Comments on: The cuts are coming

By: Nemydom

Nemydom — Sun, 26 Oct 2008 10:06:13 +0000

James, you are not right. We have big problems with employment now: army of thousands unemployed are coming. The 1% cut of OCR is not significant: interest rates are still very high. I would say even if we get back to 6.5% for 5 years it will not help. The tax cut is a stupid joke of the government: Less than $20 a week for average salary!!! It is nothing.
We are now at the beginning of prices slump. There is at least another 20% to come off prices in the next 6 months for areas like Dannemora and Albany and 30% – 40% for junkyards like Manurewa, Papakura etc. It is a good time to SELL now!!!

By: James

James — Mon, 20 Oct 2008 21:29:52 +0000

My opinion is different to the others. I believe the bottom of the price curve is about now. We have high employment, good interest rates (now), and tax cuts. The outlook for interest rates and tax cuts is still better. I think it will be business as usual for the housing market very soon. I am looking to increase my property portfolio at the moment. Don’t look a gift horse in the mouth.

By: Shane Farley

Shane Farley — Sat, 18 Oct 2008 21:48:49 +0000

I do not think the impending rate cuts will breathe new life into the housing market any time soon. The relationship between house prices and rents attained (in the case of investors) or peoples incomes (home buyers) is still way out of balance. Those with cash reserves will undoubtablly pick up some bargains from distressed sellers, but the average consumer is now rueing the carefree spending orgy of the last few years and they are the ones that drove the market beyond the fundamentals. Also I am constantly amazed at comment from “experts” suggesting NZ is somehow insulated from the worst of the international crisis, as if some domestic policy moves will save the day. We are surely affected more by the state of our trading partners than anything else, Business week recently put the NZ economy in the top 13 economys at risk.

By: TDB

TDB — Sat, 18 Oct 2008 05:01:39 +0000

I could not agree more with RGH, we returned ot NZ after 11 years in London, sold our terraced house ion Clapham in Aug 07, spoke with the estate agent we used last week and if we were to list it now would be 25% lower as an asking price, and from last year when there were 3 other similar properties in the area for sale at the same time, now there are 35.

The price adjustment has not fully hit here by a long shot, buyers are still low balling and sellers are not adjusting their asking proces to get the sale done quickly. There is at least another 15% to come off prices in the next 6 months- this will happen when NZ finally wakes up and realises although we are an island we are not isolated from world events.

The one strong feeling I had when coming back last year was how complacent NZ’ers were about the global position, this feelig is still there, we all need to wake up and realise just how serious this is.

Murray Cleland stopping telling us the bottom is in (5 timers this year at last count ) would also help.

By: Mike Williams

Mike Williams — Sat, 18 Oct 2008 03:29:16 +0000

I dont believe interest rate cuts will improve the housing market much, it may help volume improve but I believe prices will continue to decline slowly until better economic conditions prevail and returns for rental housing lift beyond the current dismal level.

Back in 2001/02 you could get money at 6.5% for 5 years before the boom actually took off. At that time there was a huge number of houses on the market that had been unsold, some for over 2 years, this surplus stock had to go before prices rose which took at least another 12 to 24 months depending which town you were from. I believe the reason for the most recent boom was 9/11 and the resulting immigration boom into NZ especially expate Kiwis wanting a safe haven with net inflow of 40,000 people in 2002 and a further 34000 in 2003. This set the scene for the rise in real estate prices, real demand. Currently we dont have the demand so the market is returning to what most people consider normal and every thing will wind back.

I dont believe we will see a price increase in real estate until the demand arrives again so expect it to percolate along with further decreases in prices in the medium term, after that it will be anyones guess. Buying investment houses will improve over time as prices decrease and returns increase but there is no need to rush.

By: RGH

RGH — Fri, 17 Oct 2008 00:37:45 +0000

I currently reside in Australia, where PM Rudd is warning of very, very, tough times ahead. This in a country where the Federal Government has just injected 10 Billion of its 20 Billion surplus into the economy to help keep it going, and will undoubtably be doing much more with actions to direct Austalia’s huge superannuation funds into nation-building projects.

Substantial moves have already been taken to help the housing industry and sales market, and direct cash bonuses are available to help pensioners.

The enormous wealth-generating mineral commodity market is already declining internationally, despite the ongoing huge infra-structure growth in China and India. Nevertheless, Australia is well set to better weather the international recession already apparent in USA, Britian and Europe than most other countries.

And the Prime Minister of Australia is warning Australians of very, very, tough times ahead.

Don’t make the mistake of thinking that NZ will not feel the full force of this blizzard. The politicians, as usual, will just not tell you about it, until it is self evident.