Global property news ...

[belgarion]

The U.K: No feelgood factor as house prices suffer worst fall in 10 years (http://money.guardian.co.uk/news_/story/0,1456,1449876,00.html)

Baltimore: Is the Housing Market Going to Crash? (http://www.baltimorechronicle.com/033105Cederholm.shtml)

[duncan macgregor]

BELGARIAN, House prices never fall by much. The very simple reason is people wont sell at less than they paid. unless it is a forced sale.
A builder wont sell below cost he only stops building. That in its self creates a shortage, and house prices start rising. It is a good time to buy an investment property seeking out a forced sale at a bargain price. macdunk

Duncan it is only just over 7 years ago that house prices were dropping a thosand Dollars a week in Auckland

[dinosaur]

You to have use past sales stats as a rough guide only, and you need to know the type of properties sold, so as you are comparing eggs with eggs.

For instance if size 7 eggs were the trend last month and size 6 eggs the trend this month, the average price of eggs sold may have fallen this month. That doesn't mean the price of size 7 eggs fell this month. Maybe eggs aren't a good example as they have a shelf life, but get the drift.

Have friends in the UK just about to put their house on the market. From their enquiries demand and prices for their type of house is still very high. They would never have considered trying to sell during winter.

BTW: I have just received new land only valuations for a couple of properties in Queensland from the Department of Natural Resources. Last Valuations Oct 2002: $51K and $66K. Now Oct 2004: $125K and $145K respectively. Just hope that is near the average so my rates don't go up too much.

[duncan macgregor]

Property is a long term investment, you dont buy and sell as often as you might with shares. Who cares if it drops, or if it rises . The average is 10pc pa up regardless of the whims of the market. With property when the market stalls, or even drops, it is of no concern to a property owner. The smart property owner sells at the top of the market, and seeks bargains at the bottom. The more fluctuation in the market the better. If the market drops thats great. The doomsdayers that cant see it well goodluck, we will provide a rental for you so that you can help us get rich. macdunk

[Halebop]

quote:Originally posted by duncan macgregor

...you dont buy and sell as often as you might with shares. Who cares if it drops, or if it rises ...

...The smart property owner sells at the top of the market, and seeks bargains at the bottom. The more fluctuation in the market the better...


:Whistles a certain tune from Seseme Street: One of these things is not like the other...

In terms of investing, property is just another instrument to choose from. How come it makes so much sense to sell shares that are diminishing in value but not real-estate? The average property investor is likely to be leveraged so even a 10% market drop could translate to a 30% or 50% loss.

In NZ the cost of holding could be especially expensive in terms of cashflow as well. Absolute rental yields are declining due to over-supply while interest rates are rising. Not a property friendly snap-shot in time right now.

[duncan macgregor]

HALETOP, Stay out of property you are not with it. Macdunk

[duncan macgregor]

ALL THE RICH PEOPLE I KNOW ARE PROPERTY INVESTORS. All the poor people rent properties that i meet. Dont intend to convince anyone one way or the other only state facts. macdunk

[Halebop]

MacDunk I will stay out for now. Thanks for the considered advice.

[dinosaur]

As a long term property investor, down times are good for my cashflow, as being highly geared, interest rates tend to fall during these times, while I have found rents do not tend to fall, at worst they stay static. Paper gains don't pay the bills.

Reserve banks tend to raise interest rates during boom times, but rents don't keep pace with the extra interest cost.

[belgarion]

American Home Foreclosure Listings Surged in March, Study Shows (http://ap.tbo.com/ap/breaking/MGBFGGY197E.html) ... pop ???

[skinny]

Interesting stats on recent global housing affordability below.

Auckland, Christchurch and every single Australian city except Darwin seen as having "severely unaffordable markets" on the basis of house price/household median incomes ratios [:0]

Interestingly, the US has both the most unaffordable housing on this basis & the most affordable, suggesting the so-called US house price bubble is still more a regional phenomona.

Canada comes out relatively more affordable in most areas

http://www.demographia.com/dhi-data200502.htm
http://www.demographia.com/dhi-data200502.htm

[Halebop]

I was reading this table just today. I think some of the numbers will be superficial.

If you take Wellington's relative "cheapness" to Auckland and Christchurch our Capital also enjoys more people per capita that earn $100,000+ than any other city in NZ. Therefore their average income will be skewed. If based on Median incomes I think at least some of Wellington's "cheapness" would prove illusionary.

And far be it for this property bear to become bull but demographics are not recognised by these ratios either. A city growing at 2% per annum versus another city in stable growth or decline will naturally disaply some growth pains via the supply/demand imbalance.

Overall not the healthiest sign that New Zealand (and Australia) is so expensive. Gotta feel for people in Las Angeles, San Diego and Orange County though! 10+!!! OMG. With their hefty property taxes a newly purchased property must have very poor cashflow.

[skinny]

HB, the numbers are based on median incomes & median house prices so Wgtn's relative cheapness is perhaps not so illusory. But even so agree that you have to take some of it with a pinch of salt. E.g. another demographic factor I wonder about is whether they have corrected for asset rich oldies with little in the way of declared incomes who would tend to cluster in the attractive coastal cities of the US like San Diego and OC. On the other hand I have heard people rave about how cheap Canada is so maybe something in that.

[cdt18]

Were I live now, the ratio is about .5 !! and no I'm not disclosing where it is !! Otherwise all the Jaffas will come and bugger the place up.

[belgarion]

Trade Group Reports 4.5 Percent Rise in Sales of Existing Homes in April, an All-Time High (http://biz.yahoo.com/ap/050524/economy.html?.v=9)

Froth ? Greenspan's words. Loved it.

[minimoke]

A 30 year mortgage @5.71% - thats got to be atteractive!

[dinosaur]

In the US isn't the interest paid on the mortgage for the home you live deductable from your income for federal tax?

[belgarion]

Paul Krugman on US housing ...

But although the housing boom has lasted longer than anyone could have imagined, the economy would still be in big trouble if it came to an end. That is, if the hectic pace of home construction were to cool, and consumers were to stop borrowing against their houses, the economy would slow down sharply. If housing prices actually started falling, we'd be looking at a very nasty scene, in which both construction and consumer spending would plunge, pushing the economy right back into recession.

That's why it's so ominous to see signs that America's housing market, like the stock market at the end of the last decade, is approaching the final, feverish stages of a speculative bubble.

Running Out of Bubbles
(http://www.nytimes.com/2005/05/27/opinion/27krugman.html?incamp=article_popular)

[K9]

What is new about that Belgarion

everyone here knows that...it has been the same for nearly 3 years

by every indicator known, this property boom has lasted alright,

right through your doom senarios for years!




what is your point?


one day it will come to an end and cause trouble...

NO! really:D:D:D:D:D:D:D
DOH

[belgarion]

I'm just contributing to the forum Dog Breath ...

What are you doing? ... Surely not trolling my every post? But you are!

Grow up and get a life loser!

Admin, can you bare this cretin please!

[K9]

quote:Originally posted by belgarion
Admin, can you bare this cretin please!


you wanna look at my ass?:D


whatta pimp[xx(] glass houses and all loser

[port hills]

K9 Grow up eh, you're getting really boreing. :(

[K9]

no e

[port hills]

quote:Originally posted by K9

no e


cheeres for that :)

[skinny]

Aspex, certainly a sobering article. Even for those who have reduced property exposures the fallout for equities could be considerable... a paragraph from near the end of article:

One of the best international studies of how house-price busts can hurt economies has been done by the International Monetary Fund. Analysing house prices in 14 countries during 1970-2001, it identified 20 examples of “busts”, when real prices fell by almost 30% on average (the fall in nominal prices was smaller). All but one of those housing busts led to a recession, with GDP after three years falling to an average of 8% below its previous growth trend. America was the only country to avoid a boom and bust during that period. This time it looks likely to join the club.

[skinny]

Aspex, the US is such a resilient economy, very bold to call a recession for it as the economist does. But yeah, I am similarly set up to go short if need be and have been building up a shorts watch list over the past few months. Top of this list is JOE, a property developer with a p/e of 60 (yes 60!) that justifies its valuation because it happens to have massive land holdings in Florida, a state where real estate fever is perhaps strongest in the US (check out Atlanta Fed Governor Guin's comments). Anyways, it's going to a beautiful short if and when the tide turns on property....

[Dough Boy]

Also firmly believe that property has had its day or about to have its day. As to the day that is up to debate.

As for who is most prone to a crash NZ has certainly pushed itself into the front runners. The reason I say is the particular love affair NZDers have with property as a wealth generator compared to other countries who have a more balanced view as to where wealth can be generated, i.e. a well paid career, private business, share ownership etc. Of couse NZer's reasons are valid as pay rates in NZ are low, taxes high, capital gain are tax free, business formation and growth slow.

[K9]

Yeilds in Japan are looking really juicy


smart money is heading to Japan and has been for 2 years or so.



widen your horizons

Turkeys;):D

[Snapper]

Just caught up on this thread.

K9 - can you elaborate on property yields in Japan?

[K9]

http://www.demographia.com/dhi-pavrls.htm

http://www.demographia.com/dhi-rank200502.htm

US and Canada still look VERY cheap in a lot of locations



Phoenix looks good to me;) at 3.2x average salary, 80% sunshine hours...Vegas up the road as well as skiing!:D

...so does Houston at 2.7x. I can buy a stylish 2 story 240sqm 10 year old 3bed/2bath home for $175,000 KIWI PESOS!!!!!!!!!
and it's the 4th largest city in the US.

Auckland at 5.9x[xx(]

[K9]

quote:Originally posted by Snapper

Just caught up on this thread.

K9 - can you elaborate on property yields in Japan?


Just caught up on yours too...sry

You can buy an apartment in Tokyo and get great tenants on 9-10% yeild and big security deposits. Market is turning up in some specific areas. Japanese can borrow from 1-2%. Can borrow if you work there at 1.75% ish.
what a spread!!!

I had a 2bdrm apartment in top location, EBISU/DAIKANYAMA, at the time $5000NZD month. Could buy around 45mYEN ($580,000NZD). Top 3 sort after Japanese locations. Cap gains to come after 12 year slump.

Reason, Japanese still very cautious about real estate after seeing the pain in some families after the big bubble burst.

Companies renting to foreigners will do very very well.

[Snapper]

Thanks for that K9 - interesting to see what's going on in the big wide world...