'Green shoots of growth remain scarce' in housing market, QV says

@ZNG hahah another cracking post 

NZGecko I would not disagree that spruikers ignore some facts, conversely I would also say the same for DGMs. 

The market got to its hights with 2.9% interest rates and positive vibes. Its come back a significant amount since then and there has been wage inflation.

I wouldn't disagree about there being some downside to go but I think -15% to 25% nominal drops from here are wishful thinking, rather than economic reality. Interest rates falling and the idea that a flat or down market (economy) will be "allowed" until 2028 is not something I would bet the house on so to speak, particularly if I was a home buyer waiting on the side lines. 

I think its now close to the bottom and arguing about 5% or 6 months here or there is not the be all and end all for any person looking to buy a long term family home. 

People in general would do far better just researching for more than 2 weekends of open homes, and buying quality and value in any market.

NZGecko, much like sinking housing valuations, your posts just keep getting better and better!

Many a Specu-frog slowly getting boiled. 

I doubt that very much so Gecko. Your over 100 years too late for "the big bubble burst" of 1920s. This is the largest decline in property prices some the 1980s, bigger still than the 08s GFC when priced fell just 6% on average in NZ and took just 18 months to recover, and still prices have only dropped by around 20% accross the country on average.

Another 25% drop is nothing more than wishful thinking from chicken little sky is falling skeptics, who wish to see their peers empires fall out of envy, so that they themselves can have an easier time to build theirs. 

It's simple maths to see that there is at least a 20 to 25% of non-value added artificial restrictive underright in property valuations, that could be removed, without affecting the amenity value of the property.

Present govt. policies are trying to remove this restriction, and I think the banks can see that this might happen.

And the easiest way for all property investors to increase their yield is to realize that their properties have a lower value.

Have the "vested interest" spruikers et al ever considered, that if oil prices increase, with the middle east situation, interest rates worldwide may halt any more decreases ? 

2./ include the family home, no exceptions



3./ We could amend this but 10 years without leaving the country is a bit much. The current citizenship settings work out at only allowing to b outside New Zealand for 90 days in any 180 day period, so people have to plan their travel wisely as one day over is one day over - line in the sand. I semi-agree with the timeframe being extended given the large granting of permanent residency after lockdowns, however the travel rules are adequate. 

Crazy Horse:

1. Remove the accom supp & see the emergancy social housing waiting list rise even further than the 548% in 6yrs under labour? Without this tenants that require this in to pay rent will have no other option. Removing the accom supp condemns many tenants to homelessness. This is a tenant subsidy, not a landlord one.

Plenty of tenants do not require this supplememt to pay rent, the ones that do would only be able to turn to the gov to house them, with the private sector then be known to only rent to elite tenants, who can pay rent without any gov financial assistance. To take away the accomodation supplement is to create further homelessness, further tenants from home ownership, yet you advocate for this?

Labour had 6yrs to remove this, they didnt, as they too also recognize this is needed in our country for tenants to pay rent so further records dont become homeless.

2. Taxing something further neither makes it more abundant nor cheaper. Basic business & economics 101. What you advocate for yet again is further envy taxes aimed at the haves, in an attempt to improve the have nots situation. We had 6 years of tampering, taxing, penalizing, restricting policies under Labour - the results was the fastest increase of poverty, homelessness, government wmergancy social housing wait list, property prices, rents, and crime in this countries history. We've already said no to continuing this trend approach when we voted them out last election.

A fair & non biased tax system would include the family home, as you said there are no exceptions. A fair & non biased tax system would also tax inheritance, kiwisaver, stocks, bonds, mutual funds, crypto, generational farms as well as family homes. After all, profit is profit, it is unbiased as to who makes it and how. Now a fair & non biased tax system would either tax all forms of profit, or none at all. Personally I'm in favour of the later. What you advocate for again is yet another biased tax system to replaced the current tax system you believe is biased again ones favour. That's like Ford advocating for a tax on Holden cars. Again, taxing ourselves to financial prosperity is a fools game, you've been decueved by the Labour socialist crowd. 

3. I would partially change this to all immigrants would have to reside permanently in NZ for 10 years minimum before being able to purchase a house here. That keeps the wealthy foreigners from instant access & gives Nzrs more of a chance. If NZ really becomes their home, they won't mind waiting 10 years. It's our people first. Plenty of people get too distracted by whats going on in other countries. We have our own country with its own problems to sort first. 

Your solution Crazy Horse is of course the typical socialist view, tax ourselves to financial prosperity, penalize all those who have more than the poor think they should have, all in the name of.equality - as long as we are all equally poor. None of this penalizing of course assists more tenants into homes, reduces the costs of a tenant, or causes more.to own homes. Your solution offers nothing more than what we've already had for the past 6 years under Labour. 75% who voted did not vote that back in a 3rd term. The country has spoken, and we've said no more of that. Incentivize, not penalize is the way to go.

Bet me to it!

@TJ I kind of believed the comment its all over the surveys that there are more buyers at open homes - why would that not be true?

Hmm mmmm, I went outside and it was raining.

Rampant floods must surely be on the way.........

Read his comment again, properly this time.

He said the industry makes buyers having options to choose from to be this horrible thing, not the article.

Yes, it's a NZ et al thing based on the inherent high risk our land use policies cause for something as basic as building a house.

Basically, a developer says, "Should I do a development or go to the casino?" The risk and reward are about the same in the long run.

This risk profile attracts people who like to take risks, but as per their personality, they build unnecessary risk into projects if the adrenaline rush is not there.

Whereas, in jurisdictions where land use policies take out the speculative capital gains potential, the cost of speculative risk and the need for speculative personalities, then building houses is more rote, much like commercial development.

Could also be rocks in the horizon. You’ve gambled on calm seas with no rocks and with a ship that may have no life rafts (if nobody wants to buy your houses if you do decide to sell and limit losses). 

Big call given how the global economy looks and the strange things that are happening to global yields. 

Everything less than $700k is right in the wheelhouse of property investors. I am aware of the same issues in the Hawkes Bay, with landlords trying to offload worn out rental properties. I have come across many who tried to sell last year with zero offers and are planning to try again this spring/summer. The vast majority of these properties have 1970's kitchens and or very old cladding/roof systems that are in dire need of replacement. 

Funding the houses people want to live in isn't feasible forever, and is the primary reason that Auckland is such a cluster for traffic. Christchurch has arable land that is more valuable for food production, south of Auckland the same. Eventually, like most overseas major cities, we must build up instead of out and create a vibrant CBD where people want to live, work, have offices etc. We also need to focus on public transport to make is easier and faster for people to get in and out of the CBD and around these cities, as we all know that more motorways and more cars is a band-aid fix that results in the same issues a decade down the line. Build the town houses, build high rise, with more people closer in the CBD living and working, the increased foot traffic will inspire innovation and new opportunities for people to start businesses there and make it a great place to be.

Yesh it is Kerikeri, have you ever seen what constitutes housing & employment in most of Kerikeri. It was already a niche market before the major electrical outage, medical service failures and road & infrastructure failures.

The super car industry caters to less than 1% of New Zealand's population. The Auckland housing market caters to approx 30% of New Zealand's population, more than the entire population of the South Island. For someone who was complaining above about not comparing apples with apples you sure seem to struggle yourself. Are apples woke? 

Love the phrase ' speculators torched '.. hopefully their loved ones will have a fire extinguisher close by 

That’s just stuff of dreams. I challenge you to name a major city in Aus or NZ when DTIs are 3-4x income.

I'm sorry, but as soon as I realised it was written by Tony Alexander,  I treated as a comedy script. He's a sell out, and a snake oil salesman. This article belongs in the digital trash bin, along with everything else he has ever written. 

His 'sources of house price support' reasons were pretty weak and optimistic compared with sources of declines. 

Most owners don't look at 'what would the rebuild cost be today', but "what did I pay for it in 1997, and what can I sell it for today?"

And that's the looming issue. There's a mass of historically owned stuff on the books at below current replacement costs that will still yield the owners a profit if they sell today, or if they sell tomorrow, even as prices keep falling. And as the property owning cohort ages, that's going to be all that matters - "How much can I sell it to fund my lifestyle and who can afford to pay that?"

I was working as a QS in the late 80's, I can concur that new builds have always been more expensive than existing. The narrative around this new build price providing a floor for existing housing is a load of codswallop, nurtured by those that are looking to justify their house whispering narrative.

In stable truly free markets that have only valued added costs, cost (including margin) does equal value, because if it didn't then why develop/build anything?

In more boom and bust markets, like NZ, then at times, costs will be greater than value when the market crashes, with super profits needed in the boom times to give an overall positive margin over time. This is in itself more risky than stable markets, so the prices will always be higher on average than stable markets.

But build costs are not the real issue in NZ. The land price is. This is many multiples more than it should be due to restrictive land use policies.

The present fall in prices has not affected landbanking prices at all - Yet.

On the potential of this alone, there is approx. another 20 to 25% fall in house prices that could happen without affecting the amenity value of property.

There's absolutely no reason why a stress test rate should change when interest rates fall, other than to enable the banks to lend more dollars to the same quantity of houses.

Maybe the stress test rate should be on the loan document as the ceiling interest rate for the duration of the loan term.  Gives the banks some incentive to properly assess, rather than to try push the envelope and have naive borrowers bear the brunt of the bank's willingness to lend.  They are meant to be the subject matter experts after all, hence they derive a profit.  

I have no real skin in the game. Brickbats or flowers, I'll take my reward. 

I'm calling the bottom. You will get the confirmation tomorrow at 2pm. There is an outside chance of a 75bps cut, if this happens watch the market turn on a dime.

It's mainly because the boomer generation was not interested in paying tax for their future health care. They did not want to pay for new hospitals or health professionals, rather they wanted to protect their wealth from any type of tax, especially in the form of capitals gains (created off the back of the younger generations having to borrow more and more to afford a basic place to live).

The people who should be footing the bill, for the health system and deferred council infrastructure maintenance, is anyone over the age of 50 with a net worth over $1 million.

@pB - great comment it seems whoever dont agree with you are the enemy - nice one

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