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I live in NZ. We have a rapidly growing population with one of the highest levels of immigration in the world. From late 2021 mortgage rates went from as low a

by tmnvix 3y ago

I live in NZ. We have a rapidly growing population with one of the highest levels of immigration in the world. From late 2021 mortgage rates went from as low as 2.5% up to around 7%. Subsequently, in my city, prices quickly dropped 20% and both the number of properties available for sale and for rent increased by as much as 50%. Where did those properties come from? In my opinion the increase is representative of the underlying existence of underutilised properties that are a result of excessive investment demand that has now fallen dramatically. I am firmly of the belief that a property boom can cause an increase in the proportion of underutilised properties even in the face of growing demand for homes - especially now that short term rental markets are playing a bigger part.

mytailorisrich 3y ago
It's the same situation as described in my comment. You have a robustly growing market so it attracts investors and then speculators, especially if money is cheap. This drives increase in supply but that lead to a bubble. For instance, new builds can be snatched by speculators even if they remain empty because market value increases 10% year on year so who cares... until something happens and the bubble pops. Again, this is a common pattern in growing markets. People might also try to sell to avoid repossession if rate hikes make mortgages no longer affordable.
lostlogin 3y ago
There has been an absolutely huge amount of building going on - and while developers are sensitive to mortgage rates, they would have started building prior to interest rate increases. That said, had building slowed? It’s building sites everywhere I go.
- tmnvix 3y ago
  Consents are certainly down. I spoke with someone that helps developers with submissions and interestingly they said they are really busy right now. Turns out though, they aren't busy with new consents but 'minor amendments' - the purpose of which is to reset the 5 year timeframe for the original consent. In other words, they don't want to go ahead right now.
  - robocat 3y ago
    There's a graph of consents in this link that shows a huge drop in consents in last two years: https://www.stats.govt.nz/information-releases/building-consents-issued-january-2024/ https://www.stats.govt.nz/information-releases/building-cons...

by tmnvix 3y ago

mytailorisrich 3y ago

It's the same situation as described in my comment. You have a robustly growing market so it attracts investors and then speculators, especially if money is cheap. This drives increase in supply but that lead to a bubble. For instance, new builds can be snatched by speculators even if they remain empty because market value increases 10% year on year so who cares... until something happens and the bubble pops. Again, this is a common pattern in growing markets. People might also try to sell to avoid repossession if rate hikes make mortgages no longer affordable.

lostlogin 3y ago

There has been an absolutely huge amount of building going on - and while developers are sensitive to mortgage rates, they would have started building prior to interest rate increases. That said, had building slowed? It’s building sites everywhere I go.

tmnvix 3y ago
Consents are certainly down. I spoke with someone that helps developers with submissions and interestingly they said they are really busy right now. Turns out though, they aren't busy with new consents but 'minor amendments' - the purpose of which is to reset the 5 year timeframe for the original consent. In other words, they don't want to go ahead right now.
- robocat 3y ago
  There's a graph of consents in this link that shows a huge drop in consents in last two years: https://www.stats.govt.nz/information-releases/building-consents-issued-january-2024/ https://www.stats.govt.nz/information-releases/building-cons...