We have been out and about in the madness that is the current housing market looking to see what’s what, and maybe purchase something.
I can tell you for nothing it’s ugly, so ugly it’s almost worth giving up and going home to wherever you already live and staying put.
The part of the housing market I have never understood though is why politicians believe they can somehow control it.
This current government fell into the trap when in opposition and during the last major period of rapid growth.
It was a scandal, they said. The government of the day was not reining in prices, they complained, as though any government has any such trick in its bag. And when they got to power (Labour that is) they said watch out -the reform would make your eyes water.
They did of course make our eyes water but sadly it was with their ineptitude and inability to do anything at all. Here we are a bit over three years later and prices are off and running again.
What is important to point out here is that what is going on in the market is no bad thing. It is rarely, if ever, a bad thing.
The failing and therefore the disappointment comes from believing it is.
That includes commentators who believe in bubbles and how they are going to burst. Andthe politicians too, the latest of which is our very own Prime Minister who said in that exasperated tone of hers that prices just can’t keep rising the way they are.
She is of course right but not for the reasons she meant.
They can’t keep rising because sooner or later no one will be able to afford a house. That That is part of the key to understanding the market.
What she meant was they can’t keep rising, so we’ll need to do something about it. You will notice her sentence finished at that point, like it so often does. Saying and doing aren’t the same thing and she does a lot of the former and very little of the latter.
Governments can make sure councisl free up land and link transport and infrastructure to that land to encourage building. But we actualy are building and consents are up all over the place.
Governments can build social housing and they are, but not to the extent they need to. However that sort of housing is not what drives the market because they aren’t the houses people are out buying.
It is why KiwiBuild never worked. Houses went in places people didn’t want to live, houses off plans for first homers who didn’t buy off plans – all the stuff you do if you don’t have a clue what you’re doing.
The people who do have a clue are the developers who know the market inside out.
What’s lost here are two key parties and their expertise.
One, the banks as in retail banks and two, us as the consumer.
The commercial banks you will note have already moved on LVRs for investors ahead of the Reserve Bank who were only going to bring them back early next March as opposed to waiting for May as they originally promised.
Why did the commercial banks mov? Because they know what they’re doing, they can read the market, they don’t want to be over-exposed to highly leveraged investors, they don’t need Reserve Bank Governor Adrian Orr looking over their shoulder.
In the meantime we, the punter, look at money which is now so close to being free it isn’t funny. We want a return on our investments. Are we getting them in the bank? No.
So those who don’t favour the markets and their risk, dip into housing with its lack of risk. We all understand housing. We always have and always will.
There has been no bubble in this country that has ever burst.
Over time, house prices rise, pause, fall slightly, then rise again.
Affordability due to interest rates ebbs and flows. The broader economy ebbs and flows and feeds into peoples’ desire to buy or not.
Immigration and consents play their part.
Things like a pandemic arrive and feed a demand you never could have predicted but all the while you have two separate things happening. For a start the market being the market does what it does. And two, the government of the day, regulatory authorities and various commentators panic about what they can do to control it.
Here is what I have learned from 40 years of buying and selling a lot of houses, and never having lost on one of them. The more you think it’s an issue that needs addressing, the more you don’t understand what’s going on, and the more you fail to learn from history.
Property is its own reward that brings happiness, shelter and returns.
You either embrace and enjoy it, or freak out and miss out.
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