Westpac economists believe house price growth will be zero by the end of this year, which will be enough to prompt the Reserve Bank to further easing of lending restrictions

Westpac economists believe weaker conditions in the housing market - they expect zero price growth for 2018 - will allow the Reserve Bank to implement further easing of the loan to value ratio (LVR) restrictions before the end of this year.

In releasing its latest Financial Stability Report (FSR) last week the RBNZ indicated it would not consider any further easing in the LVR restrictions till "at least" release of the next FSR in November.

The LVR rules were relaxed from January 1 this year.

In their NZ Weekly Commentary, the Westpac economists say the RBNZ had previously indicated that it would ease the restrictions further if it was satisfied that house price and credit growth had slowed to around the rate of household income growth, and that there was a low risk of the housing market taking off again.

"It’s a close call as to whether those conditions have been met. House prices are up 3.8% in the last year, while credit growth is running at 5.7%yr. Comparable figures for household income growth aren’t yet available, but last year it was running just above 5%," the economists said.

They said the RBNZ appeared "more conservative than before" on the prospect of an easing, highlighting concerns about the high level of household debt (rather than just the rate of growth).

"The RBNZ was also notably less specific about the conditions for easing, noting that:  'The rules will be eased in the future if housing market risks decline and banks maintain prudent mortgage lending standards'," the economists said.

They said, however, that despite "the imprecision" of these criteria, "we still think that the conditions for an easing of the LVR restrictions will be met before the end of this year".

The economists pointed to the series of new policies being introduced by the Government aimed at cooling investor demand for housing. One of these is already in play, with the extension of the ‘bright line’ test for taxation of capital gains having come into effect at the end of March. Later this year a ban on foreign purchases of residential property will come into force, and the Government has signalled that the use of negative gearing by property investors will start to be phased out from next year.

"Together, we think that these policies will have a significant impact on housing demand over the coming years.

"We expect annual house price growth to slow to zero by the end of this year, in contrast to the RBNZ’s assumption of low but positive house price growth.

"The April house price and sales figures already showed some signs of softening, and we expect that the accumulated evidence over the next six months will satisfy the RBNZ’s concerns."

The economists said, however, that they don't  expect the LVR restrictions to be removed altogether.

"The RBNZ, under successive Governors, has made it clear that lending restrictions are likely to be part of the landscape.

"Instead, the RBNZ will look to move from the current ‘tight’ settings to something closer to neutral. ‘Neutral’ in this instance is hard to define, but it implies a set of lending restrictions that are not particularly binding at the time, but would guard against a future loosening of bank lending standards."

The economists said the consequences of the LVR restrictions extended beyond the stability of the financial sector.

"Housing makes up a significant part of household wealth in New Zealand, and consumer spending tends to wax and wane in line with house price inflation. The cooling in the housing market over the last year and a half has also seen a slowdown in the rate of growth in consumer spending, and we expect both house prices and spending to remain subdued in the coming years."

We welcome your help to improve our coverage of this issue. Any examples or experiences to relate? Any links to other news, data or research to shed more light on this? Any insight or views on what might happen next or what should happen next? Any errors to correct?

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115 Comments

With a 5% fall in house prices in Melbourne in the last 3 months and Westpac being the bank that increased their market share of lending the most in the last 12 months. Of course they will be lobbying the Reserve bank for a relaxation of lending to prop up their increasingly faulty loan book. Bad news is they aren't alone. Went to a mortgagee auction recently, previous owner had a Westpac mortgage taken out in 2016 for $1,150,000. Several bids at auction, finally sold for $775,000. Of course they want a relaxation of lending criteria......what a bugger's muddle these banks, brokers and the NZPIF have created here.

How do you know about the mortgage? That's a horrifying loss. Unless you're laundering money, in which case it's only ...somewhat sub-optimal.

There are thousands of these loans made between 2010 and 2016 where there was no care to either the value of the asset that was being loaned against or the multiple of income. Anyone ever get a phone call from a broker or bank offering them more money because their house/houses went up last year?

https://www.youtube.com/watch?v=DyaitC91hEM
Take a look at this for a laugh - this was produced several years ago but in the Southern Hemisphere the issue just kept getting bigger whilst the politicians and regulators turned a blind eye, HBOS, Northern Rock. RBS was just repeated down here. its not about repaying the loan, its about servicing it - for life!

The property Nic is referring to see sold in the Wellington region. I can confirm his numbers including passed in figure at auction.

And now Barfoot & Thompson report that the median sales price in Auckland has fallen a mere 8.9% since March 2017 peak. That would suggest to me that Westpac's flat market expectation of zero growth may be akin to telling fairytales. Whatever you do don't let the FHB's find out, without them who knows what could happen?

Now Aunty Westpac, one of our generous Australian relatives (loves to hand out a big debt here and there wants to know if anyone here would like a nice bedtime fairytale about the property market? Cheesy? THE MAN 2? its called the NEVERENDINGSTORY.

The current median house price in Auckland is 820,000. The real test will be if the Auckland median price falls a further 4.8% from this level to below 781,000, and what the banks decide to do at this point, and at what level LVR would the banks start requiring additional collateral from non-owner occupiers.

At the 781,000 median price, this would be back to September 2015 price levels for Auckland. If you recall, the LVR's for Auckland residential property was 80% for property investors, and many non owner occupier buyers maxed out their LVR's. Many property investors borrowed on interest only terms to maximise their after tax cashflow, so that they could then save to buy more investment properties.

Assuming a borrower has not repaid any principal on the loan (due to the property being negatively geared or excess cashflow used for another property purchase at a lower price point), at a 781,000 median price some borrowers may be on an LVR of 80%, and the next question is at what level LVR does the bank then start requiring additional collateral. Is it 85%? is it 90%? is it 95%? If the property price falls so that the LVR is too high for the bank and the bank requests additional collateral then this could put some non-owner occupiers in financial stress.

If the bank requires the LVR to be lowered to 80%, then this could require some additional collateral. For example, if the property price falls so that the LVR becomes 90%, and the bank requires loan reduction to 80% LVR of the property value, this would require additional collateral of 69,422.

The larger the fall in property prices, then more property investors will likely need to come up with additional collateral, and the amounts of collateral required will also be larger. Should the property price fall be significant, this then creates a property price feedback loop which is negative.

TainuiBabe, other commercial bankers and lenders ..

Can any experienced commercial bankers help?

If the LVR on a mortgage rises due to property valuation falls, due to recent property comparable transaction price falls, for a property investor (non owner occupier) borrowing on retail terms (i.e not a business customer, or commercial customer which are subject to different debt covenants),

1) What size loan exposure per borrower would the bank start to review the borrower's LVR? For example - 2mn? 3mn?, 4mn?, 5mn?
2) at what level LVR would be triggered so that the bank would require additional collateral? or to reduce LVR?
3) to what level of LVR would the loan have to be reduced to? For example 80%? current investor LVR of 65%?

Nationwide price growth of zero (pa) by Dec would mean that regional house prices stall balanced by Auckland wide in reverse.

How about - house price growth could be zero by the end of this year, which will be enough to prompt the Reserve Bank to avoid easing of lending restrictions in order to prevent over-leveraged borrowers from getting into a position of negative equity if prices fall in the coming few years.

Terrible time to sell right now or anytime this year. I say keep hold of your property for the next year or 2 years. Let the demand pent up again as no new builds can keep pace with Auckland population growth. You'll be thanking me in 2 years.

Speaking of pent up demand, I see the Department of Immigration is finally cracking down on illegal foreign prostitution.

What a change not having an investment banker in charge any longer, and having a government actually making it slightly more difficult for the older generation to shaft the younger generation.

Haha, I don't think those ones were buying properties. I'm sure that investigation was underway for a long time but this govt will take credit. They'll wreck this country with underwriting crappy developers for their shoebox Kiwi dream apartments

Chessmaster, your pent up demand myth will be a dragged out to sea together with other myths by the next global debt shock. NZ banks will be found wanting by their Australian owners coming woes. While you are out there speculating, risks are mounting. You can't turn around and say you weren't warned!

the previous government patently under resourced enforcing against illegal immigration in all forms.
good to see it taken seriously, this country can't afford to be taken for a ride...

Rick... I thought that they were in the essential migrant category so that our imported construction workers had a weekend past-time and promoted their NZ experience to other short term construction workers..... has it changed?

Nic.

Not likely, a pittance compare to those on offer at multiple establishments, advertised and private. Bit of a shame for the local crowd but then again it is the same in many industries. There are still ads & advisors for migrants to come to NZ to work in prostitution. The industry & importation of sex workers is still an open door in many ways (that and immigration cannot even investigate all the advertised businesses that are registered).

@chessmaster. Or cursing you for the 50% haircut they've now suffered through inaction and dreaming. This debt bubble is going to have lethal repurcussions for the overgeared and those that exit this mess last will see the biggest loses. 'it'll get better, it'll get better, it'll get better'.. - until you've lost your shirt, socks, pants and dareisay house!

Haha dream on 50% cut. Why would anyone buy right now if that's what going to happen. Buy today and lose 50%, I thought no one is buying that's why I'm advising not to sell. Wait for things to improve, if not just keep renting out as long as you can afford. Don't expect you to understand, it's a home owner and landlords thing which I'm sure you're neither.

Why did anyone buy right before the collapse of every other housing bubble burst?

It ain't what you don't know that gets you into trouble. It's what you know for sure that just ain't so. Mark Twain

House prices never drop... :)

Perhaps that should be: The value of a home to a family does not drop. Property investments can always vary.

Well, compared to long terms averages re income and yield current prices are overcooked by 30-50%. Now I am not saying prices will fall by that, but i hardly think that contemplation of such falls are "daydreams or fantasies about something greatly desired". I means, over the long term there or thereabouts is where we have been....just saying. You can't say the prospect of a significant fall in prices is just a fantasy....cos it gets us to a place its kinda where we have been most of the time....

But of course, this time is different, every time is different,I get that too.

A truism for investors. If rental income is less than the sum of expenses (interest, tax, insurance, rates, and maintenance) then equity will be declining even if house prices are static, for the first few years anyway. You’re relying on house price inflation or rent inflation exceeding expenses inflation.

@Chessmaster. I would wager all your houses (even allowing for you to value them with the debt included)would come no where near my cash holdings.. Good luck with the negative gearing though and if you struggle to get finance out of the banks over the next few years, drop me a line.

Haha substantial cash holdings, dream on player.

@Cheesmaster. My guess is that over the next couple of years you may find that your bank becomes a bit less amenable than they have been. They may even enforce covenants with re-valuations done on their new expectations of what values really are (or where they feel safe now). You can probably test this by going to see them and asking if they would be prepared to lend you more money. My guess from your comments is that you are probably close to the line already. Go and ask and let us know how you get on.

Yeah I did and banks said how much you want. They said they have this Nic Johnson to bail them out if anything goes wrong. They said he has substantial cash to give out. :-)

Nic Johnson, what was the address of this mortgagee property you stated went for $775,000 please????
Believe that this is a figment of your imagination, unless it was your own property!

Who call's themselves THE MAN 2? In capital letters. Are you George Gregan?

in response to your question that would be unfair on the new owners of the house for me to do that. What I can say is that they were able to take on a debt of $775,000 (for the full purchase price, somehow) - also through Westpac. My guess is that they are part of Westpac's percentage of lending that isn't subject to new LTV restrictions. You do know that is why there is a caveat to these LTV's so that the banks can lend 100% for houses that sell for less than previous owners paid for them so they can get them off their books. Already quite a big portion of Auckland Apartments bought over the last 18 months that are being resold.

Goodnight George.

He doesn't own property, just has substantial cash. Probably someone lost money on an apartment or something rubbish. These guys clutch at every negative story. This Nic guy is going to bail the banks and likes of you and me out with his cash holdings.

@Cheesmaster. - Good luck with the game and I hope you don't lose too many pieces of your empire. The smart money stopped playing this game a little while ago and is getting ready to play a different game. Why else do you think John Key sold out when he did?

Might pay to start with using the right acronyms, Nic. It's not LTV, It's LVR. How will you run your bank you're going buy with your substantial cash when you can't even get that right.

Is that all you have?

“It’s spelt Mum not Mom” etc etc

@Cheese. LTV (northern Hemishere) - LVR southern hemisphere. Seen it all before. DTI's Or Loan to Income ratio's (LTI's) again same thing. Except in the northern hemisphere (where interest rates were a lot lower the last decade) household Loan to Incomes ratios were maintained at 4.5 times household income.
No restrictions at all down in the deep South so the party continued in the debt fuelled Rock Star Party. Like I said Chess, seen it all before so know what's coming.

I don't want you to be scared but I do want to warn FHB's (they are First Time Buyers FTB's in the Northern Hemisphere) of the risks of buying the bubble - Years and Years of Negative Equity and Regret, reduced mobility in life and frustration. Wouldn't want it to happen to my kids or yours so well worth me offering my experience and depth of research into this mess. The falls happen quicker these days than in the past, information spreads faster you see. I know people living in New Zealand, renting who still have houses that are under-water in the UK that they bought 10-14 years ago and will never be able to buy again. Like I said, wouldn't want that to happen to your kids or anyone elses.

Best wishes to you, George and your families. Tell your kids the water goes down the plughole the wrong way here too... But it still goes down the plughole..

Nic

Why are you here and not back in UK, Nic? You can use LTVs and offer your advice there. You can be amongst those that understand you. There are numerous reasons people come to NZ and will continue to do so. You might not understand as you might not appreciate what this country has to offer. I've been all over the World and would never choose to live anywhere else other than Auckland. :-)

You sound a bit worried.
If you are so comfortable, confident of the market and well off why do you even bother engaging with us 'Doom and Gloomsers''.

Goodnight Cheesemaster

Nic.....I like your style. Keep posting..the ppty spruikers need you.

Even though I am of the opinion that the property market is likely to be shifting to a decline, I have serious issues with this "Nic Johnson" character that has shown up on this website in recent weeks.

From my view, his posts suggest strongly that he is a troll. When he gets caught out on his factual errors, he responds with ad hominem attacks. Why he has not been banned from this site... it appears that the site monitors have a very high threshold for banning commentators.

As to swinging a bigger cash account... well, Nic... I'm happy to make a wager with you... kinda like racing for pinks... :)

Nic,

You may have not noticed... I did reply with a pearl of my own wisdom. That pearl is that you are a troll.

As to me being a property spruiker... it is clear that you lack basic comprehension, and you have zero evidence for your rather specious conclusion about my beliefs or my motivations. I have consistently represented a rather negative viewpoint in the past year on the Auckland property market in terms of future capital gains. You are a new poster that makes stuff up, and uses ad hominem attacks whenever anyone questions your "facts".

My local market has been a bit different to Auckland in the last few years (Hawkes Bay). That said, I expect my local market to follow the Auckland market, but with around a 1.5 to 2 year delay. In other words, I'm not bullish on future gains for property here, or in Auckland. I am however bullish on future idiocy from you in the content of your posts on this site.

Yankiwi.

Can we bury the hatchet here.. My motives are purely as a warning to a younger generation who are now being encouraged to fill the void of the specu-debtors, who have conveniently left the party now that the dead horse is no longer worth mounting. It should not be our kids who replace them buying a dead horse over 30 years. Hawkes Bay is less than 12 months away from following suit.

Kind Regards

Nic

Yankiwi back from/on the bus again.. Why don't you start a conversation of your own by posting a pearl of your infinite wisdom for us all to assess and support or not? If you read the thread above you will see that I have offered nothing but sensible comment on the impeding collapse of the housing market as the debt crisis comes home to haunt the overleveraged. Why don't you write a nice counter position yourself,.... And I will decide if it is worthy of a response?

How can a property lose $300k+ in this market Ben Johnson through a period of sustained capital appreciation. I’m with TM2 I think you’re full of it. That is unless the property in question was either leaky, or tied up in some sort of fraud. Please explain.

It never lost value, it was never worth what was originally leant against it. That is the point that I am attempting to make Kane02, albeit I am struggling to get the point across to many.. There are lots of houses out there where individuals have been allowed to borrow (with little check on the assets value) whatever they have wanted. The banks haven't actually cared about the security or price of the asset against which they've loaned, merely that the loan has been written. Otherwise known as lending without foundation.. The liar-loans in Australia are just the tip of the iceberg.

For example, I say my house is worth £2,000,000.. I go to the bank and tell them that, I have the ability to service the mortgage on that so they write the loan. broker takes his commission, I get $2,000,000 to play with. new car, boat and a flat in Auckland...... except its only worth $1,500,000. But they never checked that, just wrote the loan.. and now I've lost my job and have no tenant in the flat, but the banks security is significantly less than they thought it was. I understand why people did it, What I don't understand is why they were allowed to.

The banks do check the value of the property.

Funnily they are not great at doing that... or even good for that matter. Multiple bank valuations have been far of the mark and in general they do not actually value or inspect the property. Some even really on buyer provided valuations (rife with issues). It is even worse than QV valuations which are scary enough. But the percentage distant from the value and the amount gained on interest is a risk, one that was assumed to be safely on their side.

.

Nic Johnson, if you are going to post BS it should at least be semi believable!
Kane according g to Nic Johnson they would’ve lost approx700k in a couple of years at the most!
If the debt was over a million the fact is that the property would’ve been passed in and conditional buyers brought in!
No way the Bank would’ve wanted to chase the borrower for several hundred thousand on the basis that they had no hope of getting it!!!!
I have seen other DGM post other examples that don’t add up, which is what they do to try and justify their private viewpoint!
What “The Man” does is always posts the truth and nothing but the truth!
Gordon if you don’t beleive me the. Take up the challenge that you conveniently never ever mention.
25k to Interest.co. 25k to charity and 25k to the person telling the truth!

THE MAN 2 - read back I never said it sold at the Auction..... It was passed in at $710K after several bids.. it sold much later for $775k to someone who took on a loan with the previous lender Westpac for the full sales price ($775k)

detail is everything Mr Gregan.

there is such a thing as a valuation. on a 100% mortgage it would have to be a massive breakdown in policy for a bank to underwrite without following due process. this just doesn't happen.

Nic Johnson, why would it be unfair of you to give us the address of this property that the mortgagee auction was?????
It will be on public record what the sale price was so I can then check whether you are telling the truth or porkies!!!
If a Bank lent over one million on the property it would tend to suggest that the property would’ve been worth approx.1.5 million, and yet it sold for 775k?
If you are not able to give us the address then we can take it that you have just made it up and we can’t take anything you say with any credibility!!!
I await the address with baited breath!

It does seem an unlikely story. If it was recent there should still be an agents advert online. Doesn't make sense not to post a link. No link, didn't happen!

I have disclosed the original mortgage and the mortgage of the new owner and that is enough in this instance. I don't want to get sued by a new owner. However records for mortgages and the time that they are taken on are available to those that are willing to pay for the information. I would challenge you to give me your current residential address, allow me three days, and I will report back with the size of your current mortgage... I will need address, suburb, postcode and if you were happy to provide a real name that would be helpful to speed the process a day or so (but not essential). I would say that that was a fair compromise about to demonstrate my legitimacy.

Nah we call BS. All credibility lost I'm afraid Nic.

We call BS or you call BS? Are you TTP, Ecobird, Yankiwi et al, (that means the rest of you spruikers) all sat in a Barfoot and Thompson office together trying to come up with a response?

Its a debt crisis Zach, that's why so many houses aren't selling, when you look at the debts, they can't sell? All they can do is keep servicing the debt... and that is going to get really hard soon so some will have to sell and the banks will take a haircut.

I'm just not seeing it at the moment and believe me I'm looking. I study the sales around me and the sales in the auction results pages. I attend many auctions. I look up their RVs and check their sales records, looking for signs of distressed sales. I see adverts that say the vendors are desperate for the cash yet they still get a price in the high twenties above 2014 RV at very worst. I see the previous sales figures and they still make a pretty good profit.

This is why we need to see the actual data not just some story you choose to tell us. If you were truly a high worth individual you would understand this.

I am sure that you are a very good agent Zachary Smith and being positive is a good thing in agency, talking it up works like a dream in a rising market and is great until the world changes. Then you need to talk sense to your vendors and realise that there are some you can help and some that you can't.. Knowing what their debt levels are will save you a load of wasted time doing open homes on houses that you know you are never going to sell now... I know agents who spent months marketing houses only to realise that there was no fee left for them, because the seller sold, the bank took a haircut and the agent was not a secured creditor so got zilch. Stop wasting time on here, start talking to your vendors and get to know whether they can sell or not... There will be lots that can't unless the banks guarantee your fee.

The property Nic is referring to see sold in the Wellington region. I can confirm his numbers including passed in figure at auction.

Still no data...smh.

I believe owner paid 1.22 million cash in early 2008. Then must have borrowed against the property in 2016. Passed in at auction for 710K. Then top bidder did not meet expectations in post auction negotiations. Then agent effectively did a mini tender, with bank eventually biting the bullet and accepting 775K.

All sounds a bit dodgy no? Not a particularly useful example of a typical scenario presaging the great housing apocalypse.

Plenty of cognitive dissonance around here, ey Nic

Fritz... Shergar was great for while, everyone made money backing him, then he disappeared and may have become sausage meat? Who knows, but tell you what once the butcher had made his money out of Shergar, no one else did.

Fritz Thanks for keeping me alive, I have been struggling with the 'cognitive dissonance' but do feel that as a man with kids, I have a moral responsibility to help the young. Those that have backed Shergar already, I can't help.... but there's big losses ahead for anyone else backing a dead horse..

Nic Johnson or whoever you are, tells porkies!!!
You can’t be sued by anyone for disclosing an address for a property that sold at a mortgagee auction as you have not breached any privacy issues at all.
It will be public knowledge as the sales price will be disclosed on records.
Nic Johnson, if I gave you all the details that you requested you would not be able to find out what amount of money is owing secured by our residential property or our many rentals, under the system that is applied today.
Our Bank is hardly going to tell you our total debt either.
You need to change your name as your credibility has gone.

Contributors surely should not be able to post BS!
Quit before you dig yourself a bigger hole!

I understand that if you like the people you would not divulge a difference that large around their loan openly, but many on this site are closer to the real estate market where profit can lie in the sharing of personal information and exact sales data. Much like the ogling of private lives by checking their drawers in an open home. I would also go so far as to vary the numbers a little off the exact mark so this data is harder to search.

Dear George Gregan ( THE MAN #2) I put a # in because there is obviously a 'THE MAN #1 somewhere)

Please see my previous response to Kane02. Read it twice and hopefully it'll make sense the third time.

Dear George

Please see my previous response to Kane02. Read it twice and hopefully it'll make sense the third time.

This Nic Johnson guy is a bullshitter. Why would you be sued ? You're not using your real name here. All sales are public record, so what's the hesitation? Why don't you just admit that you lied and then leave this site once and for all. This is a discussion site where users normally come up with facts not making stories up. you clearly have no idea, just know from the fact that you think you'll get sued for disclosing a price. What about all your garbage about prices dropping by 50%, you not worried about being sued for rubbish. You should go back to the UK, your country needs you.

I don't see one fact in that comment, and to be fair there are a lot of comments on this site I don't see facts, especially from the guys who want property prices to remain high.

The logic of a mortgagee sale makes sense to me. Property prices in the last 8 years have rocketed up by nearly double. So if a house was worth 700K 8 years ago, it could be valued at 1.4 in recent years. But the 1.4 is a reflection of a lot of money from overseas and not local buyers, with local wages. Now that China has stopped the flow of cash, and the government are implementing changes, margins of banks are becoming mightily thin, whilst banks are also tightening lending, plus all the other measures, house prices may move back towards what the local market is able to afford.

So the mortgagee sale is just a reflection of long term house price average, for NZ incomes. Its not a wild price, based on the recent highs of NZ property market.

Swapacrate, get real!
You beleive his BS?

Well it makes sense and its a mortgagee sale, it makes a lot more sense then a lot of stuff I see on here not naming names.

Especially the one where people think house prices that are currently 8-12 times income will likely get higher. Makes no logical sense, where as Nic's comment makes sense, based on how out of whack prices have become to local wages and current lending by banks.

Swapacrate, doesn’t mean that he should be able to post BS does it?
I have a extremely good knowledge of Banking, real estate, and conveyancing and there is no way that what he stated is true, and you know it too!

Why do I know it. What does he have to gain? Its just a post along with other post, its up to us to agree or disagree, based on what we think are the fundamentals of the market and how we perceive the market to be, and what we think the future holds.

It makes logical sense you and chess master disagree based on your leanings. For me showing whether the mortgagee is real or not gets added to a lot of anecdotal stuff we see. All this anecdotal stuff helps me build a picture. It could just be plain wrong but if I see house prices in places like St Heliers going lower then I expected, then it all starts making sense.

You guys need more proof to disprove your leanings, I get that. But its just 1 piece of evidence right or wrong, if more follow then it will make this evidence correct if not its just an outlier.

But I think the markets out of whack so it makes sense to me.

You gotta admit though there is no reason to withhold the property address as it's gone through an auction process which is made public. Interest.co site shares weekly auction results

Dude, this Nic Johnson guy is obviously a troll. Everyone knows all auction results are public knowledge instead of being sued for disclosing it lol.

Borrowers details however are not so much open data though. Even the owners on the rates records can be hidden behind trusts and companies, (which thankfully are easier to search as well in NZ but can have as much or as little named borrowers linked with them). But given the sales values, the owners details and the property you cannot necessarily pick out the borrower and the amount they borrowed from the bank without access to private data. Nic has provided one item of private data, but holds off providing the other as it would unfairly disclose what can be seen negatively as oversharing someone else's private business in public.

Good point pacifica. I also think, if true, that this case is not an ordinary or typical one and there have been some things going on around valuations that are not quite right. The main reason I wanted to analyze the property was to see what its RV was and what it sold for in the past and to compare those figures. Also building materials, pylons, etc. Historic sales figures are very telling.

haha when was the last time you got a "fact" from TTP..... never

The reserve bank, does not care about the property market.

They care about inflation, and financial stability

LVR to stay, OCR basically will just track slightly below the Feds cash rate.

And they’ll print money, a lot of it, to offset any falls property prices will have on inflation. And they’ll keep doing that, till it’s over

Your logic doesn't make any sense

Which part would you like me to clarify?

Maybe we could try beat Zimbabwe’s peak annual inflation rate of 11.2 million percent.

Now they have employment to also consider, however the higher priority goal should be price stability targets.

https://www.rbnz.govt.nz/news/2018/03/new-pta-requires-reserve-bank-to-c...

Real Estate companies also put the fear into sellers that they must sell there property at a loss. The truth is Real Estate companies are struggling to survive and need your money, so they dont care what the sellers financial situation is. It is true that it is a buyers market today. But people are still buying at the sellers price. Dont listen to Real Estate companies. They lie for the sake of there commission at the sellers cost.

Real Estate companies also put the fear into sellers that they must sell there property at a loss. The truth is Real Estate companies are struggling to survive and need your money, so they dont care what the sellers financial situation is. It is true that it is a buyers market today. But people are still buying at the sellers price. Dont listen to Real Estate companies. They lie for the sake of there commission at the sellers cost.

Real Estate companies also put the fear into sellers that they must sell there property at a loss. The truth is Real Estate companies are struggling to survive and need your money, so they dont care what the sellers financial situation is. It is true that it is a buyers market today. But people are still buying at the sellers price. Dont listen to Real Estate companies. They lie for the sake of there commission at the sellers cost.

MiniCat, where on earth did that come from?
No agent worth their commission is going to tell the vendor that they must sell at a loss!
If they did they will not have any listings.
We seem to have some DOom Merchants making up BS tonight for some reason!

Real Estate companies are charging a commission even if the house doesn’t sell. It’s calculated as a percentage of the latest RV.

'No agent worth their commission will not tell their vendor the reality and cause them a greater loss' - if they do they should be sued if there are greater losses incurred through them not telling the truth.. There lies the problem, most agents have no idea what happens when the credit tap turns off.... good luck THE MAN....2

I must congratulate you Nic Johnson.

I don't know whether this $775k mortagee sale exists or not, nor do I care, but I applaud you for the entertainment value you've provided by whipping up the crowd. Some people get really riled when you try to slaughter their sacred cow don't they?

Have a great evening,

Pragmatist, so you congratulate someone that comes on and tells,porkies just to rile people up?
Other words just a stirring troll then?
Nic Johnson has been shown up to not tell the truth or he would disclose the address or link!
He looks like he thinks he is this messiah who can preach to first home buyers to not buy!
Where was he 3 years ago telling the first home buyers to buy their first home?

If he is trolling, (and i'm not saying he is), then at least he's done a great job of it, unlike your boring predictable natterings.

Sadly 3 years ago I was still cleaning up the wreckage from the Northern Rock, HBOS and RBS debacle... Its only recently that I've come back and discovered that it just carried on here so there is another train wreck to deal with here too. Thanks THE MAN 2... I was hoping to retire!

Good Lord – what a carry on – much froth – just hope I’m around to observe how this all ends.

Been around long enough to see a fair number of booms and busts – and for better or worse participated in a few of them.

Never really seen a bust nationally in NZ residential property – some slowdowns, some 10 to 20 % when push came to shove – but no real wipe-out.

But then again – never really seen the type of mania that we’ve had over the last few years.

Does it go out with a bang, a whimper or simply slink off in an inflation addressed slumber?

I’m picking a slumber. I’ve been through 2 slow periods in the past late 90’s and 2008 more than likely it’s shaping up this way again. If you can afford central Auckland you will never lose.

“If you can afford central Auckland you will never lose.”

“Never” is bold but I get your drift – it would have to be something of a cataclysmic event to spark a gut wrenching decline in that catchment.

It’s the outer stuff - $500,000 plus for a 1 bedroom apartment in Albany and no car park – really?

$950,000 plus for a 3 bedroom unkempt Lockwood in the East Coast Bays – so you can send your kid to Westlake – really?

But who knows – in 10 years’ time these could well look like bargains – that’s historically how it’s worked.

Hey don' knock the Lockwoods. Super safe houses in the event of an earthquake.

Are we talking investments?

Because central Auckland looks like the bloody third world, if I had that kind of money lying around a central Auckland property would be the absolute last thing I'd spend it on.

So Westpac is predicting zero growth in pricing for 2018 and given the banks are normally cheerleaders it could be much worse by the end of the year! Which is probably more reason to keep the LVRs as they are.

#partyisover

We know that Nic is not of sound mind due to his prediction of house prices dropping by 50%. This is like a magic figure for Doomsters.

Look, fundamentally house prices are held up by rent yields. Think about it, a house that's worth 650k earning $500 a week rent is going to be an amazing buy at 325k. A FHB will buy it for 500k as it is cheaper than rent at that price.

Rest assured dear readers I will be linking to a house sale that reveals a house being sold well below the market value when I see one. I am looking for this beast and I encourage other commenters to do the same.

Cant be much fairer than that.

These wibber-gibber comments about imminent price collapse are like medieval hysteria during the plague years. It must be fulfilling some weird psychological need or something.

Drops of that level may just be cognitive dissonance at the rate of rises in the past few years or just really, really hopeful thinking, like praying Santa will take you away from abusive parents, (and yes I stand by that analogy for the culture shock realisations of the recent housing market).

Perhaps it is you who is "not of sound mind" simply because it doesn't fit your narrative. In Nic's original post he stated that this is a mortgagee sale. Westpac are only obliged to get the best price on the day - that is why they use auctions. The balance of the debt is still the responsibility of the original owner. Mortgagee sales are generally at a discount due to issues of possession and the buyer being unable to access the property for inspection.

Robot, it is a sad indictment when the DGMs have to try and back up Nic Johnson BS!
He now says it didn’t sell at Auctio but passed in at 710k and sold afterwards for 775k
Yes the Bank will sell for what they can get but they will want the amount of the debt owing cos they wont want to be down the gurgled by several thousand k.
He also waffled about the 2 million pound home the Bank would give him 2 million to spend. Rubbish I say they have a security margin built in.
He is bitter for some reason and doesn’t understand lending from Banks.

Try to read BadRobot, it is concerning the 50% drop that I refer to being"not of sound mind".

I have noticed you only ever criticize one side in these forums for what you perceive as bad logic or something. You need to take a long look in the mirror and consider your partisan attitudes and how it reflects badly on your image.

It is really very simple. We cannot take statements on face value without data to back them up. Even a BadRobot should understand that. This is not even a partisan position.

Zachary, its unsound to believe a 50% drop will never happen and that Aust banks liar loans won't bite us all in the next downturn. It's high time you tasted some reality and stopped spreading "she'll always be right" attitude. Clowns like you, TTP, DGZ and TM2 will predictably disappear from here when it all turns to mush.

A 50% drop in a low interest rate, low unemployment environment, is extremely unlikely and I gave good reasons why.

Zachary, if you think an Australasian banking crisis is not a real possibility, think again. The price of money means little if the economy is void of confidence, trust and availability of credit. Of course right now a 50% drop is unlikely in a low unemployment environment. The landscape can change very quickly as has happened many times in the past.

Perhaps it's because one side of the in these forums seem to use bad or poor logic more than others. I'm not sure how my image has anything to do with anything on these forums - or is it because I'm continually pointing out logic flaws. You are now saying any claim has to have evidence yet some months ago you dismissed my requests for evidence to back up your claims.

Stop digging a hole. Stop trying to take some sort of moral high ground when you are guilty of the same sins you are accusing me of doing. Somewhere along the line I think you lack internal consistency.

Who said anything about people having to be without bias. This is the real world not some utopia.

If you haven't realised for the most part I am mocking your attempts to sound like some sort of "sage" when your just trying push your own barrow. Trying to scold me just adds to your lack of creditability and my view that you are just arrogant and condescending.

Pushing a barrow and being a sage are not necessarily mutually exclusive. The Chinese say that a philosopher that doesn't practice his own teaching is like a flower without scent.

......so you are as biased as everyone else. Not sure what the quote about the philosopher has to do with the conversation but anyway, I assume practice what you preach. I think that makes an assumption that you believe in something - as I've said before not everyone believes the same thing not everyone thinks the same way.

Not sure what you are going on about BadRobot, it's mind numbing. Don't much care actually but thanks for the compliment above.

Treasury budget release, buried well inside report , says interest rates will go from 2.8% to 4.3%. In the next 2.5 years. what effect do you think that has, at the margin, on FHB and those investors leveraged most?Latter group now has 2 years nil capital gain in Auckland and is coming up for loan renewal. In flattest time for sales.
Add government deflationary impacts of rental policies and LVR is going to be small potatoes I am afraid. All the punters are out buying their SUVs on debt (read, another mortgage). Remind me, apart from logs and dairy, what does NZ produce? Reverse leverage and illiquidity is key. Second downturn in housing "market" is about to commence. What does "market" mean? Prices or sales? Sales in Auckland have fallen every year since 2013. They are currently lower than in 2012! Prices (what people all "value") rest on what RE agent and seller thrash out over 4-6 months whilst buyers sit on their hands. Australian banks equity is 65% in RE asset book. If asset drops 20%?? USA and UK banks are not so exposed. When examining an economy it pays nt to look in past, or make linear assumptions. Tilt is here now.

"Treasury budget release, buried well inside report , says interest rates will go from 2.8% to 4.3%. In the next 2.5 years"

Note that this is government borrowing rates. Longer term mortgage rates are about 1.7- 2.0% above this level currently, so with a 4.3% government bond yield, this would potentially mean mortgage interest rates of 6.3%. Not sure how equipped many businesses and households have sufficient head room in their budgets for an interest rate at this level.

The banks have moved from having a heavier emphasis on asset based lending criteria to a more income based lending criteria in the last 2-3 years, which has resulted in lower borrowing limits, so a rise in interest rates may have an even larger impact.

If rates went up by 2% there would be widespread distress in the residential market. Lots of people are barely covering themselves as it is. Although to honest I think the reduction in interest only lending is just as big a problem

10 yr NZ govt bond yield - https://www.investing.com/rates-bonds/new-zealand-10-years-bond-yield

Interesting to note that in the last week, the yield jumped from 2.87% to 3.015% currently ...