Desparate Sellers ... Buyers market coming?

[belgarion]

There seem to be more and more ... Anyone else seeing this?

[patsy]

I've noticed three things over the past six months or so:

1) The number of general articles on property investment has been steadily decreasing. Amateurish property investment has been losing its glamour. I live in a cafe area and the typical scene of young fashionable couples having Saturday brunch while browsing pen-in-hand the NZ Herald property supplement has almost disappeared. A year ago, it was the "in" thing to do...

2) Getting trades-people for even minor home improvements has become easier. Now, they themselves have been returning calls and scheduling their work with no more than a couple of weeks in advance.

3) I've been following a few properties in the area, which have had their "for sale" sign for weeks and weeks.

All in all, yes... a buyer's market.

[George]

Noticed the 'Herald on Sunday' paper today had headlines about property prices still going up - didn't buy it because I may have got depressed reading it considering am hoping to buy at some point in the next year or two. I feel that 2 people saving for a deposit will save more than prices will rise over the near term, but with immigration - who knows. Is this boom different from others in the past in that it could go on for a long time yet?

[R2]

Clealy areas of speculative development in regions that don't particularly support high wages as noted by other posters are "on sale" e.g. Taupo.

I am getting more desperately toned emails from agents which would indicate that achieving 20% over expectation at tender is less the norm.

I have looked to participate on a couple of well presented and well located properties recently and they sold quickly at tender, location, location etc. still applies.

One particular trend I am noting is a larger number of higher priced blue ribbon properties coming on, something that happend around 98/9 when a lot of wealth went to OZ on the back of a Labour government. Seems those who know are planning to trade now for, I guess, a variety of reasons. Anyone else seeing this trend ?

[Halebop]

A typical pre-cursor to an "end of trend" at the height of a bull market is rising prices on falling volume. The REINZ statistics have been mixed but have generally indicated this.

When reading REINZ figures its always worth remembering that they don't go out and value properties - they collate what has sold. The median value of what is selling could easily by rising while other market segments which aren't selling have already corrected (or began correcting), vendors just haven't adjusted their expectations yet. I suspect higher priced sales tend to go through at the end of a market phase for two reasons - alleged "smart money" clearing off and business owners or investors experiencing the first stages of distress or cash flow problems and liquidating the illiquid. Both of these could lift the median price even if people were selling at a loss.

Anecdotally: I've been out of Auckland for a few months and was astounded at the number of "for sale" signs on show around my neighbourhood as spring arrived. I suspect there are more than a few people picking an end of the property bull market or selling before / because they have to refinance at higher rates.

Auckland still has demographics on its side so I think any slump or pause will be most felt in low quality offers and distressed developments. Think it was the BNZ who picked real estate to be 10 to 15% over priced? Not a time to be be gung ho with leverage unless you find a bargain. There is still plenty of boomer money sloshing around but it's worth remembering just how much of it is tied up in real estate or leveraged to interest rates.

[George]

Looks like it could still be a sellers market according to this report - also looks like no-one really knows what's going to happen short to medium term.
http://www.stuff.co.nz/stuff/0,2106,3868411a13,00.html

[Bling_Bling]

This has to be one of the longest lastig property boom markets i have experienced. Immigration is holding up the Auckland market. The money made in Ak flows onto the rest of NZ. I suspect the high $NZ will have some effect on the rural sector and hopefully cool down some parts of the NZ market. Anyway, it must be time for a cooling. If not now, will be in the near future. If only i had a crystal ball.

disc: Bling is cashed up

[Longtack]

All cashed-up n happy.:)

[tricha]

The Property Pyramid Game

Example - A basic property worth $350,000 and a mortgage of $300,000.

Say a floating rate, average 9.5 %

Interest $28,500
Rates $2,000
Innsurance and repairs $1,000

Total outgoing $31,500 a year or $605 a week.

How many $350,000 properties would earn $600 a week [?]

Yes I have a feeling the people at the bottom of the investment Pyramid are suffering badly.

Hence, yes desparate sellers, buyer market [?][?]

[cantab]

Tricha, only about 15% of all loans are on floating rates. Tony Alexander in his newsletter suggests people take a 2 year fixed rate for their own home and a 5 year rate 7.75% for their investment property. In Christchurch one could quite easily buy a property for $300,000, which is about the median, and achieve a rental of $300pw. I know someone who recently purchased a house in Christchurch for $250,000 (in good nick) and rented it out for $300pw.

Even so, the numbers don't add up.

[spector]

"Real Estate Institute figures showed house prices accelerated again, rising 9.83 per cent in the year to October, up from 7.93 per cent in the year to September."

But what the REI doesn't tell you is the fall in the amount of houses actually being sold. I have a friend in Real Estate who says there are far fewer houses actually selling, and the ones that are selling are in the million plus bracket. This distorts the median house price figures and doesn't give a true reflection of the current market.

[Sideshow Bob]

quote:Originally posted by cantab

Tricha, only about 15% of all loans are on floating rates. Tony Alexander in his newsletter suggests people take a 2 year fixed rate for their own home and a 5 year rate 7.75% for their investment property. In Christchurch one could quite easily buy a property for $300,000, which is about the median, and achieve a rental of $300pw. I know someone who recently purchased a house in Christchurch for $250,000 (in good nick) and rented it out for $300pw.

Even so, the numbers don't add up.


This is only 6.24% gross return. So negative cashflow, and while some people it may be, but doesn't seem attractive to me.

[JBmurc]

---The Property Pyramid Game---JBmurc style.

purchased ---7 invercargill sections mid 06
cost 15,000ea 2 weeks ago I was offered 25,000ea
total costs sofar -$10,000(int,rates) + 90,000 loan > 10+90=100,000
7x25,000=175,000-100,000=75,000 gross profit

My capital Used 15,000 return if sold $50,000
Say 300% for 6months

I personal find property as I do shares a great way to make money.

[JBmurc]

[quote]Originally posted by aspex

JBMurc,
So far gross is $70,000 (+$10k each)
less interest, rates, any agent fees, legals etc.-No agent fee,would only sell as one lot cost $800
Balance say $50k (generous)-Not really a section beside one of mine sold for 28,500 recently
less tax at 39%-No 33% company tax rate
Net about $30k. Nett-$45,000+
Not bad but what about the hassels?- sections land what hassel???????
Remember at the time of purchase there was no certainty of gain.
Lucky this time, maybe.-There is a very limited amount of cheap section in invercargill,house sales locally showed good value to section value.

;)

[tricha]

Is New Zealand in the same boat [?][?][?][?] - The heart of the U.S. economic expansion has been the housing bubble, and it has burst. Much hot air has been created in the fervent hope of finding a bottom in the collapsing U.S. housing sector. Despite the headline number on October sales of existing home, the underlying data produced little that suggested a bottom is near. Sales of single family homes, like the one you live in, did improve in October to the second lowest level in a year. These sales are off 11% from a year ago. Condo sales are now down 15% from a year ago. Identifiable condo inventory for sale is nine months of supply. Prices of single family homes are down 3% from a year ago after rising $200 in October. Condo prices are off 5% from a year ago, and are at the lowest level in a year. In some communities, home sales are off 50% from a year ago. The economic repercussions of this real slide have yet to show in the numbers, but with foreclosures in the U.S. in a decidedly rising trend that will happen.

[patsy]

I have just seen some statistics on sales over the past six months at The Mondesir, Takapuna. For those that are not familiar what that area, the Mon is one of the most desirable apartment lifestyle locations in Auckland. So, it's assumed that demand is there, in good and bad times.

The last 10 sales in the area had an average listing time of 62 days (well higher than the 28 or so days that REINZ wants us to believe). Most striking was the drop from listing to final sale price -11.5%. Desperate sellers? Absof*ckinlutely!

[Bling_Bling]

The apartment market in Auckland has been going sideways and downwards for a number of years. The fact that we are hearing new players wanting to build one fo the biggest apartments in the CBD only confirms to us that there are some nutters out there and there could be further pressures on the apartment market.