NZ 1st homebuyers are ScReWeD...

[Crypto Crude]

Hey bel...:)

Bel-"In 2001 you could buy a house for on average ~400 ounces of gold. In todays market the average price is... ~400 ounces of gold. In fact houses are more affordable today than they were 30years ago"

SC- Rubbish...30 years ago my dad bought his first house for 16000 pounds(think it was pounds will have to ask him tonight) and he earnt 5000 a year on His single earning income as mum looked after us kids at home... house price to income ratio is more than twice now than back 30 years ago...anyway....who on earth compares their house value to ounces of Gold...


Bel-"PS: CPI Does NOT measure inflation. Repeat untill understood. Inflation = monetary inflation. That's it. Nothing else. Zip nada. Just purely the ammount of $$$ in circulation.
CPI measures (by fudging figures i might add) items of value in comparison to valueless IOUs. A result influenced by, Inflation (+ fudging of figures "oh you can't call that a price increase, the car now comes with a new type of radio") worker productivity, new sources of supply (Chinese slave labour anyone?)compitition, supply and demand (seasonal, technological etc) OMG the list goes ON!"

WHAT... CPI DOES measure Inflation...this is from statistics NZ
quote....."CPI is a statistical tool that Statistics New Zealand produces to track changes in household spending caused by price increases or decreases. The price changes are measured at regular intervals. This change, that causes household spending to rise or fall over time, is often called inflation. Comparing numbers from the CPI allows you to work out the size of price changes, which lets you track the rate of change, or the inflation rate. The CPI is published as a set of tables. It is a series of numbers that represent the price at a set time of a selected 'basket' of goods and services that represents typical household spending.The CPI is often used as a general measure of inflation. It is not an exact record of individual households’ spending, but it gives a good idea of how price increases affect typical household spending, and the change in money’s ‘buying power’ because of inflation.The CPI measures the price of a selected basket of goods and services at regular intervals and records that price. Prices of a wide variety of goods and services are collected for use in a range of price indexes for a variety of economic sectors. A price index measures the change in price of a fixed basket of goods and services between two time periods. This change in prices over time is often called inflation. Price indexes available are the Consumers Price Index (CPI), Capital Goods Price Index, Farm Expenses Price Index, Food Price Index, Labour Cost Index, Overseas Trade Indexes (Prices) and Producers Price Index.
That's it. Nothing else. Zip nada.



Bel..."When someone says that the price of there house rose by X ammount of barrels of Oil, bushels of corn, ounces of gold over what they paid because of rezoning, local investments in infastructure and business. THEN i take note and get excited for them"

Bel do you operate on some type of barter system or something?...
Barter systems were used back in the stone age when Money wasnot a medium of exchange... it is now 2007!

Im too confused to answer the other points in your post...
[8D]
.^sc

[Halebop]

I'm not going to get into a debate on the makeup of inflation measures or price parity between corn and oil because there isn't much point. Everything is subjective and value depends on the individual.

But one commodity that does remain pretty consistent is time. We all have the same amount of it each week and without time travel we can't borrow it now and pay later. I can swap my time for a barrel of oil or a bushel of barley but most probably like most others I'll trade it for an electronic transfer of currency. Frankly, although I know money is invariably debased by inflationary pressures, keeping tabs on my online bank account is a hell of a lot easier than having to feed my money hay or dig it out of the side of a hill.

The thing about time is that it takes two average people swapping their time to buy a house when one person used to be able to do it just as comfortably (or uncomfortably). People say the houses are now bigger, have more features and technology etc but I think the reality is we have simply (and stupidly) swapped 1 persons effort for 2 (i.e. We are spending more time buying that house). The fact that the same amount of oil or gold or barley might buy that house (I'm not sure this is universally true) would just mean we are now swapping 2 peoples effort for those too! I don't really think the secret or "evil" of inflation lies with cash. It lies firmly with us, our aspirations and some pretty dumb yet "rational" decisions we've made as a society.

[Cooper]

I agree Halebop. But that line of thinking poses some problems for how we traditionally evaluate "value". On the basis of the amount of Labour expended? If so we're coming close to admitting that the Marxist idea (Gasp! Swoon! Run, Run!) that value can be best evaluated by the amount of effort expended has more validity than the idea that value is decided by the market. If not, we have to accept that the basis for the market evaluating value, ie that the people making the decisions are "rational", or "rational enough to decide their own utility" is flawed to an extent which calls into question other assumptions which rely on the basis of this perceived rationality.

It's an interesting train of thought... as well as exactly why this shift in value has occurred. At the same time, you could argue that there are global and societal shifts taking place which may be signs of a reverse of that trend.

[patsy]

quote:Originally posted by Halebop


The thing about time is that it takes two average people swapping their time to buy a house when one person used to be able to do it just as comfortably (or uncomfortably). People say the houses are now bigger, have more features and technology etc but I think the reality is we have simply (and stupidly) swapped 1 persons effort for 2 (i.e. We are spending more time buying that house). The fact that the same amount of oil or gold or barley might buy that house (I'm not sure this is universally true) would just mean we are now swapping 2 peoples effort for those too!




I broadly agree with the idea of using "time" as a store of value. But if we are taking about "people's time" as a measure of value, then the stock of time has definitely increased over the years as population has grown. The total stock of time is the number of people times their available time. That's why time also has suffered "inflation" and that's why we need more time to exchange it for things.


quote:Originally posted by Halebop


I don't really think the secret or "evil" of inflation lies with cash. It lies firmly with us, our aspirations and some pretty dumb yet "rational" decisions we've made as a society.


If we took NZ as a stand-alone system, then an ill-controlled immigration has been the "rational" decision that increased the available people x time concept.

[Cooper]

I think Halebop was approaching the topic from a broader perspective... for instance, what basket of goods we now perceive as being "necessities" vs that of a few decades ago. You could argue that specific types and improvements for a given level of Housing has also been given a value over and above the function it serves when compared with the same "basket" of housing from a few decades ago as well.

[Crypto Crude]

for those that are interested in what ive done while waiting on the sidelines for the property sector to decline...

This week I reconfigured my share portfolio...
to now only include two stocks....ASX....
85% NWE....
15% URA....
also...Getting back into NZOG next week....
[8D]
.^sc

[Bel]

You guys have all seemed to miss my point. I understand that when truthfully i was simply ranting to you guys rather than simply debating.

I'll give it a crack.

1. CPI measures prices in NZ dollars. Not inflation. To say otherwise is stating that you have no understanding as to what money is and what inflation is. Sorry but it's true.

2. Money is valueless. But its worth is in it's convenience. When i go to a farmer and give him an IOU/Money for one of his cows i'm getting an item of value in return for a promise to, say; work for one day in return at some future point.

Now this is a great system, in fact money is one of human kinds best inventions.

But here is my point, that IOU wasn't written by me. It's not me who's in control of that IOU.

That IOU was written by a third party. The reserve bank of NZ. So what happens when the government creates an additional IOU? Now we have one days work represented by 2 IOU's. And if you think that the government doesn't print off as many IOU's as it can get away with your wrong.

If that farmer had of held onto that IOU he would of only received half a days work. The government gets the other half days work for free.

So what does the poor farmer do? He starts selling his cow for 2 IOU's. The market is NOT dumb, it ALWAYS reacts to the introduction of monetary inflation. And the first place it shows up in is commodites including housing but its not a even nor timely introduction.

In this scenario can you honestly say that the VALUE of the cow has doubled?

[Bel]

Property and gold are both hedges against monetary inflation. ( i figured if i spelled out the full term people won't be getting the term inflation confused with the RBNZ concoted proganda price inflation as measured by the CPI) You can't print them out like you can IOU's.

While the spread between wages and mortgages has recently widened this is because that monetary inflation effects commodites first and wages last. But at least you don't have to take out 3 mortages to buy a home unlike 30 years ago.

[Halebop]

Bel I'm not debating the meaning of inflation or cash. I'm happy with both the proxy of CPI as a guide of inflationary pressures and receiving cash in lieu of good and services. Anyone with a critical eye can discern neither is perfect but beyond tweaking which won't provide a "solution" there aren't any realistic alternatives either.

I was just discussing that inflation is very real, however it is measured, when a particular good (a house) requires the efforts of 2 people for 20 years rather than 1. Without even trying to use money to measure value, house prices appear very "inflated". As a society we have indentured an extra person to the banks for years, with the true cost arguably being reduced birth rates. I don't even try to apply a cash value to that time, other than knowing it has roughly doubled.

In this instance, the inflation runs counter to various other types of inflation because increased trade with low wage countries, manufacturing and distribution efficiencies and technological advances has in many instances debased the New Zealand dollar value of a lot of commodities rather than raised them. I can purchase higher spec computers, big screen TVs, Cell Phones etc for a fraction of their previous real cost despite higher current prices for their inputs (Ceramics, Steel, Plastics etc).

In terms of inflation and money though, contrary to popular opinion, house prices tend to underperform during inflationary periods. So the link between hard assets, inflation and cash is hardly perfect either. Chart dates back to 1964, all the Baby Boomers are now on board...

http://img260.imageshack.us/img260/2258/realpropertygrowthjpgip2.jpg

[Crypto Crude]

new survey out says that 75% of the average income per week is spent on mortgage payments.... 5 years ago the figure was 40%....

from Halebops graph a few assumptions can be made from 1964 onwards...

1...clearly shows that after any period of house price growth, is followed by a period of falling prices...
2... the larger the period of rising prices the larger the period of falling prices...
3... in periods of bigger percentage gains followed by period of bigger percentage losses...
in periods of smaller percentage gains followed by periods of smaller percentage losses...
4... High inflation is bad for property price growth...
5...the current cycle has characteristics similar to the cycle between say 1992 and 1997.. (currently with more growth, and sustained for a longer period)... where there is the initial peak and then falling positive growth followed by a rebound... the following period, (just after 1997) of falling prices wasnt a massive sell off but a sustained period of small losses....
maybe we could expect something quite similar, but with slightly larger losses...


Recently I know of a few people in their early 20's just getting into housing for the first time...
It is obvious to me that theres the whole 'social status' of "yeah i got a house"...
and the assumption that housing brings you financial savvyiness
there aint nothing smart about buying in the current market... smells like 1987 but in a housing sense....
being smart would be like holding a few shares waiting for market to fall with a high (but not certain) degree that the market will fall at some stage...

I am not concerned, most likely going overseas regardless of what happens with property prices...
Of course I can make it regardless of what property does!
30yrs, one house, 52yrs old man ... yeah right....
with 15% falling prices over a period of 4 years, 220-250k for a house (in chch)... 100k deposit...
im looking at 12-14yr loan max... in 5yrs int rates will be alot lower aswell...
why would I want it any other way!
become smart or buy a house and turn into an old fart...[:p]
[8D]
.^sc

[cantab]

Actually, theory's wrong about the need to raise rents
Jacob Saulwick
April 6, 2007
SMH

http://www.smh.com.au/news/business/actually-theorys-wrong-about-the-need-to-raise-rents/2007/04/05/1175366410005.html

[Jess9]

So true. If Cap. gain is not occuring - or small cap loss on total cost (however possible high investment loss), then logically, yield will become paramount again - therefore new investors will not enter, reducing demand etc. Remember all those investment books that didn't push hype and which state cap gain is only a bonus, and positive c/f was the (realistic) target. I think (with regard to that article)what will occur is a little of both, i.e. over a period of a few years (3-5) prices will pull back slightly and be eroded by 3% inflation p.a. as well as rents rising somewhat.

[Dazza]

halebop do u have the reference for that chart?

whered u get it from etc etc?

many thanks in advance

[Halebop]

Hi Dazza,

The chart and charting methodology is mine. The data is one of Statistics New Zealand's datasets. They provide an indexed housing set commencing from 1981. There are separate sets prior to 1981 using different criteria.

The data is quarterly annualised which is not my favourite method - I'd prefer to know what each quarter actually did but over such a long series the distinction is probably minor.

[cantab]

Article in Saturday's Press about how domestic timber prices are about to start lifting significantly due to rapidly rising export prices so feeding into house construction cost inflation. Supposedly one customer was informed by Carters that there would be two price increases for timber of about 25% in just a matter of months. Export log prices are up 23% in the last year on the back of strong Asian demand but less supply from Russia. Interestingly Russia has recently announced its intention to apply a 90% tax on log exports by 2009/2010. To date all the other construction cost inputs into a house have risen strongly over the last 5 or 6 years - up 75% according to the statistics.

A fall in the Kiwi dollar against the US would result in further domestic timber price rises.

The problem for Kiwis is not that house prices are out of whack - they are not - rather the real issue is that Kiwis' incomes are too low - the rest of the world still sees Kiwi houses as cheap as chips.

[Crypto Crude]

cantab,
Im thinking about getting into tree investment at the moment, for the very same reason as you are talking about...I see a bright future here, and a complete turnaround to how this sector has been performing over the last many many years


quote:The problem for Kiwis is not that house prices are out of whack - they are not - rather the real issue is that Kiwis' incomes are too low - the rest of the world still sees Kiwi houses as cheap as chips.

its not until those foreigners move their familys to nz... earn our wages, until they realise just how expensive our property prices are...
and this has all been going on when exchange rates arenot in their favour, and have been this way for years...
when exchange rates fall, then a new wave of foreign investors will pursue kiwi land...
[8D]
.^sc

[Crypto Crude]

quote:cheap as chips.
all this brother wants is one scoop...
and possibly a hotdog to boot...
[8D]
.^sc

[cantab]

quote:Originally posted by Shrewd Crude

cantab,
Im thinking about getting into tree investment at the moment, for the very same reason as you are talking about...I see a bright future here, and a complete turnaround to how this sector has been performing over the last many many years

its not until those foreigners move their familys to nz... earn our wages, until they realise just how expensive our property prices are...
and this has all been going on when exchange rates arenot in their favour, and have been this way for years...
when exchange rates fall, then a new wave of foreign investors will pursue kiwi land...
[8D]
.^sc


Could be a shrewd move. Forestry has been a bleak sector ever since the mid 1990's. Logs would have to be the only commodity that hasn't gone up in price even though I see that the retail price of toilet paper in Australia has doubled over the last two years. I look at the forestry investments we made in 1994/5 and they are reselling around cost, yet the land has probably doubled in value and the costs to replant and tend the forest would also have risen substantially.

Agree about the exchange rate. I wonder how many houses are owned by absentee owners such as expats? Heard about one the other day - Kiwi living in London purchased a house in Governors Bay to use as a summer house.

[coge]

Bob Jones has categorically said; do not invest in airlines hotels or forests. I tend to agree. The best way to use trees is to add value. Cut them down & turn them into buildings. But good luck regardless Shrewdie :D

[Crypto Crude]

hey coge....
bob jones... job bones... who ever this creature is....
I totally agree with him on Airlines...
I mostly agree with him on Hotels...
I donot agree with him on Trees...

The best time to be getting in is the time when everyone is getting out...
(this applys the same in a housing market sell off, and generally any other investment where you want to time the bottom end)...
I see a bright future with trees... theres no doubt that the worlds supply stock of trees cannot contiune to keep dumping them on the world markets and not effect their prices...
For the first time im thinking about a nice stable investment where it aint going to be 100% positive or 100% negative returns within a short period of time...

other possible bad investments Id add to that list...
-resource sector investments in the eastern european block, such as russia....
-any picks that Yogi in Auzzie makes... for real...

good possible investments include...
nwe, stx, nzo, also one could ask mackdadunk for his list....
-Bonds are a great choice as interest rate cycle is at the top or one more possible rise...
when interest rates start falling then your bonds are worth more, as you have locked in a higher interest rate...
[8D]
.^sc

[coge]

Shrewdie, folks have been saying what you have just stated about forests for decades in NZ. Unfortunately our main forest products are not that well respected abroad. Can't see that changing anytime soon. Plus the ongoing costs of maintaining forests, & long years of no return. What about the exchange rate come harvest? Also you have to trust Govt not to hijack your investment, which with all the global warming bunk is looking more likely. I wouldn't touch them with a ten foot pole. Too much risk over the long term.

[Crypto Crude]

quote:Coge-I wouldn't touch them with a ten foot pole
dont you mean a 10 foot christmas tree...:D
ok... I feel your response...
Im just thinking about how I gonna reinvest my heafty share profits going forward.:D...
guess I have to sit back and watch the hefty share profits first....
just thinking through the diversification approach at this stage, as I have no diversfication and I have no spare cash... and I willnot sell my pretty shares...
although I would sell my shares for a falling property market...
peace out...
[8D]
.^sc

[Crypto Crude]

I have not seen anyone mention this important indicator yet about interest rates.... I read a month ago that analysists are putting 50% chance of one more OCR rise this year... Looks like we will see peak interest rates year end, with rates falling next year...
good news for non buyers here...


quote:
reserv
e Bank raises OCR to 7.75 percentDate 26 April 2007

The Official Cash Rate (OCR) will increase by 25 basis points to 7.75 percent.

Recent indicators confirm that the resurgence in economic activity that began in late 2006 has continued over recent months, with domestic demand continuing to expand strongly. As we noted in March, demand is being fuelled by a buoyant housing market, increases in government expenditure, a rising terms of trade, ongoing net immigration, and a robust labour market.

The lift in domestic demand is placing further pressure on already-stretched productive resources. Firms report that capacity is very stretched and that they are again experiencing increased difficulty in finding both skilled and unskilled staff. Consistent with these pressures, non-tradables inflation has remained persistently strong and has recently shown signs of re-acceleration.

The trade-weighted exchange rate has risen further, which will exert some downward pressure on medium-term inflation. The exchange rate is now at levels that are both exceptional by historical standards, and unjustified on the basis of medium-term fundamentals. Parts of the export sector continue to face challenging conditions, but the recent sharp lift in world dairy prices is expected to provide a boost to incomes in that sector and tourist arrivals are continuing to grow.

There has already been a recent rise in fixed mortgage interest rates. This further increase in the OCR is aimed at ensuring that inflation outcomes remain consistent with achieving the target of 1 to 3 percent inflation on average over the medium term.


bring on 8... slow house price growth... indicators pointing at downturn....

[Jess9]

Not likely, but...if the budget springs a new tool for the RB to target/hit neg. geared res. prop. investors with, that my steepen the start of a slump into a quick plunge, e.g. see what happened in Sydney.

[delgary]

Something to think about.


First-home buyers waiting for property prices to drop have left their run too late, BNZ chief economist Tony Alexander has warned.


Alexander yesterday told a Parliamentary select committee inquiry into home affordability that the pleasure that had come from high employment and job security had bolstered the housing market – and caused pain for renters wanting to take their first step on the property ladder.

Just as employers had been "hoarding" staff in a tight labour market, where previously they may have been laid off, property investors would continue hoarding property as long as they believed values would not substantially drop, he said.

Government plans to help first-home buyers through Kiwisaver and a proposed shared-equity scheme could instead have the obverse effect.

"These things ... will tend to place upward pressure on the prices and again discourage investors from what might be the normal liquidation of some of their assets."

Alexander agreed with other economists that economic indicators suggested an imminent cooling of the housing market – but that did not mean a return to affordable housing apparent before the present housing boom.

"If we get a bit of weakness in the housing market these days, you've got a backlog of people who are going to jump in.

"There was this feeling three or four years ago, to rent for a couple of years till things get cheaper then buy. I don't think people view that now at all."

The commerce select committee is expected to report on the findings of their inquiry by August.

Just as Westpac chief economist Brendan O'Donovan told the committee last week, Alexander said there was no one solution to making housing more affordable.

He said a lift in net migration, lower and more stable interest rates and rising construction costs all accentuated the problem.

He recommended the committee look at the supply side of the market, such as freeing up more land for housing or boosting public transport options to areas of cheaper housing.

Council of Trade Unions president Ross Wilson laid the blame for housing prices outstripping wage rises squarely at the feet of big banks.

"They are borrowing huge sums offshore, driving up the current account deficit and helping fuel house-price inflation that is forcing houses way out of reach for workers trying to buy their first home."


http://www.stuff.co.nz/thepress/4055041a6427.html

[Bel]

What would the effect of Government/Council's suddenly freeing up huge tracts of land for residential use on the property market? Afterall they are currently restricting the supply.

Would Aucklanders et al still continue to look for property investment in cheap places? (such as invercargill)

[Crypto Crude]

The housing stock is fixed in the short term, but over time as these houses gets built then supply increases which inturn puts downward pressure on house prices depending on the amount of houses being built... downward pressure would be minimal as population growth/immigrants would fill them up...
and a new developed area of residental would make stuff all difference to total number of houses...unless it was a major project undertaken...
IMO only...
[8D]
.^sc

[Crypto Crude]

WOW MUMMA... A NOOSE AROUND THE NECK NOW
Reserve Bank raises OCR to 8.00 percent
Date 7 June 2007

The Official Cash Rate (OCR) will increase by 25 basis points to 8.00 percent.

Reserve Bank Governor Alan Bollard said: “Domestic demand has grown strongly since late 2006, particularly in the household sector. Housing market activity has been buoyant, consumer confidence has remained relatively robust and a range of business sector indicators, including employment and investment intentions, have been strong. As we have noted recently, government spending continues to increase, which is contributing to domestic demand.

“Following several years of strong growth, firms have indicated that capacity remains stretched and that finding both skilled and unskilled staff has become increasingly difficult. These pressures continue to underpin inflation.

“A sustained period of slower growth in domestic activity will be required to alleviate inflation pressures. Lending rates have risen significantly in recent months, partly due to previous increases in the OCR. Given the usual lags, we have not yet seen the effect of these increases on domestic demand and inflation pressures. There are some early indications from recent opinion surveys and other data that growth may be starting to soften, but these are by no means conclusive. Indeed, at present the risks to domestic activity appear to remain on the upside.

“A significant development in the past six months has been a marked increase in dairy prices. While there are uncertainties about the future path of these prices, the increases will assist in narrowing New Zealand’s trade deficit. The rise in dairy sector incomes will provide a substantial boost to economic activity over the next few years, but will also add to inflation pressures.

“Parts of the export sector outside the dairy industry will continue to face challenging conditions due partly to the New Zealand dollar. As we noted in April, the exchange rate is at levels that are both exceptionally high and unjustified on the basis of New Zealand’s medium-term fundamentals.

“Had we not increased the OCR this year, it is likely that the inflation outlook would now be looking uncomfortably high. This further increase in the OCR is to ensure that inflation outcomes remain consistent with achieving the target of 1 to 3 percent inflation on average over the medium term.”
[8D]
.^sc

[Crypto Crude]

WOW MUMMA... A NOOSE AROUND THE NECK NOW
Reserve Bank raises OCR to 8.00 percent
Date 7 June 2007

The Official Cash Rate (OCR) will increase by 25 basis points to 8.00 percent.

Reserve Bank Governor Alan Bollard said: “Domestic demand has grown strongly since late 2006, particularly in the household sector. Housing market activity has been buoyant, consumer confidence has remained relatively robust and a range of business sector indicators, including employment and investment intentions, have been strong. As we have noted recently, government spending continues to increase, which is contributing to domestic demand.

“Following several years of strong growth, firms have indicated that capacity remains stretched and that finding both skilled and unskilled staff has become increasingly difficult. These pressures continue to underpin inflation.

“A sustained period of slower growth in domestic activity will be required to alleviate inflation pressures. Lending rates have risen significantly in recent months, partly due to previous increases in the OCR. Given the usual lags, we have not yet seen the effect of these increases on domestic demand and inflation pressures. There are some early indications from recent opinion surveys and other data that growth may be starting to soften, but these are by no means conclusive. Indeed, at present the risks to domestic activity appear to remain on the upside.

“A significant development in the past six months has been a marked increase in dairy prices. While there are uncertainties about the future path of these prices, the increases will assist in narrowing New Zealand’s trade deficit. The rise in dairy sector incomes will provide a substantial boost to economic activity over the next few years, but will also add to inflation pressures.

“Parts of the export sector outside the dairy industry will continue to face challenging conditions due partly to the New Zealand dollar. As we noted in April, the exchange rate is at levels that are both exceptionally high and unjustified on the basis of New Zealand’s medium-term fundamentals.

“Had we not increased the OCR this year, it is likely that the inflation outlook would now be looking uncomfortably high. This further increase in the OCR is to ensure that inflation outcomes remain consistent with achieving the target of 1 to 3 percent inflation on average over the medium term.”
[8D]
.^sc

[Dazza]

TIMMMMMMMMMBER

shrewd u got ur cash ready :D

this is soooooo sweet

come on all u middle aged scrouges FEEL THE BURN BURRRRN OF THE INTEREST RATES
A

time for us young fellas to get ready to POOOOOUNCE :d
MUAHAHHAH

[Crypto Crude]

Dazza,
I could have the cash in 3 days...
My strategy hasnt changed, I will wait a few years for the prices to fall off...
who could have imagined 2 years ago that interest rates would be this high...
10% house price growth just does not cut it anymore...
being patient has been the goal, and at the same time having Share portfolio growth means that Im seriously looking at that 30 year loan being cut in half...:D...
52yr old man whatever...
[8D]
.^sc

[nelehdine]

If you've got a good tenant and fixed your mortgage a few months ago for 3-5yrs in the high 7's or low 8's this is all a storm in a teacup ... all these rate rises will do is slow the rush by investors to outbid first home buyers , this will push up rents as a consequence as the rental stock will diminish. If your in for the long haul and have a good strategy and some bullets left in your box of ammo there will be some good buying over winter .... and plenty of potential tenants looking to pay good money for quality accomodation while they try and save a deposit ( high interest rates will help with this ) for there own home.

Am looking to add further properties to my portfolio is towns like;

Palmie North
Wanganui
Napier
Hamilton
Lower Hutt
Waitakere City
possibles ... Whakatane, Ashburton, Matamata, Levin.

[George]

Well, may have jumped too soon, but my girlfriend and I have bought a do-up 1920's 2 bedder in Henderson for 312k. Cross-lease but quite private. Once tall trees have been trimmed in front there is a view across to the Waitakere Ranges plus a walkway to Westcity Mall and Railway Station. A few positives there plus will hold value with painting inside and out. Managed to get a 5 yr fixed at 8.3% but could only manage 60k deposit. Can pay it off in 10 years if able to knock 12,500 off principal once each year.
At 50+ I wonder if we are taking too much risk, it's certainly more expensive than renting but at 70 we will not have to worry about paying rent each week.
George

[trackers]

quote:Originally posted by Dazza

TIMMMMMMMMMBER

shrewd u got ur cash ready :D

this is soooooo sweet

come on all u middle aged scrouges FEEL THE BURN BURRRRN OF THE INTEREST RATES
A

time for us young fellas to get ready to POOOOOUNCE :d
MUAHAHHAH



Ahh life is good, 7.5% interest rate for another 4 years, and fantastic returns on our house...I'll be retired by 30 if this all keeps up (however the naysayers have been saying EXACTLY the same thing for almost 3 years now, they're bound to be right one day [8D] )

Today's Q.V email:

Welcome to QV's latest property statistics for NZ main areas for the period ending May 2007. You can also view further statistics and commentary for the main urban areas at www.qv.co.nz.

If you know of someone who might want to receive these free property statistics invite them to join.

Residential market up 11.1%

QV's May statistics report growth in national property values up 11.1% over the past year (calculated over the three months ending May 2007 in comparison to the same period last year). The growth rate increased from 10.6% reported in April with the average New Zealand sale price increasing from $366,032 to $372,552 reported this month.

"Despite some expectations that property prices may level off, the market has continued to strengthen. Sale prices in the main urban areas keep rising, driven by significant activity in the lower value localities" said QV spokesperson Blue Hancock.

"Although immigration appears to be slowing, high levels of employment continue to contribute to sale price increases" said Mr Hancock.

The residential property market remains buoyant in most of the main cities. Auckland City's property values increased by 7.5%, up from 6.6% last month. Hamilton, Christchurch and Dunedin also reported higher growth rates at 11.8%, 12.4% and 8.7% respectively. Wellington City remained stable with property values growing at 13.3% over the past year.

These trends are also reflected in the provincial cities. Property values increased in Wanganui at 14.1%, Nelson 12.3%, New Plymouth 11.3% and Tauranga 6.7%.

[Bel]

The most rapid gains are made at the last few years of a bubble. A crash in the Share market was written on the wall in 1996 yet it took till 2000 to eventually happen.

It's all about risk, theres greater rewards towards the end but in my view with a consistantly meddlesome, anti-high house price government its too bloody risky to be buying houses at such a high premium. (i base the price on the potential cash flow return, not wishful thinking capital gains)

For me there is other ways to invest that suit my risk tolerance better.

[trackers]

Median house price hits record $350K

BREAKING NEWS: The national median house price rose $1000 to a record $350,000 in May, according to Real Estate Institute figures out today.

http://www.stuff.co.nz/4096261a13.html

[Sideshow Bob]

Tick, tick, tick........

[George]

You guys are freaking me out. Another cost for 50+ buyers is mortgage insurance - $160 a fortnight for a couple. Tempting to do without, especially for two very healthy/drive safely individuals, but the alternative is a bit daunting. I have been informed our house would be 340k if it had been looked after, so some risk is reduced in our case I feel.

[The Doctor]

Good luck George!...the outer suburbs get hit first.At least you are fixed for 3 yrs at a res rate.$60,000 invested at the bank will get you over $5000 a yr gross at 8.45 %)

[Crypto Crude]

article is a few years old, but an interesting read...
Some people have said that it was the best real estate deal in history...
Peter Minuit, Director-general of New Netherlands, the Dutch West India Companys Colony in North America, In 1626 allegedly bought Manhattan Island for 60guilders worth of trinkets from the native Americans... By 1667 the Dutch were forced to exchange it for Suriname with the British (perhaps the worst realestate deal ever)... This sounds cheap but did the dutch really get the better end of the deal?... It is reported that 60 guilders was worth about $24 at the prevailing exchange rate... If the native Americans had sold the trinkets at a fair market value and invested the $24 at 5% after tax, it would now, be worth 2billion dollars... Today Manhattan is undoubtedly worth more than 2 billion, and so at a 5% rate of return, the Native Americans got the worst deal... However if invested at 10%, the amount of money recieved would be worth about

24(1+r)^T
=1.1^377=$97 quadrillion.

In fact 97 quadrillion is more that all the real estate in the world is worth today
No one in the history of the World has ever been able to find an investment yielding 10% per year for 377 years.... not even mackdadunk who thinks Property yields 10% over the long term....:D....
8D]
.^sc

[duncan macgregor]

quote:Originally posted by Shrewd Crude

No one in the history of the World has ever been able to find an investment yielding 10% per year for 377 years.... not even mackdadunk who thinks Property yields 10% over the long term....:D....
8D]
.^sc
SHREWD CRUDE, Property does yeild 10% pa at least as long as I have played the game. Infact it has yeilded a lot more than that from my own experiance, which is some what shorter than your quoted 377 years.The cost of compliance has increased more than your 10% pa which makes the cost of new buildings is rising faster than inflation. :D:DMacdunk

[George]

Hi SC
I remember from past posts of yours that you may trade the markets and wait for the downturn in property.
Well, I tried that, and failed. With my share of a divorce plus savings in 1999 I didn't want a bar of ownership and was happy to rent, thinking I would make money in the markets.
I didn't, and was further frustrated by the property boom thinking what a little do-up would have been worth now. It's also the money lost from income, investment etc. that one needs to account for. After having learnt a bit about trading the sale of that house now could have been put to use in the market, but perhaps I may have been a bit wiser by then?
The fact is, for most people, property is forced savings and they will reap the benefit in time.
I am in no doubt that I may have bought a house at the top of the market, but if we look like getting tight with money the solution is simple, just work longer hours and cut costs. This would be money I would not have made in the first place because I wouldn't have HAD to. Also, just got our mortgage documents and we have the option of paying an extra $600 a fortnight if we so wish in addition to the 5% each year.
We can't do this yet but the potential is to pay a quarter million off in 7-8 years - there seems to be amazing flexibility and options with borrowing for property now compared to the 80's when I last bought.
As this is for our home, garden, etc. that's hard to put a price on, but 5 mins from a Mall and Rail with a view over city and ranges I feel will hold value over 10 years which may be when we wish to move on.
SC, you are young, but with probable limited experience in the stock market I wish you well and hope you have enough left over for your first house.
George.

[Crypto Crude]

ok mackdadunk,
you win...
97quadrillion here we come...:D:D
[8D]
.^sc

[Crypto Crude]

quote:George-SC, you are young, but with probable limited experience in the stock market I wish you well and hope you have enough left over for your first house.
George.


hey George, cheers for posting, I love to hear other storys...
I have been in shares now for 4-5 years...
started out with my first play of 3k on CUE energy back when I was 18 and now have over 30k invested mostly in ASX stocks... all oil.... all spec... and all undervalued...
NWE,NZOOD,TEX.... most on NWE...
Well Theres no way im even thinking of buying a house here ATM...which will lock me in for 30 years...
the only chance is if we get a flat market for 5 years or so, I get share price growth...
and I cut that loan in half...
Oherwise I'd rather go overseas and not have imagine how my life would be when im 52 and have only just payed the house off...

In your post you are completely right that home ownership is forced savings...
For the average investor this most appropriate...
but remember I am the shrewd one:D..., and becoming a saver and maintaining it has never been the issue...
it is the 30yr loan that has been the issue...
[8D]
.^sc

[Crypto Crude]

with a loan of 300k and 10% floating interest rates...
thats 30,000 dollars per year in interest only...
what the point in that...
need 10% house price growth just to break even....

it would be the worst decision of my life....
[8D]
.^sc

[duncan macgregor]

quote:Originally posted by Shrewd Crude

with a loan of 300k and 10% floating interest rates...
thats 30,000 dollars per year in interest only...
what the point in that...
need 10% house price growth just to break even....

it would be the worst decision of my life....
[8D]
.^sc
You have forgotten one little item SHREWDY and that is rent. Someone has to pay rent. It is either your self who has to live somewhere, or a tenant, it is not important to the debate.
Let us presume you paid 25% deposit to have the rent cover the mortgage, and expences. You have invested 25% to get a capital gain of 10% on 100%. The capital gain more or less equals interest to the bank. Then take it further down the track, your rent increases along with your capital gain, giving you a much better return as the years go by. You need to stop and think it out for a change, most people that i know have got rich doing just that. Macdunk

[srotherh]

quote: You need to stop and think it out for a change, most people that i know have got rich doing just that. Macdunk

Macdunk
Is your theory by experience or is it just people you know?
How many residential rentals have you aquired ?

[Crypto Crude]

quote:mackdadunk-
You have forgotten one little item SHREWDY and that is rent. Someone has to pay rent. It is either your self who has to live somewhere, or a tenant, it is not important to the debate.
Let us presume you paid 25% deposit to have the rent cover the mortgage, and expences. You have invested 25% to get a capital gain of 10% on 100%. The capital gain more or less equals interest to the bank. Then take it further down the track, your rent increases along with your capital gain, giving you a much better return as the years go by. You need to stop and think it out for a change, most people that i know have got rich doing just that. Macdunk

in my decision making, I weigh eveything up and leave out nothing... I look at it from my point of view, I look at it from yours...
and my view is correct...
your view is biased because you have been on property for along time and a swing downwards would be stuff all for you... for me its different...

with the whole rent thing what do I do?....
I want to have a wife some day and little shrewdys running around...(all searching for the next spec oiler to explode etc)... :D:D...
but how am I going to pass my good genes on when I need the kids room for the DOE...
Do I make wifey pay rent?...
and then make the little shrewdy front up for the doe when hes 18? hehe....
kinda like an IOU system.... hehe...
you see my point mackdadunk.... how good is the rent thing, when yourve the family in the house...

currently 100dollars a week in rent (5k per year) is far better than 30k per year in interest....Im not even woried about the house thing... its no biggie for me to go overseas... go and work in China for awhile or something...

the only other option I had that is now gone was to buy that house that Cantab was offering back on page 10...
the 175k bullet ridden decapated jail cell, where gansters fire strays at your crib and all...
think its been sold now, cant find the house on that link...

I understand your arguement that with price growth and rent growth that your gains compound... your yields could quite possibly be 20%, if you got your houses at a super cheap price huh... my yields would be less than 5%...


quote:srotherh,Macdunk -How many residential rentals have you aquired ?
srotherh, mackdadunk is already on his way to a quadrillion...
he probably has so many that even he cant accurately count them all...:D...
[8D]
.^sc

[cantab]

quote:Originally posted by Shrewd Crude
the only other option I had that is now gone was to buy that house that Cantab was offering back on page 10...
the 175k bullet ridden decapated jail cell, where gansters fire strays at your crib and all...
think its been sold now, cant find the house on that link...



Shrewdie, that was a bargain, looks like they've gone up, however this one is only $190,000, just needs a bit of TLC.

http://www.realestate.co.nz/478772

[Crypto Crude]

when my father was growing up Hampshire street was the most dangerous street in Christchurch by far...
gang shootouts, stabbings, robbery...
[B)]
.^this sort of activity...
[8D]<sc

[cantab]

The street seems to be improving - the two level wooden state houses have been replaced by quite nice single level stone houses.

[Serpie]

You dont want to live in Hampshire St Shrewdy. For a few extra bucks I'll sell you a house, and you get me as a neighbour for free!
You know what you've gotta do SC: head overseas, earn pounds, come back, triple your savings, and wander around the open homes with your cheque book.
An EU passport is your golden ticket.

[Crypto Crude]

quote:Serpie-
1...You dont want to live in Hampshire St Shrewdy
2...For a few extra bucks I'll sell you a house, and you get me as a neighbour for free!
3...You know what you've gotta do SC: head overseas, earn pounds, come back, triple your savings, and wander around the open homes with your cheque book.
An EU passport is your golden ticket.


1...your damn right I dont want to live on Hampshire street serpie...
cantab is mad as a meat hatter....
2... for a few extra buck eah... what like $190,001 or $190,002...[:p]
3...Im still planning to work in China the year after next....
and then go to Europe with a friend in 2010 for a working holiday...

A house is always the goal, if I accomplish all my other goals then a house will come...
if I buy a house then my other goals will majorly be sacrificed because mortgage payments will soak up all my earnings like a sponge...
so unless housing falls or a sustained period of sideways movement then I have no choice but to follow the other goals...
its one or the other in the current market...

Mackdadunk,
Im 22...
and I donot think its the wisest move for me to be free hold when I am a 52year old man...
if the house is worth 1 million when im 52, then I still dont think it would be a wise move for me...1 million in 30years is not where this shrewd one is heading... if you are still closed minded on the situation then thats ok...
you are stubborn like me, and I'm not in the slightest bit convinced that you see it from my view... why would I want a 1 million dollar asset only when im 52?
(if thats where property is heading)....
[8D]
.^sc

[shasta]

Shrewd

Wait a few years & your shares will allow you to pay for your house in cash.

Well thats my plan & i'm 30

[Crypto Crude]

shasta,
If a house cost 250k to buy...
and IF I had that cash sitting there then I'd have two options...
1, put into house...
2. earn after tax cash flows to beat the rent payments...

If I could earn 10% after tax cashflows then thats 25,000 per year...
thats $480 per week... Id be looking at $100 per week in rent in CHCH ATM...

the point that mackdadunk makes is that your using other peoples money and therefore
your small downpayment controls the total movement in valuation...
this is a valid argument...and does counter the whole rent example... but if you are talking about opportunity costs, and you are better off after the rent payments then thats not such a bad thing is it?
[8D]
.^sc

[shasta]

You don't need to own a house & tie up that much money & incur debt.

Exactly Shrewd, the new breed of Gen X & Gen Y's will likely not own homes to the same degree as other generations have in the past & is that such a bad thing?

I'd rather pay rent & have the money working for me in the market too, as im doing.

[JBmurc]

Or if you make serious $$$$$ in the market build your own house then use the equity in home to take a new loan to invest into the sharemarket through a trading company which has an office in the home plus loan interest, power,internet,sky tv,mags,overseas trips etc cost you can claim against your %33(or soon to be %30) tax rate-while giving you protection of major losses to be also writing off in future profitable tax yrs;)

I'd rather pay interest on the funds invested which i can write off at the end of the yr and pay little rent

[cantab]

quote:Originally posted by Shrewd Crude


quote:Serpie-
1...You dont want to live in Hampshire St Shrewdy


1...your damn right I dont want to live on Hampshire street serpie...
cantab is mad as a meat hatter....


Yeah but Shrewdie, tell me another street in Christchuch that has got its very own policeman? [8D]

Informative article in the Christchurch Press on Hampshire Street, which prompted me at the time to go down and have a look.

Interesting what the Police northern area commander had to say in the article:

The Police northern area commander, Inspector Andy McGregor, says the sense of pride in the Aranui community has resulted in a decrease in crime.

"People have a greater sense of pride in the place," McGregor says. "You can drive through without seeing all the broken-down cars, and the houses seemed more cared for."

McGregor says community constable Andrew Millar has been stationed on the street for the past three or four years. The community now trusts him enough to seek his help and report more crimes.

McGregor says the public's perception of which streets have the most crime, such as Hampshire Street or Emmett Street in Shirley, are not always correct. For example, Memorial Avenue in Burnside, with many well-tended and expensive homes, has higher overall crime levels than Hampshire Street.

Sides of the street
The Press | Monday, 26 March 2007

http://www.stuff.co.nz/thepress/4003652a13135.html

[Serpie]

J B Merc - Absolutely spot on.

Cantab - it must be karma: I give Hampshire St a hard time, and you respond with a press clipping about Emmett St. I have a property in Emmett St!!!

I spent a night on patrol with a policeman friend of mine a few months ago - in a much rougher town than ChCh. We toured an equivalent state housing area in his town, and he said that the transformation has been amazing.
No old cars - just well tended yards and obvious pride in the community.

I live in a "rough" part of town myself, and you'd be mad to break into a house in our area - you'd get killed!

[cantab]

quote:Originally posted by Serpie

Cantab - it must be karma: I give Hampshire St a hard time, and you respond with a press clipping about Emmett St. I have a property in Emmett St!!!

I spent a night on patrol with a policeman friend of mine a few months ago - in a much rougher town than ChCh. We toured an equivalent state housing area in his town, and he said that the transformation has been amazing.
No old cars - just well tended yards and obvious pride in the community.

I live in a "rough" part of town myself, and you'd be mad to break into a house in our area - you'd get killed!


That's bizarre Serpie and it gets even even more so because I once had a girlfriend who lived in Emmett street.

A few years ago some people from Europe wanted to see the real Christchurch so one of the places I took them was Hampshire Street. They thought it was not too bad at all and it has improved a lot since then.

I think that house would be good for Shrewdie, not only would he be shrewd but he would be streetwise. [8D]

Your tour just shows what can be done - as they say with any rental house - it gets the tenant it deserves. Give these people nicer surroundings and they will take pride in their homes, gardens, etc. I am sure there are a lot of good people living in Hampshire Street.

[Crypto Crude]

quote:cantab-
The street seems to be improving - the two level wooden state houses have been replaced by quite nice single level stone houses.


cantab, the only reason why they replaced the wooden houses with stone houses was because frequent arson attacks left the wooden houses in ruins[:p]....
sorry, but I dont have an article to prove it[:p]
[8D]
.^sc

[Crypto Crude]

Article on front page of CHCH press business page says that MOST forecasters are predicting the Reserve Bank to lift offical interest rates this month... after a recent stronger than expected inflation figure.....
Oh golly gosh....

"other economists expected a follow up rate rise in september unless the housing market falls off a cliff".....
oh and that it will buddy, market falling off cliff eah........

floating mortgage rates are at 10.3% and if a rise this month and next in OCR would be pushing 11%....
oh golly gosh....

with rental yields at JUST 3% and interest rates at more than 9% it just doesnt stack up for the investor...

Mackdadunk explain this one to the fellow first homebuyers that are thinking about housing as an investment... give us your very best arguement as to why one should get in.... I dare you....
....
kinda looks like buying a flash car... some say its an investment, others say its a liability...11% is whopper, thats 33k interest debt to the bank in one year on a 300k mortgage, thats a full time wage....... anyone that says housing is a great investment right now needs to go get a Brain scan from damage for listening to Mackdadunk for too long on this topic....:D:D... happy as to be sitting on shares...

[8D]<Mackdadunk....
.^sc

[Serpie]

Property is a great investment right now Shrewdy, as long as you bought 5 years ago.

Wouldn't be buying at the moment.

[shasta]

In 5 years time, Shrewd's oilers would have paid for his house & ADY would have paid for mine!

[Crypto Crude]

shasta,
NO,
NWE would have payed for my first house...
and CUE would have payed for my second...
:D
.^sc

[Halebop]

quote:Originally posted by Shrewd Crude

shasta,
NO,
NWE would have payed for my first house...
and CUE would have payed for my second...
:D
.^sc


I fink he sayed paid [:o)]

[JBmurc]

kinda looks like buying a flash car... some say its an investment, others say its a liability...11% is whopper, thats 33k interest debt to the bank in one year on a 300k mortgage, thats a full time wage....... anyone that says housing is a great investment right now needs to go get a Brain scan from damage for listening to Mackdadunk for too long on this topic....... happy as to be sitting on shares...


-Yeah a very flash car with a 454 big block
I can see Queenstown property in freefall soon the dam's going break on these low yeilding apartment developments with the NZD the icing on the cake
Which currently is completely different to the low cost Southland market which is booming -;)hopefully the rate rise might bring some more sections on the market

[Crypto Crude]

JBM,
Im also picking that interest rates will go up quarter of a percent next thursday,
thats 8 days away.... wwwooooohheheeeee
[8D]
.^sc

[minimoke]

quote:Originally posted by Shrewd Crude


...explain this one to the fellow first homebuyers that are thinking about housing as an investment... give us your very best arguement as to why one should get in.... I dare you....


It depends on what you are buying. If its a “home” then this is quite a different argument than if you an buying an investment property.

The house you live in is never an investment. It is a place in which you balance the odds of the landlord running you out – or the bank. It a place where you put in your own blood, sweat, worry and money rather than the landlords. Its a place upon which you can gain leverage in the future - but only if you see the mortgage as your prime financial commitment. You pay the bank before you buy the latte, the widescreen or the latest “must have” consumerable.

If its an investment then what are you looking for – an income stream (which is taxable) or capital growth (which also ought to be taxable) – both relative to other opportunities for your money. Neither look an attractive opportunity at the moment.
[u]</u>

[Crypto Crude]

quote:aspex
Posted - 29/04/2007 : 09:04:18 AM
I predict 8% will NOT be needed.
The worm is turning and the downward trend will come with the dollar first.
Then higher oil, a small surge to clear the shops of cheap imported goods and a big increase in mortgagee sales.
I have noticed more property 'for sale' signs suddenly appear.



quote:aspex Posted - 18/07/2007 : 2:55:22 PM
Yeah, right
When 80% of the bank economists say so --- make up your own mind.
While I reckon Bollard should have gone 0.5% last time, I could make something on him not doing so.

aspex,
Firstly, two months ago you said that 8% willnot be needed, and then you recently say that it should have gone up .5% last time...
make your mind up buddy...;)...
OCR at 8% and likely to rise once again, if not twice...
[8D]
.^sc

[MrDevine]

I remember my Dad saying his mortgage was 18% when he brought a 10 acre block in Invercargill, in the early eighties.

Mind you he worked in the oil field (including working on the Penrod 74 when they struck gas/oil in the GSB in the seventies. Note to Shrewdy, he says the GSB makes the North Sea look like a mill pond) but he paid it off in about 5 years.

I say bring it on Mikey Cullen intervene big time on the currency and peg it to something. This dollar is frankly stupid, hurting exporters no end. Housing boom has been brought on by cheap credit, check Fractional Reserve Banking, increasing Banks capital requirements would quickly rein in all that made up money.

Mr D holds – a house (can't live in your shares Shrewdy – but 6 and one five to the other)

[Crypto Crude]

Mr Devine,
Yes GSB has mad potential...
Great that you have a house...
Im still only earning part time wages, so I couldnot get a house even If I wanted to... My assets are now enough for a reasonable deposit but I cant make those 25k interest payments each year...
...
Your right I cant live in my shares...
Im highly confident that I could get a house and go down that line and become free hold by the time im 40-45yrs... Theres a much better route for me and I plan to take it..
[8D]
.^sc

[Crypto Crude]

aspex,
I've got to be honest....I willnot be reading the book, but thanks...
....
argghhh my next entry stock of CUE blew up today....
argghhh....

Aspex, you are right I have not been around long enough on Sharetrader... but I have been in shares for 5 years now...
is that enough experience?

earlier on in the year I posted it here and elsewhere that I had put 80% of my wealth on NWE at 16.8cent average...sold down a few now, but still over 50%... I have hidden nothing and disclosed everythin... It was a dead cert then and it is now...im allowed to be alittle enthusiastic when im doing alright arent I....
[8D]
.^sc

[Crypto Crude]

aspex,
Yes I am aware of market crashes/depressions etc...
I will be looking to take some moeny off the market next year, (towards the end of 08 at this stage)... world growth rates are strong... strong corporate earnings... companys are still real profitable...
one of the guys last night at wellington sharetraders meeting said I needed to get a big kick in the **** by the ASX a few times and then I'd be much better for it...
[8D]
.^sc-still waiting for the kick...

[Crypto Crude]

quote:aspex-SC,
Why incur the kick?
When it happens, short like hell.


Short like hell or shout like hell...:D...
Im talking about a kick in terms of a healthy loss on a stock... my biggest loss ever was 4k to Uran this year, and im thinking of a re-entry for a small play... A kick in a crashing market would be more like a steel capped, brutal slaying thump to the head...similar to what recent first homebuyers will suffer soon.... Im now doing all I can to convince my mate not to get a house in the next few months...
...
Big announcement expected out this thursday... I have read some and heard some fairly contradictory stances on the proposed OCR rise this week...weighing in favour of a rise on Thursday...
lets just hope that housing market falls for a sustained period and I continue to build my assets and cut the loan peiod into 1 quarter...
[8D]
.^sc

[Crypto Crude]

Mackdunk,
The housing market has now topped out, tipping lower and expecting to fall/crash.....
absolute peak has been reached up to the top of the last cycle and now a new cycle begins...In this new cycle the title,'NZ first homebuyers are screwed' stands strong... After this is all over the title will change and will be reworded to be Shrewd instead of screwed.... In 5 years (give or take) I will be in, looking to get 3 houses with lower prices and lower interest rates...
Im glad I stood up and held my own on these housing topic threads ....shhiiiiteeee is about to hit the fan....
The Dream is still alive...
:cool:
.^sc

[Steve]

It has been just over a year since this thread was started, and yes the housing market has slowed but it has not crashed.

In just another 4 more years we will know if the prophecy becomes fulfilled...

[Crypto Crude]

you betcha it will come true mate...
Its a no contest...
If the TAB were taking odds, then they would be offering 19-1 for a rising market. 5-1 for a stable market....
and 1.04-1 for a falling market...
....its a dead cert....
:D
.^sc

[Corporate]

Great topic SC, just stumbled across it.

I love houses and am in similar situation to you. 23 years old and I've had one year out of uni.

I looked very seriously at purchasing a house/unit/apartment but even with a much higher than average first home buyer deposit, I couldn't make it a viable option.

I mean a $300k loan needs about $600pw to service it not taking into consideration maintenance etc.

Potentially I could get two flat mates and try to service the remainder (approximately $400pw), but whats the point? Even if i could afford $400pw; I'd have a house that I couldn't afford the maintenance on, if a flat mate moved out I'd be financial trouble, I would be relying entirely on the value of the house appreciating, I couldn't go out and socialize anywhere that required any money at all.

It's prime time, I'm young and you only get one shot. Thats why I'm focusing on learning business and shares and not risking the lot stretching to purchase a house at this stage.

[duncan macgregor]

Mackdunk,
The housing market has now topped out, tipping lower and expecting to fall/crash.....
absolute peak has been reached up to the top of the last cycle and now a new cycle begins...In this new cycle the title,'NZ first homebuyers are screwed' stands strong... After this is all over the title will change and will be reworded to be Shrewd instead of screwed.... In 5 years (give or take) I will be in, looking to get 3 houses with lower prices and lower interest rates...
Im glad I stood up and held my own on these housing topic threads ....shhiiiiteeee is about to hit the fan....
The Dream is still alive...
:cool:
.^scSHREWDY, the housing market never crashes, other than a rise in mortgagee sales. The cost of construction along with escalating compliance costs make sure that it cant drop by much. When i was building in Australia i could buy NZ timber cheaper than i could in Auckland. At one stage i even contemplated buying it in Australia to ship back. Australia has much cheaper houses, simply because they dont have the same stupid building rules that we have in NZ.
There is never a better time to buy a property than now. My property is on the market at the moment with a conditional offer on it at exactly four times what it cost me over 14 years. Whoopee Doo you might think thats not brilliant, but i borrowed cheap money off and on on the back of it, to finance various business ventures.
Property should give you your total investment back after the first three years plus a great pile of cheap borrowed money on the strength of it. To not own property as soon as you can afford it will hold you back in later life. Macdunk

[STRAT]

Sorry Shrewdy I gotta agree with Duncan on this. At your age in the 80s I found myself in the same situation as you are now and I made the same decision you have. I was wrong then and I recon the same applies this time round.

[Tok3n]

For the property market to crash in NZ (which is really really really unlikely)

We're going to need loads of economic shocks e.g.

Some massive shock to the diary industry.
Negative migration.
Rising unemployment.
More and more people moving overseas.
Tax breaks removed.

Can't see any of this happening.

[Crypto Crude]

md-There is never a better time to buy a property than now

This is the most insane thing I have ever heard you say MD...
You have a chance to take this quote back now, or risk a humbling experience bought on by the shrewd....
GO back to page one and read the thread from beginning...
TRY to look at it from a young persons point of view rather than the oodles of returns you are sitting on...20k to 200k isnot the same as 200k to 2million...20k to 200k is 180k differential... 200k to 2million is 1.8million difference... but its the same return... we are at different ends... but its now more like 300k....
....
Ok maybe The word crash was abit heavy, im expecting a fall no doubt.....
goal- to save one decade off the total loan term or more...
simple as... If housing dont fall, then I move offshore...
Im going to make it another way anyway, and I wont be that ( 53year old) man with a house only, grinding out a 30year loan term....
....
The quote of yours at the top of the page is kind of like saying, for example- In all rights I should buy NZO today, tomorrow it will probably fall but eventually it will come right and back up above what I paid for it... SO what you are saying is that today you are prepared to pay $1.16...
well im way smarter and Im prepared to hold out for say $1.05 as an example...
This is not the trading mentality you have taught me...
...
Its the same godd damn thing with housing.... delay purchase and be much better off in the long run, because yes the next peak will be above the current one... the difference is a 35-40yr old... or a grandad grinding through life like a mad man....

....
hey shephejame,
there will come a time for us and it will be 5 years (plus or minus) of continued saving buying into housing then... at VERY VERY best a sideways market will still chop many years off the loan term... In all rights property will fall, this will sweeten the deal.... in 5 years interest rates will be lower aswell...
:cool:
.^sc

[Crypto Crude]

This is not the trading mentality you have taught me
....
there you go, have it again...
:D
.^sc

[duncan macgregor]

This is not the trading mentality you have taught me
....
there you go, have it again...
:D
.^sc Quite wrong SHREWDY. Property is not like shares. You can live in property saving you rent. You can rent property, giving you income. Then the big one is, you can borrow cheap money to invest in any business ventures when the market suits you. The actual ammount of money required of your own is a reasonable deposit over a term of three years after which you get back by refinancing. Its a bit like me with my share investing account last year, doubled my money then pulled my initial investment out to trade the market. My investment shares cost me nothing, all in good companies pay dividends, not a smart investment but cost me nothing. Property will go up long term, will never crash like the share market, will and if played out right will give you a much higher return than the sharemarket. Try borrowing money to buy shares, then try borrowing money to buy property. The sharemarket will crash this year, the property market will stagnate, and drop slightly, then carry on as it always does over the last fifty or a hundred years. The money you invest in property is not dead money, it becomes a source of good cheap money in an ever increasing supply, and best of all a great hedge against inflation. Macdunk

[Arbitrage]

I agree with Duncan on this one. However I would also add that "the housing market" which is often referred to is made up of a lot of different components. As Strat has shown by buying last year, there are always deals out there, no matter what part of the cycle we are in. Do your research Shrewdie, think a bit laterally about finance (eg would Duncan lend you a deposit??) and you can get into the property market with a positive upside no matter when.

[STRAT]

(eg would Duncan lend you a deposit??)LMAO. How about it Duncan????:D:D:D

[Corporate]

Quite wrong SHREWDY. Property is not like shares. You can live in property saving you rent. You can rent property, giving you income. Then the big one is, you can borrow cheap money to invest in any business ventures when the market suits you. The actual ammount of money required of your own is a reasonable deposit over a term of three years after which you get back by refinancing. Its a bit like me with my share investing account last year, doubled my money then pulled my initial investment out to trade the market. My investment shares cost me nothing, all in good companies pay dividends, not a smart investment but cost me nothing. Property will go up long term, will never crash like the share market, will and if played out right will give you a much higher return than the sharemarket. Try borrowing money to buy shares, then try borrowing money to buy property. The sharemarket will crash this year, the property market will stagnate, and drop slightly, then carry on as it always does over the last fifty or a hundred years. The money you invest in property is not dead money, it becomes a source of good cheap money in an ever increasing supply, and best of all a great hedge against inflation. Macdunk


What are you talking about. You can only refinance and use the money for business/more property IF you can afford the extra repayments. Have you not read the thread. YOUNG PEOPLE can not afford the repayments as things stand now. This is the basis for the discussion!

How is renting a house for $300 compared to paying a mortgage of $550pw saving you money? It's not like your paying anywhere near $250+ off the mortgage principle. Where is the upside in the short/medium term?

[duncan macgregor]

There is no difference today than ther was in years gone by for young people buying their first property financially. The difference today is young people wont make the sacrifice, they want it all now. The number of mortgagee sales that i attend mostly all have a sky dish, plus all the modern niceties, and sometimes a better car in the garage than the one i drive. My very first house was furnished sparsly with stuff out a second hand shop.
To come up with the guff of how hard it is for young people simply does not wash with me. Its always been hard for young people, the weak fall by the wayside. Incidently both my daughters with no help from me lived in their own houses while still single before they were married. Macdunk

[peat]

it seems to me that it wouldnt be sensible to buy at what could well be (nothing is certain of course) the top of the longest bull market in residential property even if it is your first house and you're not buying it speculatively.
your last post Duncan is bit of a an old man rant really in style of Monty Pythons Three Yorkshiremen livin in shoe box on middle of road etc not really dealing with the point here.
Of course its tough to get the deposit together etc etc but the real issue is if you have scrimped to get the deposit do you use it now. Of course ownership and tenure are attractive aspects of buying but still makes sense to buy in gloom of which there may well be a lot more. In fact if you look at periods of gloom in the past eg 87-92 they last a while and arent over in a few months. And this era of excess has been more exuberant than usual so it will take a while to clear it all out and build a base so that the cycle can continue

[minimoke]

...even if it is your first house and you're not buying it speculatively.
...
And this gets to the heart of the problem. Buying your first home is essentially an emotional decision. The only real decision is one of commitment: “Am I prepared to commit to the bank for a period of time and pay them for the pleasure?”.


Buying your first property as a speculative investment is a financial decision. Looking at the numbers isn’t hard to do – its looking to the future where the challenge lies. Those that are good at reading the crystal ball will do well. Those that make a error in judgement, and with no back up plan will suffer.

[Crypto Crude]

great posts peat and minimoke.
This thread makes for a great debate and I see a clear difference in thinking... im counting victory points already and I guess it will take more time to explain why...
strat, md, arbitrage, are looking at this debate from a different angle, Im not sure what these nice fellas pack in their sandwiches, I can't be sure what they pour into their coffee's first thing...
I also cant be sure what newspapers they read and I will supply a perfect example printed in the CHCH press yesterday, following this post...
What I can be sure of is my goal to knock 10yrs down off the total loan term, and I will prove it.... I'll still be mates with MD then, so hang around and find out... In five years time I will look to buy 3 houses under the right conditions and I dont need MD for finance, haha...
As I said in 5 years time I will change the title to NZ 1st homebuyers are shrewd.... Is that lateral enough for you Arby...
The long termers are correct in their views because long run prices look set for much higher peaks compared to the peak we just had... they have run profits so hard that a 50k house price drop dont mean much, and more so not in the overall sceme of things.. ...MD, first home buyers are only concered what happens in the next 4-5 years...
you three have clearly missed the point I believe, and I have an idea how to solve this...

Why dont we start a competition out of this !.... we can all make one pick of what we reckon the medium valued house will be in NZ, in 5 years time?
yes it would be a long standing comp...
This would sure up some healthy debate rather than the back and forth this thread topic has now taken....
Any other posters out there with consructive idea's?
probably look to get some feedback and then start up a new topic in the property investment section...
:cool:
.^sc

[Steve]

..MD, first home buyers are only concered what happens in the next 4-5 years...
you three have clearly missed the point I believe

MACDUNK missing the point?! That would be a first! :rolleyes:

[duncan macgregor]

SHREWDY, Pointless starting a competition on something that has been going on for hundreds of years. First question to ask about past rises and falls in the market is why would the market be any different over the next hundred years with rises and falls?. The simple annswer is it wont, it will go up and down as it has always done. The second question then is why dont we study what happened in the past and relate it to what will happen in the future?. It was equally as hard 100 years ago to buy your own home.
Because the modern youth is a sniveling over indulging spoilt brat, only means fewer people are commited to making the sacrifice. I think woopee doo, go through the hardships your ancestors did to get on the ladder or pay rent who cares. Do your analysis using past figures through good times depressions and normal times to see how wrong you are. Macdunk

[Serpie]

I've been reading this thread with great interest over the last few months, and can see both points of view, but I'm with Duncan on this one, for a few reasons, all related to sacrifice.

Point 1: Shrewdy, the figure that you keep using for a first house is $300k. Why not buy a house for $200k? You can get a house in ChCh for $200k. It won't be flash, and it won't be in a good area, but it's a start. Or buy a 2 bedroom unit for $175k. Suddenly your problem is $125k smaller. Get a flatmate in and, by the time you take into account what you would've paid in rent anyway, you're down to a small weekly top up.
And the younger you are when you buy a house, the easier it is to get your mates to go flatting with you. Try getting them to go flatting with you when they're 35, and married with kids.
If you wait too long you'll end up paying off your mate's mortgage.

Point 2: I can just about guarantee that there are people reading this thread, who do not own a home, who agree with everything you say, and will still agree with you in 12 months time.
The problem is that in those 12 months they would've saved ZIP for their first home.
If they'd bought a house then, sure, they would be stoney broke, poorly dressed, and having a lot more quiet nights at home, but at least they'd be on their way. Having a mortgage ensures that you are "financially responsible" (or tight).

Point 3: All of your calculations are based on 30 year terms, which is the worse case scenario. Work your tail off, earn heaps, get flatmates in, and pay your mortgage off early. All of the lenders will point out the difference in interest between weekly and monthly payments - if you pay more than the minimum payment then you can cream your mortgage quickly.

With every day that goes past it gets harder to get into the property market. The gap between the "haves" and "have nots", in socioeconomic terms, is widening quickly. Get on the right side as soon as you can.

[seaosh]

I'm with shrewdy really. . .

Values have got well ahead of rents recently. The situation cannot continue indefinitely.

More than at most times this has to be a time for taking a wait and see approach.

[George]

I agree with Serpei, at 50+ my partner and I just bought a house for 312k and I
was worried when all the sub-prime stuff came out 2 months later (as I thought it
would). But a great thing happens - you feel committed to working that bit extra to
make sure the bills get paid because you have to. Without that committment most would
simply fritter the money away and have nothing years later.
Also, the bank gave us the option to whack off 5% (12.5k) every year which takes the
repay period to about 10-11 years - another worthy goal to encourage sacrifice.
The only problem occurs if we can't work but after 2 or 3 years those worries a less
of a concern as we would have built up a lot of equity.
And why are we buying now at our age - because we both made financial mistakes after
prior separations, one travelling the world the other bad financial decisions (trading etc)
and not buying at least one small house. But we are not like some of the young generation today
who think the world owes them a living - we simply bite the bullet and do what we have to
do what we should have done years ago.
George

[Arbitrage]

Come on you guys. Don't get sucked in by the politicians talking about median house prices, and how we all want a quarter acre patch of dirt. You could take the "Manhattan" approach and easily afford an apartment with minimal deposit. As Duncan said, if you REALLY want to get into the property market there are many ways in, even with stuff all money, you just have to make a sacrifice. Then you can build your equity and use it for borroiwing against in the future.
Shrewd, you obviously aren't desperate to own a property so that is fine. I also can't imagine you wanting to mow lawns so an apartment may be the way to go.... As an investment the yields are starting to climb and it may be time to jump in.

[Crypto Crude]

Hey arby,
eye eye captain....
hows that mate of yours doing- Share Trading Rat.... ST-rat...:D
..
Listen up, article hot off the press, almost everyday articles are coming through, and I cant be bothered writing the last one as its clear to me what housing will do...this article came from the chch press....
"Auckland housing market down 7.5% for the month"
I am not using words like crash because as Mackdunk said a crash never happens... a correction and at best a sideways market for 5 years is on the cards....



CHCH PRESS- BUSINESS PAGE, SATURDAY
House prices and sales volumes hit hit the skids in Auckland in January.
The average prices DROPPED 7.5% in the month. down more than $42,000 (yes thats 3 zeros), a Big real estate company, Barfoot and Thompson.
Barfoot and Thompsons January sale figures showed an average price of $517,613, down from almost $560,000 on average in December....
.... the article goes on further....
Average prices in Jan 2007 were 475k so still up on that....
sales volumes down 40%...
Barfoot and T ended the month with 6173 listings on the books. That was higher than normal showing.

Barfoot and Thompson Director said, "It is not a good time to buy"
Shrewd Crude said, "it is not a good time to buy"
Mackdunk said, "there is never a better time to buy than right now"
....haha....
Im just heading out, I will respond to Serpie later on...
:cool:
.^sc

[neopole]

i'd like to add some other elements to it.
how many NZ houses have there value influenced by housing supliment payments?
my guess is All of them, if its a rental house, the renters generally get a supliment, either as a direct housing supliment or working for families supliment or one of the other numerous government handouts, and with the tax shelters available to investment properties, and ""market" rents supported and paid for by the government, it no wonder that house prices have accelerated way past the median wage.
most NZers earn less than $20k..... yet the government always uses the term average pay, which happens to be in the mid $40k's.
so with houses averaging $300 to $400k how can most NZs on $20k get a house?
how can they even afford the rents that these average houses gernerate?
sooner or later, the government will have to stop, or wont be able to pay, the suppliments that keep those that cant get on the housing ladder. and when that happens, house prices will come back down to earth to the affordability level of a median first time house buyer.
the speculator/investor has had a golden run on housing, paid for by the taxpayer.
that taxpayer is starting to hurt now, some are even leaving NZ, some are getting ready to vote as well.
in my opinion a factory worker who works hard, should be able to buy a house close to his factory and lead a fair life, instead......... we have a factory worker getting a benifit and living next to a non worker also on a benifet in a similar class of housing, and the landlord of both houses collects his government funded rent and his tax right offs too, which just happens to be enough to fund the investment property!!!

the whole thing is a house of cards that could blow over with a tax change, a leadership change, or a whole generation of no ownership kiwis taking flight.
and to top it off, we kiwis have amassed the largest burdeon of private debt that this nation has ever seen.

hey, its not like this country is over populated and we fight for housing space,
its just a tax and distribution policy gone bad........ the government takes too much and gives it to the speculator via gurenteed rent therefore creating property inflation, and pleasing its core voters by guanteed accomodation and supliments.

end of the day, most voters are happy and oppostion voters pay for it.
and a few smart speculators get very rich.

when i was 21 i was able to buy a house on a basic tradesman wage in auckland.
that wage is now around $50k......... and we live in a country the size of the UK with only 4 million people......... why is owning a house a dream fast fading?

[Tok3n]

Wonder what would removing those generous tax breaks and slapping capital gain tax on property etc would do

[corran]

SHREWDY, the housing market never crashes
.....
.....There is never a better time to buy a property than now.
.....
.....To not own property as soon as you can afford it will hold you back in later life. Macdunk

Hi guys,

Just stumbled across this excellent thread. Haven't had a chance to read through most of the posts but wanted to add my 2c...

My own opinion is pretty much the exact opposite of what MacDunk is stating above: Housing markets have (and will continue to) crash, there has never been a worse time to buy, property is cyclical - there are times to buy and times to sell.

Throughout history there have been many examples of housing bubbles and housing market crashes. Look at the Florida crash in the '20's, Japan in the '90's, and what's playing out in the States now and gathering steam in UK, Ireland, etc. NZ is next in my opinion.

Home affordability is at all time lows in many parts of the world. Globally, we're in a classic bubble fuelled by easy credit, relatively low interest rates and irrational exuberance -- there's no way it can continue.

House prices always revert to their long term average and at the moment many countries are way above that.

I want to move my family back to NZ in 10 years or so and have got some money saved up for a house but there's no way I'm going to buy anytime soon. The time horizon I'm looking at is 5 years, I think thats when the next housing market bottom is going to form.

I agree that at most times in history housing has been an excellent investment. But there have been exceptions and I think that 'now' is one of these.

The levergae you get when taking on debt to buy a house works well when prices are rising but can cripple you when prices fall. We bought an appartment at the peak of the Amsterdam housing market in 2002. We needed to sell in 2005 but prices had dropped about 20&#37; from their peak and we were in negative equity. It caused us a lot of financial stress, but it taught me a valuable lesson.... before then I bought into the commonly held belief that house prices only ever go up........ oh how wrong I was.

[STRAT]

Hi Corran while we are speculating on the next bottom / leg up I think you might be late with 5 years. Next leg up 2011 I recon:D

Apartments are a different deal. Houses dont go up ( unless building costs go up of course ). The land under them goes up. Apartment prices in Auckland for example have shown price movement relating more to Supply and demand for student accommodation rather than following the general market trends.

[Joe King]

[
Barfoot and Thompson Director said, "It is not a good time to buy"
Shrewd Crude said, "it is not a good time to buy"
Mackdunk said, "there is never a better time to buy than right now"
....haha....

.^sc[/QUOTE]

Jeez Shrewdie have not been ST for a while, interesting to see you still wafting on???
For the record I am with McD "there is never a better time to buy than right now". In fact although I vowed to stay out of the property market **, I bought a lovely 3 BR small investment home last week for my daughter. Market appraisel 165k. Reg. valuation 160k paid 140k. Vendors relocating Aussie. Already rented $230 wk.
Great posts above Arb. George. Serpie.
G'Day Dunk still pushing it uphill here I see....trust you are following AGM saga??
Cheers
JK.

** For those new to ST. JK used 20k equity in home and leveraged it into 37 properties over 3 years. (see earlier pages this thread) Since sold all but 6 and retired.
quote Zig Ziglar ... "The opportunity of a lifetime comes along every day"... today is no exception!

[STRAT]

Thats a great story JK. May I ask out of interest when you made the 1st purchase as per your post and when you sold up?

PS at 165k today I assume you are on the mainland :cool:

[Corporate]

[
Barfoot and Thompson Director said, "It is not a good time to buy"
Shrewd Crude said, "it is not a good time to buy"
Mackdunk said, "there is never a better time to buy than right now"
....haha....

.^sc

Jeez Shrewdie have not been ST for a while, interesting to see you still wafting on???
For the record I am with McD "there is never a better time to buy than right now". In fact although I vowed to stay out of the property market **, I bought a lovely 3 BR small investment home last week for my daughter. Market appraisel 165k. Reg. valuation 160k paid 140k. Vendors relocating Aussie. Already rented $230 wk.
Great posts above Arb. George. Serpie.
G'Day Dunk still pushing it uphill here I see....trust you are following AGM saga??
Cheers
JK.

** For those new to ST. JK used 20k equity in home and leveraged it into 37 properties over 3 years. (see earlier pages this thread) Since sold all but 6 and retired.
quote Zig Ziglar ... "The opportunity of a lifetime comes along every day"... today is no exception![/QUOTE]

Where abouts was the house for $140k that rented for $230pw?

[Mick100]

[
**, I bought a lovely 3 BR small investment home last week for my daughter. Market appraisel 165k. Reg. valuation 160k paid 140k. Vendors relocating Aussie. Already rented $230 wk.

care to tell us what's happened to your 700k portfolio of extremely speculatives shares over the last 6 months JK - from what I remember, not a single company in your portfolio had any earnings. Even conservative investors have taken a hit recently but speculative investors have been hammered. Hopefully, for your sake, you have realised that your way out of your depth in the markets. Looks as if macdunk has come to this conclusion - (he's finnally got something right)

someone once said to me when i was younger "stick to what you know"
In yours and macdunk's case, that's realestate
,

[Arbitrage]

Good one JK. 8.5% yield not bad for residential.

The rental market is interesting at the moment. Crockers just advised that preliminary rental data for December showed a kick in rental prices upwards. I just let an apartment yesterday with a 12.5% rental increase. Only advertised it once and it was gone within 24 hours. Even then some prospective tenants thought it was cheap.

Wait for the headlines screaming that rents are too high as the yields start to get back up to something reasonable.

[Crypto Crude]

joe King,
yes, Stick to what you know...It sounds like you have made the best move by selling your 31 houses...
...

If it was never 'a better time to buy', as you agreed with MD then why have sold 31 houses which you just disclosed in your last post?....
would you not be buying more?
..

Joe King,
I have put my career in New Zealand on the line by waiting off..... I've put myself in deep on this thread, standing up to the king pins like yourself and its all coming to plan...... ...Now The fact that I called it one year early, doesnot mean anything... The situation has now become much worse... In fact I would rather be seeing prices continue to rise as the downturn would then be more severe...
....
Auckland price drop in Jan, will signal the rest of the market. And in the next two months we will officially find out that national prices are falling and larger than predicted by most... Westpac is predicting 5% national downturn this year... Auckland got 50% higher than that in Jan...
Watch out....
...
It seems to me that strat has moved stance and backed away from MD as he said next leg up in 3 years...I tend to think 5 years, but re-adjust my thinking in a few years time to the changed market and continuing to persue open minded, balanced think, and ... you lot hang around in the mean time losing 10% on interest charges, any house price falls... It doesnot matter how rich you are and what you made in the past....
what is important is where is the housing market going to be in 5 years, and whats going to happen for the next five years...
....
anything else is really insignificant to the thread topic...
:cool:
.^sc

[Crypto Crude]

once again, very good posts by neopole, corran...
MD...
Ok, so no competition...
I reckon NZ national Median house value will drop to 250-270k, is my prediction in the next 5 years...
Just talking to my great chinese mate and he said China is having problems, 200 failing property businesses...
America Is having problems... AUS will have them if not already... UK....
NZ will lag...
....
From looking at the Mackdunk argument, I can only
see one situation that could occur so that housing Does not hit a big slump, downturn....
....
what is that only situation?
"NZ opening up borders and expansive immigration policy"...
...
Every signal other factor, and indictor points to a downturn, which will last longer than anyone in the market place is predicting.
:cool:
.^sc

[Steve]

Bargains for the brave in property market (http://www.stuff.co.nz/4395774a13.html)
Gilligan believes the residential property market is probably in worse shape than the REINZ's monthly sales figures suggest.

This is because the figures only reflect the trends of those homes which have sold. It can take 3-6 months before the growing number of unsold homes starts to show up in the statistics with lower selling prices. So the worst may be yet to come.

A better indicator is that the number of homes selling at auction is down to 30%, from 80% at the peak of the boom.
...
"But buyers will drive a hard bargain. There will be people who will be burned in this market," he warned.

And it takes a certain amount of courage to buy in a falling market.

"People with cash will swoop around and pick up bargains. But you need to be brave to run against the herd," he said.

[duncan macgregor]

shrewdy, JOE has been there done that. you have met me who has been there done that. Joe and i have both made heaps on the market last year i expect joe is out the share market like myself at the moment. Joe is like myself who gets followed round by idiots who have done nothing in real life, trying to minimise everything down to their level. I bought an 18 month old B&T inbuilt garage ensuite at randwick park at a mortgagee sale for cash about seven years ago. It cost me $120,000 . I leased it to the housing corp onsold it to my daughter for $140,000 who only visited it once. She onsold it two years later for $245000. That started her into a good house in a good area at a very young age. If you think the share market is for you then do it like JOE and I do it when the tide is coming in dont swim upstream. I am on the look out for super cheap properties right now. Joe sold at the top of the market not because property had its day but because he realizes as with shares its only the idiots that dont know when to buy or sell. I wont be around for a few weeks to busy up north to be bothered posting, but will catch up with you next Auckland meeting.
BUY A PROPERTY YA MUG NOW IS AS GOOD A TIME AS ANY. Macdunk

[Crypto Crude]

madunk..
"I am no idiot who has done nothing in real life, trying to minimise everything down to my level"....
....
What I am saying is contribute to the argument on what will happen to property prices in the next five years... and therefore where you think it will be then....what opportunity costs are there for current potential first homebuyers etc?
Im not overly excited about historical performance because I know its been good... Ive said long term housing remains a very good investment...I cant say I know of anyone that has lost money in the last upteen years... Im only really interested in future performance... I do not mind hearing other stories.... wheres the market going is most important?....
Ive taken my stance, you and others have gone against it...

I have heard it all before from JK, I know both you two are king pins, ive already said that...
JK talked allot about wraps, he just dissapeared when it was time to talk about the finer details of how they work, and how you set one up after he said he would go into more on his own account... he just vanished into thin air.... Im a Ok with that...
No doubt in a few years I will do my own study on Wraps as I have previously been aware of them...

see you in a few weeks also, I will also take a brake and give others a chance to post their thoughts...
I wait on a response why JK reckons its never a better time to buy than right now, when he disclosed a day ago he sold 31 houses?
lata....
:cool:
.^sc

[corran]

its only the idiots that dont know when to buy or sell. ...

BUY A PROPERTY YA MUG NOW IS AS GOOD A TIME AS ANY. Macdunk

your arguments don't stack up at all IMO. We've just been through the biggest property boom in history, it's clearly topped and coming back down.... consider:

- sales volumes are down significantly
- average sale price is trending down
- home unaffordability is higher than ever
- inflation is above target (rates unlikely to come down anytime soon)
- kiwis are leaving for Aus in ever increasing numbers
- prices need to fall by about 40% to get back to the long term average

Just like in a bear market in shares, there will always be some property investors who make money in a declining market. But most who buy now will be catching the knife just as it begins it's long fall.........

[trackers]

your arguments don't stack up at all IMO. We've just been through the biggest property boom in history, it's clearly topped and coming back down.... consider:

- sales volumes are down significantly
- average sale price is trending down
- home unaffordability is higher than ever
- inflation is above target (rates unlikely to come down anytime soon)
- kiwis are leaving for Aus in ever increasing numbers
- prices need to fall by about 40% to get back to the long term average

Just like in a bear market in shares, there will always be some property investors who make money in a declining market. But most who buy now will be catching the knife just as it begins it's long fall.........

Yes, but..

1. How far will it fall?
2. You're assuming that the future will closely follow the past

I definitely think that house prices are destined to correct, but I wouldn't suspect by much. A lot will hinge on what happens with interest rates imo

[corran]

Yes, but..

1. How far will it fall?
If we're talking median national house prices, I think 20% from the peak if the economy stays strong, unemployment remains low and inflation stays relatively low.... if those factors change I think we'll see a 40% decline in real median house prices.


2. You're assuming that the future will closely follow the past

On the contrary, I think that, because the housing bubble we're now in is unprecedented, the magnitude of the decline in prices will also be unprecedented.

[Joe King]

shephejame..... Western Heights Rotorua

G'Day Mick100.... "care to tell us what's happened to your 700k portfolio...."
Remember I started with $40 equity in property, then paid that back a year later after selling dud NOG.... Well I got to $800,904, 16/05/07 paper profit then all turned to custard fell to 520k quickly. I pulled out $100k and watched the balance held keep falling ouch! Fortunaleyl dropped heap of ags at 185-200 (buy ave. 61) put into AGM at the right time. Sold all agm 102 when everything crashed about a week back, and ZFX propped AGM price up (thank you very much ZFX) and bought heap of pna at 67 (now 94) and DYL at 17.5 (now 28). So today have paper portfolio value 476,367 plus 100k cash (well, spent 28k on a lovely Pacific/Carribean cruise with wifey in Sept) for free. OK not gonna get my mill. within time frame, but happy non-the-less.

GREAT! post Dunk, nice to see your sense of humour made into 2008 HAHA!

Shrewdie....".. he just vanished into thin air...." Hey I'm not a bluddy aparition LOL! Simply got tired of silly arguements.
..."I wait on a response why JK reckons its never a better time to buy than right now, when he disclosed a day ago he sold 31 houses?"
Remember Shrewdie I set a goal to turn $20k equity (not 1 cent of my own cash) into a million. I did not set out to be NZ biggest Landlord, or richest man in cemetry. I reached my goal (unbelievably easy).... set some new goals and moved on... end of story. People ask me all the time when is the best time to buy property... my stock reply is always the same "TO-DAY!" I have said earlier it is always simple to find a hundred reasons NOT to... all you need is ONE reason TO.
Cheers
JK.

[minimoke]

Not sure I agree. The housing market in NZ will be driven by three things. Demand and supply being the first two of course. The third being building / renovation costs.



Thanks to leaky buildings; local bodies keen to keep lots of administrators employed and the skill drain to Australia, as well as inflation in building products I can only see the cost of new houses going up – dragging the price of second hand along with it. This drag will help temper any drop in demand, making the price drops not as bad as they might otherwise be.

[George]

What would happen if one had not bought a house (when they could) and rented while saving for a bigger deposit and possible lower prices.
Many I am sure, would simply have frittered some of the savings away or got lazy and not pushed the overtime etc., simply because they didn't HAVE to.

Despite possibility of property values dropping in next few years, I am confident that with a good location in Auckland, a view and doing up house myself, we will be ok even in worst scenario (whatever that is). 65% drop would be a worry but wouldn't the govt step in. Anyway, we plan to be here for 10 yrs and I thank my partner for threatening she would buy a unit on her own if I didn't come in with her on the house (2 months before the sub-prime stuff hit the news so I have wondered if our timing was bad). Now I would try to convince her to wait or at least drive a harder deal for something we liked.
Someone mentioned that renewed immigration would boost property, well if John Key gets in he is definitely pro immigration but can we rely on that to keep prices up?

What will happen to property over next 5 years, I don't think anyone knows but my guess is that the provinces will come back more than the cities. Taranaki prices seem very inflated. Perhaps Auckland will move ahead while provincial towns stand still?

George

[Joe King]

Dr Who
Totally agree with your above reasoning. You have come up with 9 reasons for failure. And any one will work.
How about just ONE reason for success..... IT! will also work with the right attitude behind it.
Cheers all winners
JK

[corran]

Hi macdunk....

I hope you don't mind me borrowing a quote of yours (from today) from another thread...

I don't get how your "now is as good a time as any to buy" belief is consistent with your, in my opinion, spot on the money statements below...

could you please clarify?



The property market is starting to crumble...

...The smart money goes with the flow, never swim against the current...

Macdunk

[STRAT]

Hi Shrewdy,
I went back to your opening post to ascertain your position in this debate but couldn’t find one. If I was in the market looking for a house today to live in I would like yourself be waiting to see what happens over the next wee while ( weeks , months, year ) and adjust my decision to buy as things unfold. I agree we have hit the top of one of the longest property booms ever. If I was looking for an investment property it would be business as usual. If a property can wipe its own ars then its worth buying ( as a long term investment ) irrespective of whether the price dips in the next 3 months to 3 years. If you cant find a property that is cash flow positive then you have answered your own question as to whether you should buy or not but it really comes down to your individual circumstances. Live in or not. Flatmates or not, Joint venture or go it a lone, Deposit size, Current rent and living expenses etc etc. The key thing to remember is that long term RE is a stable investment so as long as you are using someone elses money to purchase and maintain you really cant go wrong. Second key point is with the way mortgages are set up these days ( may be changing soon with the credit crunch and all ) as your equity increases you gain access to credit at favourable rates.
I guess if you add a little detail about your position or create a hypothetical scenario it could be discussed in more detail. I haven’t read the whole thread so forgive me if this has already been done.

[duncan macgregor]

Hi macdunk....

I hope you don't mind me borrowing a quote of yours (from today) from another thread...

I don't get how your "now is as good a time as any to buy" belief is consistent with your, in my opinion, spot on the money statements below...

could you please clarify? CORRAN, A lot of uninformed people think that is a contradiction. Sell at the top of a cycle buy at the bottom is the best way to move forward and upward. Shares and property are both taking a hit right now, the smart money has moved to a buy when it bottoms position. With property, bargains can be had at most stages of the cycle, with super bargains to be had when the cycle bottoms. Banks are not landlords they sell to the highest bidder to recoup as much of the loss that they can. Now is the time to attend a few mortgagee sales to get the feel of what is available.
This is the beginning of the good times for bargain hunters, the banks are the ones you are dealing with, show them no mercy. There is no rush to buy anything, silly low offers take a bit longer thats all so the sooner you have educated yourself to what is going on the better. Macdunk

[peat]

This wont help the market go down


http://www.nzherald.co.nz/section/1/story.cfm?c_id=1&objectid=10491994


PM announces shared equity scheme for home buyers


ALthough I'm a bit of a Helen supporter (she's one of very few intelligent politicians) this is not the right approach and will only support the housing market boom by giving a few luckies an interest free loan. Dear dear Labour - this will aggravate the right wingers as it really is more meddling that will cause market distortions. Eg reduce the demand for rentals and increase the demand for 2nd hand homes.....
I find it hard to believe Cullen agreed to this.

[Arbitrage]

Why do politicians always meddle in the housing market?
History shows that price crashes are often a result of govt intereference (eg Hong Kong and UK have both had major corrections downwards as a direct result of govt policy shifts). With the relatively free market in nz we have generally avoided major problems. Just let the market go.

[STRAT]

Why do politicians always meddle in the housing market?
History shows that price crashes are often a result of govt intereference (eg Hong Kong and UK have both had major corrections downwards as a direct result of govt policy shifts). With the relatively free market in nz we have generally avoided major problems. Just let the market go.In this case to win votes at any cost. Nothing more. Dont you worry they are just getting warmed up with the handouts. Besides they know they can always go back on their word later.;)

[corran]

CORRAN, A lot of uninformed people think that is a contradiction. Sell at the top of a cycle buy at the bottom is the best way to move forward and upward. Shares and property are both taking a hit right now, the smart money has moved to a buy when it bottoms position. With property, bargains can be had at most stages of the cycle, with super bargains to be had when the cycle bottoms. Banks are not landlords they sell to the highest bidder to recoup as much of the loss that they can. Now is the time to attend a few mortgagee sales to get the feel of what is available.
This is the beginning of the good times for bargain hunters, the banks are the ones you are dealing with, show them no mercy. There is no rush to buy anything, silly low offers take a bit longer thats all so the sooner you have educated yourself to what is going on the better. Macdunk


fair enough.... I guess it depends on how long you think it's going to take before we see the bottom of the cycle. I think we've got a long, long way to go, so what might seem a bargin now may look very overpriced in a year or two's time.

I'm curious.... you seem to base your decisions almost purely on technical analysis when it comes to shares and then almost purely on fundamental analysis when it comes to property. Maybe thats a system that works for you but for someone who is quite outspoken on the advantages of technical investing, it seems a bit inconsistent to me.

My approach may be too conservative for many, but I've been burnt by buying at the top of the property market before and I'm in no rush at all to buy this time around...

[Steve]

I'm curious.... you seem to base your decisions almost purely on technical analysis when it comes to shares and then almost purely on fundamental analysis when it comes to property. Maybe thats a system that works for you but for someone who is quite outspoken on the advantages of technical investing, it seems a bit inconsistent to me.

Although there are a core set of analytical principles and techniques, the reality is that different 'markets' often require a differing criteria for meaningful analysis...

Yes, MACDUNK could use both fundamental and technical for shares AND property, however the reality is that the property market is not really suited for technical analysis.

Having said that, I believe that there are, or used to be, a property fund in the US that was based on technical analysis back in the 80s/90s. Don't recall what happened to it.

[minimoke]

Help may well be on the way. If you want to get into housing and don’t want to do the hard yards you could sign up for Labours proposed Ghetto initiative.

Here you’ll get to live in a “modest” house, built to reduced building standards, in dodgy land areas by trades people not tempted by Australia or a profit motive. Your neighbours, and there will be lots of them, will be low or middle income earners.

You won’t need to save as much because the tax payer will take an equity share on your behalf. And nor will your neighbour. Stretched so they can afford the reduced mortgage, they’ll probably struggle to keep up with the maintenance – but that’s OK because you’ll be in the home you so desperately want to own.

If you want a view of your future just drive through any state or council housing estate built from the 50’s.

Renting may not look so bad!

[Serpie]

If you want a view of your future just drive through any state or council housing estate built from the 50’s.

I've got a 1940's state house surrounded by other 1940's state houses here in ChCh. It's on a huge section, and, being a raging capitalist, I wanted to subdivide the section and build another house on the back.

My efforts have been thwarted because the house is in a "SAM" or special amenities area. SAM 37 to be exact, for which the council description goes:

"The layout reflects the key elements of State-housing during the 1940s – 1950s. It includes curved streets, reduced road widths, street tree planting, direct access to a communal park and large front gardens with low fencing. The regular distance that the houses are set back from the street is also notable".

Sounds idyllic doesn't it!

I'm not sure about your claims regarding "built to reduced building standards" though MM. John Key was on the news this morning saying that one of the factors in increased build costs was the tightening of building standards. And the build quality, and materials used, in 1940's state housing was outstanding.
When I was in Rotorua recently a friend of mine showed me a recent state house, and it was awesome.

[minimoke]

I'm not sure about your claims regarding "built to reduced building standards" though MM. .... And the build quality, and materials used, in 1940's state housing was outstanding.

I’ve no problems with the build quality of state houses in the past. Owned one myself years back and it was built to last damn near for ever – and they came with decent bits of land relative to todays handkerchief sized parcels.

Today you can build a house for around $1,000 a sqm, getting down to $700 at the very low end – but I don’t think you get much at this level to meet modern living needs. For example, you’ll probably only get one electrical socket per room. So you could end up with a $100,000 build cost for a 100sqm house.

However the Dept of Build and Housing has a build cost of $1600 a SQM. Knock of 25&#37; for mass production you are still left with a $1200 build cost. And say $100,000 for land you are looking at a total of at least $200,000 for a modest govt house.


If the shared equity works at say 30% the buyer still has to come up with $140,000 through deposit and mortgage – still, in my view more than those this package is aimed at could afford.

So how do you make it more affordable – you have to reduce the build cost even more. You either get cheaper land – which means it will be some swamp at the back of a sewer works and/ or cut the cost of materials/labour going into the build.

Footnote: and the other issue to consider is the value of this house in five years time. If the market drops in value due to additional supply these types of houses will, in my view, be the first to suffer. So say you buy your house for $200,000. In a few years it could be worth $190,000. You’ve “lost” $6,000 and the tax payer is out of pocket $4,000. Owners of low cost apartments in Auckland can probably recount their experiences which may have some parallels.

[STRAT]

Labours proposed Ghetto initiative.

You won’t need to save as much because the tax payer will take an equity share on your behalf.How do I go about recouping that equity share of mine Minimoke?:eek:

[tim23]

Why do people have to own property - with Kiwi saver a whole lot of people are going to retire better now!

[peat]

I'll tell you why one has to own ones own roof , at least here in NZ.
Because it is the only way to secure tenure. NZ landlords are always selling the rental property to take their profits and if you are a genuine renter (which doesnt necessarily make you a loser - you may have decided to sock money into a portfolo or a business etc) then you will just get mucked around time and time again being asked to move due to a change of ownership.
Most NZ landlords are not in fact landlords but property speculators. A true landlord will never sell.

[minimoke]

[quote=peat;185153]...
Because it is the only way to secure tenure. /quote]

Absolutely agree. Generally, landlords have little respect for tenants and have little idea of customer service. They’ll swear that making a loss or a 2% return is a genuine attempt to make an income. IRD don’t have the grey matter to see through this so Govt should look to itself for this rort. Conversely many tenants have little respect for other’s property.

[STRAT]

There are two sides to this story for sure. From personal experience I have found that no matter how hard you try as a landlord to be kind, fair and prompt with issues you will still be thrown into the money grabbing slum owner category that all landlords must be simply because they are the landlord. The better you serve your tenants the more they demand and the law is stacked hugely in their favour.

That said, there are good tenants and being selective in critical to a trouble free relationship.

I could write a list of the kinds of people not to rent to but Im sure I would be breaking at least 10 PC laws and have all kinds on my back including the Political Party I most love talking about.

[peat]

Well of course there is two sides to that story Strat (as with most stories) but its a completely different story to my point that as a tenant securing tenure is almost impossible, and the obvious implication that IF it was possible to secure tenure it may become a much more attractive option.

Very few who can afford to buy will ever choose to rent a family home even if its the sensible economic choice as it relinquishes control over their future to unpredictable factors such as the owner selling up to a owner occupier.

After a breakup I sold my house in 2001 and decided to rent for a while. It didnt last 3 months before it was up for sale and I was being asked to show buyers through and face uncertainty etc.... so I went back to owning. Anecdotes are merely that of course.... but I have a notion that in some countries people rent for decades from professional landlords who have owned the properties for generations. In situations like that the emotional factors of renting vs owning can be discarded and the economic factors may overule.
If economic factors had more weight in peoples decisions then perhaps we wouldnt see such a crazy property market here in NZ

[STRAT]

I agree whole heartedly with your point on tenure Peat. My post was directed more towards a comment by Minimoke and perhaps nothing more than throwing my 2c worth in even if only partly relevant.
Owning your own bit of dirt is not important in all cultures but is well and truly ingrained in Kiwi mind set. There is nothing wrong with either perspective.

[tim23]

I guess my point is we need to get over the obsession with home ownership, some Blue Chip investors will have by now!

[Arbitrage]

As a landlord who has never sold a property, I agree with your concern. The number of so called property investors who buy and sell must cause uncertainty in the rental market. I can see that there are genuine reasons for selling (eg death!!) but the golden rule of property investment is "never sell". You can argue for ever about this but even Bob Jones has been heard to admit that he regrets selling some buildings he has owned. I wonder whether many people look back and realise how much capital growth has been forgone (a friend discussed this 2 nights ago when he realised he thought he sold at the market peak 2 years ago and gave away 40% further growth on a mulit million dollar portfolio).

As for tenure, maybe we should look to Europe. I am not familiar with the tenancy/lease agreements, but a friend in Germany seems to have a very long term lease. They even put in their own kitchen, upgrading the existing one. There seems to be no reason why longer term residential leases can't be used in NZ.

Does anyone know how the European leases work?

[corran]

Does anyone know how the European leases work?

Hi Arbitrage...

I'm currently renting a house in the Netherlands. Over here the laws heavily favour the tenant. Minimum term of a rental contract is 1 year, if the tenant stays on after the 2nd extension the contract becomes permanent.

During the contract it is virtually impossible to evict the tenant. If the landlord wants to give notice I think a case needs to be brought before some sort of court.

It's great for the tenants but can be difficult for the landlords, especially in small inner-city appartments. There the tenant can appeal to the housing commission to get the rent to lowered to a 'fair' rate.... this rate is often only about 1/2 of the market rate. I've heard of people who've suffered huge losses financially after their tenants got the housing commission involved.

As it's pretty much impossible to evict tenants often the ones with the controlled rent contracts stay there for ever....

[Snapper]

We sold our house last year and have been renting for the past five months. The rental contract was a 1 year fixed term which seems to work well for everyone. Maybe the current flat market will work a little better for everyone as the speculators bow out and long-term landlords take over. I think that if I was going to continue renting I would negotiate a fixed term again - I would hate the thought of the property being on the market while you're still in it. Bad enough when its your own place let alone someone else's.

[Arbitrage]

Hi Arbitrage...... I'm currently renting a house in the Netherlands.
As it's pretty much impossible to evict tenants often the ones with the controlled rent contracts stay there for ever....

Remind me not to buy rental property in the Netherlands! Thanks for the comment. It begs the question as to how you strike a balance between surety of renting vs encouraging investment in residential rental property? Maybe a leasing arrangement more like NZ commercial property would work. That is fixed terms with a possible right of renewal?

[POSSUM THE CAT]

Arbitrage Lease it to housing corporation New Zealand some of these properties net 7&#37; if you buy one that is all ready leased to them but they are very hard to sell

[The GrandMaster]

I have always rented, and intend to always rent (which is not to say I will not invest in property). But not once in the last 12-or-so years of renting have I have ever been "mucked around" or left a tenancy other than at my own volition (none of which have been less than 2 years). In fact, landlords have actually chosen to sell the property when I left, rather than the other way around. If you are a good tenant, you make your own 'luck'.

While some people might see owning their own home as security, looks like a big fat albatross to me.

TGM

[peat]

thats fantastic to hear The Grandmaster (I so want to type Flash after that heheh)
But I cant accept any degree of usefulness about the comment "you make your own luck", as regards a tenant securing tenure.
Sure thats a valid perspective on life but we know it only goes so far - everyone is subject to the whims of randomness , renting is decidedly ten-u-ous.

it is good to hear that someone is taking the 'other' approach about home-ownership though, almost everyone who rents aspires to own. I've often said 'you either rent the place or you rent the money' and compared the cost of the two as a point of discussion but only academically.
I hate moving.

[The GrandMaster]

peat, I made the "you make your own luck" comment as a pre-empt to the inevitable comment that I had been "lucky". My point being, that if you seek good places to rent and are good tenants, I think more often than not you will not have any problems.

Could not the "whims of randomness" just as likely be annoying neighbours moving into your street, an ugly development going up next door, etc. I enjoy the freedom of knowing I can always move with relative ease if I want a change of scene - whether it be because of external factors or just wanting a change.

You hate moving, I hate the thought of being stuck in the same place.

Each to their own of course, but I always hear much of this unpredictability of renting and I think much more is made of it than is the reality of it (of course, if it helps people to rationalise why they base their life around mortgage repayments for a house/area they don't really want to live in, good for them).

Tongue firmly in cheek of course....
TGM

[Crypto Crude]

BULLS VS BEARS
...
Some rather interesting posts over the last few weeks since ive stood back and watched the thread... I am not naming names anymore.... As the reader or participant of this thread, it is up to you to determine who the bulls are...I believe that there has been a change of thought and definately a change of tone from this select group of house 'buffs'... sentiment is changing and Im surely not the only one to realise this, am I?
Slowly these raging bull's are beginning to accept that a crash is coming, but they are still not prepared to use big words such as 'Crash'...a few weeks ago, Two of these posters said BUY now, they also said they had sold their investment propertys on the market too...;)...
weeks ago I had articles flying off the press so much so that I just gave up posting them... I did get one chance to post some very important information about the situation in Auckland....
Every single indicator points to big down...
7.5% fall in Jan for Auckland... this has just begun...
I would say that the flow of information has slowed down now, and I wait on more definitive news about this looming fire sale.... I see for sell signs everywhere I go now...
The smart king pins around here have already sold!....
who's selling and going to rent?
Dont make a mistake and let the shrewd buy your house in a few years at the bottom... looking to buy 3 houses under the right circumstances, ie- if this falls to where I think it will then im going shopping multiplied by 3...
Yeeeeeeeehhhhhh hharrrrrrr....
:cool:
.^sc

[George]

Shrewdy, would not the vast army of young couples waiting to get
their first house provide a strong support for house prices?

[duncan macgregor]

The difference maybe, and might do is nil. The people that do things are never the might do, or maybe brigade. Houses are a bargain at any time of the cycle, as any shrewed investor in that business knows. It costs nothing to place ridiculous low offers on everything in your price range. Mortgagee Auctions are a good starting point, with the banks selling trying only to recoup as much of their loss as they can. In bad times there are a few more opportunities than the good times. You dont want a good buy you want a great buy which is available at any stage in the cycle.
More money has been lost with people trying to time the cycle missing out than was ever made timing it right. If you want a super buy stick the super low offers in right now one day you will get surprized. Macdunk

[Arbitrage]

Many property investors who have been around awhile are smiling. The equity that has built over the past few years has been impressive and provides banks with good security for borrowing to buy more property in the future. In the meantime rents are increasing dramatically. Rental incomes are usually factored on a conservative basis in any property investment, therefore when they surge ahead, this can provide a nice, albeit taxable, windfall.
So you can keep arguing the toss about when to buy, but some of us can't get this grin off our faces.

[STRAT]

The difference maybe, and might do is nil. The people that do things are never the might do, or maybe brigade. Houses are a bargain at any time of the cycle, as any shrewed investor in that business knows. It costs nothing to place ridiculous low offers on everything in your price range. Mortgagee Auctions are a good starting point, with the banks selling trying only to recoup as much of their loss as they can. In bad times there are a few more opportunities than the good times. You dont want a good buy you want a great buy which is available at any stage in the cycle.
More money has been lost with people trying to time the cycle missing out than was ever made timing it right. If you want a super buy stick the super low offers in right now one day you will get surprized. Macdunk100% right Duncan. That has been my approach through more than one RE cycle and I havent fallen down and hurt myself yet;)

[Year of the Tiger]

It costs nothing to place ridiculous low offers on everything in your price range... If you want a super buy stick the super low offers in right now one day you will get surprized. Macdunk

This is true macdunk, however it is as frustrating as hell when you put forward a fairly low, but not unreasonable offer, only to have the vendor go off in a huff (and in one case for me, the Estate Agent also went off in a huff) and wouldn't even counter-sign. So I walked away. In this case in particular, the Agent came back to me six months later to see if I was still interested in the property but I said no. I had already bought something else. The property sold a couple of months later at $15,000 below my "low offer" of 8 months before.

I've had this happen a couple of times but I prefer not to let emotion get in the way of value. I guess this sounds pretty hard-ar$ed but it is what business is all about. :rolleyes:

YOTT

[Crypto Crude]

corran-
I'm curious.... you seem to base your decisions almost purely on technical analysis when it comes to shares and then almost purely on fundamental analysis when it comes to property. Maybe thats a system that works for you but for someone who is quite outspoken on the advantages of technical investing, it seems a bit inconsistent to me.
.....
fair enough.... I guess it depends on how long you think it's going to take before we see the bottom of the cycle. I think we've got a long, long way to go, so what might seem a bargin now may look very overpriced in a year or two's time.

BINGO... great first paragraph here....2nd paragraph well done...
I think the first paragraph is wrapped up nicely....This is exactly what I have been thinking when I said... "This is not the trading mentaility MD has taught us all"... HE is usually a fundamental analyst.... BUT, HE Invests in housing on a new set of rules....all His fundamentals have blown out the window...

....
Readers must pay extreme caution when They listen to some of these bulls... If Mortgagee sales are around now, then whats going to happen in a years time?... You will get fleeced if you take on a mortgagee sale now, no matter how cheap it appears... look at whats to come, personally I take on no risk by sitting back, waiting and placing my money at a later stage on a sure bet, and a bargain....
As we all know MD, when panic sets in fundamentals fly out the window...



Houses are a bargain at any time of the cycle, as any shrewed investor in that business knows.

This was quoted from a flamboyant ST poster...
This is so wrong that im actually chuckling over here...
are you for real? that 300k house, I will pick up for 200k....
that 560k auckland average house price value will be 350-375k when this is over....(big call)
are you yanking my chain? what Im talking about is a dead cert here... We have a crash coming... I got this game down, all that and a bag of chips... We have a crash coming, someone sees an early mortgagee sales, starts jumping up and down rubbing their hands...
Oh golly gosh, It really proves that you dont have to be smart to be rich off housing...
....
All I can say is listen to me, I'll let you all know when Im getting in, when Im getting ready to get in... Hopefully the real brains will come together and make some mighty good calls on entry times as we start to see this unfold and gather in more information... at this stage im thinking 4-5 years...
These things always go on longer than anyone (apart from myself) first think.... I am not biased, because I am not currently in property...
I will readdress my position as new information comes along...
walk around your neighbourhood and tell me if you think it is time to prematurely start rubbing your hands...?
Im telling you... when this is over there will be no groves left on my hands for all that rubbing...
lata...
:cool:
.^sc

[STRAT]

Hi Shrewdy,
I suspect he didnt mean what he wrote and probably meant

" A bargain can be found at any time in the cycle, as any shrewed investor in that business knows. "

[duncan macgregor]

Hi Shrewdy,
I suspect he didnt mean what he wrote and probably meant

" A bargain can be found at any time in the cycle, as any shrewed investor in that business knows. " Exactly right STRAT. There is always an excuse to delay looking to find your first property investment. All the winners i seem to know have property bought at various times in the cycle. All the losers i meet always find an excuse not to own property.
Its a pointless debate in bad times builders stop building property then rises in price followed by the over supply and downtrend. SHREWDY YOU CAN FIND A BARGAIN AT ANY TIME END OF STORY. Macdunk

[STRAT]

I dont agree. You have to pick the right cycle on property. This boom cycle seem to have lasted longer than the previous one, so maybe the downward low cycle maybe just as long. The opportunity cost of putting my money in the bank at high rates or invest somewhere else is far better than being stuck in a leveraged property going no way in a hurry.

Dont get me wrong, I think everyone should have at least one property, but not a portfolio of highly leveraged investment properties when the market is trending downwards.Hi Doc, I think this debate could go on forever with no conclusion but no harm in going a little further. The key point in your post for me was "my money' and for me there in lies the key. While Im not advocating extreme negitive gearing and such like. The point is a property bought at a good price ( a bargain ) at any stage in in the cycle that is cash flow positive is a fairly safe investment with great leverage.

40k invested in the bank at 7&#37; pa will return $2800pa. As a 10% deposit on a cashflow positive/neutrol property valued at $400,000. average anual capital gains would only have to be less than 1.0% pa to beat the bank.

[minimoke]

.. As a 10&#37; deposit on a cashflow positive/neutrol property valued at $400,000. average anual capital gains would only have to be less than 1.0% pa to beat the bank.

Except you'd need to be pulling in at least $700 a week in rent. Is this realsitic? If you can get $350 in rent you would need at least a 4% growth in your property value to beat the bank. And that doesn’t include repairs and maintenance, rates and insurance and the hassle of tenants.

[STRAT]

Except you'd need to be pulling in at least $700 a week in rent. Is this realsitic?Hi Minimoke. The answer is probably not depending on where you are looking and what you are looking for etc.and numbers can be adjusted ie deposit total price etc.

As I remarked in an earlier post to Shrewdy. If you cant find a property that wipes its own **** then that in its self answers the question, wether to buy or not. I also asked Shrewdy to supply or create a set of individual circumstances for further discussion as these directly and dramaticly alter the bottom line.

[minimoke]

If you cant find a property that wipes its own **** then that in its self answers the question, wether to buy or not.

I agree. But I reckon 99.9% of property investors have had their sights set on capital gain while pleading they are in it for the income. These folks will start to come unstuck as their fixed rates come up for renewal and rents haven’t risen enough to cover the rise.
Getting 7%+ return on your first property investment today is going to be a hard one – the house bargains will be out there but you still need the rent to cover the costs. But buying your first house investment is a totally different discussion from buying your first home.

[STRAT]

Absolutely its all about the capital gain and any property investor who says othewize is full of **** but its a longer working time frame than the likes of Share Trading for example and if done right much easier to manage both in terms of expences and time IMO. Most people investing dont look further ahead than a few years.

[STRAT]

Getting 7&#37;+ return on your first property investment today is going to be a hard one – .Probably but if its the first one and the person is say 22yo other things need to be taken into account. For example. The weekly rent bill is gone. If one takes on flatmates the overheads change. This is how I looked at it when I was that age and managed to make it work. Back then the same talk of "the market will fall" was all around and interest rates were at 18%. They did fall back a small amount over a year or two and then flat for a few more then on up again. Thing is I didnt even notice I was to busy living to worry about the annual fluctuations in a ten year plan.

[minimoke]

If one takes on flatmates the overheads change. This is how I looked at it when I was that age and managed to make it work.


This is how I did it too with one of my earlier properties (and I recall the pig ugly flatmate in desperate times - but that's another story). However you can't do this and expect to get any tax relief. This is essentially a path towards owning your own home - which hopefully leverages you into bigger and better homes in the future as well as equity on which you can borrow. It isn't an "investment" property.

[STRAT]

It isn't an "investment" property.I think thats a matter of perspective Minimoke. For most kiwis their home is the biggest single investment of any kind and Shrewdy who started the thread is certainly looking at his first purchase as an investment I would say. At the end of the day there is more than one way to skin a cat and no reason why someone should use the same strategy each time they buy. For me my own personal situation has taken presedence in any purchase decision over the state of the RE cycle and I guess thats my underlining point .

[Crypto Crude]

I guess this sounds pretty hard-ar$ed but it is what business is all about.

" A bargain can be found at any time in the cycle, as any shrewed investor in that business knows. "

We are not looking for businesses, we are looking for a foot in the door... we are first homebuyers.... you businessmen, and business woman need to take note of the difference...One foot in the door now looks better than ever for us....
at very very worst housing will drop 10-20&#37; over the next 2 years and sideways for a further two years...
:cool:
.^sc

[Year of the Tiger]

We are not looking for businesses, we are looking for a foot in the door... we are first homebuyers.... you businessmen, and business woman need to take note of the difference...One foot in the door now looks better than ever for us....
at very very worst housing will drop 10-20% over the next 2 years and sideways for a further two years...
:cool:
.^sc

Hey Shrewdie, I wasn't talking about looking for businesses... Everytime I get money in or pay money out, I look at it as a business transaction.

If I want a new plasma tv, I get around to see where I can get the best value for money, same with buying a car or a house to live in. It might be a private transaction to me, but you can guarantee the person on the other end of the transaction is looking at getting the most dosh for the deal, just as I'm looking at paying as little as possible....

It's all business to me..

YOTT

[minimoke]

..For most kiwis their home is the biggest single investment of any kind and Shrewdy who started the thread is certainly looking at his first purchase as an investment I would say.

Hi Strat. My home isn’t an investment and here’s why.

It doesn’t create an income, indeed it is cash flow negative and always will be.


It doesn’t increase in value. Because I am likely to sell / buy my next home in the same market which will also, hopefully increased in value.


I’m emotionally tied to my home. I actually think I have quite a nice one.


I won’t get a return from it. My kids might when I depart this world, but I won’t.


Is there a point where it drops in value that I would quit it. No

But what I do have is a tool with which I can gear my assets and liabilities – enabling me to focus on real investments.

[minimoke]

... we are looking for a foot in the door... we are first homebuyers....
.^sc
And there in lies the answer to your problem. Shrewdy – what does having a “home” mean to you. If it means you get to choose where you live, how long you live there, the colour of the walls and who you have living with you then buying can make sense.

One thing’s for sure – you won’t be in your first home forever - from your posts I give you three years. It doesn’t matter if the market drops 30% in the next few years if you want to buy another home because all other homes will have dropped in value as well.

However if you are thinking of travelling you need to be in a position to either sell your house and recoup your expenditure or rent it out to cover your costs. You are also using the “we” into your posts which suggests some thought has to be given into putting your money into a pretty illiquid asset.

And YOTT is dead right – once you’ve made the decision to buy shop around for the best value. I got my plasma by working out exactly what I wanted and waiting for the xmas sales, whereas a rellie waited till a few weeks ago, got suckered by the salesman and bought one that was way over specced for 2.5 times what I paid. Same applies to homes and housing.

[duncan macgregor]

SHOPPING ABOUT FOR THE BEST VALUE. that is what it all boils down to at any time in the cycle. I wanted to buy an airconditioning system for my house. Looked up google for make and model with recommended price. Phoned up one retailer asked them to fax me the builders price for cash and carry. Phoned up three or four other retailers giving them the cheapest cash and carry price and asked them to beat it.
I then took the very lowest price to my local outlet told them what i had done and said get five bucks under that price and get me one in. I saved a few hundred dollars making a few ph calls. Buying a house is like that. You must get in with a few agents to keep close watch. I had dealings in a block of land that was being listed at a ridiculous low price in a family fued. it was listed and sold in half an hour then resold a few weeks later.
To have agents on your side looking out for you is the way to find real bargains at any time in the cycle. Most people wont make the initial sacrifice, bleat on about how hard it all is, get married and have kids before they have a house. Even a stupid bird knows to build a nest before it lays eggs. Macdunk

[corran]

at very very worst housing will drop 10-20% over the next 2 years and sideways for a further two years...


hmmm..... maybe I need to start wearing a tin foil hat but I reckon a 20% drop will be the minimum, I think prices in many areas will drop by 30% or more.

In NZ, someone on the median income needs to shell out 6.3 times their salary to buy the median priced house. I reckon there's no way that level of unaffordability can continue, maybe it can for a while but not indefinitely... Even if it dropped down to 4.3 that would still be rated as seriously unaffordable.

I think we'll see nominal house prices suffering relatively small drops, but real house prices dropping significantly (>30% from peak) due to rising inflation.

[Year of the Tiger]

I find this thread most interesting in that it seems to be sorting the do-ers from the gunner-dos.

I also find it interesting that there is so much focus on 'the market this' and 'the market that'.

In reality the housing market is a bit of a dog eat dog world out there. So much depends on how urgent a buyer's or seller's need is. I will use as an example a house for sale in a small new Nth Shore subdivision close to me.

A spec home was built last year by the developer, four bedrooms, double garage, small section, 13 minutes to Auck CBD in off peak traffic. House sold in Sept/Oct '07 for $590,000 to a well educated, senior position new immigrant. (Sorry, can't be more specific than that).

Moving to NZ from a rural environment in England, the owner and family decided that they didn't like living in Auckland, so they transferred to ChCh and bought a few acres close to the city. The house is now on the market. I wandered in to have a look last weekend during an open home and was told that the owner realised now that he would have to take a loss on the place. He bought it 2 weeks after arriving in NZ and offered a cash deal $1,000 more than the current offer that was on the table.

He is hoping to get about $550,000 for the place that now sits empty.

If I was looking for a place around that sort of price, I would be hitting it with a real low-ball offer and then wait and see what happens.

In essence, I guess what I am trying to say is, and I agree with macdunk, there are bargains everywhere, you've just got to look for them, make a move... then wait.

YOTT

[Crypto Crude]

A few weeks back I got very lucky...
My cousins flatmate is a mortgage broker and I found out all the answers to my questions in just 10 minutes...
I know just how to get a mortgagee sale, where to get one, and what I have to do to get one...
Mortgagee sales maybe one exception to the rule as we go forward over the next few years...
SO I will give alittle back to the bulls for pulling this one out of the bag...

I have much respect for my business men and woman on this thread who continue to remain bullish on housing.... over the next 15 years I only see the baby boomer issue as the underlying issue to how the housing market and in particular how the stockmarket will perform...
I suspect foreign ownership will drive this market...
I am extremely bearish on the long term prospects of the stockmarket because of baby boomers and my time is running out for investment...
....
I personally will remove all the risk of current small windowed opportunities in the housing market (bargain buying) by holding out....I will chance my hand at much better deals as the next few years roll on.... Im flush with cash, and I can raise substantial amounts of cash without the need of my friend Mackdunk...:D
I apologise for not being able to answer all questions...
This thread is just chokka full of comments and needed replys...
comments are welcome...
:cool:
.^sc

[STRAT]

A few weeks back I got very lucky...
My cousins flatmate is a mortgage broker and I found out all the answers to my questions in just 10 minutes...
I know just how to get a mortgagee sale, where to get one, and what I have to do to get one...
Mortgagee sales maybe one exception to the rule as we go forward over the next few years...
SO I will give alittle back to the bulls for pulling this one out of the bag...

I have much respect for my business men and woman on this thread who continue to remain bullish on housing.... over the next 15 years I only see the baby boomer issue as the underlying issue to how the housing market and in particular how the stockmarket will perform...
I suspect foreign ownership will drive this market...
I am extremely bearish on the long term prospects of the stockmarket because of baby boomers and my time is running out for investment...
....
I personally will remove all the risk of current small windowed opportunities in the housing market (bargain buying) by holding out....I will chance my hand at much better deals as the next few years roll on.... Im flush with cash, and I can raise substantial amounts of cash without the need of my friend Mackdunk...:D
I apologise for not being able to answer all questions...
This thread is just chokka full of comments and needed replys...
comments are welcome...
:cool:
.^scHi Shrewdy,
At the end of the day the way you play this out depends on all other aspects of your financial situation as much if not more than the state of the Market. Wether they believe or admit it everyones opinion is derived from their own personal circumstances. You are a smart fella and Im sure your plan will work for you.:D

The fact you are up to your eyeballs in cash at your age is testimony to that ;)

By the way, Serpie said the Duct tape is in the mail and that I have to apply it myself :eek:

[Joe King]

YOTT "I find this thread most interesting in that it seems to be sorting the do-ers from the gunner-dos." Actually I find it disappointing the same old procrastinators are still posting the same old excuses...
".....I agree with macdunk, there are bargains everywhere, you've just got to look for them, make a move..." Yep there's a bargain around every corner, you just have to be able to recognise it. Check my post here...http://www.sharetrader.co.nz/showthread.php?t=4419&page=5
Cheers all
JK

[tim23]

I reckon property is stuffed for now, REINZ can put all the spin they like, sales were down about 30% in January 2008 from Janaury 2007 and they say it was because its holiday season. Sorry REINZ its holiday season every January for as long as I can remember!

[Steve]

Sorry REINZ its holiday season every January for as long as I can remember!

Come on Tim, don't burst their bubble!

If you stop believing, them it won't be true ;)

[Steve]

A few weeks back I got very lucky...
My cousins flatmate is a mortgage broker and I found out all the answers to my questions in just 10 minutes...
I know just how to get a mortgagee sale, where to get one, and what I have to do to get one...

Hey Shrewdie, would you like to share this knowledge?

[Crypto Crude]

Come on steve,
we have the BuSiNeSs community reading/watching/listening... im not about to steal their thunder... the idea ive been told is very simple and theres no doubt that thinking through the idea is straight forward, I guess its abit easier when being told........ To be honest the idea is so simple that I would look stupid for saying it....
When, I was In America Last year in the first half, west coast only... Housing was so bad that these mortgagee sales were advertised regulary on the TV... This was a bad time for these types of sales as the problem has only gotten worse as time has passed...

AND, From what we have seen here, it doesnot take a real brain to make it in housing as long as you can create abit of leverage, and have time to ride out a Bear market which never exceed a bull... The current bear is years late... The bull has been pushed further which inturn will push the bear for longer and harder..
In the History of Housing NZ it has never been a better time to be a bear than Right now...
Im going to hang this JOE KID out to dry, sorry to speak...
I hope he is around to face up in one/two years time...
:cool:
^sc

[duncan macgregor]

shrewdy, let me stand in for JOE KING and tell you how this mysterious mortgagee system works from his position. I know this is how you go about it JOE, its how we all do it.
Mortgagee auction is a cash sale with no conditions. Chattels are not gauranteed. FIRST STEP, JOE arranges finance on another property to uplift if required.
He has been in touch with the various agents who specialize in this, plus keeping close watch on advertised auctions and open homes.
Anything of interest he contacts the poor bastard being turfed out, gets his viewpoint, and intention going forward.
He then sits down at the auction as a cash buyer, and bids up to one third less than market value. If he gets it, he knows and is friendly with the past owner, who might want to be a tenant.
The bastard in this is the bank, Joe gives his new tenant a chance to buy back.
Thats how JOE works shrewdy at any stage in the cycle. Come back at me JOE thats how we all do it no secret system, time the market, or whatever,the people that cant see it never do it so who cares. Macdunk

[STRAT]

Hey property lovers, the market aint looking too hot. Was chatting with an agent in the weekend. He said the sales have gone down over 50% and no one is buying!! The truth is in the pudding.Thats terrible news Doc :eek:. To add perspective to your post may I ask where yo live?

[small fish]

A mate of mine who operates from Harcourts Papanui told me target for the month was 70 sales down from 120 Febuary last year. It was unfortunate because I rung him to get some MAKO @ .50 cent but has been so busy listing properties that he hadn't the time to look into it. Quite gutted now so I would guess he knows hes will take a severe haircut in commissions.

[Crypto Crude]

Thats how JOE works shrewdy at any stage in the cycle

Joeking is a smart man, he disclosed that he sold 31 of his houses...
:p
.^sc

[Crypto Crude]

You can take alot of risk out of housing investment by waiting... let me explain...
whats the point of sticking your neck out now and having to search hard for a bargain.. In a few years bargains will be all over...
interest rates will top out and fall which will lower interest payments...
Bargains at the bottom of a bear cycle beat any bargain in any other part of the cycle... I have accepted that bargains can be found at any stage of the cycle including at the very top of a bull, as posters here say....
The bulls and Buffs here are in the top echalon in the field of housing investment... for all other potential 1st homebuyers like myself.... why take the risk of sticking your neck out?
and aaahhhhh harrrrr.... at the bottom I will be able to start leveraging one house off the next... Wheres the leverage going if you buy now and house prices are falling...
:cool:
.^sc

[POSSUM THE CAT]

Sector Surfa They really need to hammer the lesson home with A 0.5&#37; rise next meeting then they can posibly sit on there hands until 2009. Otherwise the housing market will just pick up again in a couple of months time.

[leonchai]

Well it looks like this time it might be for real...


Auctions take a hammering
By Esther Harward, Kevin Stent and Lois Watson - Sunday Star Times | Sunday, 02 March 2008

The cooling property market was evident in house auctions across the country last week.

The Sunday Star-Times went to auctions in Auckland, Wellington and Christchurch and watched 21 homes go under the hammer.

But not one sold and many struggled to attract any bids.

The properties ranged from low-budget apartments to upmarket mansions and by Friday none had been sold.

Barfoots' Auckland auction manager Tim Carter said so far this year about 30% of homes had sold at auction compared to 60% last year.

AUCKLAND

14 Scarborough Tce, Parnell

Three bedrooms, study, landscaped gardens, designer kitchen

CV: $860,000, passed in, no bids



121A St Johns Rd, Meadowbank

Two-bedroom bungalow, modern kitchen

CV: $330,000, passed in, no bids



53A Clarendon Rd, St Heliers

Three bedrooms, rumpus room, landscaped gardens and private courtyard

CV: $810,000, passed in, no bids



5R Dryden Pl, Ellerslie

Two-bedroom terraced apartment on two levels, two car parks, sunny courtyard

CV: $240,000, passed in, no bids



19A Riddell Rd, Glendowie

Two-level stucco townhouse with four bedrooms, two bathrooms

CV: $570,000, passed in at $560,000



54 Taniwha St, Wai o Taiki Bay

Ex-state weatherboard house, large 837sqm section, new kitchen and marketed as a "do up", two bedrooms

CV: $320,000, passed in at $350,000



14A Challenger St, St Heliers

Large stucco family home on two levels, tropical garden and outdoor dining area, walk to beach, four bedrooms

CV: $1.5 million, passed in at $1.75m



3 Edwards Rd, Grey Lynn

Renovated weatherboard bungalow with polished floors and outdoor entertaining area, three bedrooms

CV: $590,000, passed in, no bids



205/20 Upper Queen St, Auckland City

Two-bedroom terraced apartment with courtyard and car park

CV: $230,000, passed in at $220,000



165 Paritai Dr, Orakei

Two-bedroom weatherboard cottage with views to Hobson Bay

CV: $1.17m, passed in, no bids



5, 5A and 5B Speight Rd, Kohimarama

Large level section divided into three separate flats, close to beach and cafes

CV: $1.115m, passed in at $1.1m



CHRISTCHURCH

578 Madras St, St Albans

A three bedroom renovated character cottage, polished wooden floors and french doors opening to a sunny garden

CV: $301,000, passed in at $292,000



326 & 330 Papanui Rd, Merivale

Four-bedroom house with library and formal living area, plus a self-contained two-bedroom flat on 2670sqm of park-like grounds

CV: $2.5m, passed in, no bids



45 Cox St, Merivale

Five-bedroom house with a games room, temperature-controlled wine cellar and inground pool

CV: $1.5m, passed in, no bids



384A Memorial Ave, Burnside

Two storey two-year-old home with four bedrooms

CV: $605,000, passed in at $650,000



302 Gardiners Rd, Belfast

Four-bedroom family home on a 1492sqm section

CV: $946,000, passed in at $625,000



WELLINGTON

140 Onslow Rd, Khandallah

Three-bedroom renovated single level villa

CV: $560,000, passed in at $550,000



64a and 64b Barnard St, Wadestown

Home and income property on two levels and a large section with spectacular harbour views

CV: $535,000, passed in at $450,000



3A Madras St, Khandallah

Two-bedroom flat

CV: not available, passed in at $268,000



37B Ngaio Rd, Kelburn

Three-bedroom executive townhouse

CV: $740,000, passed in at $660,000



3B Rangoon St, Khandallah

New two-bedroom townhouse

CV: $340,000, passed in at $360,000

http://www.stuff.co.nz/sundaystartimes/4422352a6442.html

[Arbitrage]

Sector Surfa They really need to hammer the lesson home with A 0.5% rise next meeting then they can posibly sit on there hands until 2009. Otherwise the housing market will just pick up again in a couple of months time.

Bad advice based on retrospective data. Most economic data is a few months behind. Things like the housing downturn is happening now and looks to continue at these levels of interest rates.

Also it is election year this year, and the banks are doing the job for the RB.

So, until I am asked to be governor of the reserve bank, I believe that interest rates will stay as they are. If was in charge I would drop them back 0.25%.

[Placebo]

I posted this on the other channel, but will repeat it here cos it sits better on this thread...

This is probably more for comment on the property market threads, but in for a penny... :D

Wife and I have been tyre-kicking the housing market for a few years. Now that we've got another sprog on the way it really IS time to upsize. Problem is, price expectations are now extremely high. My sense is that this is at least in part to agents giving sellers unrealistic expectations.

What we have now is a large and growing disconnect between what the vendors expect, and what the buyer is perceiving as value. Vendors want high prices, buyers see those high prices, aren't prepared to pay them and simply won't engage in the commercial process. I saw this nicely expressed in a recent Dom-Post sharemarket column which described this phenomenon and called it "market inertia". I think it very accurately describes the current property market.

Comment earlier about how much of a drop it would take to knock out people's equity is very relevant. This is exactly what occurred in UK in the early 1990s. There was a rush on purchasing, fuelled by Thatcher govt policies, cheap money etc. Then the economy stalled (around the pound crisis of 92), and huge numbers of people went into negative (my wife's cousin among them). Their market was in the doldrums for about six years.

The bugger about the current situation is, my rateable value has just gone up, and so have the rates. Now the market's tanking, my rates should go down too ... shouldn't they :(

[Sumnerned]

Hi Placebo
Thought I'd just respond to one or two of your comments and queries. Incidently, I'm out of the property market and have no vested interest in the subject.

First, if your rates went up by more than the average for your area, you should be pleased because it means your RV went up by more than average.

The market at present must be frustrating, because, as you say, there is a refusal to engage and face realities. You can save quite a bit of frustration by making it quite clear at the outset, to the vendors' agent, that you believe the market is in decline, that you will be looking for very good value, that you study the market closely via internet sites, and that you do not want to deal with vendors or agents who have unrealistic expectations. Saying this clearly, and firmly, but politely, is a bit of a skill. One method I have found useful is to have it written down, along with info about what you are looking for and your personal circumstances. It takes the emotion out, and the agent can consider things at their leisure.

I well remember that negative equity situation in England. One of my english relatives who I went to visit around then, took 2 years to sell her nice little house in a nice London suburb!

If you are still based in the Wellington area, be very careful. The influence of demographics on the housing market is huge, and Wellington has already got net population outflows. John Key has made it clear that he believes there is a lot of unnecessary govt spending in Wgtn, so the outflow may grow.

Friends still in property in Chch tell me that some places are on the market below RV.

Good luck and luv your Spike quote

[Arbitrage]

Comments from agents I have talked to said the phone is dead at the moment. But I went to an open home in a nice villa in inner city Auckland on Sunday and quite a few people had been through. To talk about the market as one beast is a bit simplistic. Dare I say location location location is a well worn saying but I noticed three places valued in the $800k's have sold in the last few weeks near this nice villa.

I recall the English situation too. My inderstanding is that it was caused by the Thatcher govt meddling in the property market causing over-valuations, then policies changed and the market collapsed. Hopefully the Govt will stay out of the NZ market and the ride won't be so wild.

[minimoke]

Problem is, price expectations are now extremely high. ...
Placebo
I’m not sure you should be too concerned. You are essentially buying and selling in the same market. Your situation is different from the first home owner who is risking taking a drop in value on the chin.

I’d be suggesting you sell now. You can then rent then buy at your leisure. Sure you’ll have a bit of a hassle moving twice but you’ll bin a pile of junk along the way. And you’ll save yourself the stress of finding a place you love when your current place isn’t sold. Shopping at leisure when cash is king puts you in a strong position – especially if values do drop.

And remember RV is an arbitrary figure that simply determines your cut of financing council activities - it has little to do with the real value of your home.

[Steve]

For all of you waiting for a significant drop in the property market, Helen says that it isn't going to happen.

Clark plays down property fears (http://www.stuff.co.nz/4424066a10.html)
The Government is not expecting a property crash, Prime Minister Helen Clark says.


Well, not before the election at least! ;)

[Placebo]

Hi Ned, minimoke,

Yes I have to say the current situation for homeowners wanting to shift is bittersweet. You are in essentially a buyers' market.... but you are also a seller! I know that I will probably have negotiating power in looking for a new house... but will have to lower my expectations of selling my current house. And I will be faced with purchasing an asset that I am convinced is going to depreciate...

The prospect of selling to rent doesn't appeal, though you can argue it makes good economic sense in a declining market. It's the thought of shifting twice with three kids in tow... but as you say, there will be the mother of all garage sales en route!

I've always had a chuckle at published RV levels - they are fairly meaningless to me until I come to sell... at which point they are still meaningless, if an interesting comparison to what the market actually thinks of value. In the meantime the council takes great interest in RV levels in deciding how much to tax me. In that respect I would much rather the RV stayed low as it has little to no bearing on sales prices but much impact on the cost of living.

[minimoke]

The prospect of selling to rent doesn't appeal, though you can argue it makes good economic sense in a declining market. It's the thought of shifting twice with three kids in tow...
.
Been there, done that and would absolutely, unreservedly do it again. A whole pile of reasons but there was some satisfaction in sitting back in a place that needed me to spend no time on it other than cleaning and gardens was very satisfying. Kids look back on it as an adventure and we remember with joy the experience we had while renting. I also will never use a real estate agent and will never buy without having sold first – some of my simple lessons learnt in life.

[Snapper]

Been there, done that and would absolutely, unreservedly do it again. A whole pile of reasons but there was some satisfaction in sitting back in a place that needed me to spend no time on it other than cleaning and gardens was very satisfying. Kids look back on it as an adventure and we remember with joy the experience we had while renting. I also will never use a real estate agent and will never buy without having sold first – some of my simple lessons learnt in life.

Never say never. We sold a house in 1999 when the market was in the doldrums for $10k less than we paid for it 2 years earlier. We had already bought a house and had bridging finance but it was the best thing we ever did. Sold it last year to a developer for over 4 times what we paid and the real estate agent was brilliant. Argue about the high fees if you like but her marketing skills really paid off. Mind you, she was the 4th agent we had...
Currently renting and not liking it that much (enjoying the interest rates though) but prepared to wait for the right house at the right price.

[Sumnerned]

Minimoke, your attitude towards renting in the interim is great! If the kids can see it as an adventure of some sort, you're in a great space. We bought a camper van and went on the road for seven months, the kids thought it was great, so did we. So did the dog.

[Halebop]

KRuud on the radio, news all day, plans to incentivise major affordable housing development, targeting large developers - think I heard $6k payments per unit?

Idiots. :rolleyes:

[Sideshow Bob]

Expert advice: Wait for housing crisis sales
5:00AM Sunday March 09, 2008
By Anna Rushworth


Jana Dixon has looked at more than 100 properties. Photo / Herald on Sunday

Your Views
Do you think there willl be a property slump?
Send us Your Views
Read Your Views
Don't buy yet, don't sell right now, and polish the nugget you're sitting on. That's the key advice from three property gurus who claim to have the good oil on how to prosper in New Zealand's slumping housing market.

With the number of sales down across the country and prices beginning to fall in some areas, investment experts say the time is ripe to study the market and wait for the bargains to hit.

They say first-time home hunters should use the next six months to save a better deposit.

Investors should improve the properties already on their books and look at raising rents to make up any shortfalls.

http://www.nzherald.co.nz/section/1/story.cfm?c_id=1&objectid=10497016

[STRAT]

A little off topic but thought worthy of mention a news item on TV1 tonight showing the shameful way TV manipulates the facts to suit their slant on things. It would seem a whole bunch of people in Christchirch are up in arms about a 24&#37; rent rise by Christchurch Council for their stste houses. Sounded bad and unfair till they ley slip how much of a rise that was.

$22 per week

Yup thats right, a 3 bedroom house for $88 a week will now cost $100.

Not sure what a house costs down there on the mainland but you couldnt rent a tent for that up here.

So all you state home dwellers welcome to the almost real world, You are still getting a 50% discount.

[shasta]

A little off topic but thought worthy of mention a news item on TV1 tonight showing the shameful way TV manipulates the facts to suit their slant on things. It would seem a whole bunch of people in Christchirch are up in arms about a 24% rent rise by Christchurch Council for their stste houses. Sounded bad and unfair till they ley slip how much of a rise that was.

$22 per week

Yup thats right, a 3 bedroom house for $88 a week will now cost $100.

Not sure what a house costs down there on the mainland but you couldnt rent a tent for that up here.

So all you state home dwellers welcome to the almost real world, You are still getting a 50% discount.

Um Strat, how's your math? :D

[Arbitrage]

Median rent for a 3 bedroom house in Addington is $300 per week. See:

http://www.dbh.govt.nz/market-rent?Location=Christchurch%20-%20St%20Martins%20/%20Sydenham%20/%20Addington

[skeet]

I rent a four bedroom, 7 year old house for $465 a week, in a newish subdivision. I see no way in the next few years for me to buy a house, Unless I decide to get married or something silly! :P

[shasta]

I rent a four bedroom, 7 year old house for $465 a week, in a newish subdivision. I see no way in the next few years for me to buy a house, Unless I decide to get married or something silly! :P

You cant get a 1 bedroom flat under $300 anywhere near the city in Wellington. (Ok i found mine JUST under $300).

I could save $$$$ & move to the Hutt? :eek:

I'll wait for the apartment prices to tank ...

[A J]

I rent a four bedroom, 7 year old house for $465 a week, in a newish subdivision. I see no way in the next few years for me to buy a house, Unless I decide to get married or something silly! :P

Ahh skeet me old mate, or in other words 'flat-mate', and there will be 2 others to help pay the rent. LOL.

Cheers
A J

[STRAT]

Um Strat, how's your math? :DIts not too bad lol but as precission is required :D

Rent increase of 24% = $22 as stated on the TV

Previous rent $91.67

New rent $113.67

OK its a little more than I previously posted but going by the posts since sill sounds like they have nothing to complain about to me. Dont know how the rest of you feel about it but if my rent went up from $92 to $114 I would still be stoked and too ashamed to be caught with my mug on the TV complaining about it.

[STRAT]

Oh, just checked my post Shasta and I see what you mean

$88 plus $22 = :o

[Crypto Crude]

In earlier writing I have used the word crash many times.....
There seems to be a great miss conception of the word... some have rubbished the word, What does the word really mean to others?
anyone got a personal definition of the word?
Im not looking for text book answers, Im just trying to get a better understanding of what others think of it because it can be used in broad terms and taken out of context, or misinterpreted by others?
any of the bulls care to address The Word 'Crash'... Further more, Is a Crash coming in their opinion?....

In the last two months I have seen a clear shift of the bulls thinking...
They now write more bearish... They have backed away from heated debate...
Even Joe Kid scattered after he admitted he sold all his houses...


Remember dudes, the bigger the up and the longer the up... leads to a bigger down and a longer down...
I would have personally liked to have seen the bull last longer, it just makes it all the cheaper at the bottom....
.....
Ive been talking to many people, I know of a few that have gotten in within the last 6months... 'thats worth a log in their pants right now'...
sell to re-enter...
I was told to BUY no longer than two months ago, dating back to the start of this thread...
:cool:
.^sc

[STRAT]

In earlier writing I have used the word crash many times.....
There seems to be a great miss conception of the word... some have rubbished the word, What does the word really mean to others?
anyone got a personal definition of the word?
Im not looking for text book answers, Im just trying to get a better understanding of what others think of it because it can be used in broad terms and taken out of context, or misinterpreted by others?
any of the bulls care to address The Word 'Crash'... Further more, Is a Crash coming in their opinion?....

In the last two months I have seen a clear shift of the bulls thinking...
They now write more bearish... They have backed away from heated debate...
Even Joe Kid scattered after he admitted he sold all his houses...


Remember dudes, the bigger the up and the longer the up... leads to a bigger down and a longer down...
I would have personally liked to have seen the bull last longer, it just makes it all the cheaper at the bottom....
.....
Ive been talking to many people, I know of a few that have gotten in within the last 6months... 'thats worth a log in their pants right now'...
sell to re-enter...
I was told to BUY no longer than two months ago, dating back to the start of this thread...
:cool:
.^scGood question Shrewdy. I would say 25 to 30% would be a crash. Im not concerned though. A major fall in rents would worry me more and if they fell to "state house in Christchurch" levels I would probably fling myself out a window. Im picking a 10% drop max and a slight revival come spring 08 followed by about 3 years of sideways

[minimoke]

You cant get a 1 bedroom flat under $300 anywhere near the city in Wellington. (Ok i found mine JUST under $300).

I could save $$$$ & move to the Hutt? :eek:

I'll wait for the apartment prices to tank ...
Or Shasta you could look to your local council who have properties like:

Studio $84.00
- $108.50

Johnsonville, Newlands, Wilton, Kilbirnie, Miramar, Strathmore and the Inner City
1 Bedroom $115.50
- $175.00

Berhampore, Newtown, Miramar, Karori and the Inner City 2 Bedroom $182.00

Berhampore, Newtown, Miramar and Karori (stand-alone properties)
3 Bedroom $210.00 Berhampore, Newtown, Karori, Wilton and Brooklyn
4 Bedroom $294.00 Berhampore, Newtown, Karori, Wilton and Brooklyn
5 Bedroom $364.00 Mt Cook and Brooklyn
6 Bedroom $378.00 Newtown

[steve fleming]

In earlier writing I have used the word crash many times.....
There seems to be a great miss conception of the word... some have rubbished the word, What does the word really mean to others?
anyone got a personal definition of the word?
Im not looking for text book answers, Im just trying to get a better understanding of what others think of it because it can be used in broad terms and taken out of context, or misinterpreted by others?
any of the bulls care to address The Word 'Crash'... Further more, Is a Crash coming in their opinion?....

In the last two months I have seen a clear shift of the bulls thinking...
They now write more bearish... They have backed away from heated debate...
Even Joe Kid scattered after he admitted he sold all his houses...


Remember dudes, the bigger the up and the longer the up... leads to a bigger down and a longer down...
I would have personally liked to have seen the bull last longer, it just makes it all the cheaper at the bottom....
.....
Ive been talking to many people, I know of a few that have gotten in within the last 6months... 'thats worth a log in their pants right now'...
sell to re-enter...
I was told to BUY no longer than two months ago, dating back to the start of this thread...
:cool:
.^sc

SC....relax a bit mate.

Don't let your life be ruled by the IRR function of a financial calculator.

It's not worth it.

Get a good education, good job and the disposable income and life choices will follow.

[Crypto Crude]

Fleming,
I get a real buzz out of what I do and Im always relaxed...
smiley face and shades would be a great description of me...
-->:cool:....
No tension in my spring what so ever...
I'll be overseas in a few years so I really dont give a cook-a-hoot to what happens in the housing market...
It all just makes for interesting debate...
It would be great to have something to come back to...maybe a holiday home...
My life doesnot revolve around money... I do take a hands on approach with my shares and portfolio which has paid for the student loan...
I dont have a financial calculator, Prob should get me one...
:p
.^sc

[Arbitrage]

Steve, don't tell SC to get a job. This country needs more entrepreneurs. The education system programmes us to "get a job". What it should be promoting is getting out there to create wealth. We already have one of the highest rates of company formations in the world (and failures) which says we have a latent talent for taking risks.

SC don't listen to Steve. Get out there and use your talents mate. Create wealth and the good times will be with you along the way....

[Arbitrage]

Back to the original theme, great to see an article in Wellington finally admitting that apartment living may be the way of the future.

http://www.stuff.co.nz/4455743a6160.html

Even the thought of housing families in apartments!! Doh.

Why are NZ city planners so far behind urban planners in most other countries in the OECD?

[POSSUM THE CAT]

Arbitrage are they going to get all this extra sewrage down the same 6inch pipe they use now. They will just about have to replumb the whole city as they have found in Auckland. Auckland City council wants $40000.00per apartment in some cases as an infrastucture contribution.

[tricha]

.................................................. ...................................

[tricha]

Part 1 - With inflation becoming rampent, what effect does that have on housing costs.:confused:

New laws and regulations +++++, cost increases +++++, more cost increases +++++

.................................................. .................................................. ..

Part 2 - the crunch will be in certain sectors of the property market, maybe you would care to read "1000 Barrels a Second" to get an insight into the future of peak oil. ;) and how it will effect you personally.

[Sideshow Bob]

Metro Realty in Dunedin (biggest here) is having a 'autumn sale' next Thursday night - 57 properties going up for auction!!

[Crypto Crude]

Anybody seen Campbell live tonight?
....
Housing crunch... get out now.... Sell and re-enter...
Panic sell is the best strategy because we are at the beginning of 30% falling market... Auckland could fall further... dump on market below GV if need be...
Yeeeaarrrrhhhh Haaarrrrrhhhh....
exciting times ahead...
SELL SELL SELL...
Its No brainer...
:cool:
.^sc

[shasta]

Anybody seen Campbell live tonight?
....
Housing crunch... get out now.... Sell and re-enter...
Panic sell is the best strategy because we are at the beginning of 30% falling market... Auckland could fall further... dump on market below GV if need be...
Yeeeaarrrrhhhh Haaarrrrrhhhh....
exciting times ahead...
SELL SELL SELL...
Its No brainer...
:cool:
.^sc

Shrewd

Any comments on when the Wellington apartments take a dive...:D

[Tok3n]

http://www.stuff.co.nz/4466701a19715.html

Out of interest, how many here are baby boomers, how many are generation Y/X etc?

Do you guys agree with that article?

[Steve]

http://www.stuff.co.nz/4466701a19715.html

Out of interest, how many here are baby boomers, how many are generation Y/X etc?

Do you guys agree with that article?

I'm an Xer and the missus is a Y'er. My mission in life to to create savings for her to spend NOW! ;)

In general terms, I feel that the article fairly represents the current situation...

[peat]

Do you guys agree with that article?

lolol (at the anecdotal evidence in that article)

http://www.youtube.com/watch?v=IeXMKygwSco&feature=related

[lakedaemonian]

I'm Gen X, my wife is Gen Y.

We consider ourselves extremely fortunate to have not just survived but thrived through the "tech wreck" 8 years ago, largely due to our realistic expectations and concerted efforts to run away when we all too often hear "It's different this time".

We also benefitted from the massive run up in real estate prices in recent years. We see the same things happening as with the teck wreck....and for the past few months it's becoming increasingly obvious to the layman(or woman). We have no desire to sell our home, but we are rationalizing our non-farm property assets to take advantage of once in a generation ridiculously low yields/high prices.

Most of our peer group do not own property........we often get drawn into conversations about buying a home and property investment.

It would be foolish of us to not include "luck" in how we have achieved our strong returns...but a big part of luck is in "making" your own luck........head down, ass up, save, save, save...so one is well placed to take advantage of opportunities when they present themselves.

People have been conditioned to expect what they want, when they want it.

Those who have sacrificed and delayed gratification will do particularly well in the coming years...those who haven't sacrificed and saved will continue down the tracks to nowhere until they change their behavior.

My guess is that reading this article in 12-24 months time will result in the tables being turned a bit.

Property leverage is great when the tide's coming in......but property wealth can disappear just as quickly when the tide goes out.

[Dr_Who]

Those who have sacrificed and delayed gratification will do particularly well in the coming years...those who haven't sacrificed and saved will continue down the tracks to nowhere until they change their behavior.

.

Very wise words. The young people of today dont seem to understand the word sacrifice today for tomorrow. Only the meaning of living for today.

[Arbitrage]

Categorising people into Boomers, Gen X and Gen Y is rubbish. I agree with the last two posters about hard work, saving, and delaying gratification. In every generation there are those who do all of that, and there are those that live for the day.

I look at todays older people who are on the pension. There are those with assets and savings who are comfortable, and those without who struggle only on the govt payments. I can look around now and see people who are earning good money and I can tell you which of the older generation camps they will end up, irrespective of their "Gen".

[wns]

I'm Gen X, my wife is Gen Y.
We have no desire to sell our home, but we are rationalizing our non-farm property assets to take advantage of once in a generation ridiculously low yields/high prices.


What yield would the buyer earn on the commercial properties you're intending to sell?
ie. what % yield are you calling ridiculously low?

[lakedaemonian]

What yield would the buyer earn on the commercial properties you're intending to sell?
ie. what % yield are you calling ridiculously low?


Between 6 and 7% yield.....in an environment where I believe commercial property capital gains will be non-existent to negative for the foreseeable future.

Averaging about 2% lower than current liquid cash on call

[Joe King]

Anybody seen Campbell live tonight?
....
Housing crunch... get out now.... Sell and re-enter...
Panic sell is the best strategy because we are at the beginning of 30% falling market... Auckland could fall further... dump on market below GV if need be...
Yeeeaarrrrhhhh Haaarrrrrhhhh....
exciting times ahead...
SELL SELL SELL...
Its No brainer...
:cool:
.^sc

"quote.."In the last two months I have seen a clear shift of the bulls thinking...
They now write more bearish... They have backed away from heated debate...
Even Joe Kid scattered after he admitted he sold all his houses"... unquote

Shrewdie one day ya just gotta grow up. Winners/losers, there are plenty of both. Just like the current opportunities on the stock market, there are incredible opps in the property market. I haven't "scattered" at all. Just sitting back watching losers lose and winners win. Life goes on...
One thing's for sure young fella... if ya gonna be a winner you better start thinking like one >>>
Cheers and good luck
JK

[Crypto Crude]

Hey Joe King...
I am a full time student and I have a job working 4.5hrs per week as a poker host earning $90... Im also eligible for an allowance this year as my dad just retired...
cant buy a house even if I wanted to, and I dont want to...
...
Dont you worry about me buddy, Ive got it all sussed out...
Ive got a small group of my best friends in on my idea
.... when the carnage is over I will be buying my own house and more than a few houses with a group of mates all putting in 7k or so per house...
I wont buy into this 'its never a better time to buy than right now'
I have mad respect for the bulls... Its different for your group and quite frankly you will never understand it from my view because you are set in your ways, your views are biased because you are a housing buff, taking advice from you is more damaging than good...
theres no point going out on a crusade buying houses now...
Im not on some sort of heroic mission...
Im smart, not mad..
disc, LMPO, GGX, RPM, LMP, AKK.... all performing...
Good day...
:cool:
.^sc

[Crypto Crude]

tok3n posted a good article.. I hope you sit down and read it some time...
:cool:
.^sc

[STRAT]

Shrewdie one day ya just gotta grow up.
JK
Don’t you worry about the crude one Joe. If I had half his energy and gumption at his age and took a few less drugs Id be a wealthy man now I recon.

[huffer]

I am a 22 year old female from Wellington. I earn $45k per year. I do not have a university education. My partner of 6.5 years is a qualified plumber, just out of his apprenticeship, and earns about the same as I do. He is also 22.

In March 2007 we purchased a 4 bedroom house in Pukerua Bay (half way between Wellington and the Kapiti Coast) for $312,000 - our first house. Our interest rate is 7.99&#37; fixed for 5 years, we have a 100% mortgage. The small deposit we had attempted to save has gone towards a new bathroom - yay for dating a plumber!

I've been reading this thread for a long time now. I've seen the arguments go back and forth so I thought that today was the day I should speak up and join the fun.

My partner and I seem to have struck it lucky, have we not?
Are we going to regret the 100% mortgage?
Are we being completely naive about this?

Or is the process of buying a house actually as easy as it has been for us...?

[Dr_Who]

Huffer, congradulations on purchasing your first home.

If this is your home and you are looking to live in it for a long period, it is a great idea. I encourage all yound people to buy their first home and pay it off asap. You should try to reduce your mortgage asap. Too much debt is a dirty word.

Enjoy your new house.

[clips]

well done, wish i'd started at your age...... get stuck in and whittle that mortgage down,
every time you have a few $$'s spare throw at the debt. It may take some years but you will get on top of it and then you'll realise how smart you have been...

[Brut]

Huffer,

Well done on your purchase of your home at such a early age. My only concern with 100% mortgages is that, if properties drop 10 - 20% you won't have any equitity in your home & the banks may force the sale of your home.

[duncan macgregor]

Huffer,

Well done on your purchase of your home at such a early age. My only concern with 100% mortgages is that, if properties drop 10 - 20% you won't have any equitity in your home & the banks may force the sale of your home. ABSOLUTE RUBBISH. Banks dont close on a mortgage that is being paid unless it lapses into debt. Why would the bank have a mottgagee sale losing money if someone was paying it off during the bad times. Its a very stupid statement made by someone that is not in the business. Macdunk

[clips]

good on ya duncan... after reading at the nzoop quessing game i thought you had gone soft. p.s. - you are also right.

[Kees]

I can azure you they did just that in the early ninety's

[wns]

Huffer, congrats on getting started with property.

The important thing is to build up a cash buffer of at least a few months worth of expenses.
Then any surplus money each month can go towards paying down the loan and / or investing to get yourselves further ahead.

Do you have a 100% offset account with your mortgage? We had one. Your income goes into it, and your expenses are paid out of it. However while you have money in the offset account, it is reducing the amount of interest you pay, which helps you to pay off the loan faster. The other good part about it is - the money in your offset account is available to you, in case something comes up where you need the extra money... as opposed to paying extra off the loan and the money is not available to you (unless you pay the bank a fee for the "privilege" of increasing your debt).

[Brut]

ABSOLUTE RUBBISH. Banks dont close on a mortgage that is being paid unless it lapses into debt. Why would the bank have a mottgagee sale losing money if someone was paying it off during the bad times. Its a very stupid statement made by someone that is not in the business. Macdunk


Macdunk, We'll see what the banks start doing once property prices start falling 20% in the next year or two. Alot of property investors have 100% mortgage loans on there investment properties & I'm sure the banks are not going to sit there while these investors have no equitity in there homes. There are more & more properties listed as mortgagee sales on the market in the last few months.

Properties have gone up too fast in the last 4 years for there not too be a major correction. I have been in the property market for a number of years & cashed up at present waiting for some bargains. This is my view only & don't tell me that properties only keep going up!

[srotherh]

ABSOLUTE RUBBISH. Banks dont close on a mortgage that is being paid unless it lapses into debt. Why would the bank have a mottgagee sale losing money if someone was paying it off during the bad times. Its a very stupid statement made by someone that is not in the business. Macdunk

MD

Prices drop 10&#37; and at roll over time some people are under water or now need 100% loan as since they took the loan out they have lost their 10% equity they started with.

Be assured banks are shying away from 100% loans especially in a falling market.

therefore same result ,

many forced sales just not with the Mortgagee title

[Steve]

Macdunk is correct in saying that banks won't take any action as long as the repayments are being made on time.

Srotherh is correct in saying that when it comes to roll-over time, the banks will consider the equity situation when making their lending decision.

[Steve]

It's only getting better for those who are waiting (like SC!):

House of the sinking sum (http://www.nzherald.co.nz/section/1/story.cfm?c_id=1&objectid=10503830)
In the surest sign yet that the runaway train of the property market isn't just slowing, it's grinding to a slow halt, house sales around the country in March slumped to less than half the number at the same time last year.

Forced sales up nearly 20 per cent in a week (http://www.nzherald.co.nz/section/1/story.cfm?c_id=1&objectid=10503829)
A surge in mortgagee sales is surprising even seasoned real estate agents, with one dealing with 70 forced sales in three months this year - compared with 12 for the whole of 2007.

Other data collected by property experts shows mortgagee sales nationally rising almost 20 per cent in the past week as banks foreclose on families and property investors hit by crippling interest rates and the rising cost of living.

[minimoke]

My partner and I seem to have struck it lucky, have we not?


If you’ve struck it lucky you’re in trouble.

Hopefully you have carefully thought out what you want, how to get there and how to keep it. If you have worked to get to where you are you’ll be fine. Get that three month income buffer, hit the mortgage and stay healthy. Try to keep those spare bedrooms full of flatmates and not the patter of little plumbers and you’ll set yourself up well.

If, on a whim you’ve just gone out and bought a house, luck won’t get you far when the times get hard. Buying a house isn’t hard. Keeping up with the repayments, rates, insurance and maintenance is where things will start to get tough.

[Yossarian]

Steve - as one of those left on the sidelines, i must confess to a certain malevolent pleasure in reading these articles. Must say I am hoping for a big crash (but not holding my breath - I think it's more likely it won't happen, just stagnation for a few years instead).

[Tok3n]

I'm a bit like Yossarian, your typical Generation Y, asset poor i.e. no house :(...but reasonably cash rich, hold some resentment towards the baby boomers.

Hoping for a housing crash too, to get in for "self-fish" reasons, but there's probably plenty of us in the same situation ready to "prop" the market up lol, ironically.

Oh while, back to trading I guess.

[Crypto Crude]

Tok3n,
No need to resent them mate... our generation will inherit all the good work they have done...
these Baby boomers have savaged all chance for us to really get ahead...
Its not their fault, they were out to get a few bucks, so good on them...
Enjoying the same run they had is impossible for us... we could never achieve the same sort of results/returns...
I dont care what Im told...
Ive completely broken down both sides... The Bulls (or buffs as I call them)...and the non buffs...

Ive heard the stories....
30k to 300k.... Nowadays it would have to be 300k to 3million to get same returns... big price difference... Ive posted all this sort of craap before...
House prices willnot be 100% higher in 10 years time from where they are now... I dont care about historical performance...
Average wage would need to be 125k per year for that to happen...
Some people are only on 25% of that now...

I mean, if I want a house I have to be prepared to pay big bucks every single week for 30yrs...
Whats exciting about that?

Everybody wants to make money... I willnot make money at the expense of my wellbeing... Jail cell styles...

Id be a 53 year old man in crisis mode with a house or two only...
bleak future indeed...
Why does that clown not understand...
they had it too easy...
You just wait my friend...
That generation had a mad uptake of housing... This generation wont be too concerned about it... we inherit it anyway... Housing performance in the past willnot be the same in the future...
Brand spanking new apartments in China for 30k NZ...
when this World Wide slump is over, they will be 20K...
At least that way you dont have to give a life term to pay for it...
Yes, penitentiary here mate at these prices...
Expecting a mad selloff and abit of panic mode over the next few years..
No need to go out on a Limb and buy now...
Be smart, dont be heroic...
....
Only a buff would recommend you be heroic...
....
what happens after the baby boomers leave is in our hands...
we will find out over the next few decades if our generation is prepared to get into Life terms to continue supporting upwards rising house prices, (eg like in some parts of Auz)...
next 5 years will be our chance to get in...
In the future I will explain exactly how to leverage a house off another one with little down payment... its no magical secret...
I will explain exactly how to get a mortgagee sale...
I will tell them everything they dont tell you...
We have plenty of time to watch, learn, earn, and save and when its over have more than 50% down payment on the first house, or spread it over a few...

The great thing about this is that We get to watch the American Housing market unfold because we Lag their market by two years...
many other countries are being hit...
NZ will fear up there with the worst of them I believe... with our World leading high interest rates... High Inflation rates currently above the 1-3% RBNZ band, finance company risk, low wages....
send money offshore for now, bring it back later on... you put your left foot in, put your right foot out...
do the hokey pokey and turn around.......
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...
..
.
Thats what its all about
:cool:
.^sc

[duncan macgregor]

SHREWDY, What a load of rubbish you preach. property in any country is priced by the cost of building a new building. In bad times builders leave the country like i did in 1967 in nz, and ended up making twice as much in Australia. When i got back in 1972 there was an acute shortage of builders who could name their own price. History is repeating mate, you will outsmart yourself and miss out.
In china the wages are stuff all in comparison with the likelyhood of rising at a faster pace than here. Your chinatown house will one day be higher than a house in NZ. The NZ worker with free trade, is now heading for the three bowls of rice a day in order to compete. Changing times you should buy a house with a westpak 110% mortgage live rent free for six months before you bugger off to china. Macdunk

[Crypto Crude]

Any other opinions...No,.what a load of rubbish you preach...

Property in any country is priced by the cost of Building a new Building
Are you telling me for the next few years that costs are going to decrease by 20-30&#37;...
haha...
:cool:
.^sc

[duncan macgregor]

Any other opinions...No,.what a load of rubbish you preach...

Are you telling me for the next few years that costs are going to decrease by 20-30%...
haha...
:cool:
.^sc No but you are. The rising costs in building ensure that property long term will only increase faster than rvrt. Macdunk

[Brut]

Any other opinions...No,.what a load of rubbish you preach...

Are you telling me for the next few years that costs are going to decrease by 20-30%...
haha...
:cool:
.^sc
Shrewdy, no one is allowed an opinion on here. unless you agree with old Macdunk you are stupid or talking rubbish. I think is is too set in his ways to listen to other opinions!