The housing market has made a slow start to the summer selling season

Recovery?

I usually don't comment on RE threads - predictable and boring. But that word stuck out as assumption writ large.

Nokia was Nokia back the days because there wasn't iPhone in place. if housing market is Nokia, what is the iPhone to it? 

He did say they were actively reducing their own operating overheads at levels surprising staff, especially as they were announcing record profits

At the ANZ earnings announcement to staff, Shayne Elliott mentioned that they would be letting people go. Someone mentioned it to me. He has one of those offshore jobs in South-East Asia. Not quite sure what it is he does. My feeling is that there probably is overpaid deadwood working in the banks. 

"Good chat with a banker contact last week"

Just out of interest, what type of lender were they with?

1) top 5 bank lender 

2) other bank lender

3) non bank lender

Averageman,



Thank you for sharing that intelligence.



"He confirmed they were more or less in extend and pretend mode. They were letting people breach debt covenant ratios with little action. "



Seems like a lot of loan forbearance at the moment by the banks. Did they mention

1) how long are the banks extending and pretending?

2) under what circumstances the bank would stop extending and pretending? 



 

"He confirmed they were more or less in extend and pretend mode. They were letting people breach debt covenant ratios with little action. "

Averageman,

Did you get a sense of the magnitude of the loan value or loan book that the bank was extending and pretending? Did the commercial manager think they were comparable to the GFC in 2008- 2010 period?

No. But new models will fill the gap.

I think you may be confusing rest homes with retirement villages. The example you have given suggests a retirement village. Some retirement villages have a rest home attached to them, some do not. But most rest homes are separate from retirement villages and unlike retirement villages, most are not dependent on their residents having access to capital from the sale of a house, so gyrations in the housing market make little difference to them. 

This is eventually going to throw a spanner in the works of the Rest Home Industry and others.

The property ponzi and the retirement home industry go hand-in-hand. I don't know which is the bigger rort but I'm leaning towards the latter.  

The retirement industry will be fine. Their growth hasn't gone - we have an aging population increasingly going into retirement still with debt.

So we will see pensioners who need equity, sell their houses, pay off the remaining mortgage and go into a retirement village. The impact will come through the increasing supply of their properties. No doubt this will release more housing for the ever increasing population.

Rest homes have nothing to do with the property market.  Beds are paid for by the Govt at $1350 a week.  Even the rest homes contained within a retirement village like Ryman or Summerset fund their occupants through the Govt not through the house sale (unless you want to pay extra for a premium room).  They take any patient that is funded, and not just people who were living in their retirement village before they became ill.  This is one of the reasons why the Govt is amending the Retirement Village laws, because the retirement village operators promise people who buy in to it that they can easily move in to the rest home part, but they can't because the rest home is full of public patients.

Brilliant 

Optimists: speculators 

Pessimist: ?

Realist: DGM's

The glass is two times too big.

You forgot taxes. 

"600k mortgage @ 2.5%  550 wk or 28.5k per year to service 30 year P&I. Takes the first 34k of a gross annual salary.  "



28.5k per year after allowing for income rises of say 10% is $31,350 per annum for debt service



$31,350 debt payments at a 8.35% mortgage rate on P&I is borrowing power of $341,589  - that is a reduction in borrowing power of 43% less than the $600,000 borrowing power at a 2.5% mortgage interest rate.













 

I've been watching AKLD apartments in my area  ..absolutely dead ...  mainly due to vendors having unrealistic sky high expectations.  No idea what these landlords are smoking ... would like some though ..        

...then prices will start falling by late February.

Your Dr can now prescribe "green shoots"....    s/he cannot help you with your cash flow negative investment property though.

I close the comment stream on the property articles after 3-7 days. That's because the comments need to be actively monitored and if the comment stream was left open indefinitely we would need a team of people just to monitor the articles. It is very rare for a comment thread to still be active after 3 days.

Funny how we never get an apology from the DGM's when they are wrong, still its a bit like the end of the world, you will be right one day, just keep on thinking doom.

I am assuming the difference in QV's upward trajectory in house 'values' and the flatline in REINZ average sales price data is down to a larger proportion of lower quartile houses being sold in the current climate. First home buyers are making a bigger proportion of purchases than normal so I assume that is in the lower quartile range.

Agreed. Sellers and agents on greed hold as long as the banks enable avoidance of what the market can actually pay at today's interest rates. What will force the banks to price debt to real market affordability and income fundamentals? 

"How can they expect any increase to house prices when interest rates are rising and are at more normal levels"



Many property investors use long term historical averages of house price growth in determining their future expectations on house price growth. Capital growth forecasts used are in the 4-6% p.a range.



A number of property investors believe that mortgage interest rates have peaked and are expecting mortgage interest rates to decline.



Here are the 1 year mortgage interest rate forecasts currently used by one company of property promoters in their calculations



Oct 2023: 7.2%

Oct 2024: 6.6%

Oct 2025: 6.0%

Oct 2026: 5.0%

Oct 2027: 4.5%





Also interesting to see a former high profile property promoter who owned up to 60 odd investment properties sell his entire portfolio in 2020.  There has been no indication he is buying existing properties at the moment. He is currently developing some property - unsure if it is land subdivision, townhouses or apartments. 

Spot on I’d say

Likely. I predicted a flooding of listings this spring,  and it has been somewhat less than I thought, however still plenty in my region and at 52 days to sell there's no sign it is picking up. 

And TTP, Swifter..

First rule of Listings, we don't talk about lack of listings. Second rule of Listings, say anything to get listings.

The facts are people aren't willing to accept undervalued offers, there just aren't enough in deep poo for them to move the market.

With the current immigration levels there's a going to be a ton of demand for rentals, just did a trademe search for 2+ bedrooms between $550-$900/week in Auckland City and only 32 results (excluding apartments). Edit: trademe had retained a filter, there's only about 400.

There are bugger all facing a 70% increase in payments, only a small number fixed for >3 years when rates were at the bottom, most have already adjusted to the first rate hike, no signs of a crash inbound. 

Good point Mike. 

Inflation is still way above 2% narrative it’s not coming down just not climbing as much.

Mortgage stress + other have to sell reasons

The following people are labelled as DGMs: 

• Those who want hard-working, young Kiwis to be able to afford to buy houses in which they can raise young families;
• Those who want house prices to fall so we no longer have one of the highest income-to-house price ratios in the world;
• Those who are worried about rising crime levels and increasing homelessness and believe that affordable house prices will bring more stability to society;

I’m not really sure why, but DGM stands for ‘Doom and gloom merchant’.  The opposite of DGMs are people like 7-house Luxon who primarily seems to care about whether his property portfolio is bringing him more luxury, privilege, overseas holidays, etc (and the same for his mates with regards to their portfolios).  

Considering your name is 'safeashouses', my guess is you're not a DGM?