I love it when our media tries to pretend good news is actually bad news. Houses are more affordable than they’ve been in decades, first home buyers are actually able to buy, investors are fucking off.
Good times.
I love it when our media tries to pretend good news is actually bad news. Houses are more affordable than they’ve been in decades, first home buyers are actually able to buy, investors are fucking off.
Good times.
@Dave Good point - a general drop in the market won’t cause much change to rates overall. That will still vary a bit due to the differences in the valuation changes by suburb, of course - if your valuation drops less than most parts of your region, your rates may even increase.
With regards to other effects on home owners, as I alluded there are potential issues that could arise if equity goes negative. This won’t be a problem for most, especially given the typical deposits required by the banks for home loans, but if valuations drop enough it may come up.
Since the cost of running a council is increasing significantly (it seems mostly due to catching up on a lack of infrastructure investment), it seems highly unlikely that rates will do down even if you valuation drops relative to others. You would be lucky to pay the same next year as you’re paying this year given councils are putting rates up 7-15%!
As far as I’m aware, the effects of negative equity in NZ are generally going to be about your ability to borrow more money unless you’re selling your house. You’ll likely struggle to get another loan at a decent interest rate, but banks aren’t in the business of selling your house after a big valuation drop while you’re happily making mortgage payments.
@Dave Sure, I should have said “increase more as compared to the average ratepayer”.
As to the effects of negative equity, you’re likely right about the risk of foreclosure, but the difficulty of getting further loans at a reasonable rate is still a potentially significant downside, given how often unexpected expenses come up, especially early in home ownership when equity is most likely to be low.