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"The rent is too damn high!" A lot of talk of supply side issues, economics 101, etc in these threads. Greetings from New Zealand, where just like so many oth
by tmnvix 4y ago
"The rent is too damn high!"
A lot of talk of supply side issues, economics 101, etc in these threads.
Greetings from New Zealand, where just like so many other anglosphere economies we've been playing the low interest property speculation game for decades now. We got really, really good at it. The last couple of years saw 50% increases in property prices. Madness.
A funny thing's been happening in just the last six months though. Interest rates have gone up. 2.5% to 6% roughly. In the capital the number of homes for sale doubled compared with the year before. Prices are down 20% since the November peak.
Here's the interesting thing. While this crash is happening the number of rentals available has almost almost doubled and rents are going down. This is after tenants experienced the tightest rental market in decades just a year ago.
Where did all those new rentals come from?
Hint: there are two sides to supply and demand (no one really looks at the demand side too closely but that's where the real policy failures are).
- rcpt 4y agoPrior to the NZ Land Tax Abolition Act it was pretty good there no?
- tmnvix 4y agoI put it down to the double whammy of banking deregulation and ripping into social housing. From the 90s on property speculation has been the name of the game. It does seem like this year could bring a paradigm shift. We might have come to the end of the road with lowering interest rates and the social housing system appears to have totally fallen apart and been overwhelmed at the same time. A decent property market correction will be good for everyone in the long run, but it's going to be difficult for a lot of people. It'll be interesting to see how middle New Zealand handles it when the crisis is at their door and not just 'out there' for more unfortunate people to worry about.
- acchow 4y agoMany cities are experiencing asset price bubbles far beyond the rental price increases (driven by central banks). But NYC rental prices are actually rising rapidly. It’s quite a different situation
- throwthroyaboat 4y agoNZ doesn't do 30 year fixed mortgages like the USA does, so I presume this effects things a lot when interest rates go up? The bipartisan "medium density residential standard" legislation gave me a lot of hope for the future of NZs housing market, despite all the grumbling from some of my older relatives. Remains to be seen whether building supplies can keep up. Would be nice to have a land/capital gains tax though.