NZ 1st homebuyers are ScReWeD... [Archive] - Page 7

upside_umop

09-03-2009, 12:02 AM

Hey upside,
we should catch up soon....
im not sure if your in kiwisaver or not... IF not get in right away dude...
we are in for one cheap house...
check this out...
if we are in kiwi saver for 3 years then we can get a 5k subsidy from the government, making a total contribution of 10k....
5k can come out of our funds but reducing the size of our funds...
Ive been in one year plus a few months.... im going to wait two years until I buy...
brain haemorrhaging until then...
we need a doctor, this is so sick...
:cool:
.^sc

hey shrewdy dudey,

im back online....i went all out and bought a new macbook + cinema display from apple the other day....gives a great experience thats for sure and ill start posting a little more again.

yeah should catch up again soon, im still in the same flat this year, what about u?

im in kiwisaver, but it does have its restrictions on buying the first house...ie price limit 250 k i think? then it restricts you to certain areas...

other than that, kiwisaver is a sweet deal. i do it just as a little bit of diversification, and dont think ill really notice the 4%.

Crypto Crude

09-03-2009, 12:36 AM

hey upside,
I gave up that flat...
the flat dudes (not mates) were chumps and barely spoke to me (apart from one)... even though I was so nice and happy....
the place was a jungle...
the neighbourhood was full of rats...(human junkies)...
I moved over to barrington with some mates of 5 years...
Chinas off, it all fell through in the end even though they told me I had the job...
I will put a post up on the 2009 market thread soon explaining......

I hadnt heard of a 250k house price limit for KS...
dude...250k... mate, that will be like the 350k house of two years ago, in two years time....
we would have been buying average houses, soon we can buy manisons for that...
starting in the housing game at the top... hahahha....;)
narh.... im probably looking around the 200-250k price near fendalton, Merivale... as long as I dont have to buy in Ilam then I will buy anywhere...
KS restrictions on areas...?
I will do some snooping shortly...
:cool:
.^sc

minimoke

09-03-2009, 10:01 AM

hey upside,
I gave up that flat...

Ah, there you go Shrewdy, if you’d’ bought that first home you wouldn’t have had to move because of the flatmates – you would have move them on.
As for Kiwisaver you’ll be able to spend $300k on a house in Christchurch (Auckland and a couple of other places is $400k) – but the rates will be changed closer to the time people start buying.

Couple of fishhooks for you though

On 1 April compulsory Kiwi saver contribution rates drop from 4% to 2%. If you drop your rate to 2% you won’t be eligible (at this point) for the deal as Housing Corp say you got to be in at 4%.

Also watch out for the income limits. Sounds like you and Upside down may have a cunning plan – but if your incomes for 2 people exceed $100k you won’t be eligible.

The GrandMaster

09-03-2009, 11:52 AM

Ah, there you go Shrewdy, if you’d’ bought that first home you wouldn’t have had to move because of the flatmates – you would have move them on.

But then he'd be stuck living in the jungle with the rats. Renting he can simply move on to a better place.

minimoke

09-03-2009, 01:15 PM

[quote=The GrandMaster;246386Renting he can simply move on to a better place.[/quote]
Buying, or creating a home implies some sense of security and pleasure from the people who share it. It’s about being a place where you want to go at the end of the day and a place in which you’ll create fond memories. Sure Shrewdy can run from flat to flat (and deal with the lease issues along the way) but he’s no closer to finding a home.

Stranger_Danger

10-03-2009, 01:41 PM

I still don't get NZ's obsession with home ownership.

I pay less than $300 a week to rent a house with a QV of 550k.

I could write out a cheque to buy it freehold, but what would possibly make me want to do that?

I guess I understand some of the arguments about security, pride, ownership and warm fuzzies but, frankly, economic crimes don't tend to make me feel proud or give me the warm fuzzies.

minimoke

10-03-2009, 02:09 PM

I still don't get NZ's obsession with home ownership.

I pay less than $300 a week to rent a house with a QV of 550k.

And I don’t understand the obsession to be a landlord.
That’s only a 2.8% gross yield and is simply nuts!

Stranger_Danger

10-03-2009, 02:59 PM

I agree, its insane. Insane, insane, insane.

Long may it continue :)

fungus pudding

10-03-2009, 04:14 PM

I still don't get NZ's obsession with home ownership.

I pay less than $300 a week to rent a house with a QV of 550k.

I could write out a cheque to buy it freehold, but what would possibly make me want to do that?

I think you mean unencumbered or mortgage free. Freehold refers to tenure.
Almost all houses in NZ are freehold (as opposed to leasehold) whether they are mortgaged or not. I don't wish to be pedantic, as its a common error in street-talk, but doesn't belong in a forum such as this.
You're certainly right about an obsession with home ownership. I gave up being a residential landlord years ago and wouldn't wish it on my worst enemy. Commercial and industrial is so much easier and profitable.

JBmurc

10-03-2009, 04:16 PM

I still don't get NZ's obsession with home ownership.

I pay less than $300 a week to rent a house with a QV of 550k.

I could write out a cheque to buy it freehold, but what would possibly make me want to do that?

I guess I understand some of the arguments about security, pride, ownership and warm fuzzies but, frankly, economic crimes don't tend to make me feel proud or give me the warm fuzzies.

thats cheap here in Qtown we pay 450pw-500pw 4 a 500k-550k home

Financially dependant

10-03-2009, 08:11 PM

thats cheap here in Qtown we pay 450pw-500pw 4 a 500k-550k home

But wasn't that a 700k house 6 months ago? ;)

JBmurc

11-03-2009, 08:50 AM

But wasn't that a 700k house 6 months ago? ;)

Thats exactly why going to forced auction's of under valued freehold property here are such good buying why pay 25,000 per yr in rent when you can buy thousand's under C.V an upwards of many 100,000 under cost in time the limited buildable land in Qtown will increase the value many $$$ above current prices

minimoke

11-03-2009, 09:04 AM

... upwards of many 100,000 under cost in time the limited buildable land in Qtown will increase the value many $$$ above current prices
Until such time as Queenstown implodes on its own self inflated view of grandeur. There are many beautifully scenic high country lake areas that could be exploited once the price of Queenstown gets to high – Wanaka might be just one example.

The Great Gold Guru

11-03-2009, 10:10 AM

Hey JBmurc,

What do you reckon to the Pounamu complex. First looked at it back in 2002 I think , the apartments were around $650,000 off the plan when Q'town property was booming Thankfully decided against it and I see quite a few are for sale for around $440,000 at the moment. You gotta think an offer in the high $300's might steal you one. The view is awesome , they look well built , the road noise is an issue as it just keeps getting busier. I guess there is no hurry ... What a horrendous investment if you bought one of those 7 years ago ... OUCH !!!!

I see some of the chalets at the foot of Cardrona are up for mortgagee auction as well ... great location for a holiday home if your a ski junky.

minimoke

11-03-2009, 11:17 AM

Oh dear Shrewdy – median price back up to your Jan 07 level of $330,000 so as at today you’d be break even on price but a whole lot better off on mortgage repayments but still stuffed on deposit ratios. Perhaps the tide is turning and those that weren’t on the boat have missed it.

upside_umop

11-03-2009, 11:24 AM

Oh dear Shrewdy – median price back up to your Jan 06 level of $330,000 so as at today you’d be break even on price but a whole lot better off on mortgage repayments but still stuffed on deposit ratios. Perhaps the tide is turning and those that weren’t on the boat have missed it.

I take it your reading into the article that then goes on to say this....

The median price as measured by REINZ in February was just 2.2 per cent lower than for the same month a year earlier. However, economists have placed greater weight on the figures by QV - which measures sales after full completion as opposed to REINZ's measurement of a sale as it is reported by an agent.

"Median house prices are not the best measure of house prices over time, as it is not adjusted for changes in the composition of sales," ASB's Turner said.

"However, QV housing data is adjusted and shows that house prices are down 8.9 per cent for the three months to February compared to year-ago levels."

The latest housing figures are not expected to make much difference to Reserve Bank Governor Alan Bollard's decision on interest rates, with his next announcement out tomorrow.

Official rates are currently 3.5 per cent, down from 8.25 per cent last July. Economists are split on their views of what Bollard will decide. Most expect a reduction of somewhere between half and one percentage point.

I did read on another article however, that the best opportunities are likely to come up mid this year...will be interesting to see how the prices react to the balancing act of unemployment/low interest rates...

I might start a thread on commercial property in the next few days, as I have heard a few saying its got much greater rewards financially.

minimoke

11-03-2009, 11:45 AM

I take it your reading into the article that then goes on to say this....

The difficulty we have is reliable data with some going for median, others going for averages, others just manipulating whatever they can get their hands on. We even have people who don’t even bother with data but prefer anecdotal observations (Bernard Hickey and a few posters here included).

I’ve tended to stick to the Median for one main reason – this is the value Shrewdy used at the beginning of the thread. I can’t see the point in comparing “averages” when Shrewdy used a Median – it just confuses things. Also for its faults the REINZ does at least publish years worth of data. Whereas QV (who are a corporate entity and no doubt have their own business agenda) publish snapshots with a story woven into it. As for relying on economists – their word is about as reliable as a real estate agents if their posturing over the past few years is anything to go by.

Our bench mark was set by Shrewdy and is $330,000 in January 07 (which will be based on Dec ’06 sales). Floating interest rates were 9.5% - again Shrewdy prefers floating rates rater than fixed (my prefence being a mix of flaoting / fixed). And even though you could get a 100% mortgage back then he went for the 10% depoist. You’ll see my posts refer back to that benchmark– not some other arbitrary figure people like to toss in to make their case.

Serpie

11-03-2009, 12:27 PM

Perhaps the tide is turning and those that weren’t on the boat have missed it.

I think that with property at current prices, and interests rates at current levels (and expected to be even lower by weeks end) that there is still plenty of time. And with winter nearly upon us, plenty of opportunities in the next 6 months.

fungus pudding

11-03-2009, 12:49 PM

I think that with property at current prices, and interests rates at current levels (and expected to be even lower by weeks end) that there is still plenty of time. And with winter nearly upon us, plenty of opportunities in the next 6 months.

And even more in the six months following that.

lakedaemonian

11-03-2009, 01:50 PM

Perhaps the tide is turning and those that weren’t on the boat have missed it.

I think it would be wrong to think of the real estate market as a fast and maneuverable little speed boat....changing course quickly.

I think the real estate market is more like a bloody supertanker.......big, slow, and not the least bit maneuverable....in fact all that inertia could find it blasting beneath any reasonable perceived bottom before it changes course back in the right direction.

If the real estate market ran higher than it should have in recent years, isn't it within the realm of belief that it could correct LOWER than it should?

I think that once the credit crunch is absorbed(which could still take a considerable amount of time), and we eventually get back to normality with a new game of monopoly without all the global volatility(and after correcting to the lowside in my opinion), I think real estate will be quite boring again for quite some time.

The next fast rising real estate tide and "Act Now!" attitudes may have to wait for our children to get excited about.

minimoke

11-03-2009, 02:05 PM

narh.... im probably looking around the 200-250k price near fendalton, Merivale... as long as I dont have to buy in Ilam then I will buy anywhere...
KS restrictions on areas...?

Oh dear more bad news Shredy from the Min of Housing. When the Kiwisaver benefits kickin in 2010 you are going to have to buy in the bottom 25% of house prices in the region.

While you are hoping to buy in one of Fendalton neighbours off the back of a drop in values so will Bromley, Bexley, Aranui and Hornby. These are the suburbs you have to aspire to if you want to use Kiwi saver! Take heart – the Bromley Sewerage works may not be so smelly once that pipe line is finished. Aranui has good schooling if only the kids turned up, Hornby has a great mall with all that discount shopping and Bexleys got, well who knows but its cheap!

JBmurc

11-03-2009, 02:07 PM

Until such time as Queenstown implodes on its own self inflated view of grandeur. There are many beautifully scenic high country lake areas that could be exploited once the price of Queenstown gets to high – Wanaka might be just one example.

Wanaka not excacty all that cheap prob max 10% cheaper on average.

As for many beautiful high country areas to take over Qtown over inflated view?
yeah there pently but most have growing because of Qtown
Qtown is a well known international SKI resort it's the reason we have-
#1 QTown has a International Airport (in under 3hrs I could be in Sydney)pretty sure Jetstar has just made Qtown an chch it's only South Is destination's
#2 -200+ restaurants many 1000's hotel beds 100's bars nightclubs
#3 -5 world class Golf courses (Qtown is becoming a summer resort for Golfers)
-I think you find it hard to just to make another Qtown anywhere in NZ or outside

What do you reckon to the Pounamu complex.

Well GGG IMHO I use to take the piss out of the apartment sales agents I always believed the high prices were a joke as for Pounamu which was going to be part of the -Hilton chain-
yeah if you want a low maintenance apartment,unit etc bargain their looking good have heard you could buy for mid 300,000 only couple yrs back some sold for 799,000+GST pretty sure that rent 450pw-500pw+

minimoke

11-03-2009, 02:16 PM

I think it would be wrong to think of the real estate market as a fast and maneuverable little speed boat....changing course quickly.

I think the real estate market is more like a bloody supertanker.......big, slow, and not the least bit maneuverable....
Not a bad analogy LD. – though perhaps, in terms of volatility a bit more like a diving pontoon in the harbour. It goes up and down with the tides and will really dip and rise in the spring tides. There is more demand in some parts of the seasonal cycle and real quiet in other parts but people always will go back to it when the water is warm enough. When a storm is brewing its best to stay off unless you really know how to swim and like a bit of added excitement. You don’t get to have any fun if you just sit on the beach. And watch out for the fat kid in the jeans who reckons he can swim out there like the others.

minimoke

11-03-2009, 02:30 PM

Wanaka not excacty all that cheap prob max 10% cheaper on average.

As for many beautiful high country areas to take over Qtown over inflated view?

Yes over inflated. I skied in Banff and one lunch time talked to a guy that had been surfing in San Francisco that morning. I’d sooner do that than take a 737 to Sydney. Short runs, short season – but great given Australasia doesn’t have much else to choose from. Airport – great during daylight hours only (but it is one of the more spectacular approaches of anywhere!) and hotels/restaurants aren’t in my books scenic and don’t quite fit our “clean / green” image but a must for extracting tourist dollars. As for all those beds how many workers are commuting from Cromwell or heading to Invercargill for shopping nowadays? Can’t comment on the golf – never seen the attraction and last time I played the sheep ran scared. But each to their own.

JBmurc

11-03-2009, 03:15 PM

Yes over inflated. I skied in Banff and one lunch time talked to a guy that had been surfing in San Francisco that morning. I’d sooner do that than take a 737 to Sydney. Short runs, short season – but great given Australasia doesn’t have much else to choose from. Airport – great during daylight hours only (but it is one of the more spectacular approaches of anywhere!) and hotels/restaurants aren’t in my books scenic and don’t quite fit our “clean / green” image but a must for extracting tourist dollars. As for all those beds how many workers are commuting from Cromwell or heading to Invercargill for shopping nowadays? Can’t comment on the golf – never seen the attraction and last time I played the sheep ran scared. But each to their own.

Your not the only one thats been to Banff spent 6wks there an Whistler loved the place is the reason I now live in the southern alps main ski resort
Personal I love the area because of my interest ,Trail riding,snowboarding,golf,mountain biking,the mountains lake views etc everthing on my doorstep
Obviously you have a chip on your shoulder towards Qtown like many negative minded people you can't stand Queenstowers that love living here..pretty sad really

minimoke

11-03-2009, 03:33 PM

Y
Obviously you have a chip on your shoulder towards Qtown like many negative minded people you can't stand Queenstowers that love living here..pretty sad really
Nothing against Queenstowners at all. People can live wherever they like as far as I’m concerned. Just because I don’t particularly like the way Q’town has been developed doesn’t mean to say it’s wrong. People can put their money where they like, each to their own. But they won’tget any sympathy if they are getting burnt by Jacks Point or Pounamu Apartments or any of the other developments where people have been blinded by the dollar

JBmurc

11-03-2009, 06:27 PM

Nothing against Queenstowners at all. People can live wherever they like as far as I’m concerned. Just because I don’t particularly like the way Q’town has been developed doesn’t mean to say it’s wrong. People can put their money where they like, each to their own. But they won’tget any sympathy if they are getting burnt by Jacks Point or Pounamu Apartments or any of the other developments where people have been blinded by the dollar

LOL remember I'm talking about investing in the present property market not the past 700k+ apartment market of the area(which I also agree was overpriced)
But some how you have nothing against Qtown but post time n again why it's currently over priced something I find hard to believe when property are being sold for less than cost to build.

-Nothing against Queenstowners at all-Yeah right!

minimoke
-Until such time as Queenstown implodes on its own self inflated view of grandeur
-Yes over inflated. I skied in Banff and one lunch time talked to a guy that had been surfing in San Francisco that morning. I’d sooner do that than take a 737 to Sydney. Short runs, short season – but great given Australasia doesn’t have much else to choose from. Airport – great during daylight hours only (but it is one of the more spectacular approaches of anywhere!) and hotels/restaurants aren’t in my books scenic and don’t quite fit our “clean / green” image

minimoke

11-03-2009, 06:42 PM

But some how you have nothing against Qtown but post time n again why it's currently over priced something I find hard to believe when property are being sold for less than cost to build.

-Nothing against Queenstowners at all-Yeah right!

Perhaps you are confusing me with another poster – I haven’t posted on Queenstown very often at all. 1 recent post hardly constitutes carrying a chip on ones shoulder – and I’ve expressed similar views about coastal holiday homes, Auckland apartments, town developments like Pegasus, over priced rentals all over the place

George

11-03-2009, 09:01 PM

Article from Aus showing first home buyers leading the charge
http://www.businessspectator.com.au/bs.nsf/Article/Owner-occupied-house-finance-up-35-below-expectati-$pd20090311-Q22TD?OpenDocument

The Great Gold Guru

12-03-2009, 04:14 PM

Anybody got any experience with property rentals in Welcome Bay area of Tauranga ?. Have spotted what looks like a Keith hay home on 500sqm for asking price $250k ... If you could get it for 10% off that I would have thought it would be a good buy. Estimate of rental of $300pw.

Any experience with Keith Hay homes anywhere ??

Thanks

minimoke

12-03-2009, 04:20 PM

Tauranga has that enormous subdivision being built (name escapes me) out by Pyes Pa so I’m not sure what that is doing to the overall accommodation market. Keith Hay, as I understand have a reputation for building “affordable” homes.

The Great Gold Guru

12-03-2009, 04:37 PM

Are you talking about "The Lakes" ... development potential of around 2000 new homes over the next decade. I'm just thinking there is little profit in a modern subdivision at anything less than $150k per section. If you can get a near new home on it for $75k ( 110 sqm, 3 bed , carport , driveway , deck ) then it looks like quite a good deal.

minimoke

12-03-2009, 04:47 PM

Yes – that might be the one. I’d looked at it as Tauriko. I wouldn’t be buying there either can’t recall why I didn’t like it. Something about a motorway or some kind of roading. . My only concern would be the level of overall housing stock available to Tauranga residents – too much supply will generally, drive rents down. But I think the Lakes is trying to be quite posh so may not impact other areas.

cliff

12-03-2009, 08:11 PM

The Lakes development is located in the suburb of Pyes Pa. There is a completed large sub division at Tauriko which also houses a modern industrial estate. Tauriko is a mile or so from the top end of Cameron Rd heading north out of town. Plenty vacant sections all over Taranga, Papamoa at the moment so picking one up for under $150k won't be that difficult...not sure if you could throw a $80k Keith Hay on one...building covenants etc.
Certainly no hurry if your looking at getting some action down this way.
GGG would suggest Greerton rather than Welcome By if you are looking at some cheaper rentals, better constructed houses and closer to the city and you wont pay much more.

The Great Gold Guru

13-03-2009, 08:57 AM

Thanks Cliff, Yes a Keith Hay home is not my prefered option , I would rather buy an ex-state or 1950-1960 era house. The agent has got back to me and the property sold earlier this week for $240,000. He also confirmed it was bought by an investor and is already let at $300. Tenancy starts on settlement date ... that's how you do it.

I will look at Greerton, thanks for the tip.

Dr_Who

13-03-2009, 09:31 AM

Papamoa is a nice place.

I didnt know you can get a nice section there for less than $150k. Is it clsose to the water?

upside_umop

13-03-2009, 10:03 AM

house prices still to fall a further 10% according to bollard....25% from their peak. decent size fall compared to most other corrections huh.

one thing that is positive is to see the banks in us are forecasting profitable 2009. this will bring back a little confidence and they should start to lend...i'd almost be confident to say this is the bottom of the market over there...be interesting to see what happens to wholesale rates internationally from now on, which in turn will help dictate rates here.

talking about rates here, the lowest 5 year fixed is now 6.49 with kiwibank, up from the 5.90% posted earlier...seen the bottom in these too?

minimoke

13-03-2009, 10:42 AM

house prices still to fall a further 10% according to bollard....25% from their peak.
In March 2009 Quotable Value were saying ”Average sale prices had declined 2 percent during the year to $383,786, because fewer low value properties were selling.” And in December they were saying a 6.8% decline in national property values over the past year”. So I guess we could argue the toss that prices have dropped between 6 – 9% off the highs. Add Bollards 10% we are looking at a total fall of between 16 and 19% off the over-inflated highs - a long way from the predicated 30%. And note how the commentators are all backtracking so the picture does not look nearly as gloomy now as they had originally predicted. Simply more reinforcement that Shrewdy would not have lost the shirt off his back if he’d bought in January 07.

upside_umop

13-03-2009, 10:59 AM

I think you'll find that according to QV, which as we know is the most valid approach, property prices fell 10% for the 3 month average to february year on year. We can also see from the RBNZ graph that property prices are in their deepest correction on the graph (surpassing 1991, 1998 and 2000 dips). The graph looks to be well on its way to -10% (only till 2008). As you can notice, RBNZ uses QV figures.

http://www.rbnz.govt.nz/keygraphs/Fig4_large.jpg

RBNZ say another 10%, then add on inflation (5% last year) and thats already 25%. Then lets see the inflation over the next 3 years and whether housing keeps up - doubt it. There will be another 5%. 30% is easy to see...

minimoke

13-03-2009, 11:32 AM

I think you'll find that according to QV, which as we know is the most valid approach, QV is one approach – but I’m not sure it is the most valid – and in this graph it isn’t because new data is being introduced. We have gone from Shrewdys “Median” house price to QV’s “Average” house price and now this new “Value of Housing Stock”. Remembering also that QV changed their methodology of valuing housing stock in 2004 and they are into value/price rations. I think they gather the data from council rating valuations and I know my place is undervalued by at least $300k on value /price so how valid this data is I don’t know. All interesting statistics at a macro level – but distract from the original post which is about buying your own median valued home.

Had I wanted to bring in new data I might want to suggest that back when Shrewdy first posted the average sale price from our data source was $392,724. In Feb 09 it is now $468,653. That’s a 19% INCREASE in value. But going on about how the market has improved isn’t necessarily helpful because we are using different data sets and any old data can be used to prove pretty much any old position.

fungus pudding

13-03-2009, 12:32 PM

QV is one approach – but I’m not sure it is the most valid –

QV is not intended to be a market valuation. Its main use is setting rates, and while market information is taken into account, it's dangerous to accept it as market. The land prices are often near the mark but improvement values are all over the place. In addition they are generally desktop valuations, and maybe a drive past, but very seldom do they inspect properties.

minimoke

13-03-2009, 01:03 PM

QV is not intended to be a market valuation. Its main use is setting rates, ......
Exactly – reading the data ends up being a bit like reading the tea leaves at times and while REINZ data has its faults its still a pretty useful set. Take for example the February data – we can’t read much into one month in terms of a trend. But it does appear that a lot of properties that have been on the market a long time have sold. That these properties didn’t sell in earlier months will have skewed those months figures a bit. February is typically a buoyant month – but this February y was extremely buoyant compared with many previous Februarys. And people are spending money.

The median is up; total no. of sales is highest in 12 months; total $ sales is highest in 12 months, average price is highest since forever. I could speculate that the days on market suggests buyers are vacuuming up the bargains that have been hanging around for too long and the big ticket properties are moving again– which may suggest the bottom has been reached.

upside_umop

13-03-2009, 01:50 PM

QV is one approach – but I’m not sure it is the most valid – and in this graph it isn’t because new data is being introduced. We have gone from Shrewdys “Median” house price to QV’s “Average” house price and now this new “Value of Housing Stock”. Remembering also that QV changed their methodology of valuing housing stock in 2004 and they are into value/price rations. I think they gather the data from council rating valuations and I know my place is undervalued by at least $300k on value /price so how valid this data is I don’t know. All interesting statistics at a macro level – but distract from the original post which is about buying your own median valued home.

Had I wanted to bring in new data I might want to suggest that back when Shrewdy first posted the average sale price from our data source was $392,724. In Feb 09 it is now $468,653. That’s a 19% INCREASE in value. But going on about how the market has improved isn’t necessarily helpful because we are using different data sets and any old data can be used to prove pretty much any old position.

Just because they changed their methodology, doesnt mean their statistics are out. All they have done, is reused their original data in a way that better reflects the housing market. So the graph you see above, actually contains means for the whole period, not a 'switch over' making it unaccurate. I do notice however, that the data prior to 2004 was using quarterly figures, thus why they give 3 month averages when reporting to the market about their statistics.

I'm sorry, but you cant say that housing has gone up in value...gee you try to argue at anything even though your blatently wrong! Give it up! Financially we are much better off...you heard it from the man himself, 25% in real terms.

upside_umop

13-03-2009, 01:52 PM

Exactly – reading the data ends up being a bit like reading the tea leaves at times and while REINZ data has its faults its still a pretty useful set. Take for example the February data – we can’t read much into one month in terms of a trend. But it does appear that a lot of properties that have been on the market a long time have sold. That these properties didn’t sell in earlier months will have skewed those months figures a bit. February is typically a buoyant month – but this February y was extremely buoyant compared with many previous Februarys. And people are spending money.

The median is up; total no. of sales is highest in 12 months; total $ sales is highest in 12 months, average price is highest since forever. I could speculate that the days on market suggests buyers are vacuuming up the bargains that have been hanging around for too long and the big ticket properties are moving again– which may suggest the bottom has been reached.

Doesnt RBNZ go off sales which arent settled? Ie what the real estate agent sends in?

February was best 'written' sales on record for some offices, doesnt actually mean the sales went through. Bank financing etc.

minimoke

13-03-2009, 02:24 PM

I'm sorry, but you cant say that housing has gone up in value...gee you try to argue at anything even though your blatently wrong! Give it up! Financially we are much better off.

Of course I can – but it depends on your starting point. If you reckon people have “lost” since the peak in 08 I’m inclined to agree. Lets not forget that at the “peak” there was 7,800 property sales, in Jan 09 there were only 3,700 so QV data is at risk of being skewed. It doesn’t matter too much though because if you overlay the QV data with REINZ data (be it average / means or whatever) the trends are pretty much the same. But this thread started in Jan 07 before the market peaked and there is little evidence to suggest a buyer then is worse off now.

As for people being financially much better off I’m not sure how you could come to that conclusion unless they are in property, but excluding the twits that bought at the peak thinking property values increase in a linear fashion. Equity values are down, deposits rates are down, finance companies with individual’s loot have gone bust, and redundancies are up. Sure inflation is down a bit and tax cuts have given a bit back to peoples wallets. But who have made the biggest cash gains – it will be mortgage holders who have seen huge drops in their repayments – they will be significantly better off financially.

minimoke

13-03-2009, 02:46 PM

Doesnt RBNZ go off sales which arent settled? Ie what the real estate agent sends in?

February was best 'written' sales on record for some offices, doesnt actually mean the sales went through. Bank financing etc.
Well that’s another can of worms.

Yes REINZ use sale contracts – not settled sales. But the thing about value is that it is what a willing buyer and a willing seller can agree on. In most cases this is after the buyer has had a chance to walk through the property, compare it physically with others and perhaps even get a valuer in to check it out. So the contract is probably a much better measure of property value. Its implied in the contract that terms can be met – but whether or not we should try to extract meaning of failure to complete a contract to property value is difficult to say.

If you want a value of property sales you have to refer to the actual contracts that are settled. I don’t think QV does this for some of their data. Indeed on their website they reckon a good way of valuing a property is to look at the Rating Valuation data. Well, that’s the biggest piece of bull**** I’ve read in a long time. Or they will look at local sales – not the value of an actual property but the value of sales of nearby properties. I bet you could just about count on one hand the number of properties a QV valuer walks through when it come to creating their national statistyics.

With the REINZ data they have used the same methodology for years – so when their values indicated increase this would be on the back of agreed contracts not sales – so at least they are being consistent.

As much as I would welcome an opportunity to bag real estate agents I’m not going to suggest there is some conspiracy amongst them that they are drawing up fictitious or dodgy contracts just to give the impression that there are a lot of sales. That not to say I wouldn’t put it past them – I wouldn’t be surprised if they did such fiddles when they were working out their “Gold Medal Real Estate Agent of the Month” awards.

The Great Gold Guru

13-03-2009, 03:32 PM

fungus pudding

13-03-2009, 05:00 PM

Doesnt RBNZ go off sales which arent settled? Ie what the real estate agent sends in?

February was best 'written' sales on record for some offices, doesnt actually mean the sales went through. Bank financing etc.

No. Agents file only their completed contracts. That is those that have become unconditional within the reporting period. Often settlement comes after the end date of report, and the very odd unconditional contract might not settle for various reasons, but that's rare, and hardly enough to screw the figures. REINZ statistics are the best available if you can get your hands on them. And by statistics, I mean just that, their sales figures for the district you are interested in; not the burble interpretation of them from some waffler from the institute.

fungus pudding

13-03-2009, 05:03 PM

As long as the tenants are happy and paying the rent , does it really matter ?.

"Buy and hold" property is talking about decades ... not months. This global crisis has been great for me and my 8 rentals ... interest bill for the next 12 months will be around $30,000 less than the last 12 months. Like getting another job , tax free ... great !!

So your profit/loss situation is + $30,000. Hardly tax free.

minimoke

13-03-2009, 05:29 PM

No. Agents file only their completed contracts.
There you go, I learn something new every day. I thought it was just contracts written. That they are done deals makes their property value data even more reliable.

upside_umop

13-03-2009, 06:19 PM

Great, so there we have it, anytime is a good time to buy! The market has only fallen 2%!

You guys are absolutely crazy. So is the RBNZ, I mean they use QV.

GGG, you said it yourself...your now not having to shovel in $$$ just to make it break even. Being cashflow neutral at 6% is hardly what I'd call a great investment, especially if that was bought some years ago...

The most accurate indicator would be to get house sales at their peak, and house sales recently, of the same properties. But wait, hasnt this already happened? Its been in the paper numerous times with people losing anywhere from 20% - 50%. Your kidding yourself minimoke....

Thats something new fungus, about REINZ. Do you think houses have fallen in value? Do you think REINZ's figures represent the housing market accurately?

fungus pudding

13-03-2009, 06:58 PM

Thats something new fungus, about REINZ. Do you think houses have fallen in value? Do you think REINZ's figures represent the housing market accurately?

I'm not sure what is new. If you mean their reporting, it has always been that way. Yes. REINZ figures are exactly what happened over the preceding month. It's extremely hard to measure the overall market though, because a rush in any one price bracket makes it impossible to read the whole picture. e.g. Commentators might report market has fallen 10%, but it may be more if recent sales have included a reasonable percentage of high priced homes. It may be less if a whole heap of cheap dungers have had a run. So the average is important, the median is important, but the most important is days on market, or unsold listings. That tells the story. When the listings are piling up there's a drop coming, and when they are drying up - there's a rise coming. Yes. I think houses have fallen in value, but they still have a long long way to go, and will languish at their new low level for years. It's not yet a buyer's market. And they certainly don't stack up as an investment in the abscence of capital gain.

wns

13-03-2009, 11:21 PM

As long as the tenants are happy and paying the rent , does it really matter ?.

"Buy and hold" property is talking about decades ... not months. This global crisis has been great for me and my 8 rentals ... interest bill for the next 12 months will be around $30,000 less than the last 12 months. Like getting another job , tax free ... great !!

Niiice. We've had a great 12 months with our rental properties, rents have risen quite strongly, and as you say, interest payments have dropped by 3.4% compared to even just 4-5 months ago... does wonderful things for the cash-flow.

The Great Gold Guru

14-03-2009, 08:44 AM

As I said earlier Funguspudding ... I pulled my money out of the stockmarket is late 2007 ... used it as deposits on a few rentals. I've got no regrets , that same stock portfolio I sold has dropped by around 75% ( mainly speccie Aussie mining stocks ) , moving into residential property has saved me heaps of cash !!

fungus pudding

14-03-2009, 09:05 AM

Financially dependant

14-03-2009, 09:19 AM

Yet another good article from Brian Gaynor........

http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=10561595

The GrandMaster

15-03-2009, 02:30 PM

Yet another good article from Brian Gaynor........

http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=10561595

Amen to that!

The Great Gold Guru

15-03-2009, 09:03 PM

fungus pudding

16-03-2009, 09:07 AM

Funguspudding,

My point was instead of paying $100k in interest over the next twelve months I will be paying approx $70k ... that means I'm $30k better off. To be $30k better off thru normal employment I'd need to earn about $45k ... then get taxed back to $30k ... I just view the $30k as "tax free". Just my simplistic way of looking at it.

But it is wrong. You are now better off by $30,000 either as increased profit - or a decrease in losses, so the $30,000 is taxable, therefore it has improved your income only by $20,000, (using the same 33 % in your 45 to 30k example) To gain 30,000 in your pocket, your interest savings would need to be 45,000; It's no different than if you had worked for it. The taxman doesn't care how you got it. He still wants his bit. Still, it's a long way better than a kick in the butt (or working for it) !

minimoke

16-03-2009, 11:37 AM

But it is wrong.
Unless expenditure exceeds income. If the interest bill was $100,000 and rentals income was $70,000 then the landlord has to earn another $50k gross approx to bring in the cash to pay the $30k shortfall. If interest drops $30k then that $50k gross goes straight to the back pocket as $30k after tax.

minimoke

16-03-2009, 01:37 PM

Well Shrewdy I’ve just checked out Section Prices – see the different thread. Perhaps you could build your first home on a section. Trouble is you’ve missed the boat on this one as well. Back in Jan 07 when you posted median prices were $165,000. They are now UP 9% at $180,000. That’s another $15,000 you’ll have needed to save on top of that extra deposit you now need.

minimoke

16-03-2009, 02:40 PM

Yet another good article from Brian Gaynor........

http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=10561595
Well claiming in his first paragraph that the economic crisis is due to over investment in housing is a nonsense.
The number one cause, in my view is not over investment in housing, it is simply greed.
First it was greedy lenders who were playing games by lending to greedy people who wanted what they could not afford.

Then it was the greedy Smiths who wanted to keep up with the Jones so they demanded more and more of what the Jones had which lead to higher prices / values and more lending by the Greedy bankers who were happy to create more cash and lend even more. And then it was the greedy developers who were happy to nurture that greed by providing more and more of what people wanted at prices higher than things were worth.

In America it was sub-prime mortgages – that situation was never sustainable. Even the greedy Madhoffs of this world and their greedy Ponzi scheme investors come unstuck eventually.

An investment isn’t buying into something that is over-valued – that’s just greed. We’ve seen it here in NZ – with people buying apartments off the plans, Blue Chip type schemes where property values are inflated and developing subdivisions where the demand is not sustainable. And we had people buy rentals with diminishing yields and doing it for the income – yeah right! It was all just greed. The problems facing people today are caused by greed – not investment in property. Property is simply the guise people have used this time around. Last time around it was Tech Stock in the 90’s next time around it will be something else.

So its impossible to over-invest in something that is over –valued. That’s just throwing money at something on the blind expectation it will keep rising in value – and punting you can flick it to a bigger mug.

Mick100

16-03-2009, 03:10 PM

Maybe your right about greed minimoke but the fact is that none of this would have been possible without the easy credit provided by the bankers

now lets get back on topic
the reccession is just beginning to bite in NZ
the true property believers are still keen buyers (i noticed a number of properties, in my area, which had been on the market for around 6 months all sold in feb). Soon there are going to be mortagee sales left, right and centre while all the true belivers have already bought - what's going to happen then?

minimoke

16-03-2009, 03:42 PM

Soon there are going to be mortagee sales left, right and centre while all the true belivers have already bought - what's going to happen then?
There’s really only one thing that will cause mortgagee sales – and that is the borrowers inability to repay the interest component of the loan – after the bank has exhausted other techniques like repayment holidays.

Landlords who could afford to borrow a year ago will be even better off now with dropped interest rates making repayments easier – so we won’t see them as mortgagees.

Home owners are OK – again for the same reason.

The exception of course is those that have lost their job with no hope of finding cash to make the repayments. But at the moment the redundancies are mainly low skill / low paid and not likely to be property owners. (landloeds be warned!) And the home owners will still need somewhere to live so they will move from their own owned home to a house owned by a landlord – one house sold = one house bought!

So who does this leave – mortgage holders of properties people don’t want because the value isn’t there. Like apartments; new town developments, holiday home suburbs and the like. Sure you could pick up some bargains – but why would you want to buy?

People do not give up to the mortgagee sale easily. We aren’t like the States. If you owe the bank they want all their money back, the house sale may pay some of the debt but perhaps not all – a person will still owe the balance. And as a result people are going to find real good ways of avoiding this situation. Next we will hear the gloomsayers that bankruptcies will cripple society!

The Great Gold Guru

16-03-2009, 06:39 PM

Funguspudding ... I can depreciate the value of my houses by far more than $30k each year ... tax free increase in cashflow ... is that a better way to put it ??

neopoleII

16-03-2009, 06:44 PM

has anyone thought about the mountain of state cash dished out to benificaries every year in the form of housing suppliment payments?
with a serious recession loaming, will the govt be able to fund these payments?
as its these payments that prop up the landlords rental income.... and his investment value.

i see property sliding for sometime yet.

The Great Gold Guru

16-03-2009, 07:46 PM

Looking to buy 8 more rentals ... falling prices ... "come to papa" !!

fungus pudding

16-03-2009, 07:56 PM

Unless expenditure exceeds income. If the interest bill was $100,000 and rentals income was $70,000 then the landlord has to earn another $50k gross approx to bring in the cash to pay the $30k shortfall. If interest drops $30k then that $50k gross goes straight to the back pocket as $30k after tax.

Wrong. The 50,000 gross will be taxed, with the balance going to the pocket.If expenditure exceeds income then the losses are reduced by 30k. Increasing tax liability by the tax on that 30k. interest rate reduction is no different from increasing rent, or working overtime for that matter.

fungus pudding

16-03-2009, 08:00 PM

Funguspudding ... I can depreciate the value of my houses by far more than $30k each year ... tax free increase in cashflow ... is that a better way to put it ??

No. You can depreciate them regardless of interest. No matter how you put it you have a taxable gain of 30k. And don't get to hung up on depreciation. It's a real cost even though it's a non-cash expense. Houses depreciate by more than the tax scales allow.

upside_umop

16-03-2009, 08:05 PM

fungus pudding

16-03-2009, 08:12 PM

Fungus, I think GGG is right. Its because he's making a loss on his properties. Cashflow neutral is the best leverage to have....

If he was making a loss of $30,000 on all his properties, he would not be taxed at all right? Now consider his expenses decrease by $30,000. This is a tax free gain. (Was an inefficent structure from the start if he was making a loss..)

This is assuming, however, that he is not offsetting his property losses against his income. If GGG is, then the decrease in $30,000 is actually being taxed, as he wont be able to offset his taxable income at year end by the loss on rentals.

Are your properties in a trust, company, or personal GGG?

Oh dear! If he was making a loss on his properties, and had no other income he would carry that loss until he had an income. Of course he would be offsetting his loss if he has other income. No matter how you view it, he is better off by 30k per annum, and it increases his bottom line by 30k, and it's that bottom line (or final total) that tax is assessed on. On the other remark, cash flow neutral is only the best thing to have if you want to go to work at another occupation all day.

upside_umop

16-03-2009, 09:01 PM

Oh dear! If he was making a loss on his properties, and had no other income he would carry that loss until he had an income. Of course he would be offsetting his loss if he has other income. No matter how you view it, he is better off by 30k per annum, and it increases his bottom line by 30k, and it's that bottom line (or final total) that tax is assessed on. On the other remark, cash flow neutral is only the best thing to have if you want to go to work at another occupation all day.

If you read his earlier posts, you will see that he is not having to 'top up' his investment portfolio of rentals now. So yes, I assume he was making a loss (at least on a cash basis) on this properties.

Of course he would be offsetting his loss if he has no other income? That depends again on the structure set up used for his rentals, ie he cant claim it if they are under a company or a trust can he?

Increases his bottom line by $30k, which is tax free, because he was making a loss. Again, depends if he was injecting cash into a company doesn't it? If they are personally held you'd expect him to have it offsetting his income for sure! Which then wouldnt be tax free.

Cashflow neutral is what I would aim to at least achieve with leverage. It just makes things simpler...I dont really want to be a full time residental property manager anyways...so I'm not intending to quit the day job for that reason (although I dont have a day job as such anyway! :D)

Are we on the same wavelength now mushroom?

fungus pudding

16-03-2009, 09:18 PM

If you read his earlier posts, you will see that he is not having to 'top up' his investment portfolio of rentals now. So yes, I assume he was making a loss (at least on a cash basis) on this properties.

Of course he would be offsetting his loss if he has no other income? That depends again on the structure set up used for his rentals, ie he cant claim it if they are under a company or a trust can he?

Increases his bottom line by $30k, which is tax free, because he was making a loss. Again, depends if he was injecting cash into a company doesn't it? If they are personally held you'd expect him to have it offsetting his income for sure! Which then wouldnt be tax free.

Cashflow neutral is what I would aim to at least achieve with leverage. It just makes things simpler...I dont really want to be a full time residental property manager anyways...so I'm not intending to quit the day job for that reason (although I dont have a day job as such anyway! :D)

Are we on the same wavelength now mushroom?

No. Whatever structure, he can't suddenly return an additional 30k without affecting his taxable position. And think hard about being geared to produce a neutral position - that is no profit, no loss. In the abscense of inflation, a distinct possibility over the next 10 to 15 years - what the hell is the point? With no inflation you would see the real effects of depreciation on a house, especialy when occupied by tenants. And then there is the distict possibility of deflation, which doesn't bear thinking about for a prop. investor, when the bank keeps calling in your money to adjust your LVR. Sounds negative, I know, which is not normally my style - but I sure as hell would not be buying residential at present. It's a good time to consolidate - pay down those mortgages; after all making a profit is what it is all about, and there's nothing wrong with using property to increase your income. There's a hell of a lot of high flyers going broke!

upside_umop

16-03-2009, 09:46 PM

No. Whatever structure, he can't suddenly return an additional 30k without affecting his taxable position. And think hard about being geared to produce a neutral position - that is no profit, no loss. In the abscense of inflation, a distinct possibility over the next 10 to 15 years - what the hell is the point? With no inflation you would see the real effects of depreciation on a house, especialy when occupied by tenants. And then there is the distict possibility of deflation, which doesn't bear thinking about for a prop. investor, when the bank keeps calling in your money to adjust your LVR. Sounds negative, I know, which is not normally my style - but I sure as hell would not be buying residential at present. It's a good time to consolidate - pay down those mortgages; after all making a profit is what it is all about, and there's nothing wrong with using property to increase your income. There's a hell of a lot of high flyers going broke!

This is interesting. So if he injects $30 k into a holding company for his investment properties, it will affect his taxable position? In which way?

If he was to do the same, but inject $30 k in stocks, would it affect his immediate taxable position? No!

I agree with the rest partly. Cashflow neutral just allows you to forget about the house, let inflation take care of the rising rents and property value. Hell, I'm not advocating to go out there and buy up as many houses as you can if they are cashflow neutral, that would be far too risky! If your buying a property ATM and it doesnt reach cashflow neutrality with the current interest rates, then its not an investment property!

I guess it depends whether you want those returns now, or are in it for capital appreciation story. I'm certainly the latter being of a younger age...

Depreciation is allowed at what rate on residential housing? 3% isnt it?

The Great Gold Guru

16-03-2009, 10:56 PM

My 8 properties are all owned by a company 50/50 with my wife. They have been making tax losses since we bought them with funds removed from the stockmarket in 2007 ... phew . The company owes us about $400k in shareholder loans. This year ( 1st April 09 - 31 Mar 2010 ) I am estimating rental income will exceed interest and rates and insurance by about $30k. Because of depreciation and actual tax losses while interest rates were up in the 9-10% area we will not be paying any tax for a few years. The $30k will be removed from the company by way of shareholder loan repayments. So the $30k will be tax-free to me and the wife ... but will reduce the tax losses in the company and make the day when we actually will pay some tax a little bit closer.

The Great Gold Guru

16-03-2009, 11:02 PM

PS. I had a look thru a couple of properties in Papatoetoe today. At 100% borrowing I need to buy at a 20% discount to CV to make them cashflow positive ( assuming 50wks per year occupancy ). The agent said that's not out of the question if you get the "right" vendor. Am looking in Avondale tomorrow. Can see the first offer going in on something before the end of the month ....

Disc: Sold some Macquarie Office Trust ( MOF ) today at 17.5c ... bought them about 10 days ago for 9.2c ... will pay some of the deposit on the first purchase. What a CRAZY market !! MOF were about $1.50 this time last year !!

fungus pudding

16-03-2009, 11:12 PM

This is interesting. So if he injects $30 k into a holding company for his investment properties, it will affect his taxable position? In which way?

If he was to do the same, but inject $30 k in stocks, would it affect his immediate taxable position? No!

If he puts cash into a company that increases the profit of that company of course the company pays more tax. If he has borrowed to lend to the company, and that company pays him a dividend then he has a deductible expense (and a taxable income) If he has borrowed to purchase shares - that creates deductible interest, and the dividends are taxable. No different than property. The point is though with a business or rental income the interest is deductible - paying less interest simply reduces the deductable amount; hence increasing profit -which is taxable.

upside_umop

16-03-2009, 11:45 PM

If he puts cash into a company that increases the profit of that company of course the company pays more tax. If he has borrowed to lend to the company, and that company pays him a dividend then he has a deductible expense (and a taxable income) If he has borrowed to purchase shares - that creates deductible interest, and the dividends are taxable. No different than property. The point is though with a business or rental income the interest is deductible - paying less interest simply reduces the deductable amount; hence increasing profit -which is taxable.

I think we're on different wavelengths mushie. Contributions from equity participants are not taxable...that is what I am referring to. What happens immediately!

If its a simple prop up of the company (because it cashflow negative) its not tax deductible, simple as that. I'm not talking about future cashflow...I'm talking about propping up an equity position.

We were never talking about dividends. Interest is not a factor if we are buying a company with out-right cash - which is what would be happening if it was a cash injection to prop up a company.

Enough about this anyway...

fungus pudding

17-03-2009, 08:38 AM

I think we're on different wavelengths mushie. Contributions from equity participants are not taxable...that is what I am referring to. What happens immediately!

If its a simple prop up of the company (because it cashflow negative) its not tax deductible, simple as that. I'm not talking about future cashflow...I'm talking about propping up an equity position.

We were never talking about dividends. Interest is not a factor if we are buying a company with out-right cash - which is what would be happening if it was a cash injection to prop up a company.

Enough about this anyway...

Yes. The subject was interest payments which decrease your taxable position if interest rates rise, and increase it if they fall. You came up with this introduction of capital to a company and purcasing shares.

minimoke

17-03-2009, 09:00 AM

The subject was interest payments which decrease your taxable position if interest rates rise, and increase it if they fall. You came up with this introduction of capital to a company and purcasing shares.

Actually the subject is buying your first home – but the side tracks we head down can be quite enlightening.

skeet

21-03-2009, 03:36 PM

Whats everyones thoughts of the Welcome home loan?? For first home buyers.

fungus pudding

21-03-2009, 05:36 PM

Whats everyones thoughts of the Welcome home loan?? For first home buyers.

Like all those dopey schemes, they make it harder for first home buyers and acheive the opposite of what is intended, by feeding straight into the price of lower priced homes.

minimoke

23-03-2009, 10:28 AM

Whats everyones thoughts of the Welcome home loan?? For first home buyers.
For me they break the number one rule of mortgages – and that is you must have commitment. I can’t see why anyone would want to lend to someone if they don’t have the financial commitment to save a deposit. Having a mortgage isn’t necessarily easy – so we shouldn’t give people an expectation that just because they have low income and an inability to save they too can own their own home. That’s just setting some up to fail.

Then you have the tax payer propping up the lender through the insurance mortgage – so the tax payer is covering part of the risk of dodgy borrowers.

They are not available through main stream banks (there’s a message!) – you have to go to Kiwi bank or a couple of Building societies / Credit unions and may not suit your overall banking needs. Criteria is a bit vague – like you have to meet the Welcome Home criteria as wells and the lenders criteria

You may have to pay extra insurance which adds to the repayment commitment may be larger putting more stress on the repayments.

The Great Gold Guru

23-03-2009, 02:12 PM

minimoke

23-03-2009, 03:05 PM

Hi Minimoke,

Thinking of buying a few rentals in your fair garden city over the remainder of 2009. Seena couple of very nice houses in the Burwood region in the mid $200's. Rent of around $325pw ... also a couple in Hornby and Bryndwr ... any recommendations besides the "must haves" of insulation and heat pumps. I presume a garage is pretty essential in CHC over winter unless you want to spend 20mins scraping the ice off your windscreen every morning.

Any preferred locations in CHC ... property prices seem REALLY good value , heaps of choice as well , some good bargains to be had if your patient and find the right "desperate" vendor.
Tricky one. I personally wouldn’t buy in Hornby. Can’t really think what is there to recommend it unless the tenant wants to be in walking distance to their supplier. (apologies to posters that live there!).

Garage and heat pump are “nice to haves” and you’ll pay a bit more in rent for them. Also one of those DVS ventilation system seem quite good for getting rid of condensation which is a real problem as people lock up their houses over winter. Get on the right side of the street so the sun properly aligns to get that extra free heat in winter. Watch out for big deciduous trees – tenants may not be so good at unblocking gutters at this time of year.

School zones will get you a premium – or at least be close to a school if that is your target market. And somewhere close to a bus route.

Burwoods OK and you might get your best ROI there. Close to QE II Park swimming pool, Bottle Lake forest (bike riding) and the beaches for summer and the “ring road”. Not too damp. Out of the three I’d probably go for Bryndwr. Good schools, close to malls, city, Uni, airport and main roads north and south . You’ll pay a bit more but get a greater range of tenants.

Shrewdys renting at the moment – he can probably give an insight into what renters like him want.

The Great Gold Guru

23-03-2009, 04:13 PM

Thanks very much for the feedback. I was thinking Bryndwr would be your first pick ... Merivale is a great area and being next door is not going to harm the capital growth over the next few years. Get a good tenant with kids at the local schools and you might be able to "set and forget" it without handing 10% of the rent to a management company. Getting 10% extra on the rent by letting in less desirable areas only to hand it to a management co. charging you 10% a few months later cos the tenants are too high maintenance seems rather pointless to me !

minimoke

23-03-2009, 05:14 PM

Bryndwr would be your first pick ... Merivale is a great area and being next door is not going to harm the capital growth over the next few years.
Its also next door to Fendalton – and cheeky real estate agents will call it “Outer” or “Northern Fendalton”.Get a map and draw the high school zones for your target areas!

upside_umop

29-03-2009, 10:47 PM

If OCR gets to 2.5%, wouldnt necessarily see rates come below 5%. Most banks now have priced in a cut in OCR to 4% but yet are still up above 7% for any length of time (3,4,5,7 year mortgages). It could be possible to see the 6 month and 1 year under 5% but not for any fixed amount of time. Because if houses stabilize, and economic growth picks up and so will inflation expectations ----> higher expected forward rates. I'd like to see a 6% 5 year rate...that would definitely catch my attention! Whats NZ's equivalent to LIBOR like? I cant remember its name....

Well, well, well...what have we got here? We only saw sub 6% 5 year rates for about a week with one bank...again, we wont see sub 5% term rates...

What does this mean? People will again hold off buying a house as they dont have the certainty and security that they thought they had. This isnt the best of news for the housing market....lets see if its reflected in the figures over the coming months. Maybe the media will crank up the latest trends over these rates and along with more commentary from Bernard Hickey.

http://tvnz.co.nz/business-news/banks-raise-longer-term-mortgage-rates-2592200

More retail banks on Friday rushed to boost mortgage rates, continuing the squeeze on home buyers seeking longer-term loans.

The Bank of New Zealand said its fixed housing rates for three, four, five, and seven-year terms were reflecting the rising cost of long-term funds.

New Zealand banks are reported to be finding it increasingly expensive to make long-term borrowings offshore as lenders there contract to their "local" markets. This has resulted in rapid rises in longer-term fixed rates around the world as inflation risk rises while central banks print money.

"Continuing volatility in the offshore markets has caused costs for longterm funds to rapidly rise," said Blair Vernon, BNZ's general manager of strategy and marketing.

"These significant increases have been reflected in our longer term fixed oursing rates".

BNZ said its standard and Fly Buys rate had been fixed for three years at an annual rate 6.59%.

But shorter term costs partly priced off domestic factors such as the official cash rate (OCR) had eased, and the six-month fixed term "classic" rate had been dropped from 5.69% to 5.49%.

The ANZ National bank became the second bank - with Westpac - to lift its two-year mortgage rates in the past week.

ANZ National said its new interest rates for fixed home, residential investment, and business equity were: two years 6.25% (up 30 basis points) three years 6.75% and four years 7.15% (both up 60 basis points), and five years 7.5% (up 75 basis points).

The bank has lifted some of its rates for the second time this week.

And industry website interest.co.nz styled the rush to lift mortgage rates as "March madness", noting that Kiwibank has lifted its five-year rate for the second time in a week: it has gone up a total of 76 basis points to 7.25% to match other banks. Kiwibank's three-year rate has been lifted 51 basis points to 6.5%, and its four-year loans by 66 basis points to 7.15%.

STRAT

30-03-2009, 07:15 AM

PS. I had a look thru a couple of properties in Papatoetoe today. At 100% borrowing I need to buy at a 20% discount to CV to make them cashflow positive ( assuming 50wks per year occupancy ). The agent said that's not out of the question if you get the "right" vendor. Am looking in Avondale tomorrow. Can see the first offer going in on something before the end of the month ....
Hi GGG,
Just out of interest what made you choose those two areas?

The Great Gold Guru

31-03-2009, 08:55 AM

Avondale is quite popular with buyers who have been priced out of Westmere,Waterview sort of area. Good schools , 10mins to CBD off-peak , train service , lots of good solid 40's and 50's houses which are the one's I like to buy , similar to quite a bit of the housing stock in Papatoetoe. My basic rule for purchasing over the next 12 months or so will be ....

Possible rent per week must equal 1.5 x house price / 1000.

So for instance if purchase for $280,000 then must be able to rent for $420/wk
( 280,000 / 1000 = 280 x 1.5 = 420 )

$280,000 mortgage at 6% = $16,800
Rates = $1600
Insurance = $400
R & M = $1200

Total annual expenditure = $20,000

Rent at $420/wk = $21,840

Positive cashflow of $35pw at 100% gearing. ( $30-$50pw is my target )

In both Papatoetoe and Avondale I beleive this equation to be possible , strong rental demand in both areas , good solid housing stock , plenty of choice , find the right vendor and keep making offers til one is accepted. Getting the finance will be the hard part but I have 8 other properties with an LVR at 65% over the portfolio so pretty sure if I buy at 10-20% under RV I will get most deals accross the line.

Buying well and keeping good tenants is the key. I think that is not beyond most people.

fungus pudding

31-03-2009, 09:43 AM

[QUOTE=The Great Gold Guru;249384]

$280,000 mortgage at 6% = $16,800
Rates = $1600
Insurance = $400
R & M = $1200

Total annual expenditure = $20,000

Rent at $420/wk = $21,840

QUOTE]

Good luck GGG. Hope it works out well for you. I made my living for many years as a residential landlord. Can't say I'd bother these days as I see so many better, certainly easier, opportunities, and I don't like the look of the residential market. But I would say you should look very hard at your R and M. It's nowhere near enough. You might get by on it with a bit of luck (make that a lot of luck), but your properties will not be up to scratch after a short couple of years, and that's when the riff-raff tenants appear. And be careful budgeting on getting 52 weeks rent for the year. Even without vacancies you can lose out - tenants skipping, that sort of thing. Most often not worth chasing.

foodee

31-03-2009, 11:23 AM

FP
You're absolutely right.

À good friend has been selling down his portfolio of 25 props
over the last 2 years-only 3 to go! He has actually redefined
'residential landlord' as 'glorified cleaners'

Yossarian

31-03-2009, 11:28 AM

The Great Gold Guru

01-04-2009, 09:47 AM

I agree, there are some suburbs where renting looks outrageously cheap ... obvious places are like St Heliers or Mission Bay where you can rent a house worth a couple of million for less than $1000pw ... meanwhile down the road in Papatoetoe you can rent a property out for 40% of that that is worth not much more than 10% of the house value.

Horses for courses ... you'd never buy a rental in Mission Bay , if you could ( and that's the key ) you would buy in Papatoetoe rather than rent ... but alot of people just can't or don't want to buy. Opportunity !!

Yossarian

01-04-2009, 12:12 PM

interesting that there is such a discrepancy. i guess as a general rule the 'nicer' suburbs are going to be 'cheaper' (compared to price to buy) on the whole.

Dr_Who

01-04-2009, 02:25 PM

upside_umop

01-04-2009, 05:43 PM

it seems the governor has a similar view on interest rates with the damage it would cause households...

http://www.bloomberg.com/apps/news?pid=20601087&sid=aTpRjy3DQAjo&refer=home

minimoke

09-04-2009, 06:13 PM

Oh dear Shrewdy. Median sales have moved up this month to $335,000 - $5,000 more than your price point. And up 2nd month in a row and 3% this year. We know that interest rates are way lower and banks lending criteria much harder. There are more buyers back in the market and days on market have dropped from 62 to 44. Demand is coming back to the market and we know what that means! Haven’t heard from Bernard Hickey (30% drop man) or Gareth Morgan (40% drop man) today. I wonder why?

peat

21-04-2009, 07:40 AM

Haven’t heard from Bernard Hickey (30% drop man)
Hes ameliorating his views here
http://www.interest.co.nz/ratesblog/index.php/2009/04/12/analysis-why-its-now-almost-cheaper-to-buy-than-to-rent/

Dr_Who

21-04-2009, 08:04 AM

Haven’t heard from Bernard Hickey (30% drop man) or Gareth Morgan (40% drop man) today. I wonder why?

Japanese word is ... Fulos.h.ito

minimoke

21-04-2009, 08:48 AM

Japanese word is ... Fulos.h.ito
BH really is. In that article he wrote he reckons its cheaper to own providing you exclude rates , insurance and maintenance. Duh!

And he hasn’t found a standard measure for valuing rates, insurance and maintenance. Well he was able to find a standard measure of the preferred market peak (Nov 07 median price). By taking this data point in an over inflated market he’s spruiked his views relentlessly for the past year and a half. He must be loosing his touch if he can’t make up a value for RIM.

Dr_Who

25-04-2009, 02:23 PM

Try getting a decent house in a decent area for a discount now. I dont think you can, there are plenty of people looking at open homes.

fungus pudding

25-04-2009, 04:28 PM

Try getting a decent house in a decent area for a discount now.

You will. Patience is definitely a virtue if house buying. Big drop to come. It is unlikely to be sudden but I'd bet on a gradual easing over the next two to three years. The overall cumulative drop will be significant.

Dr_Who

26-04-2009, 08:59 AM

fungus pudding

26-04-2009, 09:14 AM

Big drop? What big drop? Your assumptions are just that, assumptions with no substantial evidence.

The evidence is in the pudding. Just have to go to all the open homes and auction for good quality properties in good areas and you will see the interest. In fact, a number of quality properties in good areas are selling at above CV in auctions recently. Good interest from buyers coming out of the woodworks with all time low interest rates. The housing markets in US, Hong Kong and Aust are also seeing evidence of stablising.

You now cant negotiate favourable discount prices like you could a few months back.

1st home buyers who have waited too long will soon, yet again, miss out.

Or perhaps you are seeing how property markets fall. It's never a straight line down, but the drop, or downward slide, is coming. Of course it's an assumption - isn't everything about the future? But the evidence is overwhelming. There will be an exodus from inexperienced landlords soon, and with rentals almost certain to drop - there won't be many buyers. A lot of the market of the last few years has been driven by new investors who seem to think that all you do is buy a property and bank the rent, fuelled of course by low-equity bank loans which have tightened up and will stay that way for a long time. Judging the market by last month's or the last quarter's performance is extremely risky.

Financially dependant

26-04-2009, 09:18 AM

volume is up but price is down......If I needed to sell I would negotiate/discount to get it sold before winter, before the prices start to really drop on much lower volume.

I'm with fungus, patience will be well rewarded.....mortgage rates are going lower, so are 1st time homebuyers houses!!

Brut

26-04-2009, 10:14 AM

The Doctor

26-04-2009, 10:32 AM

1st homebuyers are STILL SCREWED!

fungus pudding

26-04-2009, 10:47 AM

I am with Dr Who! There are alot of cashed up buyers out there waiting for the right property (ie. quality properties in the right school zones etc) or Investors looking for cash-flow properties.

From my experience I have seen a huge influx of buyers at Open homes in the last few months. We recently listed our property at $769,000 and had 4 cash offers (between $740 - $755,000) in the first week of marketing.

I have attended 3 auctions in the last month,

1. Renovated house in Ilam, CV only $430,000 but sold under hammer for $900,000.

2. Renovated house in Bryndwr with CV $520,000 sold under hammer for $725,000.

3. 2 year old house in Prebbleton on 1 acre of land. CV $600,000, sold under hammer for $895,000.

Properties that have been on the market for awhile were probably overpriced to start with?

Interesting. But you are looking at one price bracket in one city. The overall story is quite different. Median prices are up - certainly, but that tells you very little. It's because first homes, the cheapies, are not selling. They are piling up.In which case the median price acts like the average price. So the only real test is what would each of the properties mentioned have sold for one year ago? More? Less? The same? It's only possible to summise, but a couple of simple irrefutable facts are that there are fewer buyers because of bank lending criteria. And the number of sales in the last 12 months has halved - a 50% drop. So the market has far fewer buyers overall - and far more listings. One thing you'll notice in most towns and cities, probably even in Ch-ch although I haven't looked for a while, is the ridiculously high level of adverising is around about half what it was. That's because agents are just not generating anywhere near the revenue they were. But look at the poms and the USA, drastic levels of mortgagee sales as properties revert to a more normal multiple of annual incomes. We lagged behind them on the way up - and will do so on the way down.

minimoke

27-04-2009, 09:27 AM

volume is up but price is down......
Actually volumes are increasing as are prices. March was the second month in a row that saw price increases. And this is problematic for the Bernard Hickeys of this world. As the sale prices creep up it will take longer to swing around and drop to their predicted lows.

We may already have had our low of $325,000 in January 2009. For all the hand wringing that’s gone on that’s was just $5,000 down on Shrewdys price point of $330,000. But since then prices in 09 have increased to $335,000. Total March $ sales were the highest we’ve seen in 13 months and total number of properties in 16 months – so this suggests to me that buyer sentiment has changed – people are preparing to come back to the market. They are now more prepared to buy and they are prepared to pay a bit more – that’s not a sentiment consistent with a falling market – unless we are seeing a dead cat bounce.

fungus pudding

27-04-2009, 10:20 AM

Actually volumes are increasing as are prices. March was the second month in a row that saw price increases. And this is problematic for the Bernard Hickeys of this world. As the sale prices creep up it will take longer to swing around and drop to their predicted lows.

We may already have had our low of $325,000 in January 2009. For all the hand wringing that’s gone on that’s was just $5,000 down on Shrewdys price point of $330,000. But since then prices in 09 have increased to $335,000. Total March $ sales were the highest we’ve seen in 13 months and total number of properties in 16 months – so this suggests to me that buyer sentiment has changed – people are preparing to come back to the market. They are now more prepared to buy and they are prepared to pay a bit more – that’s not a sentiment consistent with a falling market – unless we are seeing a dead cat bounce.

Of course the median price is up, but that means nothing. The thing that matters is whether the same property will sell for more or less than it would have previously, and that's difficult if not impossible to measure. But drop lower priced sales out of the equation and of course average and median will rise. Lower priced sales have contributed heavily to the drop in sales, simply because low equity buyers are no longer able to obtain mortgages. The overall number of sales is half what it was one year ago - a massive 50% drop in month to month numbers. That is a statistical fact. Don't believe the spin the Real Estate institute puts on ststistics by reporting selected information from their returns.

The Great Gold Guru

27-04-2009, 11:07 AM

minimoke

27-04-2009, 12:15 PM

Don't believe the spin the Real Estate institute puts on ststistics by reporting selected information from their returns.
Strange how we can be discussing property but possibly comparing apples with oranges. I tend to go with REINZ data if for no other reason that it is freely available. It does of course have its limitations. Like they report median price of unconditional sales and that they only report transactions through a real estate agent. But what I can do is look at data over a very long time and their data tends to be quite timely (eg reporting March sales by mid April)– something I can’t do easily with QV.

QV also has its own limitations – they report averages and only get their data from councils once the sale has gone through from all sources – this means the data reflects settlement date which can be a few months behind buyer sentiment – which REINZ probably better reflects.

Regardless, the joy of statistics is we can each drag out what ever we like to support our position. But at least we can get hold of these stats which has to be a whole lot better than anecdotal information.

lakedaemonian

27-04-2009, 12:37 PM

A bit of anecdotal info in our Christchurch beachside suburb.

For approx 8-9 months our two homes(old house sold, new home purchased) were the only transactions in our suburb(as best we can tell).

There's been the odd transaction since....but far higher than average number of listings.

Some homes have been listed well over a year.

We've even just had our first "3 homes for sale in a row".

Suddenly within the last 1+ month we're seeing "Sold!" signs everywhere.

Good news I'm sure for the vendors.

I'm still not changing my negative opinion on residential and commercial real estate one iota.

minimoke

27-04-2009, 12:57 PM

Hi , I am currently selling a rental property in Blenheim that we purchased in Dec 2007 ... so this is REAL data.

We paid : $380,000 current RV $350,000

Marketing started last Wednesday ...

1 cash unconditional offer so far at $355,000 ... rejected

So you bought one month after the “peak” of the market. QV reckon the market has fallen 9.2% in the past year. It gets a bit confusing around March 08 since the market fell away a bit from Nov 07 before recovering a bit in March ’08. Shall we just round it out at 10% as what you should expect as a drop in value if we are to use QV as a guide. So this means any offer over $342K would be in line with QV press releases.

Mick100

27-04-2009, 01:38 PM

Suddenly within the last 1+ month we're seeing "Sold!" signs everywhere.

.

I'm noticing the same thing where I live

Financially dependant

27-04-2009, 02:41 PM

lakedaemonian

27-04-2009, 04:05 PM

My feeling is that there is a lot of "selling into the rally", clear before winter starts to bite! Heading into the slower time of year and following overseas trends, there big drop was during winter!

I would agree...I'm convinced we will see another leg down......but I'm unconvinced as to whether it will be a big one, a small one, or something in between.

CAM

02-05-2009, 09:38 PM

Dr_Who

03-05-2009, 01:56 PM

Sounds like a very nice house CAM.

Make sure you get a LIM report and a good solicitor. Have your agreement subject to builders report assuming you have your finances sorted.

I love character homes. Cant go wrong with a good quality character hardwood home.

All the best. :)

Crypto Crude

03-05-2009, 04:20 PM

house prices HAVE to fall...
or Wages have to go up at least 30% to keep pace...
One or the other will give...
It will be housing...
Falling interest rates adds to housing attractiveness, so slowly it is coming in favour... still far off...
:cool:
.^sc

shambles

03-05-2009, 09:25 PM

Evening folks, my first post here, altho I have been following the site with interest as an observer.

My last weeks experience may be of interest...

I listed one of my rentals in Chch on Monday. This particular property was purchased in '03 for 162K. I rejected an offer in '05 for 340K. My RV peaked in '07 at 370K.

Multi offer on Thurs with 4 bids ranging from 210K - 310K. Currently under offer.
Lot's of interest, excitement even, but the price has certainly moved back.

My gut has been telling me values may have dropped more than the stats are showing, last weeks offers have only helped to strengthen that instinct.

My belief .. is that market sentiment is changing quickly and will bottom this winter. Maybe another 5% drop? 10% MAX.

We'll see.

Look out 2010, the game is back on - I think the traditional fundamentals, when balanced, are pointing at a 'return to business as usual' - including (slow) capital gains. It shouldn't, it's crazy - as the topic of this thread rightly suggests it makes life very difficult for 1st home buyers, but I think it will.

HOWEVER, If - the CC/GFC worsens, recession becomes depression, unemployment hits 9%, or if bio threats kick up a couple of gears then I'll eat my words ;)

Like The Great Gold Guru, I'm releasing some equity to stake my claim in Devonport before the top end takes off again.. And holding my portfolio in Chch where the yields are better.

Thanks everyone for the interesting reading and many informed opinions - I think this is a great online community and a useful educational tool!

Disclaimer: I could be completely wrong.:o

Financially dependant

03-05-2009, 10:05 PM

Thanks for sharing your experiences Shambles, it is always good to get first hand accounts......& welcome aboard!

George

04-05-2009, 07:05 AM

Flu scare has passed its peak going by latest news - they must
have sold most of the tamiflu that was nearing its expiry date:)
A woman from 'Whatpricemyhouse' is coming Saturday to appraise
our house even tho told her we are not selling in the near future.
She emailed us earlier and said it was worth close to CV of 315k,
we will see what she says but surely the price is pure guesswork
until its tested in the market.

minimoke

04-05-2009, 11:03 AM

I listed one of my rentals in Chch on Monday. This particular property was purchased in '03 for 162K. I rejected an offer in '05 for 340K. My RV peaked in '07 at 370K.

Multi offer on Thurs with 4 bids ranging from 210K - 310K. Currently under offer.

Back in 03 the national median price was somewhere around $200k. Today its around $335. Canterbury / Westland was around $173,000 and is now $290,000. Looks to me you’ll do quite nicely out of that one. Thanks for the hard data!

duncan macgregor

04-05-2009, 11:55 AM

Back in 03 the national median price was somewhere around $200k. Today its around $335. Canterbury / Westland was around $173,000 and is now $290,000. Looks to me you’ll do quite nicely out of that one. Thanks for the hard data! That is what most of the people dont catch on is how good an investment property is. If the person bought the house on a deposit just high enough to make it self supporting with rent covering interest, rates etc then refinanced in three years time to get their initial deposit back its an investment hard to beat. Let us presume looking at the above figures that this is what happened.
1, National median price$200,000 in 2003 gained $135,00 in six years or $27,500 PA
Initial deposit lets say $40,000 to make it self supporting
$40,000 for three years then get your money back and do it with your second property.
The mugs in the game fail to understand the simplicity of doing that and try to time the market or gamble on interest rates.
Tomorrows interest rates can do anything always keep the figures to what you can afford and understand.
The opportunity to buy your first property is your first priority dont get to smart or you will miss the bus. Its the banks money you use not your own in the end its money for nothing.
Macdunk

The Doctor

04-05-2009, 01:08 PM

was an abberation...and the correction has still not occurred.It will.

Crypto Crude

05-05-2009, 07:10 AM

so mackdunk,
in hignsight,
Should I have bought a 250k house, for 300k...?
should I have also fixed interest rates at 9-10%...?

welcome to the board shambles...
:cool:
.^sc

duncan macgregor

05-05-2009, 07:35 AM

so mackdunk,
in hignsight,
Should I have bought a 250k house, for 300k...?
should I have also fixed interest rates at 9-10%...?

welcome to the board shambles...
:cool:
.^sc SHREWDY lets put it this way you missed the bus so no point in wondering where it might have taken you. Or to place the answer in a more brutal way it would be better doing that than buying a share at 21.6c and watch your half savings go down the gurgler. Short term no long term yes. Property is long term you will regret your limited short term outlook. Property averages 10% rise over the years so long term your house would be at least worth double with none of your money involved in ten years so yes you made a stupid mistake. Macdunk

Crypto Crude

05-05-2009, 08:16 AM

mackdunk
Property averages 10% rise over the years so long term your house would be at least worth double with none of your money involved in ten years so yes you made a stupid mistake. Macdunk

I disagree... your advice, would have added something like 10 years to the total loan term....
It hurts that you wont own up... :confused:.....I tried to give you a nudge on the TEL thread....
your advice, had anyone listened, cost them lots of money... and in some cases their livelihoods...

my livelihood would have been ripped away... (for the near term, as long term house prices would have rebounded)... BUT, why the need for that...

as for the quote...

thats a load of crap...... the house value doubles ok... but look at the first example on this thread... you own a 330k house, but you pay 799k in interest payments.....

what happens if the house price doubles?

It was this very assumption that house prices were going to continue to go up, this is why we got ourselves in the mess of this financial crisis...
It was those investment banks, and consumers who assumed house prices were only going to go up...
as if it were in perpetuity... just like your assumption...
it was people like you....
sub prime borrowers who took on home loans tlhey couldnt afford, because they thought house prices would go up...
lenders who accepted sub prime borrowers because US house prices had not fallen nationwide since the great depression of the 1930's...

when will they learn? learn that house prices do fall...

Also note... that I could never have bought a house before anyway, because I just finished full time study last year in November... so I couldnt buy a house...Im really only in the position to buy a house now... and Im
definately waiting...

im no mug... so dont treat me like one...
:cool:
.^sc

minimoke

05-05-2009, 09:34 AM

so mackdunk,
in hignsight,
Should I have bought a 250k house, for 300k...?
should I have also fixed interest rates at 9-10%...?

welcome to the board shambles...
:cool:
.^sc
No – you could have bought a $330k house for $330k, pretty much no deposit and around 9% interest. Today it would be worth $335k, your two year fixed would be off and you’d’ be able to pick up a rate around 6% and your mates would be left in the cold because they can’t get the 20% deposit together.

If you had bought a few years ago you might now have $100 a week extra cash which you could pay off your debt for an immediate 6% net return. You renting mates would be putting their money into a 4% gross deposit account and saying goodbye to 25% of interest recieved to the tax man.

And I agree – it would be more helpful if people started their own thread if their comments are off tropic rather crapping this one.

minimoke

05-05-2009, 09:43 AM

you own a 330k house, but you pay 799k in interest payments.....

One of the simple facts of life is you need a roof over your head and you are going to pay for it one way or another. In my mind you’re better to pay for it now and have it paid off by the time you retire. When I retire my rates, insurance and maintenance will cost me a whole lot less than the rent of a decent place. My debt will be self funding. Alternatively I might sell up and let the rents that come in pay for the rent I might pay for the different places I could be living in. Who knows but I’ll have options. A renter at retirement (unless they have put a pot load of cash aside) won’t have those options.

fungus pudding

05-05-2009, 10:13 AM

One of the simple facts of life is you need a roof over your head and you are going to pay for it one way or another. In my mind you’re better to pay for it now and have it paid off by the time you retire. When I retire my rates, insurance and maintenance will cost me a whole lot less than the rent of a decent place. My debt will be self funding. Alternatively I might sell up and let the rents that come in pay for the rent I might pay for the different places I could be living in. Who knows but I’ll have options. A renter at retirement (unless they have put a pot load of cash aside) won’t have those options.

A disciplined renter will. As outlined above you are only really to achieve an unencumbered property by retirement, and the options you mention, because of the compulsory saving aspect of owning vs renting.

shambles

05-05-2009, 05:22 PM

Thanks for the welcome guys.

I've posted a new thread on rental yields - would love to hear what some of the analytical minds on here have to say about where rents are headed..

(I hope that's not too presumptuous for a newbie ?) :o

...shambles

Serpie

05-05-2009, 06:40 PM

It's an interesting argument, and a great forum for making valid points, but this thread is not going to produce a winner.

The reason is that you're all talking about an issue that has a (notional - but again open to argument) 25 - 30 year lifespan. And to argue about who's right or wrong every week is futile. It's like arguing about who's winning a horse race when the horses are on the first bend.

With each fluctuation in the property / mortgage market we hear from the posters whom that fluctuation favours. Nobody knows what's going to happen over the next 30 years, and only time will tell which decision (in hindsight) was the right one.

I believe (as I've always done) that the real issue here is one of sacrifice. There's always a reason not to buy, and not buying is the easiest thing to do. But if you're not buying then you'd better be doing something pretty meaningful with your income, otherwise you'll never be in a position to buy.

I've got a tenant who's on a pension. Great guy, and he seems happy enough, but a pretty big chunk of his income pays my mortgage each week. By the time I retire that unit (and the one next to it - both now cashflow neutral) will be mortgage free, and providing an income for me.

For what it's worth,
If I was a young fella with a good job and no house I'd be jumping all over these Welcome Home Loans right now, getting a flatmate in to help with the rent, and slowly but surely adding value to my own quarter acre paradise.

CAM

05-05-2009, 09:08 PM

Hi all,
Approx 50 pages ago I asked for some advice on buying my first house. Have been following the thread and reading everyones views. Been great reading.

My wife and I have spotted a house we are quite keen on. We weren't actively searching but this one popped up so we went and had a look at the open home last week and we quite like it.

Its a brick place built in 1957. 3 bedrooms one bathroom, single garage 2 carports. Rooms are of a good size. 9 foot stud. Big windows (wooden) and some of the other features makes it look like is was an expensive house at the time. Flat 1330sqm section. It has insulfluff? in the ceiling and a couple of heat pumps. Fairly new hot water cylinder and has some new piping coming out of it. The roof is a decramastic tile I think ....that has been recently repainted/resurfaced?...could be hiding something??

Is there anything else I need to closely look at with a house of this vintage??
Will get a builders report regardless anyway. But just after some views from the "experianced" home buyers on here.

Thanks in advance :)

Well ....our offer was accepted...subject to builders report, LIM and finance. Getting the builders report done next Monday...icludes moisture testing etc etc...about 22 pages long. Not expecting anything major. Its a heart rimu, one old lady owner house since new, in immaculate condition.
I basically have the verbal from the bank on the finance just need to go in and sort it all out.

My question now is what way to structure the mortgage.
The situation is that my wife is due our second child at the end of August so we will be back to one income. Finance has been done on my income. She will look to return to work full or part time in a year to 18 months...bu that could change ...you never know.

I think interest rates might come back a bit yet but I like fixed for the certainty of payment amount. So was thinking of fixing half for 2 years and float the other half with maybe looking to fix it when rates drop back a bit. (6 months to a years time??)The reason for the 2 year fix is that when the wife goes back to work we may look to restructure to pay it off more quickly.

any advice appreciated

cheers
Cam

minimoke

06-05-2009, 08:02 AM

The reason is that you're all talking about an issue that has a (notional - but again open to argument) 25 - 30 year lifespan. And to argue about who's right or wrong every week is futile. It's like arguing about who's winning a horse race when the horses are on the first bend.

With each fluctuation in the property / mortgage market we hear from the posters whom that fluctuation favours. Nobody knows what's going to happen over the next 30 years, and only time will tell which decision (in hindsight) was the right one.

I believe (as I've always done) that the real issue here is one of sacrifice. There's always a reason not to buy, and not buying is the easiest thing to do. But if you're not buying then you'd better be doing something pretty meaningful with your income, otherwise you'll never be in a position to buy.

I agree in part with the inference that none of us can tell what property will be like in 30 years. But your argument fails because the same could be said of anything – we just have no way of telling precisely what something will be after the passing of time. I know its a cloudy morning today, it was wet yesterday so there’s a good chance it won’t be blue skies this afternoon – but who knows for sure. At least with property we know the long term trend is up.

But I do absolutely agree that if a person doesn’t ‘t buy they must do something with the difference between their rental payment and what it would have cost them finance a home. There are still too many conversations in posh bars over a Steinlager Pure “ I can’t afford to get into housing”. Well boo hoo hoo – the answer to those sukky bubbers is going down your throat!. But the flip side is these people have to live somewhere – which will drive demand for rentals which will help drive property values – and in my view that will help see values go up.

minimoke

06-05-2009, 08:44 AM

[quote=CAM;254002
My question now is what way to structure the mortgage.
[/quote]
My personal preference is to have a lump on fixed term – usually two years. That way you have absolute assurance on your weekly outgoings. And unless you are an expert on interest movements (and lets face it – no-one is) then there is no point in worrying about the up and down fluctuations over the short term. Even today we might argue the toss on ½ a percent so either fix now or in a few months – I can’t see significant changes over the next 6 – 12 months. Its not a lot to worry about over in the greater scheme of things. I know some people are going to sweat the difference between deciding on 5.75% or 5.95% but I can’t be bothered. I come from experience where I’m now paying around 6% but have paid 25%. A smidge here or there doesn’t make a lot of difference – its the commitment to repay which is important.

The other thing I do is to take the remainder lump on floating interest only. I pay a bit more but it gives me the opportunity to throw extra cash off the mortgage which I can’t do so easily with the fixed. Its also great for cash flow (because I can draw down anything up to the limit of the debt) and commitment ( I still get to use the banks money – but I don’t have to pay principle off if I don’t want to – but then if you’ve read all this thread you’ll see I intend dying in debt). When you go down to one income you know you’ll be able to afford the mortgage and when you get additional income you can throw it at the floating loan. A side benefit is if you do have extra cash and pay it off this mortgage you are getting a pretty much unbeatable return on that cash.

You can also throw your upgraded Beneficiary status into the pot as well. You might like to try to structure your loan repayments on your income alone, throw your wifes Parental Pay into the variable loan and your upgraded Working For Families payment off it as well. Build up that equity and your wifes income when she returns to work will help you increase your equity position and perhaps if you’re up for it start leveraging for the next property. Now that’s a bit harder to do if you’re renting!

Good luck Cam - lots of exciting things on your horizon!

The Great Gold Guru

06-05-2009, 09:06 AM

Hi , I am currently selling a rental property in Blenheim that we purchased in Dec 2007 ... so this is REAL data.

We paid : $380,000 current RV $350,000

Marketing started last Wednesday ...

6 private viewings
10 thru open home on Friday
15 thru open home yesterday

1 cash unconditional offer so far at $355,000 ... rejected

I will keep you all informed.

Funds required to help pay for purchase of new family home in Devonport.

I posted this a week or so ago ....

We had a set sale date yesterday , four offers in total after 62 parties thru 4 open homes in the last 11 days.

Best offer is a house swap at $290,000 + $110,000 cash , house has RV of $280,000 and will rent out for about $325,000. I am negotiating today to try for another $5-$10k cash but am realy pleased at this level whatever happens.

Best cash unconditional offer was $372,000

The Great Gold Guru

06-05-2009, 09:07 AM

OOOpppps ... will rent for $325/wk ... not $325,000 !!!

minimoke

06-05-2009, 12:28 PM

Best offer is a house swap at $290,000 + $110,000 cash , house has RV of $280,000 and will rent out for about $325,000. I am negotiating today to try for another $5-$10k cash but am realy pleased at this level whatever happens.

Best cash unconditional offer was $372,000
All I can say is that you must reject this offer. It is offers like this that just distort the views of Hickey and Morgan (especially as Morgan is relying on his reputation to spruik his Global Warming book in Christchurch this week) and all those other doom/ gloom chicken little’s. You must accept an offer BELOW $340k to give them a sense of self worth and credibility to the gullible..

Otherwise brilliant! 62 open home visits (in Blenheim!) suggests great potential local buyer interest; 4 offers suggests buyers are actually out there. What a great offer (assuming the house is worth $290,000 – ignore the RV!) - not only have you not lost on the deal, you’ll make a bit as well . Not a bad result in these tough times.

The Great Gold Guru

06-05-2009, 01:22 PM

Just had a call from the agent .. no more money on the table, young couple with another baby on the way so need extra bedroom and have absolutely put their best foot forward. So I am happy with that. I used to walk passed the swap house every day ( 5 doors up from where we lived for 12mths ) so know the property quite well. Very happy with swap and SBS Bank will lend us 80% on new property . Everyone wins.

The Great Gold Guru

06-05-2009, 01:23 PM

passed ??? past !!!

minimoke

06-05-2009, 01:41 PM

So I am happy with that.
Great attitude!. You’ll get your $5 - $10000 in spades at some point in the future. Look after the young couple and someone will help you out someday. Great result!

The Great Gold Guru

06-05-2009, 02:34 PM

Thanks for those kind words Minimoke ... gotta find some new tenants now for our new rental ...

Dr_Who

06-05-2009, 02:47 PM

TGGG stikes again. Good on ya mate. :)

Those that cant see that the market has bottom are either blind or/and in denial. And those that listen to the commentators that say the market will drop another 30-40% will have to wait another 10-15 years for the next cycle... ROFL!

The Doctor

07-05-2009, 08:24 AM

no where near the bottom.Once interest rates start to rise ,reality will set in.Prices are being artificially propped up by govt stimulus and low interest rates...and the banks 'soft' options for distressed borrowers.NZ is heavily in debt,ave houses requiring 6x ave earnings to service are an aberration....there is only one way for property prices...DOWN..the halcyon days are OVER.

The Great Gold Guru

07-05-2009, 09:10 AM

minimoke

07-05-2009, 09:17 AM

there is only one way for property prices...DOWN..the halcyon days are OVER.
I wonder what April sales volumes will be like. They are pretty much always lower than March. I guess as people have completed their summer rush and put off winter buying until next spring. I reckon there needs to be at least a 20% drop in volume for there to be any hope of a devaluing market. If volumes around 10% less then that’s just pretty well typical for this time of year. Prices also need to drop back significantly. We’ve had an approx 3% growth in the past two months of positive growth. The doom gloom people need this to be clearly a dead cat bounce otherwise their predictions are going to founder.

Over the past few years I reckon the property market has been under extreme pressure – but it is just so resilient. Even Shrewdy would have been a bit better off if he’d made the leap of faith. If the market can’t capitulate under the pressure its been under then what does it need to create the drops others are anticipating?

The Doctor

07-05-2009, 09:37 AM

My 6th form economics teachers taught me that when demand exceeds supply prices will tend to rise ....

Immigration up >>> demand up.
Emmigration falling >>> demand up.
New home building consents collapsing >>> supply down.
Real Estate listings down 34% in April >>> supply down.

I'll leave it up to you all to figure it out ...

immigration-down
emigration-constant
bldg consents-down
listings-down

rents-stable
land supply---huge
tradesmens hrly rate-down
availability of funding-down
equity required -up
unemployment-up
living costs-up
govt debt-ott
consumer debt-ott

I'll leave you to work that out.

Ptolemy

07-05-2009, 09:38 AM

Over the past few years I reckon the property market has been under extreme pressure – but it is just so resilient. Even Shrewdy would have been a bit better off if he’d made the leap of faith. If the market can’t capitulate under the pressure its been under then what does it need to create the drops others are anticipating?

Mass unemployment. The people who are buying sure aren't those out of a job.

I don't actually think the market has been under pressure except from the media. Your average kiwi in a job with a mortgage of $250k is $10k a year better off than he was 6 months ago.

Pros for property recovery

* Low interest rates
* Allegedly higher net migration (I would like to see stats on that - is it sustainable as unemployment rises)
* Supply of available land for building and low building starts

Cons for Property recovery

* Affordability on a historical basis
* Rising unemployment (and as a result mortgagee sales)
* Interest rates are likely to rise if inflation starts to kick in (watch Oil prices). Also, I suspect bank mortgage rates will also have to rise as foreign lenders are less willing to fund our unproductive debt.

I guess I'm not in either camp in that I'm not sure whether prices will rise or fall. If pushed for a prediction I would say that prices are likely to stay flat or drift lower by 5%. I certainly don't think that prices are likely to suddenly spike up like some are suggesting here, and if they do once interest rates do eventually start to go back up it is then that we may see the slump.

minimoke

07-05-2009, 09:56 AM

Mass unemployment.
Many of those currently being made redundant probably aren’t home owners anyway. They were renters, will remain renters in the short term and will probably always be out of the property market regardless of employment status.

Then we have the public service redundancies. These people are leaving with redundancy packages which will see them keeping their mortgage for a while yet. By the time their redundancy pay runs out most will have found alternative work which will keep their mortgages going. So the low paid unemployed aren’t going to impact the demand side and the high paid unemployed aren’t going to impact the supply side.

Unemployment will increase but not I think to an extent that it will significantly upset the status quo.

The exception being the high paid unemployed who over exposed themselves to other properties – we can expect supply to increase here. But given current interest rates the yields for new people entering the investment market look better so there might be a bit of self balancing there.

The GrandMaster

07-05-2009, 09:58 AM

My 6th form economics teachers taught me that when demand exceeds supply prices will tend to rise ....

Immigration up >>> demand up.
Emmigration falling >>> demand up.
New home building consents collapsing >>> supply down.
Real Estate listings down 34% in April >>> supply down.

I'll leave it up to you all to figure it out ...

There's a difference between people who WANT to buy property, and those that CAN buy property. This, I would have though, would be more important for demand in the short-to-medium term than simple numbers of people.

minimoke

07-05-2009, 10:08 AM

There's a difference between people who WANT to buy property, and those that CAN buy property. This, I would have though, would be more important for demand in the short-to-medium term than simple numbers of people.
Simple number of people is critically important – because they have to live somewhere. Either in a rental owned by someone or in a place they own themselves.

The GrandMaster

07-05-2009, 05:00 PM

Simple number of people is critically important – because they have to live somewhere. Either in a rental owned by someone or in a place they own themselves.

And rent is again very much driven by ability to pay. So if ability to pay is less, yield will be less, and this will have an impact on property prices (or should).

Mick100

07-05-2009, 09:24 PM

I think some of the property buffs are going to have problems distinguishing nominal prices from real pices.
I'v made this argument before but it's worth repeating
If most things go up in price, including wages and int rates, while nominal property prices remain flat then the real price of property is actually falling.
This is what I expect to see happening in coming yrs - inflation increases but nominal property prices don't keep up with inflation. This is how affordibility will improve for home buyers. Nominal property prices do not neccessarily have to come down to make housing more affordible.

shambles

07-05-2009, 11:13 PM

Mick100

07-05-2009, 11:33 PM

The mortgage and the nominal house values stay the same, but do the rental yields increase with inflation?

?
Yes

I expect rental yields will increase when/if interest rates increase

shambles

07-05-2009, 11:42 PM

Yes

I expect rental yields will increase when/if interest rates increase

And once yields are more attractive, house prices will appear cheap, off we go again... When do you expect inflation to really start kicking back in?

Mick100

07-05-2009, 11:58 PM

And once yields are more attractive, house prices will appear cheap, off we go again... When do you expect inflation to really start kicking back in?

Yes - but this proccess is going to take years to play out
another thing - if you can get 10-12% on bank deposits then a 10% yeild on a property will not appear that attractive to you

I expect inflation to begin to pick up late this yr-early next yr (slowly at first). Commodity prices are beginning to pick up-particuarly copper- which is a good leading indicator that inflation is around the corner

shambles

08-05-2009, 12:10 AM

another thing - if you can get 10-12% on bank deposits then a 10% yeild on a property will not appear that attractive to you

Good point - I guess that's where depreciation and gearing comes in handy,

Mick100

08-05-2009, 12:45 AM

Good point - I guess that's where depreciation and gearing comes in handy,

Gearing up may not be as apealling when ther are no capital gains to be had - what's the point?

I think property is going to become a yeild play rather than a capital gain play as it has been for a very long time - i'm reffering to the next five to ten yrs

shambles

08-05-2009, 01:08 AM

Gearing up may not be as apealling when ther are no capital gains to be had - what's the point?

I think property is going to become a yeild play rather than a capital gain play as it has been for a very long time - i'm reffering to the next five to ten yrs

I agree, yield will be crucial through the next stages - as well as strategic portfolio building through clever buying and adding value cheaply.

The game has changed, I certainly don't expect to see cap gains like the speed of 02-07's soon, or perhaps ever again.

George

08-05-2009, 06:07 AM

If nominal property prices stay the same for next say, 3 years,
a first home buyer waiting for a downturn will still have to
pay the same amount as today. Our 300k house may still be at
the same price but we will only have 145k to go plus another 20-30k
to take off principal if we can save that extra.
A first home buyer will be behind in 3 yrs under that scenario
unless he/she is working hard and saving as if they already
had a mortgage so as to have about 150k in the bank for a deposit.
George

lakedaemonian

08-05-2009, 09:00 AM

I agree, yield will be crucial through the next stages - as well as strategic portfolio building through clever buying and adding value cheaply.

The game has changed, I certainly don't expect to see cap gains like the speed of 02-07's soon, or perhaps ever again.

I think I'm in agreement here.......

I see residential/commercial yield's climbing while property prices continue to fall.

Our first local "3 in a row for sale", all have sold signs on them!

A couple of the young folks I've been working with over the last few years in trying to get them savings and patiently waiting are now deep in their search for homes.....one is about to pull the trigger with a few offers after spending the last 6 months deeply researching their targeted suburb.

I still think they are moving too soon, but they are basing their buying decision on staying in the home long-term, high deposit, low multiple of wages...so they are buying WELL within their means......so I can see their perspective.

Our ongoing saga with our last commercial property has ended...after eleventeen offers collapsing due to inability to find finance, we finally have one that has gone unconditional....transacting next week....we're selling under 8%.....5-1 point higher than last year, but FAR better than the 10-12%+++ that's coming down the track.

Commercial has some movement very recently, but without VERY strong national tenants and LONG leases not much is actually moving in my opinion.

Just my 0.02c

The Great Gold Guru

08-05-2009, 09:55 AM

lakedaemonian

08-05-2009, 10:18 AM

Must be a few peeved dairy farmers in your neck of the woods Lake ... Westland have had a shocker season and looks like payout might be as much as 80c less than Fonterra , that hurts ! How much has dairy land fallen from the peak in your opinion ... $5k/ha-10k/ha ?

Hard to say about land values......they are certainly not moving many properties at the moment.....the good news is:

Westland still has the cheapest "value for dollar" pasture in the country.

The Westland co-op members I know, while a bit upset about the payout, are fiercely loyal to the company.

They made a stuff-up.....but it's still a great outfit :)

Personally, this is a challenging year of course......but we have been driving down our cost of production incredibly fast.

We are just over $4 KG to produce, we will likely end the season with a loss this year :(

But we will probably be in the high $3's cost of production next season.

Early signs of commodity inflation are good news for us.

My best GUESS is payout will be solidly in the $6's within 2 seasons, making VERY good money again.

Quite a tough season, but the switched on farmers are grinning like cheshire cats at the opportunities going forward.

Some I talked to are thinking about smart farm consolidations that make sense.

We are looking at a POSSIBLE merger of a couple properties that, if we can agree on valuations, could see us with even greater economies of scale and lower cost of production if we can get the stars in alignment.

I'm scratching my head on farm values though in the short-to-medium term

Exciting times!

minimoke

12-05-2009, 03:48 PM

Well Shrewdy, your $330k home would now be worth $340k. Third month in a row of increased value.

upside_umop

12-05-2009, 04:38 PM

Well Shrewdy, your $330k home would now be worth $340k. Third month in a row of increased value.

Who are you going to believe? The REINZ saying that house prices have only fallen 1% from their peak, or a more realistic QV which states over 10%.

Volume was certainly up, but lets see what starts to happen in the coming months with long term interest rates not pulling back like everyone thought. I stated about 6 months ago that we wouldnt see them below 5% and I was virtually laughed at. Remember, the RBNZ is very hawkish on inflation --> I dont know that I can believe they will hold rates low till end of 2010. If we see continuation in spike of oil prices, watch out. Also credit rating downgrades.

I prefer QV. So does the RBNZ, so do the economists. Why work with numbers that have been prepared by a group with an interest to see them go up?

minimoke

12-05-2009, 04:52 PM

Who are you going to believe? The REINZ saying that house prices have only fallen 1% from their peak, .....

I prefer QV. So does the RBNZ, so do the economists. Why work with numbers that have been prepared by a group with an interest to see them go up?
Have they?. I reckon its a 3.4% drop from $352 in Nov 07 to $340 in April 09. You’ll find my rationale for using REINZ data earlier in this thread. But regardless of preference (we know both sets have their limitations) its probably more important that we benchmark against one set or another. I’m just as happy to benchmark against REINZ.

fungus pudding

12-05-2009, 04:57 PM

Well Shrewdy, your $330k home would now be worth $340k. Third month in a row of increased value.

Not necessarily. The REINZ figures are the median. It's foolish to assume that prices have risen because the median has.

minimoke

12-05-2009, 04:59 PM

It's foolish to assume that prices have risen because the median has.
But people have been merrily accepting falling property prices off the back of the same data.

fungus pudding

12-05-2009, 05:09 PM

But people have been merrily accepting falling property prices off the back of the same data.

They are foolish too if that is the case. But purely by accident they've arrived at the correct conclusion.

minimoke

13-05-2009, 02:48 PM

Not necessarily. The REINZ figures are the median. It's foolish to assume that prices have risen because the median has.
Funguspudding - I think I see some confusion. You seem to think REINZ figures are "Median" figures - which in part they are. These are the figures I use throughout this thread - unless I refer to Averages. The REINZ data also enables you to work out the Averages - it just takes a tad more work to get there. You can even work out the average of the medians if you want to. Where as QV provide extremely limited delayed "Average" data over the whole property market, REINZ provide wonderfully wide realtime "Median" and "Average" Data in the vast majority of property transactions.

If we go back to Shrewdys original post I have taken his price point as the Median and then referenced his benchmark against all later Medians - unless, as I have mentioned I have referered to Averages. But then I tend to compare Averages with Averages - it just gets too nonsensical to start comparing Medians with Averages when there is no real need.

fungus pudding

13-05-2009, 04:23 PM

Funguspudding - I think I see some confusion. You seem to think REINZ figures are "Median" figures - which in part they are. These are the figures I use throughout this thread - unless I refer to Averages. The REINZ data also enables you to work out the Averages - it just takes a tad more work to get there.

Oh Dear mm. The Reinz figures are median - they haven't provided average for years. It is the largest database of sales which is why it is so widely used. The index system they will be moving to, has been promoted by various economists and banks for years because the median is useless and does not reflect the average which is also useless, let alone 'value'. Median is distorted and here's a simple example.
1st month 3 sales. 200k, 200k and 800k. Median is 200 k. Average is 400k.
2cnd month 3 sales 200k, 300k and 800k. Median is now 300k Average is 433k, which would be heralded as a 50% increase in the median price. (200 to 300) and a 30% increase in average sales price. All along the market could have fallen. To know what the market is doing we need to know what those same properties would have fetched on a previous occasion. Therein lies the danger of these desktop assessments of the market overall.

minimoke

13-05-2009, 04:42 PM

Oh Dear mm. The Reinz figures are median - they haven't provided average for years.
Funnguspudding. Some of the figures are Median and these are the headline ones you'll see in the media. But they also provide total $sales and total no. of sales from which averages can be derived.

Jake

16-05-2009, 11:09 AM

The problem with desktop assessments is that speculation will always be based on bias of the assesor.

fungus pudding

16-05-2009, 11:29 AM

Funnguspudding. Some of the figures are Median and these are the headline ones you'll see in the media. But they also provide total $sales and total no. of sales from which averages can be derived.

They sometimes provide monthly sales from a region or two along with total $ amount. The overall $ amount and sales numbers are often only published annually which makes it hard to trace the averages over the monthly ups and downs.
You might sometimes see national monthly $ and number, but it doesn't matter. Neither median or average tell you what you need to know about the market, which is will your dollar buy a superior or inferior poperty to what it would have bought at a prior date.

George

16-05-2009, 02:24 PM

Took advantage of a flyer left in our box about 'whatpriceyrhome.com'
and an agent came round and told us she would ask 349k compared
to a cv of 315k. It's only a 2 bed bungalow with views, sunny aspect,
close to Henderson town, transport, schools etc and has been
redecorated and made nice. She even sent a card stating that
price in writing but we are nowhere ready to sell yet.
Even if that price is just a teaser to get us interested it
shows that some properties have at least held value.
George

wns

16-05-2009, 02:37 PM

If you get a cracker of a deal, who really cares about averages and what interest rates might do next month, those are just excuses not to buy.

For those who want to buy their first house...

How many houses have you looked at?
How well do you know market value in the area(s) you're looking to buy in?
How many offers have you made?
Do you have a budget for your living expenses?
Have you spoken to mortgage brokers and / or lenders to find out your borrowing capacity?

Dr_Who

16-05-2009, 07:51 PM

You are on to it wns.

It separate the dreamers from the doers.

The GrandMaster

17-05-2009, 11:35 AM

...and the astute from the sheep

Financially dependant

31-05-2009, 12:07 PM

fungus pudding

31-05-2009, 12:38 PM

As an ex-Queenstown'er I have an affinity with the place plus an interest. It was one of the first places in NZ to start the property bull run! Vertical limit production crew took just 25 houses off the rental market to start it all off!

The news that Kawerau falls went into receivership sent a shiver done my spine, if they finish the current stage of development (best case) there will be 500 tradesman looking for work. Ngi Tahu's post office project will finish about the same time as will the Mountaineer redevelopment and downtown carpark building (large backpackers). That could double the the tradesman looking for work in a years time!

IMHO there will be a large number of properties for sale and rentals hit the market in the same, this is the next leg down for Queenstown. Queenstown has a history of down turn after big projects finish, this maybe a bit of a perfect storm.
Queenstown loss may be other cities gain!!

Queenstown has always been speculator driven. Quite a different thing than a market driven by owner occupiers, or even investors. Like prime resort areas worldwide, they tend to behave more like the share market than the property market, in as much as the buyers all rush in at the sign of rising prices, totally overlooking returns, then all want out on the same day.

George

04-06-2009, 07:21 AM

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

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

Some massive shock to the diary industry.
Negative migration.
Rising unemployment.
More and more people moving overseas.
Tax breaks removed.
Can't see any of this happening.

This post was over a year ago and it appears 3 of the 5 events
have occurred, with immigration and more
people coming home the only positives.
Is this negative for property or not, the
news seems positive for property at the moment, esp in Auckland.
George

foxysfolkfaced23

28-07-2009, 11:11 AM

i've taken the plunge and used the welcome home loan scheme to buy our first home, i don't think the welcome home loan scheme will be around forever - doesn't exactly seem like national's cup of tea so i'm picking it will be gone soon, maybe next term....

anyway my situation is that we had $50k in savings (built up from savings, shares, and tab winnings) which i squandered in the sharemarket from february 08' to march 09' is a series of disasterous picks and trades which i wont go into - anyway long story short $50k turned to $5k in just over a year :cool:

at february 08' house prices were high and rates were too high that the bank would not lend us enough to buy a modest home even considering we had $50k cash (based on my income alone - my wife was preganant and not going back to work) so naturally me and wife were pretty devastated that our potential house had gone down the gurgler.....however during this time of course interest rates have come down as have house prices and the supply of modest units in christchurch has increased (it seems) - at the start of 08' we couldn't find anything for less than $230k-$240k - except linwood etc.

anyway 2 months ago i looked at the sums and whatdoyaknow we can afford a home......so we bought a modest 2 bedroom unit in the north of christchurch for $215k

our unit is 1 of 2 facing north with both houses the street with their own driveways. unit next to ours was on the market and has been done up and had offers of $250k and $259k which the vendor turned down and then pulled it off the market- so we know given some improvements we can add a lot of value - although we are planning to be there 10 years or so.

i am going to fix $180k for 3 years at 6.85% and cream the other $30k on revolving which we plan to pay off in 3 years - meaning in 3 years time we will have a mortgage of approximately $174k

point of this is that first homebuyers were screwed - but now not so - as long as you dont stretch yourself - and make sure you can afford repayments even if rates double from here - which they could...........

The Great Gold Guru

28-07-2009, 11:38 AM

$50k to $5k in a year ... don't EVER EVER put money in the stockmarket again !! ( I made 24.9% in Calendar 2008 ... how did you lose 90% ??? ) You seem to have bought well , well done.

The Great Gold Guru

28-07-2009, 11:41 AM

PS ... Why not put your $30k Revolving Credit on a 1Yr fixed rate mortgage at 5.50% ... I bet you are paying more than that for your Rev Cr ... pay it off hard for the 1Yr period and then either re-fix for another 12mths or then put balance on Rev Cr ... you can't lose and no temptation to put a new flat screen TV on the mortgage via the Rev Cr !!!

foxysfolkfaced23

28-07-2009, 12:09 PM

$50k to $5k in a year ... don't EVER EVER put money in the stockmarket again !! ( I made 24.9% in Calendar 2008 ... how did you lose 90% ??? ) You seem to have bought well , well done.

three letters A, D, Y - thats where the bulk of my money went - then moved to PDZ who at the time were holding up well but.... later they got hit hard as zinc went tumbling down - so no i will not be putting any significant money into shares for a long time............:rolleyes:

i have considerd fixing and floating various amounts for various time periods but i wrote a spreadsheet on excel to work out the optimal repayments for our situation.

i have based my repayments on interest rates (floating) being:

6% for year 1
7% for year 2
8% for year 3

they could be higher, could be lower - in the end i've decided not to gamble (funny considering the amounts i have gambled in the past:D) given that this way i know i can pay 30k off principle in 3 years - after those 3 years we can then afford 12.00% rates (if they were to go that high) even on todays income....

JBmurc

28-07-2009, 12:37 PM

As an ex-Queenstown'er I have an affinity with the place plus an interest. It was one of the first places in NZ to start the property bull run! Vertical limit production crew took just 25 houses off the rental market to start it all off!

The news that Kawerau falls went into receivership sent a shiver done my spine, if they finish the current stage of development (best case) there will be 500 tradesman looking for work. Ngi Tahu's post office project will finish about the same time as will the Mountaineer redevelopment and downtown carpark building (large backpackers). That could double the the tradesman looking for work in a years time!

IMHO there will be a large number of properties for sale and rentals hit the market in the same, this is the next leg down for Queenstown. Queenstown has a history of down turn after big projects finish, this maybe a bit of a perfect storm.

Queenstown loss may be other cities gain!!

-Sounds like stage 2 may now be going ahead -Stage 2 is mostly the large conference areas which already have advance bookings(is the re

-I see Queenstown winter visitor numbers are up 5% on last year

-I see the New Zealand Golf Open, Queenstown, 28-31 January 2010

-from what I've seen town has been busy me mate's Queenstown business has been the busiest in years...

-the Queenstown resort of today is alot different to yesteryear's queenstown the village
If queenstown hasn't the projects to keep tradesmen here they will move to were they can get work ...the effect on the 19,800 rate paying Queenstown property owners will be minimum IMHO

-tourism is the main driver which is up on last year thanks to the Aussies

minimoke

28-07-2009, 04:58 PM

point of this is that first homebuyers were screwed
First home buyers were never screwed.

If you had managed to buy a median property in north Christchurch in Feb 08 you would have paid $329,250. In June 09 the median had moved to $330,000 a negligible increase but an increase all the same. And you'd be in a position of having survived the hard times and be in a positon to look forward to some growth.

You would probably have fixed a lump of the loan for a year (indications were that interst rates were peaking around then) so in Feb 09 you would have gone from around 9.5% interst to around 5.6% - dumped right smack in the lows of interst rates. You would have been a whole lot better off - with all that extra cash in your pocket going into loan repayments and adding equity to your asset position.

But thats all on the back of hindsight.

Well done on making the plunge now and being on a position to make a place your own home. The revolving credit is a great facility - but it really does take discipline. Hopefully a person with a TAB account and losses on the sharemarket has that discipline.

foxysfolkfaced23

29-07-2009, 07:03 AM

First home buyers were never screwed.

well we were screwed..........

we had $50k savings and with my income alone we were not able to afford (i.e. bank wouldn't lend) minimum payments on a loan on a modest house/unit in an average area due to high interest rates - the maths simply didn't work out - hence the screwing ;)

now there has been a 10% to 15% fall in units in the area we were looking and the rates have dropped significantly - hence we are no longer screwed (for now......)

minimoke

29-07-2009, 08:50 AM

well we were screwed..........

we had $50k savings and with my income alone we were not able to afford (i.e. bank wouldn't lend) minimum payments on a loan on a modest house/unit in an average area due to high interest rates - the maths simply didn't work out - hence the screwing ;)

I still think not - but please don't take the following comments personaly. They are meant as a generalisaiton not a personal afferont.

Home ownership is not a god given right. Despite politicians and all sorts of other people thinking that it is. Thats not to say its something we shouldn't aspire to, but its not meant to be easy.

Owning a home is about commitment - and one of those commitments is taking responsibility for loan repayments. The potential home owner and the bank can often be at odds with their view on how this commitment can be met. I tend to think banks are relatively good (erring towards caution) with their lending repayment ratios. Wheras I think finance companies and Cash Converters are reckless. If the bank didn't think you could afford to repay there was proably a good reason for it.

Banks don't look just at income and deposit when making a decison. They will look at your credit history (and any loan defaults) hire purchase commitments, number of credit cards and credit limits. They will also look at spending habits. For example if you have an account with the Casino or TAB there is potentila for you to be a higher risk than someone who doesn't.

They will also look at your personality and look to see if you are exhibiting any yellow or red flags. These flags may indicate a more detailed investigation. In your case perhaps you were raising these flags - a thought formed on the basisi of your decison to place your home deposit into the stock market and pretty much loose it all. Your personality helped drive you to make the inital Buy decisons and for some reason you didn't have stoploss limits or other exit strategies in place when things started to go bad. When owning a property sometimes things go bad and you need to either not set yourself up for failure in the first place or know when to bail.

foxysfolkfaced23

29-07-2009, 09:35 AM

I still think not - but please don't take the following comments personaly. They are meant as a generalisaiton not a personal afferont.

none taken :cool:

Home ownership is not a god given right. Despite politicians and all sorts of other people thinking that it is. Thats not to say its something we shouldn't aspire to, but its not meant to be easy.

agreed

I tend to think banks are relatively good (erring towards caution) with their lending repayment ratios. Wheras I think finance companies and Cash Converters are reckless. If the bank didn't think you could afford to repay there was proably a good reason for it.

no problem with the banks doing this - and this IS exactly why first homebuyers were screwed - particularly those in a similar situation to us - we had a very decent deposit and were earning average wages yet house prices were so over inflated combined with such high rates that it made it impossible (nearly) to get your first home - which IS my point

so thats why i feel (at that time) we were screwed (as were many other potential first home buyers) - however who knew what was about to unfold in the coming year and now here we are a year later and the picture has changed considerably.

foxysfolkfaced23

29-07-2009, 09:58 AM

duncan macgregor

02-08-2009, 08:37 AM

just to clarify i wasn't upset at the bank not lending money based on their criteria - thats fine

the main problem was the absurdly high price of property based on income to price ratios combined with high interest rates at the time

property is probably still overvalued and rates will probably rise again and soon BUT we have taken advantage of the conditions today and have a strategy to deal with possible rate rises in the coming months/years. Property is never over valued, or under valued for long. The cost of building is the yardstick that sways the price pendulum back to a realistick cost price level. To pick the eyes out of the property market, requires you to understand the replacement cost structure value.
When the market shuts down with builders out of work, they simply leave the industry, or the country, which creates a shortage of builders, who in turn create a higher than should be price structure.
The Bricklayers in my area are undercutting each other simply to stay in work, the best brickies are now gone. Building red tape costs with compliance to keep up with the stupidity are still in a steep uptrend. The end result my friends is very obvious the price of property in the future will rise higher than the ten pc average in the last thirty years, unless the population flees to greener pastures. Macdunk

fungus pudding

02-08-2009, 09:19 AM

Property is never over valued, or under valued for long. The cost of building is the yardstick that sways the price pendulum back to a realistick cost price level. To pick the eyes out of the property market, requires you to understand the replacement cost structure value.

The factors that sway property prices are supply and demand. Replacement cost just doesn't enter the picture when or where the demand is low.

Nitaa

02-08-2009, 09:46 AM

lakedaemonian

02-08-2009, 03:41 PM

[QUOTE=duncan macgregor;267281] The cost of building is the yardstick that sways the price pendulum back to a realistick cost price level. To pick the eyes out of the property market, requires you to understand the replacement cost structure value.
When the market shuts down with builders out of work, they simply leave the industry, or the country, which creates a shortage of builders, who in turn create a higher than should be price structure.
The Bricklayers in my area are undercutting each other simply to stay in work, the best brickies are now gone. Building red tape costs with compliance to keep up with the stupidity are still in a steep uptrend. The end result my friends is very obvious the price of property in the future will rise higher than the ten pc average in the last thirty years, unless the population flees to greener pastures. Macdunk[/QUOTE

Construction and material costs never realy come down or if they do its quite minimal. What has hit property prices the hardest is most likely the land its sitting on. A Clifftop with spectacular views may have fetched $5m 2 years ago but may only be worth $3m now. The building costs havent changed (unless it was subsequently found out to be a leaky) but the perceived land value has taken a huge hit in this area.

I would disagree just a bit.

In the past 12-18 months.......surely there would be situations where shrewd cashed up materials buyers would have been able to buy a good bit cheaper than at any time in the preceeding several years as the building inventories for a continued property bubble needed to be rationalized to meet the post bubble market realities, as well as to convert into cash for those who are running too close to the bone.

I know of several people who have managed to "thread the needle" and build homes with material and labour costs at significant discounts to 24+ months ago.

I would never call never....but I would call it a rare anomoly.

minimoke

03-08-2009, 02:59 PM

[quote=duncan macgregor;267281]
Construction and material costs never realy come down or if they do its quite minimal.
If I may take an opposing view. Construction and material costs always come into it - but perhaps the buyer just isn't aware they are making those sorts of decsions.

Sure house prices, and therfore their value is affected by supply and demand. But the one thing underpining that is the replacement cost of that property. People are looking for value in their purchase which measn they are placing some value on what they see and then comparing it to other things they see. Thats a reasonably easy thing for the seasoned buyer to work out but its not for the novice.

With the novice they'll go "oh thats a nice house for $300k especially if we renovate the bathroom for $10k!" So they spend $300 on the house and $15k on the bathroom (because they had no idea what doing up a bathroom was really going to cost) and all of a sudden they have a property worth, in their minds $315k. A year later they might want to sell and a buyer might say "Oh thats a nice house - that new bathroom must have cost a bit, Yeh $315 is a good price when I compare it to that house down the road with teh tatty bathroom for $300". Especially since the likely cost of a new bathroom is going to be around, say $16,000.

The compliance and construction costs don't appear to have come down. Sure some trades may be lowering their price to keep work. But the good ones with a solid reputation won't be. Other good ones will have headed to wherever they think they can get a proper recognition for their skill (perhpas off shore). Those without a good reputaiton will really need to drop their labour prices so while you can get a cheap labour price now you may find this is a short term value and you end up spending more when the job starts to break down.

Council costs continue to increase, material costs are certain to increase, demand for materials is likely to increase (banks lending on renovations at low interst rates) and labour rates will increase because we don't have many skilled trades as we did a few years ago - and even then we had a shortage. Petrol prices will continue to go up so land near things will rise in value. Supply is down (less buiding permits and less homes built recently) and demand will increase - more people coming to NZ and houses more "affordable).

All in all prices/value has to rise.

fungus pudding

06-08-2009, 04:21 PM

http://www.youtube.com/watch?v=bNmcf4Y3lGM

MrDevine

10-08-2009, 08:39 AM

According to the Dom Post, propertys on the rise, but no sign of a 'boom' yet. Crikey can't we just have a flat market for a while. Bernard Dickey I see has been revising up his doomsday predictions to -15%, which would probably be right if we factor in inflation. As of this article Auckland prices are down -3.5% on the peak.

Also if we're talking about hyperinflation here (on the other thread), won't that be good for homeowners with mortgages as corresponding debt becomes cheaper as wages increase with inflation? Interest rates will be pricey though.

http://www.stuff.co.nz/business/personal-finance/2734225/House-values-continue-to-increase-slowly

Life rumbles on.

Mr D.

beacon

10-08-2009, 07:04 PM

Assets are cannibalised in hyper inflation. valuations suffer by comparison.

fungus pudding

10-08-2009, 07:12 PM

Assets are cannibalised in hyper inflation. valuations suffer by comparison.

Care to elaborate?

MrDevine

10-08-2009, 09:24 PM

Lets buy gold! In hyperinflated US denomitated dollars! Makes complete sense.

beacon

11-08-2009, 09:06 AM

Hi Fp, asset valuations rise best in times of slow and steady inflation. In hyperinflation, assets are cannibalised just to feed the cashflows.

fungus pudding

11-08-2009, 09:13 AM

Hi Fp, asset valuations rise best in times of slow and steady inflation. In hyperinflation, assets are cannibalised just to feed the cashflows.

In times of high inflation the nominal price of assetts rises while the value of cash erodes. Likewise the percentage of debt secured against a debt lowers.

beacon

14-08-2009, 03:54 PM

In times of high inflation the nominal price of assetts rises while the value of cash erodes. Likewise the percentage of debt secured against a debt lowers.

I'd certainly agree with that observation too. However, I see no contradiction with the cannibalisation comment i made earlier. The two consequences are not mutually exclusive

JBmurc

14-08-2009, 04:43 PM

In times of high inflation the nominal price of assetts rises while the value of cash erodes. Likewise the percentage of debt secured against a debt lowers.

yes I agree tis the reason why the USA's only hope is to create mass inflation in turn reducing their dept which now rivals world annual GDP can't see them increasing rates till inflation has increased their housing value stats & decreased their dollar value an increasing their export earnings which will be the true catalyst of a US economy recovery

fungus pudding

23-08-2009, 09:33 AM

I agree completely with Martin Hawes that residential investment has become the domain of the speculator, and is no place at all for an investor.
First class analysis in the Herald.

http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=10592526&pnum=2

voltage

23-08-2009, 09:26 PM

good article by Martin Hawes. Totally agree if you cannot get 7% net yield, then walk away. LPTs are looking good as an alternative.

fungus pudding

24-08-2009, 09:03 AM

good article by Martin Hawes. Totally agree if you cannot get 7% net yield, then walk away. LPTs are looking good as an alternative.

7% is nowhere near enough. Interest, rates, insurance, vacancies, management and the real biggie - maintenance, add up to a helluva lot more than 7%. At a 7% return buyers are relying on capital growth. And very often that only offsets the operating loss - so it becomes little more than a compulsory savings scheme. IOW buying the capital gain.

stanace

24-08-2009, 10:54 AM

7% is nowhere near enough. Interest, rates, insurance, vacancies, management and the real biggie - maintenance, add up to a helluva lot more than 7%. At a 7% return buyers are relying on capital growth. And very often that only offsets the operating loss - so it becomes little more than a compulsory savings scheme. IOW buying the capital gain.
He said 7% net, not gross. Everything you mention is already included.

fungus pudding

24-08-2009, 10:56 AM

He said 7% net, not gross. Everything you mention is already included.

Oops! Yes - so he did. I must learn to read.:o:o

voltage

24-08-2009, 05:45 PM

it is very hard to find 7% net yield properties unless you pick the worst areas in town which means the worst tenants with it.

fungus pudding

25-08-2009, 06:21 PM

Depends on your deposit ... The larger it is the easier it becomes ... And I'd add you can still use the capital in the property as collatoral for other leveraged purposes which increases the net yield ... Hawes makes the point that the average property investor isn't very savvie ... He's not wrong on that account ... I'd go a step further and say they're mainly "me-too" morons that are just following the herd and/or do it because its trendy to have "a couple of investment properties" ;)

The yield is the yield and doesn't change whether you borrow nothing at all or 100%.

minimoke

25-08-2009, 06:49 PM

JBmurc

26-08-2009, 08:56 AM

Gross yield is realively easy. Weekly rent x 52 weeks divided by purchase price x 100. So a $350,000 house at $300 rent a week is 4.45%

Cash on Cash Return (CoCR) or Internal Rate of return (IRR) are other good measures

then you have to minus all the costs of having that property-rates,insurance etc soon becomes -4%

Not saying owning a rental isn't a good investment the last one I had in inver-vegas cost me 145,000 at auction(I was the only one to turn up)was getting 300pw from the 4brm 1930's brick home that was alright for a couple yrs spent 20k tidying it up sold it for 187,000
I see it now is for sale again 5yrs after I brought it for 245k

Still rather have my funds in the market an silver bullion these days unless property becomes cheaper -IMHO buying a high priced low yeild property isn't very savy investing which is what many NZ'er have been doing over the last 3-4yrs

George

31-08-2009, 09:06 PM

Went to an auction Saturday in our street, close to Henderson so
good location, ok house, 3 bed, lockwood but right below another house
and very little privacy. CV 295k and only 1 bid at 230k, no one interested
at 240k. Must say was surprised, and disappointed a little as we own a
little villa up the road and wonder what the state of the market really is.
Based on the previous post even at 240k and 320 a week rent it's only
a yield of 6.93%. Perhaps no investors around at the moment but you
would think a first home buyer could be enticed at 55k under CV.
George

Dr_Who

01-09-2009, 07:52 AM

Housing movement usually starts in the good and/or trendy areas with so called good schools. Price movements in good areas usually have a flow on effect to the other areas abit later down the track.

POSSUM THE CAT

01-09-2009, 11:18 AM

George Went to an auction in better part of Ranui, Land Agents would call either Western Heights or Henderson Heights. A fairly new 5 bedroom home of roughly 150sq meters, living areas were only big enough for a family of Sardines. backed onto a Nudist Colony. House in below average condition, substantial water damage in both bathrooms & an absolute abortion of a plan with the laundry in the middle of the house. Auctioneer could not get any bids as he was making no indication of price. So decided to start it with an auctioneers bid of $430000.00 as he said you would not buy it for that. Working on QV for a five bedroom house in that area that they have never seen. Everybody walked out in disgust. My valuation = Land Value less cost of removing the abortion of a house. Yield more like 4% after you take rates and insurance off the rent let allone any maintenace, letting fees, etc to be viable investment in my opinion you would need to rent for $480.00 per week

George

01-09-2009, 11:42 AM

An agent for 'whatpriceyrhouse.com' came around and felt she
could ask 349k for our 2 bed villa which I have done up nicely.
With a cv of 315k which we bought 2 yrs ago for 312k (should have
offered 290), thought the market was holding up but am not so sure now.
She may have been just trying to get our business, as another 2 bed
up the road, newer but needs bath/kitchen upgrade, was for sale at
279k with a cv of 300k. No one is going to buy ours for anywhere near
350k when a 3 bed up the road can't get a bid for 240k.
We do have a great view though and very private for a cross lease.

minimoke

01-09-2009, 02:02 PM

.
With a cv of 315k
George - Don't get hung up on the CV Values - the only purpose they have is to set local body rates. Just to clarify - you've given 3 CV's a 3 bedroom lockwood for $295k, a 2 bedroom villa for $315 and another 2 bedroom vila for $300k. Its impossible to tell if there is any relativity between these figures because these properties aren't individually valued for CV purposes. Arguably a lockwood in a suburb of villas is going to be out of place and worth less - and perhaps therein lies why its not selling.

Where CV values is of some advantage is to try to buy a house with a low CV and save a bit on your rates.

As for agents coming around, I always get three to pop around. No point relying on one - in fact you can hardly rely on any of them. You then pick a figure that you reckon best suits your local market conditions. Bear in mind it appears you bought at the top of the property cycle and values have gone back from there - but on their way up again. Taking even a 5% drop in value over the past couple of years I'd have thought you'd be looking at a value of around $300 not $350.

minimoke

01-09-2009, 02:06 PM

A fairly new 5 bedroom home of roughly 150sq meters,

150 sqm!!! Holy F#*& someones brain wasn't engaged when that was designed. A person would have to be mad to even look at buying 5 bedrooms at that size - unless some major renovations could be done to convert it to a three bedroom.

Dr_Who

01-09-2009, 02:19 PM

150 sqm!!! Holy F#*& someones brain wasn't engaged when that was designed. A person would have to be mad to even look at buying 5 bedrooms at that size - unless some major renovations could be done to convert it to a three bedroom.

Hey, how did you know it wasn't originally designed for a Japanese family? :p:D

fungus pudding

01-09-2009, 02:48 PM

Hey, how did you know it wasn't originally designed for a Japanese family? :p:D

Couldn't be. It's too big.

POSSUM THE CAT

01-09-2009, 04:02 PM

Minimoke yes you are right bedrooms are good size but living areas were for sardines kitchen not even 3meters square combined dining room lounge about 6m x3.5m the only realistic alteration would be to knock out wall between lounge and garage as house steps down in two stages to bedrooms. Demolition would be best answer

AMR

05-09-2009, 12:45 AM

Design is everything...I'm about to build new 3 bedroom 60m2 house, and most of you wouldn't be able to tell :)

JBmurc

12-09-2009, 09:01 AM

Design is everything...I'm about to build new 3 bedroom 60m2 house, and most of you wouldn't be able to tell :)

60sqm thats small

Looking to build early next year current plans I think are garage is round 73sqm

Dr_Who

12-09-2009, 09:15 AM

60sqm thats small

Looking to build early next year current plans I think are garage is round 73sqm

73sqm garage? LOL

You gonna park your fleet of ferraris from the proceed of IRN? :D

I hate dealing with contractors, esp those that constantly complains to me about not able to do this and that and cant meet deadlines. The worst part is neighbours who complain. In the up market areas, the neighbours usually wants you to pay them to sign off the consent. Bunch of assholes..... shiat, I am starting to sound like Clint Eastwood in the movie Grand Tourino.

JBmurc

12-09-2009, 09:34 AM

73sqm garage? LOL

You gonna park your fleet of ferraris from the proceed of IRN? :D

I hate dealing with contractors, esp those that constantly complains to me about not able to do this and that and cant meet deadlines. The worst part is neighbours who complain. In the up market areas, the neighbours usually wants you to pay them to sign off the consent. Bunch of assholes..... shiat, I am starting to sound like Clint Eastwood in the movie Grand Tourino.

LOL yeah more like FPV I'm a ford man love me V8's even though I'm quite keen one day on a typhoon turbo 6--- 0-100km sub 5secs can be easy mod to eat ferraris

going off my current numbers we'll save $30pw owning are own home rather than renting here just down the road from are section.

As for dealing with contractors consents going leave that to the home builders -currently dealing with platinum & golden homes

Dr_Who

12-09-2009, 10:27 AM

Have you tried out the new Nissan GTR? 0-100km in 3.5 sec!! Supercar performance without the supercar price.

Good idea to own your own home. Renting only gives your money to the landlord. I have never rented. Have always been a home owner and a landlord. Owning a home also gives you security and a sense of wellbeing.

AMR

12-09-2009, 05:19 PM

Really? It seems like a better deal to rent and purchase an IP rather than buying an owner-occupied home at first, with all the associated tax benefits and depreciation, etc.

The GrandMaster

13-09-2009, 09:16 PM

Renting only gives your money to the landlord.

Really? So if the rental yield is 6% and interest rates are 7%, who's giving money to who?

JBmurc

13-09-2009, 10:12 PM

Really? So if the rental yield is 6% and interest rates are 7%, who's giving money to who?

-the bank-

An if home inflation on average is at 5% your average bank interest 7% owning your own home is a true wealth cost of 2% per ann so for ever 100,000 loan say a true cost of =$2,000 per ann + expenses
Now if you renting you have no hedge on that home inflation so true cost is your rent
=rough est per 100k home $100pw or $5200pa

Current we pay 500pw or $26,000pa looking forward to paying 480pw for a own property

Now I'm talking about NZ here where property is like gold in NZ'er eyes

Smart investors uses others money to make money-

The GrandMaster

14-09-2009, 09:11 AM

Current we pay 500pw or $26,000pa looking forward to paying 480pw for a own property

so are you buying the place that you are renting? if not, then your comparison is pointless.

most people that go from renting to owning typically 'downgrade', and think that they are somehow saving money.

currently I pay $520pw to rent, it would cost me a lot more to own...

JBmurc

14-09-2009, 10:15 AM

so are you buying the place that you are renting? if not, then your comparison is pointless.

most people that go from renting to owning typically 'downgrade', and think that they are somehow saving money.

currently I pay $520pw to rent, it would cost me a lot more to own...

No we'll be living in a house that will be twice as good fact is I've used the banks funds to make me money in the past so the loan will be only 50% of the value

OK my comparison isn't perfect but to think renting is some way is better long term financial rather than owning your own home(even if it isn't as good) is just plain stupid-Inflation takes care of that history is a great example here in NZ

The GrandMaster

14-09-2009, 10:56 AM

No we'll be living in a house that will be twice as good fact is I've used the banks funds to make me money in the past so the loan will be only 50% of the value

OK my comparison isn't perfect but to think renting is some way is better long term financial rather than owning your own home(even if it isn't as good) is just plain stupid-Inflation takes care of that history is a great example here in NZ

Not better, financial isn't a reason to do either. The financial benefits of owning a home over renting are consistently exaggerated in this country - based on a lot of misinformation. Of course, that is what HAS created house inflation in the past, though I wouldn't want to put my faith on that continuing.

So in your example, you are only going to be paying $20pw less in cash terms - but what about the cost of having that equity tied up?

minimoke

14-09-2009, 12:22 PM

Hi Minimoke,

Thinking of buying a few rentals in your fair garden city over the remainder of 2009.
Heres one for you.
http://www.harcourts.co.nz/listing/details.do?rul=%2Fsearch%2Fprocess.do%3Fpg%3D1%26t s%3D198504857%26qst%3DC090814&id=483919

CV is currently $188,000. But here'ss the beauty of it - its just down the road from the "House of Horrors" so this will devalue the property hugely - not a great time to sell. On the plus side you have three bedrooms - so you can get some bennies in there and start looking at a decent cash return straight away. Then you have the Council looking at demolishing the House of Horrrs and putting in a park - which, with peoples ability to move on and forget the murders, will see the property move up in value in time to come.

JBmurc

14-09-2009, 12:25 PM

Not better, financial isn't a reason to do either. The financial benefits of owning a home over renting are consistently exaggerated in this country - based on a lot of misinformation. Of course, that is what HAS created house inflation in the past, though I wouldn't want to put my faith on that continuing.

So in your example, you are only going to be paying $20pw less in cash terms - but what about the cost of having that equity tied up?

equity tied up not really the bank will loan me upto 80% of the value of the home in my case loan funds 350,000 reg value of home 1m so free cap 650,000- 80% =520,000 I could loan from the bank at current fixed rates of say 6% for what ever I what.

You have no faith on inflation continuing LOL tell that to your landlord when he hikes your rent up..

Dr_Who

14-09-2009, 01:25 PM

Heres one for you.
http://www.harcourts.co.nz/listing/details.do?rul=%2Fsearch%2Fprocess.do%3Fpg%3D1%26t s%3D198504857%26qst%3DC090814&id=483919

CV is currently $188,000. But here'ss the beauty of it - its just down the road from the "House of Horrors" so this will devalue the property hugely - not a great time to sell. On the plus side you have three bedrooms - so you can get some bennies in there and start looking at a decent cash return straight away. Then you have the Council looking at demolishing the House of Horrrs and putting in a park - which, with peoples ability to move on and forget the murders, will see the property move up in value in time to come.

The only problem I find investing in the poorer areas is that it is hard to find good tenants. They tend to treat your rental property like a pig style. Look at the mess in the backyard of the house in your link For Sale.

minimoke

14-09-2009, 01:45 PM

Look at the mess in the backyard of the house in your link For Sale.
Mess? Thats a sun lounger and a fish filleting table as a bonus. And a place for a sheltered hangi/umu - what more could your tennants ask for!

The GrandMaster

14-09-2009, 06:16 PM

You have no faith on inflation continuing LOL tell that to your landlord when he hikes your rent up..

I've been renting for nearly 15 years now, occupying 3 different places, and never have I had a rent hike. If the landlord wants to get rid of tenants as good as us, then they can roll the dice.

Meanwhile I will happily let the landlord take the bet that the value of the property will go up to offset the negative return they are making at the moment. If it pays off for them, good on them, but I've got better things to do.

JBmurc

14-09-2009, 06:51 PM

I've been renting for nearly 15 years now, occupying 3 different places, and never have I had a rent hike. If the landlord wants to get rid of tenants as good as us, then they can roll the dice.

Meanwhile I will happily let the landlord take the bet that the value of the property will go up to offset the negative return they are making at the moment. If it pays off for them, good on them, but I've got better things to do.

so you've paid 520pw for 15yrs thats some $405,600 in rent nice one keep renting for another 22yrs without any rent rises an you would have paid $1,000,000 in rent

personal I can't wait to finally have are own home next year an then to have it dept free before I'm 40 like having cash in the bank ...except you can live in it

The GrandMaster

14-09-2009, 08:51 PM

so you've paid 520pw for 15yrs thats some $405,600 in rent nice one keep renting for another 22yrs without any rent rises an you would have paid $1,000,000 in rent

personal I can't wait to finally have are own home next year an then to have it dept free before I'm 40 like having cash in the bank ...except you can live in it

"never had a rent hike"

but that's alright, I'll play your game. based on the average interest rate over the last 15 years, that would be $594,000 in interest I have not paid (or interest I have not forgone). no capital gain, but then I have made capital gain elsewhere.

as you mention, it's a personal decision, not a financial one. that's my only point. i just prefer cash I can spend rather than that I can sit in...