ASB expects an inflation adjusted 20% drop in house prices

Oh come on........no one can accurately 'predict' such outcomes more than a year ahead. Except me...!?

Do any of you recall that 'funny' saying from years ago?
"If you laid all the economists head-to-toe around the world......................it would be a jolly good thing!?"

Does that suggest that it would at least keep them off the streets so to speak.....for long enough for people to think over things logically?

Things such as:
What are expectations for immigration numbers to rise considerably in the next 2 to 5 years for a start?
What are the expectations for interest rates to fall enough (if at all) in the next 2 to 5 years?
What are the expectations for a major correction in overseas economies (Europe, USA, just to name a couple)?
What are the expectations or likelihood for something more serious than a recession.......like a DEPRESSION?

Those are points to consider seriously, and by using "gut-feel" if you don't have 'qualified' opinions.

Someone once asked, "What do you think of the overseas situation?"
Then answered, "It's well situated.!"

Well let me tell you what a lot of gut-feelings are right now........
Overseas situations hit us rather quickly way down here in our cosy Antipodes.

Eg: A current war in a country (where most people can't even find it on a map), and quicker than a trip on a Jumbo, the price of our fuel increased like never before......and we don't even buy ours from Russia?

Someone said to listen to the likes of economists, however, take a wee break away from the "noise", and listen to your own gut...................it works better than you may often think!

THE WELL-BEING BUDGET.

At this stage, let's focus on one important aspect of this budget.
Genuinely, without any bias to any current government member or party out of the 120 members.....

INFLATION is the end-resulting name of the outcome of us having printed new currency (referred to as NZD or money), and subsequently releasing it into our monetary system via our trading banks.
Simply put, this means that when you have $1 in circulation, and then add more NZ dollars, you have watered-down (devalued) the buying power of each of the sum total of NZ Dollars.

As an attempt to assist us with the effects of lockdowns since March 2020 (subsidies plus other 'assistance'), an amount of in excess of $300,000,000 (300 BILLION) was introduced into our monetary system.
This has resulted in much of our population bewildered by the announcement of seriously high INFLATION, approximately an exceeding whopping 3 times that of any year in more than the last decade..!

Now we have a budget released proudly today, which is proposed to introduce in excess of the previous $300 BILLION, an extra $300 BILLION, so is it explained clearly enough that we can expect a further DEPRECIATION of our NZD, with the resulting reference to that NZD depreciation as a repeat of references to INFLATION as consequence.

Now....remember how many people think that houses INFLATE in value.
Houses DO NOT INFLATE in value.......there are people who think so.......

However, what makes it 'appear' that houses increase (INFLATE) in value, is that we simply need more dollars to buy houses because our dollars have lost their buying power due to having been watered down by the billions of extra dollars introduced into our monetary system..!?

However, we need to remind a huge number of our population that it was announced back in 1998 by Don Brash that houses and land had been conveniently removed from our CPI (Consumer Price Index, their measure of inflation).

Note that in the above post from ASB, it refers to a 20% INFLATION-adjusted drop in house prices, which should now be more clear to those who had not yet had it all explained to them clearly enough!?

What do you see the next couple of years producing in relation to 'INFLATION' with the current budget addition of another approx $300,000,000 added into our monetary system to end up resulting in our NZD being worth even less!?

Be cautious on the 'conditioning' of your thoughts, because it makes many many people think that their houses have INFLATED (increased ) in value.
CONDITIONING can be a very powerful thing.

Maybe it could be a good idea for budding house buyers to 'stash their cash under their mattresses, and wait for those terrible mortgagee-sales to eventuate, as many thousands of those who bought their dream home late in the cycle (within the last year or so) struggle with increased mortgage payments as a result of interest rate increases?
The pending mortgagee sales are going result in a potentially huge number of homes selling for equally huge discounts, most of them selling for tens of thousands of dollars less than they were purchased for in the last year or so.

Imagine for a few seconds that you could buy a house that was purchased for say $700,000 for only $560,000 based on the ASB prediction of a 20% drop in price.
Or, if you wait for what may actually be a 40% drop in value, you could buy that same house for only $420,000...!

Sort of like the same warm, enjoyable feeling as when you dine out for a nice steak & veges meal at a restaurant which provides a 40% discount for the equivalent meal.
The original $100 meal at the discount restaurant would cost you only $60
Both equivalent meals taste the same you may think, however, somehow, the fact remains that the $60 option actually tastes much better, especially when you can have desert plus a big cold beer or a nice wine, and still walk out with change in your pocket.

Applying that analytical analysis to your discounted house, what sort of second car for mum could you buy, plus a trailer boat for yourself and still have approx a quarter of a million dollars (savings) in your pocket...!?
A dollar saved is a dollar made!

It can be very sad that so many thousands of people "Buy on Emotion-----and Justify With Logic afterwards."

Of course, we need to add to the above the expectations for world markets as referred to in my original post above.
What if there is a major world sharemarket correction?

So, in this example, you would hopefully have become wise enough to buy that second car and the trailer boat at more like the discounted house rate by showing strength of patience.

One of the most difficult things is picking the absolute top, or bottom of any market.
Patience, plus use of your gut feel, both work.
Plus a better and informed understanding of the meaning of the words INFLATION-----and CONDITIONING

Time will tell if this "story" is anywhere near accurate.
Watch this space.