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  1. #11
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    NZ house price rise still high, but easing
    13 September 2006

    The rise in New Zealand house prices ranks seventh in this year's survey of 20 rich countries by The Economist magazine.


    The 12.4 per cent rise was down from the 13.7 per cent rise in the magazine's survey last year.

    This week's publication shows Denmark posted the biggest rise, 23.6 per cent, compared with a 15.4 per cent rise in 2005.

    Japan's 3.9 per cent fall in 2006 left that country bottom of the list, but was an improvement on a 5.4 per cent fall last year.

    Prices in Australia were up 6.4 per cent in 2006 compared with a 1.9 per cent rise in 2005, while in Britain the rise was 6.6 per cent compared with 6.1 per cent in 2005.

    House price inflation in the United States "has certainly caught a chill" according to The Economist, easing to 10.1 per cent from 14 per cent in 2005.

    Apart from the United States, only Spain, Hong Kong and South Africa experienced big slowdowns in house price inflation.

    AdvertisementAdvertisementThe German market is starting to awaken after nearly a decade of flat, or falling, prices.

    House prices there have actually dropped 1 per cent from 1997 to 2006. That compared with a rise of 315 per cent in South Africa, 244 per cent in Ireland and 184 per cent in Britain.

    The rise over the decade in New Zealand was calculated at 94 per cent, while in Australia it was 126 per cent. Worst performer was Hong Kong, where prices fell 44 per cent over the decade, followed by Japan where they dropped 31 per cent.

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  2. #12
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    Very interesting indeed there RMB...

    With all the doom and gloom merchants around, surprised to see the US and AUS markets performing reasonably...

    Why do you think Japan's market is so horrendous? 30% decline over a decade? geez...

  3. #13
    Senior Member Halebop's Avatar
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    quote:Originally posted by trackers

    Very interesting indeed there RMB...

    With all the doom and gloom merchants around, surprised to see the US and AUS markets performing reasonably...

    Why do you think Japan's market is so horrendous? 30% decline over a decade? geez...
    Japan is industrialized and wealthy, like the few lucky developed Pacific Rim Countries and Much of "Old Money" Europe. The key differentiator is that they lost a major war in living memory. They didn't have a baby boom (you don't have sex after the game when you're on the losing side). The German market faced a similar hurdle. There is no way demographics, birth rates and immigration did not play a significant roll.

    USA, Australia etc performed well. Not quite the same thing as perfroming well. The housing markets that are still firing in Australia are those that are provding outsized job opportunities. These opportunities aren't chased by most 60 year olds. The key to defining wealth over the last 20 years has been to position in front of Baby Boomers. 20 years ago the boomers were aged 22 to 40, they were for the 1st time all in the same segments (Looking for Jobs, looking for a place to live, buying cars etc). In 2006 the oldest boomers are 60. The youngest are 42. For the first time in 20 years they will soon start fragmenting as a market again (and have probsably started already). While some will keep working and buying/trading up homes, investing for growth, others will stop or reduce working and will trade down their homes or sell riskier asset classes. There won't be so many people pushing the same barrow.

    New Zealand has the same problem as the rest of the OECD although at least we had a bigger mini boom in the 70s (The Generation X'ers) and so the challenge of supporting the Boomers is a little smoother. ...so long as we don't keep exporting them (I have a tail end Baby Boomer Sister and 2 Generation X siblings as well, all exported to Australia).

  4. #14
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    quote:Originally posted by Halebop

    quote:Originally posted by trackers

    Very interesting indeed there RMB...

    With all the doom and gloom merchants around, surprised to see the US and AUS markets performing reasonably...

    Why do you think Japan's market is so horrendous? 30% decline over a decade? geez...
    Japan is industrialized and wealthy, like the few lucky developed Pacific Rim Countries and Much of "Old Money" Europe. The key differentiator is that they lost a major war in living memory. They didn't have a baby boom (you don't have sex after the game when you're on the losing side). The German market faced a similar hurdle.
    I'm sorry Halebop,

    But you simply don't know what you're talking about.

    Japan did have a baby boom after the war - in 1947 the TFR was over 5. They were at it like rabbits.

    However the TFR dropped very quicky after that - there was no real baby boomers' baby boom.

    http://web-japan.org/trends00/honbun/tj000128.html

    Government Moves to Pump Up the Birthrate

    Birthrates in Japan after World War II peaked between 1947 and 1949, when some 2.6 to 2.7 million babies were born annually--the first baby boom. Those born during these three years have been collectively called the dankai (mass) generation. This generation brought about the second baby boom, bearing over 2 million babies each year from 1971 to 1974. The dankai juniors, as those born during the second boom are called, are now about 24 to 28 years old--in other words, around the normal age to enter parenthood. But instead of their giving rise to a third baby boom, the number of births is actually falling at an alarming rate.


    \"The overweening conceit which the greater part of men have of their own abilities [and] their absurd presumption in their own good fortune.\" - <b>Adam Smith</b> - <i>The Wealth of Nations</i>

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  5. #15
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    Thanks for the reply. So to summarise, and over-simplify, the 30% decline in the Japanese housing market over the last decade is primarily due to having a small baby boom population? Bugger

    This article is quite a good on-the-ground piece http://www.freerepublic.com/focus/f-news/1698184/posts

  6. #16
    Senior Member Halebop's Avatar
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    quote:Originally posted by rmbbrave

    I'm sorry Halebop,

    But you simply don't know what you're talking about.

    Japan did have a baby boom after the war - in 1947 the TFR was over 5. They were at it like rabbits.

    However the TFR dropped very quicky after that - there was no real baby boomers' baby boom.
    The west had an 18 year Baby Boom. I'll stick with what I said. The net effect is that Japan now (and for quite a while) has what the west is trying with only limited success to avoid. Too many old people. Not enough young people. If you track Japan's demographics their financial markets performed accordingly - hence their heyday was in the 80s.

  7. #17
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    quote:Originally posted by trackers

    Thanks for the reply. So to summarise, and over-simplify, the 30% decline in the Japanese housing market over the last decade is primarily due to having a small baby boom population? Bugger

    This article is quite a good on-the-ground piece http://www.freerepublic.com/focus/f-news/1698184/posts
    The biggest reason for the "stats" looking so poor is you need to look at the huge bubble in real estate in Japan in the late 80s very early 90s.

    It was out of control.
    Looking at a single figure of -30% has to be appreciated alongside the massive explosion in housing prices during the infamous real estate bubble in Japan.

    Right now, there are better real estate opportunities in Tokyo than NZ by far.
    Apartment renting to foreigners in Tokyo can easily yeild 10% + against loans of 1.5%





  8. #18
    Senior Member Halebop's Avatar
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    Pennywise the market was out of control because of those demographics. Real estate was positioned in front of people at the right age who had accumulated enough assets or earnings to buy. Now they are old, on fixed incomes and not thinking about or able to afford leverage and real estate. When the next demographic wave hits the age sweetspot (30s to 50s) that will change. But Japan's birthrate is none too inspiring.

    This is the same situation the West has enjoyed more recently. The markets without The Baby Boom have given an insight into our future. Unless we have more bums on seats after the baby boomers stop buying, I don't see the sorts of returns markets like Auckland have offered as being sustainable. That might not mean "crash" because NZ and Auckland in particular has a superior demographic "smoothness" than other countries. But the aging of the boomers will remove a significant lever none the less.

  9. #19
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    quote:Originally posted by Halebop

    Pennywise the market was out of control because of those demographics.
    I disagree (somewhat[:I]) with this point. It may go some way to explain the buildup, but my point is the "stats" in Japan have been distorted.

    The market was out of control due to a booming economy and absolute frenzy of wealth including in the face of massive export growth, a super strong currency and a military style dedicated workforce. The new generation of Japanese has quite a different attitude and they certainly don't work as hard as their parents did, this also being part of the problem.

    The rising market stopped nearly overnight (around 90-91) and demographics certainly didn't change that fast. It has been a slow decline so it doesn't explain it fully.

    I worked in this industry over there and I was involved with it first hand.
    The biggest reason Japan hasn't pulled out of the housing slump is actually due to a nations "attitude" and skill in the mortgage market. They just kept lending money that became more and more bad debt for years.

    *The US pulled out of their housing crisis by introducing the first CMOs (collaterised mortgage obligations) and quickly moved to recycle bad debt very quickly (have you read "Liars Poker"). Japanese government officals have been in recent years studing and working with the HUD in the US to understand the workings of Freddie Mac and Fannie Mae.
    One of the biggest goals of the current government is to unlock the massive savings in the Post Office savings system by privatising it, freeing up some of that money to be available for the mortgage market. It would be the worlds largest bank.

    Until recent times Japanese banks kept loaning money to defaulters like sticking plasters and this has stiffled the banking system for years.
    The core rot in the Japanese banking system is/was NPL (non performing loans) and over the last 5 years, alot of US investors have started buying up and collaterising these bad debts.

    This has helped lead to some recovery and stabilization in some city areas of Japan, but not rurally.

    I blame the banking system before AND after the bubble for the property market mess they found themselves in over the last 15 years.

    Many Japanese are still very gun shy on property after seeing their families get burnt severely after the bubble burst.










  10. #20
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    quote:Originally posted by Pennywise

    quote:Originally posted by trackers

    Thanks for the reply. So to summarise, and over-simplify, the 30% decline in the Japanese housing market over the last decade is primarily due to having a small baby boom population? Bugger

    This article is quite a good on-the-ground piece http://www.freerepublic.com/focus/f-news/1698184/posts
    The biggest reason for the "stats" looking so poor is you need to look at the huge bubble in real estate in Japan in the late 80s very early 90s.

    It was out of control.
    Looking at a single figure of -30% has to be appreciated alongside the massive explosion in housing prices during the infamous real estate bubble in Japan.

    Right now, there are better real estate opportunities in Tokyo than NZ by far.
    Apartment renting to foreigners in Tokyo can easily yeild 10% + against loans of 1.5%




    In theory yes, but in practice it isn't as rosy as that.

    I have some frinds who have taken out very cheap loans to buy their first house/apartment.

    There is a clause in the agreement saying they can't sublet - meaning they can't have renters paying the mortgage.

    Their salary is only enough to get one loan for one dwelling - If they do secretly breach the contract by subletting they can't count rental income from tenants as income to get another loan because they have to keep this income secret.

    The NZ model, where an person with an average salary can buy 10 houses with 5% equity in each and have the tenants payng of most of the mortgage, isn't possible in my friend's cases.

    If you rent an apartment you still have to pay quite a high monthly fee. Our friends bought an apartment and still are paying a third of the rent we pay every month as fees.

    Tokyo may be different, perhaps you can get a loans from banks there to build a rental apartment empire, but given that that Japanese banks lost more money than NZ is worth in the burstng bubble, I have my doubts.
    \"The overweening conceit which the greater part of men have of their own abilities [and] their absurd presumption in their own good fortune.\" - <b>Adam Smith</b> - <i>The Wealth of Nations</i>

    The information you have is not the information you want.
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