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 Post subject: Entering Denial in New Zealand
PostPosted: Fri Dec 05, 2008 5:29 pm 
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i forgot to post this when i first saw it. it's feedback to a recent NZ Herald. the first response sets the tone nicely.

"Realist (Auckland)
All the blogging reactionaries here that say the housing market is doomed are in denial. Volume dropped, but value has only ever been down a whisker. Mainly panic merchants and some overstretched people sold at low prices. The historical trend for house prices to meet or even exceed inflation will continue. That means a house price will double every ten years. If you are sensible you will use this fact to get ahead. Bite the bullet and buy something modest to get a foot on the ladder. Not point in doing what you are now - trying to talk the market down and complaining you cant afford a house."

http://blogs.nzherald.co.nz/blog/your-v ... d=10543035

and this is a country that through the credit boom lost more through emigration than it gained from immigration.

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 Post subject: Re: Entering Denial in New Zealand
PostPosted: Fri Dec 05, 2008 5:42 pm 
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brendan o connor is in new zealand? :P :P :P :P :P :P

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 Post subject: Re: Entering Denial in New Zealand
PostPosted: Fri Dec 05, 2008 5:45 pm 
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one guy called lance_nz even says "get a life and buy a house."

wow. subtle. i guess we'll be waiting a while for the Pin.NZ

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Those who don't study history are doomed to repeat it. Those who do study history are doomed to watch everyone else repeating it.


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 Post subject: Re: Entering Denial in New Zealand
PostPosted: Fri Dec 05, 2008 7:32 pm 
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Met a NZ guy yesterday who just bought a house there, his 6th or 7th investment property all on interest only payments. He is earning in US$ and loving the exchange rate together with the reductions in interest rates, could not be more positive about it. I just bit my tongue, there was no reasoning with this guy.


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 Post subject: Re: Entering Denial in New Zealand
PostPosted: Fri Dec 05, 2008 8:49 pm 
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when you think about, they've seen it before, their last bust was in the late nineties so the ones in hock have more reason to talk it up as they realise what's happening, in ireland denial was to a great part driven by inexperience and blind faith.

i read this piece nearly a year ago, if it pans out like he says then NZ will be a close runner up to ireland for the empties crown.
http://www.babyboomersguide.co.nz/Artic ... +2010.html

i love the scenery and the outdoor lifestyle, i could do it for a while. i have my machinery tickets so who knows, 2011!

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Those who don't study history are doomed to repeat it. Those who do study history are doomed to watch everyone else repeating it.


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 Post subject: Re: Entering Denial in New Zealand
PostPosted: Fri Dec 05, 2008 11:53 pm 
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Hi catbear

In Aus, we have the same kind of stupid maths quoted by RE dopes - "property doubles every 10 years". Yeh, right.

Found this quote from a RE site you might find useful: http://www.jenman.com.au/news_alert.php?id=90

"In 1890, the average Sydney home price was $1,446 (£723).
If property really does double every seven years then, in 2009,
the average Sydney home will be worth $189,530,112.00.
Quick, BUY, BUY, BUY"

Last time I looked, Sydney homes were way under $1M, and nowhere near $189M. Idiots.

Adapt for NZ market (change Sydney to Orkland), and lob into on-line blogs at random intervals.

Enjoy


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 Post subject: Re: Entering Denial in New Zealand
PostPosted: Sun Nov 14, 2010 11:42 am 
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Fantasy economy exposed -> http://www.stuff.co.nz/business/money/4 ... my-exposed

Quote:
So why does the economy feel so bad – for households struggling to repay debt and live within their means and for businesses struggling with low, or non-existent, consumer demand? When will the economy return to "normal"?

Welcome to the new reality, say economists Dominick Stephens, a senior economist at Westpac, and John Ballingall, deputy chief executive of the NZ Institute of Economic Research (NZIER). This may be about as good as it gets.

"There is no reason to expect consumer spending to go back to the growth we experienced in the last decade," says Mr Stephens.

"That was based on a doubling of house prices which allowed massive ramping up of debt, therefore more consumer spending. It is extremely far-fetched to think this will happen again. The reality that the last decade was the exception, rather than the rule, is beginning to hit home."

Mr Stephens sees the past 10 years as a "fantasy-land". "People are asking `when will this be over'? It is over. That was a strange period where we spent more than we earned. We're in the new reality now."

there is more


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 Post subject: Re: Entering Denial in New Zealand
PostPosted: Sun Nov 14, 2010 4:30 pm 
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Despite the headline they are still fighting denial in this piece
http://www.nzherald.co.nz/property/news ... d=10686859

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Those who don't study history are doomed to repeat it. Those who do study history are doomed to watch everyone else repeating it.


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 Post subject: Re: Entering Denial in New Zealand
PostPosted: Mon Nov 22, 2010 8:25 am 
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http://www.nzherald.co.nz/business/news ... d=10689365
S&P downgrades NZ outlook to negative

Quote:
International credit ratings agency Standard & Poor's has downgraded the outlook on New Zealand's sovereign debt rating from stable to negative citing concerns about the amount of private debt built up in the banking sector.

The rating, which reflects the Government's ability to repay debt was reaffirmed at AA+/A-1+ but the downgrade reflects a one in three risk that it may fall soon.


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 Post subject: Re: Entering Denial in New Zealand
PostPosted: Mon Mar 12, 2012 1:55 pm 
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warnings on leading in the NZ Herald
95% and 100% mortgages


Quote:
Back in 2003, the Reserve Bank missed the biggest shift in the underlying economy in recent history. House prices took off and fuelled a debt-funded spending spree that undermined our export sector and loaded more than $100 billion on to our national debt.

House prices almost doubled from 2003 to 2007, enriching a generation of property owners and ensuring the generations to follow will struggle to afford houses in the big cities.

Missing that shift and failing to raise interest rates early enough and fast enough eventually forced the Reserve Bank to hike the Official Cash Rate (OCR) sharply through 2007 to cool down the economy.

In his first year in the job in 2003, Governor Alan Bollard cut the OCR three times through April, June and July from 5.75 per cent to 5 per cent. He then held it at 5 per cent through late 2003 despite growing signs of the housing boom.

He justified holding the OCR at 5 per cent because a high currency was then keeping inflation pressures under control. It was the beginning of a slide in the relative performance of the export sector that New Zealand has not managed to turn around.

Fast-forward almost 10 years and Bollard is again arguing he doesn't need to put up interest rates because of the high New Zealand dollar. He even went so far this week as to argue he could cut the OCR if the NZ dollar continued to rise.

But are we seeing the same mistake being made all over again? Is Bollard's insistence on low rates about to fuel another housing boom?

There are some worrying early signs in recent weeks that the fizz is coming back into some parts of the market, in particular Auckland.

Earlier this week, Barfoot and Thompson reported Auckland house sales volumes growing at more than 20 per cent a year, and prices rose 23 per cent in February from a year ago in the leading indicator area of the eastern suburbs. The BNZ-REINZ survey of estate agents this week also picks up on the increasingly bubbly sounds emanating from Auckland. Agents reported many more buyers than sellers and prices rising. The survey pointed to the Auckland surge leading "the next upswing in the housing market".

Banks are out again aggressively lending to people with deposits as low as 5 per cent. First-home buyers are raiding their KiwiSaver funds and topping them up with up to $10,000 per couple in subsidies from Housing NZ.

They are doing so confident that the Reserve Bank is reassuring them about lower interest rates for longer.

In the three weeks to March 2, $3.251 billion worth of mortgages was approved and $3.206 billion was approved in the three weeks to December 16.

The last time we saw that same sequence of heavy late-summer, early-autumn house lending was in December 2007 and March 2008, just as the housing boom was peaking.

ASB's 80 per cent-plus lending grew $667 million in the December quarter alone to 19.5 per cent of its book. Westpac, ASB and BNZ are all aggressively lending at 95 per cent again, so much so that ANZ's CEO warned of the potential problems of such lending here.

To top it off, Wellington apartment owner Donald Stott and his (unnamed) bank advertised 100 per cent finance to first-home buyers this week.

"With rising values comes the consequence of rising equity levels by property owners," Stott said. "This display of confidence by one of the country's major banks is exactly the sort of positive indication the wider property market is looking for."

If 100 per cent lending on apartments is not enough of a warning signal, I don't know what is.

The slightly scary thing is the Reserve Bank could do exactly what it did in late 2003 - rely on a strong currency to leave rates low, or even allow it to cut rates. Have we learned anything?

http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=10791180

another good article

http://www.nzherald.co.nz/property/news ... d=10789942

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House prices are cyclical, no nation has ever lived through a perpetual house price expansion or contraction.
Money is a public good; as such, it lends itself to private exploitation - CP Kindleberger


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