Once again, first home buyers are being asked to look for the light at the end of the tunnel.
House prices could calm down soon, so soon. Just wait. It's nearly there.
So is it light at the end of the tunnel, or is it just another train headed their way? There are reasons to believe either way.
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If you believe Treasury and the Reserve Bank, prices could soon start to level off.
Not fall, but just stop increasing in the eye-watering jumps we've seen in recent months. And by soon, they mean in about a year from now.
One factor is the new deposit restrictions, requiring investors to stump up 40 per cent of the house price up front.
There's a reason to think it could work. The last time it was tried, back in 2016, it resulted in the housing market drastically cooling down within about nine months.
Another factor is that anecdotally, real estate agents and mortgage brokers tell me there's a level of fatigue setting in among buyers.
While earlier this year they were willing to bid whatever it took, more are now stepping back with cooler heads, unwilling to go further than their hard limit even in the pressure cooker of the auction room.
We've also seen the Government change tack on boosting house building, with tax incentives to encourage investors to build the houses they want to invest in, and a $3.8 billion Government commitment to footing the bill for new housing infrastructure including pipes and roads. That's almost twice what they set aside for KiwiBuild.
So far, so good. It's encouraging.
But this comes as we're seeing a prediction that interest rates could rise.
This would of course make mortgages more expensive. Borrowing the exact same amount of money would cost you more each week, as the bank charges you more for the loan.
Nobody truly knows the future, but well-educated predictions are that interest rates could start to slowly increase from about a year's time.
This poses two problems.
One is for those people who have managed to stretch themselves and buy a home, by hook or by crook. They may have borrowed 95 per cent of the property's cost, and now have hundreds of thousands of dollars in debt hanging over their heads.
To be fair, the beginning phase of having a mortgage is always daunting. You just have to chip away at it as best you can.
But if mortgage rates start to rise, we run the risk of people with towering levels of debt going from just-affordable repayments, to not-at-all-affordable repayments.
Nobody wants that. Anyone worried they might fit that criteria could give themselves peace of mind by using the next year or so to build up their cash savings, to make sure they don't find themselves in a sticky situation.
The second problem is the other side of mortgage repayments becoming more expensive.
It means that even if house prices flatten off, hopeful first home buyers could find themselves denied a mortgage because the bank believes they won't be able to afford the weekly payments.
Affordability comes in many forms. Even if we see the deposit amounts reducing, those repayments could still catch many out.
What's the answer? At an individual level, it comes down to the basics of personal finance that people hate hearing.
Keep your cash savings high, in order to ride out any unexpected factors that might come your way.
If you can, agitate for a pay rise. Unemployment is stunningly low, the economy is doing well, the odds are as much in your favour as they get.
At a society level, there are more powerful things that can be achieved.
The new incentives to get more houses built are a good start, and need to continue. We simply don't have enough for the number of people who need a roof over their head.
But the Government could also get real about encouraging people to invest in something other than housing.
Buying a house and hoping that more people want to buy it off you in the future, therefore pushing up the price, is a boring wealth plan that contributes exactly nothing to our society.
Just last week the Productivity Commission showed New Zealanders are working harder, for lower wages, than many other parts of the world.
Let's turn our attention to boosting the business and technology changes that could improve everyone's lives, rather than yet more encouragement to throw ever-increasing amounts of cash into our shaky housing market.
This column is general information only, and not individual financial advice.
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