New Zealand’s Emerging Property Disaster!

We look at the latest data from New Zealand, and how the property portals spin the story of rising stock, falling prices and confidence, against rising mortgage rates.

And we can probably extrapolate what may be going to happen here in Australia in the months ahead, considering our rate is well below the current NZ OCR of 2% – ahead of the RBA decision Tuesday, when we expect a 0.4% rise.

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  1. I'm Irish living in NZ and have lived through both bubbles. I believe NZ property collapse will be worse than Ireland's in 08:
    1. Kiwi's saving lowest in OECD for years, actually net spenders. Most loans are coming from foreign banks'/savers and at the whims of their markets (Ireland also did this which compounded pain)
    2. Govt Overseas Investment Office Cashing in over the boom years NZ has been asset stripped by China/US private equity and HNWI who have bought land, mines, dairy farms, pine blocks, wineries but created few low-skill low paid jobs and have probably cut more jobs on net (Over boom years Ireland attracted Big Tech, Big Pharma to domicile creating hundreds of thousands of high paying high skilled jobs which have been there decades)
    3. Mortgage lending pyramid scheme: Bank of Mum and Dad guaranteed $Billions for trust fund kids all collateralised by their own overpriced property (another systemic risk not a factor in Irish bubble)
    4. All business owners I know want the fuck out of here ASAP (authoritarian govt, shit talent, high prices, extra stat day, sick days doubled)
    5. Huge drop in productivity over years as Kiwi hubris and complacency took over Kiwi work ethic. All industries finding it hard to get Kiwis to work full time now as they spend more time and money indulging in leisure pursuits, jet skis, boating, skiing (reflected in NZ ports ranked as world's most inefficient
    6. Migration – Has turned negative for past two years and Govt have raised the bar for entry significantly 5 years ago. the few from the West who can afford to move there will find better jobs and wages closer to home. Also much migration here has been low skill (high skill migration to Ireland constantly strong due Big Tech/Pharma and many from Eastern Europe with great work ethic in 'low skill work)

  2. As predicted ALL interest articles this week about mortgage rates have only disclosed the Special Rates for people with over 20% Equity . No mention of the Standard Rates for those with under 20% Equity. Its important to keep the sheep unaware of just how bad things actually are.

  3. I see people disagree with this analysis. To make it simple if interest rates go up to stop inflation (real inflation is about 8% to 11%) you need to go 2% above that ( call it 10%) on $400000 mortgage that’s $800 a week interest with no principal paid back. It may also cause business to collapse so fewer jobs to fund these rates. If the government panics and lowers rates again inflation will go nuts and food may become a major problem. Tell me how this ends well.

  4. Reminder to owner occupier buyers – ensure that you make a fully informed buying decision (and not a one sided perspective from those with vested financial self interest). Already seeing buyer's remorse from a recent buyer who expected mortgage interest rates to stay low and may be forced to sell if mortage interest rates reach 7% p.a. The person was irate that the banks and mortgage broker didn't inform him of the risk of rapidly rising mortgage interest rates.

  5. FYI, loans on residential real estate as at March 2022

    1) approximately $52.8bn of interest only loans outstanding

    2) approximately $7.8bn of revolving credit

  6. This is encouraging, but prices have to fall by truly enormous amounts to make them realistically affordable. I can't see any government allowing this.

  7. Warren Buffett on the housing bubble in the US:

    1) "the entire American public, eventually, was caught up in a belief that housing prices couldn't fall dramatically."

    2) "very very few people could appreciate the bubble. That's the nature of bubbles. They become mass delusions of sorts."

  8. GUCCI its was always a issue and international buyers driving prices

    like tasmania .
    i spoke to chippies working on a site in WANAKA and they said they are building for internationals and they can't afford to buy

  9. Some statistical data:

    1) Housing stock in NZ valued at 503.7% of GDP as at December 2021

    Housing stock in NZ is worth NZ$1,763 bn

    GDP is NZ$350 bn

    2) I estimate that the housing stock to GDP ratio for Auckland Regional Council area is over 600% (as at Dec 2021)

    For sake of context – I estimate that at the peak for Japan the housing stock to GDP ratio was about 550%

  10. When Luxton gets in he'll just open up the housing market so the Chinese can buy it. They'll just hand out a load of permanent resident permits and bring in a million Chinese and the bubble will carry on. What difference if property goes down 10 or 20%, it makes no difference in the long term as the general trend will always be up in the longer term. Kiwi politicians are idiots and pawns of the globalists, so even if they could come up with a solution to get everyone housed at a sensible cost the globalist bankers wouldn't allow it. Debt gives them control over the people.

  11. When you get over half the population in the country dispossessed from ever buying a house that use to be a kiwi's right bye a government also giving social welfare to landlords quite frankly they should be had up for treason.

  12. Martin, love your videos. But in my opinion, it'll be better to put a positive spin, rather than using the word Disaster.
    Many a times, falling property prices is perceived as bad in the media.
    But in reality, it is good for the society.

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