FishermansFriend

Interetsing times ahead?

$Kiwi falling fast
Looks like anything that's imported will be increasing in price.
Many wholesale food prices rocketing.
Homes sales fell 15% in August (that's a huge monthly fall).
NZ Finance companies falling like ninepins.
Credit for HP and cars being tightned.
Those remortgaging are being hit by large rises in interest rates.

I've no crystal ball but if the economy starts to slow I wouldn't fall out my rocking chair with shock.

I wonder whether second hand cars and boats will fall in price? Maybe property too?

Kippers

Not just a NZ problem.
Far worse in the US I think.
And the UK will fall too as the paper-shufflers collect their redundancy.

NZ seems a most attractive option IMO.
60 million v 4 million


Kip
“Anyone who believes exponential growth
can go on forever in a finite world is either a madman or an economist. K Boulding”

lardyl

exactly why we came - just hope that NZ honours the citizenship in 5 yrs come 5 yrs time!

FishermansFriend

Unfortunately New Zealand seems to be in a worse position economically than the UK (at least in the short term).

Firstly, the falling $kiwi is bound to cause more inflation, so leaving less chance of a cut in interest rates. These rates are already causing pain, note the 15% fall in home sales last month (Auckland).

Secondly, there's been a run on NZ finance companies with several of them going to the wall and their savers losing some, or all, of their money. Not only that but, I believe, these companies have been a source of finance for a modest part of the economy - this source for less prime loans will now dry up - so some consumers will find it more difficult, or impossible, to get credit.

Thirdly. Wholesale prices of many foods is rising steeply, that along with mortgage payments and credit repayments jumping, for some dramatically - can only mean that consumers discretionary spending is cut back.

Though not all of these problems are peculiar to NZ it does seem that they may be more severe here. Or maybe I'm reading the runes incorrectly 'cause there's been little in the NZ press to back up my theory.

lardyl

FF you are right and there is now some criticism that the govt. is smply using inflation as the only measure of control it has over the economy, a la monetrism and Maggie Thatcher, so I'm with you that there is gonna be pain here and I dread that any NZ manufacturing etc is gonna go to the wall
But for me the long term prospects vs. Europe and US are better in the worst case scenario!

wilekit

While I'm not totally up to spec on whats going on in the NZ economy, I can definitely tell you things are slowing here in the UK. Interest rates have climbed steadily since last June - our mortgage started at £550 last June, now its nearly £700 Everythings becoming more expensive, consumer goods and essentials. My understanding is that its largely due to the recent huge slump in the US economy, its going to affect virtually all the world economies. basically, tighten your belts a bit guys, and hope you haven't over extended yourselves! Pity the poor bods in the states, many have lost everything they own, literally. I don't think we're heading for a recession, I just think its relative - compared to the boom of the past 5 years, a slow down is going to hurt some people.

Still, as Kippers already said, 60mill vs 4mill? No competition as far as we're concerned. God knows we aren't going to NZ to experience an increase in our material wealth!

cypherpunk

[Housing] Market has that sinking feeling.

Batty

The 15% fall in house sales is nothing new - except last year it was July that was quiet. Only the number of sales fell - not the prices. I'm not disagreeing with what you've said only that sales always fall off in winter. It's whether or not they are down in September and October that will be the teller - October especially is usually very busy. As soon as there was a whisper that the interest rates wouldn't go UP again this year the buyers came out of the woodwork. Most people are convinced that the next movement will be down. That's the layman not the economists. But in the market that's what counts.

teambwr47

I think the point is that the sales are down 18% on the same period last year....

Even though i've always thought property is reasonably safe and dealt in it myself i think theres a change coming......

Here and in other countries the affordability of houses compared to wages will eventually have an effect but it takes a long time.

We're happy to be out of the mortgage market for now until the dust of rates and borrowing drama's settles a bit...

How a young person affords a house now is beyond me......

We bought our first house in 1993 for £70K, (a new three bedroomed detached) and now its worth over 200K.
I remember how many hoops we had to jump trough to raise the money back then but even now in the Uk the wages would be similar for the same jobs now as they were in 1993. Ok there would have been a rise in wages but certainly not a 200% rise.

cypherpunk

This July sales were 15% down on last July, more in some areas. I expect it to be more for August when the stats come out next week. Even more telling is the much larger number of houses on the market. Of course prices are not coming down yet except for the truly urgent sales. Most people will hang on trying to get the price they think their house is worth, and may end up chasing the market down.

teambwr47

Asking prices......

The asking prices we've seen of some houses are bordering on ludicrous. Some people must assume that buyers don't go and look at other houses in the area of similar size and quality.

Even some of the agents have said to us that asking prices are way over the top in many cases and are people just trying their luck hoping to snag someone with more cash than sense.....

A lot of houses are on the market in the hope of 'making a killing' rather than genuinely for sale if you know what i mean.

teambwr47

Something else that we've noticed is that when we came here for our 'reccie' the property press had very few houses with prices advertised they were nearly all POA which is....

'You contact us and we'll think of a price depending on what we think you have to spend.'

Now the housing market is slowing down or percieved to be there are many many more adverts with the prices attached....

Batty

I totally agree. No prizes for guessing that I work for a real estate company - the agent I work for tells the vendors to get a market valuation done - it's the only way sometimes to get people to be realistic. The problem a lot of the time is that they bought their house from someone who made, say, $500k or maybe even $1m (it's the high end of the market) in a year and they think they can do the same!

Tbh, the high end hasn't slowed down that much and I think Barfoot's even said that the other day - it's the 'starter homes' and mid-range which seem to be suffering the most and that's all I really care about because that's me

Batty

The POA is usually because they wait to see what the market thinks it's worth at the open homes and usually because the agent doesn't think it's worth what the vendor does! So, they will go back to the vendor and say 'people see it around xxx or in the 000s'.

A guy from The Professionals told me recently that they price theirs as e.g. $420k - $470k and it doesn't mean that the house will go between those figures - more that someone with 420k to spend will go up a bit to get the house of their dreams!

Oh and, if you're looking at a Harcourts property, their reference number is the date backwards so you can tell how long it's been on the market

teambwr47

Its a very similar story on rent asking prices it would seem.....

Two identical houses in Albany in the same school zones but one $250 a week more than the other..

Still best not get onto the renting subject and people buying hovels and then assuming someone will pay a fortune a day later to rent it......