally I prefer laughing to taking offence.
Perfect!, NZ still discussing the ups or downs.. of housing affordability. Meanwhile those opt in life to study & work, all vave decided to leave. Heard about the recent news? about teachers, doctors/nurses, police, pharmacist, other essentials professional is like rare item to be found in NZ expensive cities - NZ is really NOT worth it, I bet you most of the property pro only investors all over NZ is no longer need to work, which is fair. The problem is when 'everyone' decided to become a property mogul. Even Banks forecasting the dire situations, despite the whole mess is actually from their own greed. RBNZ, can only nodded to cartel demand.
Still No Action on ammunition of Interest Only Loan.
https://www.oneroof.co.nz/news/first-home-buyers-go-for-it-in-south-auc…
What Is Mr Orr or Jacinda waiting for ...
OCR meeting on 14th April.
Will be interested if he gives it a mention as housing is now in RBNZ remit to consider.
https://www.nzherald.co.nz/business/finance-minister-says-rbnz-now-requ….
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