House prices exploded last month, with the Real Estate Institute of New Zealand's national median selling price increasing by $50,000 from January, while Auckland's median price was up $100,000 for the month.
That's an average price increase of $25,000 a week for the country's most expensive housing region.
Residential property sales volumes were also through the roof, hitting a 14 year high for the month of February.
The REINZ said 7964 residential properties were sold throughout the country in February, up 14.6% compared to February last year.
The Auckland market led the charge with 2775 sales in February, up 34.6% year-on-year. That's also the highest sales volumes for the month of February in 14 years.
Nine of the REINZ's 16 sales regions had higher sales than in February last year, including West Coast +58.0%, Taranaki +31.4% and Northland +22.5%.
Seven regions had lower sales in February compared to a year ago, led by Marlborough -24.7%, Hawke's Bay -22.3%, Gisborne -17.9% and Tasman -17.9% (the second interactive chart below shows the sales volume trends in all regions).
"It's highly likely that some of this uplift can be attributed to both investors and owner-occupiers looking to purchase ahead of loan-to-value ratio restrictions coming back into effect in March," REINZ Chief Executive Bindi Norwell said.
Prices also rocketed up , with the national median selling price increasing by $50,000 in February, setting a a new record of $780,000.
Record median prices were also set in 12 of the REINZ's 16 sales regions.
In Auckland the median price increased by $100,000 in February, to set a new record of $1,100,000.
Within the region, new record median prices were also set in North Shore, Waitakere, Central Auckland, Manukau, Papakura and Franklin (the first interactive chart below shows the median price trends in all regions).
Record median prices were also set in Waikato, Bay of Plenty, Gisborne, Hawke's Bay, Manawatu, Wellington, Marlborough, West Coast and Canterbury (see chart below for details).
"It's likely that February's housing data will make very difficult reading for the thousands of renters and first home buyers who are hoping to one day be able to purchase a property," Norwell said.
"Hopefully the re-introduction of LVR's will start to slow down the rate at which price shave been rising and that the market will stabilise in due course," she said.
The comment stream on this story is now closed.
Median price - REINZ
Select chart tabs
Volumes sold - REINZ
Select chart tabs
429 Comments
Not the total amount required, but increasing the amount of net income required to be committed to payments severely damages economic activity driven by discretionary spending. So whatever the actual amount required is, it becomes far harder to raise it in the future as we tie more up in a) saving for deposits and b) paying down debt we are now committed to, likely for life.
UK have just introduced a 40 year fixed rate mortgage.
The RBNZ already said they expect the restrictions to be permanent but if the buyer just wants a home to live in banks are telling them that as long as they can service it they should be fine, what they don't tell is that next year their payments might be way larger than now.
Not sure about other banks, but our experience in February with ANZ was that they were already strictly enforcing LVRs at 20% for owner occupiers, 40% for investors. We wanted to buy a rental property (thought if you can't bet them join them sigh) and were told we needed a 40% deposit. We thought there might be some leeway as we have a reasonable mortgage (500k owed, with around 480k of equity in the property) and are skilled professionals on a household income of $310k a year with no children (both early 30s). But, alas - they were absolutely not willing to budge - we were at 37% of the deposit requirement. Sad day when the banks are regulating themselves to standards higher than those set by the RBNZ.
this is fine
Can anyone tell me when Robertson is making an announcement on housing? Is it going to be made in March this year or March 2022?
Even if he does make under pressure will be for affect only with no real intent and that too will come with a clause that to be IMPLIMENTED from June or December or.....should be instant....best opportunity now as gas reason and also can start from April.
YES whatever the amazing announcement is (1 year later) it wont' be implemented until 2030 https://www.youtube.com/watch?v=g9rsxFaq6Ig&t=20s
He is hoping that the Americas Cup will provide a big enough distraction so that by the end of it everyone will have forgotten about housing. Anyway there is bound to be another Covid scare after that and so the can continues to be kicked down the road......
True and then they have the vaccine rollout too...
When he's finished tweeting about sports, and he'll have to get back to you as the dog ate his homework
Advice to the young. Go anywhere, but ideally somewhere where you are valued for your economic contribution BEYOND your ability to become cannon fodder to a corrupt elite that sees your debt as their wealth and utilises your tax paid as a substitute for the tax they dont pay.
So better stay put then?!
I really think that the equation of costs versus benefit over the next 10 years is a lot better for the young elsewhere. Sad but true.
Yep its not like this is a problem thats unique to New Zealand, its happening the world over. The grass always looks greener over the fence until you find out its not when you actually live there.
pre-approvals below 20-30-40% deposit wont be renewed so as they near deadline date buyers buy whatever they can for whatever they can knowing they won't make the cut as an investor now needing 40% - 15% price falls after such a run not uncommon as all present buyers (stupid people) are blocked by rbnz from buying and prices come back to the next marginal buyer - likely first home or serious investor once yields start looking slightly better.
Will be interesting if some journalist ask favourate PM - Jacinda Arden, What she has to say on 10% rise in a month and does she knows how it will add to FOMO.
Will she treat it as emergency and take steps or will she just come up with a smear smile and make fun of all FHB who were already struggling OR does she wants average KIWI to come down to street to protest and hold them by their color as that is the only thing left or will not be heard.
Do not be surprised if FHB takes to street for the first time and it will be Jacinda Arden to be blamed for it.
A white collar revolution? I doubt it. We are now firmly in the lead-up to the Budget, so any real action or assistance won't be on the way until May, and likely won't be in place before the end of the year. My only hope is that now that Wellington civil servants are copping price rises like Auckland has worn for decades, meaningful reform might happen, instead of and endless cycle of reports and morning teas and conferences about how bad it's all getting with nothing ever getting done.
Signal of interest only loan can be done as that will result in high leverage speculators coming to market to off load and also just like LVR can have DTI based on FHB and speculators.
Important do the political class has intent to puncture 10% per month which equates to 120% per annum return to stop.
Jacinda Arden has got the best excuse to hide behind corona virus...will she now stand up and even if she supports the ponzi be open like national party as atleast national party is doing what they say that they support ponzi...dies Jacinda has guts to upfront and address...
wellington civil servants...they are all about to become millionaires...if they own a house
what could go wrong
The vulture psychopath senior bureaucrats will be seeing big gains in Khandallah and Brooklyn.
I for one will be very surprised if FHB take to the streets. Kiwis in general take it lying down on practically everything. Only a couple examples stand out and thats our anti-nuclear stance and a few people invading the pitch during a SA rugby game thats all decades ago. Its pretty clear the youth cannot even be bothered to vote these days.
If global interest rates rise, NZ rates will follow. NZ long bond yields have been rising with rest of the world, and Orr can't do much about it, in the long term. Like it or not, higher interest rates in NZ will come, and sooner than many housing specuvestors would have us believe, in their wishful thinking.
If global rates keep rising (which is beyond the control of the RBNZ, and a very likely scenario), the resulting correction in the housing market may quickly turn into a crash, considering the currently ridiculously over-inflated prices, and nobody can guarantee that this will not happen.
Those who think similarly to you would be wise to fix for 5 years at 2.99%, now.
I agree that rate rises of more than, say, 1% would have a very strong effect; 3% would cause a massive fall.
I don't think that Orr will let that happen though. The Reserve Bank will buy all the bonds. Do a Japan and de facto nationalise the entire economy (without any of the benefits of actual nationalisation). $NZ1 trading at $US .25 won't make a bit of difference, the course is set, we're riding housing all the way, wherever it may take us. We will not learn anything from this until it is far, far too late to change course -- I'm resigned to that.
Elephant in the room. This is what happens when you have net migration of half a million people in a decade into the country without any plan on where they will all stay. There is a huge housing shortage. Empty houses (unable to find a tenant) is the natural constraint on a housing market. At the moment the country is full with people sleeping in cars, garages, lounges, moved back with parents etc. Let's hope when the borders reopen this insane mass immigration policy is never reintroduced.
Do you believe that this rise of 10% in a month is only because of supply ....fight for toilet paper was for short supply.....NO......have you heard about FOMO....see how this new data will be exploited by RE agent and will play of FOMO.
It's a combination of factors. Immigration has to be one of them IMHO.
More than $1 million of taxpayer money is now being spent each day on motels for emergency housing.
That's only 365 Auckland houses a year. Peanuts
Well I hope so too, but I fear the calls from the business lobby will be strong. And the powers that be will do anything to not appear xenophobic.
I don't think these stats. include all the 'off the plan' section or house and land package sales that won't settle for 12 to 24 months from now.
The purchasers of which won't be able to confirm their funding until approx. three months from settlement.
Any guesses what your circumstances and the general economy will look like and what the banks will be offering then?
JA to Ashley Bloomfield after seeing these stats.
"Please tell me someone in the community has Covid. Even a case of the flu would do."
Prime Minister Jacinda Ardern told Newshub Nation last week no decisions had been made about potential housing policy changes.
"I'm not going to get into hypotheticals about what we will or won't do until we've actually made some considered decisions," she told host Tova O'Brien.
WHAT HYPOTHETICAL IS THAT.......TALKING ABOUT (NOT ALLOWED TO SWEAR)
Shes wants to destroy NZ. Cause small to med businesses relying on govt. The slow creep of communism
Bullshit.
She's centrist or centre-right, a billion miles from communism
What is right about her, apart from giving investors plenty of 'rope'? Could be part of the plan to destroy?
What's left about her, apart from her rhetoric.
She is centre right because she is maintaining the status quo, which is centre-right and centered on neo-liberal paradigm.
Depend on your perspective. Compared to the US National is left of centre.
What is right about her, apart from giving investors plenty of 'rope'? Could be part of the plan to destroy?
Does this look Right to you?
That's lightweight bollocks.
And based on propaganda from the 'Fifties'.
Move on, eh?
Move on? You need to catch up!
Jacinda bring people to a level that many has start swearing her.. Of-course not on this portal but yes in real life.
I wonder how cops who don't yet own a house feel knowing the pedos and other crims they arrest that happen to own a house are making 150k a year more than them, just by doing nothing. (Don't anyone try to say crims are never home owners). Are those cops going to be on the governments side after this? Or members of the army who've been sh*t on by Labour?
I have caught up with several centre-left friends or acquaintances over the past couple of weeks, people are getting pissed off with Ardern and her government. I suspect she's still polling well, but there is a strong undercurrent of pronounced frustration / anger starting to build, I feel.
Agree, it's a real shame there doesn't seem to be any competent opposition capitalising on their ineptitude - barring the occasional jab from David Seymour.
Well, who wants to take over the helm of the Titanic AFTER it has hit the iceberg.
We just had an election, all they have to do is spend the next three years pointing out how much of a failure the Labour government is at everything they attempt. Yet the opposition can't seem to manage even that with any consistency.
Pretend libertarian
Starting to build? Are these people a little slow?
I'm hearing the same Fritz and my wife, who since retirement is turning into a social butterfly, says the same thing.
Ardern recently shared an exchange with Neve on social media. This is not made up, you can check it out yourself.
Jacinda: What do you think Mummy does?
Neve: You go to work.
Jacinda: And what do you think I do at work?
Neve: Eat chocolate.
Even her young daughter is onto it. Surely we'll all catch up eventually. Maybe if we get the children to write her letters about housing, as they did with Maui dolphins, she'll spring into action?
The future is never easy to see. But one thing now appears apparent:
General Secretary Ardern and her Deputies will let us know what it is, when the time arrives.
How long will it be until she seeks a mandate from 'us' for a 4-year term, to then be extended to Lifetime General Secretary of the New Zealand Communist Labour Party?
That's what we are headed for, as democratically operating, free markets no longer exist. ALL of them are now dependent upon the commands of a handful of like-minded people across the globe. Political ideology is no longer a barrier.
Yes they are all working lockstep
This sold last night for $1,670,000 - its last sale was in July 1994 for $160,000
https://www.anneduncan.co.nz/listing/l5435988-36-harlston-road-mount-al…
Quite a nice bathroom and kitchen.
Congratulations to the prizewinners. Now they have a very expensive dump with "potential".
Development site.
Was chatting with a friend who is buying a house and expecting 9500000 to a million as per RE agent so his understanding was between million to 1050 or may be more but today when checking with agent, he was advised that expectation over 1050 .
Just one news and price expectation changes....just like people rushing for toilet paper under FOMO will rush and even pay that extra.
More Debt what the f@#$ is this government doing. To what level are they forcing people to borrow and pay inflated price. It is very well to say do not buy but check with FHB who were already struggling and now this government has really screwed them - buy house and are damned AND if do not buy are damned.
Very Bad time for average Kiwi and FHB and best time for home owner as suddenly have become very very rich - millioners even if working on low wages but have a house. New division is not between halves and halves not BUT between home owners and renters....people who till now have not bought a house will be pauper for life....Thanks Jacinda Arden for life time of poverty despite working.
They just took over the ponzi close to the inflection-point. Don't blame them.
It's the whole caboodle - all those who though growth was forever. It hit the physical limits, so their keeping-on-pushing resulted in upping the 'valuations' of existing items. There was nowhere else for the injected debt to go, in quantity (and remember this was exponential growth everyone was chasing).
It's not this Govt, and it's not a housing problem, it's a Growth has run into Limits problem, and much of the issued debt had no home when the music stopped. Too collectively stupid, it was.
Low interest rates have done this.
It was strange how they dropped the OCR. It was 1.75 and they dropped by 0.25 to 1.50 then dropped 0.5 to 1.0 then a whopping 0.75 to 0.25.
Each drop was larger than the one previously but as an actual percentage drop it was larger still.
It dropped by by 14% then 33% and then 75%
Wouldn't it have been wiser to drop by only small amounts, say around 10% of the total each time?
So from 1.75 to 1.6 to 1.45 to 1.3 or something like that and observe the results.
I don't know really but as the OCR figure got smaller it would seem logical to drop it by smaller amounts rather than larger amounts.
An excellent illustration of what Panic!!! looks like.
The question now is - what do they do next? Or rather, what can they do next?
I think there was a bit of panic as well as a sense that, hey, rising property values would be a good problem to have compared to economic Armageddon. I'm sure they thought, this will probably enflame the property market but oh well.
They were just giving themselves some time - but now were in an even worse position.
The percentage is less useful. The gross is more important. There were calls in March last year for deep cuts to the OCR as in recessions the normal cuts were 500 points, not 125. The fundamentals were sound- it was the LVRs being dropped that did the real damage.
I've been reading many comments on this forum, many of which complain about the current abysmal situation. I see very few realistic comments on what to do to FIX things. As a retired corporate accountant who has also run ag/hort related and other businesses for 20+ years I have my own take on things. It may be simplistic but I think several basic things would help.
So;
Dear Grant, since you cannot make any decisions, this may help;
1. RBNZ to change the banks debt weighting capital requirements towards business lending instead of residential real estate, (exempt FHB loans). Productivity is a massive issue. Businesses starve for capital due to banks lending policy.
2. Lower the RB inflation target.
3. Limit banks interest only lending on property to everyone, exemptions for new construction & time limited exemptions for bridging/stressed loans. If you cannot afford to repay principal you shouldn't be buying.
4. Limit immigration, restrict hard to high value migrants. Excess population growth has widespread long term negative effects, especially when weighted towards low income migrants. What we have been having is madness.
5. Think about our children, not just the next 3 years.
A large scale shared equity or leasehold housing programme could make a meaningful difference.
Gordon..They wouldn't understand you. You make too much sense.
"Dear Gordon,
Thank you for your suggestions.
None of those items are within my remit, although I acknowledge that at face-value some of them may appear to be so.
The RBNZ and I only follow the directions of the Government of the Day.
I have forwarded your note to the appropriate parties.
Yours Faithfully, Grant."
Good GordonC. Remember that you can wake a person who is sleeping but not someone who is pretending to be sleeping.
Jacinda Arden and her team has won a massive mandate till 2023 so why will they care now, their attitude will only change before next election so another 2 years to rule with smirk on their face.
"Dear Gordon, I would like to thank you for your comments. As you know, this kind of feedback is appreciated. We are currently forming a committee to look into the situation. After I have read their report and given it due consideration, I should be in a better position to make a decision." Yours, GR
You don't understand, Gordon. You are so behind the 8 ball. It's not the commenters but the government that has been voted in that is in charge. Commenters can come up with every solution under the sun but - Govt has made it clear to NZ via media over the last year that they are well aware of the situation, yet they are doing NOTHING and delaying in a 'Dog ate my homework' -obvious kind of way. Jacinda and Grant belong behind bars. They have a foothold now and the only way is either a crash that is beyond even govt/central banks to prevent or overthrow govt - a coup
NZ has fallen behind in most other industries but leading in house prices! How's that sustainable in the long run?
Well, you cant say this regime isn't transformational!! Just not the transformation many were hoping for......
Correct are transformating.....earlier after major win increased house price in few months by 20% and now 10% increase in just one month......real transformation.
Vote for @#$%$
We knew that only economy in NZ os Housing but Jacinda the..... is taking it to extreme
https://www.odt.co.nz/business/property/hundreds-rush-real-estate-catch…
Tourism Industry Dead
Hospitality sector Dead.. Struggling if not dead.
Education Sector Dead... Struggling if not dead.
Immigration Dead (for good)
Does Jacinda wants only Housing Ponzi - buying and selling to each other for the Pyramid to run just like chit fund companies.
Screwing NZ - Stock market is falling despite stimulus and QE, now what. May be transfere X amount to each individual for number of years with borders close and run a Zombie NZ.
Is Jacinda Arden and her government running a scam by sipporting a big Pyramid scheme in housing -
https://www.investopedia.com/ask/answers/09/ponzi-vs-pyramid.asp
They should change their name to The Housing Party.
Has there ever been historically an equivalent situation where not just one asset class, but all of them, have been in a bubble simultaneously?
In may respects this could ruin portfolio theory. Even Dalio and Buffet think bonds are going to go bad so the backbone of a portfolio could be trash at the same time as everything else.
Can't wait for those 100'000 affordable homes to come on the market
F
Has someone asked Jacinda, what is her take on her governments latest achievement of 10% rise in just one month after 20% to 30% rise in 6 months.
Will be interesting to see her body language when responding as she normally does in such a situation with straight face and than immediately prompts for next question.
Normally media too does not ask or confront with hard questions on housing as they too are mostly dominated by Mikes - who like national supports the ponzi. So unfortunately Jacinda Arden has got a free run as neither opposition nor media raising the issue and putting government in a corner.
For Jenee :
Maybe only person who will ask and persist for an answere is Jenee but it should not be a simple question but government needs to be grilled and forced to come out with what they are planing or not planing to do anything for clarity.
Quick Adrian, lower the interest rate!!!
Orr looks in his large bag of tricks, rummages around, finds there's only one trick and so lowers the OCR.
Reminds me of this: https://youtu.be/T3D6Ecs7VhQ?t=71
Stock markets falling.
Has QE and stimulus run its course and finally economy fundamentals taking over.
Government and reserve bank screwed.
Some stocks are, but DOW hit an all time high today.
Well, I've never seen the comment section overflow into multiple pages until now! Momentous occasion.
It's on fire
It happened on the night Trump was elected in 2016.
Surely people have to be thinking this is a bubble now - even those who have completely disagreed in the past must be getting uncomfortable about these prices explosions and the trend lines on the charts above? That trend line is damn near vertical. If that was a share holding I'd be taking my profit now (selling half and keeping half).
Or I guess those who don't believe it might be a bubble don't care either way - their paper net worth just went up by hundreds of thousands of dollars last month alone (if owning multiple rentals..)
Certainly, I was thinking the same thing. I recall the days when I first became a member here and how DGZ and me used to have a high old time displaying our "sense of entitlement". Great victories were called when we predicted house prices would go up, usually only a percent or two for the month while others were convinced a crash was imminent. Miss those days and to do that now would just be exceedingly insensitive even for us.
I hesitate to say I told you so. People should have got into Elysium before it was too late. Behold the rise of the Global City.
If you expand the Auckland graph of median house prices you will see there was quite a plateau in the years 2017 to 2020. The surge in prices in recent times is simply returning house prices to where they should be.
It's not rocket science. The powers that be know exactly what determines prices and I can only conclude that this is all going according to plan.
RE lobbyist still not happy with 120% rise in house price on annualised basis......still.....
From a friend down there in Unn Zudd:
"Much of the upward pressure on our house prices is due to demand from foreigners. Everyone wants to live here."
When I suggested that is an utterly ludicrous fantasy (because it is), he replied:
"When [foreign actor] was interviewed by TayVay Toe he told us how much he loves Unn Zudd and us, and how he would love to live here!"
There's no arguing with that. Case closed.
What a load of malarkey!. I get it now.
We're through the looking glass here, people.
10% of our population are immigrants who arrived here in the last ten years, most going to the Beta+ World City of Auckland. Maori call Auckland Tāmaki Makaurau, meaning "Tāmaki desired by many".
lol.
I know you love living in Japan, being all cosmopolitan and all and think NZ is kind of cringe but not everyone thinks like you Malarkey. Did you know that? I don't think you do. You stay in Japan and you do you. When I am knee deep in immigrants here in NZ your comments just seem ludicrous.
Hey, don't forget the U.S.! I love living there too. The United States is the land of immigrants. It's a great place, despite people like Trump and his cult.
But I digress.
You should come to terms with the fact that almost nobody on Earth has heard of NZ, and the few who have don't care about it. NZ is just another country out of hundreds. It's not "spusshull". It has little to offer anyone who lives in countries where there is stuff to do. NZ is a dank mudpile in the middle of nowhere, filled with people whose only goal in life is to get drunk as often as possible and slobber about cuzz, rugbuh, thuh murruhcuh's cupp, unn -- must uv ull -- huzzuz unn cuppuhtool gunnz.
Nothing to see here, it's all expected.
Be quick!
Bravo Labour. You presided over a net migration of 175,000+ since gaining power on a platform of reducing immigration and building more houses with KiwiBuild. You 'built' (more like stamped your badge on houses that would have been built anyway) a total of ~600 homes. Wonder why we have a shortage?
Based on this government's efforts, I have vowed to never, ever vote for Labour.
A disgrace.
Wait and see what this $#@% does :
https://www.rnz.co.nz/news/political/436037/government-prepares-to-take…
Taking advise on "DTi just for investors". Next weeks announcement could be pretty interesting.
there will be more excuses from that sad f**k
It's funny thing, legislature in OZ:
https://www.msn.com/en-nz/news/national/worthless-property-listed-for-d…
Such things, will never happen in NZ.. until their next major natural disasters.. typically.
Look at this from July 2016:
https://www.rnz.co.nz/news/political/308991/labour-and-national-'unreal…
"Labour and National 'unrealistic' about housing market - Brash"
Don Brash: House prices must fall - incomes can't catch up
Winston Peters: Sees high immigration levels as the main contributor
Grant Robertson: "The currency is unsustainably high, that's got a very negative effect on exporters, and the Reserve Bank would like to see that come down.
"But in doing so, that will also make it easier for people to borrow money, which would fuel the housing crisis," he said. "Effectively what they've done today, is say we will use other tools... other than the Official Cash Rate to try and manage the housing crisis."
In July 2016 the OCR was 2.25%:
https://www.rbnz.govt.nz/monetary-policy/official-cash-rate-decisions
So they slashed the OCR anyway, but luckily the other tools were so powerful, so overwhelming, they would surely prevent a housing hyper-bubble.
"The currency is unsustainably high" at the level it has consistently been for about seven or eight years now. Despite the effects that even a slight drop would have on fuel costs and the supply chain effect on logistics that flow from it.
Are we still getting ripped off at the pump? I can't tell anymore.
So what we really want is runaway inflation. That will force the OCR to go up and then we'll see a large supply of houses going cheap.
I'm ok with exploring this - The OCR goes up which they say increases the NZD which puts our exporters at risk. But who would want to buy into a currency with runaway inflation?
If I was borrowing to buy a house, I would be scared to be paying these crazy sorts of figures. Wage growth isn't going to be high enough to cope with raising interest rates in the future years IMO.
First home buyers are most affected, and they are competing for the same houses as investors, just pushing up those prices. It is a crazy situation. What Labour should do, is give first home buyers a first home voucher so they can buy any new house for a a certain percentage below the normal selling price of that new home. This is effectively what kiwibuild is for first home buyers. But Kiwibuild is a complete failure due to the government not funding it, but putting that cost onto developers, so very few are doing it. Instead the government could actually fund it, and they could pay for it by taxing property in other areas.
But are they actually interested in solving the housing crisis? Or more interested in preserving the asset growth and wealth, rather than seeing it diminish in value.
This bullshit line that Robertson spurts out “we want to tilt the balance in favor of FHB but are also aware that a house is a persons biggest asset” is a load of waffle. You either want to improve affordability for not. The only way to do that is for house prices to drop. Negative equity is not a problem for owner occupiers that can still pay their mortgage which will be the vast majority. In regards to an asset? No your owner occupied house is not an asset, it’s a liability. It costs you more money over the course of your life than it “generates”.
Robertson and Jacinda Arden has no intention of controling the ponzi. Now if cannot avoid will try to delay and under pressure may be forced to announce but will be meaningless as may hide behind supply iszue or corona virus or pass on the buck to Mr Orr and even if do announce, will give time like from June or September or.... giving window for speculators to....
Dp
Negative equity is "not a problem" if you have no need to sell and have a stable job. So that rules out anyone who would have employment affected by the subsequent massive contraction in discretionary spending (i.e. retail, hospo) or anyone who did the right thing by buying a starter-home and planned on trading up to have kids etc. Pretending negative equity has no consequences for people just because they 'have a job' is insane.
As for the idea my house is a liability: It costs me less to own it than it would to rent it. That's including all other standing costs. That's what happens when rents chase stupidly high yields because investors have screwed the scrum. The dividends on my house an investment is the portion of my future income that I'd otherwise be committing to rent.
We know that the "wealth effect" is a myth so your argument doesn't stand. People who have an income (which will be the vast vast majority) will not be affected by negative equity. So we should just continue with the status quo because some people will be negatively affected by a correction? I don't expect my share investments to rise exponentially year on year so why should it be any different for housing? If anything, there needs to be a large correction and for housing inflation to remain stagnant for a decade or more. This would benefit society in the long run but people (see selfish) don't want the short-term pain for the better good of society. Do you realize how damaging this housing crisis is for society? Those people who want to trade up will just have to wait much like the thousands of FHBs that have had to wait and wait and wait to even consider enter the housing market.
Your mortgaged house is a liability. I'm not comparing renting versus owner occupying. I'm comparing owner-occupiers with positive cash flow rental properties or even sharemarket investment.
I'm not talking about a "wealth effect". Do you even understand how negative equity works? The first thing you lose is the money you put in. Once that's gone, you are behind on the mortgage. The banks will not let you sell until you are clear, and even then, you are back to zero. The deposit you spent half a decade saving is gone. You have nothing to put towards a new house anywhere else. You are talking about wiping out owner occupiers because of a problem caused by shitty governance and property investors filling their boots on tax-free capital gains.
But sure. continue to lecture me about "what FHBs have to deal with" when you so easily sweep aside anyone who has bought a first home in the last couple of years as collateral damage. Tell about the 'greater good' and how compassionate you're being when millennial battling student loans, high house prices, 30 year mortgages and now negative equity run the numbers and realise their partners and kids would be better off if they 'just didn't pay attention' when they were crossing the road one day and their life insurance paid out. Go on.
Let's hear it.
Of course, I am aware of negative equity but given you brought the house to live in and not for capital gains you can afford to stay in the house until you pay down more equity and house price inflation gradually erodes into your loan to value ratio. You're overstating the significance of negative equity. It’s a dynamic process, you don’t stay in negative equity forever. Those US households during the GFC have recouped their losses after 10 years.
It’s obvious you have brought recently and there’s nothing wrong with that but using that as a reason to not address the issue is just selfish for future generations including your kids. I paid down a $70k student loan, I pay the highest tax rate currently, but that’s irrelevant. A house price correction would benefit the vast majority in the long run and that’s what you need to consider, not how a correction would hurt you personally.
After putting off having a family and buying a house years later than my parents, should I then just hang around for another decade after being financially wiped out on the chance things 'might' improve and I can get back to square one because suddenly someone decided to unwind the taxpayer, government-backed ponzi scheme that got us to this point and left me with the bill?
"A house price correction would benefit the vast majority in the long run and that’s what you need to consider, not how a correction would hurt you personally."
I don't have a problem with house prices declining in real terms, which I honestly think they should do - probably back to about 4x - 5x incomes and then stay there. I have a problem with your 'LOL Whatever' attitude to negative equity and wiping out recent FHBs with some wishy-washy bullshit claim about the greater good, when there was no such "urgent action required" when I or anyone else currently buying their first house couldn't leave it any later. And you have the arrogance to accuse me of being selfish? People don't buy one house and live in it forever, so this "you can just stay in house and carry on, no big deal" is just crap - unless you're suggesting people should take on even bigger mortgages so their first home can be a four-bedder forever home. That seems kind of irresponsible to me.
If you want to reset house prices using a state-backed ZIRP lending product that would at least give owner-occupiers a chance to get out of negative equity and help them deal with a problem that most of them had no part in creating, then I am keen. I will tick the Yes box for that on any referendum you want to hold. But I'm not going to sit back and take another "tough shit for being a certain age" for the team if it means my family is better off with me dead. Maybe that does make me selfish - or maybe your idea just sucks.
Why would you be financially wiped out? Do you not have other investments? Sure, if and that's a big if you had to sell your house at a loss that would be financially damaging but that would be a select few people. I'm not suggesting you stay in your house forever, maybe for 10 years whilst equity is paid down and house price inflation gradually improves your position much like the USA recently.
You are being selfish as there is a whole generation (including your one) and future generations (including your children) that would benefit from falling house prices.
"Why would you be financially wiped out? Do you not have other investments?"
So you get that it is hard for FHBs to buy a house, but can't appreciate that as a recent FHB, I might have had to drain Kiwisaver and other available investments in order to raise the deposit for the house I bought, and don't just have money lying around in other investments, because of the obscene house price I had to pay that as the result of an inflated market that's so bad you say warrants crashing the entire market without a soft landing?
Yea, I'm done with this.
This is the first time I've ever had to go to the second page of comments (there has never been one)
No doubt the real estate industry will now significantly reduce their fee structures as it would be immoral for them to increase their commission by such massive amounts when property demand vastly exceeds supply and all properties appear to be selling within days regardless of the contribution of middle men. I'm holding my breath waiting for this concession to arrive.....
it would be v useful if someone, REINZ even, gave breakdown of what number of these sold "properties" sold are by development companies, off the plan, ie not built yet. We would then have an idea of how this segment is increasing relative to built stuff. Strongly suspect that off plan is exploding due to safe haven drive of investors given uncertain outlook for world stocks and gov inflating away their currency, plus no deposit rates.
Inventory has crashed because. lot of what was held by Agents has sold despite it being 1-3 years old and not built. Section sales alone will not give full picture.
Kid B'day party: kid inflate/blow the balloon until it's deflate/max out air from kid effort, came parents, took it to blew/inflate further, deflate cycle is not fun/out of question, give back balloon to kids to play.. nek minit?
NZ is a country that don't believe in austerity, correction down, bad terminal ill prognosis, when you refuse to believe, deny and keep on going using the same method... watch what will happen.. it's so natural, always be.
Go NZ Go, well done team labour.
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