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  1. #11
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    Jul 2017
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    Quote Originally Posted by Bob Kane View Post
    Between 2002 and 2008 house prices in NZ doubled.
    The South Island population stayed the same but South Island house prices doubled.
    Interesting, isn't it?
    Something drove SI house prices up but it wasn't the increase in population.
    Bob,

    Thank you for sharing your story about the South Island. Very interesting. Certainly some other key factor driving the house prices.

  2. #12
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    May 2008
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    A rising tide lifts all boats.

  3. #13
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    Sep 2008
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    Default

    i would imagine the rising cost of new housing

    also lifted the price of old housing

    esp. old housing in prime positions
    have you defeated them?
    your demons

  4. #14

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    If demand and supply at a macro level is balanced. I.e 100 new families needing homes perfectly matched to 100 new homes being built, how do we account for the fact that these houses are being built on the outskirts of the city while these 100 families want to live on the city fringe.

  5. #15
    Join Date
    Oct 2013
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    1,723

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    Quote Originally Posted by Bob Kane View Post
    A rising tide lifts all boats.
    CLIENT LIST FULL - Waitlist Available: [email protected]
    AAT Accounting Services - Property Specialist - AATAccounting.co.nz
    Lower fees for investors, traders & real estate agents!

  6. #16
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    Jul 2017
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    Here's some food for thought -

    A very commonly held belief is that population growth leads to increased demand for housing and hence leads to higher property prices. Population growth is very commonly cited as the reason for property prices continuing to rise and for property prices not falling by many property market commentators.

    Auckland still has an increasing population and net migration, yet there is decreasing demand for housing? How can demand be decreasing in light of continued population growth? Why do you think that is? Are we missing something?

    Quote from below article - With less demand, sellers are adjusting expectations and are more open to negotiation in order to get their property sold.


    QV data shows New Zealand house prices falling



    Property prices are falling, and those who have to sell or have problem properties are feeling the pain.
    QV has released its latest House Price Index, which shows that nationwide residential property values fell 1.6 per cent over the three months to August.

    In Auckland, prices were down 0.4 per cent in the quarter, in New Plymouth down 0.3 per cent, in Christchurch down 0.2 per cent and in Queenstown, down 1 per cent.
    On an annual basis, prices are up 4.8 per cent on the same time a year ago. That annual rate is slowing - at the same time two years ago, the annual rate of growth was 14.6 per cent. In July this year, the annual rate was running at 5.2 per cent.


    "Affordability constraints continue to change buyer behaviour. We're seeing an increase in demand for more affordable two-bedroom semi-detached units as well as apartments, particularly in our main centres. With population growth projected to continue to rise, I'd anticipate these types of properties will attract even more demand in future years, particularly in Auckland and Wellington City," said QV general manager David Nagel.

    He said small provincial towns across the country were seeing strong growth and the southern part of the country, including Dunedin and Invercargill, was also increasing in price.
    Overall, we're anticipating value growth to remain flat or steadily grow across most regions. The winter period has certainly taken the heat off the market and naturally, we'd expect the Spring period to inject new energy into the market.


    "The market is currently experiencing polarising forces with key market drivers such as low interest rates, population growth and lack of supply, being countered by tightening credit conditions and a range of Government policy initiatives aimed at cooling the market."

    "Spring is going to be a very interesting time for the residential property market as we see what unfolds when a few more buyers and sellers enter the market."

    In Auckland, senior consultant James Steele said a drop in the number of investors in the market had opened space for first-home buyers.

    We are continuing to see a high proportion of properties come to market as price by negotiation as opposed to auction. With less demand, sellers are adjusting expectations and are more open to negotiation in order to get their property sold. In general this has caused prices to soften with the biggest variation from the peak shown in properties which are poorly presented or have other issues.


    The premiums paid before the latest round of loan-to-value restrictions were introduced were no longer seen, he said.

    "As expected, we have seen minor fluctuations in price with some downward pressure through the winter months coming from those who needed to sell. At this stage, any larger downward pressure on property prices is likely to come from regulatory change or wider economic risks."

    In Wellington, senior consultant David Cornford said rising rents were pushing buyers into the market. "Two-bedroom, semi-detached units are selling particularly well, as they provide a more affordable option for young professionals or families. New builds or one and two bedroom modern apartments is also proving popular for the same reasons."

    Christchurch consultant Daryl Taggart said he expected activity to increase over the warmer months.

    - Stuff

    Source: https://www.stuff.co.nz/business/106...prices-falling
    Last edited by Chris W; 06-09-2018 at 01:53 PM.

  7. #17
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    Sep 2008
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    "A very commonly held belief is that population growth leads to increased demand for housing

    yes

    and hence leads to higher property prices."

    usually

    but an awful lot of housing demand is based on WANT

    not NEED

    so when there are supply constraints

    people can easily reduce their demand

    likewiseprices can't keep going up

    if there's no money spare...

    it's all very well taking 'big picture' views of economic theory

    but both levels of gov.

    have many ways to crash the long terms dreams

    of people who ignore short term events
    have you defeated them?
    your demons

  8. #18
    Join Date
    Jun 2005
    Location
    Auckland
    Posts
    5,087

    Default

    Increasing population will inevitably result in higher demand for housing, but it is not the only factor affecting prices.

    Measures taken to cool investor's ardor for real estate, quite a few apartment complexes coming to completion adding to supply, high prices leading to a general 'stickiness' in the market are all having a dampening effect.

    What I don't see is a massive supply of homes being built, and if net migration stays positive, pressure will continue to be on prices despite the govts. single-shot, short term policies.
    DFTBA

  9. #19
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    Jul 2017
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    This is how effective demand for property gets impacted. (for definition of the difference between "effective demand" vs "underlying demand" see earlier in this thread. Most property commentators talk about underlying demand, yet it is effective demand that is key. Buyer confidence and price expectations influence effective demand)



    When it comes to the rapidly cooling property market, I’m part of the problem.

    At the start of this year I was looking to buy a house in Sydney, despite most likely having to sell a kidney and ownership rights of my first born to do so.

    We’ve all been told for so long you need to be on that you need to get on that property ladder sooner or later, and as house prices continued to soar to unprecedented levels, I figured I had better opt for sooner.


    But after a couple of months after I began my search, I got an email from a real estate agent telling me that the owner of a property I’d taken an interest in was willing to accept offers of $250,000 below the asking price.
    “Sorry, do you mean $25,000?” I replied, assuming that was some sort of typo. Nope, it was spot on – they were willing to cop a quarter of a million-dollar loss.
    That to me said they were panicking, and in turn, it made me panic that this was definitely not a good time to be getting in to the market.
    And so I decided I was going to sit it out for a year or two and just see how far prices will fall.

    Turns out I’m far from alone – clearance rates are now down significantly from the madness of a year or two ago, and the dip in property prices can so quickly become a crash when people like me lose confidence in the market.


    The problem with these situations is that they can very quickly become self-fulfilling prophecies – that if everyone gets scared, no one ends up buying, and prices fall and fall until eventually people decide prices are so low that they’d be mad not to cash in.
    There are numerous factors to blame here – banks tightening up lending restrictions, the end of many interest-only loans, an over-supply of apartments, and the simple fact that everyone probably got a bit carried away with our property boom in the last decade and created an over-inflated marketplace.
    So we’re all the cause of the crash, but we’ll all eventually be the solution as well – once people decide there are bargains to be had, the market will roar back to life.


    Source: https://www.9news.com.au/2018/09/16/...onomy-property

  10. #20
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    Jul 2017
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    312

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    How "effective demand" is impacted ...

    "Well it seems 60 minutes has had an impact, 2 mates at work today have been scared out of buying and decided to wait. One just put an offer in Sydney and is retracting his offer and waiting. This after watching the show, I can't believe it's had that much of an influence on people I know, fear is real and starting."

    Comment from a property chat forum after watching a story on the current events program 60 Minutes in Australia. This illustrates how confidence can fall from potential buyers due to changed price expectations. As a result "effective demand" is impacted, whilst "underlying demand" is relatively unchanged.

    News stories in mainstream media can impact confidence in potential buyers, and hence impact "effective demand". Notice how the headlines of falling property prices in some cities in Australia have lead to a fall in the level of confidence already by potential buyers and this news story further fueled falling confidence and as the story reinforced the trend of recent price moves.

    If this story had come out when property prices were still rapidly rising, and the mainstream media were reporting property prices continually rising (and resulting in buyer confidence being high), then this story might have been dismissed altogether and not had an impact at all on buyer confidence as this story would be at odds with the recent experience and evidence of rapidly rising prices.


    Links to 60 Minutes story
    Part 1: https://www.youtube.com/watch?v=smPR0s2W-Ck
    Part 2: https://www.youtube.com/watch?v=BbFvwYVfwq0
    Last edited by Chris W; 18-09-2018 at 04:44 PM.


 

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