[Rabbit]

http://www.aireview.com/index.php?act=view&catid=2&id=3524

A question of timing?

[G&K]

Think we'll keep on renting for the time being then... :-(

[Rabbit]

Look at it another way, let's say a 10% drop in property prices and a 10% decline in the NZ Dollar, that could be a 20% gain, worth waiting for? :)

[G&K]

Glass half full again... ! :yes

[David with a dream]

Please pass this info on to NZ estate agents :laugh ........David

[bob_the_engineer]

Well here’s my take on the housing market in NZ (for what it’s worth)

The interest rates here are special (highest in the developed world?), and I think that’s causing some unusual problems.

Troubling points in the rental market, two things seem to be happening here. First people are beginning to stop buying “buy to let” property because of the cost of loans mixed with the cost of houses.
The other is that several Kiwis go off to work in other countries for a few years and hand their house over to an agent to let it for them. This bit I didn’t expect, the agents seem quite happy to let the rents tick along without much of an increase for several years (what ever happened to the greedy agent?).

This depresses the rental market and stops “buy to lets” but and this is a big but, as owners (not agents) reassess the value of their house, they put the rent up, still keeping it cheaper than a home loan, but high enough to make it difficult (but not impossible) for “buy to lets”.

In a nutshell, rentals are currently lagging their true value and a shortage of rentals is on the horizon. We all know what happens to rents then.

This will inevitably impact on the cost of houses too. The way I see it is the housing market hasn’t peaked yet, it will carry on climbing while interest rates are high (because new rentals are becoming scarcer).

Eventually rates will drop, the housing market will climb because of it (suddenly your $ buys you a lot more), rentals will become better, cheaper because of the lower rates too, and only then (many many months after a decrease in interest rates) will the housing market begin to level out.

I think the interest rates are about to drop, I think this because the banks are now advertising lower rates for long period loans (much lower than I could get a couple of months ago) and I think one of them is even offering you a holiday if you go for it before April!

If you continue to rent, I think you will end up paying even more for a house in the next 3 years.

Well if you read all through my ramblings, I guess you know I made the entire thing up, but it’s just my thoughts based on what I’ve seen.

Bob :nice1

[Rabbit]

Looks like heads or tails at the moment?

http://www.landlords.co.nz/survey-results-8.html

http://www.propertytalk.co.nz/

I just remember, back in the UK, when we thought prices could not go any higher, and since then they have doubled.

[real_sunfire]

I think Bob's take is an accurate one apart from one very important thing. The only way that housing market prices can continue rising is by sucking in first time buyers into the bottom end of the market.

In the UK people have been grabbing houses and flats as buy-to-lets limiting the availability of housing for first time buyers. However because of low interest rates lenders have been able to offer mortgages on greater multiple s of income or on "affordability". When I brought my house 3 years ago I got a mortgage on 5 times my income instead of 3-4 times otherwise I wouldn't have been able to afford a house.

In the NZ we have a slight different situation. Interest rates are much higher making affordability much more difficult for first time buyers. I would be interested to see if anyone has any figures on the proportion of first time buyers to all buyers in the NZ markets, I suspect the percentage has dropped, as has the number of buy to let buyers.

Also alot of people are nearing the end of their fixed term mortgages which which were arranged when interest rates were lower. I think alot of Kiwis are in for a shock when they come to re-mortgage. Finally the Governer of the NZ Reserve Bank has made it clear he will use interest rates to cool the housing market if it continues growing at an unsubstainable rate.

Rdgs.,
Nick.

[Rabbit]

I think Australia is a big dimension in the NZ space at the moment.

The NZ economy is heavily dependent on inflows of new migrants to bring in capital and stimulate demand.

http://www.pacificislands.cc/pina/pinadefault2.php?urlpinaid=20447
http://www.stuff.co.nz/stuff/0,2106,3580102a11,00.html

There probably needs to be some big structural changes within NZ to stem a potential outflow that would be detrimental to the economy.

Personaly, I see this as a good time to go there, and also perhaps better times ahead for those allready there.

A lower Dollar will stimulate demand for exports and make property cheaper to new immigrant inflows.

Potential future lower taxes to align with Australia - another incentive.

Given it's geographical location and small critical mass, NZ cannot afford to
be uncompetitive.

With very low unemployment in the modern OECD countries and the Australian dimension, NZ will have to work alot harder to attract people.

They will need to provide new outlets to enable people to save for their old age - other than property.

They can sell scenery - but they also have to offer a reasonable material standard of living, and offer more disposable income to enjoy it.

Salary multiples versus property costs are untenable at the moment, for many at the lower end of the scale - just like many other countries.

At the same time they can not increase interest rates further to stem inflation (credibility, impact on local demand).

They say they will not cut rates until the economy is demonstrating real difficulty, the problem here is by then the momentum and weight of the problems will be significant and will be too late. So I expect a dip before they have intervened to turn the corner.

Whilst the economic news, might be depressing at the moment, I think this is the right time to go. Rent for six months then do the business.

NZ needs to adapt to survive and I think it will do so - they are just starting to wake up after a long five year party.

The NZ economy is between a rock and a hard place and they need to do something radical to achieve (further) future growth. At the same time lets be positive - a very high level of employment.

Overstated? - not sure - I am looking in from the outside - dont really know - what do the people on the ground think?

Please note: just an un-educated opinion, we all have our own opinions, and as they say take professional advice or do your own research. Most of my investments turn out to be a disaster so do not listen to, or be influenced by anything I say.

[Avalon]

Given it's geographical location and small critical mass, NZ cannot afford to
be uncompetitive.


If only NZ realised this :nice1

(in fact ditto for most of what you just said imho)