NZ 1st homebuyers are ScReWeD...

[duncan macgregor]

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! BRUT you might be right in that statement. However with costs heading north at a great speed of knots if prices drop, all building work stops. This in turn creates an over the top demand eventually raising the prices higher than ever before.
If the demand exceeds the supply due to tradesmen leaving the country which happened in 1967 when we all buggered off, look for a repeat performance. Dont expect me to be nice to SHREWDY, he didnt introduce me to his girl friend last time we met. Macdunk

[Crypto Crude]

Mackdunk,
You have such a negative attitude...
Especially on the NZO thread... brain dead this... herd that....
you are a possessed stubborn lunatic who is set in your ways...
Some of the best advice I was given, was to to take the positives out of any debate...
...
Ive given it up to you, agreed that the long term picture is rosey...
I do agree with many things you say...
I just dont agree that its never a better time to buy than right now...

I have slammed housing for what the near term will do...
You have focused your efforts in the long term picture...
Your time frames are messed up...
This thread isnot for business men housing buffs who troll the market, (eg, you can find a good bargain in any market theory, which can be true)... this thread is for first homebuyers, who can eliminate risks through not buying now... waiting for the market to turn... and buy when the time is right...
Any type of investment is about timing, Right?

You have never given one Inch...
You have gone so far, and are in so deep that before a few months back, you even refused to believe/ or post that bad times were coming...
bad times are coming MD...
You know that its true... you just dont post it...
:cool:
.^sc

[Crypto Crude]

My whole debate is centered on the near term outlook...
Your view isnot...
Add your thoughts to the near term outlook or dont add them at all...
Ive asked what you reckon the near term will do and you completely dodge the questions...
Joe King sold up, Sounds like you have sold up...
all the smart ones have sold up?
why are you still towing that line... ESP Joe King...
If its seriously never a better time to buy then why has the King sold?
:)
.^sc

[Crypto Crude]

Do you remember what the King Said..Heres a quote from the King......


Joe King-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.


JK has been honest... you are more secretive MackDunk...
Just what are you really up to...?
You are out of the sharemarket !
you are a smart man... I would be surprised if you werent out of the housing market (like the king), or getting out...
SELL SELL SELL
:D
.^sc

[duncan macgregor]

SHREWDY, You miss the whole point completely. Joe and i are both of similar opinion which you fail to understand. In 1967 when i left NZ a friend of mine bought a house in AUCKLAND in a falling market. When i looked him up in 1972 the price of his house was worth more than half as much again. The cost of building the house had doubled builders were asking their own price, most had left the country, and not returned. He told me he could not have saved as much any other way, even if he lived in a rental garage for those five years. I told him to refinance, get a deposit on some more properties just like JOE KING has done. He is now a very wealthy man, who has only ever had a low paid job but is smart enough to know the wood from the trees. At the top of any cycle its time to take out some profits. I have a similar outlook to JOE pick his brains you will learn a lot more about business than going to uni. Learn about using other peoples money to full advantage in a practical way, listen to JOE he has been there done that. Macdunk

[Arbitrage]

Offset accounts are useful for investment properties. They are interest only (usually the floating rate), can be paid off at any time with no extra fees, and can be drawn on for repairs and maintenance. With rents going into them they act as an operating account for a property investment business and make tracking income and expenses easy. But yes they do require fiscal discipline.

[wns]

I do not like offset accounts at all. They are designed to trap people into constantly drawing down their mortgage equity, ensuring that the mortgage never gets paid off. It is far too easy to say "we need a new tv/car/holiday/etc lets buy one on the offset account". And banks usually charge a higher rate of interest as well, making it even more expensive in the long run.

Are you disciplined enough to ensure that you NEVER draw down more per month than what the balance would have been under a normal mortgage? Are you financially astute enough to even be able to track what the normal mortgage balance would be month by month in order to ensure that you havent drawn down more?

$300,000 mortgage, $10,000 monthly income. Interest payable on $290,000.
However, spend $10,000 every month, then you pay interest on $290,000 FOREVER!
Which keeps the banks VERY happy!

Hi KW, I hear what you're saying... offset accounts are a trap for those without discipline. I guess lots of people just HAVE to have that new "toy", and they go backwards because they "can".

The offset account is a great tool IF you have the discipline to make it work FOR you, not against you.

I don't need to worry about it anymore, we paid off the home loan in 4.5 years.

On another note, I cringe when I hear of people with lots of property who take out a larger loan against their property portfolio each year to pay for their living expenses "tax free". It might be a tax free "income", but it isn't free, its costing them the interest rate year after year after year and increases their vulnerability in the event something unforeseen happens. In my mind its better to own them free and clear, or at least have a healthy interest coverage ratio if you've still got some debt against the properties.

[Crypto Crude]

MD,
If you and King were screening parts for the Movie 'Braveheart'... Joe King would Get the role of Longshanks...
you would get the part of that Irish guy...
The one that said...
"I am the most wanted man on my Island, BUT I am not on my Island"..
:cool:
.^sc

[tobo]

Hi KW, I hear what you're saying... offset accounts are a trap for those without discipline. I guess lots of people just HAVE to have that new "toy", and they go backwards because they "can".

The offset account is a great tool IF you have the discipline to make it work FOR you, not against you.

I don't need to worry about it anymore, we paid off the home loan in 4.5 years.

On another note, I cringe when I hear of people with lots of property who take out a larger loan against their property portfolio each year to pay for their living expenses "tax free". It might be a tax free "income", but it isn't free, its costing them the interest rate year after year after year and increases their vulnerability in the event something unforeseen happens. In my mind its better to own them free and clear, or at least have a healthy interest coverage ratio if you've still got some debt against the properties.

I agree strongly with this advice.
I considered myself very financially disciplined, but found it it tough at times while I had one of those credit lines. You plan to sprint paying off your mortgage, and the only way to stick to it is to continually monitor your progress AND continually move further ahead of where you would have been.
It did work well for me, living frugally while paying down mtge faster and faster. When you get to 3 years remaining it gets exciting as you keep cutting off whole months and 'knock the b*gger off' in 20 or even 10 months.
Different for someone wanting to buy more properties, but my personal strategy was get out of debt, (to live rent-free forever), then start investing in whatever-it-might-be.

[Crypto Crude]

Tobo,
I agree strongly with this advice.
I considered myself very financially disciplined, but found it it tough at times while I had one of those credit lines. You plan to sprint paying off your mortgage, and the only way to stick to it is to continually monitor your progress AND continually move further ahead of where you would have been.
It did work well for me, living frugally while paying down mtge faster and faster. When you get to 3 years remaining it gets exciting as you keep cutting off whole months and 'knock the b*gger off' in 20 or even 10 months.
Different for someone wanting to buy more properties, but my personal strategy was get out of debt, (to live rent-free forever), then start investing in whatever-it-might-be.


Tobo,
To maximise a bull market you get your
second/third house's paying interest only...
... eg, The level of debt remains the same... House price
movements in those periods smash ----->
(interest paid -minus rent recieved) plus capital appreciation house equals large return... A heroic person will now
go out on a limb and return hopping on one foot... They might have trusted someone of position to lead them to the right moral
decision at that time... They might have been fooled in the last year...
A Businessman/woman housing buff will troll the market until they strike jackpot ( this is
not a realistic view for general first hombuyer)...


MD-If the demand exceeds the supply due to tradesmen leaving the country which happened in 1967 when we all buggered off, look for a repeat performance.

Mackdunk's building conterparts are once again buggering off.... quote "1967", he said...
....
...
... housing market turnaround here... I bet my future on it...

Im telling you now...This will be my most accurate pick of all time...
:cool:
.^sc

[tobo]

Tobo,
To maximise a bull market you get your
second/third house's paying interest only...
...
:cool:
.^sc

Oh, yes I understandf the idea of gearing up (OPM) in a bull ppty market.
Personal situation... well... odd.
- Bursts of big income,
- knowledge gained through working at a big international commercial bank
- both 3-year period in which I focussed on 'paying of mortgage' were not bulls, eg bought $120k ,sold for $150k some 5 years later when int rates 18 to15%, big ppty valn gain was while had no income for 4 years, followed by low income. (Career change - excellent for the soul)
Majority of my wealth is still in house (ie residential) and want to diversify (equities).
Oh, and, I now have more than a passing knowledge of the building industry (as an architect doing commercial work), and Energy/Limited Resources interests me more than building industry right now.

Not sure who I agree with on this thread (house prices gonna plateau for 2-5 years, cost of building will keep climbing big-time...which is contradictory, but both these things I think. New industrial ppty not slowing in narrow area I work, again some contradiction. There is a line of thinking that ties this together, relating income to cost of living trends over decades suggesting a gradual move back to cost of food/basics being a greater part of people's income...gradual shift in society.

Think I got too much sun today (sunny day in Auckland)

[tobo]

Re: tradesman
There are increasely many immigrant tradesmen, work in teams, one speaks english...many do really good work, just need supervision or managing (some don't even need that)
This will be another trend - change to greater formal education to be a "qualified" approved tradesman, and more in a supervision role over the hands-on people who do the work (and are skilled at it but don't have a piece of paper).

This model didn't work so well in the past because we had a builder who knew everything and did everything and didn't like to trust immigrant labourers to even make the tea properly, but that builder 'just knew' how to do stuff without knowing why, and probably was not interested in being a supervisor. Obviously these are oversimplified generalisations designed to offend as many people as possible (not)

[Steve]

In another 12 months, it could be looking good for you first homebuyers out there...

$300,000 houses on the way (http://www.nzherald.co.nz/section/1/story.cfm?c_id=1&objectid=10505115)
The national average home sale price is tipped to drop to about $300,000 when the market bottoms out - which may not be until 2009.

[Dr_Who]

LOL.... Where do the realty industry get these idiots from? Funny how the industy is still crying "wolf" and not facing up to reality.


Media to blame for slump, say real estate agents

11:50AM Monday May 12, 2008

It's the media - not the economic cycle or high interest rates driving down house prices, say real estate agents.

http://www.nzherald.co.nz/section/3/story.cfm?c_id=3&objectid=10509561

[tim23]

I agree Dr Who - they were fine when the headlines were bullish but not now?

[axion]

While it's obviously stupid, I do sometimes wonder the effect of the media on this. Like when the "credit crunch hit", and we started seeing effects here like drops in consumer and business confidence and such even though the problems in America barely affected us fundamentally.

[upside_umop]

"Perhaps it's time the industry began to provide its own media and look at directly connecting with customers by way of blog and email alerts and being more open with the major media by providing regular and expert insight into the state of the market"


You've got to love that last paragraph...yeah, lets get the 'experts' to tell us what the state of the market is in....because like any real estate agent would say 'anytime is a good time to buy!'

Real estate agents are not experts nor are they in a profession. They joke themselves.

I cant wait to snap up a house when real property prices have fallen 30% from their highs.

[Oiler]

[quote=upside_umop;199564

I cant wait to snap up a house when real property prices have fallen 30% from their highs.[/quote]

upside_umop..... I think your time is coming :D

Three to six months will see a whole different market. Just save your cash and be ready to drive a bargain.

I am waiting patiently with my finger on the trigger to buy.

Oiler

[upside_umop]

i think we 'know' its coming oiler.

im thinking 2 years at least for myself - need the security of having income!

but 2-3 years isnt all that bad...there is a large lag effect with changes of interest rates, unemployment etc. the us of A is a good example of that, they're still dropping over there. it may not be 30% of the figure QV puts out..but in real terms i would hope it is that at least.

[Crypto Crude]

Buying houses or buying oil companies...
Hum....
...
heres a very important article...
DUNEDIN HOUSE PRICES DROP...
Dunedin is the first of the main Centres to show a drop in residential property values.
The latest quotable value figures show further signs the market is easing - but dunedin is the first area to show negative growth.
Property values there decreased .1% over the past year, with the average price just over $272,000....
....
Its now official.. House prices are down 10% from the top...
flat over the last year plus interest payments which are negatively geared...
Ouch if you did not listen...
...
....
Buff theory has told us that the market has now bottomed and going to go sideways for a few years from here...(this is going off what we have been told by one or two of the Buffs who specialise in this industry at ST)...
Realistic theory suggests otherwise...
I do agree with the buffs... bargains can be found at any time...any week... in any market..
Theres no point having a brain explosion... no need to take risks that can be eliminated by waiting...
play the game when the odds are in your favour...
Mackdunk applies this same strategy to his share investing...
YES, the two are nothing alike... same principle though...
"Its never a better time to buy than right now", we were told...
Im still abit outraged by that flippant sentence which was backed up by the kid......
Mackdunk and his gang of business representials (the buffs) will one day give it up to us and conceed they were wrong...
...
dad put his house on the market last week.....
My bedroom has never been more tidy...

:cool:
.^sc

[Sideshow Bob]

I would be happy if my girlfriend had not put an offer in on a house recently, and then told me after she had did it!!

[patsy]

From the Herald yesterday:

------------------
"Alistair Helm, the chief executive of realestate.co.nz, - the website owned by the major agents, says media stories have an immediate and significant impact on buyer and seller behaviour.

His study monitored seven websites - described as "the major portals and real estate company websites" over a two year period from January 2006 until the end of last month.

Helm says he has found a correlation between a fall off in traffic to these websites with negative media stories. "
---------------------


This imbecile pretends to be a researcher. With his knowledge of statistics, I'm sure he can move from a moronic profession to being a PhD.

[patsy]

From the Herald yesterday:

------------------
"Alistair Helm, the chief executive of realestate.co.nz, - the website owned by the major agents, says media stories have an immediate and significant impact on buyer and seller behaviour.

His study monitored seven websites - described as "the major portals and real estate company websites" over a two year period from January 2006 until the end of last month.

Helm says he has found a correlation between a fall off in traffic to these websites with negative media stories. "
---------------------




I've also been studying the death notices in the printed media for two years. I've concluded that the media has an immediate and significant impact on the number of people dying. I have found a correlation between the number of deaths notices and the actual number of deaths. Therefore, the media is killing people.

[Dr_Who]

Buying houses or buying oil companies...
Hum....



.^sc

I had this debate with a friend of mine early this year... LOL. I am cashed up and bought some oilers and miners eg: NZO and PRC.. and he bought a rental property.

You guessed it!!! My NZO and PRC put on over 60% and yes, the property market continues to drop like a rock with dumbass realty agents tellijng everyone it is a good time to buy... ROFL HAHAHA..

The funny thing is people out there still thinks the property market is only going through a minor flat liner before it rallies again.. LOL. I am gonna pick up some really cheap property end of this year. There are properties selling below 2005 CV in good areas. Yippee.

[duncan macgregor]

SHREWDY, Ask your dad what he paid for the house, then the number of years he lived there, then the price its on the market. Come back to us with the percentage gain over the years, no need to quote prices. Then take into account if he rented plus the fact of the stability of owning rather than renting. He then had the opportunity of borrowing cheap money to play the market, or buy other properties. Why didnt he sell out, and play the market if the market is so good. Why is it you can borrow cheaper for property than you can for shares?. Hope your dad lets you know that property can be bought at a bargain price the same as shares, at any stage of the cycle. If your dad is selling to buy another house, then its in a similar market, so rise or falls in a falling market are in his favour.
Takes longer to sell at a lower price but whats the rush?. When he is sitting in cash in a lower market whoopee doo. Macdunk

[Arbitrage]

Aren't you talking about two different types of vehicles here. Surely the oil stocks are a short term speculative while the property is a long term investment? Let's not get confused about this.

[AMR]

Unfortunately there is no property crash on the North Shore. I might have to settle for an ex P-lab and clean out the place.

One of my friends bought a section right at the height of the property boom. She is now having difficulty with the mortgage. Guess what she does? No, she does not sell, but instead gets a second mortgage and plans to develop the property.

[Dr_Who]

place.

One of my friends bought a section right at the height of the property boom. She is now having difficulty with the mortgage. Guess what she does? No, she does not sell, but instead gets a second mortgage and plans to develop the property.

WTF?? She is asking for trouble. I see mortgagee sale.

[Crypto Crude]

Mackdunk,
Sounds like yourve put a major assignment on my hands... bugger that...
YES The historics look very good... I know the details, theres no point running you through them, I will only tell you about the present situation because Historics are insignificant... He willnot be rebuying any time shortly...

Your thought is comparable to EG, giving a presentation on New Zealand Oil now with company information of 3 years ago... Nobody invested gives a crap for what happened in the company back then... All investors care about in any market is what is going to happen now?
where is the market headed?...
should I get in or out?
These are important questions you stay clear of...
SO why do you give crap about historics?...
I can answer this question...
You have done very very well out of housing... so no matter what happens you are protected by your performance so you can at least come back when the market tanks and tell us "at least ive done well", its a protection mechanism you have which has done the newbie no good...
eg, Its never a better time to buy than right now...
Some of your advice has been quite damaging because you donot answer the important questions at hand for a newbie... this is not about finding a cheap house in any market... this is about finding a house for a newbie...
We arenot businessmen here, we are first home buyers...
big difference

You did the same sort of thing on NZO as with housing...
You dont attack the issue at hand (NZO), you fight your way around it by saying what opportunity cost plays you invested in...
what you could have otherwise done...
this doesnot get to the main issue, which is NZO....
will NZO perform or not... to be honest you never really said...
all you said was last 5 years NZO did, 'blah blah blah'...
You know NZO was a great stock, you never said it...
You are doing exactly the same here...
You are the man that people reading these threads take advice from,
People and posters want to see what you have to say...
You offer little help to those searching for answers...
Ive asked you many times, you dodge the real questions potential investors want to know which is "what shall I do with housing NOW"....

forget about the past...This has little to do with The previous 5 years, previous 10 years, previous 20 years... or in your case, the previous 55 years in the market...:D....
This is right here right now...
The past looks good, the future looks good... These two things dont matter
The present situation looks bad...
You are stuffed if you cant change with the times...
The Kid changed with the times, he sold almost everything...
What have you done?
....
I'll tell you what MD... dad would have got 615k about 5 months ago...
Now hes asking 575k... He will probably get much less...
First open home this weekend...
Come down to the national convention, while you are here come check out the house... we are looking for an escape goat...
:D
.^sc

[duncan macgregor]

SHREWDY, You are wrong on a few points. Firstly with your father, if it was shares he had held for years would be silly to sell in a bad market. You now say he is selling property in a bad market, and say look i told you so. If you sell to buy in any market then the odds are in your favour. If however you are selling to get out the market, then that requires you to time the market. Getting back to your point of entering the market for the first time, you will find that with a little bit of homework getting yourself organized with finance in advance of any event, you will find a bargain in any market.
I would suggest any potential first time home buyer, visit the bank or other lending agency to find out what they can borrow,against what deposit required.
Do the homework, it costs nothing, then sit in at a few mortgagee sales with your hands firmly in your pockets until you learn something. I worked seven days a week after traveling the world with no family support to fall back on if it all went wrong to get started. I drove old bomb cars just to pay a mortgage when my mates were paying their cars off. I built my own kitchen cupboards bought a second hand stove and furnished my first house out a second hand shop. I shared my first house with work mates paying rent for a year before it all came right. It never is easy at the start, delaying it is not an option if you want to get ahead. Macdunk

[Dr_Who]

I'll tell you what MD... dad would have got 615k about 5 months ago...
Now hes asking 575k... He will probably get much less...
First open home this weekend...
Come down to the national convention, while you are here come check out the house... we are looking for an escape goat...
:D
.^sc

Properties in good areas in AK are selling below 2005 CV. I am still out of the market, cos I think this downturn will last longer then previous cycles. You only have to look over in the US property market to see that there are no signs of bottoming out yet. It is very ugly over there. The banks are holding onto 3 yrs supply of mortgagee properties they cant sell. OUCH!

[minimoke]

Ive asked you many times, you dodge the real questions potential investors want to know which is "what shall I do with housing NOW"....
.^sc
Step one Determine if you want an investment in which case do the sums and buy a house if it stacks up. If you want a home then do the sums on actual and intangibles costs / benefits and either rent or buy.

[Crypto Crude]

Mackdunk,
I never said I told you so...
All I said was my father is selling his house and he's looking to re-enter in a few years at the bottom, period...
readdress the situation early next year...
Simple stuff really...
...

If you sell to buy in any market then the odds are in your favour.
NO...
Not in a falling market...
If you sell, and re-enter in a few years you are much better off in a falling market....pitch a tent in the local Park if need be:D
:cool:
.^sc

[steve fleming]

Step one Determine if you want an investment in which case do the sums and buy a house if it stacks up. If you want a home then do the sums on actual and intangibles costs / benefits and either rent or buy.

You are right to consider the intangible benefits of owning a home.

Some things in life aren't so cut and dry as just doing a monetary cost/benefit analysis.

Do people consider such a monetary cost/benefit analysis before having kids or deciding whether to send your kids to a private school, without taking into account the non-monetary benefits??

There are far more advantages to owning your own house than just monetary.

Think i've said before on this thread, but people who live their life as if every decision in life can be made based on an IRR calculation on a financial calculator really worry me.

[duncan macgregor]

SHREWDY, I will give you some numbers to work out from my own personal experience from a property i have had for the last 15 years. I bought a block of land built a house and numerous sheds etc all by the sweat of my brow.
Being a builder i did the lot myself.
I have just sold the property, so i take the agents cost and legals off then divide that figure by the purchase and material cost to see what percentage of gain that i had.
I find it comes out at 4.88. If i take the 4.88 and divide it by 15 which is the number of years i find that comes to an average gain of 32%. How many people have had a risk free average gain like that in the sharemarket over the last 15 years?. You still have not come out with your dads average gain but i feel sure its better than the 10% that i get ridiculed for quoting on this site.
Macdunk

[AMR]

Slight arithmetic error, if your house increased in value by 4.88x (or 488%) over 15 years your annualised gain is closer to 11.11% a year.

1.111^15 = 4.85, close enough.

[Crypto Crude]

Mackdunk,
I said im not quoting my dads returns because that is in the past and therefore unimportant..
Present situation not past...
Im sure we can go on and on with the success stories..
Id rather hear about who is profit taking in the housing market, and who is standing by and watching their house price fall?...
what are you currently doing Mackdunk...???
As I said My dads house is now down about 40k from the top...
Mackdunk Ive returned more than buffets average return in my first 5 years... Still up this year even with LMPO stuffed bar Otahu well and me holding 240k of them at 1.6c average...
...
Add in interest costs to your overall return aswell macky D...
:cool:
.^sc

[Crypto Crude]

Very good Point Hiawatha...
How many hours did you spend on this project of yours Mackdunk?
:cool:
.^sc

[duncan macgregor]

SHREWDY i didnt borrow to buy or build, but borrowed off and on for business reasons at a much cheaper than normal doing it any other way. Example buying and selling other property mortgagee bargains. Then take into account of not paying rent with the flexability of borrowing on the strength of it. The money that was invested in the property was not tied up dead money giving me business opportunities.
I dont care what the market cycle is, i will find a bargain in any market. You can argue all you like, but i have never known any rich person that is happy to pay rent unless its short term. I suppose being in the building trade, i meet more people that made a fortune in property than any other way. I am now looking to buy SHREWDY, let some other silly bugger do it for me this time. I would never borrow to buy shares but would borrow to buy property anytime. Macdunk

[Crypto Crude]

Is it possible that both the king pins are right????
The King is selling/sold up already...Mackdunk just stated he is a happy buyer...
....
How many hours did you spend on that project of yours...?
How much money do you reckon yourve lost on housing this year...?
....
:cool:
.^sc

[minimoke]

Mackdunk,
that is in the past and therefore unimportant..
.^sc
Couple of Points. ShrewdCrude. The past is very important – for without it you have no idea where you are today relative to anything else. Also your dad hasn’t lost $40 from the top. He didn’t sell a few months ago so there is no real idea the value of his house then, as there is no real idea today.. Your views are conjecture – and a proper figure could not be realised until someone had made an offer which your dad accepted and the deal went through.

[duncan macgregor]

Is it possible that both the king pins are right????
The King is selling/sold up already...Mackdunk just stated he is a happy buyer...
....
How many hours did you spend on that project of yours...?
How much money do you reckon yourve lost on housing this year...?
....
:cool:
.^scSHREWDY i have lost nothing in housing this year or any other year. I had a conditional contract on it that fell over in feb at my asking price. I have another contract on it from a retiring farmer who wants to buy at my origonal contract price. I am a very happy seller, the buyer wants the posession date in an unconditional contract to co-inside with his farm sale in four months time. Your other question about hours spent developing is easier to explain. I LUVED DOIN IT. If you have never turned a bare block of land into a beautifull living environment with trees, and birds, fish in the pond, then your time on this earth is a complete waste of time. Next house all lined up SHREWDY and its at a bargain price exactly as my indoors wants it. Macdunk

[upside_umop]

Slight arithmetic error, if your house increased in value by 4.88x (or 488%) over 15 years your annualised gain is closer to 11.11% a year.

1.111^15 = 4.85, close enough.

Yeah correct AMR, about to say the same thing.

The 10% stated on the stock market (long run is higher i believe) is actually compounded, not just divided by the years.

So in comparison, its not much/if better than the stock market.

[Crypto Crude]

minimoke-Couple of Points. ShrewdCrude. The past is very important – for without it you have no idea where you are today relative to anything else. Also your dad hasn’t lost $40 from the top. He didn’t sell a few months ago so there is no real idea the value of his house then, as there is no real idea today.. Your views are conjecture – and a proper figure could not be realised until someone had made an offer which your dad accepted and the deal went through.

Yes the past is important, but not that important in the context of the current housing market situation...The past will give a great clue as to how far prices will fall, the Past will give an indication of where housing will be in the future, the past 5 years willnot mean that the next two years will be the same... Therefore, I see no reason to focus on historics.. Im only focused on what is happening right here right now....
I know the past is good... the only need to talk about historics is for self gratification...
Showing examples of past performance is blinding the real truth right now as everything looks totally the opposite... we are 5 months into the downturn which will last years...
Dont get suckered into great examples of a path to super normal profits...those profits will be realised, just not right now...
I will get a house, I wont rent for life...
I wont be buying, because there is never a better time to buy than right now... what a joke...
....
As to your other query...
At the beginning of the year Dad got a reasonably accurate valuation on his house... The valuation process isnot a majorly complex.... All valuations are based on a combination of value of house itself while comparing sale prices of similar houses in the same suburb, street etc...
Id say that 610k at the beginning of the year is very accurate, and the current valuation is a fair asking price... The fall in value corresponds to the fall in the overall market...
Yes he didnot get an offer at the beginning of the year...A house is only worth what someone is prepared to pay...
connect the dots...
......

[Crypto Crude]

Minimoke,
and yes you are right..
he hasnot lost $40 from the top...
he has lost 40k from the top...
:)
.^sc

[Crypto Crude]

duncan macgregor-SHREWDY
1- i have lost nothing in housing this year or any other year......
2- Your other question about hours spent developing is easier to explain. I LUVED DOIN IT. If you have never turned a bare block of land into a beautifull living environment with trees, and birds, fish in the pond, then your time on this earth is a complete waste of time....
3- Next house all lined up SHREWDY and its at a bargain price exactly as my indoors wants it. Macdunk

1- Very impressive...
2- Mackdunk you are running a business... just because you love doing something doesnot mean you do not factor labour and time into it...
I love buying oil stocks, that doesnot mean that I would do it for free...
The time invested makes up part of the return...
The more time I invest the more time I have to spot a better return/ better stock/ better opportunity to load up, (ive now done it 3 times... PPP, NWE, MEO)
Vice Versa aswell... Im shorter on time right now, and therefore I do not currently have any major rampant picks....
.
What you need to do is stack up what you could do with your time if you didnot build a house...
EG You wouldnot catch Michael Jordan Mowing His lawns, ever... He would play a game of Basketball, earn a few mill in the same time... and pay someone to do his yard work...
as you know, its called opportunity cost...
My time as an unqualified trader will some day be worth north of $50 an hour for my time and whatever the returns are...
If im not making that then Im wasting my time in this game...
3- Good luck with your purchasing... come buy in CHCH... think about it, You could come over for sunday afternoon tea and biskets...
Invitation is open...
...
Do you ever delegate others to do your dirty work?
:cool:
.^sc

[George]

Interesting thread, you are right about opportunity cost Shrewdy, I spent
4 months on our do up purchased last July which is about 10 grand based on an
average wage, but I ENJOYED IT. Then I got behind in tax as work did not
come in over the holidays but got ahead of that now have plenty of work
leading up to July when we can pay back 12 grand off principal for no cost.
Then we are going to Rotorua for a holiday as a reward.
Would not have exerted myself like that if renting as there would have been
no incentive and our 20% equity will have grown to about 30%.
We love our old do-up (nice now) with a view and great location close to main centre of
Henderson and railline and as I mentioned before, with both of us
in our 50's, if we didn't make the move now we may not have been able to
later on (while some prices seem to be down, interest rates have gone up
so we have not lost by buying a year ago at the perceived top) and we are
LOVING IT.
George

[minimoke]

At the beginning of the year Dad got a reasonably accurate valuation on his house...
......
We too got a valuation at the beginning of the year from the Council. Thankfully it is $350k shy of what I reckon true market value is. In the good old days when I purchased houses requiring a valuation it was not surprising in each of three cases I recall the valuation was exactly what I was offering. And then I recall that leading question the Valuer asked.....

ShrewdCrude I can’t help but feel you are focussing too much on the picking the future. At some point you’ll realise you can’t pick the future. Don’t take this as a personal slight – its just one of those simple facts of life. If you doubt this then check out sharetrading competitions on these threads – you’ll find articulate and intelligent people well off the mark. You’ll start to hear people picking the future interests rates and hanging off fixing their mortgage for X % in X months. Its all just a waste of effort.

It appears you are unable to put a value on the intangible benefit of the enjoyment associated with being in your own home. That’s not a bad thing as I have often argued that renting is not a bad strategy either. This thread is after all about first home owners – not investors.

Oh and thanks for picking up the missing K in my previous post. Its added immensely to the discussion on this thread.

[upside_umop]

This thread is after all about first home owners – not investors..

Which makes it all the more important to pick as close to the bottom as possible. Its alright when you own a house with 100% equity, but when you lay down 10% and it gets gobbled up by a declining house price, it makes it a lot harder to get ahead in the future and buy more houses. In a rising market, it makes it so much easier as you essentially gain equity which you can borrow against. You cant borrow against negative equity.

And the age old saying goes...a house is the biggest investment most of us will ever make.

[duncan macgregor]

This is after all a debate about new home buyers coming into ownership for the first time.
Things to do. Get a fixed rate for at least three years regardless of what you think will happen. This will allow you to keep to a budget giving you some certainty in the short term. Most working class people with lower to middle income dont play the share market or have any other means of accumulating money, other than property investment, where even a dummy can end up filthy rich with a menial task job. I know quite a few people in that position one being a fishing friend of mine, who has about six rentals no mortgage and a factory job.
He bought his first house paying a twelve pc mortgage so what are you lot bleating about?. Get out and do it, pull your finger out, the price of houses will go sky high when this is over. All the builders are fleeing the country, next time when you want to build look out. Macdunk

[minimoke]

And the age old saying goes...a house is the biggest investment most of us will ever make.

But here is the distinction people are not picking up on – the difference between owning a house and owning a home. If you want a home it doesn’t matter if the market goes up or down, When you come to buy your next home you will be buying and selling in the same market.

Buying a home with 10% equity isn’t so much an issue around dropping values – its more about your commitment and ability to service a loan if things go wrong.

If on the other hand you want to buy a house on which to leverage capital gains then that is a totally different argument. This thread was, I thought, about first home buyers, not property investors / speculators.

And we need to get rid of the notion about your home being your biggest investment. It simply isn’t for a variety of reasons. One being there is no liquidity in it. Another being you do nothing to manage it – do home owners look at the return on expenditure each time they head down to Bunnings on their next DYI project – no they don’t. And when the housing market reached it “peak” did everyone sell their home to realise the profit – of course they didn’t. This is because its a home not an investment.
And lets not draw a distinction between investment and speculation.

My home has never been an investment because I have never made a profit on it. Each time I have sold a home I have gotten more than I originally paid for it – but I have always bought another home which is worth more. I have never been able to realise a profit and probably the only person to do so will be my estate when I die. I have however been able to make investments using the equity in my home since the bank is happy to loan on bricks and mortar.

[minimoke]

... paying a twelve pc mortgage
Ah, those were the good days. I remember paying 24% on one of my properties!

[Crypto Crude]

mackdunk-This is after all a debate about new home buyers coming into ownership for the first time.
Things to do. Get a fixed rate for at least three years regardless of what you think will happen. This will allow you to keep to a budget giving you some certainty in the short term.

Thats rubbish talk MD...
Why on earth would you want to lock in a higher interest rate now if you know its going to fall?... We all Know that the OCR is going to be slashed from late this year,
early next.... with further cuts next year...
....

:cool:
.^sc

[duncan macgregor]

Thats rubbish talk MD...
Why on earth would you want to lock in a higher interest rate now if you know its going to fall?... We all Know that the OCR is going to be slashed from late this year,
early next.... with further cuts next year...
....

:cool:
.^sc Nobody can say with 100% certainty anything will rise or fall SHREWDY not even your oil price. Can you imagine what would happen to the price of oil if some Scottish person invented a cheap method to extract hydrogen from sea water. I say that because it was a simple Scottish ploughman sitting in front of the fire trying to hold the lid of a kettle down with a tea spoon that started the whole machine age. Dont you think that can happen again in a different way?.
When i move on i will devote my mind to it SHREWDY so sell your oil stocks, and buy a house before its to late.
On a more serious note getting into your first property is not the time to gamble on the unknown. We have an election coming up with who knows what rules or interest rates changes might be. MACDUNK
PS My last 99 inventions have all been disasters so take care the next one will be a winner.

[Crypto Crude]

Mackdunk,
check out this graph....
http://www.nationalbank.co.nz/economics/exchange/nzdusd.aspx
This morning in the space of a very short time The NZ dollar fell half a cent against the greenback in response to interest rates heading lower here in NZ later this year...
its very close to a sure thing MD...
...
MD, I bet you that the next time the OCR moves from 8.25% that it will be down... do you care to put a wager on it?...$500...?
remember that Inflation is currently outside the 1-3% band...
sitting mid 3%...
:cool:
.^sc

[winner69]

Mackdunk,
check out this graph....
http://www.nationalbank.co.nz/economics/exchange/nzdusd.aspx
This morning in the space of a very short time The NZ dollar fell half a cent against the greenback in response to interest rates heading lower here in NZ later this year...

...


The fall followed the latest retail sales figures which says NZ economy is stuffed .... and big money players don't invest in currencies where the economy is stuffed .... to much risk of a cpaital loss ... so get out .... self fulfilling prophecy but that is what happens .... interest rates were not the driver .... protect the capital is the game

[duncan macgregor]

Mackdunk,
check out this graph....
http://www.nationalbank.co.nz/economics/exchange/nzdusd.aspx
This morning in the space of a very short time The NZ dollar fell half a cent against the greenback in response to interest rates heading lower here in NZ later this year...
its very close to a sure thing MD...
...
MD, I bet you that the next time the OCR moves from 8.25% that it will be down... do you care to put a wager on it?...$500...?
remember that Inflation is currently outside the 1-3% band...
sitting mid 3%...
:cool:
.^sc I never bet against myself Shrewdy all my money is in Australia worth about 12% more in one and a half years. The point being you dont gamble when its all on the line. First home buyers are cash strapped needing some level certainty who cares if it goes the wrong way when you are sitting safe. Its much better than it going the wrong way and losing the lot. NZ is a country destined to be the Australian old folks home with nice sheep running about. Your factories are all gone or closing. Your Aluminium smelter is threatoning to close with this global warming rubbish Your young people are fleeing the country in droves. Your national airline get the mantainance done in China at slave labour rates. Wait a couple of years and try to find a builder. Macdunk

[minimoke]

Thats rubbish talk MD...
Why on earth would you want to lock in a higher interest rate now if you know its going to fall?... We all Know that the OCR is going to be slashed from late this year,
early next.... with further cuts next year...
.^sc
Shrewd Crude. You’re doing exactly as I had predicted – trying to forecast the future fixed term interest rates. Lets sit back and watch and do nothing while trying to pick the optimal buy point – which will incidentally pass you by because the goal posts will keep shifting for you . You’ll be like the pokie player thinking that one more week delay will bring you the .1% drop in rates to be the real deal. Keep doing the numbers

300,000 @ 9.5% interest = $28,500
300,000 @ 8.5% = $25,750 = $3,000 difference.

Now, I’m not prepared to predict when interest rates will drop by 1%. Until they do you are loosing money.
Buy a $350,000 house with a 1% gain you’ll make $3,500. If you don’t think you can make 1% in any market you probably shouldn’t be looking at property.

[Halebop]

does anyone agree with my summation???

Shrewd your original math of requiring 8% growth is close enough but as Duncan points out ignores that there is an opportunity cost of rent. You would have to pay rent if you did not own a house, say 4%, therefore the house has to increase at a rate of less than 8% to break even when this is considered. On the other hand rates, maintenance, depreciation and insurance aren't paid directly by renters so that needs to be factored in to the ownership model too.

It's interesting though that rent more closely reflects the cost of ownership that our parents enjoyed when purchasing property than a purchase itself now costs. I think this is telling of where property fundamentals lie as opposed to a more narrowly driven demogrpahic demand. For those who are interested - Baby Boomers are the largest property owning group, more so than their own parents (they own more rentals, more holiday homes, more property per capita full stop). While not their "fault" for buying property, it would be naive to believe that sentiment would not focus on them.

The current secular trend in expanding price earnings multiples on property (from 3x to 6x) and expanding incomes (from little more than one income per household to something closer to 2) is clearly not supportable unless we believe:

Interests rates will on average fall forever
The numbers of incomes per household will rise forever

The first is improbable and the second will prove socially (and politically) unstable (As growing resentment towards Baby Boomers demonstrates).

We need some smarter compromises and balance between zoning laws, tax policy and banking policy (think how banks are allowed to operate with less capital by lending on residential property - how do we think this is working out right now, particularly in the US?)

I personally don't like debt. Just as on average it constricts returns, innovation and prudent risk taking within organisations, I think it does the same to individuals and entire economies (and I suspect correlates with our appalling track record in productivity as a huge chunk of our debt funds residential real estate while the profits on that debt are exported as a balance of payments deficit).

In terms of passive investing, a debt free policy clearly favours equities over residential real estate. Equities simply deliver higher gross returns and provide simpler mechanisms for targeting macro trends and entering and exiting segments at lower transaction costs.

[George]

I was nervous about buying a house last July so I allowed for that by
locking in the certainty of 8.3% for 5 years. I am paranoid about paying
off the lump sum principal each year as in 5 years if interest rates go
to say, 15%, I want to have as much equity as possible. How can anyone
know what rates will be, I remember 21.5% in 1988.
George

[Crypto Crude]

minimoke-
Shrewd Crude. You’re doing exactly as I had predicted – trying to forecast the future fixed term interest rates. Lets sit back and watch and do nothing while trying to pick the optimal buy point – which will incidentally pass you by because the goal posts will keep shifting for you . You’ll be like the pokie player thinking that one more week delay will bring you the .1% drop in rates to be the real deal. Keep doing the numbers

Minimoke,
You make it sound like im missing a great opportunity for not buying a house now?

Life is all about taking risks !... buying a house, paying weekly payments for 30years is no risk...Thats the safe option in life...
Im a risk taker... And the first major risk I'll take on is ridding this downturn for all its worth...

its very simple, the goal is to save 10years or more off the loan term...
Buying a first a house would likely be the most important decision of my life, therefore I would like to buy at the best time...buying at lower interest rates is a bonus only... and I will buy on the way up, I will explain further...
....
Ive posted about timing the market before...
If try and buy at the absolute bottom, you will likely miss and prices will keep falling... If you buy as it starts to turn up then you will save the time you stood by and watched, you will identify the new trend, you will be better off...
I will buy my first house on the way up, and I reckon Ive got a few years...
sideways markets at the bottom makes you worse off with interest payments...
If in 5 months the market turns up then Im stuffed, I have no real income... I would have to pursue other avenues I have on offer...
I doubt that I would miss an opportunity if one came my way in a few years...
I see no great opportunity of a life time in housing now!...
I willnot be a 52 year old man with a house only... 25-30 year loan term is what Im currently realistically looking at at 600per week.....
... It is not my dream to be 50, with 10% house price growth mostly cancelled out by 8% interest rates-negative growth for the near term...
...
The cost of Renting is cancelled out by the amount of money I would not put into the house deposit, which could be used to make returns elsewhere....
trust me dude, I have no major dream to be in shares for the rest of my life.. id seriously rather be in housing and grind out those 20-30yrs..Im way smarter than that, And I know I wont have to... Ive got a few other avenues, and In a few years when I get into business, I will need the cashflow...
If I have a house gobbling up $600 a week, (400 of interest payments), then I will likely be very tight (If I dont get married)...
marriage is for another topic... it wont happen over night but it will happen...
The only chance I have in housing is if I can shave that 30yr loan in half, or down to 20years...I know its hard for a buff or someone already in housing to understand...
With falling house prices and falling interest rates, it is very much so possible...
Its no dream of mine to be 50 with one house...
I will have a house, the path to that house might have to be unconventional...it wont be a grinding depressing ride for me...
....
lastly, 30yrs ago it was only 3 yearly incomes to 1 house price...
at the peak it was 7 yearly incomes to 1 house price...
Dont tell me that it is no different today as it was 30years ago...
....
PS-there is nothing wrong with forecasting interest rates...
....
Lets hear some thoughts from some other potential future homebuyers?
Questions I have...
when are you looking to buy?
and what would house values have to fall to for you to consider a future in housing...?
remembering that how far prices fall represents how long loan term will be...
So final question is what do you think an appropriate loan term would be (years needed to pay the house off)?
:cool:
.^sc

[Crypto Crude]

minimoke-You’ll be like the pokie player thinking that one more week delay will bring you the .1% drop in rates to be the real deal. Keep doing the numbers

get over it minimoke,
Im nothing like that...
As Steve said, life is not about IRR...
its about being smart--> the most amount of output for the least amount of input...
30yr loan is a hell of allot of input...One house is not much output....
even if that house went from 200k to 1mill in 30 years...
:cool:
.^sc

[minimoke]

lastly, 30yrs ago it was only 3 yearly incomes to 1 house price...
at the peak it was 7 yearly incomes to 1 house price...
Dont tell me that it is no different today as it was 30years ago...
.^sc
ShrewdCrude
This might have been so 30 years ago. But buying a house back then was also different. There were no such things as 110% loans. Nor were there loan options of fixed / floating and overdraft, nor were terms out for 30 + years. The lending ratios were very different; you needed registered valuations and a pile of other paper work and had to literally go down on bended knees to get cash out of a bank. And loan rates got to be over 20%. And people moan today. Jeez today – I can get $50k out of Amex by filling in a form and posting it in.

Your loan doesn’t have to be seen as a mill stone around your neck for the rest of your life. Look upon it as a commitment to repay someone for the privilege of levering equity to make gain. At the moment I am thinking of being in debt till the day I “retire”. Though I am moving towards thinking I might be in debt till the day I die. Doesn’t worry me as assets far outstrip debt and I like having the opportunity to use someone else’s money to do stuff.

Buying a home is different from buying a house. You seem to keep tangling the two. You also sound like you want to get into a house on your own. There are other options.

[minimoke]

Minimoke,
Lets hear some thoughts from some other potential future homebuyers?
.^sc

Here you go
$189k, three bedrrom, 683square section, close to golf, parks and schools. Sky installed, plenty off street parking, 10-15 minutes to CBD, quiet street. Can't go wrong!
http://www.trademe.co.nz/Trade-Me-Property/Residential-Property/Houses-for-sale/auction-148872167.htm

[Dr_Who]

I am a potential buyer of properties and cashed up. I have a funny feeling that this property cycle has abit more pain to go before any gains. I see 2-3 years of downturn or flat property market. So, I am in no rush to buy. Abit like a Briscoes sale.. 30-50% off everything in store nationwide.

[Halebop]

ShrewdCrude
This might have been so 30 years ago. But buying a house back then was also different. There were no such things as 110% loans. Nor were there loan options of fixed / floating and overdraft, nor were terms out for 30 + years. The lending ratios were very different; you needed registered valuations and a pile of other paper work and had to literally go down on bended knees to get cash out of a bank. And loan rates got to be over 20%. And people moan today. Jeez today – I can get $50k out of Amex by filling in a form and posting it in.

Minimoke all this proves is that the price of housing is partly a function of lending and liquidity rather fundamentals (the other part is the number and desire of people who want to borrow to house themselves). This is a two edged sword. Banks have already tightened lending criteria and no surprise the market has dropped. Funny how they steadfastly stuck to the line that their own practices did not encourage the property boom? Seems quite at odds with what is actually happening or any rules of liquidity that I understood.

A friend was asking $720,000 for their house - a price achieved by several in the same street in the last 6 to 12 months. Their highest initial offer was $640,000. They managed to claw the offer up to $650,000 but the purchaser had to go back to the bank to check. The bank lowered rather than raised his pre approved limit (the same bank allegedly offering 110% loans). Now the offer for $640k is gone too. Another friend, coincidentally only one street away from the first, was buying rather than selling. Went to Auction expecting the old range of $700,000ish to drop to $650,000 and was prepared to pay that. Won the Auction for around $550,000, $100,000 less than expected and a 20%+ drop on prior benchmarks.

The Real estate institute is trying to convince us the median is relatively stable. But once again smoke and mirror prevail because they are reporting sales rather than values. What are selling are small volumes of higher value properties at discounted prices. The market is in the poop and so is financing.

[minimoke]

The market is in the poop and so is financing.
Presuming your friends are buying and selling in the same market they haven’t lost anything so its not a home owners problem.


For those investing in housing then that’s a different story. And since no one invests in property for capital gain (because who is paying the tax!) then they just need to worry about the cash yields.


Things could also get problematic for those that have leveraged their property to buy the overseas trip or new boat. But that’s probably more a function of consumerism rather than property / house ownership.

[steve fleming]

If you get a good job in your 20's & 30's (or before you have major family commitments - kids), and buy a house early enough, you don't really have to worry about all this.

My wife and I ( very early 30's) pretty much paid off our $480k mortgage (first home) in 4 years, thanks to both of us having good jobs/high incomes together with some help from some investments that came good (ie see 10 baggers below).

I must say, however, the combined income really really helps.

[minimoke]

Shrewd Crude - Labour have made it a lot easier for you to get onto the property ladder. Check out the Elections 2008 thread and see how you can exploit the Governements largesse to your benifit.

[Crypto Crude]

Minimoke,
Im voting National...
Any future first homebuyers out there in internet land?
:cool:
.^sc

[Year of the Tiger]

I remember the 1st house in the Wairarapa that my late husband and I bought (built) back in the early 70's. The bank (BNZ) wouldn't lend so that we could buy an existing home, and you could only get a "State Advances" loan if you built a new house. An uncle who was a builder did us a good deal so off we went on our journey of discovery to build our first home.

We learnt that when calculating our ability to repay the mortgage, State Advances wouldn't take my earnings from a full time job into consideration as I was a woman and women get pregnant and then give up work to raise their kids. It didn't matter that my savings alone paid for the section so it was only the cost of the house we had to find.

We managed to just scrape in and finally moved into our very modest little 3 b/room house. I thought at the time, wow, we made it and this is going to be our home for the next 25 years.

Wrong..... we sold it 4 years later and doubled our money. Then moved up to the Bay of Plenty...

Every time we went through this exercise, we struggled but always made reasonable profits after 3 or 4 years, and never once regretted that struggle to get a bit further ahead each time.

YOTT

[upside_umop]

im here shrewd..

2 years + im comfortable sitting on the sidelines...
im not really in any position to buy for 2 years anyway, not until i have sustainable cashflow.
will buy in chch, around university area and live with flatmates to ease the pain...and to carry on partying up! by then, i would expect rental yields to have increased too.
i see the university area as bluechip, and would move on myself after a bit, while still renting the house.

im thinking upto a 20-30% decline in real terms.
ie, 3% inflation for 3 years, slightly over 9%.
the rest made up from falling prices.

[AMR]

I'll be buying around the North Shore area, possibly looking up north to Warkworth and Orewa. Many transport improvements and amenity improvements there, not to mention proximity to Massey Uni and SH1.

So....do kids really cost that much?:D I would have though the benefits and working for families makes it a cashflow-positve venture.

[Crypto Crude]

First homebuyers...
You seriously got to look at Bermudas pick of ROMA... RPM...
This stock will be worth dollars in a few years...
Its in early stages of certifying 1TCF of gas....
Worth $3-4 per share...
Disc Held since 6c... out at 6.7c in a very bleak market day, back in at 7c...
will not be selling... Long term hold...
This is my favourite stock, probably one of the best Ive ever seen...
:cool:
.^sc

[minimoke]

Marion Street, Labours property expert, isn’t worried about dropping property values. She reckons that what we are experiencing is a slow down in the rate of property value increases. She’s not worried about a loss of equity in the Governments new Home Loan scheme so now looks as good a time as any to buy!

[fungus pudding]

Marion Street, Labours property expert, isn’t worried about dropping property values. She reckons that what we are experiencing is a slow down in the rate of property value increases. She’s not worried about a loss of equity in the Governments new Home Loan scheme so now looks as good a time as any to buy!


Hahahahaha - ah - hahaha That's all I need to know. Time to get out of the real estate market alright.

[Halebop]

If you get a good job in your 20's & 30's (or before you have major family commitments - kids), and buy a house early enough, you don't really have to worry about all this.

My wife and I ( very early 30's) pretty much paid off our $480k mortgage (first home) in 4 years, thanks to both of us having good jobs/high incomes together with some help from some investments that came good (ie see 10 baggers below).

I must say, however, the combined income really really helps.

So Steve, the way we make real property achievable is to earn higher than average incomes and make a few 1000% returns on listed shares? Not quite a lesson on real estate riches nor affordability methinks.

[Dr_Who]

The Real estate institute is trying to convince us the median is relatively stable. But once again smoke and mirror prevail because they are reporting sales rather than values. What are selling are small volumes of higher value properties at discounted prices. The market is in the poop and so is financing.

That's cos the real institute is run by a bunch of idiots who are probably long on property and got caught with their pants down. I have no time for these hill billies. They are abit like these so called "financial planners" who put all their clients into a risk free diversified portfolio of different finance firms.

[Steve]

That's cos the real institute is run by a bunch of idiots who are probably long on property and got caught with their pants down. I have no time for these hill billies. They are abit like these so called "financial planners" who put all their clients into a risk free diversified portfolio of different finance firms.

Why can't the numbers be based from an independent source such as LINZ or Dept of Statistics?

[Dr_Who]

Why can't the numbers be based from an independent source such as LINZ or Dept of Statistics?

It is called "talking their own book". The realty industry will advice their clients that will benefit themselves and not their clients. They have seen their revenue halved so have to talk up the market to regain lost income. That's why I never make decisions on my property portfolio on the advice of a realty agent. I would talk to them to get the feel of the market, but will do my own research and make my own decisions.

Those that listen to the realty industry's BS is asking for trouble.

[Steve]

It is called "talking their own book". The realty industry will advice their clients that will benefit themselves and not their clients. They have seen their revenue halved so have to talk up the market to regain lost income. That's why I never make decisions on my property portfolio on the advice of a realty agent. I would talk to them to get the feel of the market, but will do my own research and make my own decisions.

Those that listen to the realty industry's BS is asking for trouble.

I understand that, that's why I was asking why can't the numbers come from an independent source?

[remy]

I'll be buying around the North Shore area, possibly looking up north to Warkworth and Orewa. Many transport improvements and amenity improvements there, not to mention proximity to Massey Uni and SH1.

So....do kids really cost that much?:D I would have though the benefits and working for families makes it a cashflow-positve venture.


much the same plan as me, i am too young to worry about buying a house, gotta get my degree first but getting a house on the coast / warkworth is definetly a good idea, lots of growth going to be happening up those ways, but by the time i get in will probably be too late :(

but if shrewdy is right maybe rpm, ura, nwe etc could change things over the next few years ;)

[Crypto Crude]

Oh golly gosh...
Im not tipping URA...
its on my watchlist only...
:cool:
.^sc

[wns]

its very simple, the goal is to save 10years or more off the loan term...

The only chance I have in housing is if I can shave that 30yr loan in half, or down to 20years...I know its hard for a buff or someone already in housing to understand...
.^sc

Pay fortnightly instead of monthly and you'll reduce a 25 year loan down to about 19 years.

[underground]

SC, im voting national as well. im getting sick of seeing helen clark's face.


in my early twenties and at auckland uni doing a bachelor of property as well as a BCom.

From my perceptions i see this:

there will always be a bullish market for those who wish to buy there first home...

maybe we need to look closely at market value and how it is derived? "the fair value at which a willing buyer and willing seller exchange an asset in an arms length transaction, at a certain point in time assuming both parties acted prudently and knowledgably.

in my opinion all the prudent and knowledgable people will be renting if the IRR of equity markets or other investments exceed that of owning a home. they will use this margin to increase their cash base to buy a house outright or at least with <50% Loan to Value Ratio.

if investors arent acting prudently or knowledgably then what happens? the market gets distorted to the extent at which it gets under or overpriced..

if one area of investment is exceeding returns of another, a rational investor will switch to the option that provides the higher rate of return. thus selling their investment property etc.. this should eventually create an increase in supply and reduce the price to one that correlates with the property and economic cycles.

other options i guess we youngies could consider is take over one of our parents investment properties at a discount or interest free basis..

for me my personal strategy is just to acquire land.. purchase the asset that doesnt depreciate and work yourself up from there, anticipate future areas of growth and where city and town fringes may extend..

i heard from CBRE that the residential land supply in the Manukau District (Auckland) will be gone in two years. if land stock is fixed then the price is only going up with demand. i expect this pattern to emerge in other areas as well.

do the hard yards now and with your current income and market gains increase your cash base to one that will allow you to buy a decent chunk of land somewhere. years later when demand is so fearce you could subdivide and sell.

eventually for most houses as they age. the value of land will exceed the value of improvements.

* underground will live in a tent on his land if need be, or maybe one of them portable cottages till he can afford his home. as long as i have mah laptop with internet and my woman doesnt leave me lol

i share your enthusiasm for NWE as well shrewd... but my pick is SXP.. ive made a 100% gain on it already but still think it is a hot pick and undervalued.. just wish i put more in at my entry price lol. a lot of interest in CSG lately as im sure you may be aware

[winner69]

You guys better get in quick

Tide may be turning
A surge in house-buying last week has prompted warnings that first-home buyers holding out for a bargain should get in before they miss out.


http://www.nzherald.co.nz/section/3/story.cfm?c_id=3&objectid=10510758

[Dr_Who]

It is called a dead cat bounce. Abit like the market.

[Halebop]

I'd be quite astounded that anyone could think one week of data could be extrapolated, were it not for the fact that the real estate industry is doing the talking. Remember too we haven't seen this data, nor will we be shown it - and a few sales "above reserve" does not indicate rising prices - what were the reserves? However, it's been duly noted by the Herald. The agents should remember this if the "trend break" proves to be false.

[axion]

lol amazing article. Especially when a lot of experts are saying it will bottom out in 2009, and they think a sudden spurt has nullified all of these predictions.


Minimoke,
Im voting National...
Any future first homebuyers out there in internet land?
:cool:
.^sc

I'm also probably voting National. While I don't think National is going to fix all the problems, I think we do need a change, and Helen and co are just stagnating in their current roles. (+ I can't stand all the babying and telling us what to do that they do (even though I'll admit the general population has little common sense and probably does need to be told what to do :/)).

Oh and Helen rubbed me the wrong way when she said to John Key in parliament "poor diddums" -- seriously, this is the leader of our country? Gosh politics in ridiculous. I'd far prefer MPs who were independently wealthy and didn't need the salary so they didn't need to 'play' politics. And instead they just got on with doing whatever they set out to do.


Anyway, I'd like to be a first home buyer in a couple of years, I guess my shares would have to do very well to get there, but I guess we'll see.

[Tok3n]

I'll be a first home buyer

I think rather then shared equity schemes, they should just remove all the tax breaks property investors gets, it'll be cheaper + more revenue for the govt too.

[Steve]

I'd far prefer MPs who were independently wealthy and didn't need the salary so they didn't need to 'play' politics. And instead they just got on with doing whatever they set out to do.

I think that you could find that a number of MPs are more wealthy than you would think, even before you start adding in their $100k+ salaries...

[fungus pudding]

I'll be a first home buyer

I think rather then shared equity schemes, they should just remove all the tax breaks property investors gets, it'll be cheaper + more revenue for the govt too.

Property investors do not get tax breaks. That's a myth. Like any other taxable activity they pay tax on their profits. They're not treated any differently than any other form of business or investment.

[Steve]

Property investors do not get tax breaks. That's a myth. Like any other taxable activity they pay tax on their profits. They're not treated any differently than any other form of business or investment.

That's correct Fungus. Only those who listen to Labours spin would think otherwise...

[steve fleming]

So Steve, the way we make real property achievable is to earn higher than average incomes and make a few 1000% returns on listed shares? Not quite a lesson on real estate riches nor affordability methinks.

Its a big bad world out there Halebop; and i don't pretend to have the answers.

However, what i can say is that, as a resulting working hard, and making the most of opportunities, at age 31, I am sitting reasonably comfortably.

Going through my 20's i didn't see much point sitting back whingeing, and throwing life in the too hard basket.

[tim23]

Fungus/Steve share owners don't get depreciation perks and why would you buy a property to lose on the deal (-ve gearing) if it weren;t for the tax advantages?

[fungus pudding]

Fungus/Steve share owners don't get depreciation perks and why would you buy a property to lose on the deal (-ve gearing) if it weren;t for the tax advantages?


Depreciation is not a perk. It's a real cost. You can bet your bottom dollar that any company you hold shares in will also depreciate its assetts; the benefit flows to its shareholders, just like property.
To answer your second part: money depreciates faster than timer and nails, roofing iron etc. If the market is likely to rise it's not silly to borrow more than an assett can return, because you owe what you borrowed in nominal terms, not in real terms, but it's also dangerous as many are about to learn, i.e. it works both ways and hurts like hell in a falling market.
The depreciation claimed, although it is a legitimate cost, is peanuts and makes little difference to a property deal. Remember it is only the building components, not the land, that can be depreciated and even then by a minute percentage. And remember also depreciation recovered (on sale) is taxable income, so at best it defers a small amount of tax.
The other thing to think about when you ask why do people buy to lose money - it's because so many in the market are novice, amateur investors who have heard all about the wonderful world of being a residential landlord (cough -splutter) For most of them it ends up being a reasonably effective compulsory savings plan - no more than that.

[Halebop]

Its a big bad world out there Halebop; and i don't pretend to have the answers.

However, what i can say is that, as a resulting working hard, and making the most of opportunities, at age 31, I am sitting reasonably comfortably.

Going through my 20's i didn't see much point sitting back whingeing, and throwing life in the too hard basket.

I'm not taking away from the sacrifices you made and the rewards you earned Steve. Was just addressing the core argument around affordability for 1st home buyers. For a host of reasons higher than average incomes and share market wins aren't achievable for a greater than median proportion of the population.

Sacrifice and "bootstraps" alone are not a panacea (although are still a good place to start). The fundamental equity of the argument is that older demographics started buying property at 3x earnings while typically younger first home buyers must now contend with 6x (and let's face it, with how averages leave the median far behind, their incomes have a good chance of being lower than average, so the reality is a very unaffordable 7x, 8x, 9x+).

On the question of "whingeing" - this has a real potential to be a social and political issue should a large number of have nots peak over the (rented) fence at the haves. There is no point arguing the right or wrong of it, if it ends up in the political arena as a "cause". The consequences will just "be".

[tobo]

Property investors do not get tax breaks. That's a myth. Like any other taxable activity they pay tax on their profits. They're not treated any differently than any other form of business or investment.

If I want invest $300k in shares as an investment (so I do NOT pay tax on capital gain), and I borrow the 300k, Can I claim the interest on that as deductible expense?
No, because I have stated my purpose is investment, not taxable business.

But if I invest in a renter, I get the interest deductible, but still get the capital gain tax free.

That is one difference I see in tax treatment.

ToBo

[tobo]

.......if investors arent acting prudently or knowledgably then what happens? the market gets distorted to the extent at which it gets under or overpriced.....



Well-travelled argument about the ability of just a few knowledgable traders to set the markey price in the presence of many many buyers/sellers without a clue.
At one end of the range is money markets/exchange rates pretty accurately responding to all the info.
Housing must be at the other end of the range - Most buyers/sellers (mums and dads) are not in the real estate industry, versus just a few professionals in the same market
Those 'amateurs' are (anecdotally) holding out for the price in their head, so this supports the distorted market theory.

[btw, Underground, I jumped over studying property - did a BCom, then some years later, Architecture. Now deal with developers, QS's, project managers, and planners daily.]

ToBo. Discl: speccy equities (incl NWE) and just one house.

[fungus pudding]

If I want invest $300k in shares as an investment (so I do NOT pay tax on capital gain), and I borrow the 300k, Can I claim the interest on that as deductible expense?
No, because I have stated my purpose is investment, not taxable business.

But if I invest in a renter, I get the interest deductible, but still get the capital gain tax free.

That is one difference I see in tax treatment.

ToBo

Of course you would claim interest on a loan if borrowed to invest in shares. The test for deductiblity is 'Is the money borrowed to generate taxable income'? If yes - then it is deductible.
Your shares will be sold free of any capital gain unless you are deemed to be a trader, and if you are your trading profit is taxable, as well as your dividends. That's exactly the same as property. Anyone regularly trading in property pays income tax on trading profits as well as on rental profit.

[Steve]

If I want invest $300k in shares as an investment (so I do NOT pay tax on capital gain), and I borrow the 300k, Can I claim the interest on that as deductible expense?
No, because I have stated my purpose is investment, not taxable business.

But if I invest in a renter, I get the interest deductible, but still get the capital gain tax free.

That is one difference I see in tax treatment.

ToBo

Tobo

You are entitled to claim an interest deduction on loans borrowed for investment purposes as you will be generating taxable income.

If your investments are not a taxable business, you don't pay tax on capital gains and conversley if your investments are a taxable business, you do pay tax on capital gains. Either way, the interest is still deductible.

Don't confuse the 2 issues...

[fungus pudding]

Tobo

You are entitled to claim an interest deduction on loans borrowed for investment purposes as you will be generating taxable income.

If your investments are not a taxable business, you don't pay tax on capital gains and conversley if your investments are a taxable business, you do pay tax on capital gains. Either way, the interest is still deductible.

Don't confuse the 2 issues...


N.B. Tobo ... but either way the income, rent or dividends, is part of your assessable income, even if you didn't bother deducting the interest cost, so it would be completely crazy not to.

[wns]

Originally Posted by steve fleming
If you get a good job in your 20's & 30's (or before you have major family commitments - kids), and buy a house early enough, you don't really have to worry about all this.

My wife and I ( very early 30's) pretty much paid off our $480k mortgage (first home) in 4 years, thanks to both of us having good jobs/high incomes together with some help from some investments that came good (ie see 10 baggers below).

I must say, however, the combined income really really helps.



Originally Posted by Halebop
So Steve, the way we make real property achievable is to earn higher than average incomes and make a few 1000% returns on listed shares? Not quite a lesson on real estate riches nor affordability methinks.

SF has at least hinted at a possible solution though, that made it affordable for him.

For those who want to buy their first home, they can either: give up, be a victim and rent forever, OR, they can FIND A WAY to get it.

[winner69]

I'd be quite astounded that anyone could think one week of data could be extrapolated, were it not for the fact that the real estate industry is doing the talking. ....

But Halebop - most on this forum take a bit of 'good' news (like a guy from Goldman says the crunch is over and the DOW goes up a few points) and extrapolate that into the bear market is over .... and another bull market has started

So why shouldn't we do the same with property

So it is all about hearing what we want to hear?

[foodee]

Been following this discussion on 1st home with intrigue.
There seem to be a polarisation between the 'yet to' , the 'already' and 'don't want to' factions.
The impression is that most 'want to' deep down. The 'already' group appear most contended.

My own view is that most will buy when they can manage it comfortably and when they reach a certain stage in life (what ever that is). Those 'already' in will upgrade to their 2nd with the next stage in life(whatever that is). It is a common observation that most will not acheive their 'desired home' until their 4th - 7th house.

As WNS and SF concluded effort and sacrifice are the 2 essential ingrediants in acheiving 'your first'. Mind you in life, nothing is easy!

Thus for those 'yet to' keep working on it

cheers

[steve fleming]

SF has at least hinted at a possible solution though, that made it affordable for him.

For those who want to buy their first home, they can either: give up, be a victim and rent forever, OR, they can FIND A WAY to get it.

The other thing is that the house we bought was comfortable in an OK suburb - but it was a considerable step down from the accomodation/lifestyle that we experienced when we were renting. However we wanted something that was well within our budget and that we could easily service.

On the other hand, I have friends that do not wish to give up their lifestyles in the exclusive suburbs that they are currently renting in, and then they complain that they can't afford to buy. People think Sydney is an expensive city to buy in - but there are plenty of places out there that you can pick up for less than $250k.

Your first car is never a Porsche, so there is no reason why your first house has to be a Remuera/Fendalton/Mosman mansion.

[Dr_Who]

Your first car is never a Porsche, so there is no reason why your first house has to be a Remuera/Fendalton/Mosman mansion.

You are on to it mate. There are too many wannabes out there living the life of Riley with no cash and all show. They have a nice Prada wallet but no cash to put in it... LOL

[tobo]

Tobo

You are entitled to claim an interest deduction on loans borrowed for investment purposes as you will be generating taxable income.

If your investments are not a taxable business, you don't pay tax on capital gains and conversley if your investments are a taxable business, you do pay tax on capital gains. Either way, the interest is still deductible.

Don't confuse the 2 issues...

I have not been clear enough. Let me restate.

Activity 1 = rent out a house. (Borrow to buy it. Keep it a long time.)
a) You are taxed on rent income.
b) You can claim deduction on interest payment.
c) Capital gain on eventual sale is NOT taxable

Activity 2 = buy shares to hold long term. (Borrow to buy. Keep a long time.)
a) You are taxed on dividend income.
b) You can NOT claim tax deduction on interest payment.
c) Capital gain on eventual sale is NOT taxable

I am not talking about Activity 3 = trade shares and pay tax on "capital" gains.

I am saying the difference between the 2 activities is you can't claim tax deduction on interest if borrowing to hold shares long term because that's not a taxable activity. Whereas holding a house long term can be a taxable activity (as you earn rental income) but you do not pay tax on te capital gain upon eventual sale.

ToBo

[fungus pudding]

I have not been clear enough. Let me restate.

Activity 1 = rent out a house. (Borrow to buy it. Keep it a long time.)
a) You are taxed on rent income.
b) You can claim deduction on interest payment.
c) Capital gain on eventual sale is NOT taxable

Activity 2 = buy shares to hold long term. (Borrow to buy. Keep a long time.)
a) You are taxed on dividend income.
b) You can NOT claim tax deduction on interest payment.
c) Capital gain on eventual sale is NOT taxable

I am not talking about Activity 3 = trade shares and pay tax on "capital" gains.

I am saying the difference between the 2 activities is you can't claim tax deduction on interest if borrowing to hold shares long term because that's not a taxable activity. Whereas holding a house long term can be a taxable activity (as you earn rental income) but you do not pay tax on te capital gain upon eventual sale.

ToBo


Sorry Tobo but you are wrong. The dividends are taxable income, and interest paid is deductible, provided that the purpose of borrowing was to purchase the shares. You an use anything for colateral that the lender will accept, a mortgage against a property is ideal. Timing is critical. You cannot purchase shares then go and raise a loan.
I don't know where you got the idea that interest is not deductible. Remember the purpose must be with the intention of generating taxable income. An investor buying shares is no different from a contractor buying a bulldozer, or a landlord buying a property.

[Halebop]

Activity 2 = buy shares to hold long term. (Borrow to buy. Keep a long time.)
a) You are taxed on dividend income.
b) You can NOT claim tax deduction on interest payment.
c) Capital gain on eventual sale is NOT taxable

I am saying the difference between the 2 activities is you can't claim tax deduction on interest if borrowing to hold shares long term because that's not a taxable activity. Whereas holding a house long term can be a taxable activity (as you earn rental income) but you do not pay tax on te capital gain upon eventual sale.

ToBo

If you are buying the shares for the long term then it is quite clear by New Zealand's strange little rules on taxable activites vs non taxable capital gains that you are generating an income from the shares via dividends. That the investor intends to generate an income (the shares don't subsequently have to pay a dividend) is the acid test for deduction of interest expense.

There is also some interesting case law where IRD took a hapless investor to court because their investment paid no dividend (it actually went broke) however the court disagreed with the Taxman and allowed the interest deductions up to the point that the investment was deemed worthless, as the intention was to generate an income, notwithstanding the outcome.

In short, you can claim deductions of interrest expense for shares held for the long term.

...if anything, based on actual behaviour of residential landlord's, they are most at risk of having interest deductions invalidated by the mechanism of refinancing into a negative geared position. Their intent is clearly tax minimisation and capital gains rather than income, the true acid test.

[Halebop]

SNAP. I obviously type too slow.

[minimoke]

Their intent is clearly tax minimisation and capital gains rather than income, the true acid test.
As is probably the case with most property investors. How often have we heard on these forums “I bought a great property and got 9.7% gross yield out of it this year” – not very often. But we have heard the wonders of capital growth ad nauseum.

[tobo]

Sorry Tobo but you are wrong.

LOL, thanks FP, and Halebop,
In this case I am pleased to be wrong.
(I think i was confusing the issue of trading versus investing, which is about cap gains, with this issue of claiming on costs of LT equity investing.)

Again, many thanks for clearing that up.

[Steve]

LOL, thanks FP, and Halebop,
In this case I am pleased to be wrong.
(I think i was confusing the issue of trading versus investing, which is about cap gains, with this issue of claiming on costs of LT equity investing.)

Again, many thanks for clearing that up.

We are all here to help! :)

[Sid]

You guys better get in quick

Tide may be turning
A surge in house-buying last week has prompted warnings that first-home buyers holding out for a bargain should get in before they miss out.


http://www.nzherald.co.nz/section/3/story.cfm?c_id=3&objectid=10510758

Interesting real estate agent comment in the article:

Tony Ebert, owner of Milford Real Estate, says sales volumes on the North Shore are down by more than half, because vendors are not selling under pressure, but prices have held up. That is because the North Shore has held its desirability, he says.

Ebert predicts sales will pick up in spring. Despite being about 20,000 transactions down since January, his company has noticed sales and interest increased last week.

"I think the interest rate drops in the past week and the Reserve Bank saying it will reduce the cash figure in September is a signal that things may be starting to return to normal."

The last official comment from the Reseve Bank was that interest rates are on hold for a time yet. If they do drop rates it will because the economy is slowing rapidly, hardly a positive situation for the housing market, despite what real estate agents are saying.
--------------------------------------------------------------------------------

[fungus pudding]

I seem to recall that when Muldoon was PM he introduced some rule that if you sold an investment property within 10 years of buying it, any interest claimed as a deduction was clawed back if no taxable income had been returned in respect of that property. This was to make interst non deductible when the the only profit was coming from a capital gain.
It would seem that a similar problem might arise with shares if interest is deductible regardless of whether or not a dividend is actually paid.
hiawatha


Muldoon's misguided effort was known as clawback tax. If selling an investment property under 10 years of ownership the vendor had the choice of paying tax on the lesser of interest claimed or capital gained. Like silly Rowling's speculation tax it acheived the opposite of what it was intended to do, by drying up the market sending prices upward. The beauty of the clawback tax was if you simply ignored it, nobody came looking for it. It did not apply to shares, and still doesn't as long as the shares are purchased for the income and not simply for a profit on sale. Intention is the key.

[fungus pudding]

I don't think that the "drying up of the market" was the opposite of what was intended. I think Muldoon simply wasnted to reinforce standard tax law. Under tax law one can only claim a deduction if one earns, or hopes to earn, a taxable income.
As far as "no-one coming looking for it" is concerned, I don't think this is relevant. Elegibility for tax is supposed to be declared in one's tax return. Failure to do so is fraud.
hiawatha


Muldoon wanted to take the heat out of the property market as all politicians seem to want to do in a busy market rather than just let it cycle through the peaks and troughs. Remember - Muldoon was a socialist in drag.
As far as payment of the tax: on selling a property on which interest had been claimed, you had to complete and submit a form showing both calculations, interest claimed and capital gained, and stating which one you wished to pay. Once submitted the IRD checked the calculations and if satisfied, simply sent you a bill for the amount. They seldom bothered to send the bill. As I said, they didn't come looking for it.

[fungus pudding]

You are probably right. Nevertheless there is certainly a problem in equity if interest is claimed as a deduction when rents are not being charged or dividends not received, and tax is not paid on "capital" gains.
hiawatha


But interest cannot be claimed where there is no intention of receiving rent as where rents are not being charged. Income tax is incurred where properties are bought and sold for profit, or spec. built. There is no real problem. IRD have been known to decline interest claims where properties have no chance of making a rental profit in the foreseeable future. They have also put considerable effort into policing sales in hotspots like Queenstown. Anyone buying a section simply for resale and not declaring the profit is liable for a knock on the door.
It will be interesting to see the IRD's view on sales of section over the next few years, and whether they will allow claims on losses. There will be so much burnt flesh over some of the delayed settlement deals - particularly in Wanaka, that there will udoubtedly be claims.

[Steve]

Would any of you first-home buyers consider the shared-equity scheme to get on the property ladder? Or would any of you property investors consider abusing the scheme as suggested?

Property investors could target shared-equity scheme
(http://www.nzherald.co.nz/section/3/story.cfm?c_id=3&objectid=10512198)
Thursday's Budget confirmed $35 million in new capital will be spent in the next two years to help families with a shared equity pilot scheme to get about 700 households into starter homes.

But Alastair Helm, chief executive of realestate.co.nz - owned by large agencies and the Real Estate Institute - says landlords might take advantage of the scheme.

Housing Minister Maryan Street wants to target people who had saved a deposit for a home but who cannot get on the property ladder in the area where they live and work because prices are too far ahead of the maximum mortgage they can afford. Shared equity involves the Government taking an equity share in a house to reduce the size of an aspiring home owners' mortgage.

[minimoke]

Well, what do I know. Had a property on my watch list which I reckoned would go for around $790 - $820k but sold for $900. I’m going to have to watch the market closer as other properties I’ve been watching haven’t been going at reduced prices.

[fungus pudding]

Well, what do I know. Had a property on my watch list which I reckoned would go for around $790 - $820k but sold for $900. I’m going to have to watch the market closer as other properties I’ve been watching haven’t been going at reduced prices.


Don't panic - they will. Silly taxpayer funded equity schemes don't help the market, but prices will fall.

[minimoke]

Don't panic - they will. Silly taxpayer funded equity schemes don't help the market, but prices will fall.
I’m unconvinced there will be a significant and long term drop in value. Sure there will be bargains coming up from mortgage pressures but you get that in any market. Demand will slow down as people tighten their wallets and realise to trade they have to donate so much to the real estate agents new car. Cost of building will continue to go up. Tradesmen are harder to find and inflation plus demand from China will keep material prices moving up and the consent process shows no sign of easing. The value on “leafy suburbs” will keep going up as people with the money for a new home won’t want to buy into one of these government mandated slums that we’ll see popping up. The number of aged stock worth renovating is dwindling – meaning more demolition and rebuilds. There will be bargains in poor quality property – like some of Auckland’s apartments and some of the new builds look dodgy – like in Christchurch Aidenfeld – built on a bog with Housing Corp houses hidden in the there somewhere for beneficiaries. The challenge might be finding that bargain and then finding a sucker prepared to pay more than you did. The suckers must still be out there – check out Brick Securities advertising of Riverton – jeez, why would you bother.

[Crypto Crude]

minimoke-Well, what do I know. Had a property on my watch list which I reckoned would go for around $790 - $820k but sold for $900

Now they are giving them away...
Nine hundred dollars...:D

[/URL]
Furthermore, Ive seen a house Im very much so prepared to triple the reserve price on...
[URL]http://www.tv3.co.nz/News/Housetogounderthehammerwitha1reserve/tabid/209/articleID/57096/cat/41/Default.aspx (http://www.stuff.co.nz/sundaynews/4509382a15620.html)
Whos going to turn up this weekend and put a bid in?
my bid is wait for it.... $3....
:D
.^sc

[axion]

Now they are giving them away...
Nine hundred dollars...:D


Furthermore, Ive seen a house Im very much so prepared to triple the reserve price on...
http://www.tv3.co.nz/News/Housetogounderthehammerwitha1reserve/tabid/209/articleID/57096/cat/41/Default.aspx
Whos going to turn up this weekend and put a bid in?
my bid is wait for it.... $3....
:D
.^sc

I'll go to $10, but that's my highest offer.

[minimoke]

The point is, these "government mandated slums" won't actually be slums. They'll probably be better quality housing
Ah, yes. The government has so much faith in New Zealand construction an Australian firm has been given the job of building Hobsonville. 3,000 houses, with 500 selling for around $350,000. So you’ll have 500 families who won’t be able to afford the mortgage, let alone upkeep and maintenance of these properties. To afford the mortgage we’ll need two to three families per home. And you don’t get too many old houses for $350k in Hobsonville let alone a new design/land/build package for that level. High density housing, low wage - and we aren’t going to see slums?

[minimoke]

Oh please! Pull my other leg! You don't know that these houses will be unaffordable, particularly with government taking on 35&#37; of the equity, or that there will be two to three families per house. Nothing wrong with criticism. But if we must criticise, let's stick to what we actually know.
hiawatha
Auckland’s not my market. But if you’re telling me you can design/land/build quality housing for $350,000 then I’ll bow to your knowledge. In Christchurch Pegasus Town, for example, is being built out north with housing for 5,000 people. Their land is going for $345,000 for 810 sqm sections. Pegasus is being built on sand and exposed to a bitterly cold easterly and I can’t see much to recommend it – but people have bought in at this cost. Their houses will probably cost at least $1,500 a sqm to build – and this isn’t a resort town they are building – just a nice new area, presumably not unlike Hobsonvilles aspirations.

And what else do we know. 500 houses will be available as state rentals. To get a state rental you have to be on a low or no income, a refugee or migrant. So if your family earns less than $440 a week you can live in Hobsonville.


500 houses will be for those first home buyers on moderate incomes. It looks like Housing Corp considers $85,000 to be a moderate income for a coupe of people. So they’ll lend up to $280,000. Its at this point I’m not sure how Government is going to get people into $350k houses. It looks like the moderate income people still have to come up with $70k from somewhere and pay $1080 a fortnight on their mortgage.

There’s nothing here to suggest that there’s slum potential?

[Steve]

Anyone doing this to boost their deposit?

How to live rent-free at a top city address (http://www.nzherald.co.nz/section/1/story.cfm?c_id=1&objectid=10513697)
House sitting is becoming a thriving part of the property sector as mortgage rates, rents and domestic costs continue to rise.

Once an ad hoc, temporary arrangement between family or neighbours, house sitting is now a business, with at least two agencies matching sitters with homeowners.

"It's really popular," said Antony Myers, owner of Auckland company Happy House Sitters. "It's difficult to save a deposit and house sitting gives them an opportunity to save money. It's a huge benefit."

[Crypto Crude]

Hey Steve,
Whats stopping a middle man from House sitting and then Renting it out to an unsuspecting guest, or flatmate...

How does the Home owner stand to benefit with no rent to cover some of the interest payments on Debt?
:cool:
.^sc

[duncan macgregor]

Hey Steve,
Whats stopping a middle man from House sitting and then Renting it out to an unsuspecting guest, or flatmate...

How does the Home owner stand to benefit with no rent to cover some of the interest payments on Debt?
:cool:
.^sc First Question answer the POLICE.
Second question, The owner is not out to make money only to have someone to water the plants feed the cat and be a live in janiter to the property. I have a friend of mine who does this on a fairly regular basis who loves it. One place in particular had him back simply to prune the roses because he made such a fine job of it when they were overseas on holiday the previous year. He likes moving into flash houses in nrw neighbourhoods for three or four weeks at a time. He says its unpaid but seems to get some real nice pressies. Macdunk

[Steve]

Thanks for answering on my bahalf, MACDUNK. Wouldn't have put it any differently myself. :)

While I posted the link thinking of those of you who are saving up to be first home buyers, the comment that SC made about 'what's in it for the home owner?' makes it worth mentioning that sometimes we do need to think beyond the financials when considering the whole picture...

[Crypto Crude]

Mackdunk,
If I was ever to sit in on your house while you were out of town... Id throw the biggest Sharetrader Party in Aucklands History.... The Police would come and find the Gang with our mate Joe king tearing it apart...

Without a House,
The next night we would set up a camp fire with tents and toast marshmellows...


Mackdunk,
thanks for clearing that up... I guess for the near term first homebuyer this idea would be inappropriate...without collecting Rent for the interest payments is a deadly toxic mix....
:D
.^sc

[duncan macgregor]

Mackdunk,
If I was ever to sit in on your house while you were out of town... Id throw the biggest Sharetrader Party in Aucklands History.... The Police would come and find the Gang with our mate Joe king tearing it apart...

Without a House,
The next night we would set up a camp fire with tents and toast marshmellows...


Mackdunk,
thanks for clearing that up... I guess for the near term first homebuyer this idea would be inappropriate...without collecting Rent for the interest payments is a deadly toxic mix....
:D
.^sc My kids turned out not much better than you SHREWDY when they were left in charge. Macdunk

[Dr_Who]

Mackdunk,
If I was ever to sit in on your house while you were out of town... Id throw the biggest Sharetrader Party in Aucklands History.... The Police would come and find the Gang with our mate Joe king tearing it apart...

Without a House,
The next night we would set up a camp fire with tents and toast marshmellows...


Mackdunk,
thanks for clearing that up... I guess for the near term first homebuyer this idea would be inappropriate...without collecting Rent for the interest payments is a deadly toxic mix....
:D
.^sc

That was so funny it brought tears to my eyes... LOL

Hey McDunk, I am interested to know why you sold your lifestyle block? Do you see a further prolonged downturn in the property market?

[Crypto Crude]

Dr Who-Hey McDunk, Do you see a further prolonged downturn in the property market?

Dr Who,
I was going to wait for Mackdunk to answer your question before I pounced... But I thought Bugger it... Mackdunk has been asked these questions before and he always goes down the same line...

DR who,
good question... BUT Your asking the right question to the wrong person... Mackdunk has a proven track record of making Wrong calls in the short term, to near term housing market... BUT my mate mackdunk has an awesome track record over the long term...
Because the long term has performed so well, it has blurred his signals in the short term... this is understandable...
The Main reason why asking mackdunk is suicidal is because he has a biased view as he clearly has a vested conflict of interest...
...

My dad came back from the Real Estate agent who told him the housing market is just fine... Seriously... its the same sort of thing... Mackdunk will give you the same response these dudes will..http://www.reinz.org.nz/

...Mackdunk has down played the housing Situation before it started to turn, as it was turning, and after it turned... Its all here in writing back on this thread... go check out what he said 5 months ago...

the Market has come off 10% and we are only 5 months in...
This has only just begun...get strapped Boys and girls...

Rule number 1
Never take advice From someone who has a conflict of interest...
Rule number 2
Seek advice which is correct...

I Still want to here what Mackdunk has to say...

CSG Right now is Paying for my future house with potential (on paper) to pay for it in cash, which otherwise would have gone straight into a mini deposit...
Hope you all took up my advice of RPM not long ago, here on this thread......
Big money to be made on the sharemarket... big money to be lost in NZ housing Market...
End of story...
:cool:
.^sc

[Dr_Who]

I hear ya Shrewd.

McDunk has been talking up the property sector all through the ST site for over a year and now he turns on us and sells his lifestyle block... LOL. So I want to hear what McDunk has to say.

BTW.. I am loaded with gas and oil stocks. All have performed very well with the exception of TEX, which I only just bought recently. :) TEX catapult drilling (if successful) will sling shot the sp to heaven.

[Tok3n]

Well, I've been looking around for my 1st home, prices have held up, I don't see much panic out there (and unfortunately no bargains)

All this panic about a crashing market etc is just plain media hype.

Need unemployment in the main centers to really tick up significantly to see any major price drops.

[duncan macgregor]

DR WHO I will deal with you first. The whole world dousnt stop simply because the property market is going through a normal cycle. The best time to sell is when the market starts to downtrend like a stop loss in share investing. Sell at your leasure like i did, got Eighty thousand above my mug valuers valuation. Bought at seventy five thousand under the asking price for a new four BRM, B&T at the beach. Understand the game before you play it.
I hate to think how many building cycles i have been in. The price of property is destined to go sky high when this current cycle is over.
Property is controled by supply and demand, with the level of pricing based on the new product, which is being priced out of reach of the average family by utter stupitity.
Double glazing, insulation everywhere, rule changes at a moments notice, The cost of compliance is horrendous compared to a few years ago. Most people would love to drive a rolls royce, but can only afford a mazda, that is what has happened to the housing market. What happens now is builders leave in droves. When the cycle turns they charge the earth with 20 pc pa inflation in house prices coming up instead of the normal 10pc.
SHREWDY, That house you posted me to look at is in the high risk category to be a leaky home. If it is only a couple of years old it might have an exterior air cavity but if it dousnt then tell the person to sell as quick as they can.
It looks very nice on paper but the harsh reality is the designers draw nice pictures but know nothing about building dynamics. Learn how to buy, and learn how to sell, there is just as much money to be made in a falling market as there is in a rising market. Macdunk

[fungus pudding]

Well, I've been looking around for my 1st home, prices have held up, I don't see much panic out there (and unfortunately no bargains)

All this panic about a crashing market etc is just plain media hype.

Need unemployment in the main centers to really tick up significantly to see any major price drops.



What you will notice if you have been looking is there are more listings available; that's because there are fewer buyers. Many houses are taking much longer to sell. And less activity in the market is a sure sign that prices will fall - soon some vendors will take their blinkers off and decide to meet the market. Patience will be rewarded.

[minimoke]

I hate to think how many building cycles i have been in.

Macdunk
I can’t help but feel you’re wasting your breath. There are some of us here who love property and I am in no doubt there are bargains out there to be had now and when the cycle is at its peak. There is no need to wait until the so called bottom arrives. If you know what you’re trading you know where the value is. This doesn’t mean to say that every property purchase is going to be a good one – there are different arguments between buying a home and an investment property. Sometimes it takes living through a few life cycles to see where the opportunities were. I’ve been in a mortgage since I was 16 and will no doubt die with one. Doesn’t worry me if its secured by property. I’m not sure I’d feel the same if the debt was tied to shares. Buy right, sell right – its not a complex formula.

[Crypto Crude]

Minimoke how long have you been in housing mate?
:cool:
.^sc

[Dr_Who]

Minimoke how long have you been in housing mate?
:cool:
.^sc

I used to have a large property portfolio. Sold most of it off a couple of years back. All cashed up. My family has some very substantial property portfolio which I used to take care of. This includes some substantial commercial properties in the Auckland CBD. So, I do have knowledge in the property game.

Just the Mcdunk cracks me up and I have to rack him up sometimes... LOL :D

[Crypto Crude]

duncan macgregor-SHREWDY, That house you posted me to look at is in the high risk category to be a leaky home. If it is only a couple of years old it might have an exterior air cavity but if it dousnt then tell the person to sell as quick as they can.
It looks very nice on paper but the harsh reality is the designers draw nice pictures but know nothing about building dynamics. Learn how to buy, and learn how to sell, there is just as much money to be made in a falling market as there is in a rising market. Macdunk


Guess what dunks... That house I posted to you is my dads house...its on the market and theres nothing wrong with it.....
Leaky home... sssppphhhh... Man its got a Spa upstairs... If there was a mad party and it got tipped over then leaky building for sure...:D

In the first week on the market we had many turn out, and now its gone real quiet......The Real Estate agent came back to us today asking to drop the house price by 40K....
....
...
..
.

Dr Who-Hey McDunk, Do you see a further prolonged downturn in the property market ?

See what I mean DR WHO...
Mackdunk didnot answer your second question at all...
... 'Mackdunk' can dodge Bullets baby...
Gonna have to pull out a rocket launcher so you cant miss...

Mackdunk,
thanks for answering Dr Who's Question... I have a question also...

Do you see a further prolonged downturn in the property market?
:cool:
.^sc

[duncan macgregor]

SHREWDY, I see a major downturn in the property and share markets coming up. I am sitting cashed out since dec expecting that by next dec major disruptions to flowthrough. I know it was your dads house didnt want to broadcast it but take it from me if there is no external cavity its a leaky home. My brother in law asked me to look over a very similar house and give him a building report. No need to tell you what happened he got exactly what i told him it was. Exterior walls in that type of house must be allowed to breathe otherwise they suck water in even up hill. When all your shares turn to custard the people who have bought material things will stand back and laugh at your stupidity. You were quite right about advice being for fools. Winstone Churchill i think it was getting advice on how to run the second world war said. There are only two kinds of fools in this world THOSE THAT GIVE ADVICE AND THOSE THAT TAKE IT. Macdunk

[Crypto Crude]

Ok mackdunk thanks for your advice... I had a quick read through the Leaky Homes thread, its a tough idea to get my head around...
Can you explain "external Cavity"...?
and how do you spot a leaky home before it happens?
cheers in advance...
...
Minimoke,
Mackdunk is not wasting his breath...
That dragon shoots Fireballs outta his mouth almost daily.....:).... Im sure he can Pick outliers which perform in a market which will drop 15-20% this year?
I cant...

Im just like most future first time home buyers who want to buy at the right time...who want to take on advice, and who want to eliminate the risks of Buying in a downwards market.... Im not so hot headed that I wont listen... I just have opinions of the market that I believe to be correct...
No-one I know of has told me to buy anything in the housing market in the near term apart from Mackdunk and Joe king... Ive talked to lots of people... hundreds of people...

... Theres lots to learn and talk about which has be incorporated into my future decisions and is already moulding me and setting me on the right path... We will talk about all the in's and out's here in the future...
... As Ive said, sometime down the line I will change the thread title to,
"NZ first time homebuyers are shrewd".... At that time I will completely change my tone... until then its more of the usual Bear sentiment from me...
But yes Mackdunk... Id seriously like to get to 80-100k this year and pull everything from the market most definately after US elections this year...im on track....Im hoping to slash that 30yr loan into a 5 to 10 year loan...

Peace out, your help is and has gone to a good cause...
--->Future First Homebuyers...
Also thanks for your time and help to you and everybody else...
this is the story of screwed turning shrewd...
what a great success story this will be for many of us young ones coming through here at ShareTrader...
be patient my first time homebuying friends...
Our time to shine will come...
This is so exciting...
Bye for now...
:cool:
.^sc

[duncan macgregor]

SHREWDY, I am gone for a couple of days will tell you what a leaky home is when i get back. Most of the master builders awards went to high risk leaky homes in the nineties.
Macdunk

[Dr_Who]

SHREWDY, I am gone for a couple of days will tell you what a leaky home is when i get back. Most of the master builders awards went to high risk leaky homes in the nineties.
Macdunk

Indeed. I recall my neighbours house a number of years back sold for $3 million and it was leaking!!! LOL. The funny thing was it was designed by one of the most reputable architects in Auckland.

[duncan macgregor]

the reason we have a leaky home problem is people wanted that nice clean line spanish plaster look, on a timber frame. Its a bit like trying to build a rolls royce, using honda parts. The spanish plaster look is done in block or brick never intended to be copied using sheets over a timber frame. They then made the problem worse, by making the exterior air tight, than filling the wall up with batts. When rain gets driven up against an airtight wall, the air pressure is greater on the outside of the wall than it is inside the wall.
All the wall needs is one little pin hole in the wall for the wall to suck water up, even uphill like sucking water through a straw.
This might happen only once or twice during a normal year, and wont show up for years. The timber being chemical free untreated absorbs the moisture like blotting paper which then starts all sorts of dangerous fungal bacterior.
They now have rectified that problem, by having an air cavity in the external wall, allowing the wall to breathe, but more importantly it equalizes the air pressure.
If you intend buying a spanish lookalike plaster house, make very sure it has an external wall air cavity, otherwise its a leaky home for sure.
The only way to fix the leaky home is to remove all the external cladding and stick weather boards on or batten it over the top replace your window jambs ith wider jabs to take the extra width of the cavity.
No point saying its shoddy workmanship, its almost an impossability to build that type of house that would not leak. I always refused to build that type of house, and i always used treated timber. The sad part of it all was being called stupid and old fashioned with numerous building inspectors over the years about doing that because the chemical free timber was much faster to dry where i had to have dehumidifiers blasting on for days.
The leaky home is spanish plaster, between from early nineteen eighties to 2006 avoid that type of house in that ara. Macdunk

[fungus pudding]

the reason we have a leaky home problem is people wanted that nice clean line spanish plaster look, on a timber frame. Its a bit like trying to build a rolls royce, using honda parts. The spanish plaster look is done in block or brick never intended to be copied using sheets over a timber frame. They then made the problem worse, by making the exterior air tight, than filling the wall up with batts. When rain gets driven up against an airtight wall, the air pressure is greater on the outside of the wall than it is inside the wall.
All the wall needs is one little pin hole in the wall for the wall to suck water up, even uphill like sucking water through a straw.
This might happen only once or twice during a normal year, and wont show up for years. The timber being chemical free untreated absorbs the moisture like blotting paper which then starts all sorts of dangerous fungal bacterior.
They now have rectified that problem, by having an air cavity in the external wall, allowing the wall to breathe, but more importantly it equalizes the air pressure.
If you intend buying a spanish lookalike plaster house, make very sure it has an external wall air cavity, otherwise its a leaky home for sure.
The only way to fix the leaky home is to remove all the external cladding and stick weather boards on or batten it over the top replace your window jambs ith wider jabs to take the extra width of the cavity.
No point saying its shoddy workmanship, its almost an impossability to build that type of house that would not leak. I always refused to build that type of house, and i always used treated timber. The sad part of it all was being called stupid and old fashioned with numerous building inspectors over the years about doing that because the chemical free timber was much faster to dry where i had to have dehumidifiers blasting on for days.
The leaky home is spanish plaster, between from early nineteen eighties to 2006 avoid that type of house in that ara. Macdunk


Surely you mean it's like trying to build a Honda using Rolls Royce parts? Or have you never experienced the 'pleasure' of British automobile engineering?

[George]

Hi Duncan
Bit off topic but you probably have an answer for the following.
On our walks around the area we see some modern type 2 level houses
with the plaster look siding (don't know if it's Hardies or not),
and at first glance looks like needing a paint but then you can
actually see the studs and noggs through the siding. It looks like
the space between the timber framing is mouldy which makes the rest
stand out. Just curious as to the possible cause.
Cheers
George

[Dr_Who]

I refuse to buy any house with plastering/cladding on the outside, no matter how cheap it is or what guaranties the builders give. The best houses are the old villas with hard wood.

Back to the threat topic. This market is just beautiful for cashed up buyers. You can get some real bargains. There are blood on the floor and some investors are bleeding.

[Steve]

Back to the threat topic. This market is just beautiful for cashed up buyers. You can get some real bargains. There are blood on the floor and some investors are bleeding.

Cashed up and still expecting to wait another 6 months... :)

[upside_umop]

Thanks for that summary MD.
You should start a thread called 'tips for homebuyers,' or something.
Always good to learn a bit more before I take the plunge...

[Steve]

No rush to take the plunge though...

Housing slump for 3 years - Bollard (http://www.nzherald.co.nz/section/1/story.cfm?c_id=1&objectid=10514729)
Homeowners face at least a three-year wait before properties begin to return to current values, says the Reserve Bank.

In a gloomy report on the economy, the bank predicted house prices would fall 13 per cent over the next three years.

[remy]

that will quite possibly work out quite well for me getting in to my first house presuming i land the right job, shrewd out of interest how old are you? Im guesing your 22-24

[Crypto Crude]

im bang in the middle Remy...
Thanks for post replying MD...
I'll probably buy a house around the time of your attendance at a chch NC meeting anyway.....:D
...
Thanks for the article Steve...
I took the picture in the Article and turned it into my Avatar...

mackdunk-All the wall needs is one little pin hole in the wall for the wall to suck water up, even uphill like sucking water through a straw.

is it a Leaking building or a leaking asset...?
put a pin Hole in the wall and Dollars pour out onto the street...
:cool:
.^sc

[upside_umop]

shrewdy i reckon the rb is underestimating that pick eh..

didnt they say 13% nominal in next 18 months?

we have had circa ~ -2% in last 12 months and 4% inflation --> ~ -6%

inflation looking to average 4.5% over next 18 months and 13% drop --> ~ -20 %

theres 26% in 18 months from now...and 30 months from peak.

30% real terms will happen.

[tim23]

Bollard only makes calculated forecasts so they can't be deemed lies can they?

[upside_umop]

Thats right tim123...imagine if they were to come out and say 'we think prices will drop 40&#37; over next 3 years in real terms....'

There would be havoc..but if they tell a wee lie now...or dont say the 3 year prediction, no one will get in trouble in 18 months. It would be a little 'mis-calculation' :D

[peat]

should he be making comments like that ? not so much the prediction of market direction but the very specific amounts he predicts for it to fall

I guess they (Central Bankers) have a history of jawboning bubbles so as to prevent excess and inevitable pain but once the bubble has burst it kind of seems wrong to predict so much pain so assertively. His actions should speak these thoughts imo.

[Dr_Who]

should he be making comments like that ? not so much the prediction of market direction but the very specific amounts he predicts for it to fall

I guess they (Central Bankers) have a history of jawboning bubbles so as to prevent excess and inevitable pain but once the bubble has burst it kind of seems wrong to predict so much pain so assertively. His actions should speak these thoughts imo.

The RB have been warning us for a few years about the housing bubble. It comes to no surprise that it did burst. Some choose to listen and cashed up, while others just fell on deaf ears. The RB do pick it right most of the time, maybe their timing is abit out, but it will happen.

I really dont see any recovery in the property market till (maybe) late 2009/2010. But then the realty agents will tell you otherwise and their views is that the market never drops.

[tim23]

and the burst has just begun, more of a leak at this stage I reckon!

[JBmurc]

I really dont see any recovery in the property market till (maybe) late 2009/2010. But then the realty agents will tell you otherwise and their views is that the market never drops.[/QUOTE]

Unless your the vendor then the agents will tell you must drop your price till the agent can sell it and make a commission even if you paid alot more -Agents #1 job is to make themselves and the firm money -- Buyers&vendors come 2nd

whole lot of pain coming for realestate agents-and over leveraged home owners

[Joe King]

.^sc[/QUOTE]
"The Police would come and find the Gang with our mate Joe king tearing it apart..."?
Shrewdy...A retrobate I might be but a vandal...NO! Grow up. :(

[Crypto Crude]

Thats right joe king... And we were going to Toast marshmellows and set up camp, if my mind serves me right...Yes... I was being deadly serious....
cant you tell....

Hey... Lets cut the chit chat eah... lets get down to serious business...
First of all... I had no idea what a 'retrobate' was.... so I went to www.Dictionary.com and punched it in...
heres what I came up with...
http://dictionary.reference.com/browse/retrobate
as you can see it came up as no results found...
But, under dictionary suggestions, third one down it had...
rent-rebate:D

I clicked on this link and it said " a rebate on rent given by a local government authority"...
what that basically means is "A rent rebate is given to people on a low income, you basically get a bit of money off your rent so youre not paying the full amount"....

Joe king, are you trying to tell me something here...? haha...
what are your views of a possible Rent rebate as Property prices crunch on homeowners...
Lets have a civilised debate, I promise I wont say how you told me to buy a house at the very top of the market again... its already fallen 10% and my mate Alan Bollard reckons its going to fall 22%, and my mate upside down reckons it could fall 30%...
I assure you Joe, if anything happened to my mate Mackdunks house, id be up in Auckland quick flash and Id go on a real rampage...

you will have to take my word for it, as I am being deadly serious and cant be taken light hearted...
any thoughts on Rent Rebate... what a topic...
surely would help all these struggling famlies....
shrewd crude >:cool:

[Crypto Crude]

A retrobate I might be but a vandal...NO! Grow up
Joe,
So is that a spelling mistake or are you trying to say
A 'rent Rebate', I might need, but a vandal.... No Grow Up...
I would not be surprised to hear The wider community struggling in such tough times...
wish you and others all the best through these hard times... I dont mean to get satisfaction out of other peoples losses...
as for the rent rebate bit... you gotta agree that was a tad funny eah?

[axion]

http://www.urbandictionary.com/define.php?term=retrobate

urbandictionary can be good for words that aren't actually real...

[lakedaemonian]

Thats right tim123...imagine if they were to come out and say 'we think prices will drop 40% over next 3 years in real terms....'

There would be havoc..but if they tell a wee lie now...or dont say the 3 year prediction, no one will get in trouble in 18 months. It would be a little 'mis-calculation' :D


Bullseye!

Yeah, I reckon they understated their own numbers/opinions a bit....it's the appropriate thing to do in the situation for the average audience, regardless of the ethical dilemmas it must cause.

[Arbitrage]

Good future interest rate analysis:

http://www.goodreturns.co.nz/article/976494122.html

[Dr_Who]

If oil price goes above $150 we can see the property market get hit much harder than RB forecast. I say, property will come down 50&#37; or more if oil price goes above and stays over $150.

[Steve]

It makes more cents to rent than own (http://www.stuff.co.nz/4609452a13.html)
People who do not have a mortgage on their home could be financially better off if they sold their property and rented instead.

This would be particularly true for people with higher value properties, but would also also apply to those with low-value homes.

The Sunday Star-Times prepared three case studies of the financial implications of selling a home and renting one instead.

[Dr_Who]

It makes more cents to rent than own (http://www.stuff.co.nz/4609452a13.html)
People who do not have a mortgage on their home could be financially better off if they sold their property and rented instead.

This would be particularly true for people with higher value properties, but would also also apply to those with low-value homes.

The Sunday Star-Times prepared three case studies of the financial implications of selling a home and renting one instead.

The property market is very ugly out there. Those that are desperate and holding on expecting the market to pick up anytime soon are just waiting for more pain. Just only have to look over at the US property market to see what is gonna happen in NZ. The pain will be long and hard.

[Crypto Crude]

Last time I heard, the housing market was in dead lock with buyers waiting off, and sellers holding firm...
Smartest thing ever would be to sell out at any cost right now.....
if its on the market for 575k... then take 500k....
wave one has come and gone... wave two is simmering, and it will swing into action with a flurry of falls (if it has not already begun- Ive seen no evidence to suggest that it has)... Real estate Agents are going out of business... Jobs are being lost in the Sector big time, as Those agents are not collecting fees in the standoff... houses are sitting on the market for longer... This is the worst time to buy a house in the history of NZ housing.... bar nothing...

Its a double whammy...
Its a loss of asset value, and a loss as time errodes away at other possible investment returns ......

Dr Who, over time you have offered me some of the best advice, backed up my thoughts...others have too, but you have been persistant with your message...
its much appreciated... Some of us could have been in big trouble had those knowledgeable buffs advised us...
Those buffs have taught me a valuable lesson here, and the lesson was free of heavy losses.... Ive been lucky like that in other investments aswell...
yeeeaagghhhhh hahhhharrrrgggghhhhhh...... riding cowboys...its so exciting to be alive.....

I will live in a tent before I go out on a heroic mission and buy...
be smart, dont be heroic...
I will chop my arm off with a hacksaw before I bought in this market, at this time...
Id rather live in the trees and swing from branches like a big ape... oh oh aahhh
what a disaster this will be for the Near Term NZ housing market, and in particular those that bought in the last year...

Please keep the reports and articles coming people..... thanks steve... I have not seen or heard much on the housing market in weeks... Newspapers have been blamed, and threatened (REINZ) for the current situation (hahaha) so they have somewhat backed off...
Roll on with the reports...
Saying the NZ house market has fallen because of the press, is the same as saying Oil has risen in price because of speculators... its all just rubbish talk...
keep em coming...
thanks...

[Tok3n]

Well despite all the doom and gloom

Property prices are still holding up, NZ needs a serious surge in unemployment to have any form of meaningful correction.

Still no relief for the 1st time buyer.

[upside_umop]

Well despite all the doom and gloom

Property prices are still holding up, NZ needs a serious surge in unemployment to have any form of meaningful correction.

Still no relief for the 1st time buyer.

Your right, there wont be any serious correction without unemployment rising up to the RBNZ target...thats right, they have a target, and its around 5%. They have also stated real term decline of upto 26%..so far we're over 5% decline in real terms from the top...just wait till this starts gaining momentum.

http://www.stuff.co.nz/4615973a10.html

this sort of mentality starts to kick in...'we're losing in the long term..'

[Dr_Who]

Dr Who, over time you have offered me some of the best advice, backed up my thoughts...others have too, but you have been persistant with your message...
its much appreciated... Some of us could have been in big trouble had those knowledgeable buffs advised us...



My experience came from learning the hard way. I ve been through a few market crashes and have had my fair share of blood being spilt onto the streets. I promise myself never again, so I cashed up a few years back. The art is not to go with the crowd. PArty hard and enjoy the fun, but make sure you get off the ride before the music stops.

Tok3n... abit like an earthquake. You first get the minor tremour before the big destructive quake that follows. Unemployment will follow once the firms starts seeing downgrades in their profit and have no choice but to reduce cost to stay alive. Unemployment is coming, just watch the space. Like a Tsunami, it will hit hard and fast.

I think this Tsumani is worst than any other I have experienced in the past. Stagflation is a real long term killer. I have never seen global equities markets been hit so hard before, it is a sign flashing in our faces, yet we fail to see it. The broking firms (abit like the realty firms) will never tell you to sell. It is in the broking firms interest to tell you to keep buying in the equities market.

Cash is King until the cloud clears, which maybe a long time away.

[Crypto Crude]

DR who,
I agree... I see bad times coming, and Stagflation is the worst killer... I have not seen it like this in my life time... US inflation must be 10% or close now... raising the Fed rate in the short term is not good news, but is almost a must for long term sustainability... Home owners are getting savaged by their home values, time of fall, and higher inflation erroding away at their investments... ( US inflation is unofficially 7-10%)....
....
eg,
If inflation is 5% in New Zealand for the next year... and House price values stay exactly the same then the asset of the house get diluted by 5%...(well actually house prices are falling so its a double whammy, (aswell as the time component)....
Increased savings (for a larger deposit) and lower house prices will reduce The total loan term by up to, or over 10years...

House prices dont need to be falling, for them to be falling in real terms...

Others explain that wage increases cancel this out diluted house value?
Are wages keeping in pace with inflation? haha...

Which sectors wages are rising by 4% for the foreseeable future...
boycouts... Minimum wages are going up next year...

broarder society will soon be at minimum wage if wages dont go up.....
My friend was a manager of an entertainment business and he was on less than $15 per hour...
Inflation will top out at 5%, and watch out if RBNZ starts cutting rates.... what would national do?..... RBNZ have given every indication that they will cut rates in the 4th quarter.. I orginally thought that this view might slowly start to draw out until 1st quarter 09 ......Foreign Exchange Markets were factoring in Interest rate cuts, in the tune of 70-80% chance for 4th quarter... Im now expecting less of a chance in the tune of 50-60% chance... US Oil could easily shoot to $200... I will explain when I enter my pick in the POO competition...
Two of the largest US mortgage brokers in the US crashed about 50% each over night... happy to see DOW down less than 200 pts... Oil up...
Big crash is not until next year...
Dow falling is reducing that risk everyday...
US will have to start bailing large banks...
As these banks/firms are too big for The Government to stand by and watch...
This brings on Moral hazard where Banks takw on unforseen risks in the hope of being bailed... (which will happen)....
:cool:
.^sc

[Halebop]

The simple answer in many economies is that they will allow (have allowed? can't control?) inflation to rise and diminish the value of debts. This won't help assets prices, particularly financial assets, but it will keep the debt side of the ledger a little more manageable.

I suspect the statistics demonstrate that doing absolutely nothing is the correct response to financial crisis but we can't resist politics or attempts at cleverness.

Back here in the New Zealand a combination of valuation and sale price property market the data I've seen is at odds with the REINZ median sale price. I'm only seeing a partial picture but it would conservatively suggest a 12 to 13% correction has occurred in Auckland (I can't name the source). My hunch is we are half way through the correction in real dollar terms.

On the positive side immigration seems to have picked up. Highly indebted households should be boosted by the inflationary impact on those debts as long as they can keep their jobs!

[Dr_Who]

I recall a couple of years back people laughing at me when I told them I am holding cash.

This is the average persons perception of holding cash.... Interest 8.5% - Inflation 5% - Tax 2% = 1.5% net return. My version of holding cash is the opportunity lost of investing in a deflationary asset during a down turning environment. For example... if I had $500k (crude and simple calculations).

Cash
$500k
1.5% = 7.5k
Net Return = 507.5k

Properties
$500k
Leveraged to invest in a $1m house
Negative 15% = -150k
Expenses including agent fees = -50k
Gross return = $300k
Made a lost of = $200k (assuming you can sell the house)

Shares
(assuming you listen to the brokers and invest in brokers pick this year)
$500k
Negative 25% = -125k
Brokerage rate = -5k
Gross Return = 370k
If you have invested in oil/gas, then you would have made a good positive return this year. :)

[JBmurc]

I recall a couple of years back people laughing at me when I told them I am holding cash.

This is the average persons perception of holding cash.... Interest 8.5% - Inflation 5% - Tax 2% = 1.5% net return. My version of holding cash is the opportunity lost of investing in a deflationary asset during a down turning environment. For example... if I had $500k (crude and simple calculations).

Cash
$500k
1.5% = 7.5k
Net Return = 507.5k

Properties
$500k
Leveraged to invest in a $1m house
Negative 15% = -150k
Expenses including agent fees = -50k
Gross return = $300k
Made a lost of = $200k (assuming you can sell the house)

Shares
(assuming you listen to the brokers and invest in brokers pick this year)
$500k
Negative 25% = -125k
Brokerage rate = -5k
Gross Return = 370k
If you have invested in oil/gas, then you would have made a good positive return this year. :)

If you invested that 500k in gold or silver bullion your'd be up 43% over the last year
I wish I took my own advice years ago and brought bullion instead of being greedy and investor the funds into jnr goldies thinking they would do better.
Still Think theres pently growth to come esp. in silver over the next couple year $100+ could well be reached within a couple yrs crazy but so was $140bbl oil back when $40bbl seemed high to most analysts

[STRAT]

. I'm only seeing a partial picture but it would conservatively suggest a 12 to 13% correction has occurred in Auckland !Hi Halebop,
I was looking at this also and came up with a figure of 11%. Pretty close to yours.

Wouldnt want to be a desperate Vendor mind you as the real result could be/would be much worse.

[SEC]

On the positive side immigration seems to have picked up. Highly indebted households should be boosted by the inflationary impact on those debts as long as they can keep their jobs!

How on earth do you reach the conclusion that 'immigration seems to have picked up'? Net immigration has been consistently falling over the past year, there is record migration to Australia, net immigration from Europe is plummeting and overall net immigration is effectively zero (and is trending negative). This is offset by record immigration from the likes of India and the Phillipines, immigrants least likely to buy property but will put pressure on rentals.

Without net immigration of wealthy cashed up individuals the fundamentals are simply not there to support current property valuations and lousy yields. The imbalance has to be addressed and still has a long way to go.

SEC

[Dr_Who]

Dont you hate it when realty agents treat you like a complete idiot?

I am constantly looking around to keep in touch with the property market. Have had a run in with a realty agent who treats me like a I am an idiot. He tried the hard sell technique and constantly toells me that the market will turn soon and I will miss out and why I should pay a premium for the property.

I even had an agent who tried to sell me her house and had dummy buyers (her friends) who pretended to be genuine buyers. I found out it was the agent's house when I spoke to a kid playing outside who happens to be her son. The kid disclosed everything... LOL

Give me a freaking break. Hope you realty agents out there are reading this. It only turns away a cashed up buyer like me and there are not many cashed up buyers in the market.

[tim23]

You are right Dr Who; most of them are order takers, the art of actually selling is now not when the fish are jumping in to the boat. As for the usual line it'll get better in spring, trouble is its a few springs away!

[The Great Gold Guru]

Went to an open home at Latitude37 in the Viaduct Harbour two weekends ago. Nice f/f studio apartment , 36sqm ... angled view from balcony to the water outside Stratis at Lighter Quay. Agent told us the guy bought it for $280k in 2001 ... has been rented out solidly since but due to various costs ( body corp, leasehold land , rates , rental mgmt fees ) net return to him was only around $12k per year. Was going to auction on Wed 9th and expectations were around the $200k mark. We were flying to Queenstown that day so couldn't go to the auction. Rang him yesterday .... 1 bidder only in the room , vendor sold it for ..... $140,000 !!! Now even if you'd just stuck $280k in the bank 7 years ago you'd have around $350k now .... what a CATASTROPHIC investment. Might be a good time to start going to auctions soon , looks like there are some horribly desperate sellers out there !!

[Crypto Crude]

Great story Gold guru,
My dad was talking to his real estate agent, and the company had 4 open homes that weekend... Only 1 group showed to 4 open homes...
This is going to get worse...
:cool:
.^sc

[AMR]

Went to an open home at Latitude37 in the Viaduct Harbour two weekends ago. Nice f/f studio apartment , 36sqm ... angled view from balcony to the water outside Stratis at Lighter Quay. Agent told us the guy bought it for $280k in 2001 ... has been rented out solidly since but due to various costs ( body corp, leasehold land , rates , rental mgmt fees ) net return to him was only around $12k per year. Was going to auction on Wed 9th and expectations were around the $200k mark. We were flying to Queenstown that day so couldn't go to the auction. Rang him yesterday .... 1 bidder only in the room , vendor sold it for ..... $140,000 !!! Now even if you'd just stuck $280k in the bank 7 years ago you'd have around $350k now .... what a CATASTROPHIC investment. Might be a good time to start going to auctions soon , looks like there are some horribly desperate sellers out there !!

Where was this? Viaduct Harbour in Auckland?

[winner69]

Great story Gold guru,
My dad was talking to his real estate agent, and the company had 4 open homes that weekend... Only 1 group showed to 4 open homes...
This is going to get worse...
:cool:
.^sc


Friends in Wgtn had home on market for a 3 week tender period - open homes got 17. 14 and 12 groups through ... got 3 offers with one being just 2K under RV of $500k so they are one happy couple

A month ago a property I was interested after one open home for $650k

And i see Gary McComicks old seaside villa in Island Bay only had the For Sale signs up for a couple weeks before the SOLD sticker went on it .... price in excess of $700k

Still seems to be plenty of action around these parts of the woods

[tim23]

They are goosdstories but I hink overall the market even in the captal is a bit flat, you can see that in the reduced size of the Dompost real estate section each Saturday, I sepecially noticed the reduced number of pages by Tommys.

[Sideshow Bob]

This week in the ODT they stated that in June, there were 131 sales in Dunedin - for an estimated 300 agents in town!! The sighs of sympathy could heard in unison from everyone reading their morning rag.

One sale of $650k. Advertising well down on where it use to be, but most for sale are at the 'lower end' of the market. Not alot at all for sale around the more upper market neighbourhoods.

[Dr_Who]

Went to an open home at Latitude37 in the Viaduct Harbour two weekends ago. Nice f/f studio apartment , 36sqm ... angled view from balcony to the water outside Stratis at Lighter Quay. Agent told us the guy bought it for $280k in 2001 ... has been rented out solidly since but due to various costs ( body corp, leasehold land , rates , rental mgmt fees ) net return to him was only around $12k per year. Was going to auction on Wed 9th and expectations were around the $200k mark. We were flying to Queenstown that day so couldn't go to the auction. Rang him yesterday .... 1 bidder only in the room , vendor sold it for ..... $140,000 !!! Now even if you'd just stuck $280k in the bank 7 years ago you'd have around $350k now .... what a CATASTROPHIC investment. Might be a good time to start going to auctions soon , looks like there are some horribly desperate sellers out there !!

Be very careful about buying in the Viaduct. Leasehold has no demand, just wait till renewal of lease. Also body corporate fee is a killer. The properties in Beamount, Victoria Park market area is leasehold. The investors paid around $350k and sold it for around $50k.


Friends in Wgtn had home on market for a 3 week tender period - open homes got 17. 14 and 12 groups through ... got 3 offers with one being just 2K under RV of $500k so they are one happy couple

A month ago a property I was interested after one open home for $650k

And i see Gary McComicks old seaside villa in Island Bay only had the For Sale signs up for a couple weeks before the SOLD sticker went on it .... price in excess of $700k

Still seems to be plenty of action around these parts of the woods

There's been alof of BS stories being told by property developers and realty agents about how great the property still is. It is all BS. These guys are just talking up their own book and self interest. Those that are paying a premium in this market are complete fools. These jokers manipulate the market during the boom times so fools pay a premium and now they are trying to talk up the premium market to flick off their dead stock they cant sell.

[duncan macgregor]

DR WHO, You generalize to much. Property developers are not all the same, neither are real estate agents. I only sell at my sell price, and only buy at my buy price regardless of what stage in the cycle the market is at. I dont rely on banks to prop me up into leverage positions where i am forced to sell. If the maket crashes its good i buy, if it goes the opposite way i sell.
This year i sold a lifestyle property about $80000 above what some panic cover his bum valuer valued it at. I also bought a new B&T at $125000 below its initial starting price. I do it all my way, my sell price, my buy price thats it take it or leave it, if anyone tells me different i sack them.
The people you generalize about are the mug punters, that run with the herd, getting boxed up in the corners trapped by their own greed, and stupidity. There is always great bargains to be had at any stage in the market, and you can sell anything that the market wants at anytime. People die, they get married, have children, they retire into lifestyle properties, the world still goes round along with the market. Macdunk

[Brut]

Real estate agents will tell you anything to get a sale. I am in the process of moving back from Kerikeri to Christchurch & inquired about a property on Cashmere Hills. I asked the Agent if the property was sheltered from the North West winds (as the last house I owned on Richmond Hill in Sumner was belted during the summer months) & was told "nor westerlies" are not very common in Chch. She didn't realise I grew up in Chch!

[The Great Gold Guru]

Yep, Viaduct Harbr in Auckland AMR. Leasehold land is the killer , people just don't want to know !!! Too many unknown's , you can hardly blame them. The America's Cup sure caused a few people to get caught in the Auckland waterfront apartment market hype ... paying the price now !!!

I'm renting in Devonport ... we have just moved to Auckland from Blenheim , we want to buy but will leave our money in our vineyard and dairy farm investments till late next year of early 2010. Pull out half then and buy our dream villa near Cheltenham Beach. We have been keeping an eye on the the market since the turn of the year. Some properties that were listed then are still stuck on the market now , no price reduction, no fresh marketing , 2 open homes per weekend .... the quality of some agents is very questionable , seems they can't tell the vendors the truth ... "you just won't sell your home in this environment at this price , you need to drop your price by at least 10-15% to have any chance" ... lots of deluded people still ... vendors and agents.

[POSSUM THE CAT]

The Great Gold Guru I am helping somebody look for a property in west Auckland. Most of real estate agents are still telling their clients it will be all over by Christmas. Saw the best bit of BS on saturday agent rushed an asian family to an auction handed a list of sales in the area over the last two years gave them a quick tour of property and talked them in to paying roughly the top price for a house in good condition for the area. (this is my impression of the way the realestate agent acted) When house needed about $80000.00 worth of renovations to put it into good condition. Now they will use this sale to inflate value of all property in the area.

[Crypto Crude]

brut-Real estate agents will tell you anything to get a sale. I am in the process of moving back from Kerikeri to Christchurch & inquired about a property on Cashmere Hills

Oh goodie... hes coming back... He must be missing the main event NC...
Brut,
its so true about real estate agents... they are worse than car salesmen...I say this because Real estate agents grind away at both the buyer and the seller whereas car salesmen can only grind on a buyer...
Real Estate agents go to the seller and say one thing and then say completely the opposite to a potential buyer, in these tough market conditions they get more and more desperate...
as in possums example, sometimes they manipulte the buyer to the point where little grinding needs to be done on the seller... More and more often now, its becoming a mixture of twisting buyers and sellers upside down, its never been this bad....
its a game of Trickery...Tom Foolery...

Real estate agents are so good that they could sell a toy car with a jet engine in it to a car salesman and get top dollar...hahaha...

Do not trust REINZ, property magazines, bulls, agency or organisations that stand to lose on a pesonal level through being honest, NZ property Mag is one...
You can usually trust the press, you can trust this thread, and you can trust a bear...
Its pretty bad in the US at the moment... We are only 6 months in, 2 years to go...
:cool:
.^sc

[Crypto Crude]

future buyer here at rock bottom prices..
If things fall into place as Ive planned then the life long loan term will not be required...turning 30yr sentence -> into 10yr walk in the park...
:cool:
.^sc

[Brut]

SC, yes that's the only reason I am moving back to chch so I can attend the National Convention.

My old mate Serpie has been kind enough to rent me one of his Rental Properties to us, hopefully he is not reading this as he should be getting it ready:)

I'm cashed up now so looking forward to having a good look around at the Chch market. Houses up here in Kerikeri are just not selling, so there are alot more rentals properties available.

[duncan macgregor]

future buyer here at rock bottom prices..
If things fall into place as Ive planned then the life long loan term will not be required...turning 30yr sentence -> into 10yr walk in the park...
:cool:
.^sc SHREWDY, Your inexperience is showing. The bargain can be better bought in a rising market. I prefer looking for bargains in a booming market. You will find mortgagee auctions are best in boom times with a quick flick off. Times like this you are stuck with it waiting on the market to turn. There might be lower prices but harder to sell which makes bargain hunting in the good times a better paying proposition. Macdunk

[minimoke]

If things fall into place as Ive planned then the life long loan term will not be required...turning 30yr sentence -> into 10yr walk in the park...

If you look upon your mortgage as a millstone then it will be a life time sentence. However if you see it as a commitment to repay someone for the privilege of levering one asset for growth in other assets then its not a “sentence” - its a tool. Don’t let debt scare you – just be aware of your ability to repay!

[Halebop]

There are studies that demonstrate highly indebted companies on average perform worse than their less indebted peers. I struggle to see how individuals would fare any differently. Debt works in rising markets, that's where the story ends. But debt also restricts ability to take risks at the same time as it increases default risk. Creativity and innovation are negatively impacted by tighter budgets (I know the semantics about creativity on a shoestring but the data doesn't support it).

We've just seen the impact of the "clever" Basel Accord theories - suggesting home lending is low risk and allowing lower capital ratios for both lenders and borrowers actually increases the risk profile, skews values and destroys the low risk argument. It hilarious that a product that was less than 10 years old could have a 1 in 10,000 year risk event tagged to it. There are too many bloody clever poeple around and not enough rational intellect to recall property corrections and what might cause them? We already have sages talking about a 1 in 100 year property event in Australia as if it should be some sort of surprise.

[Dr_Who]

Don’t let debt scare you – just be aware of your ability to repay!

Tell that to all the high flyer property developers out there who are falling like flies in this depressed realty market. They were drinking Dom Perignon in their beach house just last year and now they are standing in court explaining to the judge why they shouldnt be liquidated by the finance firms.

[Crypto Crude]

mackdunk-SHREWDY, Your inexperience is showing. The bargain can be better bought in a rising market. I prefer looking for bargains in a booming market. You will find mortgagee auctions are best in boom times with a quick flick off. Times like this you are stuck with it waiting on the market to turn. There might be lower prices but harder to sell which makes bargain hunting in the good times a better paying proposition. Macdunk

Whos waiting for the market to turn?
Not me...mad men are currently waiting for the market to turn, they must have too much time on their hands waiting for that to happen...IE years...
theres no turning mackdunk, theres only falling...
The best buying at the moment Id say is Old kent road, Park lane, Euston st... other than that, leave the real buying until the best time...

mortgagee auctions best in Boom times with a quick flick off? "with a quick flick off", First homebuyers are not thinking about a flick off, they are thinking about buying their first house... in bad times mortgagee sellers become more desperate, and there are many more of them on the market... do you agree?


The 30yr sentence turned into a 10yr walk in the park is made possible through a greater saved deposit, lower house price, lower forward looking interest rates...
And the combination of that makes a future homebuyer better off than a buyer of 2-3 years ago...

House A would have sold for $500k last year in a good market...
House A sold for 420k now in a bad market...
Its pretty simple to me as to which market id prefer buying in...

you read the sharemarket exactly right, and called it before it happened, and sold before it turned big... how could you read the housing market situation so wrong? when you go the Sharemarket so right?...
:cool:
.^sc

[Crypto Crude]

The KING is back


A housing expert, (and shrewd crude) are both encouraging first home buyers to delay their plans and make the most of renting.
The property investors Federation says the weekly costs of home-owning are now around two and a half times that of renting.
Vice president Andrew King says prospective buyers could be saving around $20,000 a year by renting, which could then go to a down payment.
source: newstalk ZB... article on tele text...

Andrew King, any relation to our mate Joe?...
Costs of homeowning are 2.5 times that of renting....!..... huh?
what about the costs of owning a losing asset... that 300k asset is worth at least 30K less this year... So real savings (so far this year) are about 40K then huh....
:cool:
.^sc

[duncan macgregor]

SHREWDY, I hope for your sake you dont take JOE KING up on that golf match. He will get the shirt off your back mate. I have never lost on a property deal ever. I have seen property cycles come and go with the usual bunch of clowns staying out the market missing out time after time. Looking back my average increase in property value was over 10% my average mortgage was about 8% with my average rent at 7%. I have bought bargains and sold properties right round the various cycles used the banks money to my advantage never lost on a deal. Like i said SHREWD one dont play golf with joe i think he will take you to the cleaners. Macdunk

[Crypto Crude]

I dont care if he beats me or not... My handicap is 36...
I dont hand in score cards...perhaps thats why my handicap is the lowest...
and my golf clubs are too blame... damn bent clubs, (well one of them when it got rapped around a tree, the funny thing was I didnt realise for quite some time that it was bent)...
:cool:
.^sc

[Financially dependant]

SHREWDY, I hope for your sake you dont take JOE KING up on that golf match. He will get the shirt off your back mate. I have never lost on a property deal ever. I have seen property cycles come and go with the usual bunch of clowns staying out the market missing out time after time. Looking back my average increase in property value was over 10% my average mortgage was about 8% with my average rent at 7%. I have bought bargains and sold properties right round the various cycles used the banks money to my advantage never lost on a deal. Like i said SHREWD one dont play golf with joe i think he will take you to the cleaners. Macdunk

Geeze you blue eyed brigade just don't get it! This market is going to crash (after the Olyimpics) big time, I have my money in aussie dollars gaining interest. When the time is right I will be picking over the dead carcases of the property market, picking the bargains from the road kill:D!

[Dr_Who]

Geeze you blue eyed brigade just don't get it! This market is going to crash (after the Olyimpics) big time, I have my money in aussie dollars gaining interest. When the time is right I will be picking over the dead carcases of the property market, picking the bargains from the road kill:D!

LOL...

You blue eyed brigade never learn when you bought into PRC and NZO below $1.00, while I, McDunk made huge gains putting my money in Aussie and sold my lifestyle block properties at a huge premium to fools in a depressed property market who listen to my rambling about how the property market never drops. :D:D Shrewdy, have you learnt anything from me, McDunk yet? Listen and learn young fella!! LOL

[Crypto Crude]

ahh.. I put a post up and it did not quite sound right...
Before I go further I want to clear something up with mackdunk...


SC-Pity the joe kings and mack dunks did not call the looming housing crisis before it happened...
Job only half compete Id say...



MD-SHREWDY the JOE KINGS and the Macdunks have just done that.

Mackdunk can you please explain "the JK's and MD's have dont just that"...
Do you mean that the JK's and the MD's have both sold out of the housing market?
:cool:
.^sc

[Crypto Crude]

and Mackdunk,
Do you have an opinion of the Article I posted...
Its pretty compelling eah?
The truth please, dont beat us around the bush...
:cool:
.^sc

[duncan macgregor]

SHREWDY, You can say house prices fall by this or that, therefore i must have saved such and such by being out the market clever me. Thats how the average dummy might see it, who cant see the wood for the trees. The market goes up, and down, on a general over all trend up over the years by over 10%. If the market goes down it is always followed by a steeper trend up playing catch up. If you buy a property at a cheaper price than the building cost at any stage in the cycle, you are on to a winner. It is better to buy a bargain on the up cycle for a quick profit, rather than in a downtrending market where it takes longer to sell.
If you want to buy to live in the property for ever and a day, as long as you buy at under building cost it does not matter what stage the cycle is at. The JOE KINGS understand the cycles, and sell at the top but buy at any stage in the cycle as long as the numbers stack up. The only people selling are the must sell brigade, the others wait it out. The smart investor knows that if a property is to high a price today, then tomorrow its the right price, then after that its a bargain.
Never buy simply because its cheap, position, potential,area, all come in to it better to pay to much as get second best. Hope you wake up in time to take advantage of it and learn to use other peoples money to your advantage. Macdunk

[Crypto Crude]

SC-Pity the joe kings and mack dunks did not call the looming housing crisis before it happened...
Job only half compete Id say...


SHREWDY the JOE KINGS and the Macdunks have just done that.


Mackdunk,
Ive learnt so much.... the most important thing that I have learnt is that I CAN NOT afford to MISS the opportunity which is presenting itself to me and will unfold before my eyes with the best buying time in two years time... give or take at this stage...Right now I have two years as it stands... that dream is still alive....

We both know Joe king was selling his housing positions at the best time... I say this because he disclosed it here on this thread... You have not disclosed what you have done... BUt you have said that infamous quote that I cant possibly ignore....and you have said..."the JK's MDs' have done just that",
Its quite cryptic, to me its a late message from you telling us that yes you did start selling, when you told us the exact opposite...
Lets get this straight Mackdunk...
why did you start selling when you told us the exact opposite?
Before I can move on I have to know what you did...
:cool:
.^sc

[Mick100]

shrewd
Macdunk makes money in the market whether it's going up, down, sideways or in circles

Before you ask, a circular market is not a market at the circus, it is a market in which macdunk runs rings around everybody;)

[Crypto Crude]

In two years, buying a House will be the best decision you will ever make... Get in when Housing hits lows... (or starts to rebound).... Us newbies will be better off than all of those first homebuyers that bought in the last 5 years....
there is no urgency to buy, so I feel there is no urgency to disclosue the housing buffs rules (from a newbie)...
starting next year leading on, I will provide everything there is to know, I will show you how to work out your loan tables with all sorts of variables such as changing payment rates, changing interest rates, loan term, showing how increased payments effects total loan term, etc... I will show all the mathematics behind buying a house and just what you are stacked up against......
I will tell you how to get a mortgagee sale.....
I will describe how to leverage the housing asset... I will pick the best time to buy, and disclose it...(two years away at this stage)...
I will tell you the secrets that the housing buffs know but do not say...
they beat around the bush too much......
But most importantly I will show you the tools you need to know to work out your own individual amortisation table, everyones table is different and you will be able to work my example into your own....
As newbies we have alot to look forward to...
What can you do now to prepare yourselves for buying a few houses at the best time?
in the next few weeks I will start a thread from scratch (if there is demand) on exactly how a future first homebuyer should pursue their path to getting a house, and more importantly how to take advantage of the looming situation where you should pursue more than one house... You should be thinking of Houses not house...
thank you... good day...

[minimoke]

in the next few weeks I will start a thread from scratch (if there is demand) on exactly how a future first homebuyer should pursue their path to getting a house, ....
With all due respect - what do they say: “Those Who Can, Do; Those Who Can't, Teach."

[duncan macgregor]

SHREWDY, Your enthusiasm has got to be commended. Your approach is like a blind man setting himself up to be an artist. The first thing to learn in any new venture is to understand the fundamental basics of what you intend to do. With real estate you take a couple of weeks off work, and sit the REINZ exams in a classroom with other students. The do it at home version teaches you very little, i know having done both. The next thing to do is work with a builder off and on, getting to understand the basics of what you are buying or selling.
Get into your local council, and ask all sorts of questions, get to know a building inspector and tag along with him as a student observor. After all that, you will know how to spot a leaky home, what the building cost is, how the agents are taught, how to write out your own contracts.
Next thing is finance, which should be arranged before you even start looking, never after. The reason for that is, it allows you to negotiate a much lower price if everything is in order for you to can give an unconditional offer. The market has its ups and downs over the years, with real bargains being more plentifull in the downtrends, however the uptrends are where the best bargain is found for the quick turnover for the max profit. The reason for that is the time factor [months not years].
Finance.
1, Always place sufficiant deposit on a rental for the rent to pay outgoings.
2,always get a fixed three year loan.
3, after three years refinance with the same formula, and pocket the difference which should be enough to finance the next property. Dont worry about interest rates going up or down keep it to where you know the numbers.
When you sell its when the market is booming, when you buy its anytime you find that bargain. I know lots of people who do just that who are rich after only holding menial task jobs. The dummies cant see it keep saying you must time the market or you are all going under the market is crashing. Macdunk

[Brut]

MacDunk you said:

2, always get a fixed three year loan.
3, after three years refinance with the same formula, and pocket the difference which should be enough to finance the next property. Dont worry about interest rates going up or down keep it to where you know the numbers.

Why would anyone get a fixed 3 year home loan when interest rates are heading down?

[minimoke]

Why would anyone get a fixed 3 year home loan when interest rates are heading down?
Perhaps because you know precisely what your interest bill is going to be over the next three years. Rather than trying to pick a market in say 2 years time (which might see rates up)

[duncan macgregor]

MacDunk you said:

2, always get a fixed three year loan.
3, after three years refinance with the same formula, and pocket the difference which should be enough to finance the next property. Dont worry about interest rates going up or down keep it to where you know the numbers.

Why would anyone get a fixed 3 year home loan when interest rates are heading down? It is quite simple really. They might also go up unexpectantly placing you in a high risk position. The golden rule is always know the numbers, never gamble in the unknown doing what is expected. Look at the people getting caught out the otherway.
If your loan after three years is at a higher interest rate the property on average rental would be that much higher. Property is a numbers game. Macdunk

[Crypto Crude]

minimoke-With all due respect - what do they say: “Those Who Can, Do; Those Who Can't, Teach."

Minimoke, thats a load of rubbish...oh well, I will accept your advice and let others to work it out for themselves...
I still want to show the finance behind Loan Amortisation tables, so I will start a thread on that next year.....thanks...

Brut, I totally agree.. Mackdunks theory of fixing the home loan for 3 years, is far from savvy...its a load of hoey, and costly...
Hey Ive got an idea,
If you really want to lock in your payments, Get a 3 year floating interest rate loan, and Send me the difference in cash savings, That way you "know what your interest bill is going to be over the next 3 years"....
Send me a Personal Message, or let me know if you are looking to lock in a those higher interest payments and I will gladly accept the difference between floating (savings) and Fixed (amateurs)...
...
You can get me on...
0800 Call shrewdy, or at www.Imabigidiot.co.nz... I have operators ready and waiting...
You are right Brut, absolute savage behaviour coming from the buffs...
:)
.^sc

[Brut]

SC, I actually wonder how many properties Macdunk has brought or sold over the last 10 years? I doubt that many... I actually think he has just read alot of Investment books???

Locking in a fixed 3 year term may have been good for the past 10 years but times have changed. Falling house prices & interest rates are expected to head down over the next 12 mths. If I was borrowing to buy an Investment property in this enviroment I would only lock in a 6 - 9mth term, then refinace after that.

Everybody is entitled to there opinion so good luck Macdunk on your 3 year fixed loan.

[Crypto Crude]

brut-SC, I actually wonder how many properties Macdunk has brought or sold over the last 10 years? I doubt that many... I actually think he has just read alot of Investment books???

brut,
Im not about to start speculating on how many houses mackdunk has or does not have...
Mackdunk is a living legend, and I pretty much caught him out on a rare mistake (which was admitedly a major mistake on his behalf)...
This mistake is so large that it outweighs him beating me in our two stock share picking competition... for real...
He was selling his houses when he was telling us 'it is never a better time to buy'...
At least Joe told us he had already sold his houses when he was saying
"Mackdunk is absolutely right, it is never a better time to buy than right now"...hahaha... :D... true story...all on this thread, pages back...

all im prepared to say is,
mackdunk would not buy me a beer at the auckland meeting so perhaps he is abit of a squirrel... haha...
No comment on how many playboy mansions he has......:D...
:cool:
.^sc

[duncan macgregor]

SHREWDY, You know only to well that i sold a lifestyle property, and bought a new house this year. I sold the life style well above valuation, and bought the new house well below valuation. To say i only say this or that after the event is untrue in property as it is in the sharemarket. I only ever sell at my price, and only ever buy at my price regardless of what stage the property cycle is in. I buy and sell at any stage in the cycle. The novice property investor who prattles on about not locking in loans has a lot to learn, thats if they ever have enough guts to actually do it some time. Right now is a very dangerous time not to lock a loan in with inflation ready to take off with the price of oil about to go sky high after the olympics. Its only a numbers game, get the numbers right, and sit back watching the smart greedy people doing nothing. Its a risky game trying to time it or risking numbers that might pop out the hat in tomorrows mareket. Macdunk

[Crypto Crude]

Mack dadunk...
heres the RBNZ OCR statement...

date 24 July 2008

The Reserve Bank today reduced the Official Cash Rate (OCR) from 8.25 percent to 8.0 percent.

Reserve Bank Governor Alan Bollard commented that “more unpleasant international news has emerged since the June Monetary Policy Statement, and there is a risk that the domestic economy will slow further. Moreover, the cost of funds raised abroad by banks has been rising in recent months as the international financial situation has deteriorated. Today’s cut will help to mitigate the effect of these increases on the actual borrowing costs paid by firms and households.

“Recent oil and food price increases mean that annual CPI inflation should peak around 5 percent in the September quarter of this year. However, we expect that inflation will return inside the target band in the medium term. The weaker economy is expected to reduce pressure on resources, making it more difficult for firms to pass on costs and for higher wage claims to be agreed.

“Economic activity is likely to remain weak over the remainder of 2008. The ongoing correction in the housing market, together with the very high oil prices, will limit household spending and constrain the extent of recovery. However, high export prices and an expansionary fiscal policy are expected to contribute to a gradual pickup in activity through 2009.

“Consistent with the Policy Targets Agreement, the Bank’s focus will remain on medium-term inflation. In this regard, it is important to note that monetary policy has been reasonably tight for some time, and is now restraining activity and medium-term inflation pressures. Provided that the outlook for inflation continues to improve and there is no excessive exchange rate depreciation, we would expect to lower the OCR further.”


"The novice property investor who prattles on about not locking in loans has a lot to learn"

mackdunk, Id like to make a bet with you... but you never take my bets on...
Aggregate demand is falling and therefore inflation is going to fall after its peak in a few months...its a fact... its a cycles game... Interest rates have stayed the same or risen every time over the last 5 years, and now a new cycle has started... We are on a new Interest rate cycle where OCR will be percents lower in 5 years as to where it is now!
8% now... in 5 years the OCR will be 6% or less...Probably much closer to 4.5%....
do you want to bet on it...?
I agree, "get the numbers right"... getting the numbers right means your loan should be floating...

Its a risky game trying to time it or risking numbers that might pop out the hat in tomorrows mareket. Macdunk-

Being a future homebuyer (minimoke, im not all talk, a doer here)... I have to take on these sorts of risks ie waiting for the market to bleed dry, get floating interest rate.. I have to take all the 'givens' that I can... Property prices are so expensive for us future first time homebuyers, that we can not take things for granted like you buffs do... I can not blatently pay more in interest payments just so I can have a set interest payments figure.....Man, you just brush that dirt off yah shoulder as if it were crumbs...
:cool:
.^sc

[duncan macgregor]

SHREWDY, When you play numbers you play with numbers that are fixed for the medium term, in order to avoid nasty shocks. Missing out on a few quid here or there because the numbers trend in your favour, is nothing compared to getting hit with a sudden leap in interest rates. When you get interest rates that we had in the past of 18%, along with a collapsed share market such as 1987, you might learn to be cautious. The share market is crashing, the economy is in trouble, The property cycle has dropped, yet you are smart enought to pick the inflation rate in tomorrows market.
The share market has dropped 30% this year, and will crash. The finance companies are dropping like flies, its the banks turn to get hit next. The one thing left is property, which when its all over is worth every cent you paid for it. Set it up in a cautious conservative way that you can afford, dont be a smart ass and try to beat the system. Macdunk

[tim23]

But who will be able to buy property Duncan if all that gloom transpires?

[upside_umop]

Duncan, many things have changed since the 1980's...to see 20 odd% inflation again would be very suprising. Unlike the 80's, we now have a floating exchange rate, and inflation targeting regime...property is only a partial inflation hedge, the best thing would be to go to the underlying inflation cause if you want to be fully protected. :D

[upside_umop]

Also, about the 3 year fixed etc, banks usually use a forward curve to predict rates and therefore trying to beat the market doesnt always work. 3 years ago, commentators were saying 'take out a 1 year fixed rate...' that wasnt wise advice.

a 3 year would have been marginally better, but you would still have been entering today at a high rate.

I guess it comes down to individual circumstances. 3 years definately does give certainty..but im with shrewd. I reckon a 2 year would be more beneficial at the moment. Then again, I've never been in the property market..!

[Crypto Crude]

Hiawatha- I cant answer your question without research... Hopefully someone can help...
I agree with Upside down apart from no locked Fixed interest rate would be more beneficial....

mackdunk-
1....SHREWDY, When you play numbers you play with numbers that are fixed for the medium term, in order to avoid nasty shocks.
2....Missing out on a few quid here or there because the numbers trend in your favour, is nothing compared to getting hit with a sudden leap in interest rates.
3.... When you get interest rates that we had in the past of 18%, along with a collapsed share market such as 1987, you might learn to be cautious.
4....The share market is crashing, the economy is in trouble,
5....The property cycle has dropped, yet you are smart enought to pick the inflation rate in tomorrows market.
6....The share market has dropped 30% this year, and will crash. The finance companies are dropping like flies, its the banks turn to get hit next. The one thing left is property, which when its all over is worth every cent you paid for it. Set it up in a cautious conservative way that you can afford,
7....dont be a smart ass and try to beat the system.
8....Macdunk

Give mack 'some slack' a dunk...
Never...:)....
1....I disagree....The reserve bank meets ever six weeks, if there was some 'nasty shock', then I would have abit of time to act before the next meeting...
Only those that are locked in for the medium term are worse off.... Its like going flatting and getting locked into a one year term....some flats ask you to sign an agreement, others dont....
what would you want?....

2.... A few quid.... ----> .25% on a 300k house is $750 per year... half a percent for a few years is serious dosh mate (if you are locked in)...If you are locked in for 3 years and there are multiple cuts then watch out... If you hold multiple mansions then best you get yourself a young gun in the know...

3.... the OCR was implemented in 1999 and we will never again have to suffer what your generation had to back 300 million years ago.... I mean 25 years ago...
Yes we need to be cautious at the moment, Im hoping for a market crash even though I hold shares... I will be back just like you to swoop, and I am looking to exit at some stage... I have time to run, Ive done it before and I will do it again (fact)... I hope to see the markets continuing to fall so it reduces my risk....

4....... look mackdunk, I dont want to hear it on the property section thread.....how about You give me a hard time on the sharemarket when my portfolio is down in negative territory, until then let me rest in peace... If you really want to know all my stock positions are up apart from CTP and CTPOA... ive got more than half my portfolio on CUE and LMP now... and the only other position I lost money on this year was FAR about $500...that postition was first time ever id locked in a short stop, thanks for that one.. I learnt that from you.....
... im bit mad about WHN though, which ran 50% and came all the way back down to breakeven... oh well....

5....Mackdunk, I dont need to be that smart, the RBNZ has said it all and they are impartial and the most open central bank in the world ( I even posted their statement on the thread)....... the most open Central Bank in the World... Period....

6....blah blah blah.... Im a fly swatter...(one of those magnetic ones), I gobble up flies for breakfast... banks smanks... Ive mentioned banks before... If you remember MD I got booed off the thread...they said I was paranoid etc, ...Houses will be worth every cent you paid for it, Yes.... at the bottom of the market...

7.... You of all persons know that systems are put in place to be broken....

8..... Shrewdie....

:cool:
.^sc

[George]

I'm not a first home buyer but feel like one, have never been so interested in property matters as now, never knew what property was worth till it sold and never cared.
After one year in our new house we have no regrets but I was so aware of the 'toppiness' of the market (May-June 07) that we locked in the 8.3% for 5 years, not because it will be necessarily cheaper over that time but because it gave us certainty that we could budget around.
We also paid off 5% of loan principal at no charge which I don't think one could do 10 yrs ago - things are more competitive now. Next year, if rates stay above 8.3 we may pay off more but if they dip below there will be a charge, but that's a risk we can live with. Also, what if rates are say, 15% in 5 yrs, I would want to have whittled that mortgage down a lot, at this rate we will only have about 120k owing. We may be done and dusted in less than 10 yrs and may have got into a second property if prices do drop.
If we had kept renting we may have got a house cheaper now but interest rates are higher. The only thing I should have done better was negotiate a lower price - asking 325k, started at 305, buy at 312, but should have started about 285 (itemising all the things that need doing) and bought maybe for 295-300k.
As I mentioned before on this thread the house gives us an incentive to work and save because you have to, one would need more discipline otherwise to save for a bigger deposit on an imaginary cheaper house in the future. I wonder also if there is an army of young first buyers out there just waiting to pounce as they will not want to miss out again should prices look like recovering.
Of course our ages dictated some urgency in buying as if we waited too long the banks could have an issue giving us a big loan. And it gives us security for the future, a younger person would not have that urgency and may well do better to wait.
Hard to know which camp is right at this point. Has the world really changed, is inflation really dead??

[minimoke]

Minimoke, thats a load of rubbish...oh well, I will accept your advice and let others to work it out for themselves...
I still want to show the finance behind Loan Amortisation tables, so I will start a thread on that next year.....thanks...


One of the risks to Shrewd Crudes approach is paralysis thorough analysis. That is never actually buying a first home. By the time SC has done all the analysis to time the property market right he then has to become a financial markets expert so he can time the interest rate market right. While all this is going on he isn’t enjoying the intangible benefits of being a first home owner.

Rather than all the analysis a person might just work out if they are going to be an owner or a renter. The numbers never really stack up to own your own home from a financial perspective – you do more financially by being a renter. However you don’t get the intangible benefits of owning your own piece of land and having security in location.
With the glut of rentals around now the question should perhaps be : Should I be a first home owner or a first home renter?

[Crypto Crude]

minimoke-One of the risks to Shrewd Crudes approach is paralysis thorough analysis. That is never actually buying a first home.
...By the time SC has done all the analysis to time the property market right he then has to become a financial markets expert so he can time the interest rate market right. While all this is going on he isn’t enjoying the intangible benefits of being a first home owner.

Rather than all the analysis a person might just work out if they are going to be an owner or a renter. The numbers never really stack up to own your own home from a financial perspective – you do more financially by being a renter. However you don’t get the intangible benefits of owning your own piece of land and having security in location.
With the glut of rentals around now the question should perhaps be : Should I be a first home owner or a first home renter?

Minimoke, if thats the way you feel about me then so be it...
first of all, I am studying to become a financial markets expert, its my future...
Ive not gone overboard on the analysis... Ive kept it very simple for others to understand...
I have not even gone into details, perhaps due to the opposition of me providing it...
The two most important Ideas that we have recently debated
1) dont buy a house because they will keep falling in value, and
2) go floating interest rate because we are on a new cycle

are both givens...absolutely cash in the bank mate...
certainty, no brainer... Its just a wait and see as to if they come true or not and I know Im right... Mackdunk wont even take a bet with me...
I cant believe it someone of your ability (minimoke) would pretty much recommend me buying a house now just so I can enjoy the intangible benefits of it while house values crumble around me... your just trying to be funny eah?

Look mini,
its nothing to do with timing the interest rate cycle (that comes last, perhaps an added bonus only)...
its a mixture of many things in harmony for the best entry time (most profitable outcome).... I will save a decade off my total loan term.... WHAT dont you understand about that...?
Im off for abit, catch you up when I get back...
see you at the national convention, 23rd August Lone Star Riccarton...! check out the appropriate thread for more details...
catch all you buffs in the next round...
In a few years us newbies will be laughing straight to the bank with this...
All of the buffs will all be proven wrong, you just watch me...
its a story in the making...hang around to find out what happens
thank you...bye for now...
:cool:
.^sc

[minimoke]

Im off for abit, catch you up when I get back...

But here in lies the problem. Are you buying a home or a house? On your return I‘ll look forward to continuing the debate on one or other – or even both but lets not confuse the two. In the meantime enjoy life as a renter. Your landlord will appreciate you paying his mortgage. Oh – and also enjoy that 5% gross you’ll be getting with your money on the bank. The government will appreciate your tax contribution – but watch out as those rates drop!

[Dr_Who]

I ve noticed that a number of sellers are putting prices very close to the 2005 CV valuation. Things are starting to bite and sellers are becoming more realistic when there are no buyers around.

Hey Shrewd. If you are buying a home to live in, it is ok to pay abit more. If you can get property below 2005 CV, it is worth considering. There are plenty out there for you to choose from mate.

[Halebop]

I ve noticed that a number of sellers are putting prices very close to the 2005 CV valuation. Things are starting to bite and sellers are becoming more realistic when there are no buyers around.

Hey Shrewd. If you are buying a home to live in, it is ok to pay abit more. If you can get property below 2005 CV, it is worth considering. There are plenty out there for you to choose from mate.

I was speaking to a group of lawyers and they remarked that they have noticed more than a few sales and valuations at and sometimes below 2005 CVs. Wonder if anyone still hopes this market isn't correcting?

A friend of mine just bought a house in a central Auckland Suburb at 16% under the 2007 CV and in no way does he believe he got a bargain (Any Auckland real estate still seems pricey to me but then I don't have a vested interest... or any interest). He simply made the offer he thought it was worth and refused to move. After weeks on the market with little interest the vendor capitulated.

If I was to put a number on it I think the market will correct 20 to 25% in real terms but inflation may hide some of the drop.

[minimoke]

they remarked that they have noticed more than a few sales and valuations at and sometimes below 2005 CVs.
But that’s a meaningless conversation. RV’s/CV’s are simply a tool to divi up a Councils rapacious finance needs. They are not a reflection of an actual property’s value. At best they give a ball park figure – which is why banks have been happy to accept them when looking at security for a mortgage. And it is only for a very short time that a CV is in sync (but not necessarily accuralty reflecting) with the market.

[tim23]

Agree totally minimoke I still see ads qouting RV, GV (does not even exist!) & CV what garbage they are largely meaningless even registered valuations can date pretty quickly.

[Halebop]

To me that meaningless conversation confirmed the industry data I've seen first hand. The Auckland market at least has dropped by double digits in the last 12 months.

The residential property market is screwed and those with an investment bias towards the sector will do it tough. A house is a house and if you are buying for emotive or practical purposes rather than financial then fair enough. I can't see a compelling need to rush though. At best the market will show neutral movement while inflation will favour deferral strategies.

[minimoke]

..and those with an investment bias towards the sector will do it tough.
Nothing new there. High original purchase price, high interest rates and low ish rental demand all has spelt danger for more than the last few years. Property values may be temporarily deflated as desperate owners try to quit their “rental yield” investment in the face of crippling costs in a talked down market. Indeed I suspect it is these people who are loosing in the current market as they are simply selling. Whereas residential owners are selling and buying in the same market space. If they are selling a lower valued property they are also able to pick up a lower valued property – so they are just as well off.

[minimoke]

At best the market will show neutral movement while inflation will favour deferral strategies.
So presumably today’s buyers are cashed up – but where have they parked their Cash. Higher interest finance companies are risky. The share market is in the doldrums. Bank Interest rates are falling and inflation has probably eaten away any net income. Money has to find a home - the first three options aren’t great: some say property isn’t great - but the money has to go somewhere. Meaning property doesn’t look so bad – and at the end of any fall off you are still left with a piece of dirt, bricks and mortar. Perhaps a reason why the property fall won’t be as bad as some suggest.

[Halebop]

I've had a cash bias for almost two years and been strongly in cash the last 12 months. The 1% real return after tax in the last 12 months has been handily compensated by the 15% to 25% boost to purchasing power it has enjoyed thanks to falls in real estate and equity markets. Going long in falling asset classes hasn't been a compelling argument against low real returns in cash.

[George]

Some people I know went to USA a yr ago to buy a house and ended up
buying two as they were so cheap.
With news that owners are defaulting and walking away, their purchases are
probably worth less now so if I didn't own a house I may wait a yr or two
in case this situation repeats here.

[minimoke]

With news that owners are defaulting and walking away, their purchases are
probably worth less now
Remember – it wasn’t that long ago when banks were offering 105% mortgages. We spoke of the foolishness behind that at the time.

[minimoke]

The 1% real return after tax in the last 12 months
But if you had a mortgage you would have got a 9 – 10% net return for every dollar you paid off. Cashed up people have nowhere so effective to park their spare money.

[upside_umop]

But if you had a mortgage you would have got a 9 – 10% net return for every dollar you paid off. Cashed up people have nowhere so effective to park their spare money.

Thats only a 9-10% return if the property goes up in value. If it stays stagnant, you are essentially paying interest costs, which the price of borrowing. Ie. The opportunity cost to use that money. There is no return if your investment stays the same.

Its exactly the same as borrowing money for a stock on the sharemarket, and it doesnt move all year. You pay back the loan, but the stock is still worth the same. There is essentially a loss on your interest paid - an expense.

I fully understand if property is rising at the same rate of borrowing costs - its a bit like compulsory saving.

[minimoke]

Thats only a 9-10% return if the property goes up in value.
If I have $100 in disposable income I could pay $100 off my mortgage and save my self $10 a year on my interest bill. So I now have $100 extra in equity and gained another $10 to do something with. This means I now have $110 dollars to invest elsewhere.

The same applies if I have borrowed for shares – except a bank won’t lend me so much to buy shares – it prefers property.

If I just put my $100 in a bank account I’d have around $106 to invest elsewhere.

[upside_umop]

How is that saving or a return when your underlying asset (house) is still worth the same? Ie, If you liquidate your asset, then you are left with only $100 and an expense over the period amounting to the interest...so your amount returned is a (-) ?

$100 (sale of asset) - $110 (repayments including interest) = $90.

Purely for comparision, even though it doesnt make sense, would be to borrow and put money in the bank.

$106 (money end of period including interest) - $110 (repayments including interest) = $96

By borrowing money, and putting it in the bank you would be better off. Of course, you wouldnt have a roof over your head.

Putting it another way...

If I didnt take out that loan of $100, then my disposable income would automatically be $110 because of no interest costs. My return for the year would be $110*1.06=$116.60 to invest elsewhere. More than your $110 from taking out the loan and paying it off right?

[minimoke]

H
$100 (sale of asset) - $110 (repayments including interest) = $90.

Assuming house values stay the same then on sale I’d get my $100 back, and in the mean time didn’t have to pay interest on $100. Remember – I’ve changed my asset / Debt ratios. Trying to work formulas around debt interest costs is a lot more complex because this is the cost of having a roof over your head.

[SEC]

I've had a cash bias for almost two years and been strongly in cash the last 12 months. The 1% real return after tax in the last 12 months has been handily compensated by the 15% to 25% boost to purchasing power it has enjoyed thanks to falls in real estate and equity markets. Going long in falling asset classes hasn't been a compelling argument against low real returns in cash.


At least keep your story consistent Halebop. You've been claiming on this site to be largely or completely cashed up since early 2005.

SEC

[lakedaemonian]

Some people I know went to USA a yr ago to buy a house and ended up
buying two as they were so cheap.
With news that owners are defaulting and walking away, their purchases are
probably worth less now so if I didn't own a house I may wait a yr or two
in case this situation repeats here.

Agreed....patience is still required......some are getting "buck fever".

From a strictly dollars and cents clinical point of view.....I'd wait another 1-2 years or so......in my opinion

[Halebop]

At least keep your story consistent Halebop. You've been claiming on this site to be largely or completely cashed up since early 2005.

SEC

SEC I think you have a bone to pick with me but my story has been quite consistent. In 2005 there was still plenty of trading and a few holds in my activities. In 2006 there was trading only in lower portions and when between trades it was of course converted to cash. From Mid 2007 onwards the cash bias has been very full, with only sporadic trades in smallish portions - although given most of these have been shorts my cash position was technically topping out at around 110% less the short obligation.

I haven't been on the right side of every trade but my contrarian position on cash has so far been beneficial… despite your attempt to characterise me as disingenuous.