A Housing warning from Bloomberg to New Zealand
An article from Bloomberg yesterday has the following warning – with NZ at the top of the list in the accompanying graphic:
A world economy already contending with raging inflation, stock-market turmoil and a grueling war is facing yet another threat: the unraveling of a massive housing boom.
As central banks around the globe rapidly increase interest rates, soaring borrowing costs mean people who were already stretching to buy property are finally reaching their limits. The effects are being seen in countries such as Canada, the US and New Zealand, where once-hot residential real estate markets have suddenly turned cold.
It’s a sharp reversal from years of surging prices fueled by rock-bottom mortgage rates and government stimulus, along with a pandemic that popularized remote work and sent homebuyers on the hunt for bigger spaces. An analysis by Bloomberg Economics shows that 19 OECD countries have combined price-to-rent and home price-to-income ratios that are higher today than they were ahead of the 2008 financial crisis — an indication that prices have moved out of line with fundamentals.
Taming frothy home prices are a key part of many policy makers’ goals as they seek to quell the fastest inflation in decades. But as markets shudder from the prospects of a global recession, a slowdown in housing could create a ripple effect that would deepen an economic slump.
Falling home prices would erode household wealth, dent consumer confidence and potentially curb future development. Animal spirits are typically tamed when people are faced with higher repayment costs on an asset that’s losing value. And property construction and sales are huge multipliers of economic activity around the world.
Blackstone are hovering, soon they will buy everything at a fire sale price.
They say that they will be fair landlords, so we shouldn’t worry
Is Adrian Orr actually an agent of Putin ?
I’m in the UK at the moment, staying with a relative who is a realestate agent. It’s worth noting that here I can buy a brand new 4 bedroom brick and tile house with double glazing and underfloor heating for less than HALF of the price of a very basic wooden house in Auckland. This in a country with over ten times the population density of NZ.
So let the correction begin!
No one saw it…coming!-*sarc*