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House prices up nearly 20 percent

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  • House prices up nearly 20 percent

    So why are house prices up nearly 20%? Not sure you can blame local investors - in fact far from it however ASB and ANZ have imposed their 30% deposit rule and arguably it will have next to no real impact on house prices.

    There are more FHBs in the market, however, the number of investors buying hasn't changed. However, there's a new type of buyer - the offshore or recently arrived Kiwi.

    It would be interesting to see statistics on how many offshore or cashed-up returning Kiwis are in the market and what their impact is on prices. I suspect it's a lot.

    For example in Kapiti a home with a rateable value of $595K sold for $945K - to a Kiwi living offshore but thinking of coming home sometime in the next couple of years.

    Interestingly this article doesn't mention this type of buyer.

    Click image for larger version  Name:	Screen Shot 2020-11-14 at 11.45.22 AM.png Views:	1 Size:	490.3 KB ID:	721957

    Whereas this article on Good Returns - nails it!

    Hitting local investors with LVR restrictions is not the magic bullet. The Gov't needs to keep its focus on what it can control - i.e. building affordable 'social housing' stock that meets the needs of low wage earners.

    cheers,

    Donna

    Last edited by donna; 14-11-2020, 11:55 AM.
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  • #2
    Some how this seems all familiar...

    Prices rocket in city housing boom

    ...The Bank of New Zealand also reported this week that Auckland house prices are 11.9 per cent higher than a year ago, taking the cost of the average home from $260,000 to $290,000.

    Saturday, November 23rd 2002



    Figures from the Real Estate Institute show the surge is greatest in Auckland City, where the average house now changes hands for $335,000.
    Motorway fright has led to runaway demand for inner-city suburbs.
    Prices are rising at the rate of nearly $500 a day, says real estate company Barfoot and Thompson.
    But the North Shore is showing signs of cooling. Its median house price has dropped $2000 to $298,000 in the past month.

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    • #3
      Originally posted by donna View Post
      Whereas this article on Good Returns - nails it!
      Hitting local investors with LVR restrictions is not the magic bullet. The Gov't needs to keep its focus on what it can control - i.e. building affordable 'social housing' stock that meets the needs of low wage earners.
      I have some doubts about that, given the immense success of KIWIJILT

      As has been said many times hereabouts, reining in councils' empire-building penchant and 'dealing to' the RMA are absolutely some things the gummint can do.

      Comment


      • #4
        Steven Joyce has an opinion piece in the Herald today on just this topic, naming it a bubble. It is paywalled. He touches on building restrictions, land supply and immigration, but then says this -

        "That leaves only one major suspect for the current super high house prices, ultra-low interest rates. These work in two ways with housing. People can afford the repayments on a bigger mortgage so they bid up the sticker price on the house, while others look for any sort of asset yield that's bigger than the derisory amounts available from bank deposits. There is now much more recognition that ultra-low interest rates are driving high asset prices including house prices, but so far much less will to do anything about it."

        He also mentions wrt net immigration "Since April we have had a net gain of only 2500 people. That's down from around 20,000 in a normal year." And also that the Reserve Bank has been instructed by the government to focus on employment (implication not housing) so that is what it is doing.

        Comment


        • #5
          Originally posted by artemis View Post
          Steven Joyce has an opinion piece in the Herald today on just this topic, naming it a bubble. It is paywalled. He touches on building restrictions, land supply and immigration, but then says this -

          "That leaves only one major suspect for the current super high house prices, ultra-low interest rates. These work in two ways with housing. People can afford the repayments on a bigger mortgage so they bid up the sticker price on the house, while others look for any sort of asset yield that's bigger than the derisory amounts available from bank deposits. There is now much more recognition that ultra-low interest rates are driving high asset prices including house prices, but so far much less will to do anything about it."
          Being a politician, every utterance from such people should be weighed and considered very carefully.

          I imagine that interest rates do have an influence, but I also suspect that many kiwis are acutely aware of how fickle such rates can be.

          That allowed, I do not accept "the one major suspect" conclusion. I believe it to be defective. It matters not what the interest rates are if demand exceeds supply.

          The "super high house prices" are most probably the consequence of too many buyers and too little stock. Plain and simple.

          If Dhil Twitford had pulled off the impossible - the 30,000 affordable houses which weren't, nor ever could be - we would probably not be having this discussion.'

          As for the 'derisory yield on bank deposits' why did Joyce bother stating what everyone knows? And what might he have expected from stating it?

          Comment


          • #6
            As a corollary, how many econ-o-mists had predictions which align with the current burgeoning houses prices?

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            • #7
              Originally posted by Perry View Post
              As a corollary, how many econ-o-mists had predictions which align with the current burgeoning houses prices?
              Ha!
              And yet not one was shocked by their terrible failure.
              They just picked up as if nothing happened, to continue using the same faulty tools to "predict " the next future.

              Comment


              • #8
                Originally posted by Perry View Post


                ....The "super high house prices" are most probably the consequence of too many buyers and too little stock. Plain and simple....
                But, wouldn't you remove buyers, if you stopped lending some of them infinite amounts of money?
                Less buyers, less competition, lower prices?

                Comment


                • #9
                  Wonder what will happen to real asset prices with the reserve bank throwing $100B of funny money about...
                  Another disaster from our glorious leaders.
                  The three most harmful addictions are heroin, carbohydrates and a monthly salary - Fred Wilson.

                  Comment


                  • #10
                    Originally posted by PC View Post
                    Wonder what will happen to real asset prices with the reserve bank throwing $100B of funny money about...
                    Another disaster from our glorious leaders.
                    yup.
                    Adding extra money into a system will ALWAYS result in INFLATION.
                    You just have to find what's been inflated.

                    (It's actually a disguised version of the physical law known as" conservation of mass", so "you canna mess with the laws of physics captain").

                    In this case, the catastrophic inflation is occurring in a market ( technically) outside the old CPI measure.
                    The technical system rort is enabled by the inflation only hitting the young.
                    So yes, very unwise on the part of the RESERVE BANK CREW.
                    Last edited by McDuck; 19-11-2020, 06:44 AM.

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                    • #11
                      Grant Robinson says he wants to work with the RBNZ to 'work out how to achieve stability in house prices'. What does this mean? And what could they do to make it happen?

                      I see also in the Stuff article - they can 'now' confirm LVR restrictions are coming back - they'd pulled the link to their announcement earlier but it's now back.

                      Stuff

                      Possible sharp fall in house prices in the medium-term (5 years away?) Who will take any notice of that - given no one can say what's going to happen from one day to the next.

                      The article also says house prices have risen 5% since COVID when economists said they'd drop 20%.

                      The Gov't under pressure to do something more than talk - and this is all they've achieved in over 3 years at the helm. How long do they need to actually do something worthwhile?

                      How about an announcement from Gov't that they have secured developers in a private partnership to build housing that includes 'rent-to-buy' stock, FHB homes, social housing etc around the country?

                      cheers,

                      Donna
                      Last edited by Perry; 25-11-2020, 06:43 PM.
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                      • #12
                        Originally posted by donna View Post
                        Grant Robinson says he wants to work with the RBNZ to 'work out how to achieve stability in house prices'. What does this mean? And what could they do to make it happen?
                        Actually allow the building of more houses. As in, actually do so. Not talk about it.

                        Jees, it's simple supply and demand! Something the socialist comrades can't comprehend.

                        And / or can't do anything realistic about.

                        And perhaps don't even want to?

                        Who knows what goes on in their empty heads?

                        Further, comrade Robertson is just using the RBNZ as a stool pigeon / whipping boy for gummint failures.

                        Comment


                        • #13
                          If the government wanted to bring prices down its pretty simple, free up more land zoned as rural for development . At the moment we are all being hedged in like sardines in a tin and its going to get much worse. In my street they are buying perfectly good houses for 1.3M and bowling them over to replace with 4 new ones each selling for 1.2M - all 4 on a 600 sq metre section, that is each one sits on a 150 sq metres.
                          The coming result is plain to see , overcrowding .
                          Last edited by mrsaneperson; 25-11-2020, 09:40 PM.

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                          • #14
                            That's what the watermelon party aspires to: concrete canyon ghettos well serviced by public transport.

                            Of course, the socio-commie reds don't know that no one else wants that.

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                            • #15
                              Originally posted by Perry View Post
                              That's what the watermelon party aspires to: concrete canyon ghettos well serviced by public transport.

                              Of course, the socio-commie reds don't know that no one else wants that.
                              It sure ain't the Shire.

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