I think I'm going to stay home
My prediction for the next election is that Labour are going to lose. Not only are they going to lose, but they are going to lose over one issue. That issue is house prices.
Now, there is still plenty of time before the election so they have time to fix this but I'm not sure they are going to be able to. As a staunch Labour supporter I find this disappointing but not unexpected. Labour have been in power my entire voting life, that had to change sometime. (I like to think it is not a coincidence my becoming eligible to vote brought and kept Labour in power but I'm guessing that every vote doesn't count quite that much.)
House prices in New Zealand are astronomical and apparently the NZ property market is one of the riskiest in the world because prices are so over-valued right now. Add to that the growing interest rate and you can begin to see where the problem is. The ordinary New Zealander just can't afford to buy a house anymore, they might be able to afford a hovel if they are lucky. Apparently a third of all home owners in New Zealand now commit at least 40% of their after-tax income to their mortgage repayments. That's a hell of a lot of money! Others are paying upwards of 50% and 60% of their take-home pay, not necessarily because they want to but because it's that or lose their home. I doubt paying 60% of your pay towards your mortgage leaves much money in the pocket for anything else and it's not even just a short-term thing, it's for the next 20-30 years!
Housing markets are unlikely to crash but the New Zealand market is getting closer to that point than most. If it does that will spell instant disaster for Labour and I think it'll be a very long while before we see a Labour-led government again. If Labour can start to fix the problem before the next election then maybe they will just be out of power for one term.
John Key (hiss hiss) has been making the most of the housing problem, stating that it is due to Labour's economic mismanagement. You can see where that line will be believed by people up and down the country. Afterall, one of the things making home-owning such a difficult prospect at the moment is the soaring interest rates. Every time I turn around the interest rate has risen. Personally I don't see National as a cure for this problem but I do want to see a change. Those who are not as in hate with National as I am will see National as the cure and that will be the end of Labour.
As for what I think is going to happen with the housing market. I think that investors are going to start leaving the market, its no longer the viable investment market it once was. Prices will level off, or even drop quite significantly. I don't think it will be a crash but I do think there will be a big dip in prices. People just aren't going to be able to afford to keep buying at the prices houses currently are. At the moment for a lot of people renting is by far the cheaper and more sensible solution.
In 2010 the first round of home deposits are going to be able to be drawn from people's Kiwisaver accounts. This will set the market on the rise again. So my plan based on these expectations? Forget Kiwisaver and buy in late 2009. Or don't forget Kiwisaver but buy right at the beginning of 2010. I think the 2009 option is safer though so I'm not just buying for the sake of buying. Looking in 2009 will give me plenty of time to find a place I actually want to own.
So there it is, I can't deny these predictions if they don't come true now that I've put them on paper. They will come true though, you'll see. share this: facebook
Now, there is still plenty of time before the election so they have time to fix this but I'm not sure they are going to be able to. As a staunch Labour supporter I find this disappointing but not unexpected. Labour have been in power my entire voting life, that had to change sometime. (I like to think it is not a coincidence my becoming eligible to vote brought and kept Labour in power but I'm guessing that every vote doesn't count quite that much.)
House prices in New Zealand are astronomical and apparently the NZ property market is one of the riskiest in the world because prices are so over-valued right now. Add to that the growing interest rate and you can begin to see where the problem is. The ordinary New Zealander just can't afford to buy a house anymore, they might be able to afford a hovel if they are lucky. Apparently a third of all home owners in New Zealand now commit at least 40% of their after-tax income to their mortgage repayments. That's a hell of a lot of money! Others are paying upwards of 50% and 60% of their take-home pay, not necessarily because they want to but because it's that or lose their home. I doubt paying 60% of your pay towards your mortgage leaves much money in the pocket for anything else and it's not even just a short-term thing, it's for the next 20-30 years!
Housing markets are unlikely to crash but the New Zealand market is getting closer to that point than most. If it does that will spell instant disaster for Labour and I think it'll be a very long while before we see a Labour-led government again. If Labour can start to fix the problem before the next election then maybe they will just be out of power for one term.
John Key (hiss hiss) has been making the most of the housing problem, stating that it is due to Labour's economic mismanagement. You can see where that line will be believed by people up and down the country. Afterall, one of the things making home-owning such a difficult prospect at the moment is the soaring interest rates. Every time I turn around the interest rate has risen. Personally I don't see National as a cure for this problem but I do want to see a change. Those who are not as in hate with National as I am will see National as the cure and that will be the end of Labour.
As for what I think is going to happen with the housing market. I think that investors are going to start leaving the market, its no longer the viable investment market it once was. Prices will level off, or even drop quite significantly. I don't think it will be a crash but I do think there will be a big dip in prices. People just aren't going to be able to afford to keep buying at the prices houses currently are. At the moment for a lot of people renting is by far the cheaper and more sensible solution.
In 2010 the first round of home deposits are going to be able to be drawn from people's Kiwisaver accounts. This will set the market on the rise again. So my plan based on these expectations? Forget Kiwisaver and buy in late 2009. Or don't forget Kiwisaver but buy right at the beginning of 2010. I think the 2009 option is safer though so I'm not just buying for the sake of buying. Looking in 2009 will give me plenty of time to find a place I actually want to own.
So there it is, I can't deny these predictions if they don't come true now that I've put them on paper. They will come true though, you'll see. share this: facebook
This entry was posted
on Sunday, August 05, 2007 at 11:15 AM.
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1 Comments:
but you didn't put them on paper
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