Auckland Property Prices

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  1. Post
    #26
    bradc wrote:
    For your plan to work house prices would have to fall considerably. Such a climate would also be a period of economic chaos, meaning interest rates would probably drop again, and your own financial position would be rather tenuous.
    Sobwhat you're saying is that it's physically impossible for housing prices to fall... Ever... Despite what we've seen overseas and in our own property market historically..... Riiiiight.

  2. Post
    #27
    Not how I read it, but anyways. Wait two years and see how far the prices have dropped It could potentially go either way.

    I read it as, in the current situation for prices to drop something is going to have to hit the fan big time. That could be reading it completely wrong. But that's how i'd see it anyway. From MY personal view, speculating that prices will drop, is at LEAST as dangerous as speculating they will rise. There isn't a crystal ball with the answers, but for me i'd rather be on the ladder. Who knows, waiting at the bottom of the ladder could net you a good deal, or it could mean the ladder is lifted further out of reach.

  3. Post
    #28
    Esprit wrote:
    Sobwhat you're saying is that it's physically impossible for housing prices to fall... Ever... Despite what we've seen overseas and in our own property market historically..... Riiiiight.
    Nice reading comprehension. I'm saying that for house prices to fall to such a level as to compensate for the higher interest, the economy would be screwed, and rates would drop back down.

    There's a bit of a pardox when your economy is so reliant on bouyant house pricing.

  4. Post
    #29
    bradc wrote:
    Nice reading comprehension. I'm saying that for house prices to fall to such a level as to compensate for the higher interest, the economy would be screwed, and rates would drop back down.

    There's a bit of a pardox when your economy is so reliant on bouyant house pricing.
    My apologies, I guess you're right.... interest rates would drop, but even so, the property prices would keep falling because it doesn't matter even if interest rates are zero, if you don't have a job it's hello mortgagee sale.

    I'm in a bit of a jam. I really could do with buying a place, I'm couch-surfing at the moment after getting out of a relationship and I'd love to not have to go back flatting again, I've got cash and could get into a place easy enough, but I just don't think it's a good time..... not in Auckland at least.... I could buy so much more with my money in a year or two if things go the way I think is inevitable.... in the meantime I can keep saving, it just means more sacrifice.

  5. Post
    #30
    What exactly do you think is inevitable? Demand for housing in Auckland to drop? Interest rates to make it unaffordable to service mortgages? From what I recall in ~2007, interest rates were 8-9% yet people were still paying silly money for houses. I'm not sure if rates go back up there (eventually) it's going to give you the solution you're after.

    Sure some people will find it unaffordable to keep their houses. But even today people are finding that, with much lower rates. If there wasn't a whole bunch of people moving to NZ with $$$$ then things could be different. You will get (as you always do) the people that just sit tight and wait. The people that make sacrifices to buy anyway. And the people that bail out of ownership due to affordability. I just can't see enough people being in the third group to warrant any meaningful price drops. For that to happen, rates would have to increase a lot and you'd have to shut the gates to Auckland. Perhaps then, things might change.

    As always, no one can predict the future, you can only guess. There will always be arguments for and against owning a house. No right answer for everyone etc.

  6. Post
    #31
    Esprit wrote:
    My apologies, I guess you're right.... interest rates would drop, but even so, the property prices would keep falling because it doesn't matter even if interest rates are zero, if you don't have a job it's hello mortgagee sale.

    I'm in a bit of a jam. I really could do with buying a place, I'm couch-surfing at the moment after getting out of a relationship and I'd love to not have to go back flatting again, I've got cash and could get into a place easy enough, but I just don't think it's a good time..... not in Auckland at least.... I could buy so much more with my money in a year or two if things go the way I think is inevitable.... in the meantime I can keep saving, it just means more sacrifice.
    I can empathise with your sentiment and situation but I'm not sure I can agree with your prediction. For an absolute crash of pricing (so let's say that's pricing in Auckland halving), you would have to have a mass selloff. Such a selloff would be likely done buy people hugely mortgaged up, and while that demographic is largely behind the high prices, they're actually only a small portion of the market, and even then they all have to fall over. And as has been suggested, you still have strong demand for housing in Auckland which will help make prices consistent.

    So short of an absolute catastrophe that'd be protracted for years, I don't think we're going to see any sort of sizeable correction anytime soon. I've resigned myself to housing in Auckland being unaffordable long term, and that's part of the reason I left, the effort required to service the mortgage required to own a house anywhere near central there isn't a commitment I'm wanting to take anymore. Possibly ill regret that in the future, but I've just managed to secure a nice house on 3000m2 on a river in Marlborough and my mortgage payments are less than the rent of a 2 bedroom shoebox in Sandringham.

  7. Post
    #32
    Fragluton wrote:
    What exactly do you think is inevitable? Demand for housing in Auckland to drop? Interest rates to make it unaffordable to service mortgages? From what I recall in ~2007, interest rates were 8-9% yet people were still paying silly money for houses. I'm not sure if rates go back up there (eventually) it's going to give you the solution you're after.

    Sure some people will find it unaffordable to keep their houses. But even today people are finding that, with much lower rates. If there wasn't a whole bunch of people moving to NZ with $$$$ then things could be different. You will get (as you always do) the people that just sit tight and wait. The people that make sacrifices to buy anyway. And the people that bail out of ownership due to affordability. I just can't see enough people being in the third group to warrant any meaningful price drops. For that to happen, rates would have to increase a lot and you'd have to shut the gates to Auckland. Perhaps then, things might change.

    As always, no one can predict the future, you can only guess. There will always be arguments for and against owning a house. No right answer for everyone etc.
    The price of credit will go up the moment the world realises it can't print its way out of this financial crisis. In 2007 we had similar house prices and 8-9% mortgage rates, but we also had technically full employment, consumer and business confidence was through the roof, banks were (as now) falling over themselves to lend money, living costs were cheaper when compared to inflation and our net immigration was much more positive than it is now. The global market was in fantastic shape then and was going from strength to strength. Now it's as flaccid as a penis after seeing Helen Clark naked.

    Given that our net immigration is closing in on zero as our European and Asian people-importing is being offset by our massive outflow to Australia..... because people can't afford to live and raise a family here on the average household income. The world we live in now is VERY different to the one we lived in 5-6 years ago. Our current housing mini-boom in Auckland seems to have very little or no grounding in solid financial principles, other than a blip of internal demand from Christchurch (which has peaked and is ebbing away with all the people willing and able to move to Auckland having done so) coinciding with a lull in the building market. Subdivisions are now back in full-on building mode (the stalled Stonefields suburb is, after 3-4 years dormant, now almost doubling in housing density every time I drive past it)... I can't see it lasting.

  8. Post
    #33
    Government cuts top-rate to 33% from 39%, Auckland property market booms.

    Shocked. Shocked and stunned.

  9. Post
    #34
    Probably more the ocr tbqh, people earning 39% were previously over investing in housing to dodge tax.

  10. Post
    #35
    More income would mean you can service more debt, right? I imagine it's a very multifaceted thing, however.

  11. Post
    #36
    Multifaceted sure, but from the maths perspective, lowering interest rates by a couple of percent allows for a far greater amount of possible debt to obtain/service than dropping income tax.

  12. Post
    #37
    Its supply/demand. Auckland house prices are rising because there aren't enough houses. I recalling reading a couple of months ago that the number of Auckland houses for sale was at a 7 year low.

    Big increases in Auckland house prices and static prices throughout the rest of the country is another clue.

  13. Post
    #38
    The capacity to borrow greatly effects demand. If interest rates were 1%, prices would be higher again.

  14. Post
    #39
    bradc wrote:
    The capacity to borrow greatly effects demand. If interest rates were 1%, prices would be higher again.
    Exactly. This and the fact that so many people these days are on some kind of "government assistance", "tax break", "benefit", supplement" etc. I'm a single bloke, salary earner with a pile of cash and a reasonable, but not massive, salary. I'm up against single parents, people with children who all seem to get a plethora of "targeted assistance" from the government despite taking home a similar amount of money as I do. I read somewhere that of all renters (and I'm assuming this includes HNZ tenants), that 69% of them were getting some form of government assistance. That's a fair chunk of people in my situation that are getting helped to save their first home deposit, that I'm not able to access. Not that any of it actually matters when you don't need a deposit to get into a house these days. Banks will all lend 100% if you ask nice. Just tick it up bro.

    Imagine for a second that the government gave EVERY first home buyer $300k to buy their first home as a gift, no need to pay it back. Overnight the price of almost every home on the market would increase by $300k.

    More needs to be done to link the cost of a house to what people actually earn:

    1. Owning residential land/property requires permanent residency or citizenship. Only homes a non-resident can own is one they develop themselves to live in themselves and must be sold before vacating the country.
    2. Maximum LVR on property of 80%.
    3. Maximum LVR across a multi-property portfolio to be 60%, to stop people endlessly borrowing against inflated values of one property to buy another.
    4. Investigate why in NZ it's 80% more expensive to build a house than in Australia (once you've already got the land), despite Aussie builders being paid more.... HINT: Fletchers & CHH.
    5. Land tax or CGT on all housing.

    These could all be easily implemented and within a couple of months would probably knock 80-100k off the sale price of houses. Government doesn't want to do this, however, since they all have nice fat property portfolios, and so do many of their constituents.

  15. Post
    #40
    People getting assistance have more costs than you though, so they're not likely any better off financially.

    And the government wouldn't do your plan because its economic suicide.

  16. Post
    #41
    Lol, financially f**k anyone that has already worked hard to get a house, because I want prices to be lower. Good plan.

    Lets put in some rules that say all (your hard earned) savings need to be taxed at 50%, annually. Sound fair? Does to me as I have no 'savings' as I chose a different path.

  17. Post
    #42
    Fragluton wrote:
    Lol, financially f**k anyone that has already worked hard to get a house, because I want prices to be lower. Good plan.

    Lets put in some rules that say all (your hard earned) savings need to be taxed at 50%, annually. Sound fair? Does to me as I have no 'savings' as I chose a different path.
    Thing is, it doesn't financially f*ck anyone any more than they already are. The value of your house isn't realised until you come to sell it, and if you're selling to buy again then it's a zero-sum game and you've lost anything. The only person that's financially ****ed themselves is the person that buys something for a massively overhyped price. If you've bought a house you've already made your financial bed, and expecting the taxpayer to prop up values for now and for ever more, is criminal.

    Peoople in NZ need to learn that investing in housing is just like investing in anything. There's a risk. Recent history has taught us that over a period of 5 years or more, there's a GUARANTEED positive return, and that's the mindset that investors go in with. Those with a longer memory though will know that corrections do occur to bring things back in line with longer term trends.

    The only reasons the property market is so overvalued at the moment is because successive governments have opened the floodgates to absentee landlords to purchase property with hot cash from abroad and they've tried to keep kiwis in the mix by paying out "accommodation supplements", "welcome home zero-deposit loans", "working for families" etc. There will come a time, not too long from now when the international money-printing and credit freedom constricts. Then watch the house of cards will fall.

  18. Post
    #43
    Esprit wrote:
    The only reasons the property market is so overvalued at the moment is because successive governments have opened the floodgates to absentee landlords to purchase property with hot cash from abroad
    You're forgetting that these overseas investors will only invest in NZ property if they perceive the market to be undervalued, which was the case 10-15 years ago. Hence we have a huge upwards correction when compaired to international standards. Outside of the major population centres the NZ property market is still very stagnant.

  19. Post
    #44
    http://www.economist.com/blogs/daily...l-house-prices

    According to that graph we have some of the highest prices compared to the developed world, ignoring outlyers like Ireland. Similar to GB.

  20. Post
    #45
    Indigo1 wrote:
    And while the banks are creaming it, this is the reality http://www.stuff.co.nz/business/mone...near-six-a-day
    This place is in a block of 8 in Auckland's "hot" suburb of Onehunga.
    http://www.trademe.co.nz/property/re...-504015312.htm
    The 8 places are all very similar and three years ago one went for $290,000. two years ago one went for $345,000 and this year one went for $430,000. This one is likely to go for late $400s and it's considered a bargain as there is nothing else in the area that is standalone for near that price.
    At this end of the market in suburbs like this demand is outstrippping supply massively. The majorty of sales in Auckland continue to be below $500 k... so this isn't considered unrealistic.

  21. Post
    #46
    I think what many people forget when crystal ball gazing is the biggest factor = supply & demand. When viewing the housing market & deciding it's madness because of reason A, B or C.........just look over at the stock market? Rational behaviour??


    Demand: A few things that need to be kept in mind......more than 1/3 of our pop live in one city (35% & growing FAST!)........the next biggest isn't even CLOSE to that (Wellington is only a 1/3 in size). It's the economic heart of the country. NZ is also the 5th most desirable country in the world to immigrate to (USA, Canada, UK, Australia, then us, in that order) & in the top 10 most livable cities to live. So we have good long term immigration prospects (both internally & externally) it's easy for foreigners to buy property here.

    The inner city area's of Auckland have only just really being valued for their convenient (central) location in the last 20yrs, hell it wasn't THAT long ago Ponsonby & Grey Lynn were slums! So we really are just playing catch up.


    Supply: Land...........well...........they ain't making anymore of it! They are only releasing bits here in there on the outskirts. And when you add to that the slow & costly consent process the supply isn't flash! We don't keep pace with the demand. Auckland is built on an Isthmus, surrounded by water & severally constricted. It's pretty much north & south growth, that's it which is obviously making inner city area's that much more valuable.


    In terms of a bursting bubble obviously I like the rest of you can't accurately tell you the exact future but I personally believe it's not likely soon is people will just hold on & not sell if the market swings (like they always do) & this dries up the listings (supply). The only things that can really upset the market are the GFC & how that pans out. But hey at the end of the day if that goes as bad as it could possibly go then we're all gunna be in the shit no matter what lol. There will always be reasons why not to buy something at any point in a market.

  22. Post
    #47
    Lastly to add, there are always plenty of bargains to those with an ear to the ground. Friends just recently bought a 160sqm house on a 700sqm section that can be subdivided with 180 degree sea views in Stanmore Bay for under $400k.

  23. Post
    #48
    Situation as I see it, rental supply is low, with low interest rates its spurring traditional renters into first home buyers, constraining the low end and affordable homes into the less affordable homes. As much as people like cheap mortgages, its really driving high house prices at the moment as its opening up more of the market. You cant have it both ways

  24. Post
    #49
    Pants Optional wrote:
    Lastly to add, there are always plenty of bargains to those with an ear to the ground. Friends just recently bought a 160sqm house on a 700sqm section that can be subdivided with 180 degree sea views in Stanmore Bay for under $400k.
    What's the address? I ask because I have been keeping a very close eye on the Hibiscus Coast market in that price bracket, and I find that hard to believe. Unless it's on Whangaparaoa Rd or in a shit/not very private condition.

  25. Post
    #50
    Jewjew wrote:
    What's the address? I ask because I have been keeping a very close eye on the Hibiscus Coast market in that price bracket, and I find that hard to believe. Unless it's on Whangaparaoa Rd or in a shit/not very private condition.
    I couldn't tell you the exact address as I didn't actually ask, obviously will know when we go visit next time. Can say with 100% certainty that the details are accurate.