A look at the future of NZ property market

[donna]

Hi All,

I wrote a blog post on PropertyBlogs today called 'A future sneak peak at the NZ property market' as a result of receiving Michael Yardney's newsletter.

In short, Michael Yardney's newsletter talked about 'macro prudential controls' and how Aussie are going to bring in one targeted at property investors. While NZ and Britain are also using measures to control the property market both are targeting all buyers - whereas Aussie RBA want to target just investors.

It got me thinking how we may suffer a similar fate in the near future - on NZH this week I read - NZ mortgage lenders are targeting investors to secure more business, as Investors now make up a larger slice of all new loans so lenders are focussed on competing for their business.

Maybe we just need to watch what's going on across the ditch for an insight into what may become a reality here? If the macro prudential control works in Aussie - our RBNZ may see fit to follow suit.

cheers,

Donna

[klauster]

Have been told NZ is a risk country (when comparing fires/floods in OZ, or storms/floods in UK, etc totally ignored) – possibly the focus remains an property prices.

[flyernzl]

If the macro prudential control works in Aussie - our RBNZ may see fit to follow suit.

cheers,

Donna

And if it doesn't work over there, the Green Party will probably still agitate to bring similar restrictions in here - as per the CGT to restrain property prices.

[PTILoveYou]

Usually NZ governments would want to see the effects on Oz before implementing any changes.

[mortgage broker]

I have a feeling that two factors will lead us to a colossal boom:

1. Over the past 6 years central banks in some major economies have been creating money out of thin air
2. Once the non government banks start to feel confident along with their clients they will start the multiplier affect of factoring banking on this freshly printed money

Our central bank is being fairly wise in trying to armour up to control the oncoming tide of inflation, I wonder what kind of assets might experience bubbles in our country due to this new weaponry. We might see the money tide, form pools of price increases in non property assets as well. Maybe even small businesses, farms or even service businesses like mortgage broking firms, website forums.

[Damap]

I'm with you Hamish it is almost impossible to see anything but a boom coming to NZ. It may be unwarranted it may be false but there are simply too many unusual leading indicators to suggest anything else.
Even the USA is recovering in spite of solving none of it's problems. And we don't even have half the problems :-)

[JABlog]

I'm with you Hamish it is almost impossible to see anything but a boom coming to NZ. It may be unwarranted it may be false but there are simply too many unusual leading indicators to suggest anything else.
Even the USA is recovering in spite of solving none of it's problems. And we don't even have half the problems :-)

https://nz.finance.yahoo.com/news/home-prices-headed-triple-dip-124247719.html

[Damap]

Which has what to do with the conversation JABLOG?
we are talking about NZ not USA :-)

The USA has been screwed since 1971. It just took decades to unfold. They will not recover until they get into a real depression, which will eventually come but in the mean time the world grinds on.

[Davo36]

House prices look bubbly to me: http://www.interest.co.nz/property/7...lar-plus-homes

$1.125m for an ex state house in Mt Roskill?

Oh well roll on out to Papakura house prices!

[JABlog]

Damap - I was referring to your comment about US recovering.


Both countries (NZ and OZ) have specific regional issues around house prices, which would often indicate
challenges around housing supply, rather than necessarily being indicative of price bubbles.

Clear guidelines will need to set/given in advance as to what might comprise excessive growth in house prices and by whom and only then should it justify intervention.

[Damap]

Oh I didn't mean USA was actually recovering I meant the stats say they are. I invest there and I think the worst is yet to come. Americans are, in the main, clueless and have no idea how screwed they are economically. Thanks to Nixon :-0

[Davo36]

Good article here on real estate stats/prices: http://properazzi.co.nz/opinion/same...ifferent-story

This graph is interesting:

[donna]

I heard on the news that property investors now make up over 41 percent of all property sales - I thought it was less than that - but stands to reason too given it's the investors that buy a lot of the properties the general population don't want!

I agree our inflated property values (in parts of AKL, CHCH) are to do with lack of supply - rather than a 'bubble'. However there could be pressure put on the RBNZ to follow Aussie and put in a 'macro prudential' control aimed at investors!

cheers,

Donna

[skid]

Its a complicated global economy we live in these days --We could suffer from someone elses ''bubble'' even with the lack of supply.
If Joe lunch box (or joseph excecutive)loses his job,he cant go on paying his mortgage.
People could still be keen to fing a house with the short supply but everything could be notched down 30% etc.
It doesnt make much difference that lots of people want a house..if no one can afford one. etc. etc.

they say that bubbles are not obvious except in hindsight---however some of those articles in the paper are classic signs of one.

Im glad Im not just getting into the market

[Damap]

That info is quite wrong Donna. A company that doesn't seem to actually exist called "corelink" has said that 43% of sales in Christchurch are going to investors.
Given the dubious source who knows if that is even correct :-)