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Kiwibank economists say housing changes to be announced this week 'do have the scope' to cool the housing market but won't address the clear lack of affordable homes

Kiwibank economists say housing changes to be announced this week 'do have the scope' to cool the housing market but won't address the clear lack of affordable homes

Kiwibank economists say the changes the Government is set to announce this week around housing do have the scope to cool the market - but don't address the central problem in the housing crisis.

In their First View publication, Kiwibank chief economist Jarrod Kerr, senior economist Jeremy Couchman and economist Mary Jo Vergara say the central problem is "a clear lack of affordable homes".

In terms of what the Government may be announcing this week, the economists say policy changes will likely fall into two categories, macro-prudential and tax.

"[Finance] Minister [Grant] Robertson has already asked the RBNZ [Reserve Bank] to investigate restrictions on high Debt-to-income (DTI) and interest only mortgage lending to investors," they note.

They believe therefore that the RBNZ may be given the go ahead to put these restrictions in place.

The RBNZ has for some time wanted to include a tool for restricting high DTI lending and moved to have such a tool put into its 'macro-prudential toolkit' during the National Government's last term before the 2017 election.

However, the then government pushed back against the introduction of such a tool - even though the RBNZ pledged not to use it at that time.

In terms of interest only lending this is significant for investors. 

RBNZ monthly figures on mortgage lending by payment type show that generally around 40% or more of new lending to investors is interest-only, including revolving credit facilities. 

In terms of potential tax measures in this week's Government announcement, the Kiwibank economists say, with a capital gains tax "frustratingly ruled out", tax policy changes could include an extension of the bright-line test on investment property sales pushed out further from five years to 10.

"In addition, tweaks might be made to lower investment income tax rates (such as the prescribed investor rates) to encourage investing outside of housing."

But as said at the top of the article, the economists believe that while some of these changes do have the scope to cool the housing market, they don't address that central problem of a clear lack of affordable homes.

They say policy change also needs to be focused on "ensuring housing supply in NZ is faster to respond when demand builds".

This will include an overhaul of the resource management act, boosting local government infrastructure spending, examining the high costs of construction in NZ, "and weakening vested interests blocking intensification in our major cities".

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118 Comments

15
up

Indeed, prepare to be underwhelmed. Without strong supply side measures (new housing/fast RMA restructure/new infrastructure etc etc) AND demand side measures affecting mainly investors, but also FOMOd FHBs, we are unlikely to see the needle move. If we get all of these (highly unlikely), it could shock the overblown market so badly, it could lead it to a death spiral unlike anything we have seen.

Through continuous uselessness, they have painted themselves into a corner. Interesting times.

17
up

I don't think we can realistically expect resolution of the supply issues in the short term, after the failure of Kiwibuild. We can see measures put in place.

But the housing crisis needs to be looked at as two fundamental issues that need to be tackled side by side:

Supply/Demand imbalance. Immigration has been reduced, and construction levels are relatively high. Both of these settings need to be retained until we see a rebalancing of supply and demand. Further tweaks can be made to continue to encourage land /infrastructure is being made available to support the supply side of the equation, and trying to drive down construction costs. This will take a while to resolve.

The misallocation of capital into housing and the speculative bubble it has created. The current tax and lending rules massively favouring investors over FHB can be resolved with policy settings and can start to impact the market right now. If they get this right it will take heat out of the market, even if it can't resolve the underlying shortage of houses.

Both of these need to be done. We can't have one without the other.

12
up

The good news is that I think capital is interested if we can open up the opportunity for new builds and redevelopment. In some ways investors have huge potential to accelerate house building if we can just tilt the incentives heavily towards building new houses and away from buying existing houses.

Capitalism is an excellent economic tool if you direct it. At the moment capital is totally misdirected so causing more harm than good.

17
up

I really think the Ma and Pa investors need to be replaced with institutional investment, large scale, new build, long term rentals. Not the ad hoc, all about capital gains, retirement plans we currently have. A bit more renter centric would provide far more certainty than what we currently have.

Why are they mutually exclusive and if it is such an attractive proposition for institutional investors, why aren't they doing it already? You will find the average Ma and Pa a lot more forgiving than a large investor with unlimited resources to pursue you.

The only way to get institutional interest is to offer up incentives.

Arent the tax free CG's , rental subsidies, and WFF incentives for what is happening now ? Just need to shift these to change behaviour.

They are mutually exclusive because they are not only a different business model, but true Build to Rents (BTR) are also built differently from standard rentals.

These institutional BTR should not be confused with the NZ BTR's that are being promoted as such at the moment.

You can throw as much capital at this as you like. As someone working in the industry, manufacturing to be precise, you simply won’t see any further ‘scaling up’ worthwhile mentioning. Just no way you will find skilled staff to scale any further than where we are right now without a focused drive to bring in specific trade skilled labour. When you have experience in ‘scaling up’ any manufacturing, you stop dreaming of it in NZ unless you get a decent juicy government contract for at least 5 years or more. And even if you were so lucky, it would be a tough call to commit the capital without knowing if you can find the 50-100 staff to start with for any manufacturing of size that will make a difference. And before you tell me to simply pay more, i have tried that, in Auckland. And it has only added a perhaps minor irritation to film studios having to dig slightly deeper into their kitty to poach the hundreds of contractors they suck out of trade and industry with every major film project. But of course those things sound very good in media as so-called export earners, lol... only because we don’t count the ridiculous incentives given in the first place.

I agree, this will be yet another chance for the Govt to provide an example of their incompetence and economic inadequacies.

Go Hard Go Early replaced by Go Lame, Go Late

... more of the same flap & waffle ... blame foreigners , blame local investors , blame " greedy " landlords , blame Adrian Orr ... flap , waffle & blame ....

Blame the RMA , you numpties ! ... start there ...

30
up

The most significant supply issue here is an excess supply of bank lending against housing - but a bank economist will never tell you that.

Turn the credit tap off and watch prices fall.

12
up

Yes. Almost daily media releases from the banks who never address how lending money into existence is the essential element in the charade. The sheeple don't understand the significance nor do they really understand the debasement of money (inflation, not the meaningless CPI).

Exactly!! You never hear kiwi banks chief economist say this, it’s always supply supply supply! Who does he think he is kidding? Must have a future in the previous national party government.

28
up

What makes housing affordable is low prices.

If prices were on a sustained downward trajectory we would see a flood of properties on the market.

These "bank economists" are nothing but blowhards talking their own book.

Brock
Please tell how falling house prices are going to create a flood of additional homes.
The housing crisis is a result of cheap interest rates and shortage of housing supply. My experience is that falling prices - such as cheaper prices in “sales” - create greater demand.

13
up

I know of at least 3 people who hold 2nd/3rd properties unoccupied (or used 1 or 2 days a year). From speaking to them they do this because the tax free capital gains far outweigh the costs. There are additional benefits (like having a place to stay when in town, or lend it out to friends), but they consider it an investment first and foremost. If tax free capital gains were off the table they would not continue to hold properties in this manner.

I don't believe it would solve the supply/demand imbalance (I don't believe we have enough un-used properties to saturate demand) but it would help.

If people can afford the holding costs of keeping houses empty, why would they sell when prices are falling? They'd be more likely to hold, on the expectation that over the medium-long term, prices will go back up to where they were.

100%. Virtually every piece of evidence shows investors find it very hard to cut their losses as it means their loss is then realized. Proved time over, and over in share markets. Not sure if it translates to housing but at a guess I'd go 'Yes'.

That depends entirely on their timeframes and expectations on future returns. All of the people I mentioned are at (or close) to retirement age. I suspect all would be looking to realise the paper gains now.

Far better to act to increase the carrying cost. Something like the FiF regime currently in place on foreign shares, applied to all properties that are now the owners main residence, would do the trick. For higher rate tax payers this would cost them ~2% of the RV of all excess properties.

Turn that FOMO into FONGO (fear of not getting out).

Miguel
Yes I know of a couple of people with an “empty” home: one who works on contract in Australia and returns home for holidays, and another who owns an inner city apartment for staying over occasionally.
In both instances they seem to see this as affordable and long term: like most property investors neither would be concerned about short term market fluctuations as they are happy with their “yield of convenience”. The reality of the one on contract in Australia was that when formerly on short term contract very early 2000s he sold in Auckland and could not re-enter the property market at the same level when he returned - once bitten twice shy.

But again your thinking is based on the assumption that prices *must* go up faster than incomes. This is exactly why we need to short circuit the belief prices will only ever go up and that prices do not need to be rooted in fundamentals (like income).

If these people believed that prices would remain steady, relative to their income, it would change their decision making.

Yes exactly, as soon as you take away capital gains higher than the rate of inflation, then yield is the only place to make a return. We are at an unusual place in the cycle in which the yield is enough to cover holding costs and is making property cash flow positive at the same time as getting high capital growth.

This does not happen in a stable market and is very indicative of unstable countercyclical cycles between demand and supply.

Even the recent increases are a faux demand increase with many people buying from FOMO, many 'off the plan' sales, with sales that would have happened naturally later in the year, being pulled into the present, which will result in those buyers not being there later.

Until land supply is allowed to be bought on the fringe at close to its next best use-value, then prices cannot come down across the board.

I'm picking they will be looking to make being a non-professional landlord negative enough that these houses will be put on the market with the idea they are bought by FHB, and not more professional landlords.

This of course does not help the person who was renting the house unless of course, they are in a position to be the FHB, so maybe they will team the landlord selling with something for the sitting tenant to buy. And also maybe something to stop or slow down Professional landlords buying more, at least in the short term so there is less demand.

There is some sense in this as you would save the agent's commission which could be part of the deposit for the tenant/buyer.

One other point, Kianga Ora has just got a license to be their own consenting authority, to speed things up supposedly. Why do they always give themselves the benefit of something they won't give the general public?

In answer to your last question, I think it will have to do with the government (whether central or local) always being the last man standing in terms of when private development goes wrong. I suppose developers could become their own consenting authorities if prepared to build as sole traders, as opposed to limited liability companies. However, even then - when a sole trader goes bust many folks have learned you can't get blood out of a stone. And I suppose in that case, it becomes buyer beware. The good thing about it is that if a consenting authority is not a government authority, the government holds no liability.

I agree, questions of legal liability are underestimated as a cause of our ridiculous building costs. The legacy of councils rather than builders or architects being held responsible for the leaky buildings fiasco. Cost local gov’t a packet to fix it up, probably costing us ten times as much in unnecessary overhead now that they’re once bitten...

I was being a little tongue in cheek with that last question. The point is they come up with a solution to a problem, that they will only allow themselves to have.

But there are other examples, like,
Exempt from Healthy Homes standard.
Guaranteed and high salary increases every year,
Etc.

I'm sure you can add to the list.

Yes it's far too cheap to have an unoccupied house! I have stated this before - the low interest rates are causing the supply to SHRINK. Who's even going to bother, let alone take in a boarder to help pay mortgage. So efforts to build are almost futile in this environment - especially if investors are soaking them up. But yeah, anyway..sit back and do nothing and watch evil Queen toof-toof as she rides her two-headed man-beast even harder and mows down kiwis, laughing as she goes, although this weekend she is pouting about people being meanies

dago
Interest rates have nothing to do with it in either of the instances I quote. No necessity for mortgages. Plenty of people with two houses with no mortgages on either and have seen considerable paper increase in value and are in it for the long term for reasons other than CG.

18
up

You are making zero sense. If a Term deposit was paying 8% pa, and property prices were hovering around the rate of inflation, it would clearly produce more incentive to sell unused property and put the money in the bank.

Right now we have the situation where money in the bank returns negative real returns, and that same money in property returns 10%+. Of course interest rates matter.

Miguel
It is you who misunderstands/ doesn’t comprehend the situation. You need to read my original post.
The houses are held for reasons other than best return.
Some can afford a yacht and in doing so is not about return - there is actually a financial cost but that is a cost outweighed by intrinsic reasons which they can readily financially afford.
Similarly owning two houses/homes the financial cost is outweighed by intrinsic value.
To have an inner city apartment to be used at convenience is considered worth the financial cost to do so whenever they choose; the flexibility and familiar surroundings is of high intrinsic value (and actually the cost of maintenance and bodycorp etc will have been outweighed by capital gain, and over the future long term will probably continue to do so).
In the other instance the family home has been retained while on a work contract in Australia and it remains a good place to return for breaks and for family occasions such as Christmas (children independent) and provides assurance that they aren’t risking being shut out of the market again which also has high intrinsic assurance value.
So it’s not a case of me making zero sense, rather a need for you to get your head around the fact that many have and can financially afford to have more than one house / home for intrinsic value. Over the long term - not the current short term calculations you post - the capital gains have and will likely continue to make it financially advantageous as well as the intrinsic reasons. So unlike a yacht as well as intrinsic value there can also be a financial advantage in two houses / homes.
Whether one agrees with it or not, we don’t live in a totalitarian state where owning two houses / homes is illegal - or is that what you are arguing for?
Note: You commit a basic error when you calculate current / short term costs. Property is about long term and short term market fluctuations are irrelevant - any experienced property investor knows that and I have previously posted of my experience of a short term fall but considerable long term gain.

Chances are they bought their second or third house before the market went bananas. People who could afford to do it starting now are definitely the elite. Formerly, they were aspiring elite.

I'll be honest I didn't read much of your diatribe. I never said "it will mean everyone sells all their empty properties". I said it would INFLUENCE their decision making. If tax free capital gains are greater than the risk free rate of return it will add further incentive to hold empty properties. If there are no capital gains and the risk free rate of return it will mean less incentive to hold empty properties. Thus interest rates have in influence on those decisions.

13
up

The housing crisis is a result of monetary debasement. Low interest rates is just a tool for manipulation.

10
up

‘Falling prices create greater demand’ - yet another person who is unaware of the US housing market crash, also the one in Ireland, the one in Japan etc.

15
up

It's quite elementary printer5.

Houses are being hoarded in the expectation they will be worth more tomorrow.

As soon as that expectation is corrected to one where they will be worth less tommorrow the hoarding will cease and the market will be flooded.

Brock
Well there is one on this site who have been calling bubble burst for six years.
All through 1998/99 posts were about a severe correction.
Twelve months ago the vast majority of people on this site were calling a bubble burst of 30 to 50% (and one not surprised if it was going to be as much as 80%).
So are you really certain you got it right this time?
It has been at considerable cost to those potential FHB who waited on expectation of market falls that you have continued to call.
Fortunately over the past three years 150,000 FHB have ignored your continuing rhetoric, have purchased, are enjoying the financial and social security of homeownership as well as the considerable CG and have every reason to be laughing at the expectations of your ilk.
Not one recognised NZ economist or bank economist are currently signalling any significant/considerable fall or correction. But then you know better. :)

Fortunately over the past three years 150,000 FHB have ignored your continuing rhetoric

Imagine having an audience of 150K house buyers

P8
A year ago, all the economists in banks and the government were calling a severe correction of anything from 5 to 40% in the housing market. At the same time many of us were predicting the same.

Then the government and RBNZ stepped in and over cooked their support by so much it has lead to a massive boom considered completely unsustainable and very worrying for anyone that looks at it, including the government and RBNZ. This has also put severe risks into the financial system. Many of us thought they wouldn't be so stupid as to further inflate a bubble which was already well inflated, but they were. This has set the stage for near unlimited government and monetary support of the housing market, which previously did not exist.

Had the government not stepped in with ridiculous amounts of support, it is likely we would have seen big drops. At the time people were making those predictions, said support did not exist.

No, no bobbles. You memory fails you - I'm the one who should have dementia.
At the height RBNZ was calling 10% as were other banks. Westpac was the only one calling around 15%.
As for interest.co posters you could smell the glee in their expectations:
- "be -30% drop cone end April"
- "Its obvious now that the market is about to plummet and there is absolutely nothing anybody can do about it. We are going back to 2006 prices."
- "Til next month"
- "Here comes the freefall. Hold on . . ."
- "The housing market is going to tank big time."
- "the biggest hurricane in history just made landfall."
- "looking like a tsunami."
- "That means approx April 18th for when housing market will freeze over."
- "This will mean 25% drop in house price medians by end of 2020"
- "I'm guessing 30% to 50%."
- "Shares just correct instantly, housing will follow like night follows day."
- " damn well it will be more like 30%."
- "Another dreamer. 30% drop minimum."
- "here we go! TIMBEEEEER!!!!"
- "in 6 weeks when price go backwards (6 March) . . . "
- "I am picking 30 plus percent . . . Also was picking NZX down to 6000 soon."
- could be 30% to 50% wouldn't be surprised by 80%.

This is just a sample; I was noting them. :)

Yes, I stand corrected sorry, it was RBA economists predicting up to 40% house price crashes. Here the worst was Kiwibank however, with their "bad case" predicting around 25% down over 3 years if you look at their worst case here: https://www.newsroom.co.nz/what-becomes-of-the-housing-market

Your glee at having an overcooked market putting the entire financial system at risk just so that you can "one up" commentators and who were shocked that the government acted irresponsibly is a little odd. It's like you are saying "f*** the financial system, I just want to be able to prove people wrong". An interesting attitude, usually found strongly in narcissists.

These comments weren't baseless, given at the time they were made, most of the extreme monetary and policy measures implemented by the government were not in play. Commentators on this site aren't economists who are paid to make these predictions. And the economists who are paid to make these predictions got it wrong by anything upwards of 40-50% (they guessed up to a 25% decline when we have had a 25% increase). So you cannot assume that commentators are going to be highly accurate. And tracking there comments just so you can feel good about yourself by "proving them wrong", frankly is a little disturbing.

I'm flattered that you put in the effort to try to strawman the argument.

However your idiotic off-topic ramblings have little to do with the point that was being made, which, to re-iterate, was that falling prices would result in a flood of properties to the market.

Does ridiculing the victims of the housing bubble make you feel better about your lousy personality?

Brock
The premise of your argument is that house prices are going to face a significant correction - your ilk have been wrong for a number of years so I don't accept that assertion so not off-topic ramblings.

Note that I am not ridiculing "victims of the housing bubble" at all - I feel for them and are concerned and have posted many times regarding falling homeownership for 25 to 35 year olds over the past 30 years (from 65 to 35%) and that still concerns me greatly. I have kids who have fortunately bought homes on their own, but I feel for my grandkids.
I just challenge baseless assumptions and wild assertions - that is why I noted the extreme baseless comments last year.

It might also be worth noting that those who were calling doom and gloom of 30 to 50% falls this time last year along with considerable increases in unemployment were not showing any empathy with the then recent FHB, so please don't rely on the "pity me, pity me" argument now.

I didn't say a single thing about what is going to happen to house prices. The honest truth is that I have no idea and I'm making no predictions.

What I did say is that IF they start falling it will result in a flood of properties to the market. You asked me to explain why, and I did.

This nonsense about me and "my ilk" is just that... nonsense.

Fair call Brock
Cheers

Cheers

Accidentally report. Sorry!

It is not hard to understand really, if investments stop making sense investors get rid of them to cut their losses.

Like bailing out of shares as the market plummets so might investors looking to lock in their CGs.

We should be very cautious of limiting investment in property completely, if the government is sincere about RMA changes to open up development investor capital may assist in expediting the building the hundreds of thousands of houses. It's a matter of channelling property investment in such a way that it supports the stated aims of government to providing more affordable housing instead of crowding out FTBs.

When a market is correctly regulated (e.g. zoning allows new development to accommodate local population growth) then channelling private money can get things done very rapidly. Look at the huge swing towards investing in EVs and self-drive even from legacy manufacturers, the industry is being catapulted forwards by private capital who realise that this is an inflection point in the industry.

Create an inflection point in housing by opening up for development and redevelopment. The capital is waiting on the sidelines, looking for an opportunity with better returns.

16
up

It's too late to rely entirely on supply side measures, they take too long to ramp up.

We also need to shortcircuit the speculative bubble that has be built up on the assumption prices will always go up, irrespective of the underlying fundamentals. Right now too many investors are not really investors who want to provide quality accommodation . They want leveraged tax free capital gains and that is the only reason they have invested in housing.

So no, we can't let this continue until supply catches demand. But yes we DO have to address the supply and demand side of the equation, but that will take time.

Realistically demand side reform has failed for successive governments. I wish there was a better alternative to extreme supply side measures but we sat on our hands too long to be afforded that luxury. At least newly built modern homes would provide more of the population with warm, dry houses and reduce energy consumption. Building is clearly the lesser evil.

It's failed as there's been no appetite to reform it in the past. I don't think that this as a good reason to abandon all demand-side measures. If anything we need to implement them more than ever.

But why would investors build 100k+ houses if they knew in doing so they're reduce their ROI per house? Better to drip feed and keep house supply constrained and prices high.

The only affordably dwelling will only be apartment in population centers in New Zealand.

15
up

‘"No one thinks that the housing situation is okay. Every day that goes by is a night when another New Zealander is sleeping in their car, or in a doorway. And we're better than that."

"I think most people realise that it's time we treated housing no longer primarily as an investment asset but as a place to live and raise your family."

Twyford is adamant that he can fix housing affordability without crashing the market. Instead, he wants stability.

"We need people to invest in property, and we need good landlords. But the wild west days of 15-20-25 per cent capital gain? They're over."

"For people who want a long-term investment and are happy to be landlords and provide a service, but aren't looking for a fast buck from capital gain, I have every expectation that property will continue to be a good investment."

"Our policies are designed to stabilise the market and take the capital gain out of the market," said Twyford.’

- Phil Twyford, 29/10/2017

What a catastrophic Fail! FAIL!!!

35
up

How can you ever keep up with demand when we’re looking to import over 100,000 people every year? When will we wake up here in NZ? When the last snapper is caught? When the last pipi is harvested? When our health system collapses completely? When our landscape is covered with small boxy dwellings, carpeting all of our productive land? Is it xenophobic to wonder what the hell we are doing and why we would want to overwhelm our existing infrastructure in this way? Why bring in more people when 22,000 NZers are living in temporary housing!!

18
up

Oh – I think a large number woke up some years ago.

However, a small number remain asleep and still with their hands on the wheel – including sadly the government and policy makers – who actually previously said they would change course.

Nice work Jacinda & Co - another policy in tatters.

Where’s the newly formed “Population” party – I’m sure they’d get a nice little chunk of votes.

Don't worry, NZ has a fertility rate of 1.61 which is well bellow to sustainable rate of 2.1. What we will see in the next 20 years is unaffordable houses really taking their toll on young professionals reducing the fertility rate even further. As the government struggle to cover the costs associated with the elderly we will fully open up NZ but battle with other countries to recover the workforce. All those who are 65+ with multiple properties will pass them onto the next generation who will inevitably be stung by inheritance tax and offload those properties. Will be a buyers market again in in say 20-30 years.

Tom..well said. We would want to bring in all these extra people in because we care more about our GDP, greedy landlords and business owners than our poor people

21
up

It's bizarre how economists can contort themselves into saying that affordability has nothing to with price. 'There is lack of affordable homes' is not the same thing as 'homes are too expensive'....? As if 'affordable home' was some kind physical entity, a different species to 'expensive home', rather than being extremely fungible parts of the same market, in fact *the same entity* priced differently due to speculative demand and credit availability? It takes a very special kind of education to produce such stupidity.

Hi Brisket, Should ask economist and politicians what has changed in last one year - A Million dollar is still a million dollar for average Kiwi.

Just by saying the word so many times, does not make it less or may be one hear the word so casually that it has lost it weightage while speaking but in real term it is still a million dollar and this rich econo ist and politicians living in ivory tower are taking about affordability - Utter BS.

15
up

I agree. Property prices have become detached from 'money' as people usually think of it. A million dollars used to be an unthinkable, foreign concept for most people. Now average Joes expect to sign up to that much debt if they want a decent house. It's the old metaphor of a frog slowly boiling, not noticing the temperature shooting up... until one day he realises he has a mortgage that cannot be repaid in the course of his natural life.

12
up

Sadly when people voted Jacinda Arden thought that she will be working to address many issues that no politicans was ready to touch, hence the mandate but alas, it turned out to be just another case of power hungry politician unless she proves otherwise in the next announcement

First division Lotto is no longer sufficient to buy a house...that says something. Powerball minimum jackpot still will buy you a house in most parts of Auckland, but not all.

Completely agree. Just economists being obfuscating morons as usual.

We seem to have too much of an infestation in politics, bureaucracy and economics of those whose portfolio wealth is dependent on their efforts to address the property problem NOT working.

Yes, that use of "äffordable" stuck out for me too. I honestly think that they used that word because they were thinking "there are no enough shitboxes miles from work on tiny sections", and then thought better of saying it. They are too clever for that.

10
up

When their is a fire, first step has to be to douse the fire before salvaging and starting the process of rebuild.

So priority has to be to cool the housing market specially by targeting speculative demand and see to it that FOMO is killed and for that house price has to fall ( not that will make much different as from 100 have gone to 140 and if it falls back to 135 or 130 or 125, it will not be end of the world but the perception that is adding to FOMO will ease and required for FHB to think rationally and also for country as an economy to look beyond housing).

Not that it will solve the problem 100% But atleast will send the right message that government tried and is serious - perception is important to douse the fire and that should come from Jacinda Arden or Mr Robertson.

Government has to decide, What it wants :

Housing = HOME ( Basic necessity : Food, Clothes and Home)
Housing = Casino Chip to Speculate.

If government is serious to cool, first step should be to ban Interest Only Loan from immediate affect and can add DTI just like LVR.

More important should have Intent to act in right earnest and not just doing in pressure for media byte and should not pass the blame to supply or.....no excuses. Straight talk.

Social well being cannot be achieved by giving more dole and also wage rise does not help as money is losing its value - paper inflation is meaningless as realty is that most things are up 20% to 30%.

12
up

Absolutely correct all policies should be to kill FOMO and that is possible now after reaching to such high scale only with fall in price - even small percentage may help as rightly pointed perception is the key word.

If supply was the only reason than people would not be fighting over toilet paper - it was because of perception which created FOMO that led to people fighting over toilet paper.

Identical thing is happening in house market and the earlier Jacinda and her government understand, better it will be.

No cycles in NZ properties are ever meaningful to a first home buyer- if they can't buy on the way up, they won't be able to buy on the way down either.

16
up

More pearls of clown world wisdom.

And utter horse s***.

Looks like the airlines must had rejected your bitcoins as payment for your plane ticket.

What are you talking about? What bitcoins? Looks like what? You still didn't get down to Specsavers?

Bizarre comment. You don't think cheaper houses would make them more affordable to FHBs?

You have to remind me of OMC on a Monday!

Answer to your question.

Relatively more affordable? Yes. Getting a loan for it? No.

I've bought houses in two markets, one in the UK and in Christchurch a couple of years ago. In both situations, the housing market was stable. Buying was straightforward, and I could have done so with a 20% deposit or less if I wanted to. I knew how much money I needed set aside as I knew the market, and it wasn't changing much.

That's the ideal situation for buying a house, when prices are affordable. Right now, we need a bit of a downward shock first to get things back into sensible territory. Then we can work on stabilising house prices so we all know where we stand on this essential good.

Watching my friends trying to buy their first homes in todays market is tragic.

"Kiwibank economists say housing changes to be announced this week 'do have the scope' to cool the housing market but won't address the clear lack of affordable homes"

Housing affordability is a myth, no one will be able to solve it 100% in short term but atleast can try to calm down by not allowing it to become a source of easy and fast tax free money to speculators thereby taking it further away from reach of average Kiwi.

Anyone be it expert or politicians who say that now the house is more affordable compare to last year should be made to parade naked on Queen street to face the emarassement faced by FHB in their search for decent home ( do not mean one bedroom apartment for $745000).

Don't think just increasing supply will improve the situation. Not until the demand issue is solved. The problem of current housing situation is investors, who owns multiple houses, keep snatching houses from the market. The rise of housing price enables them to build better equity and help them to get hands on more properties. The Do-Nothing Government also encourages them. This creates the housing market frenzy.

Best to look at the Housing Crisis as a Currency Crisis - NZ Dollars are simply pretty worthless. Perhaps ask your employers to pay you in Bitcoin?

I rent so I'm NOT having-a-go, I'm just simply pointing out that there are many decent properties on the market, they're just unaffordable because your dollars are worth less, less than the HOUSE~!!

Shortages, Banks Pumping Prices, Land Banking, etc, etc, etc .. meh, STOP BEING POOR? As long as you accept NZ Dollars for your work product, houses are likely to stay unaffordable for YOU - unless you're earning about 250K per year (before tax) - even then I imagine Auckland would be a challenge if you had multiple children.

Our dollars are only worth less because the govt can't print houses - but can and does print dollars.
Thank the Fed Reserve....we are but a pawn. B - all Jacinda can do.

So much anticipation has been build around the announcement by FM that it has to be really affective or both Jacinda and Robertson will fall flat and will be hard to get up.

Why did they not do the announcement soon without building so much of hype - they are in self destructive mode unless, they really, for once are out to deliver a real blow to all speculative activity in housing market.

Will they redeem themself or will they let the opportunity pass by as will be a shame as now, they have the mandate and perfect situation/opportunity to act on what they always preached.

They could perhaps try Bill English's language having tried John Key's approach. Define it as "a good problem to have" and "a sign of our success" rather than a negative.

But realistically, National were turfed out for their 9-year dishonesty on the housing crisis and it's likely that Ardern and Robertson may follow the same route if they try the same approach.

Govt have more social policy they want to implement. Wage tax is going up, GST is already 15%, several sectors are dead and generating no tax and the Govt critically need more tax revenue. The only untaxed untapped area left in NZ is ........... property.

Buzz in the housing market is that buy any 3bed/one bath house in any area ( check Manurewa and nearby) and give it to government for emergency house at a premium. Getting 150% to 200% time more than average and though they say is temperarory is actually for long term as what other options do they have or what changes will they achieve in short time.

https://www.newshub.co.nz/home/politics/2021/03/housing-crisis-temporary...

One reason that RE agent says that people are buying house to rent to government as they are in short supply and desperate to save their image.

Another failure resulting in boom for many who are renting to government just like many motel owners, who are charging government a premium instead of negotiated price.

Are they actually so dumb or some sort of corruption at play.

Hard to tell at times. Hard for decent people to imagine anyone is this dumb or corrupt

Email from Barfoot agent :

Dear Owners,

Team ... recently sold the street mark price in the following of the properties, we have many cash buyers who miss out on the opportunity, please contact Team ASAP if you are thinking of selling. Premium price & quick sale!

We are working with CASH Buyers and they request a property urgently. Contact me have a friendly chat.

Regards

Notice the broken English.

Personally I think, like his/her buyers, they are in a hurry, and left some words out to expedite the process.

‘They happy to exchange freshly printed funny money for hard NZ asset. They make you rich!?’

40% LVR coming up!

Bold lands tomorrow folks. 9 am.

I’ve got inside word.
You will be whelmed. Definitely not over-, probably not under-, just whelmed.

I'll take whelmed over under, but not under over over. Unless you're in over your head and the whole thing is under done. Then I'll be totally over it, and many here will be done with the whole thing entirely.

https://www.youtube.com/watch?v=BrRdy4BAYp0

Tragically brakes applied too late and Bold careens off runway ending in a smouldering heap. 9.01 am.

Pilot error blamed.

13
up

Have too seen families crying in auction room and that was for standard house :

https://www.oneroof.co.nz/news/39135

Gift from Jacinda Arden Government for voting them with full Majority.

Someone has to take responsibility for this tears and the credit goes to....

Credit of people fighting over toilet paper goes to Corona Virus

And

Credit of people fighting over house goes to Labour government which is been lead by Jacinda with absolute majority and power.

"They believe therefore that the RBNZ may be given the go ahead to put these restrictions in place."

Government should not only give the tool to ban interest only loan and DTI to RBNZ but see to it that it is implimented immediately and is not used as a tool/excuse to buy more time, delay and passing the buck

So a land tax paid quarterly wouldn't put any pressure on the empty housing speculators...would be a great source of tax on capital gains.

Bloomberg interview provides some good perspective on value https://youtu.be/RYfmRTyl56w

Well they are right on the flaws of the likely proposed measures but only half right on the needed solutions.
What's conspicuously missing- not surprising given they are neoliberals - is the need for government to step up with a major shared equity programme.

Problem there is we (taxpayers) would be sharing that equity on ridiculously inflated house prices, compared to incomes. The cost of accommodation needs to come down. Just saw a 1 bed Kiwibuild apartment going for $600K, or thereabouts in AKL. This is unacceptable. Think of the purchasers that will be underwater in a couple of years - all thanks to the government. Nuts.

Shared equity is the only way to get low and middle income households into housing ownership.
There's NO other way, Kate.

And if that turn out to be the case what a sad day that will be for our country.

Seriously, is there any genuine alternative? If there is, then I would like to know. I am all ears...
And is it really a bad thing? A stake in something is better than a stake in nothing. Especially when your outgoings are much lower than what you would pay in rent.

There is an alternative, but it's a big old reset button no one seems to want to push. CGTs, DTIs, LVRs based on cash-only, a higher OCR, the works - and ideally a soft landing for owner-occupiers if you don't want consumer spending to dry up totally. Whether that's a state-funded zero-percent mortgage or whatever, it's the only way we'll ever get back to 5x houses.

Yes there is - its for property speculators to take an absolute pounding, which they will, as they have so many times before, even if not recently in this country.

No! Even a ginormous crash of 30% would not restore proper affordability.
The notion of a property crash restoring affordability is nonsense.
Anyway, it's not mutually exclusive from a shared equity programme.

I am waiting for someone to argue why a major shared equity scheme is not a big part of the solution. I am yet to hear a valid criticism
And to those of you who think it wouldn't be popular, think again. The New Zealand Housing Foundation has got a waiting list in the thousands for its shared equity homes.

Heres an idea. Instead of assault being illegal, Jacinda to allow bullies to go around beating on people and provide remedies for the injured victims - compensatory grants, medical subsidies. Anything but do something to deal with the bullies. Would that seem hairbrained at all? As if govt does not stop the specuvesting behaviour and just offers help to the disaffected FHB that is the equivalent. Nothing wrong with shared ownership per se. But it's not dealing with the real problem. As specuvesors are the property equivalent of bullies who go around thumping FHB and continued to be allowed to

They won't be underwater when in a few years 600k doesn't buy what it does now.

Might need to charge up that crystal ball a bit Kate.

Buying at nosebleed panic level tip top highs with interest rates at historical lows, what could go wrong. I dont gamble but those that do say it always pays to identify the patsy. If you look around the table and can't work out who it is, guess what.

Where have I heard the saying "do as I say, not as I do" The government needs to get its own house in order by stopping HNZ from buying up cheap existing houses (first home buyer stuff). Blaming investors and low interest rates is easier than actually doing some real work of your own. Everyone knows existing house prices are going up but just have a go at building something cheaper. Existing house prices are always controlled by the cost of building.

Get ready for FHB helicopter money which will push prices even higher up and a useless move of the bright line test to 10 years.

Exactly this is what Jacinda Arden will do she too knows will not Have any affect on speculative demand but will be just a front to show concern that they want to help.

Interest Only loan could be game changer along with DTI and exactly for this reason will not act on it. Maximum will ask RBNZ to look into it as have done it early and RBNZ will take its own sweet time to think......strategy by government to delay as much as possible.

In given situation, INTEREST ONLY LOAN TOGETHER WITH DTI is the only detterent, if it their is one.

Nothing will change.

20% interest free deposit loan for FHB, higher if outside main centers...

I pick they will lift the price ceilings for Homestart / kiwibuild

The "affordable" benchmark has historically been around 3x single annual income in developed countries.
The real culprit is the central bank. Centrally controlled interest rates to keep a dying debt fuelled-system on life-support which is effectively reshaping the social landscape for the worse.