House prices rise, rates to follow?
Jan 16th 2013, 5:03 am
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House prices rise, rates to follow?
Latest data from the Real Estate Institute shows the national median house price reached a record $389,000 last month, up almost 10 per cent from the previous year.
Asset bubble? Will RBNZ move on rates? BNZ have said said they expect an early rise, Wespac and ANZ are saying they are on the fence.
Jan 16th 2013, 5:36 am
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Re: House prices rise, rates to follow?
Erm. My rate rise already kicked in due to an increase in our QV by 10% plus.
Jan 18th 2013, 4:38 am
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Re: House prices rise, rates to follow?
. As I said here before local government may do what the government hasn't by constricting house prices with rates.New mortgage approvals have peaked again according to RBNZ, up 23% on 2011. That has to play into the low rates argument.
Jan 20th 2013, 10:58 pm
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Re: House prices rise, rates to follow?
NBR story suggests politicians are also thinking rates must rise:
Deputy Prime Minister Bill English is warning of a new house price bubble as interest rates remain below historic levels.
...
He made the comments in the introduction to the annual Demographia survey released this week which finds New Zealand prices are 5.3 times annual household earnings, slightly higher than last year's 5.2.
This compares with Australia at 5.6. Hong Kong rates most unaffordable at 13.5 times annual household earnings, with the UK at 5.12 and the United States at 3.1.
Houses in New Zealand are now nearly 80% expensive than the early 1990s, when the figure was 3 times annual household earnings.
Within New Zealand, Auckland is the least affordable market, with a median multiple of 6.7. Christchurch is 6.6, Tauranga-Western Bay of Plenty 5.9, Wellington 5.4 and Dunedin 5.1.
All were said to be “severely unaffordable”.
...
He made the comments in the introduction to the annual Demographia survey released this week which finds New Zealand prices are 5.3 times annual household earnings, slightly higher than last year's 5.2.
This compares with Australia at 5.6. Hong Kong rates most unaffordable at 13.5 times annual household earnings, with the UK at 5.12 and the United States at 3.1.
Houses in New Zealand are now nearly 80% expensive than the early 1990s, when the figure was 3 times annual household earnings.
Within New Zealand, Auckland is the least affordable market, with a median multiple of 6.7. Christchurch is 6.6, Tauranga-Western Bay of Plenty 5.9, Wellington 5.4 and Dunedin 5.1.
All were said to be “severely unaffordable”.
Jan 31st 2013, 4:53 am
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Re: House prices rise, rates to follow?
RBNZ rates held at just 2.5%, lip service paid to housing market and overweight kiwi dollar.
Housing bubble 2.0 here we come?
Housing bubble 2.0 here we come?
Mar 14th 2013, 11:51 pm
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Re: House prices rise, rates to follow?
RBNZ signals rates hold for an entire year to try and stem the rise of the kiwi. Banks are likely to drop rates further and push for more lending. Credit is already outgrowing wages, house prices in major urban centres are still well on track for another bubble.
The only thing lagging is wage growth now, a good shot would fix a lot but I have seen little evidence of much in the pipe? How do you guys and gals feel, think you'll get CPI or above wage increases next quarter?
The only thing lagging is wage growth now, a good shot would fix a lot but I have seen little evidence of much in the pipe? How do you guys and gals feel, think you'll get CPI or above wage increases next quarter?
Mar 19th 2013, 7:45 am
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Re: House prices rise, rates to follow?
IMF says "Yeah you have a problem but the token effort and fact you can just reduce interest rates mean we think you'll be OK when it crashes".
Full story.
Full story.
Mar 19th 2013, 9:41 am
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Re: House prices rise, rates to follow?
I think most would agree house prices are too high, but using interest rates to control them will only had further fuel to NZ dollar, there are other tools.
Yes, interest rates are historically low, but they're still inexcess of all of Europe and US.
Yes, interest rates are historically low, but they're still inexcess of all of Europe and US.
Mar 22nd 2013, 9:25 pm
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Re: House prices rise, rates to follow?
True but most European and U.S. markets aren't getting much price growth. HSBC and JP Morgan are predicting a jump in rates before December but I can't see it, if they have ignored double digit growth in major local housing markets why change now? http://www.mortgagerates.co.nz/artic...economist.html
Apr 1st 2013, 1:09 am
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Re: House prices rise, rates to follow?
Perhaps surprisingly nothing has changed since I started this thread.
Housing minister Nick Smith suggests the new Auckland planning scheme may help start to ease prices when it is introduced...in 3 years time. He also suggests 10%+ price growth is quite possible again this year
.
There is a nice little link there to this article about the house-price-to-income ratio in various urban centres around the country (which seems to be the most stable measure of affordability and long term price stability).
RBNZ's macro-prudential tools for helping keep high LVR loans under control (first time buyers to you and me) look nowhere near being ready to roll out yet. It looks like at least two of the big four banks would currently meet the LVR requirements anyway and the other two could probably trade their balance sheets to keep lending. Again if this becomes a brake on housing it's likely in the very distant future and on first time buyers rather than speculators.
No announcements on OCR changes, maybe they are waiting for the market to correct in a few years when property bubble 2.0 falls flat on it's face?
Housing minister Nick Smith suggests the new Auckland planning scheme may help start to ease prices when it is introduced...in 3 years time. He also suggests 10%+ price growth is quite possible again this year
.There is a nice little link there to this article about the house-price-to-income ratio in various urban centres around the country (which seems to be the most stable measure of affordability and long term price stability).
RBNZ's macro-prudential tools for helping keep high LVR loans under control (first time buyers to you and me) look nowhere near being ready to roll out yet. It looks like at least two of the big four banks would currently meet the LVR requirements anyway and the other two could probably trade their balance sheets to keep lending. Again if this becomes a brake on housing it's likely in the very distant future and on first time buyers rather than speculators.
No announcements on OCR changes, maybe they are waiting for the market to correct in a few years when property bubble 2.0 falls flat on it's face?
Last edited by Charismatic; Apr 1st 2013 at 1:12 am.
Apr 4th 2013, 12:20 pm
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Re: House prices rise, rates to follow?
NZX trades at an all time record.
Barefoot & Thompson report:
Despite agricultural exports falling away due to drought their seems little constraint in the wider economy.
Barefoot & Thompson report:
...supply [of houses] was lower than last year, with new listings and total listings both down by a seasonally adjusted 5 per cent.
Westpac senior economist Michael Gordon said there had been hints in the previous two months that more properties were coming on to the market in response to rising prices.
"But that wasn't the case in March," he said.
"We're forecasting a 9 per cent rise in nationwide house prices this year, followed by a 4 per cent rise next year."
Westpac senior economist Michael Gordon said there had been hints in the previous two months that more properties were coming on to the market in response to rising prices.
"But that wasn't the case in March," he said.
"We're forecasting a 9 per cent rise in nationwide house prices this year, followed by a 4 per cent rise next year."
Apr 8th 2013, 4:22 am
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Re: House prices rise, rates to follow?
Auckland house prices are predicted to rise a further 12 per cent over the next year, with the nationwide average jumping almost $40,000 by the end of the year.
And economists say there isn't an end in sight...
And economists say there isn't an end in sight...
Still fancy those softer "macro prudential" tools to get this under control?
Apr 9th 2013, 5:41 am
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Re: House prices rise, rates to follow?
Originally Posted by RBNZ
Mortgage rates on offer are the lowest since the 1960s and have dropped half a percentage point over the past year, even with the official cash rate on hold, as banks accessed lower funding costs on international markets.
"Added to this, credit has become easier to obtain, with banks competing aggressively to gain or protect their mortgage market shares," Spencer said.
"An increasing proportion of new mortgage lending is going out at high loan-to-value (LVR) ratios. Now around 30 per cent of new lending is at LVRs over 80 per cent, compared to around 25 per cent of lending in late 2011 and early 2012."
...
The median house price is now 12 per cent above its level at the end of 2007 and, according to a recent international study of housing affordability, the third highest, relative to disposable incomes, among comparable countries, Spencer said.
In the short to medium term the Reserve Bank could mitigate the risks to bank balance sheets by requiring them to hold more capital, and curb the demand side of the housing market by pushing up interest rates.
But in the medium to long term supply-side measures were essential, especially in Auckland.
"Added to this, credit has become easier to obtain, with banks competing aggressively to gain or protect their mortgage market shares," Spencer said.
"An increasing proportion of new mortgage lending is going out at high loan-to-value (LVR) ratios. Now around 30 per cent of new lending is at LVRs over 80 per cent, compared to around 25 per cent of lending in late 2011 and early 2012."
...
The median house price is now 12 per cent above its level at the end of 2007 and, according to a recent international study of housing affordability, the third highest, relative to disposable incomes, among comparable countries, Spencer said.
In the short to medium term the Reserve Bank could mitigate the risks to bank balance sheets by requiring them to hold more capital, and curb the demand side of the housing market by pushing up interest rates.
But in the medium to long term supply-side measures were essential, especially in Auckland.
Apr 12th 2013, 1:58 am
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Re: House prices rise, rates to follow?
More strong housing data on sales. Milk prices have done very well also, looks like a strong kiwi isn't holding us back much.