From Seattle to Sydney to Stockholm and Auckland, homebuyers are getting squashed by financial pressures as the world’s hottest housing markets face a painful rest.
- Losing its froth: Buyers are pulling back as central banks raise interest rates, pushing down house prices. Property markets like Australia and Canada face double-digit declines and economists believe the global downswing is only getting started.
- Variable risk: In the US most buyers rely on fixed-rate loans for as long as 30 years. Other nations commonly have variable-rate mortgages that move closely in line with official interest rates.
- Economic threat: If the paper losses whacking homebuyers turn into real-money declines for households, banks and developers, that may hit a world economy that’s already slowing and that the IMF has warned is teetering on the edge of a recession.
Although remembering Bernard Hickey on the working group pointing out NZ appears well stress tested for a house price fall.
Yeah I remember Ben Bernanke’s quotes just before the GFC:
2007 Feb: “Despite the ongoing adjustments in the housing sector, overall economic prospects for households remain good. Household finances appear generally solid, and delinquency rates on most types of consumer loans and residential mortgages remain low.”
2007 Mar: “At this juncture, however, the impact on the broader economy and financial markets of the problems in the subprime market seems likely to be contained. In particular, mortgages to prime borrowers and fixed-rate mortgages to all classes of borrowers continue to perform well, with low rates of delinquency.”
2007 May: “All that said, given the fundamental factors in place that should support the demand for housing, we believe the effect of the troubles in the subprime sector on the broader housing market will likely be limited, and we do not expect significant spillovers from the subprime market to the rest of the economy or to the financial system. The vast majority of mortgages, including even subprime mortgages, continue to perform well. Past gains in house prices have left most homeowners with significant amounts of home equity, and growth in jobs and incomes should help keep the financial obligations of most households manageable.”
2008 Jan: “The Federal Reserve is not currently forecasting a recession.”
‘Recession. In economics, a recession is a business cycle contraction when there is a general decline in economic activity. [1] [2] Recessions generally occur when there is a widespread drop in spending (an adverse demand shock )’
So infinite ‘growth’ is never guaranteed…………how tragic.
Maybe need to reset a system that relies on ever increasing interest bearing debt.
“In the US most buyers rely on fixed-rate loans for as long as 30 years.”
LOL, imagine trapped paying a rate set in the 90s for the last two decades of CB directed dirt cheap credit.
Indeed. It’s a good time to remember for those of us without investments outside KiwiSaver to remember that even that can be put into a less dangerous set of investments until the crisis the criminal money power has created blows over.
Y’all must watch this documentary to slowly realise we’ve all been conned, and are still being conned. The four foreign owned Kiwi banks are crooked. The management of them are crooked, the politicians who enabled them are crooks and we who tolerate them in our country are stupid and greedy and more than a few of us are crooks too.
https://www.youtube.com/watch?v=T2IaJwkqgPk
Inside Job is a 2010 American documentary film, directed by Charles Ferguson, about the late 2000s financial crisis.
The global financial meltdown that took place in Fall of 2008 caused millions of job and home losses and plunged the United States into a deep economic recession.
This documentary provides a detailed examination of the elements that led to the collapse and identifies key financial and political players.
Director Charles Ferguson conducts a wide range of interviews and traces the story from the United States to China to Iceland to several other global financial hot spots.
Ferguson, who began researching in 2008, says the film is about “the systemic corruption of the United States by the financial services industry and the consequences of that systemic corruption”. In five parts, the film explores how changes in the policy, environment and banking practices helped create the financial crisis.
The Aussie Banks get away with the export of loot from AO/NZ squeezed out of hundreds of thousands of small businesses, farms, horticulture enterprises and millions of various mortgage holders. They have been pinged by IRD occasionally but need to be seriously taken on.
I quote an old commo, Mr VI Lenin on some of this, pre digital funds transfers, pre bit coin etc. obviously, but he nailed the basics by the reality of his time.
In his work “Imperialism, the highest stage of capitalism”, VI Lenin provided a comprehensive definition, highlighting its five basic economic features:
“(1) the concentration of production and capital has developed to such a high stage that it has created monopolies which play a decisive role in economic life;
(2) the merging of bank capital with industrial capital, and the creation, on the basis of this “finance capital”, of a financial oligarchy;
(3) the export of capital as distinguished from the export of commodities acquires exceptional importance;
(4) the formation of international monopolist capitalist associations which share the world among themselves, and
(5) the territorial division of the whole world among the biggest capitalist powers is completed. Imperialism is capitalism at that stage of development at which the dominance of monopolies and finance capital is established; in which the export of capital has acquired pronounced importance; in which the division of the world among the international trusts has begun, in which the division of all territories of the globe among the biggest capitalist powers has been completed. “
Of course with our 21st century reality we have to add (pre COVID perhaps) the effects of globalised production and supply chains, mega shipping and air transport.
Lenin? Good grief. The only thing he was ever good at was shooting “reactionaries”.
We’ve absolutely been conned. It’s disgusting that the government is not issuing credit to NZ families via the Reserve Bank. That’s literally what the money-printing authority is for.
House prices are the least of our worries.
Expect food shortages in 2023 because of a combination of ill-considered lockdowns, a drought, crazy green policies and the war in Ukraine.
As global food supplies get tighter and tighter, so will the risk of civil unrest.
@Andrew agreed, compounded by sharp squeeze in the global supply of fertiliser. European production of nitrogen based fertiliser is way down due to natural gas prices. China blocked export of phosphate fertiliser and a large proportion of global potash comes from Russia and Belarus which are under sanctions. This will feed into costs and the global food supply for 2023 onwards.
With the up and coming hung parliament in next year’s election and then a minority government to boot.
There is no party or person in NZ that can lead NZ in the right direction.
So, the only solution to bring about a social democracy would to be governed by referendum. Reduce MPs to be merely administrators and electorate representatives. Do away with list MPs.
Have an upper house of 20 elected people and reduce the number of MPs from 120 to 100 elected electorate representatives. Get rid of the party gang colours too.
Sounds like Switzerland. Keep in mind they didn’t give woman the vote until 1971.
I like that Denny, getting rid of the gang colors especially and useless list MPs. Let each elected MP stand on their own merits and actually do some mahi for their salary and perks. I dunno about an upper house though. We seem to be too small in population to raise high calibre ethical and non self serving polititions to the top. How about instead we rigorously test election candidates first? Psychological tests to begin with. Hey why not suss them out esoterically as well, see through them first that way too. I forget the names of the type of testing i mean, but anything to weed out the crap and locate the genuine people who actually want to serve the people. Jmo
IMO we should cancel some non-values of being a liberal democracy. We need to be more insular and promote nationalism to get rid of these global players who come in and take our wealth. We need to incorporate the TOW into a new constitution that will protect our natural resources for all NZers regardless of race and conscript our teenagers into our military which would do away with high crime like joining gangs, ram raids etc.. We need to extend our foreign policies to countries like Iran who is gonna play a major role in the 21st century as a hub for energy security that we will desperately need to keep our economy moving forward. And we need to trade in our own block like the Asian region that is becoming or if not the riches economic region in the world.
I have total faith in PM Ardern and her brilliant leadership team to see us through this looking crisis. Economic management is their forte. Everybody relax.
We get it Bob.
Cameron Bagrie is anticipating a recession in NZ in 2023. That’s just perfect for the election!