Housing affordability still a major challenge for first home buyers in Auckland and Queenstown, interest.co.nz Home Loan Affordability reports show

By Greg Ninness

The dream of home ownership was pushed a little further out of reach for many first home buyers last month, as rising property prices in February eclipsed the benefit of falling mortgage interest rates.

However there were a few bright spots for first home buyers, with prices falling in some parts of Auckland.

Interest.co.nz measures changing housing affordability for typical first home buyers by tracking the monthly changes in the Real Estate Institute of New Zealand's lower quartile selling price, the average two year fixed mortgage rate charged by the major banks, and the median after-tax wages of people aged 25-29 in each region.

Those figures are then used to calculate how much of a typical first home buying couple's after-tax wages would be eaten up by the mortgage payments on a lower quartile-priced dwelling in reach region.

The mortgage payments are considered unaffordable if they take up more than 40% of take home pay.

In February the average mortgage interest rate eased back slightly, to 4.72% from 4.74% in January. 

But the benefit of that drop was more than wiped out by rising lower quartile prices in most parts of the country.

The REINZ's national lower quartile price increased from $350,000 in January to $360,000 in February. Around the country it rose in 10 regions and declined in just two - Nelson/Marlborough and Otago.

However although lower quartile prices rose in most parts of the country, they were only at record prices in three regions, Hawke's Bay, Manawatu/Whanganui and Southland, which were three of the cheapest regions for housing in the country.

In all other regions, February's lower quartile prices remained below the all-time highs that were mostly set last year.

And the lower quartile prices remain low enough for mortgage repayments to still be considered affordable in all regions of the country except Auckland, which is the only region where mortgage payments on a lower quartile-priced home would take up more than 40% of a typical first home buying couple's take home pay.

Separate Home Loan Affordability Reports are available for each of the following regions and cities (click to view).
Northland Region
Whangarei District
Auckland Region
Rodney District
North Shore District
Waitakere District
Central Auckland District
Manukau District
Papakura District
Franklin District
Waikato Region
Hamilton District
Bay of Plenty Region
Tauranga District
Rotorua District
Hawke's Bay Region
Napier District
Hastings District
Gisborne District
Taranaki Region
New Plymouth District
Manawatu/Whanganui Region
Palmerston North District
Whanganui District
Wellington Region
Masterton District
Kapiti District
Porirua District
Hutt Valley District
Wellington City
Nelson/Marlborough Region
Nelson City
Canterbury Region
Christchurch District
Timaru District
Otago Region
Dunedin District
Queenstown-Lakes District
Southland Region
Invercargill District
All New Zealand

And even in Auckland there were some bright spots.

Although the region's lower quartile price increased from $650,000 in January to $668,888 in February, the increase was driven entirely by rises in Central Auckland, Manukau and Rodney, while lower quartile prices declined in West Auckland, the North Shore, Papakura and Franklin.

Some of the price movements were substantial.

In Central Auckland, which includes all of the suburbs contained within the old boundaries of the former Auckland City Council prior to the formation of the Super City, the lower quartile price increased to $695,000 in February from $620,000 in January.

In Rodney it increased to $740,000 from $700,000 and in South Auckland, which includes all the suburbs contained within the former Manukau City Council boundaries, it jumped to $665,000 from $585,000.

Going against that trend the lower quartile price on the North Shore dropped from $820,000 in January to $781,000 in February. In Papakura it fell from $590,000 to $545,000, and in Franklin it dropped from $600,000 to $573,000.

In West Auckland it fell slightly to $649,000 from $649,786.

That means Papakura and Franklin are the only parts of Auckland considered affordable for typical first home buyers. 

In all other parts of the city it's likely that typical first home buyers will have been priced out of the market, unless they are earning higher than average incomes.

Auckland's North Shore remains the most expensive place in the country for first home buyers, even though the lower quartile price dropped to $781,000 from $820,000 last month. 

The most affordable place is Whanganui, where the lower quartile price hit a record high of $175,000 in February, followed by Invercargill at $185,000.

Whanganui and Invercargill are the only major towns or districts where the lower quartile price is under $200,000.

Lower quartile prices in other major centres such as Hamilton, Tauranga , Wellington, Christchurch and Dunedin remain well within affordable limits for first home buyers.

The only significant centre outside of Auckland where housing is unaffordable for first home buyers is Queenstown, where the lower quartile price was $739,000 in February, down from $767,000 in January. 

Queenstown's affordability problems are compounded by the fact that the nature of many of the jobs in the town means median wages are lower than many other places.

The median after-tax pay for a couple where both are aged 25-29 and working full time in Queenstown was $1517.55 a week in February, compared to $1622.72 in Auckland and $1670.40 in Wellington.

Home Loan Affordability - First Home Buyers

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146 Comments

Oops.. too many rich people ..house prices increased here.. time to flee this country..

???

It is clear that the proposed decrease in immigration is too little to late. To make homes affordable for FHB any person who has obtained residency or citizenship in the last 20 years should have it revoked and be forced to sell their home and any investment properties by way of auction within 3 months. Non resident owners should simply have their home confiscated and used as state homes by the Government.

C'mon Labour. Give us what we voted for.

20 years is unreasonable. 200 years however, I could get behind

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It is what it is. Auckland is the world's 3rd best city after all in terms of quality of life. 3rd out of 450 cities worldwide is a milestone. We should celebrate success instead of whinge, whinge and more WHINGE!!
http://www.nzherald.co.nz/nz/news/article.cfm?c_id=1&objectid=12015973&r...

Get in while you still can I say.

"Get in while you still can I say." NO get out while you still can!

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You get out, we get in. How about that?

He/she isn't in Auckland. They're somewhere in Regional NZ. Probably in a rural retirement village mulling over why life hadn't gone as well as they'd hoped.

The thing is that we can keep the 3rd best city title while keeping housing affordable. The two aren't necessarily coupled.

What we really need to focus on is maintaining housing affordability while shifting future investment into technology and innovation. It's about improving productivity via GDP per capita.

Technology & innovation companies are highly mobile (as in the cost for them to switch countries is relatively low), as such they are more sensitive to taxation settings as well as business confidence metrics. New Zealand tech companies tend to move overseas when they reach a certain size. Foreign tech setting up headquarters here is comparatively rarer.
A unique feature of tech companies is that they are often staffed by the companies owners (at least initially) which makes income tax rates just as important as corporate rates when it comes to attracting tech.

Egotistical techies often also want to be the very best which means that constantly pushing to make everyone more equal is likely to be a turn off.

Expanding globally is a win for local investment into the firm though. We can continue to create and sell innovative tech companies to the world. Someone selling their shares in a tech company to a foreign investor doesn't mean reduced options for local investors.

I'd much rather NZ become known as an innovative tech hub, rather than favoring investment into real estate.

My point was that NZ can not become an innovative tech hub because we like high taxes on fewer companies (and people) as opposed to lower taxes on more companies. Singapore with Visa, MasterCard and the parent branches of many of our insurers is an example of the effect that lower taxes can have on a nation. 60 years ago Singapore was a collection of fishing villages with no natural resources. Their national policy settings have turned them into an economic powerhouse within my grandparent’s lifetime. If i’m not mistaken, not only did they have no natural resources, they were also invaded during the Second World War and should have spent a few years recovering from that. Why can’t we set our taxation settings similarly and become an equivilant economic & technological powerhouse as well?

Simply because Singapore doesn't have a comprehensive welfare system like NZ. Welfare is the biggest Crown spending in NZ ($30.6B in 2017), which is more than 2nd and 3rd largest categories combined - education and health. Not saying which system is right or wrong but the money has to come from somewhere which usually is from taxation. Singapore also has a lower GST of 7%

And over half of NZ's welfare budget is handed out regardless of need, just for being of a certain age.

“I’ve paid my taxes for f-f-f-f-fiffffty two years, I’m entitled to every god damn cent. It’s not much anyway, a drop in the ocean compared to my rental portfolio”.

Mine come from the UK and are paid to NZ gov so they can pay my super. If NZ changes its mind and stops or restricts superannuation then I just get the UK gov to pay me direct. NZ is full of immigrants from the UK.

Unfortunately, taxation heavily favours property investment so that's where the funds flow. There's some kind of belief in NZ that property is the only form of investment to get our country wealthier. With this outlook, things won't change until the voting demographic which doesn't own property has a big enough voice.

Singapore is an interesting example.

All land is owned by the government, 85% of housing is supplied by the government-owned housing corporation, and a staggering 22% of national output is produced by state-owned enterprises. (The international average is around 10%.) .

Singapore boasts of one of the best public transportation systems in the world.

https://www.theguardian.com/commentisfree/2011/nov/15/anti-capitalist-oc...

Isn’t it amazing what can be achieved with lower taxes! Also I am 99% sure that a mate of mine bought a place freehold in Singapore a few years back ( foreigners can own freehold titles in Singapore!)

Nationlise all land, makes sense. God has stopped making so it is immune from capitalist forces.

There's some very important differences between Singapore and NZ for which I think won't wash down too well with Kiwis. Singapore has very high home ownership rate but the vast majority of housing is from the housing corporation. These are very high density housing generally around 60-90sqm per unit and frequently a block will be 30 storeys high. Not sure how many kiwis will subscribe to this idea of housing.

The other thing is that although Singapore is democratic by name, it really is more akin to autocracy. 50 years of rule by the same party (this would be unheard of in western nations). They also have very draconian laws eg. consequences for publicly insulting government and you wouldn't even dream of robbing the dairy with a gun, you get the death penalty. Very safe country but to most western folk it will be at the expense of personal freedom

The Singapore government can get things done very quickly too with its utmost control over nearly everything. No need for endless redtape and public consultations when getting projects underway. Just take the process for getting a single house or road built in NZ, that would be absurdity there.

Singapore's results driven culture stems from its conception as a country. 50 odd years ago it was kicked out of the Malaysian federation. It really was a fishing village with no natural resources, so it was do or die.

In a nutshell, NZ and Singapore are two very different countries with very different cultures derived from very different circumstances.

I thought the Mercer analysis was a silly and superficial exercise. But I can see why it would appeal to you

I can see why it would seem silly to you

I thought the Mercer analysis was a silly and superficial exercise. But I can see why it would appeal to you

The Mercer Quality of Life Index is for expats who are relocated for work. Typically, money is not an object as living expenses are usually covered for high-level expats.

Australia and NZ media love these kind of indexes. It taps into our sporting culture. You know, punching above weight, etc.

Yeah! I know. It’s an assessment which effectively allows an employer to rank which destination for an employee requires the least hardship rating. I am sure Auckland Council, etc fawn over these people. The way people latch onto this assessment makes me cringe. Ironically it’s always the people who are the least well travelled who make the most noise about it. I’ve lived around UK, Europe and Asia for 20 years, I have pretty clear views about the cities I think are great, needless to say they differ a bit from others here. Will keep that to myself, I think...

"3rd best city after all in terms of quality of life" ..so Aucklanders love driving their SUVS..yes thats quality ..prefer the fresh air myself in Swellington

Yep, they can keep Suckland

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It might be something for you to be proud of.

But if I compare now back to the 70s and 80s we have gone down hill is so many areas it is actually embarrasing how far we have fallen.

Look at things like

Crime
homelessness
The state of peoples properties and gardens (does anyone have any pride in their properties anymore)
Traffic
pollution
crap dumped on the side of the road
over loaded schools
water quality
Council debt
Public Transport
Affordable housing
drug addiction
youth suicide rates

There are a lot of positives as well such as parks, playgrounds and other facilities but we have a long way to go before we can hold our heads up high

Auckland being named the 3rd best city in the world is laughable!

I'm in an average Auckland house and happy but if I was bringing up a family living in a garage or a motel my laughter would be hollow. The people who do these surveys just fly from one international hotel to another.

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The plight of speculators is as serious an indicator as that of the dairy farmer. Many are loaded to the gills with debt and on declining property values. Access to additional capital is now proving awkward for many.

Its all looking rather top heavy with a glut of unaffordable homes. Auckland is now a buyers market.

FHB's wait, there are big declines coming. Let the speculator/Landlord carry all the risk.

On the face of it I dont agree, please explain?

I mean the FHB just wanted a home to call their own and is not experienced or a professional in this area. A dairy farmer (or indeed a landlord) knowingly went into huge debt taking on that huge risk with a view to get a tax free cash out on retirement. Meanwhile a farmer can get tax advantages? live rent free? on top of the tax free cashout. So as far as I am concerned the latter can be put down to knowing choice and greed so no I dont have much sympathy for them really.

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How did we get into such a mess in dairy? Low margin high volume highly leveraged businesses that pretty much rely on the untaxed capital gain of the farm at the end to generate the return. I mean...really?!

[ Silly, unnecessarily partisan comment removed - along with the rest of the thread from others. Please keep it adult. Ed ]

Yes, and I wonder how many other sectors we see a similar business model? How much (any?) tax income of the Govn's is actually lost to such high debt tax avoidance strategy?

I look at the likes of Fletcher's and I wonder.

Because its debt it just transfers the income around to other places so over all doesnt actually reduce the tax base.

Many years ago my parents made a very nice living from 130 cows milked in a 10 a side herringbone on 300 acres. The income from the cows meant they could invest off farm. Capital gain wasn't as important.

Now days dairy is like residential property investment, low revenue, high costs and counting on capital gains.

Capital gain is only important nowadays to investor farmers, not to those who choose to go farming because it's what they want to do - just like in the days of your parents. The average age of farmers is in the high 50's and more and more farming families are finding that there will be no family succession, so who in the future will buy the farms - that is the elephant in the room for farming in 10 or so years time. NZ is one of the few countries that do not have some sort of incentives for young farmers - in some countries it may be access to cheaper loans etc. If young farmers sign up to kiwisaver they cannot access their funds for moving up the farming pathway, hence many choose to stay out of it.

You assume greed really. The problem with incentives is the price of a farm is set at the maximum price someone can pay. When you give incentives or allowances or tax breaks which allow that someone to pay more the price of the farm will rise so the effect is just like accommodation allowances it just drives up rents and prices.

So who will buy? it is simple really when the farmer comes to sell he will sell it at what someone is able to pay. If at the same time we prevent foreign ownership then the farmer is restricted to sell to a kiwi. Of course the Baby Boomer farmers who want to retire on the max payout tax free they can get wont vote for that.

if you really want t get those who want to be in it for the lifestyle then really a CGT would remove the perverse incentives and "investor farmers" from the game allowing them in.

Yes, someone eventually has to take the hit to stop the madness. Want your kids to buy the farm, sell it at a discount. Start a deflationary cycle that undermines finance and puts primary production back in its real place. Until farmers are willing to do this, they are part of the problem. But greed is an obstacle to even the most well intentioned.

But greed is an obstacle to even the most well intentioned.

Your statement accuses you

except who really wears (some of) the losses in the event of big declines? thinking OBRs here. Who will be expected to take the losses really? Suspect ultimately when teh screaming and panics starts its the tax payer myself (and I mean ppl who actually pay tax and not the ponces who dodge most or all of it already).

FHB's wait, there are big declines coming. Let the speculator/Landlord carry all the risk.

Yeah; I that was my belief also or rather a hope. Because the house prices is not a reflection of most of people's income; so normalisation has to happen some stage.
But the more I read into the details, the house-prices may not come down without a collapse of economy or banking sector. so this greed/inequality could be the new norm for years. :(

RP, you obviously didn't read the article which talks about FHB's having a harder time buying as property prices are going UP... You could have at least read the 1st paragraph, here it is for you:

"The dream of home ownership was pushed a little further out of reach for many first home buyers last month, as rising property prices in February eclipsed the benefit of falling mortgage interest rates"

Note the words "RISING PROPERTY PRICES"

dairy farmer. Many are loaded to the gills with debt 

It's only a small percentage that are loaded to the gills. The kingfish of debt. The rest have either low or no debt, let's not imply otherwise

Houseworks, to downplay this is foolish. It represents significant debt and risk to the banks, the same banks that allowed you to leverage up in Hamilton. A small percentage of housing speculator/investors carry a lot of the debt too. If they were to run into trouble enmass and be forced to liquidate I guarantee you would then take notice!!!!!!!!

Banks pressure Dairy Farmers; http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=1198...

10% of Dairy farmers hold 12 Billion of the 60 Billion of dairy debt; https://www.stuff.co.nz/business/farming/dairy/77875850/small-farmer-gro...

Now that farms values appear to be in decline, additional capital proving difficult to obtain for some. Farms have to be profitable to pay down this debt or have income sourced from elsewhere.

The dairy payout is rising, farm incomes increasing. The same goes for right across the rural sector that all of our primary produce is in demand. Those are the facts, if you are interested

Houseworks, I think you need to sit down and have a chat with a Dairy Farmer whos on suicide watch. I have a friend who is a Dairy Farmer down in the Waikato. Many of neighbours are equally desperate. They are praying for strength in the rural market so they can at the very least get out with some equity after decades of hard slog. There are just no buyers, sometimes not even tender offers. Banks are not helping this. Many are so loaded with debt incurred from just essential maintenance they are not even breaking even at the current payout. Many have also borrowed to buy shares hoping for the additional income stream and are now facing a dividend cut. Those who operate on efficient perfect flat land and are practically debt free, obviously have a lower break even point and remain profitable.

Lately, your posts offer ample evidence that your financial knowledge is only confined to your weekly food bill. On many occasions fellow commentators have had to correct misinformation. It seems as though anything short of Utopia does not exist! (sigh)

Interviewing yourself again

You've modified some of your offensive comments. Thank you for that

Houseworks, what complete rubbish. Nothing offensive was posted, edited or otherwise by me. Now, THAT'S just plain desperate. Only your lonesome self is left stewing in this pot,

Seeeeya!

Please just stick to the facts instead of your personal remarks. Thanks

So this would appear to be a case of "I had an in-adequate business plan based on un-realistic figures, (probably advised by professionals who could see no down side) and all I could see was the tax free payout at the end, so really I paid too much for this"

While I can feel sorry for anyone from the human/personal aspect having listened to Farmers, (and "landlords" for that matter) for enough years crowing on how much money they have made and their attacks of "I am a fool for not diving in " added to their with their contempt for "townies" not so much.

steven, I couldn't agree more that the responsibility for preparing a rock solid business plan ultimately rests with whom signed on the dotted line. I think there are serious risks developing in farming (dairy in particular). Equally as disturbing is the leverage that has bloated out on real estate at the same time. It's a double whammy.

Check out the article under the heading Agricultural Woes (1920s);

https://www.encyclopedia.com/economics/encyclopedias-almanacs-transcript...

Other countries subsidize their overproducing farmers, we don't. In a twist, one could argue our farmers were subsidized by cheaper borrowing rates, easy access to capital on ever increasing land values.

dp

dp

This is a 'tp' (triple post) not a 'dp'.

Good to see the investigative journalism yet again.
The outlook for FHB is positive. I suspect that FHB and property investors are significant buyers of the lower quartile houses and currently these are overvalued not only as shown by your affordability report for FHB, but also for yields for property investors as in your reports on rental yields.
Issues of affordability for these two cohorts will mean that there will be downward pressure on house prices in this segment of the market at least. I do not suggest a "crash", but prices coming back by 5 to 15% or so are not unrealistic and reflects what is happening in some other cities overseas.
My hope for FHB is that mortgage interest rates will remain at historically low levels and what has become the recent norm, and that when FHB do start entering the market in increasing numbers, that they are in a position to absorb some potential future increase in interest rates.

Not so sure. If you believe we can grow for ever even on a finite planet then yes prices will go up for ever.

If on the other hand you do not believe we can grow for ever on a finite planet then prices could easily drop back to the long term trend. Now that long term trend is frankly ugly as that would mean the potential of a 75~90% loss of capital wiping FHBers out, bankrupting banks causing OBRs and then staggering losses into savings and pensions.

Think it cant happen? well in 1929 ppl didnt think the Great Crash was possible either.

Look at more recent examples also:

1) US property prices which peaked in 2006. The large scale defaults, and subsequent property price falls, ultimately caused the GFC in 2008.
2) Ireland property prices which peaked in 2007
3) Spanish property prices which peaked in 2007
4) other Euronations where property prices peaked near 2007 (Slovenia)
5) Japan property prices which peaked in 1990

This time it’s different!

USA - fraud and overbuilding
Ireland - economy collapse, unemployment to 16%
Spain - economy collapse, unemployment to 26%
Japan - literally the modern formative lesson on 'dont hike rates in to a bubble'. Following this lesson all major economies instead cut rates to reset yields and if needed monetize.

none of these are examples that are relevant to NZ.

Laminar,

Can you explain your thinking further as to why none of these are examples that are relevant to NZ.

Because you have not made a case for either overbuilding, fraud or an increase in unemployment to extremely high levels. Without that basis none of your examples are relevant. You have put the cart before the horse.

In all of these places there were irrational exuberance and asset price bubbles. Yes they all had different characteristics, but they all boiled down to one way bets on rising prices of assets, mostly property. Asset prices bubbles, debt bubbles, loose credit, poor underwriting standards, risk premimums falling to zero are all relevant or potentially relevant to New Zealand.

“This time is different!”

They do not boil down to one factor, no one sensible would ever take a single factor analysis of a market seriously.

Do you think New Zealand, being dominated by four big Aussie banks, would be immune if the Liar Loans fiasco over there becomes a much bigger issue?

If the Aussie bubble pops, then I would say so will ours. We are umbilically connected to that bubble via our common banks. There would be a further tightening of underwriting standards even if the overall credit of the Aussie banks is not seriously impaired.

If that credit is seriously impaired, we will be the residual risk holders in the NZ subs of those banks. I doubt the nz subs have any serious debt funding capacity independent of the Aussie parents. We had ridden the coattails of the credit strength of the Aussie parents to get cheap loans, it’s a shame we seem to have spent most of it on residential property, but that’s where we are. If that credit is seriously impaired it’s our problem

Exactly, if Aussie goes belly up then i'd suggest the 4 banks will suck their NZ Debtors of every last penny they can in interest payments to save themselves. At the same time savings and term deposit rates would probably stay where they are, at practically zero.

These are examples of the actual cost of a collapse NZ has as yet not gone through. In terms of how this will impact NZ, well when you look at the Great Depression NZ was actually hit very hard so if it hits us then its reasonable to expect the impact will be huge.

The Q then is how in an era of low interest rates, low company profits and excessive risk how does an investor best protect their income stream. For me I can see some ways to reduce this impact but not enough to insulate me from the impacts that could still "take me out".

Really its a Q of waiting and moving soon enough based on what actually unfolds.

FHB who delay purchasing a home based on DGM comments on this blog will live to regret it.

TTP

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An equally likely outcome could be: FHB who follow TTP's advice on this blog will live to regret it.

Time will tell which is correct.

Time will ultimately favour buying at any point – including now if you can.

Your time horizon simply needs to be around 10 years – and you need to be able to weather some possible bumps and potholes in-between.

There is no bell at the top or the bottom – only hindsight.

Potentially a few alarm bells at the top..

Quite often it keeps going past the alarm bells – look at US tech.

Yes and alarm bells have been ringing for quite sometime (years)

Two neighbors, one smart and the other stupid, both bought their family homes in 1980.
Stupid neighbor buys a rental in 1986. Smart neighbor says its a bad time because the NZ economy is unstable and waits.
Stupid neighbor buys a 2nd rental in 1996. Smart neighbor says its a bad time because Asia is looking like it could have a currency crisis and waits.
Stupid neighbor buys a 3rd rental in 1999. Smart neighbor says its a bad time because the USA tech markets look over priced and waits.
Stupid neighbor buys a 4th rental in 2007. Smart neighbor says its a bad time as the US housing market is packed with fraud and waits.

Today one of them has been able to retire early, funny how things work out.

Yes, yes, and that was all a bit stupid too. Changes the details a bit and see what you think: Hong Kong 1997, Ireland 2006, USA 2007, Spain 2006, Australia 2020? In which case all the canny property investors have gone bust. Or thrown themselves under a train. Funny how things work out.

Honestly, you didn’t work as an economist for Anglo Irish Bank pre 2006 did you? You sure?

Laminar, is the stupid neighbour still a debt junky and ever considered diversifying into something else besides property? You know, the eggs in multiple baskets methodology. Just wondering in the event of another GFC which country you believe will be our White Knight? Its ground zero with monetary stimulus. Central banks have nothing left to stave of a deflationary spiral. There is stuff all inflation out there and a lot of businesses have very little pricing power combined with lifting wage demands and difficulties gaining access to additional capital because property (security) has largely stalled.

I know we have had several crisis and full recoveries have subsequently ensued but it's worth remembering that Central Banks have been forced into adopting more extreme policies each time, especially since 1987. What will they do next time, wholesale debt forgiveness? Ultra cheap money is not the remedy next time around simply because it will likely prove the ultimate root cause of the longest slump in modern time.

Laminar does not believe in asset price bubbles or credit cycles. There are only “bad actors”. So the GFC is explained away as “fraud and overbuilding”. Which in my view is a complete mischaracterisation of what the USA credit bubble and GFC were really about.

Laminar has a point there! You realise that despite the heroics from the coalition they have not succeeded in changing any of the fundamentals that support property.

He sure got a reaction from rp

Someone that got their act together starting in 1980 is no longer interested in what happens in the future because at some point in the past they become "Untouchable" by anything else other than NZ sinking back into the sea.

Laminar - lets say the average FHB was in nappies in 1986.....You might be able to help me, but I can't recall the banks lending money to babies in nappies in 1986 to buy rental properties? But I could be mistaken?

Equally in 1999, the average FHB was probably too busy focusing on sitting School Certificate or University Entrance exams and not worrying about buying rentals...guess they're pretty stupid huh?

Come 2007, the average FHB is loaded up with university debt and isn't in a positiono to buy their own home, let alone a rental. But hey, guess they're pretty stupid for not being able to pay for university, study and be financially prepared to buy a rental. What idiots!

But you'd be more open minded than to think its all about you, and your generation who were in a position to buy a new rental every decade for the last 30 years? And those who were born late, well they're just simply stupid because they were born at the wrong time? That would make you fairly self centered in terms of your view point wouldn't it? What about the other generations?

Are you describing yourself, you were born 1986? What's your uni degree?

No - I'm simply saying that the average FHB is likely to be around 30 years old now in 2018 so would have been born in the 1980's and not in a position to be buying rentals when Laminar is implying the people were fools for not doing so...

Hypothetical situation then? You could say the same about laminars example of two smart people who each bought a home in 1980 they are not fhb. Anyway you have already said that you are hoping to buy your first home, that you currently invest in other investmt vehicles. The two ppl in his example took different routes in life one was pessimistic the other took his chances and made the most of his opportunities. You can't blame that guy for when he was born as a boomer or for making the most from what was before him. Btw IO what's your bachelor degree?

What Laminar is saying is that putting off til tomorrow what you can do today has historically been a poor decision. This has been proven over a long period of time. Sooner or later the DGMs 'might' get it right, but it is likely to only last a relatively short period of time, and if they are wrong yet again......

Merrydaze, my interpretation. What Laminar is suggesting is where home ownership is concerned, impatience has and ALWAYS will be profitable. What unravels his theory is that post GFC, the market has become so top heavy with over leveraged jittery speculators with vast portfolios of now unaffordable homes, it's ripe for major downside.

I suggest that patience will generously reward by way of home ownership backed by sound finances and much less first home buyers remorse.

The smart know that when indulging in such speculative behavior, only invest money that can afford to be lost. If the speculator does not agree with this comment then they are in it way over their heads and are self declared amateurs.

Your interpretation is incorrect. It is simply a story that supports time in the market rather than timing the market. It applies to all quality markets, not just housing, and is most famous in US stocks. It is about investing rather than speculating. The story advocates buying things that are likely to rise in value over long periods of time and to keep buying over time.
Say you bought a house today, and the market dropped 20%, okay, so what? After some period of time you would be able to buy another, maybe you get a better deal, maybe you dont, the point is that is doesn't actually matter, you can still be successful. It doesnt have to be property though, it can be stocks as well, anything where the long term prospects are strong.
What you are advocating for is called speculation, you speculate that prices will drop, and thats completely fine, for example i am on the record for saying i expect to see prices fall in Auckland by about 10-15%. Never the less if a person was buying today I still think thats perfectly fine, because I could be wrong and im aware that what matters most is that you buy quality assets and that you keep buying. If you save money, buy quality assets, dont panic sell, then you will be a successful investor over long periods of time.

The problem is you assume an exponential, growing market, expanding economy and increased population all on a finite planet using a finite resource, oil.

Now go back and look at the "growth" /expansion pre-industrial revolution and the growth on an oil rich world. It is a huge bubble that with oil gone has to revert back towards long term trend the big Q is how far pack, 50%? 75%? 90%? So its not a case of take a 20% loss and not worry as you will "recover" long term that game is over.

I do not assume that. In fact price growth in housing over long periods of time is actually very modest if you adjust for inflation correctly. Even stock growth rates are much lower than advertised one you calculate them correctly. But you dont need high growth to be successful as an investor. Its perfectly acceptable to get rich slowly.
This pervasive idea that the end of cheap oil is the end of growth will almost certainly be mistaken. Things will change and what we consider valuable will change, but growth will persist. For example self drive will slash personal vehicle ownership, slash road expenditures, slash traffic, boost fuel efficiency, reduce maintenance costs etc. Partial electrification, work from home, automation, cyber entertainment etc. Those are not even big changes relative to what will eventually happen. Replacement of the body with cybernetics, affordable space flight, food ooze etc.
The world will change but the bet that oil collapse will prevail over innovation, adaption and efficiency gains is a speculative bet that has already been wrong for a very long time.

You earlier writing and indeed this assume the thing you deny. I mean what is "its perfectly acceptable to get rich slowly." this but assumption that we will return to the short term upward trend?

"This pervasive idea that the end of cheap oil is the end of growth will almost certainly be mistaken."

you are gambling here. The thing is also you are ignoring other effects Peak oil brings like volatility and fragility.

There is actually an interesting real world example, Cuba when the USSR collapsed and oil stopped going to them.

Last sentence, actually we have as yet not had a global oil collapse as you term it, hence it cannot be wrong for a very long time. However second example, the high price of oil in 2008 driven by lack of increase in production since 2004 triggered the last 10 years of at best stagnation and oil output has not even declined overall yet.

I sympathize with peak oil but it has been wrong for almost 50 years now. The current above trend oil prices have slightly reduced economic growth but they are not the sole source, wealth inequality carries a larger share of the blame.
As to the short term trend, im not sure what you mean. I am interested in the modern dynamic of assets in a world with a high population, extensive technological advancement and rapidly developing middle classes. When I look back at the entire history of the modern and highly populated world, growth rates when correctly calculated in either stocks or property are modest, however modest growth in assets is all that is required as its perfectly acceptable to get rich slowly.
Oil production will decline at some stage, but technology has already shown just how horrifically early peak oilers have been. When you are as early as peak oilers there is no meaningful difference to been wrong.
Was it difficult to predict peak oilers were overly pessimistic? No, it wasnt, there is a very long track record of technology solving problems and to bet against that established history is a dicey business.

Your “time in the market” theory is no more sensible than saying “you can’t lose”. There have been a number of regular crises where asset prices have collapsed. “Time in the market” would not have helped a buyer in Hong Kong in 1996, nor in Ireland in 2006, nor in any number of other places over the last 15 years where irrational exuberance has led to the creation of asset price bubbles, which is what we have now. From where we are now, “time in the property market” is most likely to lead to a long term destruction of value as things return to their long term averages. There is no long term when you are insolvent, cashflow or balance sheet.

Not in the slightest Bobster. Time in the market reduces the risk of a loss over time, it does not guarantee you wont lose.
If you bought in Hong Kong in 1996 by the way you'd be in profit today. Of course youd have bought again in 2007, another peak, and now youd be kinda rich. So even using one of your extreme examples buying over time worked.
Ireland is pretty ugly, thats what 16% unemployment will do to you. Spain is another example. Dont buy junk.

@Independent_Observer It's a fictional story that illustrates inaction is the biggest risk of all. It applies generally to most quality markets, for example the US stock market. It tries to make the point that what is most important in time in the market, not timing the market. In the fictional story the stupid neighbor literally buys at the worst time every time, but because he is buying with a long time frame in mind he comes out in good shape.

Given your wisdom, you'd be aware the of the risks a FHB would be taking by entering the market now - yes?

Would be similar to telling someone to buy shares in 1987, 2000, 2007 or potentially now....right?

Sure time in market is important, but timing is also critical - espcially if you don't have the benefit in the housing market of dollar cost averaging....instead its i'm all in with all my money and the banks...if the first few years don't work out well, its negative equity terriroty.

My real life true example that is in counterpoint to Laminars conclusion...

I bought my first home way back in 1986, and sold it in 2006, at about 3x the purchase price of two decades prior. Three years later, it was worth about 50% of the 2006 sale price. Now, 12 years after I sold it, it is worth about the same as when I sold it. The person that bought it should have rented instead... and would have been far better off waiting instead of purchasing. I moved to NZ in 2007, and continued renting until 2016 when it finally became cheaper to own than to rent. For a decade, my landlords underwrote my housing costs in the forlorn hope of capital gains. As I was living in Hawkes Bay from 2009 onwards, there was almost zero capital appreciation, and my proceeds that were in term deposits paying the rent as well as adding a bit to my savings during my decade of renting. I did much better than my landlords in increasing net worth via renting for a decade instead of owning.

All real estate is local.

If I was living in Awckland, then my decisions may have been different. At present, I am now a happy homeowner in HB, and if I was in AKL, I would have sold a year ago and gone back to renting (or more likely sold up and left Auckland for greener pastures). I see a softer version in Auckland now of what I saw back in 2006 in the US. I also remember explaining my views as to the upcoming rout in RE to various REA when we interviewed several agents in preparation for sale, and was laughed at by most despite what was clear and compelling evidence IMO.

Sometimes timing the market can be a very good thing.

Timing the market is speculative and speculation can work very well yes.

Indeed, if you had bought on an 80 year cycle, ie just after the Great Depression you would now when exiting be very well off. If however you buy today and we get a second Great Depression and it takes another similar time to recover, you are long dead. Of course no one will sit around with you owing them that much money for that many decades, they will foreclose.

I sometimes suspect and even fear that "debtors prisons" will make a come back, ie modern day slaves made out of people with no earthly chance of ever getting free. It wont be real prisons though that costs too much to keep you (about 100k a year) but using the law to take all your money off you as you earn it in perpetuity. Being a "criminal" of course you lose the right to vote and then cannot negate the legislation in the ballot box.

You made my point, there is no long term when you are insolvent. Shares aren’t bought with leverage, houses are. I can understand why current owner occupiers would buy and sell in this market, I don’t understand why FHBs would buy. A FHB taking on lots of leverage is taking on lots of risk, what exactly is the monetary reward?

Bobster,

Many FHB are on auto-pilot for their life - the common thought process which most people have been taught is: 1) go to school, 2) get a good job, 3) get married, 4) buy a house, 5) have children, 6) earn more income and upgrade to a bigger house , 6) buy a holiday home 7) retire.

When a FHB or owner occupier buys a house, the valuation metric they commonly use is comparable recent transactions in the neighbourhood - this is what most property valuers do. This valuation approach works most of the time, however it does not work when there is an extreme asset price bubble (which are very rare - say once every 30-50 years). When you're comparing your property purchase price with other recent property transactions in the neighbourhood, which are valued property bubble prices, you don't know that you're in a property price bubble. They are looking at the house price in the wrong context. In an environment of rising property prices, the thought that property prices could drop doesn't enter their mind - look at the fear of missing out by buyers in 2015/2016 in Auckland when property auctions were well attended with many bidding wars. Look at the many FHB, & owner occupiers who got caught out in US in 2006, Ireland 2007, Spain 2007, etc.

Most people are uninformed or lack interest about economics, property price bubbles , nor know other property valuation measures which would alert them to potential house price risks. It's only after prices have fallen and they're affected personally that they start to worry.

Most of my friends and relatives would fall into this category.
1) My sister in law (who works in a bank), gets her opinions on the property market by reading commentary made by "property market commentators" and looks at the value of her property and holiday home using QV.co.nz (which uses recent comparable transactions as it's valuation metric)
2) I had a friend who relocated back to Auckland and is an accountant (so supposedly financially literate) and he wanted to buy property for his own peace of mind, and financial security, despite repeated warnings about the elevated house prices levels and asymmetric house price risks. He eventually bought in September 2016 in a central Auckland suburb, financed with a large bank mortgage. He said to me that he wasn't making an investment, he was buying a home. For him, it wasn't purely an investment decision, it was an emotional decision.

There are many commonly held beliefs which are driving owner occupier buyer behaviour. Many are used by those with a vested interested in the property industry to sell property or promote real estate mentoring programmes. How many of these have you heard before?
1) rent is a waste of money / rent is dead money
2) rent is throwing away money
3) property prices always go up (population growth is continuing to grow, migration is growing, everyone needs a home to live in)
4) buy land, they're not making any more of it
5) The best investment on earth is earth
6) Ninety percent of all millionaires become so through owning real estate. More money has been made in real estate than in all industrial investments combined. The wise young man or wage earner of today invests his money in real estate.
7) Don’t wait to buy real estate. Buy real estate and wait
8) I still think buying a home is the best investment any individual can make
9) Every person who invests in well-selected real estate in a growing section of a prosperous community adopts the surest and safest method of becoming independent, for real estate is the basis of wealth
10) Buying real estate is not only the best way, the quickest way, the safest way, but the only way to become wealthy
11) It is a comfortable feeling to know that you stand on your own ground. Land is about the only thing that can’t fly away
12) Now, one thing I tell everyone is learn about real estate. Repeat after me: real estate provides the highest returns, the greatest values and the least risk
13) Ninety percent of all millionaires become so through owning real estate. More money has been made in real estate than in all industrial investments combined. The wise young man or wage earner of today invests his money in real estate.
14) Land monopoly is not only monopoly, but it is by far the greatest of monopolies; it is a perpetual monopoly, and it is the mother of all other forms of monopoly
15) The house you looked at today and wanted to think about until tomorrow may be the same house someone looked at yesterday and will buy today.
16) buy investment property so that you can earn a passive income for your retirement. The government is going to stop the pension payments in the future.

I'm sure that there are many more.

I was talking to another friend about property prices and he quoted me one of the above commonly held beliefs.

It takes critical thinking to think and act differently from the herd.

Here is an interesting survey - https://www.domain.com.au/money-markets/most-property-investors-believe-...

Yeah, that’s scary. I’m fine with the “I’m buying a home “ theory, but not sure I am fine mortgaging myself to the hilt to do it. FHBs are the least informed yet also the ones under the most pressure to buy. I have lived overseas for a long time and rented, people don’t blink an eye at that but here they firmly place renters in the “loser” category. If you are young I suppose the only consolation is you can still claw your way back from insolvency. And this bubble has gone so high and for so long, people struggle to contemplate any other form of reality...

No one should mortgage to the hilt.
In terms of how much of a bubble it is, you'd first have to evidence that interest rates will normalise.

Bobster,

Here is the story of someone who bought a "home". They believed that "rent is dead money.", and had a fear of missing out as they extrapolated past price rises into the future ...

https://www.youtube.com/watch?v=BfcSWLJBIRg

and the comments from another caller who did not buy a home and remained a renter -

https://www.youtube.com/watch?v=m25FXP9O7dE&feature=youtu.be&t=3m44s

@Independent_Observer If you bought quality stocks in NZ in 1987, 2000 and 2007 you would be rich. My point is that market timing is NOT critical if you are buying quality assets.

I can understand the stocks. But add in the leverage of real estate and I don’t get it. If you get the timing and leverage wrong you could end up rich. Or you could end up hopelessly insolvent.

You should calculate your position with care when ever you employ leverage but it can be done safely.

It is all about risk... Once one uses leverage, there is a risk of insolvency. What level of risk does one want to take? For some, a 10% chance of insolvency is safe. For others, 1% chance of insolvency is risky. In other words, your definition of safely may be equivalent to my definition of foolhardy. Even with OBR, I'm more comfortable at this time with the risk/reward in investing in term deposits than housing. You on the other hand may be comfortable in a 10% risk of losing 50% of your equity for the potential of a 30% gain (to put some WAG numbers out there). Not me... at this point, I'm more focused on return of equity than return on equity.

It is all about risk/reward. At present, the housing investment level of risk to the possibility of reward suggests to me that there are far safer investments than housing. Increasing leverage means increasing risk, as well is increasing potential reward. The issue is the likelihood of the reward vs risk of losing capital. At present, I'd be very carefully evaluating the risk aspect and comparing to the likely reward in the current environment.

Here is an example of owner occupiers who bought at peak prices in 2007 in Ireland ... Negative equity affects around 40% of homeowners ... It would have been better to have rented their accommodation and kept the money used as a deposit to purchase the property as a time deposit in the bank as they would have earned interest income on it. This clearly shows the dangers of using debt to finance the purchase of an asset which subsequently falls in price (of which they are also paying an interest cost, making the property purchase even worse). Some of these properties may take many more years to reach the price that was paid for them at the peak.

- https://www.belfasttelegraph.co.uk/news/northern-ireland/property-60000-...

https://www.independent.ie/business/personal-finance/property-mortgages/...

Such a party pooper

Using an example of Ireland does not illustrate the dangers of using debt because it is a multivariate function it illustrates the danger of several factors combining. In order to extrapolate that market to NZ you must first evidence the similarities of the underlying material factors which you can not.
The next most sensible step is to assess global property which at least gives you a general understanding of property dynamics as an average but is still unsatisfactory.
So then you assess specific markets and look at the factors effecting that market and the future likely pressures and attempt to sum those factors.
Your attempt to extrapolate the Irish example to NZ based on a single factor analysis is invalid.

"...similarities of the underlying material factors.."

Here are some similarities for you.

How about these:
1) High percentage of purchases to investors rather than owner-occupiers
2) Unsustainably high median house price to median income reducing organic demand
3) Ramping inventory levels showing supply/demand imbalance
4) Decreasing sales showing buyer reticence

The first sets the stage. The second is the signal for the diva to leave her dressing room. The third and fourth are her cues to step on stage. It is getting to be time for the fat lady to sing.

Yankiwi,

Another essential element and similarity to add is record levels of household indebtedness, which increases the financial vulnerability of highly indebted borrowers.

Making some assumptions there, ie continued grow for ever on a finite planet.

Affordability is just one consequence of the asset bubbles that have popped up all over the world. It will not get better for FHB's, as that would require a price crash, in which case they may be out of a job or have no chance at securing a loan. Look at youth unemployment in the PIGS countries post GFC, you think FHB's ran out and bought a new condo post GFC in Spain. Nah they picked up cigarette butts along the beaches. Maybe our land gentry class will take FHB's into their homes to help out with the kids, water the plants, walk the dogs.

Bluff as a potential FHB, I'd happily be unemployed for a few years if it means there's a 50% reduction in house prices. Lets do it!

I mean, say in Auckland, if that means the average house reduces in price by $500,000, well that's fantastic. I can't generate that amount of cash in a few years, nor even think about covering all of the interest on that amount over a 30 year term if I were to pay it off in the form of a mortgage on a house. I'd take a few years off, complete a Masters, be more skilled and then buy a house much cheaper than before! Sounds ideal...

So from th FHB perspective, a few years of unemployment caused by a significant housing crash/recession, long term would be financially very beneficial to them.

It's not FHB's that are scared of such a scenario, I think you'll find that its the 'haves' that are....

You mean after you finally buy a place you’d be happy for a 50% housing market crash which coincided with you becoming unemployed? What if as soon as you get employed again the housing market also takes off again because more people are employed and as such can pay more for houses?

No - while we wait for the housing market to return to some less irrationally exuberant position, if there were a crash, fantastic....if it means recession and unemployment, so be it. If it means 50% cheaper houses, over say a 2 year period, I'm effectively earning $250,000 a year while doing nothing + whatever interest I'd be paying on $500,000 of mortgage over a 30 year period. It really would be something....thats when one would buy. But while houses are so irrationally exuberant in price, who'd be that foolish?

No, IO would like the housing market to go down 50% in value just so that he can buy a house,then it can go back up 100%

up
10

No - I wouldn't care what the market did following a 50% crash. It could stay flat for the next decade. Wouldn't care.

For the average Auckland house that means $500,000 less principal on a mortgage that I would need to service over a 30 year term - a value that could potential outstrip any capital gains in a market that has just crashed. It might also mean the reduced deposit would allow me to maintain a diversified position with exposures to stocks, bonds and currencies - instead of having to put all my eggs into one basket (the family home).

So you wouldn't want houses to go down another 50% after you buy...?

So we could use Auckland as an example - a drop of 50% of the current average selling price is possible. So lets say, hypothetically that happened. I buy in at $500,000.

You're now suggesting that houses would drop another 50% from there, to what would be $250,000 average selling price. This would be a 75% drop from the current price. I personally don't think that is probable, let alone possible. But I do believe a 40-50% price drop is an event with some merit.

So in terms of decision making, and market entry, theres the case for whats possible, then what you propose above which is very much a marginal and unlikely event (a 75% drop in real estate is an extreme and unprobable event, 50% is quite possible though) At the point of purchase you'd have to ask yourself, am I catching a falling knife? Which if you don't need to, why would you? You'd wait....as Warren Buffet points out, markets are a device for transferring money from the impatient to the patient. People have been far too impatient of late.

Funny.. what makes you think the salary/house price multiples will improve? The wages will plummet and people will be leaving the country in droves including yourself... so your wish came true but the whole country ruined along with everybody else's lives... but it achieves leftie socialist's goal of everybody living equally in misery except the top troughers

And what would happen to demand if people leave in droves? How would that affect house prices, congestion on roads, the lifestyles of doctors, nurses and others who are under-funded and overwhelmed at the moment.

Why would I leave? I've never received a government welfare payment and payed plenty of taxes - but if I find myself unemployed as a result of peoples reckless speculation on a potential housing bubble (people who are dodging taxes through their 'investments' - why should I care if they suffer?) Or is the cause of suffering only a one way deal? Speculators/landlords can cause suffering for the 'have nots' but if the shoe is on the other foot, its not okay?

Leaving the country to go where? If a major house price crash happens in NZ it will be triggered by something external to NZ I believe, and Property/Economies around the world will be subject to the same event. I just don't think anything that happens in NZ will trigger a full on Auckland house price crash (short of a new volcano popping up in the middle of Remmers maybe?). I certainly don't think anything this Govt does will crash the market.. stall it, yes, cause a gradual unwinding yes.. but a full on crash, not due to this govt. It would be political suicide to do it, and they aren't that stupid.

At some point in time - perhaps about now, there might be some merit in a political party called 'Crash The Property Party Party'.

I'm sure there are enough disgruntled younger people in NZ who'd vote to achieve the 5% threshold.

Sadly most of the young aren't really aware how comprehensively they are going to be screwed if the system doesn't change, or they are the kids of the well off who think they will do okay through inheritance and/or mummy and daddy underwriting their first house. Otherwise TOP would have done better in the last election.

It was known as TOP and got 2.5% of the vote.

Good point IO.

You are highlighting the hammering our real incomes have taken. The purchasing power of our wages is worth bugger all - for those who want to own a house or even buy another. I think that's called inflation. So much so it may be better to be unemployed while the market resets and our incomes become worth something again. Unfortunately the ramifications of a reset will be worse than just unemployment. China, NZ, Australia, US, Canada, UK are scrambling for levers to pull to ensure a soft landing from this credit binge.

Why would he buy before the prices return to sanity?

Its quite obvious he means he'd be happy to be unemployed now for a few years then buy after the prices have fallen. As for the market taking off after there is a big crash it'll take a very long time for people to get all bubbly about housing again. Just look at the great depression and how long it took for house prices to recover, or how there are still many people that are stupidly scared of equities after the 87 crash.

Bingo

Yep is all good hoping for a crash until you loose your job and/or interest rates go through the roof and then your worse off than you are now. Some people have a very narrow outlook and cannot see the big picture. A huge crash or financial event is not going to do anyone any good. People think alot of money solves everything, but you had better be behind some pretty high security walls and armed to the teeth if civilization as we currently know it breaks down.

Like all events, there will be some winners, and some losers. Would I shed a tear for those landlords that have been living the high life on skyrocketing house prices and leveraged to the gills.. nope. Would be sad for the genuine home buyers that brought at inflated prices and just wanted a place to live however.

And high interest rates (relative to inflation) would be great for those of us who aren't in debt..

I don't know if anybody else has asked this question, but looking specifically at Auckland, how can one account for the fact that many of the homes that would generally sell in the lower quartile bracket are not selling at all? i.e. the average lower quartile SELLING price is only going up because the rubbish places that were selling last year for ludicrous amounts aren't selling any more, while the reasonably good ones still are.

It's a very good point. The means and medians quoted give a picture but there is a lot of potential for sampling error given the relatively small sample size. Perhaps introducing CV into the equation would help determine the estimated "quality" of each quartile. Determine an expected mean/median for each quartile and compare against what was actually achieved? This is also obviously frought with error as well but it would help put the statistics into more context.

Been waiting for the decline so I can add some more to my portfolio and I am still waiting.....

You must have missed Retired-Poopy's post above, the market is way down and the end is nigh. It's got the most thumbs up of this thread so it must be true. LOL

Yvil, yesterday you posted the following comment "It seems vendors are slow to adapt to the changing market. Auctions are great when there are several buyers outbidding each other. They are dreadful when there are few buyers"

What were you alluding to exactly? Weaker sentiment, vendors losing pricing power or even Auckland being officially in a buyers market?

RP, it seems you didn't read this article which talks about FHB's having a harder time buying as property prices are going UP... You could have at least read the 1st paragraph, here it is for you:

"The dream of home ownership was pushed a little further out of reach for many first home buyers last month, as rising property prices in February eclipsed the benefit of falling mortgage interest rates"

Note the words "RISING PROPERTY PRICES"

Yvil, before you criticize, I suggest you read the article carefully yourself instead of latching onto one headline in a shallow unsophisticated fashion. Why are you behaving like some scorned property speculator/flipper busting for a break? Try making some insightful contributions others can both relate to and benefit from instead of resorting to childish name calling.

Quote from above; "lower quartile prices declined in West Auckland, the North Shore, Papakura and Franklin" these cities cover a considerable area as potential FHB turf. There is indisputable evidence in recent auction activity that weakness is spreading and you acknowledged this yourself. I believe deep down the declines so far witnessed are only the beginning and will soon spread to the provinces.

To those that give a damn (not you obviously) it is of major concern there is a glut of unaffordable housing and FHB are largely shut out because of it. In the event of a global shock I find it difficult to imagine FHB support will be strong enough to provide any meaningful buffer to counteract the massive deleveraging process that would ensue.

Again, for the time being FHBs will do well to sit on the sidelines and let speculator/Landlords carry all the risk. Renting is the way to go for now, living within means while saving hard. Timing the entry to the market is everything now that its top heavy with jittery speculators combined with the unstable global environment.

"The dream of home ownership was pushed a little further out of reach for many first home buyers last month, as rising property prices in February eclipsed the benefit of falling mortgage interest rates"

Whether this is true or not, I am not sure its a great reason for some people on here to be bragging, always thought NZers were for helping fellow kiwis. NZ has definitely changed, not for the better it seems.

What did you just call RP? That’s very immature please apologise to him at once.

Perhaps I’m missing something but in a general sense most of the drivers of this market are still relatively intact – there’s been no seismic shift.

The only thing of possible significance would perhaps be “sentiment” – people aren’t rushing to buy houses because people aren’t rushing to buy houses.

It would also seem that those properties that are selling are achieving a reasonable price – at this point it’s just that a fairly high percentage aren’t selling – not straight away anyway.

Possibly the market in some sort of limbo at the moment.

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