MrsFychan

This is scary

paddy234

The scariest thing is how the government doesn't doesn't see it as a big enough crisis to effectively deal with it. Look at Covid and see the lengths each nation was willing to go to avoid this crisis. With housing it's clear it's of little concern to them. Instead you have a Prime Minister telling Kiwi's that they will have to buy a new EV vehicle instead of a petrol/diesel vehicle In a few years because they can afford it forcing an already expensive used market to inflate even further. There is a term for people who think like this today and when such people are leaders of nations, leaders with their head in the clouds they do an excessive amount of damage.

Yes i know this has been brewing for some time but we have to accept that the inflation that now exists is solely down to those that reacted excessively to the covid crisis which has created a new crisis that they have no intention of fixing. Lowering interest rates, choking global supply. Do you think they were naive to this?

It reminds me of the Premier here in WA who in relation to the housing crisis here has Said there isn't much he could do to help those struggling due to building companies going under before their builds are complete. When covid was announced he on top of the reserve back with low interest rates offered people tens of thousands of dollars to build a new home. What this caused was a boom in the industry. Builders immediately put their prices up tens of thousands of dollars meaning the money the government was giving to ordinary people went straight to the builder to pay for these extra costs. His response to all this was he didn't regret it and would do it again yet if he had any sense he would have realized that simply lowering interest rates was enough to cause a boom. These type of politicians we have today all too often over-react on some issues while showing complete indifference to other more pressing issues. The problem is their over-reaction is tilting the world toward a dangerous trajectory

BEVS

Maybe a WA er with a whole lot of real family skin right there might like to respond to that lot.
I'm looking at you Spouse of Scouse.

Other than that .....

Charismatic

Generally public officials regard high house prices as positive in New Zealand, for example Reserve Bank Guv' regards high house prices as a "first-class problem" and MPs also hold a lot of investment property. Whether explicitly stated or not this has been a deliberate policy by consecutive governments to keep prices high by keeping supply tight and not an error or oversight. We knew the deleterious effects of what we where doing and did it anyway.

paddy234

What would people on here think about creating a new market for home owners? Similar to the over 60 year old market only this time it is housing solely for the purpose of those who own one property to live in. The main problem is supply but the fact is a minority of homeowners in New Zealand only own one home, that can't be sustained especially in a nation where being mortgage free is essential to surviving retirement. Housing affordability ALWAYS needs to be sustained. Have most residential development released be directed towards this market and you wouldn't have to worry about investors swallowing it up. Then when supply is better able to meet demand scale back so that both markets are running smoothly. The fact is too many people see real estate as an easy way to retire as a millionaire. This is all well and good in a economy where supply isn't a problem but it currently is today so something has to give. Another option is modular homes, quicker, easier yet have materials that are as high in quality. I'm surprised someone like Elon Musk hasn't already started something like this. This is a global problem and while NZ is either the worst or among the worst it needs to be addressed rather than ignored. Affordable housing is one if not the main economic issue in the developed world today. Too many talk about climate change etc especially Jacinda in regards to saving the next generation. What about giving people security of having a roof over their head today before you worry what might be tomorrow

Justcol

Every person I know, bar one who is saving for a deposit, owns a house.
That covers all age groups from mid 20's upwards on both islands. All are average, or there abouts wage earners 🤷‍♂️
​​​​​​

BEVS

Yes True enough.

Justcol

The second statement explains the first, and for many it's a plan that has worked.
the solution to the housing problem is social housing but this government seems more intent on punishing anybody who earns more than the minimum wage than actually looking after it's people
Would you rather people have no initiative and no investments and try to survive solely on the NZ pension.
It seems to me what you're describing already exists in the form of the growing number of retirement villages that are increasing in popularity all over the country

paddy234

True but like retirement villages we need a separate regulated market that investors are locked out solely for those who live in the home they will own. It's the only way to guarantee something that has been long an expectation of past generations to also be expected from future generations. The ability to buy their own home. It's essential, New Zealand isn't a nation that will have enough social housing for the retirees who have rented their entire lives. Home ownership is essential so we need a regulated market as the current one has been ravaged by investors for too long.

What bothers me is that some Kiwi's believe it to be foreigners buying up the property market when that has been proven false. Some people who come out with this actually own more than one home lol. Crazy stuff

Justcol

I don't think there's one part of this I agree with.
Govt regulation !! ​​​
look what happened when they last tried to control prices with the affordable homes scheme. In many places you could by a similar home from a developer for less 😂😂

paddy234

I don't think you understand that the market is already heavy regulated by the government though there are loopholls for huge investors as expected. The only regulation for this market would be that the government would preserve so much residential development for this type of market, much more than it does for the over 60s market. I mean the over 60s market is essentially how this will work and it works quite well. Would you say it doesn't?

The fact is supply isn't meeting demand, I had a look at modular homes and I'm not impressed what so ever as it is just as expensive if not more so this is not the answer currently. In Australia it is between $1500-3000 a m2. That's insane and so much more expensive than traditional builds. The reality is something needs to change. Home ownership is dropping for the younger generation. If we can't provide them with home ownership then we will need to pay for the accommodation for their retirement and if they aren't able to get into a state house then it looks like we will just have to pay a private landlord. That's the reality if housing doesn't become affordable again. The fact that you have political parties aiming to uproot entire industries to try and prevent climate change tomorrow without worrying about an even bigger crisis today shows their heads are buried in the sand.

The other option is crashing the market, one that brings down the market and allows supply to once again catch up with demand. This will be painful but essential if we want to avoid becoming a society that increases social security programs to deal with low ownership. It's currently at 65% and for younger Age groups is around 15% lower than 40 years ago. This has to be dealt with within in the next 5-10 years otherwise we have no choice but to radically change our social welfare society.

Justcol

No, you've lost me know. I can't figure out what on earth you're on about.

Not sure a price crash would solve anything. It happened in the noughties with the GFC and here we are again with prices higher than ever.
Higher interest rates will have an effect but they won't last forever.

When I bought my first home in 1988 I started looking at houses in December 87. By the time I'd bought in April prices had risen by around 40% and that was with interest rates well into double figures, it's always been hard getting on the ladder.

Setting limits on borrowing would have a huge effect. I don't know what the criteria is now but in 88 I was only allowed to borrow a max of 2.5 times our joint incomes.

paddy234

Setting limits on borrowing does little to prevent investors. The GFC corrected the housing market, the reason why the market today is bigger than ever is largely down to a number of differences. First, significantly lower interest rates which thankfully are starting to rise and a growing number of investors swallowing up the Market not to mention Covid which has crippled supply and prevented movement of people and wealth spent elsewhere. The GFC was caused by unsustainable debt which inevitably wiped out the market. This is very different

Banks use a debt to income ratio in seeing how much one qualifies for a mortgage and today it's usually anywhere between 30-40% of one's income depending on the lender. Interest rates don't matter as much nor does the price. I often hear about how in the past people bought a home with a double digit interest rate so young people today should stop complaining. The fact was that their house only cost $50,000 so interests rates don't matter when your debt to income ratio back then may have been much lower than today.

The issue with very low interest rates is that it only ever pushes the market out of reach for first home buyers who in regards to rising house prices have to cough up a much more significant deposit. You also say that higher interest rates won't last forever? You do know the current low interest rates were only ever meant to be temporary during the Covid crisis, they were always going to go back up. The problem is with inflation continuing to rise and interest rates rising this puts pressure on people's ability to service debt. Eventually they stop going to restaurants, buying coffees etc and business's suffer greatly which in turn causes people to lose their jobs etc. A slowdown is coming, hopefully it can correct the market once more and deflate the bubble before it gets too big and so more can get onto the market eventually

To say it has always been hard getting on the ladder is simply not true. We got on the ladder with a 10% deposit mostly driven by our kiwisaver. How many young people will have $70,000-$100,000 in their kiwisaver and savings today? If prices drop to what they were pre covid in places such as Christchurch things won't be so bad but as it is the deposit alone required is essentially a person's yearly salary.

LittleGreyCat

I've grumbled before how unaffordable NZ housing is becoming.
Yes, UK house prices are strong but they are trailing NZ house prices by more each year.

brits1

We had a few “up’s and down’s whilst we lived in WA (property wise) I think the main problem Perth has is that property is usually based on either the natural resources or interest rates charged on mortgages, both were “up and down” like a yo-yo when we lived in WA but we were lucky we bought and sold and did “well” but we also built (x2) in good and bad times.