Average dwelling values down by more than $100,000 in many parts of NZ with Auckland & Wellington hardest hit

So straight away, there goes your hard earned deposit. A deposit that was in fact 'real cash' either saved over many years, or borrowed from mum and dad. On the other hand, the $700,000 that the bank lent you, is just a number on their balance sheet that doesn't even really exist as hard cash. What a sad state of affairs...  

Odds on he will be right.

Timing The Property-mkt... TTP-m

Pity you didn't talk to a smart investor ten years Ago in 2012. Your smart investor didn't just buy his properties in 2021, some have already doubled and he may have started with zilch and now has millions in equity.

You could have done what he did but sold up last year and not have to keep slaving to bring in a few pesos

Need to put the 6 percent fall into context. Prices have risen different amounts around the country over the last 3 year's, but probably at least 30 percent in Auckland so they are probably way ahead. Agree prices are likely to double in 10 years. I would be far more worried if we weren't carrying debt.

A serious recession is expected which means high unemployment followed by many empty rentals; The cash flow formular that the Ponzi scheme is built on will collapses like a house of cards.

Because of inflation the days of cheap and easy credit that drove house price bubble up as much as 3 times in 20 years and created the Tsunami of debt will correct to real income levels and only rise in many years considering the global economic outlook and when NZ becomes productive again with export goods and services that bring money into the country.

Due to new rules, high cost of living, unemployment and the risk of another pandemic and being thrown out, immigrants won't be coming back to pre Covid levels anytime soon.

Government will make sure new builds will continue, to meet the affordability demand of the next generation entering the system.

Inexperienced speculator/investors conditioned by those unregulated property wealth courses; industry spruking; those so called independent valuations and mortgage brokers, will go into denial while their asset go negative and start costing them until they go broke.

Tbh that's not leveraged up so much

... fake news ! ...

But TA said yesterday that fixed mortgage rates topped out in June??

"Where we stand now is that I still feel fixed mortgage rates for all bar the one-year term peaked in June."

..  the spruikers will reset their timing from a " spring rally " to a " New Year rebound " ...

Waiting for their dead cat to bounce ...

.. at the moment  , their holy priest St. Ashley of the Property Church , is keeping their spirits up ...

But ... they can only maintain their faith for just so long  ... then its flaccidity time ... 

They only have to survive until the National led government reinstates interest deductibility and reduces the top tax rate.

Listening to them is like hearing Putin trying to convince us the invasion of Ukraine as a 'special military operation'. There is no Crash! 

The gubmint (thats us) also pays more when their bonds roll over. They have hundreds of billions owed and probably why the kiwi peso is not healthy.

Crash Crusader (aka Retired-Poppy) is so crooked and twisted that if he swallowed a nail he’d shit a corkscrew.

TTP

More pain to come for Wellington homeowners looking to sell with new supply hitting the market in the capital city's Northern suburbs as well as Hutt and Porirua over the next 12-18 months.

Not sure about Tauranga but the city had one of the worst median price-to-income ratio in the country (except QT). Surely recent buyers there are up to their eyeballs in debt and Infometrics says the largest sector in the city by employment is construction - not a good combination in today's economy.

Two massively different markets. My antictdotal evidence is that people were selling in Auckland and buying Tauranga, pocketing the difference. Welly is dominated by first home buyers, and upgraders who are much more exposed to the winds of mortgage rate change. My bet would be where Wellington and Auckland go, the rest of the country will follow

Know both the Tauranga market and the Wellington city and regional market of late well. We sold a very good property in Tauranga and have been trying to find the same down in Wairarapa. Bar the numerous homes with monolithic cladding in Tauranga, the homes there are generally of much higher quality for the same money. Newer homes with well developed sections. Down in Wairarapa/Wellington very rare to have a formed driveway (Wairarapa) or even a drive on section (Wellington). Even if homes have been renovated many are still in very poor repair mostly because of their age. So was very surprising to see the massive rise in price down here….. not so surprising it’s correcting. I don’t know the Auckland market, so perhaps Wellington market was following Aucklands very inflated prices

Carlos67 - the largest influence over what happens here is the US. The NZD will keep our OCR higher for longer than is required by our domestic data and property is most vulnerable to that fallout.

I see falls for at least another 3 months, I am betting flatline in 6-9 months.

No flatlining. Either they go up fast or they go down fast.

I've been looking at charts for most of my career and the only ones that flatline is where trading is suspended due to a bankruptcy, de-listing, or takeover, and when a government takes over a market and pegs a rate at their pleasure. That already happened with interest rates, but that period has ended - the spigot has been knocked off the barrel for housing, it'll keep draining cash now, down to the dregs.

We have invited ikimpaul to contact us to discuss his commenting but he/she has failed to do so.

If we can resolve certain issues satisfactorily the comments may be able to resume.

Not that I really care less what happens in the Hutt valley, but it looks bad form to delete this and all subsequent comments, after all he/she has been contributing on the same subject for months without a problem.

..  maybe it's time we contracted out the running of our country to independent outsiders  ... imagine how NZ would look in a decades time if the Singaporean government had made up all our rules for us ...

Love a hawker centre ...

But to be fair, at least Orr did not chicken out this time. Like they did in Oz.

I tend to think lower than pre covid. I bought Nov-19 on 3.35%, now moved to 5.4%. Quite a difference, can’t see people would line up to pay what I paid. (Welly & Not bothered either way). 

I agree that the affordability is still in sci-fi territory.

I am surprised, like a lot... , that there is anybody at all still buying houses for 20 times average salary.

I am not sure how a firefighter, a cop, a nurse, a teacher, a checkout operator, etc can even dream to make a life in those places.

What will be the endgame?

Houses will go back to be affordable or necessary people will abandon hope and sail away?

Wow

You realise that the proportion of rates you pay only increase if the value of your house rises more than the average house.

However, the rates do increase because the council wants more money overall every year. And that has been way higher than inflation up until this year. Plus in Ak they continue to increase residential house rates and reduce business rates so that makes the residential increases even higher.

Plus the Councils are borrowing as much as they possibly can. In fact in Ak they have fudged the rules so that they can go even higher (temporarily...) can you believe it! Plus they accepted the advance govt 3 waters bribe. And of course there are new "targeted" rates coming thick and fast.

The Ak Council is completely out of control.

Been thinking about this for a few days. It seems in the 1980s the property ladder made a lot of sense. There were no capital gains to speak of, building equity in your property involved a decent amount of hard work, that's hard work directly contributed to the value of the house and in a few years you could change up, having left the house in better nick than you found it.

But these days it makes no sense. Any renovation you do will easily be eaten up by house price changes. Just for example last year I bid on a house, someone beat me by paying 125k more. They replaced the roof and relisted this year in March, it still hasn't sold. Now they're trying to sell at much less than they paid. If they sell today they'll probably have lost 100k. Point is, it was likely they never planned to rely solely on their home improvement to add value to the house, they were relying on the market rising to provide the profit. In this example they lost that bet badly.

I think that's become widespread, people stopped relying on their own hard work to build equity and started relying on the market ever increasing to do it for them. That's consistent with a ponzi scheme.

Property is cyclical. I have seen property values in Queenstown lakes crash 5 times, and each time it recovers to higher levels than where it fell from.

Like the ol' rat poision 

>  remember what property is used for

I'd say that is precisely the rub. For too many property has been a speculative vehicle, not a home (or even a holiday house).

"Property is cyclical". 

True - though in addition to the typical 10 year cycles we're all familiar with, history points to the existence of much larger 50-year economic cycles (e.g. the late 70s inflation shock), and 100 year cycles (e.g. the Great Depression).

Which one is this? I don't know, but writing anything off at this point seems like a bad idea. 

Bang on.  People talk like crazy here, but the reality is, those are the people who keep missing out and don't have money to buy avo+toast.

-7

Not all properties have fallen in value because not all properties are the same...

Off the top of my head:

1. lower prices to start with for comparable sized homes further out

2. price changes flow from the centre out

3. the ones that went highest first have further to fall and do so sooner.

There's nothing worth investing in that is minimum to no risk. Plenty of risky things to invest in, which is where decent rewards are possible. 

I certainly wouldn't call leveraged rental property minimum to low risk - quite possible to lose your entire investment in a variety of different ways. 

The rules for intensification allow more than one extra, sometimes up to 10. The problem is the build cost. If you can solve that you can solve the affordability issues

It sounds like he might start to incur some capital gains tax there, since he is purchasing each property with the intention of developing it and on-selling.  I hope he has budgeted that in.

TOP's land value tax would work even better than a CGT, it's more if NZ voters are willing to vote for a fresh party with new (or technically, rather old) ideas.

The property gains have already occurred. As they going to pay back tax when house prices fall. I know someone who had to sell their house for a 10% loss on what they paid for it in 2021 but they had to sell.This is pulling values down with the higher interest rates.

It is in place.  10 years is effectively a capital gains tax.

Not an area I would want to live in but great childhood memories of holidays down there in a place with no power or hot water, had to boil it up in a big copper pot over the fire and run to the shower with hot water in a bucket, stick the hose in it and foot pump it to the shower head. Used to wizz up and down the beach on a Massey Ferguson tractor, good times. Thames is now flood and storm prone, lost count of the number of times its been smashed over the years.

Tops tax policy would lead to even greater swings up and down in the property market. When it's going up the increased take home pay will allow even greater borrowing and therefore bidding house prices even higher. The 0.75%pa tax is insignificant when prices are rising 10%pa.

Some Top supporter please refute this..

Yup - It's a bubble. It's not acknowledged in the mainstream as such is there are so many who are vested to say it isn't.

Yup - I remember a few saying last year the the RBNZ would never let property fall by 20% etc as it would wreck the economy etc. They were talking their own book.

If you stand back and look at it from an international perspective or as someone without the vested interest of being a property owner of some kind in NZ, then this is a property crash with no sign of stabilising. 

The only way the vested merchants can spin a positive from the current position is saying prices are about to bounce. It's all BS, unless interest rates are about to dive back to 2%.

It's always about the cost of debt, and right now it's finally getting back to more normal levels.

Property crashes happen like this, slow and steady until they finally stablise - and no one knows when this will happen.

But what you can easily calculate without speculation is your cost of debt as you get hammered with a statement on it every month.

They question we need to ask, is why was it allowed to happen. Bubbles only ever end with one outcome.

and hopefully lower wages and more pressure on our health system

Excellent idea.......you absolute tool.

Thanks for spotting the error DIYman. It has now been corrected.