On top of that, 1 in 3 NZ properties doesn’t have a mortgage at all.

And of the borrowers who took out new loans over the last 12 months, over 1 in 4 have a debt-to-income ratio of 3 or less (very low).


The point here is that some borrowers will find it tough to stomach rising interest rates.

But, this group is relatively small compared to those borrowers who have owned property for years and diligently paid down their mortgages.

#3 – “New Zealand banks predict 20% drop in house prices over next year.” The Guardian

The article claims that Westpac predicts that house prices will fall by up to 20%.

Is it Fact or Fiction?

Fiction

That’s not what Westpac actually said in the source material.

Instead, the bank predicted a 20% drop in inflation-adjusted house prices.

A slight change in words, but a significant shift in their meaning.

A 20% drop in house prices ≠ 20% drop in inflation-adjusted house prices.

That 20% inflation-adjusted drop could be made up through a 10% drop in house prices and a touch over 10% inflation.

But the price you could sell your house for hasn’t gone down by 20%; it’s gone down by 10%.

This is an important distinction to make. No major bank is currently predicting a 20% drop in house prices.

So where am I supposed to get my information from?

The point of this email isn’t to bash the media. It’s to point out that news content is not there to help you make an informed financial decision.

It is there to be a short, sharp snapshot from one point of view or the other. And the headlines are written to stoke your emotions and get clicks.

And that’s why it is essential to pay attention to specialist investment publications that are committed to balance.

That could mean subscribing to either of the two investment magazines that are part of our group here at Opes Partners (NZ Property Investor and Informed Investor mags).

It could mean subscribing to The Property Academy Podcast.

But, you don’t just have to listen to us. You might also enjoy reading Tony’s View or tuning into the NZ Property Market Podcast from the team at CoreLogic.

Sign up here 👇

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Andrew Nicol

Managing Director, 20+ Years' Experience Investing In Property, Author & Host

Andrew Nicol, Managing Director at Opes Partners, is a seasoned financial adviser and property investment expert with 20+ years of experience. With 40 investment properties, he hosts the Property Academy Podcast, co-authored 'Wealth Plan' with Ed Mcknight, and has helped 1,894 Kiwis achieve financial security through property investment.

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