Comments on: Where to for house prices? http://www.landlords.co.nz/blog/where-to-for-house-prices A blog for New Zealand landlords and property investors Thu, 09 Feb 2012 07:09:47 +0000 hourly 1 http://wordpress.org/?v=3.3.2 By: Ian http://www.landlords.co.nz/blog/where-to-for-house-prices/comment-page-1#comment-1306 Ian Sun, 04 Jul 2010 21:49:44 +0000 http://www.landlords.co.nz/blog/?p=292#comment-1306 Im not so sure that this article is sensible. Well parts of it I do agree with. But to suggest the housing market may pick up due to a slight lift in building activity just doesn't make sense to me. Actually the number of consent issued has dropped again after the small blip 2 months ago. The point is building activity will follow the housing market, not lead it. It is very much a supply and demand issue. Building activity will pick up only when there is real growth in the market. Yes there may be some hot spots here and there but in general the market remains flat and appears will remain flat for a while. As far as interest rates not rising as high in this cycle is inaccurate. The RBNZ had said they may not need to raise the OCR as high in this cycle however, there is an additional 1 1/2% to 2% funding cost on top of the OCR so real interest rates may not be too different from previous cycles. The real problem is people just don't have the money to spend or the job security to take on big mortgages. Investors are unale to leverage off existing property so are in most cases out of the market. All this points to a long flat period which is likely to keep interest rates lower for longer. Suggesting the higher valued properties will not be hit as badly by the tax changes is also false. Many of the more wealthy are finding it tight at the moment too and if you had a more expensive house as a rental, or perhaps a beach house, I think the tax changes would be disasterous. Lets hope the increased returns from the export sector filter through the economy quickly because it is this stimulus that will restore confidence and create a new money-go-round. Im not so sure that this article is sensible.
Well parts of it I do agree with. But to suggest the housing market may pick up due to a slight lift in building activity just doesn’t make sense to me. Actually the number of consent issued has dropped again after the small blip 2 months ago. The point is building activity will follow the housing market, not lead it. It is very much a supply and demand issue. Building activity will pick up only when there is real growth in the market. Yes there may be some hot spots here and there but in general the market remains flat and appears will remain flat for a while.
As far as interest rates not rising as high in this cycle is inaccurate. The RBNZ had said they may not need to raise the OCR as high in this cycle however, there is an additional 1 1/2% to 2% funding cost on top of the OCR so real interest rates may not be too different from previous cycles.
The real problem is people just don’t have the money to spend or the job security to take on big mortgages. Investors are unale to leverage off existing property so are in most cases out of the market. All this points to a long flat period which is likely to keep interest rates lower for longer.
Suggesting the higher valued properties will not be hit as badly by the tax changes is also false. Many of the more wealthy are finding it tight at the moment too and if you had a more expensive house as a rental, or perhaps a beach house, I think the tax changes would be disasterous.
Lets hope the increased returns from the export sector filter through the economy quickly because it is this stimulus that will restore confidence and create a new money-go-round.

]]> By: Scott W http://www.landlords.co.nz/blog/where-to-for-house-prices/comment-page-1#comment-1270 Scott W Fri, 18 Jun 2010 03:45:35 +0000 http://www.landlords.co.nz/blog/?p=292#comment-1270 Finally- a sensible article that discusses the New Zealand housing market. The New Zealand housing market is clearly segmented on price and location and most market commentators fail to appreciate this. Prices in some segments will continue to rise, eg NZD800k - NZD1m houses in good areas in Wellington in Auckland, and prices in some segments will fall, eg NZD400k- NZD600k in rural areas. Its all about supply and demand. Don't forget that even though interest rates are set to rise they are still far lower than the rates in 2007 when all segments of the market were rising rapidly. Property investors just need to pick the right segments to invest in! Finally- a sensible article that discusses the New Zealand housing market.

The New Zealand housing market is clearly segmented on price and location and most market commentators fail to appreciate this. Prices in some segments will continue to rise, eg NZD800k – NZD1m houses in good areas in Wellington in Auckland, and prices in some segments will fall, eg NZD400k- NZD600k in rural areas. Its all about supply and demand. Don’t forget that even though interest rates are set to rise they are still far lower than the rates in 2007 when all segments of the market were rising rapidly.

Property investors just need to pick the right segments to invest in!

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