WEBVTT - Ed McKnight: 2025 will be a great year for property 0:00:05.761 --> 0:00:29.001 You're listening to the Weekend Collective podcast from News Talks B. 0:00:49.721 --> 0:00:52.841 Welcome back to the Weekend Collective I Tim Beverage. 0:00:53.121 --> 0:00:54.641 If you missed any of the panel had a great 0:00:54.641 --> 0:00:56.681 time with Luke Dello and car McDonald. 0:00:56.681 --> 0:00:57.841 There you can go and check it out where you 0:00:57.881 --> 0:00:59.601 beat your podcast, look for the Weekend Collective. 0:01:00.201 --> 0:01:03.561 iHeartRadio, let's face it. Just go there and check it out. 0:01:04.281 --> 0:01:06.961 Right now, it is time for the One Roof Radio Show. 0:01:07.801 --> 0:01:09.401 By the way, just on that number, I was having 0:01:09.441 --> 0:01:11.521 a conversation. That's not really so much a Christmas song? 0:01:11.601 --> 0:01:11.961 Is it? Short? 0:01:11.961 --> 0:01:14.041 Old Grand Speed forgot? It's more like a New Year's 0:01:14.081 --> 0:01:17.401 Eve song. It's a seasonal song, I guess. Anyway, this 0:01:17.601 --> 0:01:20.721 is the One Roof Radio Show and my guest is Well, 0:01:20.761 --> 0:01:22.681 he's a regular these days. I think we could call him. 0:01:23.001 --> 0:01:25.041 He's not in the studio today because I suspect he's 0:01:25.081 --> 0:01:28.241 probably gone. He's probably looking he's either in his new 0:01:28.241 --> 0:01:30.561 house or he's on holiday or something. But his name 0:01:30.761 --> 0:01:34.521 is Ed mcnighty's a resident economist at Opea's Partners and 0:01:34.561 --> 0:01:35.601 he's with us now. 0:01:35.961 --> 0:01:40.241 Ed, good afternoon, how you going him? Great to be here, mate, Yeah, 0:01:40.241 --> 0:01:41.481 where are you actually. 0:01:41.841 --> 0:01:45.321 I'm currently in christ Church, which is where our head officers. 0:01:45.321 --> 0:01:48.681 So I'm sitting in our podcast studio, just being down 0:01:48.761 --> 0:01:53.801 here for the annual Christmas bash with the team and how. 0:01:53.801 --> 0:01:55.601 Was it well? 0:01:56.361 --> 0:01:59.321 Some people, as usual, probably push the boat out a 0:01:59.321 --> 0:02:00.601 bit far, but good on them. 0:02:01.001 --> 0:02:02.921 Hopefully their hangovers aren't too bad today? 0:02:03.001 --> 0:02:04.881 Are you talking about yourself? And the third person? 0:02:06.921 --> 0:02:08.401 I wish these days are going to be a bit 0:02:08.441 --> 0:02:09.561 more responsible to. 0:02:09.801 --> 0:02:13.001 Oh, you've got to set the example. Back in the 0:02:13.041 --> 0:02:13.801 old days, said. 0:02:13.721 --> 0:02:15.721 In the example was being first to chunder in the 0:02:15.721 --> 0:02:21.401 flower beds, but these days probably the opposite is Anyway, Actually, 0:02:21.521 --> 0:02:24.041 last time we spoke, had you just bought your because 0:02:24.081 --> 0:02:26.841 you're a property investor, but you hadn't you were about 0:02:26.881 --> 0:02:29.161 to either buy or you had just bought your first 0:02:29.201 --> 0:02:32.721 home for you to live in with your fee once. 0:02:32.841 --> 0:02:35.881 Say, I believe there, that's right me and Angela. 0:02:36.041 --> 0:02:38.561 So last time I think we spoke, i'd won the 0:02:38.601 --> 0:02:40.921 auction I put up in my hand was the final better. 0:02:41.321 --> 0:02:44.601 And since then we have settled on that property that 0:02:44.681 --> 0:02:47.961 we officially own it. We've moved in and I think, 0:02:48.041 --> 0:02:49.961 like a lot of first home buyers, were people who 0:02:49.961 --> 0:02:52.241 buy their first house to live in. Were still waiting 0:02:52.241 --> 0:02:54.921 for a bit of furniture to turn up, because when 0:02:54.961 --> 0:02:56.321 you move into a bit of a bigger house, you 0:02:56.401 --> 0:02:59.681 realize how little stuff you have if you've been living 0:02:59.721 --> 0:03:01.481 apartment life for the last few years. 0:03:02.201 --> 0:03:04.961 Actually, how what does it feel like to sort of 0:03:05.041 --> 0:03:06.961 cross the threshold and opened the door as owners for 0:03:07.001 --> 0:03:07.641 the first time. 0:03:08.801 --> 0:03:11.641 Well, it's quite different, actually, you feel quite a sense 0:03:11.641 --> 0:03:14.441 of permanence that radio this is our place. We can 0:03:14.481 --> 0:03:16.881 do whatever we want to it. We can invest in 0:03:17.241 --> 0:03:20.241 buying some nice furniture now because we know that we're 0:03:20.281 --> 0:03:22.441 going to be here for five years at least, rather 0:03:22.481 --> 0:03:24.881 than when we were renting it was like, oh, well, 0:03:24.921 --> 0:03:26.681 if you need a new couch, just get a cheap 0:03:26.681 --> 0:03:28.321 one because we don't know where we'll be in a 0:03:28.401 --> 0:03:29.641 year year or so. 0:03:30.001 --> 0:03:32.401 Yeah, are you going to renovate or is it you 0:03:32.441 --> 0:03:34.801 bought something that's ready to basically rock and roll. 0:03:35.801 --> 0:03:38.041 It's pretty much ready to rock and roll. But I'll 0:03:38.041 --> 0:03:41.161 tell you a little story, just because it's close to Christmas. 0:03:41.201 --> 0:03:45.481 When we moved in, one of the bedrooms I think 0:03:45.601 --> 0:03:49.121 definitely had a young kid in the had this enormous 0:03:49.161 --> 0:03:52.321 snowboarder decal stuck to the wall, and so I thought, oh, no, 0:03:52.721 --> 0:03:55.481 we'll get that off. Well anyway, within about five minutes 0:03:55.481 --> 0:03:57.961 we'd ended up ripping the paint off, So we'll fix 0:03:58.041 --> 0:03:59.401 that at some point in the future. 0:04:00.121 --> 0:04:02.201 Excellent. Oh it's good to have a project, isn't. 0:04:02.001 --> 0:04:06.161 It Now, Tim, I've lost year audio. 0:04:06.601 --> 0:04:07.321 Oh that's weird. 0:04:08.641 --> 0:04:10.401 We just need to check something. And we just need 0:04:10.441 --> 0:04:12.361 to check something there. I think we're feeding the audio 0:04:12.521 --> 0:04:13.001 the wrong way. 0:04:13.001 --> 0:04:13.921 We might need to check that. 0:04:15.481 --> 0:04:18.761 Hey, now let's let's carry on as as we were. 0:04:19.441 --> 0:04:22.521 So there's been this wave of we want to talk 0:04:22.561 --> 0:04:26.201 about what's in the store for next year, and there's 0:04:26.241 --> 0:04:28.761 been this wave of good news for everyone with the 0:04:28.801 --> 0:04:32.161 ocr dropping, of course, and I would imagine that the 0:04:32.241 --> 0:04:36.521 HIFU has bought brought a bit more pressure on downward 0:04:36.561 --> 0:04:38.281 pressure on that for the next time they have to 0:04:38.281 --> 0:04:41.361 announce it. But of course New Zealand is now in 0:04:41.401 --> 0:04:45.201 recession and the high Fo's released it didn't paint a 0:04:45.281 --> 0:04:47.761 very rosy picture of the government's books. In fact, while 0:04:47.801 --> 0:04:50.161 I'm discussing this were this is. 0:04:50.121 --> 0:04:51.681 Your chance as well. We want your cause on this 0:04:51.881 --> 0:04:53.081 eight one hundred eighty ten eighty. 0:04:53.361 --> 0:04:56.921 What does the the sort of shock or surprise of 0:04:56.961 --> 0:05:01.401 a worse than anticipated picture for the government's books. What 0:05:01.881 --> 0:05:04.881 do you think it means for the retestate market and 0:05:04.881 --> 0:05:07.681 it growth potential. We want to hear from you on 0:05:07.801 --> 0:05:09.441 e one hundred and eighty ten eighty. You can text 0:05:09.561 --> 0:05:12.241 nine two nine two. But first, of course he's my guest. 0:05:12.241 --> 0:05:14.201 He gets first DIBs ed. 0:05:15.521 --> 0:05:17.081 In terms of what I think is going to happen 0:05:17.081 --> 0:05:19.601 in twenty twenty five, there's there's quite a few changes 0:05:19.641 --> 0:05:23.361 that are already locked in. The first thing that we've 0:05:23.401 --> 0:05:26.281 got to acknowledge is just last week or the week before, 0:05:26.721 --> 0:05:30.041 the government confirms that they are changing the tenancy laws, 0:05:30.121 --> 0:05:33.601 and in fact they've passed the third reading. So from 0:05:33.641 --> 0:05:36.881 the thirtieth of January, a lot of the laws that 0:05:37.001 --> 0:05:40.241 lords and tenants both have to follow are being rolled 0:05:40.241 --> 0:05:42.801 back to what they were about six years ago. So 0:05:42.841 --> 0:05:45.641 what that means is that the ninety day no course 0:05:45.721 --> 0:05:48.681 termination rule that is back, So landlords are going to 0:05:48.681 --> 0:05:50.921 be able to give ninety days notice without having to 0:05:50.921 --> 0:05:53.761 give a reason and tenants will move out. There's also 0:05:53.801 --> 0:05:56.641 some quite big changes around pet bonds that we might 0:05:56.641 --> 0:06:01.361 get into. Basically, now landlords can't really know say no 0:06:01.801 --> 0:06:04.201 to your tenants having a pet whereas in the past 0:06:04.241 --> 0:06:07.761 landlords had a bit control. Those new changes are a 0:06:07.761 --> 0:06:10.441 bit of a surprise. So that's all coming in twenty 0:06:10.481 --> 0:06:12.801 twenty five. The big one, of course is interest rates 0:06:12.801 --> 0:06:16.121 in house prices, and we have seen a little increase 0:06:16.361 --> 0:06:18.761 over the last three months in house prices. They're up 0:06:18.801 --> 0:06:23.081 about two point one percent. A lot of that probably 0:06:23.121 --> 0:06:25.521 comes down to the timing of the market. It's summer. 0:06:25.801 --> 0:06:28.521 House prices tend to go up a bit faster in summer. 0:06:28.801 --> 0:06:30.761 In terms of how much I think house prices will 0:06:30.761 --> 0:06:33.361 go up next year, six to seven percent is my 0:06:33.561 --> 0:06:36.961 best guess. And one of the things that really is 0:06:37.001 --> 0:06:39.481 supporting that is the fact that interest rates are falling. 0:06:39.921 --> 0:06:41.121 That's quite bullish, isn't it. 0:06:42.601 --> 0:06:43.161 I don't think so. 0:06:43.241 --> 0:06:44.961 It's pretty orthodox. At the moment. 0:06:45.681 --> 0:06:47.881 I keep track of all of the major banks house 0:06:47.921 --> 0:06:52.121 price forecasts, and currently the bank that is being the 0:06:52.201 --> 0:06:54.961 stingiest with their forecast, if I can say that, the 0:06:55.081 --> 0:06:58.761 lowest forecast currently that I've seen is six percent, which 0:06:58.801 --> 0:07:00.841 is out of A and Z. They made that prediction 0:07:00.961 --> 0:07:04.641 back in November, just last month, so it's pretty orthodox. 0:07:05.041 --> 0:07:08.201 Probably the most bullish one that I've seen ASP's most 0:07:08.241 --> 0:07:11.441 recent forecast came out in August. They thought house passes 0:07:11.441 --> 0:07:14.761 would go up almost eleven percent and twenty twenty five. Now, personally, 0:07:14.801 --> 0:07:18.721 I don't think that's realistic, but six or seven percent seems. 0:07:19.081 --> 0:07:20.801 Pretty pretty achievable. 0:07:21.121 --> 0:07:23.401 I think, Okay, we'd love to have your cause on 0:07:23.401 --> 0:07:25.441 this on eight hundred eighty ten and eighty what's going 0:07:25.481 --> 0:07:28.641 to happen with the property market next year? And actually, 0:07:28.681 --> 0:07:30.161 do you agree with ED that it could be six 0:07:30.281 --> 0:07:35.001 or seven percent. I've mind you, I don't serve opinions 0:07:35.041 --> 0:07:39.601 as thoroughly as you would as thoroughly as you would ED, 0:07:39.721 --> 0:07:42.401 but I seem to recall I have heard a couple 0:07:42.441 --> 0:07:46.761 of slightly more pessimistic views on it. But we want 0:07:46.801 --> 0:07:48.601 to have your cause on this eight hundred eighty ten 0:07:48.601 --> 0:07:51.201 and eighty text nine two nine two get on the 0:07:51.201 --> 0:07:55.561 blow when you'll be straight through just on the What 0:07:55.641 --> 0:07:57.601 are the pressures going to be that are actually going 0:07:57.641 --> 0:08:00.441 to push those prices up? Because at the moment there 0:08:00.481 --> 0:08:02.321 is quite a lot of supply. Do you think that 0:08:02.361 --> 0:08:03.761 the demand's just going to kick in? 0:08:05.161 --> 0:08:06.921 Well, the big thing is we are seeing out of 0:08:06.961 --> 0:08:09.401 real estate agents that more and more people are turning 0:08:09.521 --> 0:08:12.121 up to open homes, more people are becoming interested in it. 0:08:12.601 --> 0:08:15.441 We did see similar feedback from real estate agents in 0:08:15.481 --> 0:08:18.161 twenty twenty three or at the end of twenty twenty three, 0:08:18.201 --> 0:08:20.161 and what we saw is that house prices did rise 0:08:20.201 --> 0:08:22.441 a bit over summer, and then they started falling again 0:08:23.121 --> 0:08:26.401 in mid twenty twenty four. The difference between this year 0:08:26.601 --> 0:08:28.921 and last year is what was happening to interest rates. 0:08:28.961 --> 0:08:32.241 So if I take you back to November December twenty 0:08:32.241 --> 0:08:35.321 twenty three last year, we saw that interest rates still 0:08:35.361 --> 0:08:37.801 climbed up, but they kind of peeked around February at 0:08:37.841 --> 0:08:41.001 about seven point four percent for their advertised one year rate. 0:08:41.041 --> 0:08:43.321 In fact, ASB got up to seven point four to 0:08:43.401 --> 0:08:46.961 five percent, so they were still climbing this time last year. 0:08:47.481 --> 0:08:51.241 Now they've really really rocketed down, specifically in the last 0:08:51.361 --> 0:08:55.601 half of this year, because on average, the one year 0:08:55.681 --> 0:08:58.281 rates fallen somewhere between one point six to one point 0:08:58.281 --> 0:09:01.161 eight percent, and that makes a really meaningful difference for 0:09:01.201 --> 0:09:03.881 people getting out there and saying, hey, look, I'm going 0:09:03.921 --> 0:09:06.001 to borrow some money to go buy a house. I 0:09:06.001 --> 0:09:08.161 think it's probably going to be one of the major things. 0:09:08.321 --> 0:09:11.281 The other thing we haven't seen is any real flow 0:09:11.441 --> 0:09:15.241 through into house prices from the record high net migration 0:09:15.401 --> 0:09:18.721 that we had, So typically a one percent increase in 0:09:18.761 --> 0:09:22.561 the population as a whole would typically lead to about 0:09:22.561 --> 0:09:24.521 an increase of house prices of somewhere in the region 0:09:24.561 --> 0:09:27.281 of eight percent. We didn't really see that when we 0:09:27.321 --> 0:09:30.161 had this record net migration. So you've got that kind 0:09:30.161 --> 0:09:33.361 of pent up demand coming that's still there that hasn't 0:09:33.361 --> 0:09:35.881 flowed through into house prices. I think all of that 0:09:35.961 --> 0:09:38.481 will come through in twenty twenty five. 0:09:39.041 --> 0:09:41.321 What about the interest rates in terms of the hiphou 0:09:41.361 --> 0:09:44.001 and the pressure on that, I mean, actually to be honest, also, 0:09:44.121 --> 0:09:48.001 do you think that the economic report will have any 0:09:48.161 --> 0:09:53.721 if any, if not, or no bearing on what the 0:09:53.721 --> 0:09:54.361 market does? 0:09:55.121 --> 0:09:56.801 Personally? I think we have very little bearing. 0:09:56.841 --> 0:09:59.641 I don't think a lot of people make their decisions 0:09:59.641 --> 0:10:01.881 about whether to buy a house or not based on 0:10:01.921 --> 0:10:05.841 Treasury's reports. If people did that, then nobody would ever 0:10:05.841 --> 0:10:08.641 buy a house, because often they are quite pessimistic. If 0:10:08.641 --> 0:10:11.001 I go back and look at a lot of Treasuries forecasts, 0:10:11.401 --> 0:10:14.681 typically they undershoot what house prices are going to do. 0:10:15.361 --> 0:10:17.881 And I think that a lot of people don't judge 0:10:17.921 --> 0:10:20.961 their personal financial situation based on what Treasury rights in 0:10:20.961 --> 0:10:23.841 a report. I think they base it on the redundancies 0:10:23.881 --> 0:10:27.441 that they are seeing now. I think that people's fears 0:10:27.481 --> 0:10:30.161 about job in security that certainly plays a part, and 0:10:30.201 --> 0:10:32.441 in fact, real estate agents aren't reporting that. That is 0:10:32.481 --> 0:10:35.321 one of the main factors people are worrying about it 0:10:35.321 --> 0:10:37.481 at the moment when they're out there at their open 0:10:37.521 --> 0:10:40.321 homes talking to buyers, and so I think some people 0:10:40.321 --> 0:10:43.921 will factor that into their decision making. I always think though, 0:10:43.961 --> 0:10:47.641 that when it comes to the total unemployment level that 0:10:47.761 --> 0:10:50.521 is often reported, even if you get a five percent 0:10:50.601 --> 0:10:53.281 unemployment rate, that means that ninety five percent of people 0:10:53.321 --> 0:10:55.841 still have jobs, and so that will support the housing 0:10:55.921 --> 0:10:56.681 market as well. 0:10:57.241 --> 0:10:58.641 Good stuff. We want your cause on this. 0:10:58.881 --> 0:11:01.401 Eight hundred and eighty ten eighty What do you think 0:11:01.441 --> 0:11:04.081 the property market's going to do next year? 0:11:04.241 --> 0:11:05.001 The level of growth? 0:11:05.361 --> 0:11:08.401 Ed McKnight is is a resident economist at Opia's Partners, 0:11:08.801 --> 0:11:10.641 and he reckons six or seven percent. 0:11:11.201 --> 0:11:11.841 What do you reckon? 0:11:11.881 --> 0:11:13.241 Do you think it's going to be a bit flatter 0:11:13.681 --> 0:11:16.241 just because things like the high food and recessions and 0:11:16.281 --> 0:11:18.241 things like that. Oh, eight hundred and eighty ten eighty 0:11:18.441 --> 0:11:21.721 text nine nine two jump on the blow. You will 0:11:21.721 --> 0:11:24.521 be up with your next seventeen and a half past four. Yes, 0:11:24.601 --> 0:11:27.441 News Talk said be with. Oh we'll let that Christmas 0:11:27.521 --> 0:11:27.881 roll for bit. 0:11:27.961 --> 0:11:31.361 Yeah, there we go, lot of other ranges. 0:11:31.601 --> 0:11:33.241 You know, you're the mastermind. 0:11:36.041 --> 0:11:40.601 Run run, rude off, run up and you far behind. Well, 0:11:40.641 --> 0:11:41.321 it's not that good. 0:11:41.361 --> 0:11:45.481 Maybe we'll chuck cutters looking back to the Weekend Collective. 0:11:45.521 --> 0:11:47.481 This is the one Riff radio show. My guest is 0:11:47.641 --> 0:11:50.641 Ed mcnighty's resident economist at Opia's Partners. Now we've had 0:11:50.681 --> 0:11:54.041 the high foo the rose. The economic outlooks doesn't seem 0:11:54.081 --> 0:11:56.921 so rosy. Productivity is down, the government's tax takers down. 0:11:57.561 --> 0:11:59.241 And is it going to make a difference to the 0:11:59.281 --> 0:12:03.201 real estate market your picks, Ed reckons, it's still going 0:12:03.241 --> 0:12:06.601 to grow about six or seven percent. And let's see 0:12:06.641 --> 0:12:08.161 what Steve reckons, Steve. 0:12:07.961 --> 0:12:13.681 Gooda, yeahs good. Hey, listen, I think you're being yeah, 0:12:14.241 --> 0:12:19.441 totally over over optimistic with that sixte We might even 0:12:19.481 --> 0:12:20.761 call you Ashley church. 0:12:20.561 --> 0:12:23.881 Light now steady on, Steve. 0:12:25.441 --> 0:12:27.761 Oh, we won't go that far. We won't go it's not. 0:12:27.721 --> 0:12:29.761 As combative as Ashley. So we we're going to be 0:12:29.841 --> 0:12:31.161 We're nicer to. 0:12:31.161 --> 0:12:36.601 Eat exactly that that's all good. We'll get off on 0:12:36.601 --> 0:12:40.361 the right foot here. Look, I think it's going to 0:12:40.481 --> 0:12:44.441 remain a memeic for quite some time. Is a few reasons. 0:12:44.841 --> 0:12:51.401 I think New Zealand has now successfully has sentially built 0:12:51.441 --> 0:12:57.721 over supply of houses in Auckland. We've now got a 0:12:57.841 --> 0:13:00.841 lot of new stocks sitting around. You've probably heard recently 0:13:00.841 --> 0:13:04.321 in the news, which I find. You know, I'm surprised 0:13:04.361 --> 0:13:06.521 you haven't brought that your formula. So you're talking about 0:13:06.961 --> 0:13:11.201 interest rates coming down only, and that's you know, supporting 0:13:11.641 --> 0:13:14.601 higher house prices. But that's only a very That's only 0:13:14.601 --> 0:13:16.761 a part of the formula, isn't it really? And I 0:13:16.801 --> 0:13:19.881 think if you can have low interest rates, but you 0:13:20.001 --> 0:13:22.081 need more than that to get the house prices going 0:13:22.361 --> 0:13:25.521 jet We know Japan had low interest rates, almost virtually 0:13:25.561 --> 0:13:31.161 negative interest rates, and the housing market stayed, you know, deflated. 0:13:31.401 --> 0:13:33.161 The price is still went down. You know, they couldn't 0:13:33.201 --> 0:13:35.481 give the money away because you still need to you 0:13:35.561 --> 0:13:37.481 still need to pay the money back, right, even the 0:13:37.521 --> 0:13:41.361 principle so interest and if you've got a zombie economy 0:13:41.441 --> 0:13:44.761 that's not going anywhere and you haven't got job security, 0:13:45.081 --> 0:13:48.281 you're not going to go out and just grab grab 0:13:48.281 --> 0:13:50.561 that big loan right and just jump into the housing market. 0:13:50.921 --> 0:13:54.761 So as your point more around confidence, Steve, regardless of 0:13:54.761 --> 0:13:56.561 the numbers that we look, I mean the numbers plus 0:13:56.601 --> 0:13:57.321 also confidence. 0:13:58.441 --> 0:14:00.321 You know what's really funny is that the people we 0:14:00.441 --> 0:14:03.401 talk about confidence are probably the real estate people. People 0:14:03.481 --> 0:14:05.641 have a vest of interest in making money the market 0:14:05.921 --> 0:14:08.241 because that's the only thing they've got. But look, it's 0:14:08.241 --> 0:14:10.361 not showing up from the data. And you can be 0:14:10.401 --> 0:14:12.321 confident all your life. But it's a mood, isn't it. 0:14:12.601 --> 0:14:15.681 Yeah, we'll see we'll jump in there if I let's 0:14:15.761 --> 0:14:17.841 let it jump in and you can come back and 0:14:17.881 --> 0:14:19.121 we can have a good old ding dong. 0:14:19.721 --> 0:14:22.761 No, I'm enjoying this, Steve. One thing i'd just say though, 0:14:23.001 --> 0:14:25.201 because you're saying, oh, well, there's no evidence that house 0:14:25.201 --> 0:14:27.641 sparce is going up. Houseparces went up just over two 0:14:27.681 --> 0:14:30.001 percent over the last three months. Now you extrapolate that 0:14:30.161 --> 0:14:33.801 over over four quarters then and you'd be up around 0:14:33.801 --> 0:14:36.521 the eight percent market. I'm not saying would be there. 0:14:36.761 --> 0:14:38.361 In fact, if you look at all of the banks, 0:14:38.441 --> 0:14:41.961 more models and forecasts, the most conservative bank is at 0:14:42.041 --> 0:14:44.521 six percent. One thing that I'll just add into this 0:14:44.841 --> 0:14:48.001 equation are two small facts. One, we are seeing the 0:14:48.041 --> 0:14:51.921 banks lending criteria really loosen up. So at the start 0:14:51.961 --> 0:14:55.521 of the year, most banks were testing your mortgage application 0:14:55.841 --> 0:14:58.401 at nine percent. Now it didn't matter that you were 0:14:58.401 --> 0:15:00.961 going to pay a seven percent interest rate, they would 0:15:01.041 --> 0:15:03.641 run their calculations. Is if you were paying a nine 0:15:03.681 --> 0:15:07.881 percent interest rate. Today most banks are sitting around that 0:15:08.001 --> 0:15:10.641 seven and a half to seven point seven percent mark, 0:15:11.001 --> 0:15:12.961 So you're you may not have got a pay rise, 0:15:13.001 --> 0:15:15.201 but you might be able to borrow more money. And 0:15:15.241 --> 0:15:17.881 so it's not just a confidence equation. It's whether people 0:15:17.921 --> 0:15:21.081 are not just able to afford the mortgage, but is 0:15:21.121 --> 0:15:23.841 the bank willing to lend it lends the money to them, 0:15:24.081 --> 0:15:26.241 And in fact banks are now more and more willing 0:15:26.281 --> 0:15:28.361 to lend money out to them. Now I understand that 0:15:28.401 --> 0:15:31.961 this is a pretty finely balanced thing. There are reasons 0:15:32.001 --> 0:15:34.601 why house prices might go up, there are reasons why 0:15:34.601 --> 0:15:37.481 it might be an emic. In fact, I wrote two 0:15:37.521 --> 0:15:40.601 separate articles for one roof quite recently, one outlining the 0:15:40.601 --> 0:15:43.201 seven reasons why I thought that'd go up and another 0:15:43.321 --> 0:15:46.521 outlining the six reasons why I thought that'd stay the same. 0:15:46.601 --> 0:15:49.881 So I get that this is balanced and you can 0:15:50.081 --> 0:15:51.161 argue it both ways. 0:15:52.281 --> 0:15:53.241 Steve, what do you reckon? 0:15:53.521 --> 0:15:57.481 Yeah, I think that of spent is almost what you 0:15:57.961 --> 0:16:03.281 might say, virtually zero. You know, it's technically there because 0:16:03.281 --> 0:16:06.241 it can it can fluctuate, so it really means nothing. 0:16:06.841 --> 0:16:09.201 I think what we can really see at the moment 0:16:09.281 --> 0:16:13.041 the rents are actually going and where I live in Booklyn, 0:16:13.121 --> 0:16:15.681 you can you can see that the rents have dropped. 0:16:15.721 --> 0:16:19.321 That dropped dramatically since the beginning of the year. So 0:16:19.401 --> 0:16:21.641 why would you go out and buy an investment property 0:16:21.641 --> 0:16:25.481 when you have the rents going sell? So wouldn't you 0:16:25.601 --> 0:16:28.201 just sit on your wouldn't you just sit around a bit? 0:16:28.481 --> 0:16:31.601 Because that's going to factor in the health process. If 0:16:31.601 --> 0:16:36.001 you don't get a higher rent, health prices will will 0:16:36.041 --> 0:16:39.561 remain static because you know you need to be paying that, 0:16:39.961 --> 0:16:42.281 you need to be paying the mortgage, right and it's 0:16:42.361 --> 0:16:44.921 not great for investors to jump and at a time 0:16:44.961 --> 0:16:46.321 with rents are going down. 0:16:47.201 --> 0:16:48.081 Ed, what do you reckon? 0:16:49.601 --> 0:16:52.401 Well, to you Steve's logic, they're going sideways and so 0:16:52.481 --> 0:16:58.001 it's basically zero. But I'll just say what I'd say 0:16:58.121 --> 0:17:00.761 is two point one percent up is not zero, Steve, 0:17:00.841 --> 0:17:03.521 It's two point one percent, and that's over a three 0:17:03.561 --> 0:17:05.521 month period, and then you extrap play that out and 0:17:05.601 --> 0:17:08.201 all it's no longer zero percent. Now I agree that 0:17:08.241 --> 0:17:11.481 there are that the rental market is pretty tough at 0:17:11.481 --> 0:17:14.401 the moment. Rents are going sideways. Part of the reason 0:17:14.401 --> 0:17:18.001 in Auckland for that is because rents jumped dramatically during 0:17:19.041 --> 0:17:21.321 during the floods, because we saw a decrease in the 0:17:21.401 --> 0:17:24.361 number of rental properties available. People had to move out 0:17:24.361 --> 0:17:26.561 of their homes while they were being repaired, and so 0:17:26.721 --> 0:17:28.801 rents went up by quite a lot. 0:17:29.201 --> 0:17:30.161 Now that you don't. 0:17:29.961 --> 0:17:33.321 Have that, it's that same stimulus, you are seeing them 0:17:33.361 --> 0:17:34.041 go sideways. 0:17:34.081 --> 0:17:37.161 Actually, Steve, just before you, Steve, Steve, hold on there 0:17:37.201 --> 0:17:40.401 just percent. What's what's your position in the market yourself? 0:17:40.801 --> 0:17:44.241 What's because we know what Ed's position sort of he's 0:17:44.241 --> 0:17:46.721 an investor and he's works for IPS Partners. 0:17:46.881 --> 0:17:48.641 Are you in an Are you somebod who wants to 0:17:48.641 --> 0:17:51.041 get in? You have got in? You want more property? 0:17:51.121 --> 0:17:52.761 You want to sell property? Where are you at? 0:17:54.561 --> 0:18:00.161 You were funnily enough, But oh no, I rent the 0:18:00.241 --> 0:18:05.401 property that I own, but I also rent that live it. 0:18:06.481 --> 0:18:10.041 What's happened in the last year taken one hundred dollars 0:18:10.721 --> 0:18:14.201 a week on the rent. It's dropped from eleven hundred 0:18:14.201 --> 0:18:18.681 and nine to fifty. Had to drop it because there 0:18:18.801 --> 0:18:21.161 was no one around. We had to meet the market 0:18:21.401 --> 0:18:25.881 and also being renting the mar that dropped like a 0:18:26.001 --> 0:18:29.921 rocks from say March to October. You wouldn't believe the 0:18:30.481 --> 0:18:33.161 stock that came on the mark, but believe it. And 0:18:33.321 --> 0:18:36.681 on a weekly basis, the rents were just dropping and 0:18:36.801 --> 0:18:39.401 they're still going south. Everyone to talk to is more 0:18:39.481 --> 0:18:43.201 houses that you see people normally sell their house won't 0:18:43.241 --> 0:18:45.801 because they don't want to get a love actually thrown 0:18:45.841 --> 0:18:48.281 on the rental market for the first time long time. 0:18:48.441 --> 0:18:50.681 Like I said, we're not just meeting the market and 0:18:50.761 --> 0:18:54.201 supply of new houses to rent, but we're actually got 0:18:54.241 --> 0:18:57.281 a massive oversupply. Takes a long time for that to 0:18:57.321 --> 0:18:57.721 work out. 0:18:58.001 --> 0:19:00.041 Hey, thanks Steve, Steve, look at your lines a bit 0:19:00.561 --> 0:19:02.601 actually the lines a bit fi there, so I'll have 0:19:02.641 --> 0:19:07.081 to have to end it there. Yeah, any final comment 0:19:07.201 --> 0:19:09.521 on Steve's sort of and put their air law. 0:19:10.201 --> 0:19:12.241 I think a lot of what he said was incredibly valid, 0:19:12.401 --> 0:19:15.761 and there are reasons to think that house bruces will 0:19:15.761 --> 0:19:17.441 go up. There are reasons to think that they'll go 0:19:17.561 --> 0:19:19.241 sideways for a bit. We just have to make our 0:19:19.281 --> 0:19:21.561 assessment of where that is. The One thing I'll say 0:19:21.681 --> 0:19:26.881 is that one person's experience is not necessarily the average. 0:19:26.921 --> 0:19:29.841 So that's the reason why I often look at data 0:19:30.441 --> 0:19:36.081 macro macro just as opposed to one person's experience, because 0:19:36.241 --> 0:19:38.641 if you wanted to, we could go out and find 0:19:38.841 --> 0:19:41.081 somebody who's rent's gone up by one hundred dollars a week, 0:19:41.281 --> 0:19:43.441 and as we've found with Steve, there are people whose 0:19:43.521 --> 0:19:45.441 rents have gone down by one hundred dollars a week. 0:19:45.681 --> 0:19:48.001 At the moment, it kind of averages out to zero 0:19:48.121 --> 0:19:50.081 and the rental markets going sideways. 0:19:50.401 --> 0:19:52.001 Hey, thanks for your call, Steve. 0:19:52.761 --> 0:19:55.521 You will have read the other factor in the market 0:19:55.641 --> 0:19:58.361 is I imagine you keep up to date with what 0:19:58.521 --> 0:20:02.281 Tony Alexander's writing on it. And it's interesting because he 0:20:02.361 --> 0:20:06.481 does these market surveys and one of the things that 0:20:06.681 --> 0:20:09.081 was a surprised I think he's seen it as a 0:20:09.161 --> 0:20:13.601 surprise is that FOMO is still quite low. I'm not 0:20:13.641 --> 0:20:15.921