Financial Armageddon!!

[Perry]

An over-analysis. It's not risk achievement deferment or the like.
It's the gloom-and-doom, sky-is-falling-mongering that needs some counter-perspective.

[McDuck]

An over-analysis. It's not risk achievement deferment or the like.
It's the gloom-and-doom, sky-is-falling-mongering that needs some counter-perspective.

I haven't heard much doom and gloom at all.
Must be the social circles you move in.

Everyday people have just become disinterested in property as a way to make a quick buck, because they can't anymore.
(Yea, thanks guys, for ruining the market for the real enthusiasts).

Even though the Hoi polloi (kidding) don't fully understand high exposure to international economic conditions, they have some sort of communal consensus about the latest "thing" to chase.

And that would vary with age.

That "mood" you are talking about is one of the deep primal ways it's communicated.

A many layered beast is the social mind.

* note: Don't forget that each culture has it's own social drivers. Belief and value wise, so importing people will give you interesting cross ripples of actions. (Both short and long term).

* It's humorous to note that without negative emotions like dissatisfaction, nothing would get done.

**This has been a McDuck public announcement, trying to help you make sense of the big confusing world you find yourself adrift in.(Ha)**

[flyernzl]

And that sucks right. What if the Government was giving you grants and bigger players to help you through scenarios? I bet that would have helped.

Not much.
The main problem that small business has in NZ is the bureaucracy.
When regulations and laws are introduced, there is the assumption that all businesses have H&R departments and dedicated safety teams to implement and monitor them.
If there is any consultation at all, it takes place between career public servants and executives from the largest private sector companies.
Small business is left completely out of the loop.

How is a two or three person business supposed to cope with all the employment legislation or the latest Heath and Safety requirements over the kitchen table at night after physically working a 10 hour day?

[Perry]

New Zealand at risk of a house price crash: Bloomberg

How's that prediction looking, a couple of months later?

[OnTheMove]

How's that prediction looking, a couple of months later?

Ever the Optimist Perry :-)

I think people confuse getting lucky with 1 property boom and then NZ being bailed out of a 30% crash by the Nats and then getting lucky with another property boom as being intelligent. It doesnt take any smarts to make money in a growing economy.

The hard part is making money on buy reno sells in such an over inflated market that its simply not viable imo and anybody making money doing so in the current Auck $800k+ market, hats off to you.

Picking when the crash would occur is the opposite, its impossible imo. They are right. But who knows when China will have a recession or the US, but it wont take a big one for lending to be recalled and NZ is 150% personal lending to our butter and lamb GDP. ALL our graphs are ridiculous compared to settled economies like Germany. Our most alarming is affordability, price to income. Its near double the next highest.

So she wants Kiwis buying homes, sorry Jacinda, John screwed the Kiwi dream. Only way kiwis will afford NZ homes now is a major correction in the market, I think if we have lost 10% already, another 20% would be enough to get our affordability closer to realistic, will still be the worst in the world but a lot better than currently. Her silly grants etc are going to do nothing.

Anyway, back to your question to him about that bloomberg report. World economics is worse crystal balling than our property market haha. So Im just waiting rather than questioning if it will happen. It could be 2 years. Who knows......

Either way the bubble has patches all over it from it seeping, i think it will be a slow sag rather than a pop. And would it be so bad if it did? Kiwis owning kiwi homes again, 8%PA, lifes back to normal pre 2001 :-)

[Bluekiwi]

Auckland prices came down around 20% so that was a crash in my eyes.
From August 2016 to August 2019.
Crash is over, get over it, prices are coming back,...….. very slowly.
Mostly due to the banks having no money to lend as they are ausie banks with limited NZ funding and so ramped up the criteria significantly.
DTI's by stealth to serve their dark masters abroad.
Still you cant complain at what credit you can get, being at such low rates.

This has flattened the market, at the same time as Chinese couldn't buy as couldn't get funds, and then only residents could buy.
It was a perfect storm and market only crashed 20% in real terms, as in real life prices not BS stats.
Not many markets could survive such a battering so well.

This however caused a slow but huge flood of buyers to the regions as the big investors with lots of houses and even low LVR's were DTI'd out of the market.
Smaller investors wanting 2nd houses went to the regions picking up HN, Rotorua then further afield at values in the 2's, 3's, 4's 5's.
Larger investors also forced to go regional if they had the funds in R/C.

RB and Banks have "by accident" spread the Auckland housing boom nation wide, and Phil in Featherston cant buy his own home now, as prices went from 250k to 450k in about 3 years.

Its a very slow crawl back from that perfect storm hammering of the market from late 2016 and it will take time.
If it were not for the failure of CGT and low interest rates at the same time, you would indeed of had your crash.

But, as long as you are holding a long term rental, that you will hand on to your children.
It matters not what your house is valued at.

[OnTheMove]

But, as long as you are holding a long term rental, that you will hand on to your children.
It matters not what your house is valued at.

I agree with your sentiment, just not how it will work out for most. This is the kiwi dream, but to do so when the market made it impossible for some is not just. Getting lucky is not building wealth by adding value to the world or even the country, all its done is made it impossible for some to leave their kids a long term investment.

Also the problem is the Millenials cannot afford the housing. So whilst it seems nice for some baby bomers to hand off to their children, its blocking a generation from owning Kiwi homes.

I dont think the Auckland down turn was a crash, it was a stopper and as you said its been up and down since, its simply a plateua. I dont think it will continue on in the same vein as the last 2 insanity booms.

The real problem is that is just Auckland, Housing is still over inflating around the country. Outside showing how unobtainable our property prices are and considering the majority of that price is driven by debt, dont be fooled that we have had a crash, Auckland is just stagnant but the rest of the country is still steaming on, a crash will be when tha line dips 30% across the country. Stable economies and property markets sit around 100 on this scale, that where I envy Germany's consistency and its a sign of their economic strength.



Essentially there is nowhere for the average median household to go to own a home in New Zealand, and that imo is shameful on behalf of both governments who whilst doing the minimal, have generally encouraged the problem.

As this article says, CGT on $1 trillion would have been $300 billion or 700 000 homes. Or fund the next 14 years of Pensions..

But as normal no Party in NZ has the Balls to do the right thing by the majority and baby boomers get to keep the untaxed housing and STILL get paid a F'n pension. That is taking the piss to be fair.

IMO Top had great policies, unfortunately even though Morgan was/is right about Cats, its what got the rest of his Policies ignored.

To solve this problem Assett testing for the pension has too happen, at a fair threshold, ie you own your own $1.5m home, have a few assetts like cars and a boat etc, no problem. Its those with a $4m home, all the toys, $1m index fund or bonds etc, and 5 IPs providing exorbitant income, they should be declined based on assett testing, why the hell would they need a $350 hand out, outside being greedy.

Who is that really rich guy who shows off and and takes the piss that he is getting a pension on top of his insane wealth?

Either Assett test it or remove it all together, those in need of income approach Winz for something like "Retiree help".

That solves a lot of fiscal budget issues.

Next, implement that CGT on everything. I dont care if people dont like it. The rich controlling Government is a blight on what was once a great nation to raise a family. Get that $300b Tax and use it for some thing like, i dunno, "Kiwi homes" lol.

Lastly get these mortgage rates above 12%. That will shake off the investments, in turn it will put a correction in the entire NZ property market not just Auck. Why are we encouraging people to get us in more debt? our 150% personal debt to GDP is already one of the reasons we will remain in a potential housing market crash bubble. Affordability is not resolved by reducing mortgage rates. All it does is reduce lifestyle affordability and increases that scary debt to lamb and baby formula GDP.

Lastly introduce an inhertiance tax in strong econmies like Germany. It works best when only applied to those above threshold, it essentially helps maintain wealth equality.

I know that last one would seem so foreign to most kiwis, but thats our problem and why we are the most inflated property market in the world, we are isolated from the norms of good STABLE economies.

But as said, no Kiwi has the Balls to do whats best for the majority and at the moment the Rich Baby Boomers have the Governments by the balls. They want their cake and eat it to. Its simply greed.

Gareth Morgan not claiming his pension sets a standard for other Baby Boomers in such lucky positions t live by imo. But its obvious human nature greed will prevent the very large majority from doing whats just and fair by the following generations.

Handing it to their kids, what a nice notion. Its not always a fair one though if the parents helped over inflate the market to get what they are leaving for their kids. Thats where inheritance tax works well at lowering the gap between the rich spoilt children with multi million dollar inheritance and the majority of kiwis who will have nothing to leave their children, with no fault of working hard, simply our last 2 decades have left some getting LUCKY and others just surviving pay cheque to pay cheque. The level of arrogance in thinking one has done something smart to become paper wealthy is absurd.

This article is a fairly well thought our reasoning behind our "Armour Plated housing bubble"

https://www.newsroom.co.nz/2019/07/18/686320/our-armour-plated-housing-bubble

[OnTheMove]

Its a very slow crawl back from that perfect storm hammering of the market from late 2016 and it will take time.
If it were not for the failure of CGT and low interest rates at the same time, you would indeed of had your crash.

I agree with that, the problem being Key wanted the market to flourish and encouraged it and then supported it by bailing NZ out in the GfC, then resigns from PM at the perfect time and sells his own house at the height of the market. He does none of the above. I find that not just political to win votes but for personal gain .

We needed a government who would back small business and industry to improve the GDP and a government to employ CGT and raise interest rates to curb the unrealistic or unwarranted rate of growth vs income and GDP. A NZ that just worked hard through the GFC not print money to bail us out would have been far better off for the majority not just the few.

Then Jacinda who only got the PM job thanks tot the Greens, then she doesnt implement their referendum immediately showed me immediatly how weak willed she is and no way she will raise interest rates and increase CGT across gains.

So yes that was one possible way for the bubble to burst without requiring international economies to spark it. Who knows, 2020 we may just get a PM who really understands prices need a correction to be close to median income earners being able to purchase Kiwi homes. But the baby boomers will vote against such a leader, I wish we had controlled this market better from the start. Still allowing a good gain, 8-10% PA, which doubles your investment in a decade. That is a market most can afford. Auck median needs to drop to about $650k imo to be in line with 8-10% from year 2000. That would fix the affordability significantly. But still be twice the affordability index of the 70s. etc.

[Bluekiwi]

Millennials can easily get a house if they wanted to do some hard graft, but most do not.

You have to save hard for a deposit and forgo the fun stuff in life, buy a shit hole on the fringes and fix it up and move up the ladder.

No.
They want to step straight into a nice house in a nice area.

I have seen plenty of example today where young people work their butt off to get a first home.
It is not easy.

You can right now get 400k houses in Papakura with a 10% deposit if you have a job.
They are shitters and you need to fix them up yourself and sell them for 500k and move up.

BTW:
I did my time in Massey, in an ugly cold house with a terrible driveway, working 2 jobs and renovating at the same time.
Lets see how many millennials put their hand up for that.

[OnTheMove]

Millennials can easily get a house if they wanted to do some hard graft, but most do not.

You have to save hard for a deposit and forgo the fun stuff in life, buy a shit hole on the fringes and fix it up and move up the ladder.

I wouldnt say Easy, but yes I agree with the sentiment of what you are saying.

But based on price to income ratios alone, it is 3x harder for people to buy a house now than in 1999.

So we have to be fair when we say its Easy. It was piss easy for baby boomers, whom most are gloating how smart there property technique is when reality is it was just a weak government that gave them such insane gains.

For me and my partner, both on modest 6 figures, its not too hard, but its risky still, lets not ignore international economists, they are right. But as that link I put states, our Bubble has an Iron Guard, but even with a weak government, international economics "COULD" easily pop it and put us back to what would be a fair gain since 2000, somewhere close to $650k in Auck median.

So I do stress it pays to try to get a bargain to risk mitigate the investment.

[Perry]

. . . let's not ignore international economists, they are right.

Bollocks!

No. Let's ignore them. They are economic soothsayers, after the fact. Their record of failed predictions of what was going to happen - and their failure to predict things which did happen - speaks for itself.

[Bluecoat]

Waiting for a bargain may never come. Sounds like 80% of the population, waiting for the prices to come down. Or some missed the gains and now throwing their toys.
Yes the prices are over inflated due to the boom post GFC, and there was a reason, monetary policies , cheap credit , most importantly just look at how many houses we built pre GFC.
So over a period of say 10 years, things will need to adjust, until wage and everything else catches up. it will come in line. it always does.

[OnTheMove]

Bollocks!

No. Let's ignore them. They are economic soothsayers, after the fact. Their record of failed predictions of what was going to happen - and their failure to predict things which did happen - speaks for itself.

Not what I meant Perry. Im saying the facts they are saying are correct, Im not saying their predictions are accurate. Like the link I posted, yes we are very over priced but we have an iron guarded bubble

All Im saying is IF it does happen, we cant say we didnt see that coming.

[OnTheMove]

Waiting for a bargain may never come. Sounds like 80% of the population, waiting for the prices to come down. Or some missed the gains and now throwing their toys.
Yes the prices are over inflated due to the boom post GFC, and there was a reason, monetary policies , cheap credit , most importantly just look at how many houses we built pre GFC.
So over a period of say 10 years, things will need to adjust, until wage and everything else catches up. it will come in line. it always does.

100% Im with exactly what you have stated. I do think its possible Auck median may lose another 10% but it will be a slow bubbling plateau of ups and downs. But wages are another way the government can solve affordability. But their lack of small business support which is where it all starts is just criminal. Health is screwed and Education none of those overly affect housing but, Small Business, Health and Education are the mainstays of a healthy economy.

People are educated so can do wonders at work, Small business can utilise these really educated kiwis to come up with amazing products to improve our GDP, and a proper Health system like Medicare in Aus as a minimum keeps our work force running. None of those have been a focus by Governents for 4 decades.

So no wonder we pump out so many smart people who simply go to Aus because of the lack of Monetary insentive and Health and employment via Small Business in Aus.

[eri]

it's not just nz having these problems

a new nz leader or party can't simply wave a new policy wand and make the effects of globalisation go away without tossing us back to a worse time

globalisation has allowed the efficient to make more cash and live where they like

and the inefficient to blow cash and get stuck where they don't want to be

last century's biggest experiment was socialism/communism

which killed millions and blighted billions

should we try again to grow a massive state to prevent individuals from harming themselves through foolish choices?

certainly we should keep trying to help people look after themselves and their families better

but not in the HUGE crazy steps you suggest

which have failed everywhere they've been tried

but there are still plenty of fiscally and morally bankrupt states still barking up the wrong tree

of let's just pass laws to make others give us the rewards of their work

banks fail when depositors lose trust in them

and countries when heavy handed governments squeeze the workers dry

will be interesting to see what americans want

and how they go about getting it

Elizabeth warren is remarkable. Born into a struggling family in Oklahoma, she worked her way up to become a star law professor at Harvard.
As a single mother in the 1970s, she broke with convention by pursuing a full-time career.
In an era of rule-by-tweet, she is an unashamed policy wonk who is now a front-runner to be the Democratic nominee for president in 2020.
Polls suggest that, in a head-to-head contest, more Americans would vote for her than for Donald Trump.
But as remarkable as Ms Warren’s story is the sheer scope of her ambition to remake American capitalism.
She has an admirably detailed plan to transform a system she believes is corrupt and fails ordinary people

https://www.economist.com/leaders/20...can-capitalism