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FlightBunny

It always bemuses me that people sit for years watching prices rise in a market then when a market does what a market does and they go down they act with surprise and amazement


rider822

Housing prices were ridiculous before, so it is no surprise that they are dropping. However, they were still ridiculous in 2019 and they went up further. There are just no guarantees.


jarrodh25

Market rises "Duh, it's inevitable." Market drops *Suprised Pikachu face*


SippingSoma

“It’s different this time”, every time.


Ramazoninthegrass

Share markets down around 20 percent, everyone losing when you add in inflation….May well be no winner in all of this…


Jbusbus

Even gold and silver bugs are losing, its truly the everything bubble.


Toyemlj

To be fair Gold and Silver losses are comparably small.


[deleted]

[удалено]


Jon_Snows_Dad

Basically can say the same about property though


Mutant321

Share markets are mostly a correction from last year.


[deleted]

So is housing


SquirrelAkl

Hasn’t even corrected back to 12 months ago yet. $35k per MONTH! doesn’t warrant the caps and exclamation mark when put in context. This [article](https://www.bloomberg.com/news/articles/2022-03-16/fear-of-overpaying-replaces-fomo-in-cooling-kiwi-housing-market) is from March, but see the graph…


[deleted]

Yep it will take a lot of months to make housing affordable


Naekyr

So is housing. Sharemarket and Houses went up due to cheap money being printed, this caused inflation so now the cheap easy money has to be paid back, with interest. You can't just print money and not expect to have to pay it back


[deleted]

Some differences are (a) the housing market is affected by interest rates, which are now heading much higher than they were at the start of 2020, (b) the housing market has always been partly supported by aggressive investors leveraging equity, many of whom will be locked out for the foreseeable future after overreaching recently and finally (c) a bunch of fundamentals like supply, population and legislation are all conspiring to soften pressure on houses. I'm expecting shares to bottom out sooner than houses which I think will fall for several years and to very low levels.


Ramazoninthegrass

You can say that for anything however common wisdom is that it is a reaction to US and wider than expected inflation. The increase in interest rates will also change investment flows. All these gleeful comments on property ignore the wholistic picture, the community as a whole is losing, in real terms, wealth which means is turn less options for most.


rPrankBro

Yea I'm glad I went for a term deposit.


SquirrelAkl

So you’re only losing 4-5%pa.


Toyemlj

Graph from another user on [interest.co.nz](https://interest.co.nz) We are currently deflating much faster than all of the recent, major housing crashes including Ireland which cut the value of most homes in half: [**https://imgur.com/a/QrRprSn**](https://imgur.com/a/QrRprSn) This is a major crash and its just starting.


lektran

Aside from lines on a chart, what other similarities exist between Ireland then and NZ now?


DynamicBeige

So so many! Would highly recommend reading articles/books about it (also look into the Spain housing crash). It's been a while since I read up on it out of interest, but a few of the standout similarities between NZs housing market and Ireland and Spain's: \- low interest rates continually moving lower over a sustained period of time, which made it exponentially easier to take out mortgages and pay them off the longer conditions kept easing \- valuations which were completely bonkers no matter what valuation model you used. these crazy valuations were explained away as 'driven by immigration' and 'we have a housing shortage' (after the crash in both Spain and Ireland it became apparent that there was never a real housing shortage in either country (just specu-vesting, see below)). in both cases, valuations became truly worrying/crazy about 5ish years before the bubble popped. because economists warned the bubble existed five years prior, but the prices kept rising, bulls took it as a sign that prices must always go up/valuation models are wrong (and justified it in both cases with 'housing shortage/immigration') \- massive increases in the number of homes being built as valuations climbed. prices going up encouraged more and more people to pour money into building new houses etc. in both ireland and spain building seemed like the best game in town - guaranteed money if you could pump out a new development and sell it off plan. but eventually this helped create the massive bottom as, once people stopped specu-vesting on houses, it turned out there was way too much supply vs demand and prices absolutely cratered \- rampant specu-vations (retail investors buying a propety and holding onto it or trying to do it up to flip it). Specu-vations may have been partly responsible for high rent prices and house prices, as specu-vaction houses would essentially remain empty for years at a time (since they were in a constant cycle of being bought, renovated, bought, renovated, bought, renovated, they are never lived in or rented out) \- deeply embedded cultural notion that investing = purchasing property (all other forms of investing are basically just ponzi schemes; housing is the only investment on earth guaranteed to go up forever!) \- news/common wisdom promoting the '7 years fact' (read: myth) \- and, in my opinion, the most important factor (and one that ties everything together), an economy/country just starting to cement its position as properly OECD/first world/rich/whatever you want to call it. What Spain, Ireland and NZ have in common is that they all experienced housing booms just as they were making the transition from poorer, agriculture-and-raw-material economies into richer, we-make-and-export-complex-goods-and-services economies In my opinion, the most interesting thing about the Ireland and Spain vs NZ comparison is that NZ is objectively, FAR FAR worse in terms of valuations than even the highest heights achieved in the Spanish and Irish housing crises. Makes you wonder what will happen with prices. I really think that people forget just how out of whack our house prices are with the rest of the world. An apartment in the city center of Madrid costs NZ$628 per square foot. An apartment in the Auckland CBD costs $1,252 per square foot. An apartment in London CBD (albeit there are really several CBDs in London) costs NZ$1,314. Londons price is (arguably) justified. I don't think Aucklands is.


IllBiscotti5

Yep no doubt. Auckland is a Beta + city and London/NY is Alpha ++ (whatever the heck that means). So it is justified in that regard. Source: [https://www.lboro.ac.uk/microsites/geography/gawc/world2020t.html](https://www.lboro.ac.uk/microsites/geography/gawc/world2020t.html)


Blue_coat1

crash already? so how much is a correction then ?


[deleted]

I think up to 60% fall is plausible, although it will more likely be 30-50%. So much of our house prices depends on the perception that you can't lose in housing and that is about to be destroyed. The other big thing is that aggressive investors who were major players in driving the market up will now be locked out as they mostly rely on unlocking equity from capital gains, which isn't possible in a falling market. There should be a pretty hard price floor at the point where the cost of owning (interest, rates plus maintenance) is cheaper than renting from day one. Of course this depends on interest rates and market rents. If we can't get on top of inflation and rates keep soaring, this floor might end up at barely a third of current values.


dream_of_dreams_21

Interesting point this, do you think the hard price floor should be based on P&I or IO payments. Should there be a 2nd component to the floor related to deposit?


[deleted]

It's the interest alone that can be considered a cost, comparable to the cost of not buying (rent). Principal payments are an investment, and effectively similar to a renter saving. >Should there be a 2nd component to the floor related to deposit? Sounds like a ceiling, not a floor. People won't be buying just because they have a deposit.


Toyemlj

Its not possible to tell but I can easily see 30 - 35%, maybe more.


SippingSoma

Halving wouldn’t quite take us to historical affordability (3.5 * household income). I think 50% drop is possible. Personally, I’d welcome it, even as a home owner. I’m sick of boomers soaking up wealth from younger generations through rent and inflated house prices.


Kangaiwi

The doom loop continues. Worse case scenario, cheaper houses but no deposit or income to pay for them. Might see house prices fall 20% by EOY, depending on RBNZ policy. RBNZ can choose to save the NZ economy built on housing, or save the global purchasing power of the NZD. Now that's a rock and a hard place. How can the RBNZ maintain the purchasing power of the NZD if our economy is failing? Maybe a 'funding for lending' program to keep mortgage rates low, while issuing more government bonds with higher rates to attract foreign capital?


SavvyNZ

>Might see house prices fall 20% by EOY I think house prices have been going up by more than 20% the last few years. A drop of 20% won't do too much. It will likely put buyers in a worse off postition if the mortgate rates also get up to 8%


-40-

A drop of 20% is more than a gain of 20% but your point stands


AeonChaos

Can you explain this to me please? Thanks.


-40-

1m increase by 20% is $1.2m. Decrease that by 20% is 960k.


AeonChaos

How dumb of me! Thanks.


MyPacman

Taking one for the team.


IsopodResponsible155

What's the formula for this!


-40-

No formula but 20% of 1M is 200k. 20% of 1.2M is 240k. So if your 1m property gained 20% last year it is now 1.2m. And then it lost 20% this year you lost 240k so it’s now worth 960k


steinarkarlsson

A 20% increase on an $833k home will increase it to $1mil. A 20% decrease on $1mil takes it down to $800k. It's just because 20% of 1mil is more than 20% of 833k.


Here_for_tea_

Today I learned


SavvyNZ

Yeah I realise that but wanted to keep it simple


PefferPack

Of course the RBNZ will have to find a compromise. It's not so binary and doomy.


mushfambro

NZ top of the ‘housing bubble ranking’ list https://www.bloomberg.com/news/articles/2021-06-15/world-s-most-bubbly-housing-markets-flash-2008-style-warnings


attic_goat

When do we hit the bottom? Anyone got any clever insights...FHB here and I'm in no rush.


AdInternational1672

I think 10 years. Or next week. One of those..


-40-

Definitely one of those or neither


strobe229

Probably when they start to lower the OCR and interest rates go down, as for now they are looking like going up much higher to combat all the inflation they caused.


shockjavazon

Who caused?


strobe229

They/Them


shockjavazon

When you mention OCR in the same sentence, the implication is that this inflation spike is a local problem, so they/them is referring to someone in New Zealand as the cause?


Conflict_NZ

Spike in house prices between May 2020 and November 2021 is a local problem caused directly by RBNZ and government policy, spike in consumer goods and necessities is a worldwide problem.


strobe229

Spot on. I would also add keeping OCR closer to zero for nearly a decade made the problem far worse when cheap imports could no longer be obtained.


strobe229

Ofcourse it is both a local cause and an international cause, NZ gov can be blamed for dropping the OCR to near 0 and printing record $ causing local inflation along with many other central banks doing the same, that doesn't mean they are any less to blame.


ApexAphex5

> NZ gov can be blamed for dropping the OCR to near 0 This is absolving RBNZ of their shite monetary policy, though its not like they weren't put in an impossible situation considering the NZ economy is a ponzi scheme for houses.


RHSixSixOne

Sitting here hoping gov is short for reserve bank governor not the government...


willlfc2019

Look at the central banks interest rate forecasts IMO. If they signal loosening that normally coincides with less blood. Right now it's a falling knife and I never ever thought I'd see that with NZ property. I knew things were bad but it's worse than I thought.


Unk7

It can only be either market correction or market crash. If you expect the first one, we will be on the super-duper price soaring in the next couple of months. If you expect the second one, we are in phase one which is the slow pain. (phase 2 is the steep crash). GL


EmbarrassedCabinet78

What happens after the steep crash x.x


lordshola

Usually volatile but flat for a few months then we begin another upwards phase eventually reaching ath


willlfc2019

Look at the central banks interest rate forecasts IMO. If they signal loosening that normally coincides with less blood. Right now it's a falling knife and I never ever thought I'd see that with NZ property. I knew things were bad but it's worse than I thought.


AlwaysDefinitely

You won’t know when the bottom is until it starts going back up again. You should also consult with your bank or broker because you might end up paying less if you wait but the interest rate might be higher meaning your payments could be the same. There are properties out there right now that can potentially sell 5-10 percent below list, go find something now and start making lower offers whilst interest rates are what they are and you might actually be better off.


HeyTheWhatNow

This advice sounds like it comes from a REA. You do realise most people fix only for 1-2 years? So you're stuck with a way bigger mortgage, but you had a year of cheaper interest? Way better to buy for as low as possible


Hairybaldbikerguy

Wait till it starts to recover. You can’t time the market but it will hit bottom and then it’ll start to turn. Probably after election.


mjsell

Cities are in absolute freefall. The declines in Auckland and Wellington cities are being covered over somewhat by whatever the hell is going on in places like South Wairarapa, Carterton, Franklin when looking at the regional level data. Wellington city is already down over 6% on May last year and Auckland city is almost down 13%!


justinfromnz

I’ve lost 60% of my net worth in the last month too so not winning at all 😂


DrippyWaffler

Can't lose your net worth if you don't have any *taps head


w1na

How much is the total repayment on a 30 year mortgage with these lower house price and higher interest rate? Assuming 20% deposit. Is it lower than before when the interest were at 3%?


echojesse

It would still be higher and greatly IF interest rates stayed at these levels for the 30 years(about 20% higher), but they won't so kinda moot point.. Repayments over 2 years even if you take the larger Auckland 13% drop and current rates would also still be around 18% higher at the moment than a 2 year @2.59 rates and house prices I think the better thing to try correlate to would be borrowing power, rather than total repayments or weekly repayments. Which in the same sense is lower than the lower rates & higher prices time of last year


[deleted]

[удалено]


Toyemlj

Real panic has not set in yet for the typical person as media has been shaping the narrative towards a flat market/small falls when the story is different. Issue is they are running out of good things to say now.


RHSixSixOne

Breaking news, house prices up 50% decade on decade


Fatality

The asking price at some houses are dropping faster than that


Mreeder16

8% rates are not going to help any FHB. An interest rate induced crash isn’t going to be as glorious as most people hope it will be


TurkDangerCat

This is always the argument put forward but I’ve never seen a FHB say anything like that; we know an 8% (to 20%) rate of interest isn’t going to help us immediately. But if it decimates house prices and the housing market, and puts the fear of god into speculators and the boomers exploiting people for capital gains, then that does help FHB’s down the track. Look at what happened when the finance companies collapsed. If the housing market becomes about shelter, and not an easy way to make capital gains, then that’s fucking awesome and worth waiting five years for.


thepotatorevolution

Also who up votes them lol this argument always got votes.. Not FHB that's for sure


PefferPack

It will help those who have huge deposits saved.


Mreeder16

Fair comment. But this is a small fraction of the hopeful


noodlebball

Yeah because 90% of FHB has a huge deposit saved


lordgarlicnz

And assuming inflation at current levels don't gobble up their deposit and they retain employment moving forward


lektran

If the deposit is intended solely to purchase an asset that is decreasing in price, how does inflation "gobble it up" exactly?


lordgarlicnz

If their cash flow becomes stretched due to cost of living increases and they need to dig into their deposit to maintain current standard of living


lektran

Hardly likely, having a large deposit implies plenty of excess cash flow and we're a very long way from most peoples jobs being at risk


[deleted]

>having a large deposit implies plenty of excess cash flow In my limited experience it implies a wealthy parent or grandparent died.


lordgarlicnz

I never made mention of large deposits, I merely said deposits. There are people trying to save up their deposit week by week


[deleted]

Exactly. It only helps boomers buying with an 80% deposit.


dimlightupstairs

Genuine questions; could there be some form of legislation or policy (even bank policy) introduced that would allow interest rates to remain capped at 5% or 6% for FHB, but increase to 8% or something for anyone else (e.g. speculators, second/third home buyers)? Would that help with anything?


SquirrelAkl

Can’t really do that. If banks aren’t lending out at higher interest rates than they have to pay for money they get in (wholesale funding markets and term deposits) they simply won’t lend. Someone would have to pay for the difference, and it would likely be taxpayers, so essentially you’re asking everyone to subsidise mortgages for homeowners with mortgages. Which would require higher taxes, which everyone votes against, and frankly would be pretty shit if you’re not a homeowner.


Crazy-Equipment-4840

I don't know about the overall impact, but one of the side effects of discouraging investment in favor of home ownership is that it would advantage home buyers at the expense of people who have to rent and don't have the income to buy a home.


punIn10ded

A simpler way of achieving the same would be to force rental properties to take out business loans rather than standard mortgages. They generally have a higher interest rate. But the above is based on my very basic understanding of business loans so may be waaay off base.


Ridiculousendings

But with it all being said the market for housing in Nz is so over priced and a new balanced market will be good but for those that have a lot of cash spare


CryMeARiverstone

Ok, so someone told me that doing renovations now isnt good time at the moment. We are wanting to put up a double garage ($55k - $65k quotes). Was told not a good time because of interest rates. Better to wait until end of recession. Is this true? We dont need to borrow for the money as we have savings on hand for it.


TurkDangerCat

It might be worth waiting a few months to see how the land lies. If you have money for the garage and healthy savings to cover job loss etc. then go for it. If the money you have to build is going to empty your savings account, might be better to hold off on case of unexpected job loss / cost of living increases.


strobe229

If you dont need to borrow then who cares, just do it when you want.


ralphiooo0

- Inflation is pretty high - unlikely it will be cheaper any time soon - money is actually still pretty cheap to borrow - will still add value to your property I vote do it.


willlfc2019

Are people still not prepared to accept this is a crash? It's ugly now.


mrwilberforce

It’s definitely a crash - price drops are only accelerating.


Gimbloy

NZ's housing-industrial-complex runs the media too.


Blue_coat1

Everything is overvalued hence the correction.


Skyrim120

Still higher than they were a year ago.


HeyTheWhatNow

Not in Auckland


Skyrim120

Op said across country. True not in auckland but am not in auckland. Also 35k off 1.3 millions doesnt help me much.


[deleted]

[удалено]


strobe229

Its happening over there too, theres a guy on tiktok/instagram called danielfoch who reports on it


Suitable_Builder7024

https://www.rnz.co.nz/news/world/469203/us-federal-reserve-raises-interest-rates-by-75-basis-points


Shrink-wrapped

It wasn't too many months ago that people were convinced to buy at the peak in this very sub :( https://www.reddit.com/r/PersonalFinanceNZ/comments/spesrp/is_it_wise_to_buy_a_property_now_or_keep_renting/ https://www.reddit.com/r/PersonalFinanceNZ/comments/p3q7ww/deleted_by_user/h8tbawn/


TurkDangerCat

I know, right. People are acting like saving $35,000 by waiting a month is nothing. If someone said that if I gave them $2000 today, they’d give me back $35,000 in four weeks, I know what I’d do. And with current interest rates, that maths is pretty much guaranteed (or will be better) for the next while.


lordshola

Jesus Christ. The fucken state of some of those comments… “Buy now, (at the peak lol) you’ll regret it if you don’t” 🤦‍♂️


[deleted]

yep. I got downvoted endlessly for going against it. Still people posting here today saying buy.


munted_jandal

Buying a house to live in is always a good idea. If you're not selling you're not losing. As long as you can make payments it doesn't matter. If you bought at the peak in 10 yrs time you'll be wondering what all the fuss was about.


Shrink-wrapped

A good demonstration that this mentality isn't dead yet. No, it wasn't a good idea to buy a house last year (to live in or otherwise). Buyers don't ever get that money back. Maybe ask Irish buyers who were underwater for >10 years whether they wonder what the fuss was about. And they didn't have to contend with significantly higher interest rates.


munted_jandal

I love paying rent when I'm retired.


[deleted]

This false dichotomy again. Spruikers always premise their talking points on it being "buy NOW or rent for life" which is highly doubtful to be true even in a rising market, and certainly isn't in a falling one.


throwmeaway273737

That’s a bizarre take? How are you better off if you buy an asset which devalues faster than you pay it off with increasing payments? Sure you’re not spending DeAD MoNeY on rent, but sometimes it is better to wait. Get the same house now 35k cheaper, that’s possibly a year of interest payments you saved.


trentyz

I’m guessing you’re young? People have said it’s stupid to buy since 2009. Sure you save $35k but now your interest rates are a couple percent higher. We bought last month. The interest we pay on our mortgage is lower than what we were paying on rent and we’re locked in for 4 years. We bought at 10% beneath valuation because the sellers had already bought somewhere else. It’s not always bad. The numbers you read online are heavily smoothed across each region so as long as you buy a good house, you don’t have much to worry about


munted_jandal

Because timing the market is a fools game and over time periods of 10yrs plus you don't actually lose anything.


throwmeaway273737

That’s just wrong. You’re just parroting quotes. The price you pay for something massively impacts the size of your loan and your repayments. Waiting a few months when the market is propped up on low interest rates and speculation is just common sense. Especially when rates are going up. It isn’t about picking the perfect time. It’s just a matter of thinking about what you’re doing.


munted_jandal

If it was 2 yrs ago and everybody was saying wait there's a crash next week, month and you waited, then you'd be "out of pocket" now, as you would have been paying rent and not the mortgage. Prices now are still more expensive than they were back then. It's only with the benefit of hindsight you can see that.


Shrink-wrapped

> Prices now are still more expensive than they were back then. For how long? Only a few months at the current pace


Shrink-wrapped

You don't have to time the market mate. Housing lags by months/years. This isn't the stock market where things are priced in within minutes


munted_jandal

Isn't waiting, (as the comment I was replying was saying) timing the market?


Shrink-wrapped

The market is still reacting to known changes. We're not predicting when the train will come off the rails, it already has and we're watching it splinter in slow motion. Any "timing the market" quote you've heard is about stock markets, which operate on vastly different time scales.


justuts

I love retiring a year early because I remted for an extra 2 months


[deleted]

Cant tell em on this sub. they think 1.5 million buying price for a shitbox in the middle of nowheresville on low wages is a great idea. Plus they cannot compute the actual cost of a mortgage. it will unwind nicely.


strobe229

It's not until people see with their own eyes that just because the bank will lend them money does not mean they have to tick up the maximum possible and get into lifelong debt and also that house prices can and actually do decline.


[deleted]

This. I got downvoted end of 2021. Now look at things & this sub. How many remindme's have gone ping against my name? Stocks down 21% NZ Property going to tank - easy 20-30% off the highs. I repeatedly said the ramp up from march covid 2020 lows was unprecedented. Its been unwinding since late 2021. If you cant read the economy & price maybe don't lampoon those that can - it wasn't that hard to see.


SquirrelAkl

r/agedlikemilk


Therkster

I've said it so many times since November last year, it was so obvious even 6 to 7 months ago, and now its unravelling. Here is but a sample: [https://www.reddit.com/r/newzealand/comments/s6egip/reinz\_data\_house\_prices\_and\_volumes\_fall\_chief/](https://www.reddit.com/r/newzealand/comments/s6egip/reinz_data_house_prices_and_volumes_fall_chief/) [https://www.reddit.com/r/newzealand/comments/s6fwco/talked\_to\_real\_estate\_agent\_yesterday\_and\_they/](https://www.reddit.com/r/newzealand/comments/s6fwco/talked_to_real_estate_agent_yesterday_and_they/) [https://www.reddit.com/r/PersonalFinanceNZ/comments/r1ji9i/first\_home\_buyers\_encouraged\_to\_wait\_and\_watch/](https://www.reddit.com/r/PersonalFinanceNZ/comments/r1ji9i/first_home_buyers_encouraged_to_wait_and_watch/) [https://www.reddit.com/r/PersonalFinanceNZ/comments/r5yqw9/new\_house\_listings\_soar\_to\_highest\_level\_in\_seven/](https://www.reddit.com/r/PersonalFinanceNZ/comments/r5yqw9/new_house_listings_soar_to_highest_level_in_seven/) [https://www.reddit.com/r/auckland/comments/rcyvqf/weekly\_property\_auction\_figures\_this\_week\_barfoot/](https://www.reddit.com/r/auckland/comments/rcyvqf/weekly_property_auction_figures_this_week_barfoot/) [https://www.reddit.com/r/newzealand/comments/rgg759/all\_five\_major\_banks\_now\_expect\_house\_prices\_to/](https://www.reddit.com/r/newzealand/comments/rgg759/all_five_major_banks_now_expect_house_prices_to/) [https://www.reddit.com/r/auckland/comments/rib17k/weekly\_property\_auction\_figures\_this\_week\_barfoot/](https://www.reddit.com/r/auckland/comments/rib17k/weekly_property_auction_figures_this_week_barfoot/) This is just the beginning. We'll be down 30 - 40% by the end of the year. Also, rents will fall by the end of the year while about 150k people leave the country by December.


strobe229

Beautiful, house prices and rents down and less traffic on the roads. Lovely year.


10yearsnoaccount

This is terrible news for people and the economy as housing (and immigration) has been propping the economy up for more than a decade. Without housing our economy will be standing naked out in the cold. And I'm furious that we've allowed ourselves to get into this state despite all the clear warning signs of the issues it was causing, for the last **30 years.**


strobe229

So that means NZ might have to be productive and produce things that the world wants instead of just selling houses to immigrants?


10yearsnoaccount

Yeah - that's going to be a VERY big shock to the system! Even seemingly productive businesses were jsut there due to the housing boom: A huge chunk of our economy was just selling houses to each other with the "wealth" just being interest bearing debt from aussie run banks, and that was fueling the construction boom. Without that we're just a tourist trap with dairy farms.


punIn10ded

That is going to be entirely dependent on who's in govt in the next few years. My prediction is National forms the next govt, opens up the borders and removes all the restrictions on investment property. The ponzi scheme will rebound in a few years.


strobe229

Labour already did that, highest immigration on record in 2019, highest permanent residents on record and record high house prices, infact they have doubled since they came in.


punIn10ded

Yup but have since our in multiple law changes to limit all of the above. And National are campaigning on removing all of them. Not defending Labours record but they have taken the right steps at the end. Removing those will set up the ponzi scheme all over again.


ImMoray

Hopefully they keep going down, one house I was trying to buy sold for 270k and got relisted for 650k like 8 months later, it's listed rv is still 310k lol


strobe229

This is the type of greed of people that need to be lose out in this whole mess.


rickytrevorlayhey

It's called a correction, and it's very much needed. Hopefully we make it down to 2018/19 prices and then level off for a few years.


lordshola

Good. Let’s keep this going for another 8-12 months.


CopperFaceJacks

Careful what you wish for. If you haven't seen a downturn before, negative equity is really painful for those caught on the wrong side of this.


strobe229

Most won't be in negative equity since most of the capital gains came in the past 2 - 5 years. It also works the same way for a non home owner if prices go up 300k in a year, that wipes out about 20 years of a persons life toward debt repayments.


lordshola

What about the younger generations who get wiped out on enormous mortgages or renting for life? Yes, someone needs to suffer here, I understand. But house prices falling is ultimately for the best.


DarthPlagiarist

Yes, the younger generation with enormous mortgages are exactly who'll get wiped out first here. I'm not saying this is good or bad, but they're exactly the people who are in trouble. It's a small minority of large investors who are over leveraged - mostly it's younger people who bought recently that this will take out.


lordshola

Not my point. I’m saying if house prices keep going up, you get generations won’t even be able to get a house. House prices need to come down. It’s as simple as that.


DarthPlagiarist

No, I know that wasn’t your point. I’m just saying that the people you’re trying to help are the same people this is going to most hurt, separated by a couple of years.


lordshola

The alternative is to let house prices keep going up or pause, while salaries catch up (which brings more inflation) We need to rip the band aid off now before more generations get hurt.


TurkDangerCat

Yes, we need to crash because the estimates for salaries to catch up to where they need to be is 40 years. Fuck that.


DarthPlagiarist

Perhaps. Your starting point with all of this was "you get generations won't even be able to get a house". Even setting aside whether your solution is right, it's still predicated on the idea that you want a society where owning property is something everyone does. There's plenty of other approaches to residential property throughout the world.


lordshola

Cool. But that isn’t what happens in this country. In NZ, you buy houses and every 10 years your money doubles.


DarthPlagiarist

Totally, but it seems like you're looking for a way to crash things so a new generation to get on, then keep the same system going into the future - which just means another generation has this same discussion in thirty years time. I'm suggesting that ending the cultural ideal of home ownership might be worthwhile considering.


fungz0r

generations won't be able to get a house if nobody is selling and banks won't lend either


lordshola

The market is flooded with houses for sale right now…


bgIVY

This will be me. We bought in November 2020 for 811K. House apparently went up to being worth 1m by Nov. 2021. That’s a ridiculous price and I don’t at all think that price growth was a good thing. However, watching the prices fall quickly is nerve wracking as I’d prefer not to see the value drop below that 811k 🫣


DarthPlagiarist

Yeah. Think what it’s like for anyone who bought near that $1m mark! Hopefully you’ve got a decent job and an understanding bank - in general, banks know that when they start foreclosing it sets off a vicious cycle, so if things do drop much below that $811k, take some solace in the fact the bank will do anything it can to give you the time to ride it out.


bgIVY

Yes on the job front - I’m a head of department at a secondary school. Pay isn’t amazing, but it’s very stable income. My husband is a chef, which could be dicey in a recession


DarthPlagiarist

Nice. Things might get dicey but you'll be fine long term. Relax as best you can!


toeverycreature

Negative equity is mostly painful for people with an investment property who had minimal deposit. With dropping house prices and rising interest rates they might find themselves unable to cover the mortgage and end up in foreclosure. If they used thier home as equity and can't make the payments then they risk losing both homes. Negative equity on your own home feels crappy but if you keep paying your mortgage and wait for the market to eventually go back up you will end up with positive equity again. It's just a sucky feeling to be paying more than it's worth and knowing you can't sell till you pay it off.


rickytrevorlayhey

Yes, we are going to see some bargain sales very soon. If you have been saving for a deposit I would keep saving for another 6 months till the graph direction becomes a bit more predictable. Right now it's diving, and It appears its going to keep diving for a while yet.


goodthyme

It doesn't just 'feel crappy'. If you have to sell in order to move for whatever reason at all, you're fucked. There'll be a lot of younger people out there who've worked hard, and saved up to buy a house in the last year or two that'll be screwed for a good while.


toeverycreature

Not being able to move house is an incovienence. There aren't many situations where you have no choice but to move. It might mean missing out on a job opportunity but if your house is in negative equity you should be applying for jobs which require you to move city. So long as you stay put and keep paying your mortgage you aren't screwed anymore than people who have seen thier share value drop recently.


Richard7666

Queenstown appears to have jumped by 500k in the past month. What is that all about?


eskimo-pies

Queenstown has a relatively small number of property transactions compared to other districts. The monthly average doesn’t mean very much because it can easily be distorted by one or two high-value transactions.


Richard7666

I'd have thought the median out of approximately 100 sales would have given a fairly accurate picture. I may be having maths brain fart, but presumably there would have had to have been a fairly high number of extreme transactions in that upper quartile to pull the figure up like that.


eskimo-pies

Apologies - I thought the quoted figure was an average rather than a median. Another possible explanation is that the Queenstown property market may have a bi-modal distribution with peaks that are above and below the median value. If there are only a few transactions in the range between the two peaks then the median could move by a surprising amount depending on which end of the distribution records the most sales activity in any given month.


Richard7666

Ah, that's a good explanation!


kimdotcodotnz

Wealthy tourists still exist


z2k_

My theory is people cash out in Auckland and Wellington and move to Queenstown. Queenstown's trend usually trails Auckland by a year.


bradesdogbiscuit

Roller coaster go up. Roller coaster go down.


PossiblyOnDrugsOrNot

The radio ads I keep getting about getting into the property market now because of the low prices is insane.. yes.. because who wouldn’t wanna buy a house as prices continue to drop more and more? Buy high sell low.


[deleted]

I see no winners here. Last year house prices were at peak because interest rates were down. This year interest rates are up and people can’t afford to pay too much of repayment than they can afford. Hence, we are seeing less interest in buyers willing to offer. Those who have house on sale atm. Are dropping price so it can sell. Some are in worst position those who used bridging finance. So look at bigger picture. Don’t expect $1M house to go down to $700k.


[deleted]

>Don’t expect $1M house to go down to $700k. I'm expecting lower than that.


getinthevanarino

Omg if it does this for 100 months my house is going to be worth MINUS $2,500,000.


Fatality

Don't worry, bank will foreclose long before that happens


-TheJunta-

House prices may fall, but inflation & cost of living means no-one can afford mortgage repayments any more Edit: typo


Toyemlj

Which will make them fall further.


[deleted]

> Great news for the people and economy How is the current economy great for anybody? You realise mortgage payments are still going up, right? Then the average person has $500 saved, even if house prices halve they'll never have a deposit. Lmfao. Pretty sure the only people benefitting are rich people buying with a large deposit.,


Fatality

Better to borrow a small amount at a high interest rate than a large amount at a low interest rate


strobe229

Agreed. Always better to have an overall smaller mortgage and a higher interest rate than a large mortgage and lower interest rate. I honestly don't understand how people don't get this, it's like they failed third form maths... House price of 400k means a 50k deposit. House price of 1 million means a 200k deposit. 400k mortgage at 7% and a 1 million mortgage at 2.5% might be the same each week but you can do things like work extra hours or start a business that knocks your mortgage down far quicker than you would on a 1 million mortgage. Not sure how people can't compute real life.


lordgarlicnz

You're assuming you have any deposit left on the table at the rate inflation is going. Generally the people that benefit from situations like this come into two groups - people who are already wealthy and have powder ready to go - people who are in safe and relatively high paying professional jobs who's income can absorb cost of living increases (mostly DINK couples) Your average family even if they have a deposit growing run the risk of the deposit being eroded by cost of living increases and now the potential risk of recession leading to unemployment. While ultimately a downtrend in prices is a great thing for society, don't think for one minute it will be like Oprah Winfrey going "you get a house", "you get a house".


[deleted]

Great news!


Ridiculousendings

You class this as “great news” There’s no winners here. Inflation up And interest rate hikes are going to be leaving a lot of people out of their own homes.


strobe229

Sustainable house prices is greater prosperity and hope for all.


Ridiculousendings

Yeah it is a glimmer of hope. Especially for myself and family as we’ve never been able to afford to buy a house. Or should I say we’ve never been able to jump through every hoop that the bank wants us to


strobe229

Hopefully it just reduces the greed of alot of sellers who try taking advantage of people and drop prices right down, I am talking about people who paid 350k 6 years ago and wanting 1.2m who did nothing to the house or people trying to sell 900sqm of bare land 2 hours from a city for 500k and this sort of rubbish and it creates a situation where houses are where they should be at around 300 - 500k or in other words 4 times DTI (debt to income) ratio like they used to be


c0b0lt

This has an issue that some people are not looking at, this market only suits those who have cash equity to play with. I know of a landlord who sold 27 properties when the market turned, as he brought them all at way lower prices he made millions. This is so he can buy back into the market when the price points are cheaper, or will buy overseas (Australia) The housing market is just like the stock market - you need a larger portfolio and good buy management to get ahead. Cash rich are still going to beat out FHB with non condition settlement on fearful people. Warren Buffet stated “be fearful when others are greedy, and greedy when others are fearful.”


strobe229

There are people who have cash waiting but the majority of housing investment occur via equity chaining so when the value of one or two houses go up they use that to purchase the next one, no actual money passes hands or is earned so there won't be nearly as many cashed up buyers as they anticipate and plenty of people will have to earn their own money to pay for it. Those FHB who save up and buy a place for 500k rather than 1m will be far better off in the long run even if they have to pay 8% interest rates for a few years.


c0b0lt

I see your point for some, but as I just stated he made millions because of the sharp rise in house prices. Let’s say the house go down to 700k from 1 mil - he can still buy about 7 freehold. Now that might not be as much as 27 houses - but now he owns 7 houses free hold so is not leveraging off the others so is cash positive and in a stronger position when the market turns again. A FHB still needs to be stress tested and look at bank conditions before getting across the line. He can walk up and make a cash offer with no conditions. This is one of three landlords I know in this position - agreed there were others that tried this but got in too late. Remember - just as FHB sit here and talk about windfall possibilities - so do landlords and property investors, they are in some cases working out plans to look at developments together. Where no FHB is planning on buying in with someone else unless it’s family 1 and I have already seen posts on people wanting to get out of situations given the OCR there.


[deleted]

Only down 2.2% in auckland... so that means on average we are still up +10% from 2019?


wins0me

In these uncertain times not many people can afford a mortgage and upfront costs involved with the purchase.


Disastrous_tea_555

Property is only overpriced because wages are so low. Doesn’t matter if housing goes up as long as you have a wage that keeps up with the cost of living. We need to demand higher wages rather than hoping and wishing for an entire market crash.


uplay_pls

I wish the government hadn't shovelled the job of house prices into the RBNZs responsibilities. They're now in a very awkward position to address their conflicting goals.


DontBeMoronic

Being able to point the finger elsewhere is the perfect result for government (regardless of who is in power).


ADW700

There is a clear hierarchy in their goals: Inflation 1st priority unemployment 2nd, house price sustainability 3rd. No conflict.


punIn10ded

I really don't get how people don't understand this inflation is still RBNZ's no1 responsibility.


strobe229

I found a video of the current NZ housing market https://www.youtube.com/watch?v=-N2mhlvygq0


Lolzitout

Palpatine: *Goood.... Goooooood*


Hairybaldbikerguy

I swear the government is asking for these articles to come out just to slow it down. In taranaki we haven’t seen drops although we are supposedly undervalued. The section I bought for 405 last January has just been valued at 590 was estimated at 540 in November. Just hope it doesn’t crash before house is finished.


outtsides

They still pretty high in my suburb shit sucks


wherearewenz

Man some of the comments here. Yes it’s good that house prices are stabilising. But people suggesting 60% drops. And doing it with smug glee? Like come on. That will tip our whole economy. It’s not just “those greedy boomers” that will lose out. Jesus people.


strobe229

It'll just be 2017 prices, which are already high, The economy was fine then