Economist picks land price correction

[PTWhatAGreatForum]

Outside of Auckland land prices have dropped considerably.

[Perry]

Outside of Auckland land prices have dropped considerably.

You may need to be more specific.

Picking one in Hawke's Bay, the 285k RV in 2009
has changed to 300k in 2014.

Using the RBNZ's inflation calculator for housing
the value should have moved to 359k.

So if the (alleged) RV has any reasonable cor-
relation with the RBNZ's guess, that HB property
has lost ground to inflation by 59k. Bugger!

But it has not met the econo-mist's prediction.
He's not even close for Hawke's Bay, at least.

[Damap]

Perry you must learn DNFTMNZ
The reality is that you would be hard pressed to find anywhere in NZ where land values have not recovered. Even Northland, home of the unnecessary holiday section int he middle of nowhere has recovered.
REINZ report in November shows whole country is doing OK. They all get overshadowed by Auckland of course but MNZ's statement is, as usual just baiting.

[Bob Kane]

The revisit to this thread just shows all the bank economists (except one) have got it wrong when predicting property prices.
They also get it wrong when predicting OCR changes.
You'd be better off listening to me!

[Perry]

A year later and where are we at, now?

Not including the naive and touching
faith of the econo-mists, of course.

[Perry]

Another year later and yet another yawn?

[Anthonyacat]

Wait long enough and there'll be a correction. Does that make them right?

[Perry]

There's been an analogous discussion on the not if but when question: here.

Seems too much like a rehash of the sky is falling, run to the cave story.

[Perry]

Is it coming true, at last?

A leading economist believes New Zealand has an over-abundance of land and says prices will have to come down in the near future. ANZ chief economist Cameron Bagrie warned "prices are going to have to adjust and this will be the story of 2010."

Nope! That was how long ago?

[Davo36]

Yeah if these guys were paid on the percentage of forecasts they got right, they'd be broke.

[Perry]

The story of which year was that, Cam, m'man?

[Perry]

Jan 2010 was the original prediction.

Stuff still has the story on its web pages.

A leading economist believes New Zealand has an over-abundance of land and says prices will have to come down in the near future.

Ten years on when apart and asunder
Bang went guesses of a decade ago
Econ-o-mists e'er make us chunder so
For it's so plain just how little they know

[Davo36]

And then came a tidal wave of Chinese money.

[Perry]

Don't put too much faith in economists' predictions, one economist says
20 Mar 2020

Economists often get it wrong. There's good reason to think that the current claims suggesting a decrease in house prices could be incorrect. That might sound ironic, coming from an economist. But, let's look at the facts. Economists spend a lot of time forecasting the future. But, when you look back at previous predictions, especially in uncertain times, we often get it wrong. Property owners should, therefore, be wary of any forecasts that predict large and long-term declines in the New Zealand property market.

A misunderstatment, at best. The first sentence should read:

"Economists get it wrong, more often than not."

[OnTheMove]

"Economists get it wrong, more often than not."

I think Bloomberg and economists should have said we SHOULD be receiving a major price correction, not we WILL. I do believe Bloomberg did not put a time frame though. But some have. Because it was going to take a major internal event or a major external economic event to put the correction into action. I think financially if you look a property market graphs its fairly obvious there are a lot of sectors (regions) that are ridiculously over priced. I think even the most one eyed investor can see that.

Covid 19 is the kind of event that COULD do this. Especially given China is our major economic base now, not the USA like in 2002~

So I thought when Jacinda got PM, she was HORRIBLE sounding on the world stage, but the harder things have gotten and thrown at her, the better she has got.

Why would we have had any lock down if not full lock down. The only way to stop the spread is to remove potential hosts and with archaic measures, the only way to do this is to isolate people to family at maximum. We now know there is community spread, so good on her, level 4.

This could not only save lives but it may be the stop of losing 40% of our property market. If we just let it live itself out we would have lost 1/5th of our population between 60-100yo.

4 weeks minimum. Big deal. I think if it turns out 8 weeks still not a big deal. The sooner it is dealt with the sooner economies return to normal.

We could have gone with what Britain was going to do and just it run its course and lose 100s of thousands of citizens. But even Britain realised this was non humane.

So will be interesting to see if it has a major impact on the property market, given investors have pushed prices to the point of pull back, or the push back line in shares terms, in Auckland, if prices do dump 40%, young couples who scraped together $150k to buy a house on $100k family income, they will NOT be able to afford the extra $400-800k asked for by banks via extra mortgage repayments. I see the ORC dropped majorly (just after I bought a new PPOR grrrr), but even if you dropped mortgage rates to 1.5% that will likely just be enough to make repayments possible for some people and some property sectors (ie Wellinton suburbs with ridiculous medians ~ Remuera).

My feeling is with Auckland losing 10-12% then flat lining it has already had a fairly substantial correction vs the rest of the country where investors moved to when Auck demand pushed back at the price point late 2016. Not saying Auckland and especially specific parts of the market wont lose 20% etc, but I feel the median price houses will lose the least. Normal homes with actual LAND in a median price point within feasible commuting. I think they will be fairly safe.

Going to be an interesting few months.

Perry please take care Bro, keep in touch and let me know if I can help in any way (outside money as I know Im a small fish in comparison haha) practically.

Luckily my Mrs was already working from home 2 days a week and aside from Biology field work, her office work does not change. Just makes her expertise as a Senior Biologist (double PHD) harder to get to than being able to walk to her desk.