Speaker 1: You're listening to the Weekend Collective podcast from News Talks B.
Speaker 2: Welcome back to the Weekend Collective I Tim Beverage.
Speaker 3: If you missed any of the panel had a great
Speaker 3: time with Luke Dello and car McDonald.
Speaker 2: There you can go and check it out where you
Speaker 2: beat your podcast, look for the Weekend Collective.
Speaker 3: iHeartRadio, let's face it. Just go there and check it out.
Speaker 2: Right now, it is time for the One Roof Radio Show.
Speaker 2: By the way, just on that number, I was having
Speaker 2: a conversation. That's not really so much a Christmas song?
Speaker 3: Is it? Short?
Speaker 2: Old Grand Speed forgot? It's more like a New Year's
Speaker 2: Eve song. It's a seasonal song, I guess. Anyway, this
Speaker 2: is the One Roof Radio Show and my guest is Well,
Speaker 2: he's a regular these days. I think we could call him.
Speaker 2: He's not in the studio today because I suspect he's
Speaker 2: probably gone. He's probably looking he's either in his new
Speaker 2: house or he's on holiday or something. But his name
Speaker 2: is Ed mcnighty's a resident economist at Opea's Partners and
Speaker 2: he's with us now.
Speaker 3: Ed, good afternoon, how you going him? Great to be here, mate, Yeah,
Speaker 3: where are you actually.
Speaker 4: I'm currently in christ Church, which is where our head officers.
Speaker 4: So I'm sitting in our podcast studio, just being down
Speaker 4: here for the annual Christmas bash with the team and how.
Speaker 5: Was it well?
Speaker 4: Some people, as usual, probably push the boat out a
Speaker 4: bit far, but good on them.
Speaker 5: Hopefully their hangovers aren't too bad today?
Speaker 3: Are you talking about yourself? And the third person?
Speaker 5: I wish these days are going to be a bit
Speaker 5: more responsible to.
Speaker 3: Oh, you've got to set the example. Back in the
Speaker 3: old days, said.
Speaker 2: In the example was being first to chunder in the
Speaker 2: flower beds, but these days probably the opposite is Anyway, Actually,
Speaker 2: last time we spoke, had you just bought your because
Speaker 2: you're a property investor, but you hadn't you were about
Speaker 2: to either buy or you had just bought your first
Speaker 2: home for you to live in with your fee once.
Speaker 5: Say, I believe there, that's right me and Angela.
Speaker 4: So last time I think we spoke, i'd won the
Speaker 4: auction I put up in my hand was the final better.
Speaker 4: And since then we have settled on that property that
Speaker 4: we officially own it. We've moved in and I think,
Speaker 4: like a lot of first home buyers, were people who
Speaker 4: buy their first house to live in. Were still waiting
Speaker 4: for a bit of furniture to turn up, because when
Speaker 4: you move into a bit of a bigger house, you
Speaker 4: realize how little stuff you have if you've been living
Speaker 4: apartment life for the last few years.
Speaker 2: Actually, how what does it feel like to sort of
Speaker 2: cross the threshold and opened the door as owners for
Speaker 2: the first time.
Speaker 4: Well, it's quite different, actually, you feel quite a sense
Speaker 4: of permanence that radio this is our place. We can
Speaker 4: do whatever we want to it. We can invest in
Speaker 4: buying some nice furniture now because we know that we're
Speaker 4: going to be here for five years at least, rather
Speaker 4: than when we were renting it was like, oh, well,
Speaker 4: if you need a new couch, just get a cheap
Speaker 4: one because we don't know where we'll be in a
Speaker 4: year year or so.
Speaker 2: Yeah, are you going to renovate or is it you
Speaker 2: bought something that's ready to basically rock and roll.
Speaker 4: It's pretty much ready to rock and roll. But I'll
Speaker 4: tell you a little story, just because it's close to Christmas.
Speaker 4: When we moved in, one of the bedrooms I think
Speaker 4: definitely had a young kid in the had this enormous
Speaker 4: snowboarder decal stuck to the wall, and so I thought, oh, no,
Speaker 4: we'll get that off. Well anyway, within about five minutes
Speaker 4: we'd ended up ripping the paint off, So we'll fix
Speaker 4: that at some point in the future.
Speaker 3: Excellent. Oh it's good to have a project, isn't.
Speaker 5: It Now, Tim, I've lost year audio.
Speaker 3: Oh that's weird.
Speaker 2: We just need to check something. And we just need
Speaker 2: to check something there. I think we're feeding the audio
Speaker 2: the wrong way.
Speaker 3: We might need to check that.
Speaker 2: Hey, now let's let's carry on as as we were.
Speaker 2: So there's been this wave of we want to talk
Speaker 2: about what's in the store for next year, and there's
Speaker 2: been this wave of good news for everyone with the
Speaker 2: ocr dropping, of course, and I would imagine that the
Speaker 2: HIFU has bought brought a bit more pressure on downward
Speaker 2: pressure on that for the next time they have to
Speaker 2: announce it. But of course New Zealand is now in
Speaker 2: recession and the high Fo's released it didn't paint a
Speaker 2: very rosy picture of the government's books. In fact, while
Speaker 2: I'm discussing this were this is.
Speaker 3: Your chance as well. We want your cause on this
Speaker 3: eight one hundred eighty ten eighty.
Speaker 2: What does the the sort of shock or surprise of
Speaker 2: a worse than anticipated picture for the government's books. What
Speaker 2: do you think it means for the retestate market and
Speaker 2: it growth potential. We want to hear from you on
Speaker 2: e one hundred and eighty ten eighty. You can text
Speaker 2: nine two nine two. But first, of course he's my guest.
Speaker 2: He gets first DIBs ed.
Speaker 4: In terms of what I think is going to happen
Speaker 4: in twenty twenty five, there's there's quite a few changes
Speaker 4: that are already locked in. The first thing that we've
Speaker 4: got to acknowledge is just last week or the week before,
Speaker 4: the government confirms that they are changing the tenancy laws,
Speaker 4: and in fact they've passed the third reading. So from
Speaker 4: the thirtieth of January, a lot of the laws that
Speaker 4: lords and tenants both have to follow are being rolled
Speaker 4: back to what they were about six years ago. So
Speaker 4: what that means is that the ninety day no course
Speaker 4: termination rule that is back, So landlords are going to
Speaker 4: be able to give ninety days notice without having to
Speaker 4: give a reason and tenants will move out. There's also
Speaker 4: some quite big changes around pet bonds that we might
Speaker 4: get into. Basically, now landlords can't really know say no
Speaker 4: to your tenants having a pet whereas in the past
Speaker 4: landlords had a bit control. Those new changes are a
Speaker 4: bit of a surprise. So that's all coming in twenty
Speaker 4: twenty five. The big one, of course is interest rates
Speaker 4: in house prices, and we have seen a little increase
Speaker 4: over the last three months in house prices. They're up
Speaker 4: about two point one percent. A lot of that probably
Speaker 4: comes down to the timing of the market. It's summer.
Speaker 4: House prices tend to go up a bit faster in summer.
Speaker 4: In terms of how much I think house prices will
Speaker 4: go up next year, six to seven percent is my
Speaker 4: best guess. And one of the things that really is
Speaker 4: supporting that is the fact that interest rates are falling.
Speaker 3: That's quite bullish, isn't it.
Speaker 6: I don't think so.
Speaker 5: It's pretty orthodox. At the moment.
Speaker 4: I keep track of all of the major banks house
Speaker 4: price forecasts, and currently the bank that is being the
Speaker 4: stingiest with their forecast, if I can say that, the
Speaker 4: lowest forecast currently that I've seen is six percent, which
Speaker 4: is out of A and Z. They made that prediction
Speaker 4: back in November, just last month, so it's pretty orthodox.
Speaker 4: Probably the most bullish one that I've seen ASP's most
Speaker 4: recent forecast came out in August. They thought house passes
Speaker 4: would go up almost eleven percent and twenty twenty five. Now, personally,
Speaker 4: I don't think that's realistic, but six or seven percent seems.
Speaker 5: Pretty pretty achievable.
Speaker 2: I think, Okay, we'd love to have your cause on
Speaker 2: this on eight hundred eighty ten and eighty what's going
Speaker 2: to happen with the property market next year? And actually,
Speaker 2: do you agree with ED that it could be six
Speaker 2: or seven percent. I've mind you, I don't serve opinions
Speaker 2: as thoroughly as you would as thoroughly as you would ED,
Speaker 2: but I seem to recall I have heard a couple
Speaker 2: of slightly more pessimistic views on it. But we want
Speaker 2: to have your cause on this eight hundred eighty ten
Speaker 2: and eighty text nine two nine two get on the
Speaker 2: blow when you'll be straight through just on the What
Speaker 2: are the pressures going to be that are actually going
Speaker 2: to push those prices up? Because at the moment there
Speaker 2: is quite a lot of supply. Do you think that
Speaker 2: the demand's just going to kick in?
Speaker 4: Well, the big thing is we are seeing out of
Speaker 4: real estate agents that more and more people are turning
Speaker 4: up to open homes, more people are becoming interested in it.
Speaker 4: We did see similar feedback from real estate agents in
Speaker 4: twenty twenty three or at the end of twenty twenty three,
Speaker 4: and what we saw is that house prices did rise
Speaker 4: a bit over summer, and then they started falling again
Speaker 4: in mid twenty twenty four. The difference between this year
Speaker 4: and last year is what was happening to interest rates.
Speaker 4: So if I take you back to November December twenty
Speaker 4: twenty three last year, we saw that interest rates still
Speaker 4: climbed up, but they kind of peeked around February at
Speaker 4: about seven point four percent for their advertised one year rate.
Speaker 4: In fact, ASB got up to seven point four to
Speaker 4: five percent, so they were still climbing this time last year.
Speaker 4: Now they've really really rocketed down, specifically in the last
Speaker 4: half of this year, because on average, the one year
Speaker 4: rates fallen somewhere between one point six to one point
Speaker 4: eight percent, and that makes a really meaningful difference for
Speaker 4: people getting out there and saying, hey, look, I'm going
Speaker 4: to borrow some money to go buy a house. I
Speaker 4: think it's probably going to be one of the major things.
Speaker 4: The other thing we haven't seen is any real flow
Speaker 4: through into house prices from the record high net migration
Speaker 4: that we had, So typically a one percent increase in
Speaker 4: the population as a whole would typically lead to about
Speaker 4: an increase of house prices of somewhere in the region
Speaker 4: of eight percent. We didn't really see that when we
Speaker 4: had this record net migration. So you've got that kind
Speaker 4: of pent up demand coming that's still there that hasn't
Speaker 4: flowed through into house prices. I think all of that
Speaker 4: will come through in twenty twenty five.
Speaker 2: What about the interest rates in terms of the hiphou
Speaker 2: and the pressure on that, I mean, actually to be honest, also,
Speaker 2: do you think that the economic report will have any
Speaker 2: if any, if not, or no bearing on what the
Speaker 2: market does?
Speaker 5: Personally? I think we have very little bearing.
Speaker 4: I don't think a lot of people make their decisions
Speaker 4: about whether to buy a house or not based on
Speaker 4: Treasury's reports. If people did that, then nobody would ever
Speaker 4: buy a house, because often they are quite pessimistic. If
Speaker 4: I go back and look at a lot of Treasuries forecasts,
Speaker 4: typically they undershoot what house prices are going to do.
Speaker 4: And I think that a lot of people don't judge
Speaker 4: their personal financial situation based on what Treasury rights in
Speaker 4: a report. I think they base it on the redundancies
Speaker 4: that they are seeing now. I think that people's fears
Speaker 4: about job in security that certainly plays a part, and
Speaker 4: in fact, real estate agents aren't reporting that. That is
Speaker 4: one of the main factors people are worrying about it
Speaker 4: at the moment when they're out there at their open
Speaker 4: homes talking to buyers, and so I think some people
Speaker 4: will factor that into their decision making. I always think though,
Speaker 4: that when it comes to the total unemployment level that
Speaker 4: is often reported, even if you get a five percent
Speaker 4: unemployment rate, that means that ninety five percent of people
Speaker 4: still have jobs, and so that will support the housing
Speaker 4: market as well.
Speaker 3: Good stuff. We want your cause on this.
Speaker 2: Eight hundred and eighty ten eighty What do you think
Speaker 2: the property market's going to do next year?
Speaker 3: The level of growth?
Speaker 2: Ed McKnight is is a resident economist at Opia's Partners,
Speaker 2: and he reckons six or seven percent.
Speaker 3: What do you reckon?
Speaker 2: Do you think it's going to be a bit flatter
Speaker 2: just because things like the high food and recessions and
Speaker 2: things like that. Oh, eight hundred and eighty ten eighty
Speaker 2: text nine nine two jump on the blow. You will
Speaker 2: be up with your next seventeen and a half past four. Yes,
Speaker 2: News Talk said be with. Oh we'll let that Christmas
Speaker 2: roll for bit.
Speaker 3: Yeah, there we go, lot of other ranges.
Speaker 5: You know, you're the mastermind.
Speaker 3: Run run, rude off, run up and you far behind. Well,
Speaker 3: it's not that good.
Speaker 2: Maybe we'll chuck cutters looking back to the Weekend Collective.
Speaker 2: This is the one Riff radio show. My guest is
Speaker 2: Ed mcnighty's resident economist at Opia's Partners. Now we've had
Speaker 2: the high foo the rose. The economic outlooks doesn't seem
Speaker 2: so rosy. Productivity is down, the government's tax takers down.
Speaker 2: And is it going to make a difference to the
Speaker 2: real estate market your picks, Ed reckons, it's still going
Speaker 2: to grow about six or seven percent. And let's see
Speaker 2: what Steve reckons, Steve.
Speaker 6: Gooda, yeahs good. Hey, listen, I think you're being yeah,
Speaker 6: totally over over optimistic with that sixte We might even
Speaker 6: call you Ashley church.
Speaker 3: Light now steady on, Steve.
Speaker 6: Oh, we won't go that far. We won't go it's not.
Speaker 3: As combative as Ashley. So we we're going to be
Speaker 3: We're nicer to.
Speaker 6: Eat exactly that that's all good. We'll get off on
Speaker 6: the right foot here. Look, I think it's going to
Speaker 6: remain a memeic for quite some time. Is a few reasons.
Speaker 6: I think New Zealand has now successfully has sentially built
Speaker 6: over supply of houses in Auckland. We've now got a
Speaker 6: lot of new stocks sitting around. You've probably heard recently
Speaker 6: in the news, which I find. You know, I'm surprised
Speaker 6: you haven't brought that your formula. So you're talking about
Speaker 6: interest rates coming down only, and that's you know, supporting
Speaker 6: higher house prices. But that's only a very That's only
Speaker 6: a part of the formula, isn't it really? And I
Speaker 6: think if you can have low interest rates, but you
Speaker 6: need more than that to get the house prices going
Speaker 6: jet We know Japan had low interest rates, almost virtually
Speaker 6: negative interest rates, and the housing market stayed, you know, deflated.
Speaker 6: The price is still went down. You know, they couldn't
Speaker 6: give the money away because you still need to you
Speaker 6: still need to pay the money back, right, even the
Speaker 6: principle so interest and if you've got a zombie economy
Speaker 6: that's not going anywhere and you haven't got job security,
Speaker 6: you're not going to go out and just grab grab
Speaker 6: that big loan right and just jump into the housing market.
Speaker 2: So as your point more around confidence, Steve, regardless of
Speaker 2: the numbers that we look, I mean the numbers plus
Speaker 2: also confidence.
Speaker 6: You know what's really funny is that the people we
Speaker 6: talk about confidence are probably the real estate people. People
Speaker 6: have a vest of interest in making money the market
Speaker 6: because that's the only thing they've got. But look, it's
Speaker 6: not showing up from the data. And you can be
Speaker 6: confident all your life. But it's a mood, isn't it.
Speaker 2: Yeah, we'll see we'll jump in there if I let's
Speaker 2: let it jump in and you can come back and
Speaker 2: we can have a good old ding dong.
Speaker 4: No, I'm enjoying this, Steve. One thing i'd just say though,
Speaker 4: because you're saying, oh, well, there's no evidence that house
Speaker 4: sparce is going up. Houseparces went up just over two
Speaker 4: percent over the last three months. Now you extrapolate that
Speaker 4: over over four quarters then and you'd be up around
Speaker 4: the eight percent market. I'm not saying would be there.
Speaker 4: In fact, if you look at all of the banks,
Speaker 4: more models and forecasts, the most conservative bank is at
Speaker 4: six percent. One thing that I'll just add into this
Speaker 4: equation are two small facts. One, we are seeing the
Speaker 4: banks lending criteria really loosen up. So at the start
Speaker 4: of the year, most banks were testing your mortgage application
Speaker 4: at nine percent. Now it didn't matter that you were
Speaker 4: going to pay a seven percent interest rate, they would
Speaker 4: run their calculations. Is if you were paying a nine
Speaker 4: percent interest rate. Today most banks are sitting around that
Speaker 4: seven and a half to seven point seven percent mark,
Speaker 4: So you're you may not have got a pay rise,
Speaker 4: but you might be able to borrow more money. And
Speaker 4: so it's not just a confidence equation. It's whether people
Speaker 4: are not just able to afford the mortgage, but is
Speaker 4: the bank willing to lend it lends the money to them,
Speaker 4: And in fact banks are now more and more willing
Speaker 4: to lend money out to them. Now I understand that
Speaker 4: this is a pretty finely balanced thing. There are reasons
Speaker 4: why house prices might go up, there are reasons why
Speaker 4: it might be an emic. In fact, I wrote two
Speaker 4: separate articles for one roof quite recently, one outlining the
Speaker 4: seven reasons why I thought that'd go up and another
Speaker 4: outlining the six reasons why I thought that'd stay the same.
Speaker 4: So I get that this is balanced and you can
Speaker 4: argue it both ways.
Speaker 3: Steve, what do you reckon?
Speaker 6: Yeah, I think that of spent is almost what you
Speaker 6: might say, virtually zero. You know, it's technically there because
Speaker 6: it can it can fluctuate, so it really means nothing.
Speaker 6: I think what we can really see at the moment
Speaker 6: the rents are actually going and where I live in Booklyn,
Speaker 6: you can you can see that the rents have dropped.
Speaker 6: That dropped dramatically since the beginning of the year. So
Speaker 6: why would you go out and buy an investment property
Speaker 6: when you have the rents going sell? So wouldn't you
Speaker 6: just sit on your wouldn't you just sit around a bit?
Speaker 6: Because that's going to factor in the health process. If
Speaker 6: you don't get a higher rent, health prices will will
Speaker 6: remain static because you know you need to be paying that,
Speaker 6: you need to be paying the mortgage, right and it's
Speaker 6: not great for investors to jump and at a time
Speaker 6: with rents are going down.
Speaker 3: Ed, what do you reckon?
Speaker 4: Well, to you Steve's logic, they're going sideways and so
Speaker 4: it's basically zero. But I'll just say what I'd say
Speaker 4: is two point one percent up is not zero, Steve,
Speaker 4: It's two point one percent, and that's over a three
Speaker 4: month period, and then you extrap play that out and
Speaker 4: all it's no longer zero percent. Now I agree that
Speaker 4: there are that the rental market is pretty tough at
Speaker 4: the moment. Rents are going sideways. Part of the reason
Speaker 4: in Auckland for that is because rents jumped dramatically during
Speaker 4: during the floods, because we saw a decrease in the
Speaker 4: number of rental properties available. People had to move out
Speaker 4: of their homes while they were being repaired, and so
Speaker 4: rents went up by quite a lot.
Speaker 5: Now that you don't.
Speaker 4: Have that, it's that same stimulus, you are seeing them
Speaker 4: go sideways.
Speaker 2: Actually, Steve, just before you, Steve, Steve, hold on there
Speaker 2: just percent. What's what's your position in the market yourself?
Speaker 2: What's because we know what Ed's position sort of he's
Speaker 2: an investor and he's works for IPS Partners.
Speaker 3: Are you in an Are you somebod who wants to
Speaker 3: get in? You have got in? You want more property?
Speaker 3: You want to sell property? Where are you at?
Speaker 6: You were funnily enough, But oh no, I rent the
Speaker 6: property that I own, but I also rent that live it.
Speaker 6: What's happened in the last year taken one hundred dollars
Speaker 6: a week on the rent. It's dropped from eleven hundred
Speaker 6: and nine to fifty. Had to drop it because there
Speaker 6: was no one around. We had to meet the market
Speaker 6: and also being renting the mar that dropped like a
Speaker 6: rocks from say March to October. You wouldn't believe the
Speaker 6: stock that came on the mark, but believe it. And
Speaker 6: on a weekly basis, the rents were just dropping and
Speaker 6: they're still going south. Everyone to talk to is more
Speaker 6: houses that you see people normally sell their house won't
Speaker 6: because they don't want to get a love actually thrown
Speaker 6: on the rental market for the first time long time.
Speaker 6: Like I said, we're not just meeting the market and
Speaker 6: supply of new houses to rent, but we're actually got
Speaker 6: a massive oversupply. Takes a long time for that to
Speaker 6: work out.
Speaker 2: Hey, thanks Steve, Steve, look at your lines a bit
Speaker 2: actually the lines a bit fi there, so I'll have
Speaker 2: to have to end it there. Yeah, any final comment
Speaker 2: on Steve's sort of and put their air law.
Speaker 4: I think a lot of what he said was incredibly valid,
Speaker 4: and there are reasons to think that house bruces will
Speaker 4: go up. There are reasons to think that they'll go
Speaker 4: sideways for a bit. We just have to make our
Speaker 4: assessment of where that is. The One thing I'll say
Speaker 4: is that one person's experience is not necessarily the average.
Speaker 4: So that's the reason why I often look at data
Speaker 4: macro macro just as opposed to one person's experience, because
Speaker 4: if you wanted to, we could go out and find
Speaker 4: somebody who's rent's gone up by one hundred dollars a week,
Speaker 4: and as we've found with Steve, there are people whose
Speaker 4: rents have gone down by one hundred dollars a week.
Speaker 4: At the moment, it kind of averages out to zero
Speaker 4: and the rental markets going sideways.
Speaker 3: Hey, thanks for your call, Steve.
Speaker 2: You will have read the other factor in the market
Speaker 2: is I imagine you keep up to date with what
Speaker 2: Tony Alexander's writing on it. And it's interesting because he
Speaker 2: does these market surveys and one of the things that
Speaker 2: was a surprised I think he's seen it as a
Speaker 2: surprise is that FOMO is still quite low. I'm not
Speaker 2: sure if that was actually the big surprise in his piece,
Speaker 2: but in terms of people's averages, but also the number
Speaker 2: of people who are worried about their jobs and things
Speaker 2: like that, and plus he also talks about the uncertainty
Speaker 2: around the global trade, etc.
Speaker 3: Does what did you what do you reckon? Yeah?
Speaker 4: I think that it doesn't surprise me that there's not
Speaker 4: a lot of fear of missing out going on at
Speaker 4: the moment. The reason is that we have got a
Speaker 4: lot of listings on the market. In fact, that is
Speaker 4: one of the factors that will keep house prices lower
Speaker 4: than they would otherwise be is that we've got the
Speaker 4: highest number of listings on websites like One Roof that
Speaker 4: we've had for about nine years. So there is a
Speaker 4: lot of stock on there. So that does mean that
Speaker 4: buyers feel like they can take their time. On average,
Speaker 4: they're not too worried about missing out on one house
Speaker 4: because they know that there's going to be another house
Speaker 4: down the road and they can see it on trade
Speaker 4: me and shop around a bit.
Speaker 6: Now.
Speaker 4: I think that does mean that it's a really good
Speaker 4: market to be a buyer at the moment, And that's
Speaker 4: one of the reasons why in that One Roof article
Speaker 4: I talked about I'm pulling the trigger on buying a
Speaker 4: house right now.
Speaker 2: Yeah, And I would say that was I don't think
Speaker 2: anyone I would argue with that timing actually ed what
Speaker 2: about the what about the regional differences? Where do you
Speaker 2: think we are going to see the most energy in
Speaker 2: the market, Because Wellington certainly took a caning after it
Speaker 2: went up with the cheap interest and then bang not
Speaker 2: good news.
Speaker 4: Yeah, I think Wellington's one of the areas that's going
Speaker 4: to continue to be sluggish when it comes to the
Speaker 4: property market. It's really interesting looking at the data down there,
Speaker 4: it does seem like there's not a lot of confidence
Speaker 4: in the market, probably because you've got that decrease in
Speaker 4: government spending or the government holding back a little bit
Speaker 4: in terms of spending money down there, a bit more redundancies,
Speaker 4: so I think the mood of the market will continue
Speaker 4: to be a bit sheepish. One of the places where
Speaker 4: we are seeing the most or the fastest increases in
Speaker 4: house prices at the moment is Queenstown. Queenstown never really
Speaker 4: took a hit when interest rates really started going up,
Speaker 4: and as a country, our house prices fell about eighteen percentage.
Speaker 4: Queenstown pretty much just stayed the same. It has gone
Speaker 4: pretty quickly, I think somewhere between five to seven percent,
Speaker 4: depending on which months you specifically look at but year
Speaker 4: on yeah, house prices have been going pretty well down
Speaker 4: in Otago. Also, Southland has been another area where house
Speaker 4: prices have fully recovered after their drop, and so we
Speaker 4: will see some variation around the country. Steve, for instance,
Speaker 4: is in Auckland where house prices are quite low. Last
Speaker 4: time I looked there something like twenty percent below the
Speaker 4: peak of the market. Some other areas have fully recovered.
Speaker 4: It just so happens that there are two hour flights
Speaker 4: south of Auckland.
Speaker 2: Actually just before you go to Catherine, who's waiting. The
Speaker 2: Queenstown market. Why is it such a bubble? Is it
Speaker 2: simply because it's really expensive property market and people who
Speaker 2: are buying and selling and that maybe they've got a
Speaker 2: bit more to a bit more room for maneuver.
Speaker 4: I think that people get into who get into the
Speaker 4: Queenstown market have the money to be able to bid
Speaker 4: up house prices and pay what they need to get
Speaker 4: into that market. The other thing that tends to push
Speaker 4: up the average house price in Queenstown is the fact
Speaker 4: that people tend to get in there and build really
Speaker 4: expensive homes. That can be another factor that pulls up
Speaker 4: that average. In fact, I saw in Core Logic Stater,
Speaker 4: Arrowtown has popped into the top ten most expensive suburbs
Speaker 4: for the first time that I've seen it in there.
Speaker 2: Oh damn, I've been having mine aratime. But never mind,
Speaker 2: it's always just a fantasy for me, to be honest.
Speaker 2: But well, maybe not anyway. Twenty seven minutes to five,
Speaker 2: let's go to Catherine.
Speaker 6: Hello.
Speaker 7: Yes, Hello, I'm just wondering when you judge your percentages
Speaker 7: of how either rises or falls, how do you do that?
Speaker 7: Because looking at RVs at the moment, especially in Auckland,
Speaker 7: I'm talking about the housing market, the RVs are just
Speaker 7: completely out of whack. What do you think about the
Speaker 7: RV situation in Auckland.
Speaker 4: Yeah, so I'll answer your second question first and then
Speaker 4: I'll come back to how economists put together their forecasts. So,
Speaker 4: at the moment, house prices are in Auckland are telling
Speaker 4: about ten percent under RVs. The reason for that is
Speaker 4: because those valuations were set back in twenty twenty one.
Speaker 4: Would you for a new set of valuations coming up
Speaker 4: in twenty twenty five, And the fact of the matter
Speaker 4: is that house prices will have fallen about ten to
Speaker 4: eleven percent below that month where they set them. I
Speaker 4: think they set it in June twenty twenty one from memory,
Speaker 4: and so we see that actually around the country that
Speaker 4: because we set the RVs or the council valuations a
Speaker 4: couple of years ago, the housing market always gets out
Speaker 4: wack because house prices move and the RVs stay the
Speaker 4: same for roughly three ish years. I'll tell you one
Speaker 4: other little little data point that's quite interesting. At one
Speaker 4: point I saw Thames Thames Corrimandal district house prices were
Speaker 4: selling something like forty percent above RV on average. And
Speaker 4: again the reason is because the RVs were set many
Speaker 4: years ago and then house prices take off and they
Speaker 4: do tend to get out of whack.
Speaker 7: So with the Auckland market in my lifetime, I can
Speaker 7: never see we used to call it government valuation I've
Speaker 7: never seen a drop in a government valuation ever. Is
Speaker 7: do you think realistically they are going to drop the RVs?
Speaker 4: Yeah, I do, And in fact we've seen that in
Speaker 4: Todonga recently. I think the average RV and Todong dropped
Speaker 4: somewhere between eight to twelve percent, depending on the suburb
Speaker 4: that you're looking at. Now, let's be clear that doesn't
Speaker 4: mean that your rates bill is going to go down
Speaker 4: because the way that governments or councils use the RVs
Speaker 4: is just to say how are we going to split
Speaker 4: the rates that we're going to collect. So the councils
Speaker 4: sit around and say how much money do we need
Speaker 4: to raise out of rate payers, and then they use
Speaker 4: the RVs to split that amount up between all of
Speaker 4: the property owners. So you probably will see them come down. Unfortunately,
Speaker 4: you won't see your rates will go down. They'd likely
Speaker 4: to go up, but at least it's going to be
Speaker 4: a little bit less an airplant.
Speaker 7: Because years ago it always used to be the situation
Speaker 7: where the RVs were extremely low. They were never really well,
Speaker 7: as far as I can remember, the RVs always extremely conservative.
Speaker 7: Where they've almost gone the opposite way.
Speaker 2: Now, oh yeah, absolutely, my RV's I think definitely more
Speaker 2: than minors. But no, thanks Catherine, thanks for you Core
Speaker 2: take care. By the way, that's the best explanation i've
Speaker 2: heard of how the rates. People who think, oh, my
Speaker 2: property's goneup, I'm going to be paying more rates, it's not.
Speaker 2: It's just just the way that council decides how much
Speaker 2: you should pay of what they want to raise in rates.
Speaker 2: Nice and succent. There ed good work anyway, Right, let's
Speaker 2: take some more call. Oh, by the way, sorry, I've
Speaker 2: just got a quick update on the the Hawk's Bay
Speaker 2: powercut situation. Transpower says two of its two hund and
Speaker 2: twenty kiler vault lines are offline and they are unsure
Speaker 2: how long it will take to be fixed. Transpower believes
Speaker 2: that all of Hawk's Bay is now without power. So
Speaker 2: a Transpower spokesperson says, lightning struck its equipment and Transpower
Speaker 2: is still assessing the.
Speaker 3: Extent of the damage. So doesn't sound great, but he's
Speaker 3: hoping they really manage to get into it and get
Speaker 3: you back online sooner rather than later. Right, let's take
Speaker 3: some actually tell you what. We'll take a break.
Speaker 2: We've got Kareem waiting and Ross. We'll be back in
Speaker 2: just a moment. We're talking about predictions for next year,
Speaker 2: the housing market. We're in recession?
Speaker 1: Is it that bad?
Speaker 2: Are we going to be six or seven percent growth?
Speaker 2: Like Ed McKnight, my guest from OPS Partners says back
Speaker 2: in attack, Yes, welcome back. This is the one roof
Speaker 2: radio show. I'm Tim Bevers, my guest is Ed McKnight.
Speaker 2: Be talking about your predictions for next year basically, and
Speaker 2: we've got the callers come in so kareem.
Speaker 8: Hello, good afternoon boys, how are you doing good? I
Speaker 8: was wondering if you go do me a favor, pick
Speaker 8: up the phone and bring up the muppets, that green
Speaker 8: and the laver to tellent it's like a rich lungdon
Speaker 8: got a tax cat and how come the property rental
Speaker 8: is coming down? Ah, there were screaming, they were streaming
Speaker 8: the bottom of the alungs Chloe in the Parliament. The
Speaker 8: rich lundon getting a tax cat and there's nothing's going
Speaker 8: to pass on to the tenants.
Speaker 9: And she was wrong.
Speaker 8: The market is getting all the all the rentals getting
Speaker 8: a bit in the moment.
Speaker 2: Actually, and actually what you're saying is probably if we
Speaker 2: go back in time, kareem, and if I can bring
Speaker 2: an ed McKnight, is that of course, when you make
Speaker 2: it more expensive to be a landlord, if it can
Speaker 2: get passed on at will, ed so, But I'm not
Speaker 2: sure that's responsible for the it's taking the pressure off,
Speaker 2: but is it responsible for the fallen rents?
Speaker 6: Well?
Speaker 2: Everything, Yeah, I'm just throwing this to d now, Kareem
Speaker 2: and you can come on and again in a second.
Speaker 4: What I would say is it's quite difficult to split
Speaker 4: out the different factors, but it's certainly something that's going
Speaker 4: to contribute to it. So what Kareem's really talking here
Speaker 4: is the interest deductibility rules, because what Labor had done
Speaker 4: back in twenty twenty one was said, we're not going
Speaker 4: to let you count your mortgage interest in calculating your tax.
Speaker 4: And what that really means is that landlords were being
Speaker 4: taxed as if they didn't have a mortgage, despite that
Speaker 4: they still had a mortgage to pay, and so you'd
Speaker 4: pay a whole heap more tax. With National coming in
Speaker 4: and saying actually we're going to treat property investment like
Speaker 4: every other business. You're going to get the same rules
Speaker 4: as every other business, then property investors go back to
Speaker 4: paying the normal amount of tax that they always used
Speaker 4: to pay. So if you stop them from being overtaxed,
Speaker 4: then yes, that means that there's a little bit less pressure.
Speaker 4: It means that landlords are a little bit more willing
Speaker 4: to go out and make a purchase by another house
Speaker 4: add to the rental supply. So it's certainly I would
Speaker 4: expect it to have a bit of a flow on
Speaker 4: effect into the rental market, and that might be one
Speaker 4: of the contributing factors to the fact that we now
Speaker 4: have quite a side what's going rental market. Rents are
Speaker 4: basically staying the same or going down in real terms.
Speaker 3: Now, Kreem, you've got any further comment on.
Speaker 8: That, You exactly explained it absout clearly because they're so
Speaker 8: out of touch. They're telling you to pay tax it's
Speaker 8: a business, but then telling you do not detect that
Speaker 8: your mortgage because of it it's an income. Is it
Speaker 8: a business or is it not a business? Just the
Speaker 8: way they're saying is is out of touch. I've got
Speaker 8: rental properties. I told my tenants I'm not going to
Speaker 8: put the rent out because I don't have to pay
Speaker 8: an extron taxes.
Speaker 3: Yeah.
Speaker 2: Yeah, you're preaching to the choir as well, by the way,
Speaker 2: because both of us about Ed and I would have
Speaker 2: the same view on that. And it's amazing the number
Speaker 2: of people who still say, oh, the landlord's got aant
Speaker 2: tax cut, when in fact, my view, which I think
Speaker 2: is the accountants view as well, is that it's a
Speaker 2: legitimate tax deduction.
Speaker 3: So not really a tax cut.
Speaker 4: But anyway, the other thing you've got to factor, and
Speaker 4: it is that a large part of that is that
Speaker 4: it was a tax cut relative to what would have
Speaker 4: been the cakes. So what I mean by that is
Speaker 4: Labour's rule where they were going to take away interest
Speaker 4: aductibility was only half phased in, and so that tax
Speaker 4: cut is compared to if the Labour's rule got fully
Speaker 4: phased in. So it's not quite the tax cut that
Speaker 4: some people sometimes make it out to be. It's just
Speaker 4: that we wouldn't see landlords paying even more in tax.
Speaker 3: Okay, let's take some more calls. Where are we up to?
Speaker 2: It is ross, good morning, afternoon. Sorry, yeah, I don't
Speaker 2: know where I was there.
Speaker 9: Sorry, yeah, yeah, I think I need for thinking that's
Speaker 9: going to be six pcine. But I don't think it's
Speaker 9: anywhere there that I'd say more like two point two
Speaker 9: percine or two point five percent. But why I say
Speaker 9: that is because when economy is going well, and it's
Speaker 9: a Rocksdale economy, so does the housing market and there
Speaker 9: is fuel by Oh, hang on a board, the house
Speaker 9: for six hundred and now it's worth seven hundred. I've
Speaker 9: got one hundred thousand dollars in equity. I'll go out
Speaker 9: and buy a new car, or do some multations for
Speaker 9: the house, or buy a rental property or rental properties.
Speaker 9: All that comes back. But this is the worst recession
Speaker 9: since nineteen ninety And the only the only thing I
Speaker 9: could have thought of, what Nichola Willis could have done
Speaker 9: different is say, look, we're in a really really bad stay.
Speaker 9: Their books aren't looking good. We won't do the tax
Speaker 9: cuts because they really aren't going to do anything for
Speaker 9: a lot of people's. Some people it might so you
Speaker 9: to test them people that may need a real, real
Speaker 9: super hand somewhere. But to the point is that you know,
Speaker 9: until you do that, you know you would have put
Speaker 9: that money back into the economy to try and get
Speaker 9: the economy working, you know, and let the fairies go ahead.
Speaker 9: And you've got because you know, to me, you've got
Speaker 9: a bigger fair you've got more goods and services coming
Speaker 9: across the straight. You got more coming at you.
Speaker 6: Across on a small boat.
Speaker 3: Okay, Yeah, I mean that sort of ties into the
Speaker 3: whole confidence thing, doesn't it. That argument?
Speaker 6: Yeah?
Speaker 4: And the good thing about house price forecast, especially saying
Speaker 4: what we think it's going to happen over the next year,
Speaker 4: is we all get to make a good guess, and
Speaker 4: no one can prove us wrong today.
Speaker 5: So I mean, it's awesome that we all keep to
Speaker 5: have our guess.
Speaker 4: What I would say as well, just around the two percent,
Speaker 4: is just keep in mind that a lot of the
Speaker 4: data we're looking at is backward looking in terms of
Speaker 4: the economy. Right, So the economy has been pretty terrible
Speaker 4: over the last year, and yet over the last three months,
Speaker 4: house prices still went up by two percent. Now, I
Speaker 4: agree that some amount of that is seasonality, but what
Speaker 4: you're saying is over the next twelve months, we're going
Speaker 4: to see what we saw over the last three months,
Speaker 4: even though the economy was pretty dire over the last
Speaker 4: three months. Now, I mean, the difference between two and
Speaker 4: a half percent and six percent is actually not that great.
Speaker 5: I don't think we are miles apart.
Speaker 4: But what I just say is often when we are
Speaker 4: at a time where we're not seeing house brasses change
Speaker 4: a lot, we think that it's just going to continue
Speaker 4: in the future. In fact, if we just see what
Speaker 4: we had over the last three or four months and
Speaker 4: have that continue over the next year, you will see
Speaker 4: roughly around five to six percent worth of growth.
Speaker 2: I guess I should nail my prediction to the mask,
Speaker 2: which is massively uninformed, and it's more about what they
Speaker 2: call the vibe. I'm going to go tops four percent
Speaker 2: because I think there's going to be a bit of
Speaker 2: a I think in the middle of the year there's
Speaker 2: going to be a bit of activity, but a bit
Speaker 2: of lack of activity, should I say? And I'm just
Speaker 2: going to go with four percent, and then we can
Speaker 2: in a year's time, as long as you're still talking
Speaker 2: to me, we can meet in the middle and see
Speaker 2: where we got to.
Speaker 4: Well, that's great news. It means you're basically inviting me
Speaker 4: back for same time next year. I'll see you then to.
Speaker 3: Well, I don't see why not, you know, we'll log
Speaker 3: that in absolutely.
Speaker 2: We'll just get a little bit of tinsel out, decorate
Speaker 2: the studio, have a little bit of eggnog, and away
Speaker 2: we go, and then celebrate who was right anyway, a
Speaker 2: few texts, just we've got the one the week will
Speaker 2: go to in just a moment. The forecast for rising
Speaker 2: house prices, as text to says, have been wrong for
Speaker 2: the last two years. The remarket will remain flat. Sprookers
Speaker 2: doing their best, but the market will speak for itself. Well,
Speaker 2: the market will speak for itself, so in that respect
Speaker 2: that text is correct ed. Another one, no surprise, read
Speaker 2: the government books. This government has talked down New Zealand's
Speaker 2: economies for around one year before the last election, so
Speaker 2: it's got what it wanted. Borrowing to fund tax cuts
Speaker 2: not good. That's just an economy sort of discussion. Not
Speaker 2: so much on them on property. But I think yeah,
Speaker 2: there is in the text. It's fair to say a
Speaker 2: fair bit of pessimism. I think that's probably going to
Speaker 2: be the most interesting factor as to the confidence, because
Speaker 2: once confidence picks up, then you.
Speaker 3: Know your guess is as good as mine or better.
Speaker 5: I think that's fair.
Speaker 4: And the one thing that I would just point to
Speaker 4: is just keep an eye on the bank's willingness to lend,
Speaker 4: because I think a big part of whether whether somebody
Speaker 4: decides to go and buy house or not is whether
Speaker 4: the banks are willing to give somebody a loan. And
Speaker 4: the big drops and servicing test rates over the over
Speaker 4: the last month. Generally the public can't see that because
Speaker 4: we're looking at the advertised rates. What banks are saying
Speaker 4: they're going to charge you for a mortgage. What a
Speaker 4: lot of people aren't keeping their eye on. Is the
Speaker 4: fact that banks have over the last month dropped their
Speaker 4: servicing test rates from about eight percent to seven and
Speaker 4: a half percent. That is quite a large drop just
Speaker 4: in just thirty ish days compared it to the start
Speaker 4: of the year. Again, they were testing at nine percent.
Speaker 4: Now it's down to seven and a half. The kind
Speaker 4: of fundamental fact is that all else being equal, banks
Speaker 4: are more willing to lend. And I think that's the
Speaker 4: factor that's going to come in in twenty twenty five
Speaker 4: that a lot of people probably can't see excellent stuff.
Speaker 2: Hey, we got to take a moment. The one roof
Speaker 2: the Property a Week is next. It's an absolute beauty
Speaker 2: and you can check it out. Book someone to share
Speaker 2: the address with you. After the break. This is the
Speaker 2: one Reef Radio Show one hundred and eight. Actually we're
Speaker 2: not calling for course. We'll be back in just a moment.
Speaker 2: Eleven minutes to five.
Speaker 1: The one roof Propity of the Week on the Weekend Collective.
Speaker 2: Yes, the one roof Property of the Week is a well.
Speaker 2: A lot of properties in Queenstown are quite stunning. It
Speaker 2: is ten Limerick Lane in Queenstown. It's five bedrooms, five
Speaker 2: love those five bedrooms, five bathrooms, two car garage. One's
Speaker 2: kind of expecting a three or four car garage with
Speaker 2: all those bathrooms. But anyway, the house is four hundred
Speaker 2: and thirty square meters. By the look of it, it
Speaker 2: does look big. I wonder if we've got the right
Speaker 2: figure there actually, But anyway, it's described as style and sophistication,
Speaker 2: abounding with polished concrete floors, heated throughout, superb timber detailing,
Speaker 2: wine cellar and bar, as well as generous balconies on
Speaker 2: three of the four levels. Okay, let's go with four
Speaker 2: hundred square meters. Yes, definitely three of the four levels. Yeah,
Speaker 2: I think it's probably pretty big. Main bedroom residents is
Speaker 2: it's sorry. The main three bedroom residents is configured over
Speaker 2: three levels, spacious living and dining, a designer kitchen.
Speaker 3: Look, it's got it all. It's pretty new, it's pretty flash.
Speaker 2: But the views, to be honest, you could probably have
Speaker 2: any old house in Queenstown and you put it in
Speaker 2: the right place, it's going to look magnificent. But Ed McKnight,
Speaker 2: what do you make of it? Two point six million
Speaker 2: r V but the estimate is three point five or
Speaker 2: range between three point one nine and three point eight four.
Speaker 3: What's your pick go show?
Speaker 4: I think I think Catherine who called up earlier, she'd
Speaker 4: have a go at that RV because that's going to
Speaker 4: be way out. It is absolutely stunning. You get any
Speaker 4: house on the hell in Queenstown that looks out over
Speaker 4: Lake Walker Tippu and you just think that is absolutely stunning.
Speaker 2: I don't think there'd be many people who wouldn't look
Speaker 2: at the photo of the deck. So there's two photos
Speaker 2: of the deck, one with the chairs and the glass
Speaker 2: balcony and the view to die for, and the other
Speaker 2: one is the spar pool just sitting there and you
Speaker 2: can just imagine having a I've got to go buy
Speaker 2: that lotto ticket, I think, don't you that seem actually
Speaker 2: I want your thoughts on it. At three and a
Speaker 2: half million, does that sound about right in terms of
Speaker 2: what you would pay if you had the money for
Speaker 2: a house like that.
Speaker 4: To be honest, I thought that sounded quite cheap for Queenstown,
Speaker 4: especially with those sorts of views. I think maybe one
Speaker 4: of the things that's going to keep the price a
Speaker 4: little bit lower is that it is attached to a
Speaker 4: similar house right next to it. If you're spending that
Speaker 4: sort of money in Queenstown. Perhaps you want to go
Speaker 4: for something that's more standalone, doesn't have your neighbor right
Speaker 4: next to you. So maybe for the right buyer they'll
Speaker 4: look at that as a bit of a plus and say, oh,
Speaker 4: that's great. Maybe I'll get a really good quality house
Speaker 4: a little bit cheaper than would otherwise be the case.
Speaker 2: Yes, anyway, so that yeah, I'll give that addressed to you.
Speaker 2: By the way, if you want to go look at
Speaker 2: it again, it's ten Limerick Lane, Queenstown, and so go
Speaker 2: and check it out. And any other property in queen
Speaker 2: Stein check those out as well. Of course they're all
Speaker 2: generally pretty good. Hey, Ed, thank you so much for
Speaker 2: your contributions. During the course of the year. You're going
Speaker 2: to be taking how long are you taking off?
Speaker 4: I'm taking about three and a half weeks off. We're
Speaker 4: going to North Queenstown, which is another word for Switzerland,
Speaker 4: which is basically Queenstown in Europe. So I'm going to
Speaker 4: kick off on Monday head over there. Oh so you're
Speaker 4: going to Switzerland to Switzerland skiing. I'm going to attempt
Speaker 4: to ski. I'm not sure whether whether it will counter skiing,
Speaker 4: but we'll give it a good go.
Speaker 3: Which part of Switzerland We're.
Speaker 4: Going to go to zoom Art which is the skiing town,
Speaker 4: and also Zurich and then all and in Milan.
Speaker 3: Excellent.
Speaker 2: Oh well, hey, hey mate, you'll love it. It's a
Speaker 2: stunning part of the where we're in Shamanee last year,
Speaker 2: which is literally on the border. You could ski off
Speaker 2: one side of the chair lift and you crossed into
Speaker 2: Switzerland with every return.
Speaker 3: So yeah, have a great holiday, mate.
Speaker 2: Thanks so much for your contributions and if people want
Speaker 2: to check out your work they can go to ope's
Speaker 2: the website address for OPS Partners.
Speaker 4: Yeah, Opspartners dot coded inzad. That's about OPES Partners, dot
Speaker 4: coded inzad.
Speaker 3: Excellent.
Speaker 2: I have a great holiday, mate, and we'll catch you
Speaker 2: on the other side. That is one roof radio show,
Speaker 2: the last one for the year. We'll be back with
Speaker 2: the Parent Squad. John Cowen joins us talking about a
Speaker 2: whole bunch of things around Christmas and managing families and
Speaker 2: all that sort of thing. Eight hundred and eighty ten
Speaker 2: eight'll be taking your course. Lots to talk about.
Speaker 1: For more from the Weekend Collective, listen live to news
Speaker 1: talk said be Weekends from three pm, or follow the
Speaker 1: podcast on iHeartRadio