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Jess9
26-04-2007, 08:57 PM
Floating rates almost breaching 10% (Westpac 9.95%), and one assumes fixed rates likely to head higher in sympathy. Has the the exit sign just begun to flash? Are overleveraged investors edging towards the door?

If we see a continued trend down in net migration, and possible mini recession next year - driven by dual figure interest rates and an over valued Xrate...the slump will finally bite!

If interest rates stay where they are and cap growth drops below 10%,...hmmme how likely is that in the near future ; ), then a big reason to invest for leveraged cap gain disappears, and capital loss looms.

Let the fun commence!

Crypto Crude
26-04-2007, 10:13 PM
Yes I agree...
seems like my time is just around the corner it seems...
lets dance, when the bear appears he will be in a ravenous mood after along time in hybernation
[8D]
.^sc

Halebop
27-04-2007, 10:23 AM
I'm not sure you need to get too excited. A correction, if coming, is likely to be no more than 10% and will worst impact developers, traders and the over geared. I suspect the most likely form any bear market takes will be slowly strangling years of under performance rather than a more exciting crash. The jury's out on the impact of 10% floating rates just yet. The psychological impact will be interesting to watch though - Bollard has finally grown cojones so may well hit again if the market doesn't take pause.

Halebop
27-04-2007, 10:28 AM
...Keep in mind the impact of interest rates on the share market too!

SEC
27-04-2007, 12:21 PM
quote:Originally posted by Halebop

...Keep in mind the impact of interest rates on the share market too!


Not to mention more income from all that cash you hold Halebop!;)

Come to think of it, if I was limited to NZ investments only, I would be holding 100% cash too.

SEC

trackers
27-04-2007, 01:54 PM
quote:Originally posted by Shrewd Crude

Yes I agree...
seems like my time is just around the corner it seems...
lets dance, when the bear appears he will be in a ravenous mood after along time in hybernation
[8D]
.^sc


Haha, funny - Yep your time to pick up a house at a 5% odd discount is almost here - good luck paying it off @ 10%

I agree with halebop, we're most likely looking at a period of negligable returns for the next couple of years, then when interest rates drop I suspect we're back on (Tony Alexander - BNZ economist predicts 2 yrs for interest rates to start seriously coming down, and that sits about where I was thinking). In addition to traders/developers/overgeared people, first home ownership is now near impossible imo - the high house prices people could just struggle with, but 10% interest on top of that has really put the nail in the coffin as far as I'm concerned.

Jess9
28-04-2007, 01:46 PM
Negative gearing pain for between 5-10 years, ouch, thought the idea was to reduce reliance on alternate income. NG - all OK if the market is rising quickly, just buy and buy I guess especially with virtually free access to finance, then sell a few to pay down "over" gearing of the remainder, into passive cashflow states to wait out such a flat period. I guess its the old game of pass the parcel, getting quicker and quicker, however the last holder really will get the surprise, when the music stops [B)]

Crypto Crude
29-04-2007, 03:47 PM
quote:trackers
quote:
--------------------------------------------------------------------------------
Originally posted by Shrewd Crude

Yes I agree...
seems like my time is just around the corner it seems...
lets dance, when the bear appears he will be in a ravenous mood after along time in hybernation

.^sc

--------------------------------------------------------------------------------


Haha, funny - Yep your time to pick up a house at a 5% odd discount is almost here - good luck paying it off @ 10%

I agree with halebop, we're most likely looking at a period of negligable returns for the next couple of years, then when interest rates drop I suspect we're back on (Tony Alexander - BNZ economist predicts 2 yrs for interest rates to start seriously coming down, and that sits about where I was thinking). In addition to traders/developers/overgeared people, first home ownership is now near impossible imo - the high house prices people could just struggle with, but 10% interest on top of that has really put the nail in the coffin as far as I'm concerned.


Hey trackers... whats up...
I would argue that prices will fall further than 5%... ... although prices MAYNOT fall dramatically but remain in limbo for many years, around 10-15% drop could be expected... last house price recession lastest 15 half years...
Halebop posted a graph on 1st home buyers are ScReWeD thread on page 29... have alook at the length of time of last recession...have alook at graph characteristics...
read my post below his great picture... market would have to break 45 years of data to only fall in a small manor, for a short period of time...
probabilty wise, beating dollars would be in my favour buddy...

intuiatvly after housing recession bank rates willnot be 10% ...in 4-5years rates will be alot lower as in 4-5 years likely for me to get in on current market situation... It is looking like its the beginning of property recession....OCR is close to peaking to then start a down trending cycle IMO over time....

you go onto to say that first homebuying is now near impossible........
not with abit of shrewdness buddy... if all falls into historical patterns, and in 5 years that 300k house fallen to 250k... interest rates around 6.5-7% then outlook on future loan payments will change my life forever... only way I can think of breaking away from being that 52 year old man... only way possible for me buddy..
I cannot be a 52 year old man with house only, even if that house is worth a mill...
hope you are around here in five years to see who is correct...
I have no other choice but to risk it, and at the same time going against what many posters have told me, and at the same time going against what family and other wise people have told me...
goal-loan target decrease from 30years to 10... simple strategy...
lata tracker...
[8D]
.^sc

trackers
30-04-2007, 05:31 AM
quote:Originally posted by Shrewd Crude
you go onto to say that first homebuying is now near impossible........
not with abit of shrewdness buddy... if all falls into historical patterns, and in 5 years that 300k house fallen to 250k... interest rates around 6.5-7% then outlook on future loan payments will change my life forever... only way I can think of breaking away from being that 52 year old man... only way possible for me buddy..
I cannot be a 52 year old man with house only, even if that house is worth a mill...
hope you are around here in five years to see who is correct...
I have no other choice but to risk it, and at the same time going against what many posters have told me, and at the same time going against what family and other wise people have told me...
goal-loan target decrease from 30years to 10... simple strategy...
lata tracker...
[8D]
.^sc



Hey shrewdy how are ya?

First home buyers, right now, are completely screwed... In addition to this, mortgagee sales are right up there, people going broke because they can't afford the payments.....Finally, we have renewed interest in the dollar due to the massive interest rates (bad luck exporters)

So what right? Well my point is, that shouldn't the government be trying to look after everyone's best interests? Certainly doesn't seem like that's going on here...To me it almost looks like Bollard raised the OCR just because he was sick of people saying he didn't have the balls to do it...

You may think I seem a little affected by all this...funny thing is I'm not, at all. I'm fixed for 5 years, my house has gone up around 40% and would have to fall a looong way before I was ever hurt in the pocket... I just think the actions by the Reserve Bank are bordering on irresponsible, and are certainly not helping the majority's situation one bit

minimoke
30-04-2007, 09:29 AM
Lets not loose sight of how the government is continuing to fuel the property market.

By continuing massive growth in the public service with lots of well paid office workers who don’t add any productivity to the economy but who are in a position to afford better and better housing – driving demand.

By giving the reserve bank one tool (interest rates) to control inflation. Funds flow out of savings (which get taxed) into areas where a greater return can be made – like capital gains on property

By having tax rules which let property investors purchase property where there is no chance of a decent financial income – but great non taxed capital gains on sale.

By having a Working For Families programme which floods money back into families pockets which they can put into increase mortgages at a faster rate than can be offset by interest rate increase.

By forcing all home builders to comply with “leaky building” standards – forcing up building costs, raising the value of new homes which has to be reflected in the value of older homes.

skinny
30-04-2007, 10:13 AM
quote:Originally posted by belgarion

On April 24, the National Association of Realtors reported that sales of previously occupied homes in March dropped 8.4% from the prior month to a seasonally adjusted annual rate of 6.12 million units -- the largest monthly drop since 1989. The trade group said the median price for homes was $217,000 in March, down 0.3% from a year earlier.
House Prices Slide as Property Glut Grows (http://biz.yahoo.com/weekend/propertyglut_1.html)

Would that mean that NZ median and the US median were about at par?


Well I don't know for sure but an anecdote....my in-law returned from a business trip to San Francisco last month where he had dinner one night with a local real estate agent. The next day he was shown around some pretty nice properties in solid upper middle-class neighbourhoods. He came back raving how "cheap" SF was and impressed with what he could get if he sold his house in....wait for it.....Hamilton [:0]

Maybe I am prejudiced but something is seriously out of kilter when Hamilton is more expensive than San Franciso!! And SF is supposed to be one of the more expensive US cities; I was reading in a recent edition of The Economist you can get a McMansion in some of the Southern States now for around $250k US.

Crypto Crude
30-04-2007, 08:37 PM
quote:trackers-I just think the actions by the Reserve Bank are bordering on irresponsible, and are certainly not helping the majority's situation one bit

as You know the most important goal for the RBNZ is to contain inflation in the 1-3% band....
when inflation is controlled then growth as in GDP can perform at its best over the long term...
short term GDP is not effected by inflation...
so in away RBNZ is looking after us by spurring growth which impacts dirrectly on wages...
although this maybe hard for others to see when exporters are being killed...
the other side of the dice is cheaper imports...
NZ is a net importer, so cheaper imports is better for NZ consumer...
expect a 50% chance of one more OCR rise trackers...
[8D]
.^sc

Crypto Crude
30-04-2007, 08:46 PM
quote:minimoke-
1....By continuing massive growth in the public service with lots of well paid office workers who don’t add any productivity to the economy but who are in a position to afford better and better housing ?driving demand.

2....By giving the reserve bank one tool (interest rates) to control inflation. Funds flow out of savings (which get taxed) into areas where a greater return can be made ?like capital gains on property
1....every working person adds productivity to the economy regardess of which sector they are in...

2...in current market conditions money actually flows into savings..
with higher interest rates lead to bigger savings deposit rate, which creates more incentive to save rather than spend...
this is how inflation is controlled through the cycle of less spending disencourages prices to rise because less people are bidding up prices...
[8D]
.^sc

minimoke
30-04-2007, 09:05 PM
2...in current market conditions money actually flows into savings..
with higher interest rates lead to bigger savings deposit rate, which creates more incentive to save rather than spend...
this is how inflation is controlled through the cycle of less spending disencourages prices to rise because less people are bidding up prices...
[8D]
And this is why I love our Government. They enable me to work hard and pay lots of taxes with heaps left over to save at 5 – 6% interest which is then subject to more tax. Silly old Bollard – no way would I want to be paying my mortgage off when he puts rates up to 10%.

Halebop
30-04-2007, 10:27 PM
quote:Originally posted by Shrewd Crude

1....every working person adds productivity to the economy regardless of which sector they are in...

Shrewd productivity is a measure of efficiency, not production. The trick with productivity is to do more with the same (or better yet more with less). As a generalization New Zealand business owners, managers, staff and government officials don't tend to understand productivity. What tends to happen is that problems or needs get bodies thrown at them. This rarely lends to higher productivity, although sometimes masquerades as the same via more than usual over-time performed by an existing workforce. Little about it generally makes a company or country more efficient or competitive unless the output materially exceeds the inputs.

Higher employment is not necessarily good for everyone (except perhaps for that "next" person employed). Imagine a company produces widgets. They sell 1,000 widgets around New Zealand each year. The economy is strong and the company has high confidence that it will sell 1,000+ widgets next year too. It has some operational problems though, it's staff require lots of training and in a tight labour market it takes longer to find new people. Management decide to hire an additional "Production Cadet" to help pre-empt the downtime gap when the next, more prized, "Production Senior" leaves. This improves the company's position from a risk management perspective (They can hopefully keep producing widgets to order without incurring any late delivery penalties and customer losses), but adds to overhead with little augmentation to their offer. So either prices must rise to compensate or the company will make less money. In either instance economic productivity drops (The company makes lower profits on higher capital or their customers pay higher inputs for the same outputs).

The smart company would have focussed on productivity enhancements rather than production issues. They would look at existing processes and work out how to do the same or higher volumes with less or the same staff. They might also look at their existing staff and develop a retention strategy for the more valued "Production Seniors" and training strategies to cost effectively get their other staff up to that level. None of this need involve throwing another body at the problem.

This may seem obvious but most corporate managers and a horrendously high proportion of SME entrepreneurs don't have a strong grasp of methodically improving the customer offer combined with operating efficiency gains.

Jess9
01-05-2007, 07:57 PM
Well said.

Crypto Crude
01-05-2007, 08:05 PM
cheers Halebop...
your arguement is correct, but if your not working then you cant be productive! and then add nothing to productivity...


quote:What tends to happen is that problems or needs get bodies thrown at them. This rarely lends to higher productivity

is it not true that as you throw more bodies at a problem you get closer and closer to economies of scale... as you increase output, you get lower and lower average costs... this is productive right..:)

let me give you another example... In China the people are not productive at all... but it is the sheer number of people thats making their economys wheels lubrucated...which is giving them higher average wages year on year.... can Increased wages be a measure of productivity?...
without workers then theres nobody to lubricate these wheels...
[8D]
.^sc

Dazza
01-05-2007, 09:19 PM
yeah i read somewhere to that a good house in US costs around 200k..

obviously its in perspective to them earning USD as well.

so u cant say oh 200k USD = 300k NZD

cause u will be earning USD too..

nzl sure is getting expensive.


im sure others have said this as well...

but.....
wait till kiwi drops...

petrol at pumps get higher... $2 a litre? def possible with 10c tax on it...
.
that will be $80 a week for me!!!

a big increase... considering i only pay around 60 at the moment...

feel the squeeze anyone

George
02-05-2007, 06:59 AM
Hi all
Get confused with all the opinions on property.
If, or when, our dollar drops, won't that mean that overseas folk will travel more and perhaps also, to buy our property, which would put a floor under values at not much less than they are now?
If that is true, how high would our median property have to go before overseas investors consider it too expensive?
George

Crypto Crude
03-05-2007, 02:05 AM
quote:George-Hi all
Get confused with all the opinions on property.
If, or when, our dollar drops, won't that mean that overseas folk will travel more and perhaps also, to buy our property, which would put a floor under values at not much less than they are now?
If that is true, how high would our median property have to go before overseas investors consider it too expensive?
George
when the dollar drops then a new wave of foreign investors will invest... the smart ones are waiting for imminent dollar drop... the floor that you talk about is possible... it may just be a sideways market for 5 years or something like that, or a minimal drop of 5% as trackers talks about...
I cant give you a price that foreign investors would cap our Median prices at, but NZ housing is cheap as compared to the rest of the world... most likely the cheapest for a secure western country, when taking into account foreign exchange and just how far NZ dollar goes for them...
[8D]
.^sc

ratkin
13-05-2007, 02:20 AM
Agreed property is cheap for developed country.
However , wages are cheap too , the country is isolated, etc etc

Property will always be cheaper here while the standard of living remains so low

JBmurc
14-05-2007, 10:45 AM
-Every week think goes bye the more happy I'am that I've sold my house and that my only property investment is - 7 15,000 invercargill sections 1 Queenstown section -(more than happy to rent a 600,000+ property for 400pw )
-Going only get worse here for NZ property investers Inflation will IMHO not be keeped below target(crude oil 70+ soon) for the reserve Bank to halt the rate rise 10%+ fixed rates 11%+ floating rates -Property will remain flat or negative from here IMHO for at least the next couple yrs
Will build houses on section's Once Builders&tradies are screaming out for work;)

Bel
24-05-2007, 09:24 AM
If you check out RBNZ website you will find out that for the year till march the M3 money supply increased by %12.8

When someone claims inflation is only 3% i laugh because there is no way in heck that our real GDP grew by 10% since march 2006
In october 2000 the NZ economy was represented by 99,803 million dollars.

By march 2007 it is represented by 187,743 million dollars. Does anybody think our population+technology level has doubled in 6.5 years?

Still consider your capital gains to all just be a true increase in wealth?

JBmurc
25-05-2007, 01:07 PM
Just got an offer on my 7 invercargill sections 100% more than what i paid 12months ago:DI know guys that brought similar sites for $500 6-7yrs ago now worth 30k+

Jess9
26-05-2007, 08:02 AM
Anyone know if finding a flat or house in Wellington (central) is getting alot easier? I heard that some are now finding it difficult to bring in flat mates, and rent out entire houses - for the prices they were getting.

Wonder if the heat is coming out of the demand we saw earlier in the year.

Could be the start of the "Triple Whammy" (interest rates rises, on falling rentals and falling house price/equity).

neopole
26-05-2007, 06:34 PM
one way or the other, what goes up will always go down........... relative to wages.
and wages for the average joe blow...... not the "average wage" havent increased anywhere near as much as property prices, and, at the end of the day, a property is a roof over a working persons head.
as for the IRD getting ready to chase down speculators........ what a joke, but at least its a start........ i wonder if they will chase rectrospective speculators or just from now on.
this whole business of non taxed property speculation and lax IRD enforcement and easily obtainable credit and endless tax rebates on negative gearing is going to cause this country a few problems in the near future........ just when the opposition party might end up in power.
and knowing the sentiment of the general public...... the government of the day will get hounded by the problems of the day......... built by the present regime.

IMHO...... i can see the dollar sliding back to the $US.40 level again in a few years.
and a lot of recent home purchasers suffering bigtime.
but this is the age of "want now buy now"
and all generations have to learn their lessons the hard way.
i learnt mine in the 80's,
now im waiting to recapture what i lost..... with interest.

hopefully, with the iminent correction, the new generation will learn that to grow real and stable wealth, you have to invest into vehicals that produce growth and wealth not like the house of cards of property speculation.

disclosure.......

boy!!!!...... this vino is good stuff!

lakeside
28-05-2007, 07:37 PM
Heard on National radio that IRD are targeting property sales (was in the budget.)

Sounds like any subdivision when you have owned a place less than 10 years or any quite rapid resale should be fully taxed ie 39% if thats your rate on whatever you made.

Could have quite a few worried. Apparently they will be looking through land transfer figures especially in high growth areas in the past few years. They advise talking to your accountant or lawyer to see if you should turn yourself in and pay the tax plus 14% interest or wait & see if you are fined is the other option.

Could make speculators less keen to buy? Investors long term - and there are still lots out there esp in somewhere like Wanganui where you can get good yield, or Chinese immigrants buying town houses to rent ... will still be buying.

Tim
28-05-2007, 08:46 PM
how long do you need to hold house before you sell to prevent capital gains.

trackers
29-05-2007, 01:47 AM
quote:Originally posted by Tim

how long do you need to hold house before you sell to prevent capital gains.


Its your intentions that count - How many properties do you own? Why did you buy the property you are talking about?

If you have multiple buy and holds, the prop investors normally try to aim for 7-10years IIRC

trackers
29-05-2007, 01:51 AM
quote:Originally posted by lakeside

Heard on National radio that IRD are targeting property sales (was in the budget.)

Sounds like any subdivision when you have owned a place less than 10 years or any quite rapid resale should be fully taxed ie 39% if thats your rate on whatever you made.

Could have quite a few worried. Apparently they will be looking through land transfer figures especially in high growth areas in the past few years. They advise talking to your accountant or lawyer to see if you should turn yourself in and pay the tax plus 14% interest or wait & see if you are fined is the other option.

Could make speculators less keen to buy? Investors long term - and there are still lots out there esp in somewhere like Wanganui where you can get good yield, or Chinese immigrants buying town houses to rent ... will still be buying.


Not sure that they'll put through anything radical this close to election?

I was having a laugh today though about how everyone's still having the same thoughts and predictions today they were having three years ago....and whats happened during this time? Steady tick up, 10%p.a house price gains, business as usual....

lakeside
29-05-2007, 11:11 AM
I found this article on it. 14 million to spend on investigating property transactions


IRD woos property investors


Related Video

IRD woos property investors (2:00)

Job Links

Want more money? Search SEEK

May 24, 2007

Inland Revenue is going to ask property investors to dob themelves in if they're buying and selling houses for profit and not paying taxes on the gains, and in return they won't be penalised.

It will be part of a $14 million campaign aimed at helping cool rampant house prices.

Booming house prices mean there is money to made from property speculation.

Professional property Peter Trapp pays taxes on his profits and wants others to as well.

"There's a lot of private people out there who own three, five, 10 homes and they really need to start paying some tax on those houses that they're selling," Trapp says.

Inland Revenue agrees and has been given an extra $14 million of Budget money to catch those cashing in on the housing rush.

The tax collector is planning an education campaign and wants investors to turn themselves in.

"We would encourage people to come forward and let us know if they think that might have got it wrong," says Colin MacDonald of Inland Revenue.

A lot of people think if you own a house for a set period of time you don't have to pay tax when you sell. But the law is based on "intention". If you buy "intending" to sell your house for profit you owe tax on your profits.

"I think most retail investors don't have a very good appreciation of the tax rules as they apply to them," says Thomas Pippos, Deloitte managing tax partner.

The goal behind the extra Inland Revenue funding is to cool down Kiwis' obsession for property. To do that, the IRD is using a carrott and stick approach. The carrot is that investors who come forward could have any penalty tax waived.

Then there's the stick.

"If, however, people don't come forward and those situations are found after an audit starts then penalties will generally apply," says MacDonald.

"I think anybody who is out there running a legitimate business should pay tax like all of us do, like most of us do," says Trapp.


Inland Revenue is hoping that tax evaders line up to dob themselves in.


Source: One News

trackers
30-05-2007, 05:23 AM
Aspex, its all very true but c'mon how long have we heard these exact words for? 3-4 years? They're bound to get it right eventually, what with the reserve bank putting the rates wayy outta first home buyers reach and the IRD on the rampage...

I find it all pretty funny really

lakeside
30-05-2007, 10:09 AM
They certainly have not clearly communicated what the law is - every one has a differant idea of what is OK.

Bel
30-05-2007, 12:20 PM
quote:Originally posted by JBmurc

Just got an offer on my 7 invercargill sections 100% more than what i paid 12months ago:DI know guys that brought similar sites for $500 6-7yrs ago now worth 30k+


Nice JB, are you going to sell? After all if anyone is daft enough to buy in a dreary city with a declining population you should accomodate them by taking there money!

JBmurc
30-05-2007, 03:53 PM
-Nice JB, are you going to sell? After all if anyone is daft enough to buy in a dreary city with a declining population you should accomodate them by taking there money!
[/quote]

-I'm glad alot of investors think invercargill as dreary city wish more would,truth is 20%-30% of current inver homes sales sell before even gettng advertised ,I myself would love to buy another property here prime redevelopment but after 1 week of listing the homes already got an offer.
Pretty sure your find Southland has the highest GDP per pop. in the country.
-Great Southern Basin has certainly been the driver of some off the investors buying up inver's property-(from what I've read the GSB could well be the Worlds next North sea type discoverey)LMP also on a smaller scale.the high yeilds,cheapest house§ion prices of any of the major NZ centres,think Inver,s is the 6th largest centre here.
-As for population decline the way Major Property investors are building new homes here theirs more likely going to be an increased I'd say(Know of one Auckland developer building 140 new 4brm houses over the next couple yrs)
-As for selling my sections ;)turned down the offer even though the agent reakon he could get more

-reasons
-accountant said it would taint my personal housing asset as it's through my rental LAQC
as planned to build rentals on them
-bank pays for interest I get 3-4,000 tax rebate each yr
-they just went up 100% this last yr I'm confident they'll keep going up there just is so few sections left.

JBmurc
30-05-2007, 08:02 PM
Unless I build on them or put transportable homes onto them so to generate an rental income
then say in 3-5yrs once the CapGrowth of the property have sky rocketed on the back of a massive 8 TCF offshore GSB GAS:D find I decide to sell because of the Tax paid yeilds not keeping up with cap growth I then sell for a Tax Free profit-Sounds good to me anyway.

moe
31-05-2007, 09:05 PM
I know of a number of properties in the South being sold by overseas owners taking advantage of the exchange rates and the high prices. They want out ASAP aswell and are pretty negotionable with prices.

Jess9
01-06-2007, 05:48 PM
Also Dom business section had a story about NB stating a big drop in business confidence, last two times the drop was of this magnitude it was noted it coincided with mini recession, and from memory the start of property slumps.

JBmurc
07-06-2007, 02:32 PM
-so we now have 10%+ floating rates [:0] this has got to hurt checkout the average NZ'er wage compared to the new average house price's ,The Pain's n Coming for all you high geared owners & spec builders([:p]Not me anymore)

-What to lose some serious $$$$$$$$$$$$$$$$$$$$$$$$ come buy a couple
$$700,000+ 2-3brm apartments yeilding 4%-5%max here in Queenstown
With some high apartments sales here over the last couple yrs developers have gone completely nuts building & planning thousands more for even lower yeilds[xx(] even though some of the previous apartments haven't sold sometimes over 50% still for sale
-The pain's n coming also for the big boys ;)

tricha
08-06-2007, 12:52 AM
Final bullet into a dropping property bull?

Yep, it has happened, they fired the ending bullet.

I can not understand it, sounds like the labour party are out to lose.

Immigration falling, this will plument it surely.

Housing will now plumment, thousands upon thousands of Young Kiwi's will be booked onto a plane to OZ.

Why, income, govt support, lower interest rates and juicy tax cut,its a no brainer.
Example come 1st July OZ tax on $6,000 nil, tax on the rest up to $30,000 something like 12%

The NZ Govt has a screw loose!

Hommel
08-06-2007, 04:04 AM
I fear that the way Bollard has played it - that is put up interest rates a couple of years too late - will now end up resulting in the feared "hard landing" scenario due to the huge increase in consumer debt over the last few years. I can see housing dropping at least 15% at some stage which will put many of those who have to sell "upside down" on their mortgages. The effect of this will ripple through the whole economy. I hope I am wrong about this....

Halebop
08-06-2007, 08:18 AM
quote:Originally posted by tricha

Final bullet into a dropping property bull?

Yep, it has happened, they fired the ending bullet.

I can not understand it, sounds like the labour party are out to lose.

Immigration falling, this will plument it surely.

Housing will now plumment, thousands upon thousands of Young Kiwi's will be booked onto a plane to OZ.

Why, income, govt support, lower interest rates and juicy tax cut,its a no brainer.
Example come 1st July OZ tax on $6,000 nil, tax on the rest up to $30,000 something like 12%

The NZ Govt has a screw loose!

Think your confusing the labour government with the Reserve Bank, who have a mandate under the reserve bank act to ignore political considerations when governing monetary policy. Tax cuts would put upwards pressure on interest rates, not the other way around.

RBNZ tried to talk the market out of its speculative exuberance for 3+ years with absolutely no success. With that strategy failing, the only way to correct the situation (in the RBNZ ****nal) is a quick succession of interest rate rises to remind punters of concepts like cost of capital and sustainability.

The worst element is not the housing market. Housing (as housing, rather than an investment) is over valued and the cost of housing (billions of dollars in interest payments and bank profits to mostly foreign investors) don't add much value to the economy, despite evidence to the contrary like shiny Audis, VW Bettles and Mini Coopers scooting around town. The real cost is to the more productive sectors like agriculture, tourism and exporting thanks to a higher dollar. I think it's time to develop tools that target specific areas of concern:

Exchange Rate (Interest Rates?)

Domestic Consumption (Floating GST Rates? Sales / Luxury Taxes? Income Tax Rates?)

Housing (Interest Rate Levies? Review tax advantages for investors? Land Tax? Capital Gains Tax? Land Supply? RMA?)

Investment (R&D / Innovation? Accelerated Depreciation? Capital Gains Tax? Tax Shelters? Corporate Tax Rates?)

JBmurc
08-06-2007, 10:10 AM
I'm certainly no expert analysts but from what I've seen over the last 3yrs the whole time the Reserve Bank being saying Save Save stop spending.
all the major banks have been screaming buy buy just the other day ANZ credit cards sent me a form to take all my credit dept on any other cards to them up to a max of 80% of the limit ($12,000) for the killer 6.9% interest rate for 6months [?] Or go to any Harvey Norman store No deposit No interest Pay nothing for 36 months

-As for the housing market it's been out of control for the last 5yrs+ if the government had brought in a Cap-Gain Tax on any short term sales say 5yrs with some exceptions I believe we'd been better off.

-I remember here in Queenstown couple yrs back there was a article in the local paper about a Yank that made over million tax free dollars in buying then reselling a section of land in under year
Never lived here ,I'm sure their's been hundred of these

Halebop
08-06-2007, 11:35 AM
Gotta love how the mighty RBNZ pokes global bond markets in the eye too.

Hommel
08-06-2007, 12:01 PM
Capital gains taxes and stamp duty on houses overseas has not stopped them having a huge property boom. I think the government should stop allowing "losses" on rental properties to be offset against other income - eg. salaries.

JBmurc
08-06-2007, 02:03 PM
quote:Originally posted by Hommel

Capital gains taxes and stamp duty on houses overseas has not stopped them having a huge property boom. I think the government should stop allowing "losses" on rental properties to be offset against other income - eg. salaries.


-That law would certainly make me sell them sections quick[:0]

Bel
08-06-2007, 03:26 PM
They did that in the US in 1986 which caused a massive plung in property prices.

cantab
08-06-2007, 03:28 PM
quote:Originally posted by Hommel

Capital gains taxes and stamp duty on houses overseas has not stopped them having a huge property boom. I think the government should stop allowing "losses" on rental properties to be offset against other income - eg. salaries.


Good idea Hommel, they did just that some years back in Aust, investors dumped their properties and rents rose.

cantab
08-06-2007, 04:04 PM
When Governments have a go at greedy landlords often it has the opposite affect. An example was when the government switched from market to income related rents. At the time the thinking was that this would cause private sector rentals to fall (claps and cheers)but the opposite actually occured. That was because there was no longer a need for 20 people to cram into a single state house. Everyone could now afford their own statehouse. Also the people with the state house no longer needed all the hanger-ons to help out with the rent because the rent was now very affordable. The consequence was that a lot of people got told to bugger off and had to rent from private sector landlords. Yep you guessed it, rents went up and we had to build more state houses.

The gummit is always coming up with good ideas.

Halebop
08-06-2007, 04:11 PM
But Cantab it's interesting that arguments against tax subsidies on real estate trading losses indicate property values would drop and rents would rise (including your own). Surely this is market forces at work rather than "gummit" intervention? In other other commodity markets, prices (in this case rental yields) have to rise in order to stimulate supply. Why should this be different? With higher cash rates of return (rising rents & falling values) the argument for both property investment and owner-occupancy is clearer. Subdued rents and rising values does not send the right signal and instead smacks of speculation and tax driven investment rather than good business.

Year of the Tiger
08-06-2007, 07:42 PM
I've been thinking that if the Housing Boom is about to go 'pop', and Investors start to sell off some of their rentals due to high mortgage interest rates, then surely there will be a bit of spare cash around looking for a home.

Does anyone have any thoughts on where investors might channel their funds and what effect it will have on other investment options, e.g sharemarket??

YOTT

Jess9
08-06-2007, 10:15 PM
You assume that such houses sold are not 90+ financed, if these sell into falling prices (or are pushed by lenders) the investor won't keep very much at all (may even be sued by bank for any remaining debt)! Investors with high equity however, may simply choose to ride out the slump - as they can.

Hommel
09-06-2007, 03:32 AM
I think Jess is correct. Most rentals bought in the last few years are probably at least 90% financed. If the market drops even a small amount people will owe more than they own after a sale.

tricha
24-06-2007, 01:58 PM
Anyone buying rental properties [?][?][?]

I'd say if anything the last two interest rate rises will have been the final bullets.

Lets say 9% average new mortgage.

Borrow $100,000 = $180 a week.
$200,000 = $360 a week.
$300,000 = $540 a week

Plus costs rates,insurance and maintenance = $60 a week

So I borrowed $200,000 for a $250,000 house, I do not think I would get anything near $420 a week to cover costs. Ouch!

To top it off if Govt put in a capital gains tax or take away the tax loss rebate, Ouch!, Ouch!, Ouch!

Not that there will be a capital gain for a while anyway, more likely a 10% capital loss coming.[xx(]

Sideshow Bob
24-06-2007, 08:12 PM
Interesting how when the talk this week about the removal off tax advantages for rental owners, it was all talk about rents going up, to cover this shortfall.

I would have thought that there would be little movement in rents, and effect would be on house prices. If rents could go up, sure the majority of landlords would have gone there already.

peat
25-06-2007, 02:29 PM
yes that article in the Herald about that poor landlady with a 500k fixed mortgage to renew didnt seem to question how rents could go up if landlords become squeezed. Why would they not be charging what the market can bear already.

Everyone seems to think that price determines yield but its the other way round surely.

Rents will not go up to match the OCR, this is the risk phase of being a landlord starting to appear now.

Sideshow Bob
25-06-2007, 06:20 PM
quote:Originally posted by peat



Everyone seems to think that price determines yield but its the other way round surely.



Just have took around scarfie-ville here in Dunners. Houses are sold on the basis of number of bedrooms x rent x 52 week lease. Little account of condition, land size etc - purely yield based.

tricha
08-07-2007, 02:50 PM
Anyone buying rental properties or any property [?][?][?]

I've noticed price drops, urgent sales, etc appear in advertisements.

So I take it the property market is screwed for a year or two.

nelehdine
09-07-2007, 09:49 AM
Iv'e bgt 6 rentals in the last eight weeks, 4 in Wanganui, 2 in Blenheim. Looking to add another 6 in the next 12 months. Will be patient and look to buy at 5-10% below asking price. TradeMe is great in that it tells you how long the property has been listed. Minimum rental yield I will accept is around 6% . Looking to hold for a minimum of 5 years to catch the next interest rate cycle, have fixed all mortgages for 2 years at 8.60% ... hopefully in two years time I will be looking at rates in the high 6's or low 7's ... rents will have increased 15-20% and the properties will be cashflow positive. I have plenty of other investments in shares, dairy farms, vineyards so these can just be sleepers for the time being.

PS: All properties rented within days of advertising in local papers , heaps of enquiries and rents some 20-25% higher than local agents rental appraisals.

trackers
09-07-2007, 02:05 PM
quote:Originally posted by tricha

Anyone buying rental properties or any property [?][?][?]

I've noticed price drops, urgent sales, etc appear in advertisements.

So I take it the property market is screwed for a year or two.




Housing market powers on
5:00AM Monday July 09, 2007
By Martha McKenzie-Minifie


New housing figures show interest rates hikes have done little to slow the property boom, with the average sale price in the Auckland region rising by more than $20,000 in the past two months.

Quotable Value statistics released last night showed average property values rose 12.2 per cent nationally over the past year to $378,672.

http://www.nzherald.co.nz/section/8/story.cfm?c_id=8&objectid=10450393

Dazza
09-07-2007, 10:01 PM
nel

blenhiem?

i believe we have spoken be4

u have lived in wanganui be4 so u know the area

but blenhiem?

u brought the houses without looking or?

nelehdine
10-07-2007, 11:55 AM
I live 8km out of Blenheim , surrounded by vineyards with the best climate in NZ ... not a bad life !!

CJ
10-07-2007, 07:00 PM
quote:Originally posted by nelehdine

Iv'e bgt 6 rentals in the last eight weeks, 4 in Wanganui, 2 in Blenheim. Looking to add another 6 in the next 12 months. Will be patient and look to buy at 5-10% below asking price. TradeMe is great in that it tells you how long the property has been listed. Minimum rental yield I will accept is around 6% . Looking to hold for a minimum of 5 years to catch the next interest rate cycle, have fixed all mortgages for 2 years at 8.60%

These properties are obviously cashflow negative. Are you using the losses to offset other profits. If so, how would ring fencing of property losses affect you?

Do you think house prices will go down? If so, why dont you wait to make purchases.

tricha
15-07-2007, 12:52 AM
Oh Nedehdine - "live 8km out of Blenheim , surrounded by vineyards with the best climate in NZ ... not a bad life !!"

Obviously u havn't heard or been to Mapua [:p]

Amazing what another day can bring trackers ;)

NZ house prices fall - REINZ
5:05PM Wednesday July 11, 2007


Real Estate
'Tale of two markets' confusing property buffs
House sales start slowing as interest rates kick in
The national median house price dropped by at least $2500 in June, according to latest figures from the Real Estate Institute.


The drop follows an increase of $45,000 over the last year.

The national median price dropped from $350,000 in May to $347,500 in June, the figures show.

Real Estate Institute president Murray Cleland said the residential market had "cooled its heels".

Mr Cleland put the fall down to cold weather and high interest rates.

He said he believed Reserve Bank governor Allan Bollard would be happy with the figures but that they were unlikely to change the Official Cash Rate.

"We're in a period of wait and see," Mr Cleland said.

He said it was normal for a drop off to occur over the winter months.

The institute has tightened its reporting deadlines for collecting sales figures and Mr Cleland said this may have affected the number of sales by up to 8 per cent, or 600 sales.

But Mr Cleland it had not affected the median prices and there was no doubt the market was pulling back.


Advertisement
AdvertisementThe institute's figures differ from those of Quotable Value, which put the national median price at $378,672 in June.

But Mr Cleland said the institute's figures were based on unconditional sales, whereas other figures were based on property settlements, effectively making them six weeks out of date.

There had been falls across seven of the 12 national regions surveyed, he said.

It is not known if the new figures are likely to have an impact on interest rates.

A Reserve Bank spokeswoman said the bank did not comment "mid cycle".

She said the next Official Cash Rate would be reviewed on July 26.

Regional breakdown

Auckland Region: $450,000 in May down to 445,000 in June.
Metropolitan Auckland: $451,000 in May to 450,000 in June.
North Shore: $535,000 in May to 539,000 in June.
Auckland City: 492,000 in May to 495,000 in June.


The Regions, from May to June:
Northland: From $330,000, down to $315,000.
Waikato and the Bay of Plenty: Up from 315,000, to $325,000.
Hawkes Bay: Down from $277,000, to $268,100
Manawatu and Wanganui: Up from 222,000, to $248,000
Taranaki: Down from $281,000, to $265,000
Wellington: From $385,000, to $375,000
Nelson and Marlborough: Up from $328,000 to $335,000
Christchurch steady at $330,000
Otago: Down from $240,000, to $230,000
Southland: Up from $177,000, to $177,750.

nelehdine
16-07-2007, 09:55 AM
We visit Nelson quite often in the summer , easy to have a day out at Rabbit Island with lunch at the cafe on Mapua Wharf ... v nice.

tricha
19-07-2007, 12:26 AM
We might just catch up with u there one day [8D]

Sideshow Bob
19-07-2007, 09:01 PM
Hmmmmm.......


Homes now more out of reach
NZPA | Thursday, 19 July 2007

Rising interest rates mean the more than 80 per cent of the average pay cheque is needed to pay a mortgage on an average house.


Interest.co.nz's home loan affordability index worsened in June to 81.2 per cent of pay needed to repay a standard mortgage, up from 79.4 per cent in May and well above the 68.2 per cent of income a year earlier.

Five years ago, it took 45.3 per cent of take-home pay for a weekly mortgage payment on a median house.

While weekly pay rose $28.79 in the past year, that has failed to match the rise in weekly mortgage payments for a median-priced house of $107.12, publisher David Chaston said.

Benchmark interest rates for a two-year fixed mortgage rose 31 basis points over the month to 9.22 per cent in June, as the latest Reserve Bank Official Cash Rate rise to 8.00 per cent took effect.

Most economists polled by Reuters expect the Reserve Bank to raise rates next week for a fourth consecutive time, to 8.25 per cent, as it tries to dampen inflation pressures, particularly in the housing market.

Median house prices fell 0.7 per cent to $347,500 in June, but were up 12 per cent on a year earlier.

The most affordable region was Southland at 43.4 per cent of the average pay, against the benchmark for affordability of 40 per cent. Auckland was the most unaffordable region at 104.1 per cent of income.

An average buyer would need to allocate 9.9 years of their current annual income to afford a median-priced house, up from 9.3 years in June 2006, Mr Chaston said.

"We seem stuck with an affordability crisis for a very long time unless major public policy changes are made," he said.

"Urgent actions attacking housing supply inhibitors and new-build rates are required."

The index was based on individual pay, but the reality was that most buyers relied on more than one income to buy a mortgage, Mr Chaston said. It assumed a 20 per cent deposit.

Arbitrage
24-07-2007, 01:37 PM
If it is an "affordability crisis" and he recommends public policy intervention, he could also consider letting the market do the work. Especially if no one can afford property then the price must fall as demand drops.

Arbitrage
26-07-2007, 12:27 PM
Dollar down tho, at least at the moment!!

Stranger_Danger
30-07-2007, 02:51 AM
From http://www.stuff.co.nz/4145122a13.html

Such arguments don't wash with property's believers. "I don't care what the economists say," says Trass. "House values will double in the next 10 years. There's no way they can't double. Ten years ago you could buy a villa in Mt Eden (Auckland) for $300,000. Today, what can you buy there for $600,000?"

I honestly don't know where to start with that statement.

*shakes head*

Such predictions seem to assume that the future price of houses is completely unrelated to incomes.

If the same person said

"10 years ago the average person was making $15 an hour. Today they're making $30 an hour. In 10 years, they'll definitely be making $60 an hour"

then that is a different story (and not as pleasant a story as it seems on the surface, by the way!!). But no one is saying that.

Also, to "project out" the gains we've had over the last 10 years to the next 10, you have to "project out" an increase in the appetite for financing risk. What is next, sub-sub-sub prime? 150% mortgages?

Hommel
30-07-2007, 07:14 AM
So much of the property boom in the last few years has been driven not by increases in wealth or incomes but by debt. Surely, once most people are mortgaged to the eyeballs with 90-110% mortgages then the ability to borrow more is limited. Thus one of the key drivers of the boom, higher and higher debt, is removed. If wages and rents were increasing at the same rate as house prices then that may be sustainable but they are simply not.

srotherh
05-08-2007, 05:03 PM
An article published today


Sunday August 5, 03:42 PM
Mortgage stress mushrooms
New research by economist Brian Easton shows half a million New Zealanders are now living in mortgage stress, spending more than 40c in every after-tax dollar their households earn on the mortgage.

"There has been a sharp rise in households under financial pressure because of their burgeoning mortgage bills," Dr Easton told the Sunday Star-Times.

Overall, 175,000 households, or 11.2 percent of all households, are in mortgage stress, in figures to June 2007.

The figures, compiled for the newspaper, represent a large swath of the mortgage-belt, as only about 30 percent of all households have a mortgage.

In 2004 just 3.7 percent of all households were in the mortgage stress zone.

Dr Easton said while for some households heavy mortgage repayments were a deliberate part of their life financial plan, for others it was a huge strain and left little in their budget for anything else.

Last week the international credit ratings agency, Fitch Ratings, ranked New Zealand as the world's riskiest housing market, with our prices among the world's most over valued.

In a survey of 16 developed nations, Fitch also ranked New Zealand households second only to Denmark for their debt vulnerability. With its high interest rates, New Zealand also had the worst interest to income ratios in the survey.


Dont sound that hot

Are we following the americans

Stranger_Danger
06-08-2007, 04:31 PM
There are going to be a lot of grumpy people around in the next few years. I'm seeing it already in a number of different ways.

I honestly believe many people have led themselves to believe that getting paid is unrelated to output, that reward is related to risk and that debt is something that actually has to be paid back.

MrDevine
08-08-2007, 07:24 PM
From Bloomberg:

U.K.'s Subprime Crisis May Be Worse Than U.S.'s: Matthew Lynn
By Matthew Lynn

Aug. 8 (Bloomberg) -- We are now all familiar with the damage that can be done to financial markets by a subprime lending crisis. Global equity markets have taken a battering recently because of concerns about U.S. home mortgages.

So which country is next?

The U.K. has had a property bubble every bit as crazy as the U.S.'s. Valuations were stretched, and lending criteria loosened. And now arrears are starting to rocket, even while the economy remains healthy.

Not only does the U.K. face its own subprime crisis, it could be far worse than in the U.S.

The latest figures on debts and mortgage arrears in the U.K. certainly make grim reading. Households ``are getting into more trouble when it comes to their mortgages,'' London-based consulting firm Capital Economics Ltd. said in a note to investors. ``With higher interest rates yet to have their full effect, mortgage arrears are likely to rise further, while unsecured bad debt might start to rise again too.''

The signs of trouble ahead can be seen in the number of homes now being repossessed because their owners can't keep up the payments. According to the Council of Mortgage Lenders, lenders foreclosed on 14,000 properties in the first six months of the year, 30 percent more than in the year-earlier period. That reflected ``the impact of an increasing amount of subprime lending within the overall market,'' the council said in a statement on the figures.

Britons in Debt

Arrears aren't in great shape either. An estimated 125,100 households are behind with their mortgage payments, about 1 percent of the total, according to the council. Home owners behind with the payments will have their homes repossessed a few months down the line, unless their finances improve.

The wider picture of indebtedness isn't much more comforting. The British are deeper in the red than any other major economy. According to data from the National Institute of Economic and Social Research in London, the ratio of household debt to personal income is 1.62 in the U.K., compared with 1.42 in the U.S., 1.36 in Japan and 1.09 in Germany.

The U.K. is now facing a subprime crisis on a similar scale to the U.S. As anyone who has taken out a mortgage in Britain will know, banks shovel out money without asking many questions. A review by the U.K.'s Financial Services Authority last month criticized reckless lending in the subprime sector, which has, it said, ``resulted in the approval of potentially unaffordable mortgages.''

No Proof of Income

The British market doesn't fall neatly into ``prime'' and ``subprime'' categories. Most of the mainstream lenders offer so- called self-certified mortgages, which require no proof of income. Plenty of prime borrowers -- meaning people who haven't defaulted on a loan yet -- are likely to take out mortgages that will be hard to make the payments on.

The U.K. subprime crisis may be a lot nastier than the U.S one. Here's why.

First, despite the mounting evidence that people can't afford them, house prices continue to soar. The National Housing Federation predicted this week that British house prices will rise 40 percent in the next five years, taking the average value of a home to 302,400 pounds ($618,000) by 2012.

The average British home already costs 11 times the average local salary, and that figure continues to increase. It is driven mainly by the U.K.'s small geographic size, high levels of immigration, and very low levels of house building. People have to live somewhere -- a home, after all, isn't an optional item for most of us.

The net result is that even as payment problems mount, people will carry on taking out bigger mortgages. What choice do they have?

Rate Differences

Next, U.S. interest rates may have reached their peak and could soon fall. In the U.K., that isn't the case. The Bank of England is likely to raise borrowing costs at least once more to 6 percent. If the housing market and general inflation don't show any sign of responding to that treatment, interest rates could go higher still. That won't help borrowers already hard-pressed to make their payments.

There should be two self-correcting mechanisms for fixing a subprime crisis in the housing market. House prices should gently fall, making properties more affordable, and reducing the size of loans. And interest rates should stabilize or fall, making the payments on those loans easier to maintain.

Neither seems to apply in the U.K.

Instead, interest rates are rising and so are house prices. The result is that thousands of families are left in a vulnerable position -- and so are the banks that have lent them money (not to mention the investors who have bought those loans as they have been sold on).

Just Walk Away

While the property market rises, everyone will be safe. If your house is worth more than your mortgage, you will be desperate to hold on to it. If you get into trouble, you can always sell it, repay the loan, and move somewhere cheaper.

Yet, as the U.S. has discovered, if house prices start to fall, that arithmetic changes. If you are in trouble with your mortgage, you can't pay it off by selling. There is little incentive to keep up the payments. Why not just walk away, and hand the keys and the problems over to the mortgage company?

Britain hasn't reached that point yet. But if it does, the mess could be even worse than in the U.S.

To contact the writer of this column: Matthew Lynn in London at matthewlynn@bloomberg.net .

Last Updated: August 7, 2007 19:17 EDT

tricha
11-08-2007, 02:17 AM
Siping lattes will not solve the problem.

Australia is truely the lucky country :D

Any Kiwi with half a brain will be here:D:D:D

Halebop
11-08-2007, 07:49 AM
Siping lattes will not solve the problem.

Australia is truely the lucky country :D

Any Kiwi with half a brain will be here:D:D:D

You can have the Kiwis with half brains! :p

This Kiwi with a whole brain stays at home and lets his money do the roaming.

POSSUM THE CAT
11-08-2007, 10:50 AM
tricha as you say every Kiwi that emigrates to Australia raises the average IQ of both countries

tricha
13-08-2007, 01:44 AM
tricha as you say every Kiwi that emigrates to Australia raises the average IQ of both countries

Hmm :rolleyes: , I think Sir Robert Muldoon wrote that one.

Snapper
13-08-2007, 10:09 AM
Hmm :rolleyes: , I think Sir Robert Muldoon wrote that one.

Muldoon often gets that quote attributed to him. If I recall correctly, Tom Scott wrote that in the Listener a few weeks before Muldoon used it in Parliament. Ironic really, considering all the grief he got from Muldoon (and vice versa).

tricha
20-08-2007, 01:36 AM
NZ well on the way for a fall of 10% (in the cities) says Brash


Make it 20% if the NZ dollar goes any lower compared to the OZ.

Kiwi's will be leaving in their droves to earn a decent living and maybe come back one day.

Australia are living on the back of the biggest commodity boom in history.

JBmurc
20-08-2007, 08:15 AM
IMHO in 5-10 yrs NZ will be world known for it massive offshore Oil&Gas feilds Exxonmobil and others don't plan on spending 1bill+ here if there wasn't this will drive are $$$$ very high.(Nz diary Farming Vs the drought stricting Aussie farmer)
Working in the export sector to Aus markets I like certainly don't mind the NZD falling and in some ways would like to see us pegged to the AUD at .85c-.90c as in my view in the longer term we could well have a stronger currency than the aussies (water is mans most needed resource, many aussies already drink there own waste converted water)

tricha
24-08-2007, 01:43 AM
IMHO in 5-10 yrs NZ will be world known for it massive offshore Oil&Gas feilds Exxonmobil and others don't plan on spending 1bill+ here if there wasn't this will drive are $$$$ very high.(Nz diary Farming Vs the drought stricting Aussie farmer)
Working in the export sector to Aus markets I like certainly don't mind the NZD falling and in some ways would like to see us pegged to the AUD at .85c-.90c as in my view in the longer term we could well have a stronger currency than the aussies (water is mans most needed resource, many aussies already drink there own waste converted water)

U R onto it JBmurc, long term NZ will blow the OZ out of the water :p, short term next 10 years this mining boom will blow NZ out of the water.:(

Hence lots of kiwi's living over here making megabucks:D Might be able to afford a section or 2 off u.

P.S a hint for u JB - Exonmobil are drilling soon in the Bonaparte Gulf for 200 million barrels of oil, the ex penny dreadful, DrillSearch get 35% of the booty.

JBmurc
24-08-2007, 09:43 AM
U R onto it JBmurc, long term NZ will blow the OZ out of the water :p, short term next 10 years this mining boom will blow NZ out of the water.:(

Hence lots of kiwi's living over here making megabucks:D Might be able to afford a section or 2 off u.

P.S a hint for u JB - Exonmobil are drilling soon in the Bonaparte Gulf for 200 million barrels of oil, the ex penny dreadful, DrillSearch get 35% of the booty.

-Yeah to right Tricha have to look into- Drillsearch I think they have interest's in BUY who use to have interest in the GSB
As for my sections I've current got them for sale if ya want the lot a cheap $295,000 planning on investing more into the ASX in the short term

tricha
09-09-2007, 11:47 PM
Everyone gone to sleep on this one ?????????????

Whats the verdict on the NZ property market, Good :D, Bad:mad: or plain old Ugly:eek:

:confused::confused::confused::confused::confused:

The Doctor
10-09-2007, 09:27 AM
looks like prices are holding up...less activity though ,longer time to sell.Another 6-12 mths will tell the story as people deal with higher fixed rates and probably more stringent lending criteria.

AMR
10-09-2007, 09:30 AM
Does anyone have opinions on those central city apartments discussed in the Herald today? The contrarian in me is thinking now is a good time to buy. The technician inside is saying wait until the downtrend ends.

Tok3n
10-09-2007, 09:58 AM
NZ housing market looks so bullet proof.

minimoke
10-09-2007, 10:03 AM
From todays news

"Rising interest rates, slowing migration and a volatile currency are having no impact on property values.

The latest statistics from Quotable Value show property prices rose 13.3 percent to the end of August.

QV spokesman Blue Hancock says the market has picked up from a 12.7 percent increase in July, but some of that could be due to fixed term interest rates that are yet to roll over."

Locally our Realtor magazine is a bit thiner than it might have been - but this tends to happen over winter. Its getting harder to find a house for less than $250,000 and houses at $1m still seem to be turning over.

Employment is still secure, we're about to head into an election year in which the Govt will hand out more cash goodies to Citizens, another increase in intersts rates, dollar has fallen, collapse of finance companies seeing funds funds move back into banks and bricks and mortar. I'd say the imediate future still looks like growth - with a few more mortgageee sales coming up as interst rates do bite those who have over extended.

tricha
11-09-2007, 12:15 AM
Thanks for that Minimoke

I would have thought we would have been following the lines of the US,
especially with all the finance companies crashing.

Jess9
11-09-2007, 08:36 PM
From todays news

"Rising interest rates, slowing migration and a volatile currency are having no impact on property values.

The latest statistics from Quotable Value show property prices rose 13.3 percent to the end of August.

QV spokesman Blue Hancock says the market has picked up from a 12.7 percent increase in July, but some of that could be due to fixed term interest rates that are yet to roll over."

Locally our Realtor magazine is a bit thiner than it might have been - but this tends to happen over winter. Its getting harder to find a house for less than $250,000 and houses at $1m still seem to be turning over.

Employment is still secure, we're about to head into an election year in which the Govt will hand out more cash goodies to Citizens, another increase in intersts rates, dollar has fallen, collapse of finance companies seeing funds funds move back into banks and bricks and mortar. I'd say the imediate future still looks like growth - with a few more mortgageee sales coming up as interst rates do bite those who have over extended.

Agree, but its not far to go now. I

would say time to assess portfolio's to ensure a strong balance sheet (or sell one), before the slump bites!

lets say a newish investor has say 3 or 4 properties (all purchased in the last say two years). Chances are the portfolio is overall negatively geared (i.e. no cashflow) and has low equity. Rents lthen evel off (or decrease), interest rates stay at present levels or rise a basis point or two, credit criteria next tightens (as second tier finance collapses trigger main banks to re-assess proprty lending risk)..and then that nice friendly bank asks for a cash payment to reduce its exposure.

Be a bugger if there was no spare cash, so required to sell a property, only to find the market has fallen 10%+. The portfolio may then resemble a crumbling house of cards, as sale on sale is triggered i.e.selling one may not meet the banks call, and so on. 3-4 years aggressive investing may unwind unpleasantly and quickly.

As others would be in the same position the laws on price (supply and demand will prevail)...so review your balance sheet, while there is time : )

ynot
17-09-2007, 08:28 PM
Hi JB and others on this thread. I notice JB you have an interest in Invercargill / Bluff property.
I am also interested in the real estate market down there, just how significant is the oil exploration regards property values? Is the market still humming along or have things slowed down?

The Great Gold Guru
18-09-2007, 09:37 AM
I bought another rental in Maori Hill, Dunedin last Friday. Agent had 80 people thru 4 open homes on the property. She said demand was still strong but most buyers needed to sell prior to trading up. I viewed it over the internet ( open 2 view is a great tool !! ) and will hold it long term. Agent said there will be no shortage of people to rent it ... probably around $350/week. ANZ 2yr fixed at 8.99% to pay for it. Well located property will always be a good long term investment.

1. Buy some Gold / Gold stocks
2. Buy some dairy farms
3. Buy well located residential property
4. Buy commercial property in Auckland or Wellington
5. Be happy, enjoy life .... this isn't a practice run !!

Jess9
18-09-2007, 11:48 AM
Received a group email from Kieran Trass last night about his new service - analysing investor property portfolios - as we enter the property slump. While the wheel turns slowly it is indeed turning...

Arbitrage
18-09-2007, 12:30 PM
[QUOTE=The Great Gold Guru;165227]I bought another rental in Maori Hill, Dunedin last Friday. Agent had 80 people thru 4 open homes on the property. She said demand was still strong but most buyers needed to sell prior to trading up. I viewed it over the internet ( open 2 view is a great tool !! ) and will hold it long term. Agent said there will be no shortage of people to rent it ... probably around $350/week. ANZ 2yr fixed at 8.99% to pay for it. Well located property will always be a good long term investment.

What level of yield do you expect from your Dunedin rentals?

Dr_Who
18-09-2007, 04:32 PM
I've cashed up my property portfolio last year. This market makes me nervous as hell. Good luck to those that still hold a large chunk of properties.

The Great Gold Guru
18-09-2007, 08:35 PM
6% in Dunedin .....

Arbitrage
20-09-2007, 07:38 AM
That is lower than I would have expected. Perhaps it is a result of rises in values over the past few years, as Dunedin used to be attractive for its higher yields. Rent yields in city fringe Auckland are hovering just below 5% so the differential doesn't seem that different as it has been in the past.

Interesting article on the state of the central Auckland apartment market:
http://www.nzherald.co.nz/section/3/story.cfm?c_id=3&objectid=10464754

The Great Gold Guru
20-09-2007, 09:25 AM
It's a nice 3 bed villa , will only rent to a couple/family ... if you're into the student rental market where rooms are rented out individually I am sure yields are up in the 7-8% area.

Arbitrage
20-09-2007, 02:13 PM
That is what I was wondering as the higher yield need to allow for higher vacancy rates in the student game.

Still, I am surprised that the yield is only around 6%. However there tends to be an inverse relationship between yield and quality so you must have picked a nice investment in a good spot. Well done. What are your thoughts on rents in Dunedin in the near future? Is there much upward pressure?

My tenancies in Auckland have been stable for awhile which usually means it is too expensive for tenants to move. Location has a huge influence especially in the lower quality inner city apartments. Watching with interest as a mate rents out a villa in the next few weeks to get a feel for rental direction. We are due for an upsurge in rents due to high property prices. Sydney and other major oz cities have already followed that pattern.

Jess9
20-09-2007, 07:38 PM
It takes more than expensive house prices to increase rents. Renters also need to be able to afford to pay, and of co**** the balance between available supply and demand is also another "main" factor. I hope they do increase, then (investment) affordability will improve also.

The Great Gold Guru
22-09-2007, 08:19 PM
Four phone calls today from my $12.85 ad in the ODT. My new purchase ( settles on Mon. ) 3 bed villa in Maori Hill let to second caller who with her husband and two children have moved recently from Nelson. Plan on staying in Dunedin until youngest girl ( currently 9Yrs ) finishes at secondary school. Fell in love with the property as soon as they saw it, current owner very kindly showed them thru and they offered me a two year tennancy and $15/week more than asking rent to secure it there and then. No agents involved, total marketing costs for me $12.85 and a great tenant for the next 24mths min at $365/week. Sweet !!

Arbitrage
23-09-2007, 03:18 PM
Maori Hill is a nice spot. Not surprising you got a good tenant. Sounds like a bit of upward pressure on rents too.
As for marketing, I find it is a 50:50 split between Trademe and the newspaper in terms of getting responses. However the advantage of Trademe is being able to put photos of the property plus a greater description of its features for a lot less money. This usually reduces the number of prospective tenants being shown through and sometimes results in possible tenants agreeing to take places without even visiting!!
Congratulations.

JBmurc
29-09-2007, 09:42 AM
looks like I have a buyer for my sections 295,000 by the end of oct.
Where the funds will go-
Property-have my eye on another couple decent sections down south will not be spending much %70-%80 funds will stay in cash or good NZ shares(not into ASX- NZD to weak)
-like-
#1-NZO -great growth story unfolding here-maybe a .20% share


-Not overally keen at all to take on dept into NZ property, currently find prices even in Invercargill getting abit over the top driven by speculation of Oil boom which is still too many yrs away ,with the negative facts of the weak rental market there currently really making the 6-7%yeilds IF rented not to positive.

My #1 down south property bargins is ------Queenstown(were I'm based and have personal exp. in buying selling developing property)

I have seen prices stay steady and fall in some areas over the last 3yrs and now with 1000's of apartments planned to be built into the soft market place there bound to be some pressure selling over the next couple yrs till the NZ rugby world cup which should help turn it round my pick is under further rate rises Qutown apartments will be as cheap to buy as townhouses in Invercargill are,and I know where I'd rather have a rental property

Arbitrage
30-09-2007, 01:07 PM
Todays news on section prices from the Sunday Star:

"Prices of sections and lifestyle blocks appear to be declining more quickly than house prices.


The median selling price of sections dropped from $180,000 in July to $150,000 in August, while the median lifestyle block price fell from $445,750 in July to $430,000 in August, according to the latest figures from the Real Estate Institute of NZ (REINZ).

That compares with the median dwelling price which bounced back up to $350,000 last month after several months of decline.

Significantly, some of the biggest price declines for sections and lifestyle blocks occurred in Auckland, Northland and Wellington, where demand for properties has previously been particularly strong and the market extremely buoyant.

REINZ rural property spokesman Peter McDonald said the lifestyle block market was largely driven by the residential property market, so any slowdown in house sales would flow into the lifestyle market.

Most people who bought lifestyle properties lived in urban areas and wanted a change of lifestyle by moving to the country, McDonald said.

"So their ability to buy (a lifestyle block) is affected by their ability to sell (their urban property)" he said.

"When you see what we've had over the last 12 months with interest rate rises every quarter and a lot of people now coming up for their two-year fixed rate mortgage rollovers, that puts a little bit of uncertainty and hesitancy there and you only need a wee ounce of that in the market to make people sit (in their existing properties) a bit longer. And that's what you are seeing at the moment."

This was reflected in the reduction in the number of lifestyle blocks sold from 1898 in July, about the same number as in the previous two years, to 1752 in August.

The biggest decline occured in the Auckland region, where lifestyle properties sold dropped from 361 in July to 309 in August.

Another sign that the market may be coming under a bit of stress, is the "mortgagee sale" signs which are starting to appear on lifestyle block and residential subdivision developments.

One of the largest of these is the third stage of St Clair Park Village subdivision at Te Atatu South in Auckland.

The development already has resource consent for 132 units and much of the preliminary site works have been completed and many of the lots have been presold.

But the developer, West Auckland Residential Developments Ltd, appears to have been caught by the collapse of the project's major funder, Bridgecorp. The development appears to have stalled when replacement funding for the project could not be arranged.

Another mortgagee sale which has been widely advertised is the last remaining lots of Tui Ridge, a small development of lifestyle blocks located about 15km from Cambridge. The two sites, on a 31ha block and the other a 7.66ha block, will be auctioned by Cambridge agents Ace Real Estate on October 12."

miner
23-10-2007, 09:23 AM
http://www.nytimes.com/2007/10/22/us/22auction.html?th&emc=th

bambi
23-10-2007, 09:09 PM
It's hard to know if the houses really are cheap in the article Miner posted.

Prices are much cheaper than they were previously valued at but they were probably valued at the height of the market. The current prices still may not be the bottom.

I personally liked this comment the best:
“The market’s really low right now, so you can get a good price,” said Lori Crook, a food server at Keys Cafe who said she was looking for a place she could fix up and sell. “Even if you can’t sell it right away, if you just sit on it and sit on it, it will go up.”

Really low compared to the peak but perhaps not low compared to where the market is going.

miner
23-10-2007, 11:25 PM
Yep no rush Bambi,only the first few domino's have fallen so far and they get faster as they go.

Cheers
Miner

shane_m
25-10-2007, 05:17 PM
I looked at prices in ellerslie definitely not cheap 500+ for a decent house.

The Doctor
25-10-2007, 08:04 PM
'BULL' is taking a long time to DROP!...still about 12/18mths away!

ari
05-11-2007, 04:15 PM
About to place one property (Northshore) with Agent after 157 days on Trademe and 3250 hits.
Was offered $725k 10mths ago....now that at 8% would have certainly covered any shortfall....bugger!