Easing residential rents will be good news for tenants in most areas - not much fun for landlords

Remember RP, apparently, you do not lose until you sell... by then you may have lost a lot.

Topical at bottom of screen today

One common way of judging whether housing's price is in line with its fundamental value is to consider the ratio of housing prices to rents. This is analogous to the ratio of prices to dividends for stocks.

~ Janet Yellen

I fully understand its difficult to value a beach front house, but a shit box 3bdr with converted garage renting in Manurewa for $6-$650 is simply a yield play, council won't let you develop unless you put bigger storm water down the entire street etc...   Council know its cheaper to provision infrastructure green field.

650 x 52 is 33,8k less rates 2k, maintenance 2k, 29.8k at 5% is $596k max maybe less with the hassle property mgr take 5% maybe $550k

but you have to find that buyer and that buyer is looking for bargains due to "Urgent Sale Required"

And enough are going to Aussie to make a real dent in demand.

I do not see migration picking up in this market the electorate will punish if they do not see a move to get kiwis back into jobs.

I can see another 5-10% house price falls over the next few years if this is just NZ, if global recession all bets are off, it will be carnage. Equity markets are smoking crack not green shoots.

There has been more supply, but the theory is rents are related to incomes. And incomes are pretty flat, and the jobless rate is up.

It’s definitely house supply. There’s always a shortage until there's isn’t   There’s no coordination within the building industry to control what comes on line so when there’s a shortage it’s inevitably going to be followed by a surplus.  It’s just a matter of l when. When I was in markets in the early 2000’s I remember wondering whether the mining companies were digging too many holes as there was a shortage of ore at the time and obviously to get one on line takes ages. But they all rushed to be first and boom supply came on line. I thought if 2-3 huge conglomerates can’t coordinate with a centralised Chinese government then there’s no way a fragmented building industry with thousands of suppliers will. Still think it’s a healthy thing for us sort out supply and price to create a better market. Just feel sorry for the people who paid at the top. 

True these type drops where part of RBNZ stress tests...    I am sure the banks have a portfolio of stressed lenders but nothing life threatening yet.

still as the Speights ad goes

Plenty of Time Yet!

Sure if you can subdivide and build

It's often better to sell that dream to someone else.

When I used to argue that National were idiots for taking away the full employment mandate, I’d get 0 likes and the next comment that said I was an idiot would get 50 likes. And here we are. 

I always said Labour got it wrong, they needed to be more prescriptive and say CPI in band was the core goal. But this current situation was always both ridiculous and inevitable. 

Yes indeed however with global uncertainty, if they drop too low then have another economic shock like a fuel price spike due to international conflict, we have less buffers to weather the storm and would see inflation rise again, and further degrade our living standards, followed by another blast of the OCR to once again send the economy back to it's knees, which nobody wants. I'm for the cautious approach, as enticing people to load up on more debt in an attempt to 'save' the economy is akin to fixing your hangover with a bottle of vodka and thinking all will be well due to confirmation bias.