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NZ mortgage giant warns of 'outright house price fall

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  • NZ mortgage giant warns of 'outright house price fall

    Hi all,

    Just looking to buy a second investment property and the above article in today's Herald sort of halts me in my tack.

    ANZ, New Zealand's biggest residential mortgage lender, has warned of an "outright house price fall", sparked by interest rate rises or a global recession and cited Auckland in particular.

    Would appreciate any comments on this.

    Source

    cheers

    Dax
    Last edited by donna; 27-10-2016, 04:55 PM.

  • #2
    Keep using your tacks. If you actually read the article it doesn't match the headline. If " a whole lot of unlikely things" actually happen and a worst case scenario occurs Auckland prices could "tumble".
    It's just nonsense. Bank economists get things right a lot less than they get them wrong. They're just hunting for news. We need a good war.,

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    • #3
      The FED has finally admitted that the US economy is a basket case and has said it will be holding interest rates low for at least the next 2 years. The Dow surged some 300 points on the news - 2 more years of money printing !

      There is already a global recession, the politicians just wont say it out loud.

      Our interest rates will stay low & if the economy doesn't improve will be cut again.

      Another GFC is unlikely to see a surge in interest rates as the two conflicting sides battle it out - FED money printing, while actual money supply to our backs gets more expensive. Rates need to stay low or the system collapses.

      The surge in Auckland property prices is due to demand, too many people, not enough houses & low interest rates.
      While we are likely to see a reduction in the rate of increase, any significant drop is very unlikely.

      As far as buying another property, my pick is that we are reaching a temporary peak, while things stabilise, then they will be off again.
      Food.Gems.ILS

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      • #4
        Don't buy a property you can't afford to hold if you lose your job for 3 months if there's a vacancy and lose your job.
        Free online Property Investment Course from iFindProperty, a residential investment property agency.

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        • #5
          certainly if over-leveraged borrowers lose a few properties to mortgagee auctions

          they won't be able to say they weren't warned
          have you defeated them?
          your demons

          Comment


          • #6
            In the long term, houses will go up. This, I guarantee you.

            Given that, if a property purchase makes sense at its current purchase price, you should buy it. If it doesn't, you shouldn't.

            Nothing could be simpler.
            AAT Accounting Services - Property Specialist - [email protected]
            Fixed price fees and quick knowledgeable service for property investors & traders!

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            • #7
              Originally posted by Bobsyouruncle View Post
              Keep using your tacks. If you actually read the article it doesn't match the headline. If " a whole lot of unlikely things" actually happen and a worst case scenario occurs Auckland prices could "tumble".
              It's just nonsense. Bank economists get things right a lot less than they get them wrong. They're just hunting for news. We need a good war.,
              I think we are reading different articles. This one says something as simple as rising interest rates can trigger it:

              While impossible to pinpoint a date, we need to consider candidates for a turn. We could see an outright fall in house prices courtesy of higher interest rates
              with New Zealand's economic growth surprisingly high, higher interest rates are far more likely to eventuate soon than they were just 6 months ago.

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              • #8
                as orion? said

                buy as many as you can

                keep as many as you can
                have you defeated them?
                your demons

                Comment


                • #9
                  Is there anyone who thinks recession or interest rate rise will not have an effect on prices?

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                  • #10
                    Originally posted by Jerk View Post
                    Is there anyone who thinks recession or interest rate rise will not have an effect on prices?
                    Only in Auckland perhaps, yes.

                    Comment


                    • #11
                      Is there anyone who thinks recession or interest rate rise will not have an effect on prices?
                      Won't affect Auckland much, if at all. The GFC didn't do much to Auckland prices and that was the biggest hit since the depression.

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                      • #12
                        What were Auckland incomes to prices ratio going into the GFC.

                        I'm not disagreeing with you, I don't know where AKL market is going... but your "bad stuff didn't happen last time so next time is ok" logic needs work.
                        Free online Property Investment Course from iFindProperty, a residential investment property agency.

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                        • #13
                          Originally posted by Nick G View Post
                          What were Auckland incomes to prices ratio going into the GFC.

                          I'm not disagreeing with you, I don't know where AKL market is going... but your "bad stuff didn't happen last time so next time is ok" logic needs work.
                          It was the year 2000.
                          Something out of whack started happening about half way through 2000.
                          The GFC only put a little dent in it.
                          I wonder what in 2000 changed?

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                          • #14
                            Originally posted by Bobsyouruncle View Post
                            Won't affect Auckland much, if at all. The GFC didn't do much to Auckland prices and that was the biggest hit since the depression.
                            Well it did bankrupt you Dean, along with hundreds of other investors, and that was only a small 5% drop in the market.
                            Facebook Property Chat Group NZ
                            https://www.facebook.com/groups/340682962758216/

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                            • #15
                              I don't see significant interest rate rises as likely, but if they happened this could have an enormous effect.

                              The primary factor allowing property to skyrocket like it has is interest rates being so low. A $1.2M mortgage at 4% over 30 years costs $5.7k per month. At 7%, you can only support a mortgage of $860k. At 10%, it's only $650k.

                              Put another way, if your $1.2M mortgage goes up from 4% to 7%, you're looking at $8k per month. How many people do you know who have an extra $2.3k lying around each month? A lot of people stretched right now with their mortgage payments. I've heard of home buyers using IO terms in order to afford the mortgage. If rates increase significantly, they simply can't afford to own their current house. And who is going to buy it for what they paid, on a 7% loan?

                              On the other hand, if interest dropped to 2%, you'd be able to service $1.55M of debt, and at 0% it's over $2M. Don't even get me started on negative interest rates like overseas - property could have a long way to go yet!
                              AAT Accounting Services - Property Specialist - [email protected]
                              Fixed price fees and quick knowledgeable service for property investors & traders!

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