So I'd "save" 10% on the small portion of loan paid off but would continue to pay 10% on the remainder, all while the underlying asset fell by 15%? Not really a compelling equation.
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But its only a notional fall in value. The loss of value is only realised if you are forced to make a distressed sale. If your’ not selling you aren’t loosing any value. What I would suggest you are loosing though, is an ability to leverage your equity into other areas – but this is different from loosing value.
Halebop you've been quoting phrases since early 2005 like 'cash is the easiest option', I no longer have exposure to the sharemarket etc, perhaps coincidentally after the first correction of the 2003 - 07 bull market.
Yes cash is 'comfortable' for the moment but medium-long term it is a proven underperformer. It's where and when to put the cash into better performing investment classes that is the question. I agree with you it's definitely not property at the moment.
SEC
Here's a recent news item, question is whether they are just talking the market up or not?
"There aren't enough homes on the market to satisfy cashed up buyers, says one of the big Auckland real estate firms.
A "drought of properties" had been caused by cautious vendors adopting a "wait and see" attitude through the winter months.
The traditionally slow winter months had been made even worse by what Bayleys describes as a "lack of confidence in the housing market.
Median house prices fell by 2.15 per cent in June - from $345,000 in May to $340,000. That fall followed on from a 1.42 per cent drop the previous month.
Real Estate Institute of New Zealand national president Murray Cleland said in a release today that much of the drop in sales volume could be attributed to a severe
shortage of property 'stock' on the market - making buying choices markedly harder.
"It's certainly noticeable that there are considerably fewer 'for sale' signs up outside homes. That's a trend across New Zealand - from the larger cities through to
smaller towns." said Cleland.
Bayleys managing director Mike Bayley said many of his sales people had databases brimming with potential buyers who were struggling to find suitable properties.
"There's no shortage of buyers as far as we're concerned," said Bayley. "We have substantial numbers of buyers with money ready to get into the market, yet there
simply aren't the properties out there for them to choose from," he said.
"We're not talking about buyers without approved mortgage capabilities... these are astute home owners and investors who are highly liquid, have seen that the
market is close to bottoming out after a year of gradual declines, and are looking for somewhere to invest in now.
Bayley said the company's books were "full of these individuals" - inlcuding ex-pats who were returning home cashed up with British pounds or US dollars.
Other investors had sold out at the peak of the market and were now re-entering "at the other end of the scale". First home buyers watching "the affordability gap
close" were also in the market.
"Sales people are pulling out all the stops to encourage vendors to get into the market, but the winter malaise has set in. With the official cash rate dropping last week
and Reserve Bank governor Alan Bollard hinting at a second round of cuts in September, the conditions are certainly primed for our customary winter phase to end
in August rather than October," said Bayley."
You would have had to come down in the last rain shower to believe that desperate load of cr#p,what spin will they come up with next ???.
Cheers
Miner
LOL... those realty people make me laugh. What alot of crap!! They've been talking up the market and according to them the market have never dropped. It was the media that caused the property market to fall from the sky. Abit like the US blaming traders and OPEC for the oil price hike.
Time the realty firms get real and tell the truth. All the smoke screens and crying wolf can only last so long. No wonder realty agents are rated at the bottom of the most trusted list next to rats and snakes.
From a builders view on the market let me put you straight on a few points.
1, The cost of building is going up twice as fast as inflation due to new building specifications.
2, Nobody sells at a substantial loss unless it gets forced on them.
3, During a building slump new homes built wont keep up with demand.
4, If people find it cheaper to rent then shortage of stock leads up to higher rents plus higher house prices.
5, What happened over the last thirty years will almost certainly happen in the next thirty years with prices rents and inflation.
6, The people that delayed buying a house in the past all lived to regret, it some things never change. Macdunk
Hey McDunk, tell that to the American banks holding onto 5 years worth of foreclosure/mortgagee supply of properties no one wants.
I just know that the material input and the cost of compliance is streaking far higher than the inflation rate.
The people coming in later when the storm blows over are in for one huge shock. Its all happened in the past, only this time its different because of the leaky home problem.
I just bought a new house that if i worked for nothing i couldnt build it cheaper. I know what the building costs are, buy below that at any stage in the cycle, then sit back. A few little things to consider.
1, double glazing is an extra 50% which adds thousands coming in now.
2,compliance fees at least doubled in the last three years.
3, Builders gaurantees comes at extra cost.
4 Tradesmen fleeing the country in droves.
Any one foolish enough to think that after this downturn is the time to buy will miss out in a real big way as they have always done in the past.
The only difference in a down turn is you will find more bargains other than that its business as usual with the mugs missing out as they have always done. Macdunk
"I just bought a new house that if i worked for nothing i couldnt build it cheaper. I know what the building costs are"
Hi Duncan,
Question from someone looking to buy a house in the not too distant future.....what is the current rule of thumb as to the cost of building a house?... so that I have a rough idea if I am looking at something it is below replacement costs.
thanks in advance