Charismatic

It's not fair or achievable really but it is a prudent short-term measure and it's easy to implement.

When you start talking about unitary planning as in Auckland or forced consents as in Christchurch it's a much more difficult balance to strike. Basically councils are reluctant to consent because the up-front costs of services etc. are high, in my view if council funding was more directly tied to number of consents house prices wouldn’t be an issue (or we simply do away with consents altogether and devise a better strategy).

[Boring bit of post proceeds]
In terms of loan-to-value (LVR) they are OK(ish) as long as housing stocks don’t devalue (which is what happened in Europe) but loan-to-income (LIR) and uncommitted monthly income (UMI) are pushed well now so income growth is a big issue. In terms of servicing the interest on debt we are back at ’03 – ’04 levels (which is why I’ve indicated that we could have a run of three or four years of house price appreciation at the current rate before we get a crash) because rates are so low.

However consider the situation for the reserve bank and government in terms of risk. The big 4 Australian banks, who secure most mortgage debt, a collapse in New Zealand would likely be survivable for the big 4, a collapse in Australian debt would be survivable for New Zealand exclusive banks (and Australian banks who operate under the Australian guarantee scheme) and a collapse in both would make us Spain. However in any situation, unlike Europe, the government are off the hook because there is no deposit guarantee scheme in New Zealand. There is no risk for the government or reserve bank in running with a housing bubble except regarding subsequent unemployment. Regardless of how badly we behave we have backstops as long as the Australians hold up their end of the deposit guarantee deal and banks here can raid depositors accounts.

So, while I’m surprised that this has been implemented, in a way it’s also welcome.

shocked kiwi

I was watching Location Location on tv about 2 real estate agents and they were helping a single guy get into his first house in uk. He had $12 thousand quid as a deposit and was living in Nottingham. he could buy a 2bdrm for 90-100 thousand quid - in an average area. Would this be realistic or was this show before the GFC?

shocked kiwi

aint welcome to me, kiwis are too placid.

davros1984

Very realistic. You'll find that since 2008 (excluding London) - house prices have dropped. They have started rising very marginally in the last few months but nothing like they have here. I still cannot believe how CHEAP houses are in the majority of the UK. I can buy a 3-bed house in the midlands for 75K GBP. That's going to be a deposit here

TommyLuck

Yep, we're looking to buy. Found out that we lost a bidding war a couple of hours ago.

That said, we decided to move when there was no inheritance and the person in question was in good health. We were preparing for renting in Auckland.

Our situation is different because we have the money to invest now and property is the way forward, we think.

Investment for future security is more the reason than simply to own a home.

For instance we have enough money for a deposit to get a mortgage for a family home that would see us through 20+ years. As it is we're going to invest first and move to the dark side and become landlords. Simply put, it's a business decision although with the same aim of securing the future of the family.

But we may well rent whilst letting out properties in time.

Without the inheritance we'd have been happy to rent, albeit knowing there was inheritance coming. Although timescale would have been unknown.

whitesand

Perhaps some investors are getting worried because there seems to be quite a few units and houses around Milford up for sale at the moment. Noone wants to be left holding the ball when the music stops!

Kin1of2

Saw that also and was amazed at how cheap the properties were. It was filmed in 2011 after the GFC.

BEVS

Rats ! Better luck next time.

TommyLuck

Ta.

I think the trick is not to panic and treat each proprty (situation) as it comes.

shocked kiwi

wow that is fantastic. I think over here the media are like "the uk is so expensive too" and quote all the million plus properties in London as if it's like that everywhere in the uk.

RedDragon2008

A sign of a healthy market is where on a normal average income you can save a 20% deposit over 5 years while renting in the same area.

However the consequences of saving for a deposit means fair well holidays and car upgrades.

You then contribute another 20% over the next 10 years (in addition to your monthly repayments) and by then you have achieved higher income growth then when you started 15 years ago, and your proportion of equity has increased as the value of your home has.

Charismatic

Our house price boom attracts international attention:
Full Story.

Purrball

Question to anyone: In your opinion, where on this chart is the New Zealand housing market?

Assanah

Delusion?

davros1984

I would say Greed, Delusion and Denial.

Greed = landlords
Delusion = the average Kiwi who's buying a house at the moment and doesn't think they will get into negative equity
Denial = John Key's Government.