Politicians, the Reserve Bank and every man and his dog apparently believe that the current rising house prices are a bad thing - just don't try to tell the New Zealand public that.
According to the BNZ's latest confidence survey, rapidly growing numbers of people reckon that the current hot house market is a pretty darn good thing.
The survey, which, by the way, showed confidence at an all time high (the survey was conducted before Fonterra's weekend bomb hit), has recently been seeking views of respondents on whether rising house prices are a good thing or not.
In the latest (July 29) survey, which attracted a high number of 763 respondents, some 42% of those respondents were happy about the rising house prices, up from 36% in June and just 29% in May.
Correspondingly, the number unhappy about the rising market has dropped to 24% in the latest survey from 29% in each of the last two surveys. The number of people indifferent is 34%, down from 35% in June and 42% in May.
Therefore a net 17% are happy about the rising prices in the latest survey up from 7% in June and 0% in May. More to the point some 76% of respondents to the latest survey are either happy about the rising prices or indifferent.
"While policy-makers and buyers fret about house prices rising the bulk of people on average appear increasingly happy with the situation," BNZ chief economist Tony Alexander said.
"The [survey] results suggest that electoral support for radical policies aimed at curbing house price rises could be minimal," he said.
The Labour Party announced a little over a week ago that it would ban overseas investors from buying New Zealand houses.
The latest ONE News Colmar Brunton poll over the weekend showed, however, that Labour (on 33%) had not gained any support after releasing the policy, though the Green Party, which has had such a policy for a while, did jump from 9% to 14% and the ruling National Party fell to 46% from 49% support.
The BNZ's main result in its latest confidence survey shows that a net 59% of respondents expect that the economy will be in better shape in a year's time than it is now. (Though it should be noted again that this was conducted before the Fonterra announcement over the weekend.)
"This result is consistent with other less up to date measures showing very positive business sentiment," Alexander said.
"Some of those other surveys also show high levels of business investment and employment intentions.
"Our survey does not directly gather such information but instead we give respondees the opportunity to tell us how things are in their particular sector. In that regard the comments have been over-whelmingly positive this month with some key themes being worsening shortages of labour and a still deepening shortage of residential real estate listings."
Alexander said that while growth in the economy appears to be picking up and the Reserve Bank is laying the groundwork for a tightening of monetary policy, our survey shows that credit demand as such is not shooting upward.
"The gross proportion of our 763 respondents who say that they are thinking about borrowing more money for their business in the next three months has fallen to 21% from 27% in June and 28% in May."
For three surveys in a row now the net percent of people feeling relaxed about our growing economic relationship with China has sat at 44%.
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25 Comments
Of course Mr Smith the homeowner from Glenfield would be delighted with increased house prices , he is now suddenly wealthier as a result of this fiasco.
He can now borrow against this new valuation for a cruise to Fiji for the clan , some Resene to paint the home , a new big screen TV for the kids , and a new Toyota C'roller for the Missus.
And the Bank is delighted to lend , it increases its assets , and pays the dividends to the Aussie shareholders who are sensible enough to have diversified assets through COMPULSORY SUPERANNUATION .
hmmmmm .. 763 respondents .. huh .. wonder who they were? ..
Were they home owners with 100% equity
Were they home owners with 5% equity
Were they business owners using their home as equity
Were any non-home owners included in the survey?
Were any renters included in the survey?
Were any hopeful intending first-home-buyers included in the survey?
Where do you go to participate in the survey
Were all the respondents randomly selected?
Surveys are to landlines. Owners occupiers are more likely to have a landline phone wheras renters are more likely to have mobiles. So this factor might give a false impression of the popularity of house price rises. Also maybe some people are happy for themselves that house prices have risen but also realise for society housing affordability is a problem.
It's also a measure of collective stupidity.
All those folk who think they're 'richer'.
The houses haven't changed, the global supply of anything hasn't changed, the rate of depletion of resources hasn't changed, cumulative pollution effects haven't changed, population growth hasn't changed.........................
But they're 'richer'.
Read: stupid.
No other word for it. So much for the smartest species on the planet.
OCR, well that will depend on the next inflation stat, or maybe the one after that. Despite the last 2 or 3? being under 1% the OCR has not moved down when the response should have been to start a correction. Thats OK though the RB thinks 18months out we'll have 2% so they wont move. We'll see I think they'll be wrong myself, too many ppl have no more money.
When the next GFC strikes then yes the OCR will bottom, 1% or something, but NZ is a risky currency so the banks probably cant borrow much below where we are now....so the OCR almost becomes moot, The floor on retail rates are based on the floor on wholesale rates plus a margin.
Prices up, yes until this pops, the only Q is how long til it does. 15% next year? yes I dont know why not, just try selling when everyone else is....
Rents have been flat, dont forget ppls ability to pay counts for a lot and petrol is up and power will go up this spring I expect. Things like this take more money out of ppls wallets...so just how will higherrents be met? cant see it myself.
Smiling...well Im not, this is stupid and when it pops Im sure I still wont and a lot more wont be either. I wont because as a tax payer I'll be paying to bail out the banks and we'll be seeing a lot of first time buyers in the financial misery of neg equity.
regards
Many ppl it seems take the ostrich head in the sand approach to life.
"richer" well whats real wealth. What we are seeing now is the assumption that there is a bigger fool in the future willing to pay more and/or considerble inflation will occur negating the value of teh debt taken on.
You are right on it being "blue" voters, the same ones it seems with a really wonky understanding of economics.....lets just say I hope they get what they deserve, certainly the ones who dont deserve it are going to get it ie the poor and heavily indebted first time buyer IMHO.
regards
Hubris. We haven't got to Euphoria yet, the final stage when any money that sat out starts to believe maybe it was wrong and gets in at the worse possible top. Only when nearly everyone agrees with the price do the shorts get their day in the Sun. More Gold, anyone?Unlike most financial instruments, you can't liquidate property at the click of a mouse. The more properties you own, the longer the portfolio takes to offload. I can see that roundabout down in Dunedin getting very crowded.
Sure, there was a rather famous Auckland property Guru from the last 3 or 4 booms that finally got chewed up by the last one in 07/08, overleveraged and overexposed. He ended up in a tent on a roundabout in the Ocuupy Dunedin protest, a turncoat rail against the GFC and its greedy mortage pushing bankers. No sleight on Dunedin, its property market or its traffic regulating furniture. I actually quite liked the guy, honest but delusional.
Not me YL.
I would be quite happy to see my one only $1m home drop by 20% if it stabilised the market.
And no renters in my portfolio either. Just a bit of cash and a small bucket loada shares which produce a worry free income without tenants, expenses etc. Life is so boring we need two or three overseas trips a year to up the tempo a bit.
YL - wrong. I own a property in Adelaide. But not a speculative investment but a house my family and I live in. I have nothing to lose if Auckland property continues to spiral out of control - other than preventing me from ever returning to Auckland, if I ever cared to - unless the boom ends in a nasty crash. But.... I am still a Kiwi and care deeply about the crazy direction Auckland is headed. If I didn't care I wouldn't post here anymore.
Unlike some people on this website, I do actually care about the bigger picture, the future of NZ, and the future of its people. That is, I do care about things other than my own personal gains in wealth. And the way I see it, NZ's future is getting screwed by self interest and very very poor policy.
Tony A's survey...
Of course more people in such a survey are likely to come out happy that house prices are rising. After all, more people own rather than rent, and therefore have a stake in house prices rising.
As PDK alluded to, this is however an illusion of wealth.
Furthermore, this should have no correlation to what is good or bad policy.
I guess Tony A's main point however was that as long as more people are happy than unhappy with house prices rising, then don't expect strong political will to stop prices rising.
Sad, but true.
And as I've said ad nauseum, The Nats will just keep talking and not doing because they know this price boom keeps the electorate happier, on balance. And if the boom turns to bust, I BET you they will point the finger at councils.
I give credit to TA, when I predicted prices wouldn't boom again 3 years ago, it was on the assumption that the Nats were going to make some meaningful policy change, as they promised. Tony A probably knew better.
Fat Tony emails these surveys out - hence the canvassed population are those who care to be on the mailing list of a bank economist.
Hardly a diverse sample of NZ society.
However it is probably a very good sample of influential asset owning NZ society who always vote and probably always vote blue.
Good call on the prediction - I think Fat Tony is older than he looks and has good awareness of the political side of the equation.
He has zero awareness of decent hairdressers.
Unless you wish to downsize, or are a PI, rising home values is a BAD thing.
Need to get a bigger house, or want a house in a nicer suburb? Rising prices means it will cost you more.
Want to buy that first home? Move overseas. Want to spend time with your grandkids? You're gonna have to buy a plane ticket.
Why don't the NZ public see raising prices as a bad thing like many other countries do?
Are NZer's Idiots? Uninformed? Misguded? Don't care? Or is the NZ demographic is such that most NZer's wish to downsize / or are PI's?
(I have never understood why people doing productive work for the economy be taxed at 30% and those sitting on thier asses, raising house prices, denying first home buyers a roof over their head be taxed at 0%).
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