Auckland slowing down

[Wayne]

So that means house prices can increase by 25% to reach the same level of affordability!!!

The same level of Unaffordability!!!!
Actually you show a 20% drop (1% in 5%)

[PTILoveYou]

The same level of Unaffordability!!!!
Actually you show a 20% drop (1% in 5%)

Yeah I didn't get my calculator out so I knew my number wasn't correct.

But still, 20% increase in price in the next two years just to match how unaffordable auckland properties are today, amazing capital gains yet to come!

[Wayne]

Yeah I didn't get my calculator out so I knew my number wasn't correct.

But still, 20% increase in price in the next two years just to match how unaffordable auckland properties are today, amazing capital gains yet to come!

By the same token then - following the logic - if the interest rate goes back to say 6% house prices will nearly halve?
If you don't think so what's wrong with the logic (you seem to imply there is a direct correlation between interest rates and prices)?

[propertybuyingNZ]

so, now we are "doomed", the end is here, etc, etc....
how are you going to adjust your investment strategy moving forward?

[eri]

auckland apartments currently getting record results at auction

oakwood hall units were selling for about $125,000, 2008 - 2011

Learning Quarter
Oakwood Hall, 81 Wakefield St, unit 4B:
Features: 29m² studio, deck
Outgoings: rates $953/year including gst; body corp levy $3137/year
Income assessment: $380/week
Outcome: sold for $250,000
Agent: Krister Samuel

[PTILoveYou]

By the same token then - following the logic - if the interest rate goes back to say 6% house prices will nearly halve?
If you don't think so what's wrong with the logic (you seem to imply there is a direct correlation between interest rates and prices)?

Well for home owners that doesn't work both ways.

If interest rate drops, means buying power increases, people will buy when serviceability relaxes.

But that may not necessarily mean these buyers will sell when interest rates increase.

Home owners will hang onto their roof over their head with their life.

[Boom]

Low interest rates favor investors over fhbs. Higher interest rates give incentive to fhb to save and buy.

The less fhb's that can afford = more renters = higher rents = less money to save for a deposit with crap interest rates!

Problem now though for Auckland market will be that old trend won't matter with house prices inflated so high that those who own are not that affected by interest rates when they have so much equity to borrow against to keep buying and inflating.

Good luck to Auckland fhb's who are starting from scratch without mummy or daddy to hold their hand - working till they die to pay off a shitty three bedroom home in a city with 3rd world transport.

Auckland will be nz's most livable unlivable city.

[Anthonyacat]

By the same token then - following the logic - if the interest rate goes back to say 6% house prices will nearly halve?
If you don't think so what's wrong with the logic (you seem to imply there is a direct correlation between interest rates and prices)?

If interest rates increase significantly any time soon, we'll see a big correction. People are buying houses right now where their income is stretched to cover the mortgage. If rates rise before their principal is paid down, there will be mortgagee sales. Several of those in a row when cheap finance isn't flowing everywhere will bring the prices back down.

I read an article about prices in Sydney having increased stupidly over the last four years, like Auckland's. Basically if you look at the mortgage repayments on a 30-year P&I loan, they're very similar now to how they were before the prices increased. Owners are simply using the excess capacity in their budgets created by lower interest rates to bump prices up. Naturally if rates increase, budgets collapse, and mortgagee sales occur.

Monthly payment on a $500k loan at 4% is less than $2,400. At 6% it's almost $3,000, and at 7.5% it's $3,500. Where is that extra $1k per month going to come from?

[Damap]

If rates rise before their principal is paid down, there will be mortgagee sales. Several of those in a row

I love it when you talk Busty Ant

[Damap]

If rates rise before their principal is paid down, there will be mortgagee sales. Several of those in a row

I love it when you talk Busty Ant

But rate rises will only affect those who aren't fixed so the impact could be very muted. People on IO as I was are the ones who can get hammered. No debt reduction the banks may call the loans as the LVR's will go through the roof.

[marklowes]

I love it when you talk Busty Ant

But rate rises will only affect those who aren't fixed so the impact could be very muted. People on IO as I was are the ones who can get hammered. No debt reduction the banks may call the loans as the LVR's will go through the roof.

My latest bank experience involved them using 7.5% rate to gauge serviceability... and taking about 25% off all my rental income.. both assumptions particularly the discount applied to rental income overly conservative in my opinion. But if they're being tested at 7.5% then rates can rise to this level before you can expect to see the mortgagees start flowing... and with 5.4% fixed for 5 years in that time most people would cope with 8% after 5 years principle pay down... in any case it'll be a long time before we need to worry about this.

[wilditr]

lJ Hooker held what they called a big event selling 50 odd properties in a weekend.
Would be good to know how many sold under the hammer l, I have heard its as low as 10 and a number negotiated to a sale afterwards.
Certainly noticed less people at open homes.

[Boom]

I doubt Barfoot and Thompson will be saying anything other than the market is still pumping.

A lot of their staff have probably be involved in the speculative drive and its in their interests to keep pumping out an image that scares people who may be FOMO. eg.

"Barfoot and Thompson managing director Peter Thompson says he understands the three-bedroom home was sold at the weekend for a negotiated price of $628,000.That makes it the fourth time the property - which has a CV of $340,000 and was listed by his company just last week - has changed hands since late May.

Mr Thompson said the sale had yet to go through his company's system, but he confirmed that the vendor was a member of its sales force.

That was "a hundred per cent disclosed" to the latest buyer, he assured the Herald this afternoon. "My understanding is that the person who sold it is a member of our property staff," he said."

[BlueSky]

Has property market finally peaked?

http://m.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=11517311

[Bluekiwi]

Has property market finally peaked?

http://m.nzherald.co.nz/business/new...ectid=11517311

I think we have seen the peak, but remember the peak was a short 5 month period of madness.
That the last 8 weeks was a madness of people getting in before 1/10 and 1/11.
And there is a natural drop off, a market fluctuation that you would expect.
Much the same as when LAQC's went, when the election last year stalled the market.

The IRD and bank rules for oversease investors, will take some adjustment.
I am thinking from now to Dec / Jan.

But the market fundamentals of high immigration and low interest rates, and weak new constuction of supply, are still there.
And I think the market will recover from Feb through 2016, but more muddling along rather than anything else.