• Login:
Welcome, Register Here
follow PropertyTalk on facebook follow PropertyTalk on twitter Newsletter follow PropertyTalk on LinkedIn follow PropertyTalk on facebook
Page 1 of 3 1 2 3 LastLast
Results 1 to 10 of 24
  1. #1
    Join Date
    Sep 2003
    Location
    High up above and deep down under
    Posts
    10,915

    Default Property price plunge predictions ridiculous, says economist

    Property price plunge predictions ridiculous, says economist

    2:30PM Thursday Jul 30, 2009

    Predictions of property prices falling 20-30pc are wrong, says BNZ's Tony Alexander. Photo / Janna Dixon
    With the housing market seeming to have easily fended off the worst predictions of its fall, at least for now, the doomsayers have come in for some derision.
    In his Weekly Overview commentary out today, BNZ chief economist Tony Alexander - emphasising the views were his own - was generally positive about the prospects for housing.
    The housing market was recovering, although the upturn could not be strong for a while yet if at all this cycle, he said.
    Dwelling sales had jumped and consents were now growing and he expected they would continue to do so for the next two to three years, particularly given New Zealand's housing shortage.
    "And that is one reason we have so strongly argued against the silly forecasts from some wayward people of house prices falling 30-40 per cent in New Zealand," said Alexander.
    "We have a supply-demand imbalance at current prices with insufficient dwellings."
    He goes on to discuss, without naming, three "such wayward pundits", and advises to always ask, when listening to people promising riches or foretelling doom, what might be motivating their position.
    Newspaper headlines are also questioned, with Alexander pointing out that negative sensationalism sells.
    "It is hard-wired into us to pay more attention to things which may be bad for us than things which may be good."
    Alexander is also scathing about measures of housing affordability.
    "Keep in mind that they give zero insight into where house prices are going and are only really useful for voyeuristic commentary on the pain those on lower incomes might be experiencing to try to get into the housing market," he said.
    - NZPA
    http://www.nzherald.co.nz/business/n...ectid=10587627
    "There's one way to find out if a man is honest-ask him. If he says 'yes,' you know he is a crook." Groucho Marx

  2. #2
    Join Date
    Dec 2007
    Location
    Vienna, Austria
    Posts
    2,663

    Default

    I read Tony Alexander's overview..... the one thing that really made me laugh was using Grisham a charector in CSI las vegas as a quotable authority
    The mission of any business enterprise should include the aim to develop economic conditions rather than simply react to them.

  3. #3
    Join Date
    Feb 2009
    Posts
    159

    Default

    "We have a supply-demand imbalance at current prices with insufficient dwellings."

    And there will be many people out there who will actually buy into this slop.

  4. #4
    Join Date
    Apr 2008
    Location
    Christchurch, New Zealand
    Posts
    1,125

    Default

    "BNZ chief economist" - say no more!

  5. #5
    Join Date
    Sep 2004
    Location
    Hastings
    Posts
    15,487

    Default

    Professor Paul Ormerod, in his book:
    The Death of Economics
    described economics as an empty box
    and economists as soothsayers - after the fact.
    Want a great looking concrete swimming pool in Hawke's Bay? Designer Pools will do the job for you!

  6. #6
    Join Date
    Oct 2003
    Posts
    3,578

    Default

    Quote Originally Posted by tanmedia1 View Post
    "We have a supply-demand imbalance at current prices with insufficient dwellings."

    And there will be many people out there who will actually buy into this slop.
    I think he said somewhere else that that referred to auckland only. His reassoning is that while properties are 'overpriced' based on asome measures, the demand exceeds supply which will stop any further fall. Replacement cost is also higher than current cost so you cant just build to increase supply as they will cost more than current stock.

    Whether prices will increase will remain to be seen but I think this will put a floor on the market (in auckland at least).

  7. #7
    Join Date
    May 2006
    Location
    Mordor
    Posts
    1,048

    Default

    Tony Alexander may be right but he painted himself into a corner about 3 months ago when he originally said house prices had hit the bottom. Now he has to stick with it.

    Ultimately the price of a house depends upon what a buyer can pay. Low interest is nice but if the mortgage is $400,000 on an average wage, its unattainable. We are not a high wage economy.

    All things converge to average. The long-term price of a home in NZ is something like 3.5x average family income. In 2007 it had risen to 6x.

  8. #8
    Join Date
    Oct 2003
    Posts
    3,578

    Default

    Quote Originally Posted by Winston001 View Post
    All things converge to average. The long-term price of a home in NZ is something like 3.5x average family income. In 2007 it had risen to 6x.
    Hte average can change though. Things like two income families, looser credit, increased use of tax benefits by investors etc have increased it from the 3.5x it was.

    I am not saying 6x is the new average, just that 3.5x may not be where the average settles down to.

  9. #9

    Default

    Rental vacancies are over 9% in Auckland, with the days of high capital gains long gone there's little justification to hold onto properties that are not tenanted. I think Tony's supply-demand ratio may need some re-calculating in the near future as more and more of these properties come to market.

    Prices are presently reflecting the current supply-demand; Add extra supply from property investors re-sizing there portfolio's in light of high vacancies and poor future capital gains and there's where your next round of price falls is coming from.

  10. #10

    Default

    It makes sense Tony's an expert on how others selling books, managing websites etc are able to put various spin's on the housing market, he has been doing it himself for years.

    Here's the document he has used to justify the undersupply of houses which he constantly talks about:


    New Zealand's fundamental housing problem is one of an undersupply of accommodation as evidenced by the recent report from the select committee investigating housing affordability in New Zealand. The committee was not created to try and figure out how to get more people into thousands of empty houses sitting around the country or how to encourage local authorities to demolish houses to prevent neighbourhoods sinking into empty ghetto status. The outcome of that long-running investigation by the Commerce Committee was a 10 point list of, well, essentially nothing going to make any measurable impact on housing availability in the near future.

    http://www.parliament.nz/NR/rdonlyre...4170_61892.pdf
    The documents an interesting read, but makes no mention of a housing undersupply. In fact the only mention of housing stock numbers is where it compares the 8.2% growth in houses during the 2001-2006 period to the 7.7% population growth showing a housing surplus.


    ANZ agree we have a surplus, not a shortage:

    http://www.interest.co.nz/ratesblog/...pply-anz-says/
    Last edited by JohnJackson; 04-08-2009 at 04:17 PM.


 

Thread Information

Users Browsing this Thread

There are currently 1 users browsing this thread. (0 members and 1 guests)

Similar Threads

  1. Economist picks land price correction
    By muppet in forum Property Investment (NZ)
    Replies: 44
    Last Post: 23-03-2020, 02:16 PM
  2. Who's Already Taken the Property Plunge?
    By mattinvestor in forum Australia
    Replies: 4
    Last Post: 04-12-2015, 06:32 PM
  3. The Economist world house-price indicators.
    By muppet in forum World in General
    Replies: 0
    Last Post: 13-07-2010, 01:41 PM
  4. The Economist house price indicators
    By Gatekeeper in forum General (NZ)
    Replies: 29
    Last Post: 14-11-2009, 10:49 AM
  5. Property price plunge predictions ridiculous, says economist
    By muppet in forum Property Investment (NZ)
    Replies: 19
    Last Post: 01-08-2009, 09:21 PM
  6. Economist: house prices fall below fair price for investors
    By jenny_pt in forum Property Investment (NZ)
    Replies: 0
    Last Post: 26-03-2009, 12:02 PM
  7. May property sales plunge
    By essence in forum Regions News (NZ)
    Replies: 1
    Last Post: 21-06-2008, 10:43 AM
  8. The Economist house price index
    By Rampage in forum Property Investment (NZ)
    Replies: 0
    Last Post: 09-12-2005, 10:22 AM
  9. The Economist's house-price indices
    By mrmarketing in forum Property Investment (NZ)
    Replies: 0
    Last Post: 22-09-2005, 01:49 PM
  10. New Zealand Property Investing Holiday
    By Sooshie in forum General (NZ)
    Replies: 15
    Last Post: 05-12-2003, 12:39 PM

Posting Permissions

  • You may not post new threads
  • You may not post replies
  • You may not post attachments
  • You may not edit your posts
  •