There's a cruel sting in the tail of falling interest rates - they've already started pushing up house prices at the bottom end of the market, making home ownership less affordable for aspiring first home buyers

There's a cruel sting in the tail of falling interest rates - they've already started pushing up house prices at the bottom end of the market, making home ownership less affordable for aspiring first home buyers

By Greg Ninness

Falling mortgage interest rates appear to have worked against first home buyers in August by sparking a significant rise in lower quartile house prices in most regions.

In most cases the benefit of lower mortgage interest rates was more than offset by the rise in lower quartile prices, leaving aspiring first home buyers worse off overall, according to interest.co.nz’s Home Loan Affordability Reports for August.

The reports show that the average of the two year fixed mortgage rates offered by the major banks dropped to  3.70% in August. That's down from 3.81% in July and 4.43% in August last year.

It means mortgage rates are at their lowest point since interest.co.nz began compiling the figures in January 2002 and have more than halved since they peaked at 9.64% in March 2008.

While you might think the fall in interest rates would be favourable for first home buyers, that does not appear to have been the case.

Unfortunately falling interest rates are generally inflationary for asset prices and that appears to have been the case for prices at the bottom end of the market.

According to the Real Estate Institute of New Zealand, the national lower quartile selling price increased from $401,900 in July to $415,000 in August. The rise was almost nationwide, with Canterbury being the only region where the lower quartile price went against the trend and dropped from $350,000 in July to $346,000 in August.

In Auckland the lower quartile price increased from $643,000 in July to $655,000 in August. In Wellington it increased from $485,000 to $490,000.

And lower quartile prices reached record highs in seven regions – Waikato, Bay of Plenty, Hawke's Bay, Manawatu/Whanganui, Taranaki, Otago and Southland.

Overall, the rise in prices had a greater effect on affordability than the fall in interest rates, with the payments on a mortgage to buy a lower quartile-priced home increasing in all regions except Wellington and Canterbury.

Nationally, the weekly payments on a mortgage needed to buy a lower quartile-priced home increased from $351.31 to $360.15.

In Auckland the weekly payments on a mortgage required to buy a lower quartile priced-home increased from $609.31 a week to $613.35.

And of course the rising prices would also have increased the size of the deposit first home buyers would require.

Ironically it appears that the real winners form the latest cuts to mortgage interest rates will be existing home owners who still have a mortgage, who will likely see their mortgage payments reduce and the values of their homes and therefore their equity in them, increase.

The losers are more likely to be aspiring first home buyers who could be looking at the start of another round of house price inflation, and the elderly who are looking at their income from bank term deposits dry up in front of their eyes.

The comment stream on this story is now closed.

Home Loan Affordability Reports are available for each of the following regions and cities (click to view).
Northland Region
Whangarei District
Auckland Region
Rodney District
North Shore District
Waitakere District
Central Auckland District
Manukau District
Papakura District
Franklin District
Waikato Region
Hamilton District
Bay of Plenty Region
Tauranga District
Rotorua District
Hawke's Bay Region
Napier District
Hastings District
Gisborne District
Taranaki Region
New Plymouth District
Manawatu/Whanganui Region
Palmerston North District
Whanganui District
Wellington Region
Masterton District
Kapiti District
Porirua District
Hutt Valley District
Wellington City
Nelson/Marlborough Region
Nelson City
Canterbury Region
Christchurch District
Timaru District
Otago Region
Dunedin District
Queenstown-Lakes District
Southland Region
Invercargill District
All New Zealand

We welcome your help to improve our coverage of this issue. Any examples or experiences to relate? Any links to other news, data or research to shed more light on this? Any insight or views on what might happen next or what should happen next? Any errors to correct?

We welcome your comments below. If you are not already registered, please register to comment.

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10
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This may be true in some places but in the high build areas like Honsonville there are plenty of developers with stock now discounting prices.

Joe Wilkes reporting anecdotal evidence of some developers holding back from listing their properties for sale for fear of depressing market prices in areas where there have been heavy levels of development in Auckland. They can hold off if they are well capitalised and do not have urgent cashflow needs. They may be able to hold on for a period, not sure how long they can hold on - they may already have held on for a period of time and now cashflow pressures are mounting). On the other hand, if they have cashflow needs then they may need to discount and sell. If the developers don't get the prices that they need to repay the debts, lenders might call in receivers.

https://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=122...

This was for a completed project which was unable to sell their completed units.

Wait until you get unfinished developments where the project funding dries up, and those buyers become unsecured creditors, and potentially lose their deposits. Also contractors, subcontractors, and tradies don't get paid and become unsecured creditors, leading to potential liquidity problems for those businesses and some start going bankrupt, and then there are the unemployed staff from these businesses. Construction labour goes from shortage becomes excess supply, and labour is willing to work at lower prices due to supply competition.

When unfinished developments start defaulting, then that leaves less funds to finance other new projects.

Mikekirk29 talked about the development funding cycle.

All part of the property development cycle.

11
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I'm not really a fan of Joe Wilkes or the DFA channel as their analysis is often overly simplistic.
However...I do agree with him on this. There is a metric proverbial tonne of new builds coming online
If anyone needs an example of this - go to the new Universal West Hills development. Probably around 50 very near completed dwellings there which are yet to be sold. Same story in Whenuapai. Seems to be more of a implied withholding by setting prices above what are current market price levels.
Discounts already awash in Huapai and Kumeu unsold new builds, so it's likely contagion is going to spread soon..

11
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Likely to result in imbalance between effective supply and effective demand, which is resulting in a buyer's market in Auckland currently. If there is a recession, then the imbalance is likely to become even larger and desperate vendors will need to cut their price expectations in order to sell their property.

Meanwhile economists and market commentators go on repeating the housing shortage in Auckland narrative due to underlying demand and underlying supply and how property prices in Auckland will not go down by much. In talking about property prices, they are missing the link of the imbalance between effective supply and effective demand in their framework.

11
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Still a certain degree of ignorance out there, as agents continue to play with the commercially naïve. Don't rely on (most) valuers, as they are just part of smoothing the price variations.

Went to a mortgagee auction yesterday, which turned out to be a trap for young players and some old too. Original vendor, no longer in possession, was bidding too but with no hope to settle. Not counted as a vendor bid, when the mortgagee is in possession. Just trying to mitigate their losses I suspect.

With the price reached, it represented a net cashflow return of 2.5%. Way to low for me, especially the full force of the storm still to hit. Unfortunately a younger couple took the bait.

Happy investing.

In Auckland, the days to sell are at 44 days for August. This is the highest for August since 2008/2009 during the GFC (note that this is the same for the other seven months of this year where the days to sell is the highest for the same month in each year since 2008/2009). The recent days to sell numbers are in an economic environment where the NZ economy is currently still growing, and unemployment is currently low. What will happen if the economy slows down significantly and unemployment rises?

Most developers are very unsophisticated with strategy.
Many would have simply assumed, 2-3 years ago, that prices would keep rising in Auckland by 5-10% per annum.
They haven't and were never going to.
Unfortunately not only are the developers unsophisticated but so are many of their advisors....

I know because I've heard this numerous times, from developers and advisors.

Yea. Agree RE the unsophisticated projections of the construction sector.
How any developer could ignore the effect that all that greenfields fringe land was going to have on land prices bewilders me.

4 units completed just list 1. That sells, list the next. ie 4 listings show as one.

Sure, discounting from 1.3 mil to 1.2 mil :-) , FHB's bargains :)

1.3 million for a 3 bedroom townhouse on a postage stamp of land. What's not to like?

Didn't see that coming...

Not sure if you're kidding, about a week ago I made a prediction that prices will reach all time highs next March 2020

Oh look, Auckland lower prices are above the limit for the First Home Loan and First Home grant, and if thats the lower quartile that'll predominantly be 2 bedroom units and the like, not the sort of place that a young couple looking to start a family are going to be looking for.

26
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"Ironically it appears that the real winners form the latest cuts to mortgage interest rates will be existing home owners who still have a mortgage"

This is not ironic, it comes as a surprise to no one because this is exactly what was intended.

18
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Nice one - more young couples frozen in time - putting off having children, paying higher rent to the rentiers class, carrying on paying student loans and high taxes due to bracket creep. I would move to Ozi and somewhere that gives a damm if I were them, this country is a joke when when it comes to the young and talented.

13
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Completely agree, and as a country we are just digging the hole deeper. I'm 25 and have a good job, but I'm looking at the kind of future I want to have in terms of a family, a decent place to live and future prospects for employment. If NZ doesn't turn around soon I will be compelled to leave.

Thats the issue - all the clever young ones leave to find better opportunities that don't exist here

15
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My brother moved back to London after more than 5 years in other parts of Europe.
He's bought a 3 bedroom (albeit pretty compact) townhouse within one hour commute of central London, in an OK area, for about 600K.
That's much better value than Auckland.
London is an amazing city, with great opportunity, and of course you have easy access to the wonders of Europe.
I think the only downside, and it's not insignificant, is the generally poor quality of education. Generally speaking, the education here in Auckland is good.

I think you forgot about the weather (and the failing economy, but I would be more worried about the weather).
Also I imagine this 1 hour commute does not involve a car?

Less than 1 hour, by train.
I didn't find the London weather too bad. At least it's much better than the north of England (although that's not saying much)
I wouldn't describe Auckland's weather as amazing. The summers are brilliant, not too hot, but the rest of the year it's so changeable, windy, rainy.
The winters, while not cold, are pretty damp.

The other great thing with London of course is that you can escape to Spain or the Riviera quite affordably.

10
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I never saved more money than when I lived in London, I miss its vast range of options for everything. Back here its ridiculously expensive, for everything.

Cost of living is really important in terms of quality of life. I've lived in Australia, Japan and England and overall, as you say, the cost of living here is really high.

Sorry but London has got a heck of a lot more problems than NZ has.
Spoken to many people from London and it is now stuffed.

Suppose Christchurch is the land of opportunity?

11
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I agree. Trying to make housing affordable with handouts and lower interest rates will obviously be counterproductive because in the current limited stock situation, such moves will simply add to the existing demand pressure.

The entire housing debacle IMO is a huge distraction from real socioeconomic issues like rapidly falling living standards, stalled productivity, lack of 'first' world industries and jobs and the list goes on.

12
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And instead of striving to make it more practical for young people to have children...

...we take their taxes and subsidise low income migration including funded schooling for children of workers making $52k on a temporary visa. To prop up hospitality businesses.

NZ houses will forever be unaffordable unless
1. NZ became an undesirable place to settle
2. Residential construction sector were no longer a key pillar to support NZ economy
3. New Zealand People's United Party got elected into office to address the issue

13
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#3, Nah. Like most PUPs it'll piss on the carpet and chew the furniture..

Hahahahaha. I concer.. there goes the pot calling the kettle black again.

What about the Ghost Cities in China? That no one can afford? Biggest misallocation of capital in History!!!!

https://www.youtube.com/watch?v=m9We2XsVZfc&list=RDm9We2XsVZfc&start_rad...

11
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Or Chinas economy implodes leading to a severe worldwide recession
https://www.zerohedge.com/markets/schiff-next-crash-will-bring-down-fiat...

I doubt our masses will be able to splash cash on housing assets if a global recession waters down the purchasing power of consumers in China.

#3. What you really need to start is something back home, like a China's Peoples United Party so that you can own property in your homeland, instead of trying to change things here.

New Zealand's property market is going through the ebb and flows like the rest of the world and luckly we are far away from those big countries that are going to blow eachother up.

We'll be down here watching it all happen. Happy Friday ;o)

He (it?) never replies to any comments that reveal how false his (its) comments are. It's just a troll bot.

Exactly. We should probably just ignore (and sniggle)

Ban the bot already.

{Citation Needed}

Xingmowang, when is this NZ PUP going to be registered Wei? Or are you 五毛党?

The CCP Parody Bot might have an inadvertent point: maybe it's worth registering the "New Zealand People's United Party" as a parody party, especially as we're lacking something like this since McGillicuddy Serious (unless I'm mistaken). Given the state of what's in parliament, such a party could likely get seats in the house....

Hey iPhone 11 is out today.
Forget buying a nice house, you can have a nice iPhone 11 now!

Well, you can have 475 base model iphone 11s for the price of a lower quartile house in Auckland. Maybe that should be the housing equivalent of the BigMac index. the iPhone index?

I would hazard a guess that the much wider prices difference between "gadgets" (especially gadgets seen as luxuries) and house prices that exists today vs. the good old days exacerbates old folks' tendency to think of young people as spendthrifts (despite the high savings rates in young generations today, vs. the good old days).

In the early 1970s a house seems to have cost around 30 times the cost of a television. Versus today, where a median Auckland house costs >400 times a good television, or an iPhone (which is anyway often purchased by an employer, or plays the role of phone, camera, and computer).

Back in the days of the four Yorkshiremen it was understandable few would spend on luxury devices.

15
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Things which seem like they help FHBs, but which actually hurt them:
- low interest rates
- loose lending standards
- government handouts
All these are assumed to be solutions, but instead simply boost house prices to the benefit of incumbent owners.

19
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Lets just rename NZ - Boomersville - and a new flag with the middle finger digit raised to under 30's

10
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or New Rymans??

Don't kid yourself Frazz, if it was the other way around it wouldn't change a thing, the Millennial's are just as greedy as the boomers. You don't seriously think if you owned a house you would think poor millennial's its a bit expensive for them I will sell my house at half price to help them out ?

We should not be having this conversation to begin with Carlos - thats the whole point but doubt you see the bigger picture.
"Millennial's are just as greedy as the boomers" - can you provide some proof of that comment or are you just a grumpr boomer hanging out with his goldcard and a flat white?

Maybe he's suggesting that having been raised by narcissists they'll struggle to be better?

However, the boomers were raised by post-war generations who actually built and left a great legacy of affordable housing. Shame more of that legacy hasn't seemed to rub off on the Me Generation, or at very least a little beyond one's immediate offspring.

"raised by post-war generations" boomers were the post war generation or did you forget. They had to deal with 'fallout' from Guinea pig type economic policies of Rowling Muldoon Lange/Douglas Richardson as well as a world on a knife edge. As a result only some have done alright, alot of boomers have virtually nothing built up.

Agree I am supporting them as well

Did the society in Logan's Run have a flag or emblem? Asking for a friend.....

Yeah who would have thought that increasing demand without increasing supply would lead to house prices increasing?!?

To be fair the supply has been increasing faster than ever. So increasing the demand is a perfect way of maintaining the status quo. Let's keep the party going!

This is a little counter to those who have advocated FHB should hold off as it can only get better.

11
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I think if we weren't lowering interest rates, the bubble would have popped, so by blowing more air into it, just means it's bought us a bit more time.
Walking along the beach this morning, the water was pristine, the tide coming in. So lucky to be here in NZ. That is real wealth when synthetic things aren't going your way.. and by synthetic, I mean money manipulation. The tide will be on it's way out at 5.40 pm.

DP

FBB, LVR restrictions, ring fencing, AML, brightline were all are attempts to pop the "bubble" so the bubble was fairly resistant even without the latest OCR cut.

It didn't pop, it sprung a leak, and so far its losing more air than the interest rate cuts are pumping into it..

Median and 1st quartile prices both lower than a year ago, median lower than 2 years ago. Aucklnd days to sell up, HPI down, Median down on a year ago.
The month on month price gain is just seasonal.

When you're promised fireworks and get a sparkler you can see why people are sceptical of the promoter's competence.

No argument there, i'm fed up with how useless this lot are.

Someone will be here to tell everyone about CHCH is a best place to buy.. so cheer up, not the end of the world (yet)!

Correct Chairman, you have caught on!
Property prices and standard of living can not be beaten in Australasia.
Aucklanders can whinge on as much as they like about unaffordable housing prices but if you can’t afford a home at the moment, then you never will.

Hi Pragmatist
The "slow leakers" are just the new "bubble poppers".
Even Retired Poppy was once a strong advocate for a "bubble pop", then some time ago a "slow leaker", and now - like the "bubble poppers" - seems to have gone very, very quite.
Like the long term KiwiSaver growth funds as for home ownership, short term fluctuations are irrelevant as one is in there for the long term, over the long term it is likely to be substantial capital gains, and don't try and pick the bottom of the market.
While one doesn't read too much into one event such as this article, there should be concern for FHB that the lower quartile of the market and affordability could have - or be close to bottoming.
So for potential FHB continuing to rent, just keep paying off the landlords mortgage, let him/her benefit and pocket from the longer-term capital gains, and focus on meeting the increasing rent payments.

blah blah blah...

Since we moved in here the landlord has capital losses of about $30k going by the homes.co.nz price estimate, and a poor as hell return on his investment (3.2% gross rental yeild on his purchase price). Our rent doesn't cover P&I on a 70% mortgage, on a 70% interest only mortgage at 4% this place is probably about cashflow neutral once you account for rates and insurance. I'm not paying down his mortgage :)

Hi Pragmatist
Your "blah, blah" comment is a well known typical immature simplistic tactic of one who doesn't want to acknowledge reality. Teenagers are well known for it.
So are you going to rent for life? Don't know too many older people who rent and are comfortable (or happy).
Don't worry - your landlord isn't stupid (he/she is the one with the nonce who owns the house). He/she is accepting that there in a short term there may be a down turn and probably hasn't given it a thought or two hoots about the $30K downturn; he/she knows in the longer term that there is going to be capital gain. And don't worry he/she will be planning for your rent to pay off their mortgage - don't kid yourself otherwise.
You don't seem to be able to either understand that home ownership is about the long term, or are you just looking for excuses to convince yourself from making a real commitment. The reality is that over 74,000 FHB have purchased homes in the last three years.
If these comments make you bitter or angry, then you need to ask why.

These comment dont make bitter or angry at all. Just the tedium of repetition from the spruikers..

Simple fact, my landlord would have been better off over the last few years to throw his money into equities than he was to buy a house for us to rent from him at below holding cost.

Good to hear .
It is very difficult to time the bottom of a property market and property investors - as well as FHB - take a long term view. In the longer term your landlord is going to be smiling and that will be his/her goal so unlike you, he/she won't be currently too perturbed.
Hindsight is a wonderful thing and it doesn't take any degree of skill to determine what was a better course. Your landlord could quite easily have lost in equities over this short term.
In hindsight - if you read the article and live in Auckland - buying a house just got a little harder for you.

Median and lower quartile both lower than a year ago...

To quote yourself:

by Pragmatist | 20th Sep 19, 1:23pm
blah blah blah...

Yeah, that extra $4 a week he now needs to pay for his mortgage is terrible. No way he could have saved for a bigger deposit over a month to cover THAT enormous expense.

Even though Pragmatist's moves so far have made sense and have clearly made him better off than he would have been if he bought 2 years ago, you're still claiming victory. With incredible confidence, too. This website is truly amazing sometimes, I have to say.

“Even though Pragmatist's moves so far have made sense...”

I assure you Pragmatist’s moves so far have not made sense. Getting out of the housing market in the early/mid 2000s in favour of renting was not prudent. If he is so gifted at timing the housing market perfectly, as he is attempting to do now, why did he not buy in 2010?

I didn't say Pragmatist is gifted at prediction and I didn't know any of his history. I said he made the right move over the last 2 years and I stand by that. Referring to a previous occasion where he was wrong doesn't change anything.

Your landlord probably isn't a short sighted individual, financially speaking. Good on you for living in the moment, but your preoccupation on the here and now isn't going to stand you in good stead in the long term.

If you can be honest with yourself, think about what the probable value of that house will be in 10 years time, and what the probable rent will be. The value of the house will very likely be well up, and so will rent. You'll be paying 30%ish higher rent still waiting for a falling knife to hit the floor. They on the other hand will be receiving a nice return on their initial investment due to increasing rents, while their mortgage prepayments stay relatively consistent, average something like 5% interest over the life of the loan.

Lol, not preoccupied with the here and now, and we won't be renting in ten years. Just not silly enough to jump on at the top. Probable value in 10 years.. who knows, but it won't be doubled what it is now.

I take no satisfaction from giving you grief, but you need to stop this folly. You’re acting like you’ve done well by not purchasing in the last two years, but you’ve actually dropped the ball by not purchasing in the last two decades. In retrospect who really cares if one purchased in peak 2007 or trough 2009 when you’re still much better off in 2019 either way? Prices might go down or up in the short term, but someone with your track record shouldn’t be risking it trying to time the market when in the long run prices are very likely to go up. If you can find a reason not to buy now, in a buyer’s market with incredibly low interest rates, you’ll always manage to find a reason not to buy. And you wouldn’t be jumping in at the top, which was late 2017.

Perhaps you should keep your nose out of other people's personal business.
You have no idea what my personal circumstances were at the various times. Could I have paid a mortgage while I was studying full-time? No, I couldn't. Could I have paid a mortgage in NZ while I was overseas? No.

F*** off stalker.

Are you exhibiting your repressed anger

Just telling a stalker to f*** right off. You can join him if you wish.

Didn’t mean to upset you, I just want you to do well. You should put some ** in that expletive - I know some people have been banned for less.

Cut the shit, you are just an obnoxious w****r of a person.

Pragmatist WANTS to be banned so he can claim there is a conspiracy by boomers hehe.

Bwahaha, BLSH isn't a boomer.

DD looks like you ruffled some feathers haha

And you dropped the ball by not buying Bitcoin when it was $1, or not buying Apple shares when they were first offered. Nobody can go back in time, so knowing what the best move was 10 years ago isn't actually helpful.

All any of us can do is make the best moves right now. Over the last two years, the best move has clearly been not to buy in Auckland. That is unlikely to change in the short term with signs pointing to a global recession and New Zealand being number 1 on practically every property bubble indicator. There are still advantages to owning your own house, but there is no point in acting like it's 100% the best financial decision you can make.

Hi BL
You have been waiting three years since the peak for the bubble to pop. To support your view, rather than substantiated reasons you put up irrelevant and therefore meaningless analogies to justify your stance.
Despite the stability over the past three years, respected commentators, the view of the RBNZ and its actions, low interest rates, continuing high immigration rates, and market trends; is this the best rationale you can put up?

What are these market trends you're referring to? The ones suggesting the next global recession or the ones showing last month was the worst for property sales since 2010?

Under $655k sales in Auckland in August 2019: 548
296 were house or townhouse. 120 apartment
191 had 3 bedrooms and 158 two bedrooms.
Pretty paltry for lower quartile market in Auckland for FHB with $71,000 deposit

296 + 120 is only 416. What covers the rest of the 548?

Could be sections? Developers deciding not to develop, or perhaps more quarter acre owners subdividing and cashing in?

Units 55; sections 65

Ah, thanks.

Still more affordable than the same month last year in every part of Auckland. I thought year to year comparisons were preferred over month to month?

"The losers are more likely to be aspiring first home buyers who could be looking at the start of another round of house price inflation". Yes. Yes I am.

It is a feature, not a bug. The idea is to put up house prices and increase spending. Central Planning is clumsy and cruel. It is just another form of monopoly control and exploitation, just in the hands of bureaucrats and politicians.

Having said that, the problems we have are entirely of our own making. We just have to figure out how to solve them. A tweak here, a tweak there and it's all sorted:
1 Reduce the rate of immigration, permanent, temporary and tourism, to a level that we can easily cope with.
2 Sort out housing regulation so building can be done quickly and easily.
3 Reduce the rate of foreign capital inflow to a level that we can easily cope with, ie, without it causing a rise in either unemployment or indebtedness. (See Michael Pettis for an explanation of how excess foreign investment into an advanced economy tends to cause either increased unemployment or increased indebtedness.)

We have the answer to the problem, we just don't want to use it. The problem is developers and landbankers keeping supply off the market to keep prices high, the answer is to push that land into the market to depress prices. Compulsary accqusition or 'use it or lose it' Which ever method, it will lower prices.

Simple. Increase the rates to the developed potential. Pretty sure Council is already doing that as they need the cash.

When we get SOME figures off census, we may be able to look at how many 25-34 year olds have what income in Auckland, and what % of them are in fact buying.

An interesting fact for you: we are not given figures by REINZ (although they are recorded) as to difference between what a property was listed as (price) and what it sold at. I was looking at a list of about 90 properties that I compiled a year ago, which at the time had been on market 3m or more. Of those that sold for over $1.2m, rather a lot sold for about $150 - 200k less than original price. That is, the higher price places are losing a higher proportion of the asking price b4 they sell.

This is a little more revealing of the state of the market than following medians and averages.
This metric, if published in detailed numbers, would show what market is demanding re reductions.

I have been recording asking prices for all properties in NZ for the last 10 or so months, and matching off these with the auction results or sales results when they eventually flow through to places like QV. There is unfortunately a few months delay in this data flowing through, so I only have about 4 months of good data. However, there are plenty of houses listing for high prices that are selling at or below CV, often a gap of $100k+ from listing price.

There are a few other ways to slice this as well, as you can see who (or what) owns each property if you use LINZ data. Lots of homes for sale are owned by people or companies who own 3+ houses, and are selling several of them.

No more tax loss income tax offset....?

So lower interest rates don't increase economic activity or CPI inflation, they simply cause further asset price inflation as more debt chases the same amount of scarce assets.

Probably what happens when you have an economy that is based around selling houses to one another at ever increasing prices.

House prices in Auckland are going down, regardless of NZ interest rates. Ask any honest Bankster or Realie, if you can find one. Overlay a multi year chart of 10 yr US treasuries with Akl property prices if you want to understand whats going on.

Yet another sign that market intervention has been long overdue, the housing sector has been out of control for way too long and banks just going to keep doing what banks do. We really need affordable and quality homes Kiwis can live in and more credit is just not going to help with that. Limit investment in housing and set a limit for land prices and in a no time we should see some improvements.

Interestingly, not a comment form bw who has repeatedly been claiming that lower interest rates will lead to deflation of house prices...

BW what a ridiculous claim haha. How does cheap debt = a drop in house prices??

Milky1, we've had several discussions over "timing the bottom of the market", I'm still of the opinion it's a looser's game, if you can afford a house without stretching yourself, buy as soon as you can rather than gambling on picking "the bottom of the market" because you might end up still being a FHB in 10 years time playing this game

Rather than TIIMING the market its TIME IN the market that counts.

Exactly Houseworks, in fact still right up until today its been a cannot loose market. Plot any point in time and then look 10 years later and your ahead in the game. There has been no other investment that has had the guaranteed gains that the housing market has had, why else do you think that so many people got on the bandwagon, its just very simple math.

So tell me this; 10 years ago were NZ mortgage rates at 3.19%? I think not! You guys are obviously are lacking a certain grey matter between your ears. :)
Can you not figure out that mortgage interest rates have had to drop to maintain house prices. FTB's are taking on more debt then ever before, there's not much wiggle room for house prices to increase especially not in Auckland.

CJ099 10 years ago I was paying 8.6% interest rates, but then again the house prices were half what your paying now. I had to borrow $255K on a house that ended up being worth $1Mil so you do the math.

And by now you would have repaid a chunk of your mortgage but CJ is paying more rent than he was 10 years ago

Looking at the figures in this report confirms that there's still dodgy money coming in to Auckland and that's what our property prices have been built on. In the Key drivers info for Wellington, Take home pay for family 35-45 is $2,376 per week. Auckland, Take home pay for family 35-45 is: $2,021 per week. So in Wellington families earn on average $355 more per week than they do in Auckland. That's an $18,460 annual salary difference. Yet Auckland's house prices on average are significantly higher due to overseas money going in to non performing assets (Property).