Real Estate Market Over Inflated and Ready for a Crash?

Opinion Piece – Property Noise New Zealand

Crash

We are the last people to be negative. But, the reality is the real estate markets are over inflated much like the New Zealand Dollar.

Why do we think that?

1/ The economy is running pretty average to be fair. So the rise in real estate prices are by no means a reflection on how well the economy is performing

The facts are, the jobless rate in New Zealand rose to 5.7 percent in the first three months of 2016 from an upwardly revised 5.4 percent in the previous quarter. Yep – we are not creating more jobs and those that are employed are not earning any more.

2/ House price rises and the Christchurch rebuilt on the back of positive net migration are the only aspect fueling our economy

The facts are, net migration in New Zealand is the highest it has been since at least 1978 — and possibly ever.

More than 124,000 people arrived in New Zealand in the March 2016 year, intending to stay long-term or permanently. A During the same period, 56,450 emigrated — resulting in a net gain of 67,619 people — the highest 12 month figure for any period in at least 38 years.

We are worried and concerned:

Why?

1/ The nation is becoming one of Debt, Debt and more Debt.  SEE HERE

HH DEBT

New Zealand’s gross debt is a whopping half trillion dollars; housing now accounts for $218 billion of that.

As of April that housing debt was growing at an annualised rate of 8.3 per cent — and that rate is accelerating.

2/ Off house price rises – Car dealers are laughing all the way to the bank . People are adding the car to their Mortgage on the back on increased paper equity.

Something to think about:

1/ What happens to all those first home buyers that have borrowed $400,000/ $500.000 / $600,000/$ 700,000 to buy their first home when interest rates start rising towards 8 and 9%?  Because they will…

MIR

As always – One person’s opinion!

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