Interest Rates

[Davo36]

But seriously SB, it's not a good thing to have politically. If you in government and there's a housing crash, you will be out of government pretty quickly. So they will do anything to avoid it, even if they know they're just kind of propping it up, kicking the can down the road.

So they will be putting pressure on the RBNZ not to lift interest rates.

[speights boy]

Davo
Do you honestly believe a rise in OCR of 100 basis points will cause a "housing crash"
What is a "housing crash" in your mind ?

If households have so much debt that they can't absorb that type of rise over 18 months then we have too much debt.

PS: I don't believe it will "crash" the housing market.
Slow down rate of increase in household debt levels.......yes, hopefully.

Wheeler versus Key....my money is on Wheeler.
Key is looking tired.

[Wayne]

We have too much debt.

[drelly]

We have too much debt.

What makes you say that?

[Maccachic]

Most mortgages are the cost of renting anyway - so take away the debt you are still paying the outgoings but very little return.

[Davo36]

Davo
Do you honestly believe a rise in OCR of 100 basis points will cause a "housing crash"
What is a "housing crash" in your mind ?

If households have so much debt that they can't absorb that type of rise over 18 months then we have too much debt.

PS: I don't believe it will "crash" the housing market.
Slow down rate of increase in household debt levels.......yes, hopefully.

Wheeler versus Key....my money is on Wheeler.
Key is looking tired.

Where do you get the 100 basis points from? It could be 500 basis points, the OCR was 8.75% not that long ago right? It could go back there or even higher.

But perhaps interest rates going from say 5% now, to say 8% next year would cause a housing crash.

Now what is a housing crash? Isn't this like asking what is a tree? or What is an orange? Don't you know what a housing crash is?

In the common vernacular surely it means house prices dropping by a large amount in a short time. So your "$500,000" house becomes a "$300,000" house and if you owe $350k on it then you're in the poo and decide you have to sell (or the bank might decide this for you). And if there are many people in this situation, then this is a housing crash. It last happened here in NZ in 1987/1988. It happened in the states in 2007/2008. Remeber that? it was only 5 years ago...

[elguapo]

It last happened here in NZ in 1987/1988. It happened in the states in 2007/2008. Remeber that? it was only 5 years ago...

I don't think 87/88 was anything like as bad for house prices. They might have dipped some, but it wasn't the 20/30/40% falls seen in the US and elsewhere recently. That doesn't mean it can't happen, but if it did it would confirm what we have right now is a bubble.

[Davo36]

I don't think 87/88 was anything like as bad for house prices. They might have dipped some, but it wasn't the 20/30/40% falls seen in the US and elsewhere recently. That doesn't mean it can't happen, but if it did it would confirm what we have right now is a bubble.

You're joking right? It was waaaaay worse. Do some reading mate.

[Davo36]

I don't think 87/88 was anything like as bad for house prices. They might have dipped some, but it wasn't the 20/30/40% falls seen in the US and elsewhere recently. That doesn't mean it can't happen, but if it did it would confirm what we have right now is a bubble.

You're joking right? It was at least as bad as that. Do some reading mate.

This is the thing, everyone forgets so quickly how bad things can be. Ho bad things WERE.

[Bob Kane]

You're joking right? It was at least as bad as that. Do some reading mate.

This is the thing, everyone forgets so quickly how bad things can be. Ho bad things WERE.

I haven't forgotten.
I even checked the cpi calculator.
The was a small dip in NZ housing prices around 1990 - about 1-2% I think.
No big deal.
Big problems for a lot of other businesses though and times were really tough.
But NZ house prices came through the post '87 crash ok.
The number of sales dropped dramatically, I think, which helped stabilise the prices.
I'll give you that some of the frothy, glitzy houses built for the newly-rich, sharemarket whizkids could have dropped in value but the average NZ house was ok.

[elguapo]

You're joking right? It was at least as bad as that. Do some reading mate.

This is the thing, everyone forgets so quickly how bad things can be. Ho bad things WERE.

I know how bad things were from vague memory, it wasn't anything like happened in, say, Ireland 2008/2009. The QV figures for the time show at most a 5% drop in prices starting 91, but prices carried on increasing right up to 1990. Are QV's figures wrong for this period, is there another source?

[speights boy]

Davo,
I'll leave you to your "imploding", "crash", "40% price drops", "500 basis point rise" scenarios.

Personally I don't see that, and think OCR rises will be evidence of some growth and rising confidence.
If we did end up with an OCR of 7.5% there will be a reason for it to be there.
Hopefully will stabilise around 4.5%

I think Wheeler has a handle on things at present.

[Leftette]

...things, except for the exchange rate.

[speights boy]

The exporters I invest in are handling the ROE well.

[McDuck]

The exporters I invest in are handling the ROE well.

Nice , .