Wheres all the doomsayers posters that predicted the property will drop 30-40% gone??
Still renting?
Printable View
Wheres all the doomsayers posters that predicted the property will drop 30-40% gone??
Still renting?
Depends where your looking,as have watched quiet a few drop 20-30 %,including one on the weekend that has just recently dropped in asking price by 25%,as for sections try a subdivision that started at 169k-187k(cheap compared to others) and are now down to 150k as only one has sold,each to there own.
Cheers
Miner
I'm not sure why that's good news. The average is up because lower priced stuff just isn't rating. Time on market for sections is a joke - don't believe what you read about that. There is a tendency for agents to fudge those figures by 'relisting' a section at a new price and forgetting about the two years it had been for sale before that - perhaps previously listed with the agent down the road. Fact is sections are cheaper now in many parts of NZ. Average up, median up, value down. Fools a few and the REINZ love quoting medians and values, but they never ever report values. Mind you value is what they quote when listing, pricing or persuading a buyer to accept an offer. They obtain it through a CMA or comparative market analysis. It's a rough method, but nearer the mark than meaningless medians or averages.
If you cant see that the Auckland property have turned you must be blind. I suggest you go visit your local optometrist.
Yep it's turned in Auckland...just sold house privately (with 2 buyers interested same weekend) after 2 years on trade me and over 6000 hits. Last 2 months have shown a definite increase in daily hits.
In todays news from QV:
"
Nationwide property values were up 0.7 per cent in July, and have now gained 1.3 per cent since hitting a low in April, Quotable Value says in its latest survey.
The national average sale price was up $4223 to $382,758 from June.
The market seems to have returned to some form of normality," QV valuations manager Glenda Whitehead said. "Buyers are making rational, carefully considered decisions based more on fact than emotion."
Don't fall into the trap of interpreting the average price increase as a value increase. For instance in my area averages and median are both up, but $400,000 will buy a very much better property than it would have around 18 months ago, so values are down. The same applies broadly across the price ranges. QV and the REINZ both use the misnomer 'value increase' to describe any numbers that show an increase. It's deceptive.
Also from the QV, supporting your take.
http://www.qv.co.nz/propertyinformat...et07082009.htm
Basically says that properties in the lower end of the market not selling and most sales in the mid/upper which is dragging up both medians and averages.
This supports your supposition FP. Interesting that most people are interpreting higher prices as a bad thing, yet evidence is pretty clear that a return to increasing house prices and higher debt levels on unproductive assets are definitely bad for an economy.
Any renewal of the property boom is likely to result in another recession before we have a chance to recover from this one.
I own 8 rental properties ... I aim to double that in the next 12 months ... houses are cheap , rental demand is increasing , enough said.
Raising finance will be the hard part ... finding great capital/rental growth property will be easy.
Current portfolio sits at 63% LVR and is cashflow positive by $1800pm ... equity and cashflow to burn !!
FGP, these figures have been used for years and years. They have been used during times of "value" increase, boom times, bad times and now. They have been used by Governement, treasury and the Reserve Bank for policy setting. What they do is show an overall trend.
To find the true value is proably impossible because there are too many variables in trying to make a comparrison. For example in my neighbour hood you'd need to find two properties with the same sq metres, same no of bedrooms, bathrooms, lounges etc, same size land, same suburb, same school zones, same proximity to desirable services, distance from undesireable things etc. One of these house has to have sold a year ago , the other today to make a comparrison. It can't be done - and if it is the data can't be used to establish a national trend.
Your point remains valid though but I'm not aware of any measure where someone goes out and says what, say $350,000 will buy me in July '08 and what $350,000 (inflation and whatever else adjusted) will buy me in 2009. Over the past year or so there have probably been too few listings to make any comparrison reliable.
Agreed, but after a large reduction in interest mortgage rates, new and tighter bank lending rules (particularly for first time buyers) and a general change in market sentiment, things change. The market has not moved in unison, and so there is the danger of interpreting a median rise as a rise in values. It's not always the case - and it certainly isn't currently.
Hey TGGG, have you had a look around Grey Lynn and Ponsonby? The properties around there are in great demand. Crazy buyers are paying a huge premium to the valuation and outbidding eachother. I ve been looking around that area wanting to load up some more investment properties, but found it getting abit too pricy for me, so best to stay buying around the bays area.
Already started my mushy friend.
http://apps.reinz.co.nz/reportingapp...rt&RFCODE=R100
I've had a brief look through my areas of interest, and yes...house prices have fallen in every single area that I've looked at.
- Ilam/Fendalton/Merivale
http://farm3.static.flickr.com/2629/...cbe6545e_o.jpg
-Inside the 4 avenues
http://farm4.static.flickr.com/3476/...d614f115_o.jpg
Will higher forward interest rates and threat of job losses keep pushing this market down??
Since this is the "good news" thread , in todays paper
"House prices in Christchurch could rise by nearly 14 per cent in a year and 25 per cent in three years, a new report says.
The report, by economic forecaster Infometrics for mortgage insurer QBE LMI, says lower interest rates, rising immigration and a shortage of new houses will boost the market.
It also expects prices to rise faster in Christchurch than in most other centres as the city had a larger price correction after the housing boom.
"People selling property in Christchurch appear to have been more willing to lower their asking price than in other regions," the report says.
Bank of New Zealand chief economist Tony Alexander said it was now reasonable to expect prices to rise.
"I think they [Infometrics] are on the right track. It pretty much tallies with what we see happening because of the housing shortage," he said.
Westpac chief economist Brendan O'Donovan expects price rises, although Infometrics' forecast of 25 per cent in three years could be "a stretch".
Upside - thats the same set of REINZ data I've been using in all these posts for ages - theres nothing new there.
Heres another way of looking at your Merivale / Fendalton / Ilam / Strowan data which is also an area of interst for me.
What we see here is the median "values" coming down off their highs and bottoming out around Jan / Feb this year. From there we have seen increases from a low of $425,000 to the latest value of $487,500.
Thats a $62,500 INCREASE or an INCREASE of 14.8%
Yeah, I saw that. I dont believe houses will fall much further/if at all. I may look to dip my toes in the market the end of this year/early next year.
Might even ask your opinion MM if you'll be happy to help...nothing like experience! You coming to the next ST meeting in early September?
Isnt this the new 'stratified' data sets? I've never noticed it before...
Theres nothing new about the data, no. Its just that its split up into suburbs, where you can get a suburb by surburb view of whats happening in the market. As you can see, from the peak, house prices have definitely fallen and are alot more than $5k below their peak on average. When using the data set as a whole, the figures are skewed as mushy has been saying all along. Agree?
Things do look to be flattening out/slightly up in last few months. But look at the big picture...nice trend has developed since peak.
The suburb data has been there for ages. I think what is new (but only because I haven't used it) is the 1 month, three month and 12 month medians. You can also use this data to find the averages in each suburb over time as well. Easier to export the data to excel and write a few formulas from there.
If we look at the trends we reached a peak in "values" around Nov '07 and those values then fell away. Well that was no surprise - values had to fall away at some stage. This was Bernard Hickeys "House values will fall 30%" era and it was all doom and gloom. Hence the reason for starting this thread - I reckoned it was never going to be as bad as the "pros" were making out and that we needed to be loking at the good stuff that was happening. What we can also see is a flattening off around the end of "08 begining of 09 and from there "values" have been increasing.
If we go back to Nov '07 we can probably carve off a few months data. Its probably fair to say the market overshot itself so the "highs" everyone refers to is probably an exagerated high - but still one that looked good in the media Everyone was going "oh, look at how much my house is worth now and I can borrow for the holiday home, rental preoperty and flat screen". They didn't realise that values do not go up all the time - they cycle up and down but the overall trend is up.
Nov 07 is not necessarily a good data anchor point though - which is why I've suggested we now anchor to Jan 09 figures as a starting point to measure growth - thats the good news perspective. And perhaps the start of a new cyclic wave.
But we shouldn't be expecting huge growth - thats unrealistic. And some people still seem to have unrealistic expectations. I wouldn't be paying, for example, $650k for a house on the old Sunnyside mental hospital site - but someone has high hopes!.
Have put in an offer on a 2 flat villa in Wanganui yesterday. Asking is $149,000 from a UK based seller . I have offered $130k cash with settlement next Friday. With NZD so strong vs the Pound I thought a really quick clean offer would be tempting. Vendor has come back at $133k but I am sticking at my number. Currently rents for $120pw each flat but agent agrees with me that a $5k makeover on each would get rent upto $150pw each very easily. Rates are nasty at $2700pa ( 2 dwellings ) but still currently cashflow positive at 100% gearing with interest rates at 6% ( TSB 5.99% 2yr fix ) ... spend the money on the renovation and she really starts humming.
Looking at No. 2 this afternoon in Onehunga ... talk that Auckland prices could rocket due to serious housing shortage over next 3 years. See article at www.nzherald.co.nz
Hickey is an idiot Moke. He is only interested in pushing his ideological barrow - reality just doesn't figure into it.
People make money out of property - fact. You can't stop them investing in it no matter how much some bobbleheads want them to.
I agree.
Didnt he make a prediction last year the property market collapse 30-40%? I guess alot of people (including some in here) believe in the crap that comes out of his mouth.
Is the National govt preparing us for a capital gains tax or are they blowing hot air again?
I think they are blowing smoke Dr Who.
The mantra that NZers don't save enough is also rubbish - their houses are their savings.
Economists are contrarian indicators really -- and losers to boot. How often do see an economist on the Rich List?
"eEconomists are contrarian indicators really -- and losers to boot."
Exactly, I reckon the media should start quoting posters on Sharetrader.
Well said Capitalist.
Mr D.
I'm inclined to agree. There seems to be a bit of envy over the past few years with how property owners have increased their overall wealth.
What people loose sight of is that landlords are up for tax on profits which includes the sale of a property at a value over the purchase price. Its just that IRD aren't good at tracking these missing taxes.
And there is nothing wrong with property as "saving". What we should be looking at is overall asset accumulation. Doesn't matter where or how - people might like fixed term deposit assets, kiwisaver assets, share assets, cash asset or property assets - or even a mix. What we shoudl be aiming for is an increase in an individuals wealth - but thats not politically paletable even for a National governement. Which is a shame.
There is nothing wrong if it is funded by productive earnings. What is wrong is that it is not - it is funded by ever increasing debt. That is the problem for NZ.
We do not have enough productive earnings in NZ to pay for this ever increasing debt (that is why our current account deficit continues to grow). Essentially the housing market is one large Ponzi scheme - values being driven further and further up by access to credit via overseas banks.
Property in Wanganui went unconditional yesterday. Will be cashflow positive of $320pm when renovation work is done and is re-let at $150pw each flat, This assumes 100% gearing with interest rate locked at 5.50% for 1 year.
That's one found ... now , where is number 2 ?
REINZ data now out shows no fall off in median values (hanging in there at $340,000) - pretty good going in the winter months. More importantly median time on market has dropped down to 37 days - pretty much the lowest rates since the markets "highs" in Nov 2007.
Its reported today that floating mortgage interst rates are at the lowest in 40 years. Kiwibank is at 5.79 and BNZ on 6.3%. The last time we had rates around this level was in 1966
Well the Reserve Bank reckon the OCR is set to stay around 2.5% for a while yet so I think it would be a brave person saying interst rates will be in double digits next year.
Buying a rental is of course a personal choice and there are lots of things to think about when making that decision. But if you are worried about interest rates heading to double digits next year you could look at locking in a five year mortgage at 8.3%
I agree you need to look at yield and price/vlaue but the deposit is also relevant.
Say you have $50,000 in cash - you need to work out how you are going to get your best return on that cash. Perhaps its by putting it in as a deposit and reduce your interst expence at a rate of, say 6.5% and consequently increase your gross income from the rental.
Alternativley you could put your money on, say, an NZF Term Deposit at 8.25% with interst paid quartely. Or you might prefer to put it into shares like TEL for a 10.47% dividend yield.
Just because you have cash doesn't mean putting it into a deposit is necessarily the best use of that cash.
Exactly so, but it's far better to spend time and effort sussing out a bargain than worrying about whether the deposit is 15%,5% or nothing. I've bought properties before and raised mortgages of well over the asking price. (Some to buy the property and some to live on till I found the next bargain:D) I didn't ever lose sleep over the deposit. Mind you that was a long time ago and easy to do then. And I had no choice, cos I had no $$$$$$:D
Ah yes, but I've never mortgaged a property to the point where it wouldn't cover its own backside, so to speak. Even though it meant that not all the mortgage was tax deductible, I just pocketed the excess for living expenses. It was a very good way of creating a tax free income. (Don't tell the socialists - they never woke up to it.)
Will start negotiating with vendor on property 2 next week ... can I fill my 8 properties in 12mth target by Christmas? Lots of stuff on the internet making eyes at me ...
This one will be cashflow positive of $274pm with a 2Yr 6.19% mortgage at 100% gearing if I can get $10k off the current asking price.
Totally agree.
I dont mean to make this negative, but since MM suggested we dont have anything wrong with savings, i'd beg to differ.
Have a think about why banks have been putting interest rates up over the last wee while. The marginal cost of funding is now coming from overseas, suggesting that we have a shortfall of deposits/savings here in NZ. That shortfall in turn is hurting NZers taking out mortgages! Surely its in home owners best interest to have a decent domestic savings pool?
GGG, does that steep upward sloping yield curve not scare you? Cashflow positive at 6% etc...what about when floating rates rise too?
Just to keep you up to date on my target of buying 8 properties in the next 12 months. First one is in the bag and paying me $240pm after borrowing 100% of the cost at 5.50% ( fixed for 1Yr )
Property 2 ( 2 flat villa in central Wanganui ) is in contract and hoping to hear finance is OK tomorrow. This one will pay us $325pm after 95% finance again at 5.50% for 12mths. Purchased at $147,500 with a RV of $165,000
Property 3 ... Had offer accepted on 1 bed flat in Brighton Rd, Parnell late on Friday at $291,000. Should rent at $375pw and is exactly cashflow neutral at 100% debt funding. Really funky little 1950's period flat ... 10 min walk to Newmarket , 2 minutes to top of Parnell Rd ... glimpse of the sea ... FREEHOLD !!
LVR on portfolio ( 11 properties in total ) after purchase of 3rd property 100% debt funded will be 68.8% so approaching the current 70% limit for rental properties without paying over the odds for finance. Fresh equity to come from sale of listed shares prior to end of September.
5 to go ...
Watch this space.
Wow GGG, how are u managing these properties this widespread across NZ?
Hey GGG what happens if rates go up dramatically after one year?
For the fourth month in a row QV reports today a further increase in property values up to $385,426 from $382,758 last month.
I don't think so. My understanding is that tax on capital gains are taxable only if (one of) the reasons for purchasing the property was to re-sell at a profit. If this wasn't a reason for the original purchase then no capital gains tax is payable (although there would usually be a clawback of any depreciation claimed)
I agree. And if we look at the returns from rentals over the past few years (pre 2007) compared with the rate of capital gain what do you think the real (but undislosed reason) was for the house purchase. The key reason people get into property is for the capital gain. They can't say its for the rental yield when this is so low on so many properties
So this would imply those people who buy property so negatively geared that it doesn't turn a positive cashflow for years are really chasing capital gains and so should be paying tax on it...
Has the IRD done this before? (Go after the negative gearing crew).
They used to send a standard letter to new owners who showed a first year loss, full of silly questions such as ' is the property occupied by a friend or relative' and so on, but didn't often bother doing much about it. Nowdays they seem to concentrate on areas where there is plenty of acivity. Flick over merchanrs are taking a risk by deliberately trading for profit and not declaring profits. IRD have had a real clean up in Queenstown and other hot spots in recent years. Although primarily chasing section resellers, a fair few house buyers have had nasty suprises - and penalties.
I do think this whole area is likely to be more rigidly enforced in nthe future. It's more political than anything else, There are one hell of a lot of these type of buyers who actually lose money, and will be more likely to claim the loss.
And more good news from REINZ.
August values are up 2% on July sales or from $340,000 to $346,000.
Average values are up from $389,302 to $405,742 and median time on market is the shortest in nearly two years at 34 days.
If we look at the low of Jan 09 this is a 6.7% increase in median value or a rise of 9.0% of average value. Time on market has fallen from 59 days to 34.
Its that time of year when the banks go hunting for those spring buyers.
BNZ now dropped its variable rate down to 5.59% which begs the question: how low will they go?
People should be asking, how long will they stay there?
Sorry NeopoleII heres another soundbite from todays news:
Property values continue to recover
Property values have continued to increase according to the QV residential property indices for September released today.
Nationwide values are now 2.7 percent up from their low in April.
A further market measure, distinct from the index, is the average sale price which across New Zealand also increased further to $387,567 in September from $385,426 in August.
It appears that the influence of more higher priced property is the major influence rather than a general lift.
hey minimoke,
you seem to be in the camp of rising house prices being a good thing, and me in the camp of it being a bad thing.
myself being a landowner, rising prices is always good when assessing personel wealth, but, what about community wealth or state of the nation wealth, or the fact we have to live in a community where the spread of haves and havenots is ever widening?
i see these property investors and speculators driving a wedge between different parts of our society. and the fact that the $200 billion residential investment market generates no taxes for the government.....
if tax laws dont change, or arent administered enough, the gap between rich and poor will increase, and in my view, this leads to animosity and general ill feelings in the community. if its let to continue, thing will only get worse.
obviously there are many factors involved, like absconding fathers, domestic violence, laws protecting crims, ease of benifit fraud etc............ but NZ used to be a place where a hard working man ( of whatever creed, skill or inteligence) could get a home.
now it seems that only working families with skilled labour can afford a home and the rest are left to rent....... to make the skilled families even richer, .... and richer still with the tax advantages to boot.
sooner or later, if the system is left as it is, the house of cards will fall simply because of the ever rising debt level.
the smart ones cash out early......... but then what?
move overseas or live in gated communities in luxuary while the rest crumble with debt.
its very true that alot of people live outside their means and live only for today, and they should go down the gurgler, but the majority of folks out there are genuine and are struggling and the biggest issue for them is the cost of housing whether owning or renting.
gees......... im starting to sound like a labour/socialist campainer!.... but im not, im the opposite, i hate free loaders and whingers and lazybu.ms and the "want it all today", and fully agree that if you work hard and plan ahead you shall be rewarded........ and get to keep it too!
but loading up on negative gearing, claiming tax losses, running lac's and the other many numous systems developed of accountants to generate wealth along with a lax govt is causing this country great pain.
for the amount of people living on this land mass called NZ, we should have cheap housing...........
but we dont.
i cant see wages going higher for the general population any time soon.
upskilling the population will take many years.
i cant tarrifs coming in to protect us from cheap overseas labour.
i cant see NZ debt burden disappering soon either.
the property owners are getting older.
more people are finding it harder to get into a home
more people are finding it harder to keep their home.
house prices will come down, one way or the other.
how and when it happens is what thinking and planning is for.
[quote=neopoleII;277114]hey minimoke,
you seem to be in the camp of rising house prices being a good thing, and me in the camp of it being a bad thing./]
I am in the context of investment and personal asset growth
[but, what about community wealth or state of the nation wealth, or the fact we have to live in a community where the spread of haves and havenots is ever widening/]
Now thats a different story and we need to whole set of new threads to cover that off.
[i cant see wages going higher for the general population any time soon.
upskilling the population will take many years.
i cant tarrifs coming in to protect us from cheap overseas labour.
i cant see NZ debt burden disappering soon either.
the property owners are getting older.
more people are finding it harder to get into a home
more people are finding it harder to keep their home/]
- Agree wages aren't going higher until we lift our productivity
- Cheap labour is what the governement wants - look at who is caring for the elderly in droves.
- NZ Debt also unlikely to reduce
- Many people have always found it hard to buy a home - doesn't mean to say they can't make one from a rental
- People finding it harder to keep a home - not so much due to the value of the home but due to the debt that home is expected to carry: holiday home / new cars flat screen telly etc.
House values will never come down. They have always trended upwards and will continue to do so. Not even the sub-prime suceeded in the long term drop in NZ values.
Neopole, I couldn't agree with you more.
But one thing I have learned from reading these types of sites is you can never convince a NZer in love with property that property will ever go down in price. Property in NZ (and Oz) is special - like no other asset class. Risk free guaranteed gains. It seems that investment fundamentals don't apply to housing because there is never aenough supply to meet the demand (despite no supporting evidence of this).
[QUOTE=minimoke;277121 House values will never come down. They have always trended upwards and will continue to do so. Not even the sub-prime suceeded in the long term drop in NZ values.[/QUOTE]
Ironically MM, it is the very GFC that saved the property market in NZ - property prices in NZ were in fact trending down until the GFC exploded in October 2008. It was then that the RBNZ entered into the most aggressive rate cutting known in NZ history. Interest rates halved in a matter of weeks. Due to relatively tight supply, high employment and a massive dose of liquidity prices were stabilised. The fact that our banks didn't fall over like in Europe and the USA was a huge factor also - the fact property prices didn't drop preciptously was a factor in their stability also.
I don't profess to know which way prices will go, but before I made a bet on prices returning to an upward path I would want to see what they are doing under "normal" interest rate conditions and higher unemployment before I loaded up with debt to buy a few properties. I would also want to see what any gummint tax changes were too (although I have no faith in the gummint to make changes which are good for the economy to the detriment to their own vested housing interests - most of them own properties which they use to rort the entitlements systems.)
The GFC began in 2007 and the NZ mood in property changed in Jan 07 (evidenced by Shrwedys timely thread). The doom sayers were saying the sky will fall. In fact prices continued to grow into 2007 reaching a peak around Nov 07. This was around the "30% drop" time but it didn't happen. From Nov 07 to Oct 08 there was about an 5% drop in average. Prices continued to fall to an eventual 9.7% drop in Jan 09.
Property is said to be a long term investment and a few months activity may not be enought to measure the trend. Sure those that bought at the peak in Nov 07 are possibly ruing their "losses". But what about those that bought in Jan 02. Well, in Jan 09 when things were at the gloomiest, they have seen an increase of 78% or added $163K to their personal wealth. If they took the snapshot today they be up 94$ or $197.
I don't see NZ property as being "special" but there are certain things that suggest values will continue to go up where as the evidnce for a fall is slim. Not even the worse financial crisis to hit the planet since the great depression managed to but much of a dint in it.
"""House values will never come down. They have always trended upwards and will continue to do so."""
this statement has been true for a long time, probably all the time.
but, things are changing, namely the way countries like china et al have come onto the scene in a large way and have drastically changed the way of commerce and industry.
here in NZ we are closing our factories at an alarming rate due to cheap overseas labour, so we are left with agri industry...... which is low order skill and pay and service industry which is also low order skill and pay. the rest make a living out of wheeling and dealing. there is only so much forign exchange coming into NZ, and its not enough to go round, so we borrow to make ends meet. and its this borrowing that has catapulted NZ into debt, and that debt was spent on housing.
the wheeling and dealing has dramatically slowed down, as the flow of funds has.
but we are sitting at the top of a mountain.
people dont have the income to support large debt for much longer, and those that do take on large debt are gambling their futures. a house is only worth what someone is willing to pay or is able to afford.
at this stage, the addiction to debt is still strong and therefore are willing to pay high prices........ in the belief that property always goes up.( just because history shows it did) when the reality sets in that the economy is controlled by outside influences, namely credit suppliers and goods suppliers, and that a home buyer is at the mercy of forign nationals, people will start to think about what is affordable and whether they will have employment in the future to be able to afford these prices of today.
all through the western world house prices have soared though speculation and easy credit. the govts of the western world have avoided catastrophy by borrowing from future citizens. the debt has to be paid, and those future citizen who will be forced to pay it are not going to be happy paying top dollar to current home owners and speculators to get accomadation.
there is only one constance, and that is time.
current home owners will get old and want to sell at some stage.
debt multipled by time increases if not paid.
to pay a debt money has to be saved or diverted.
the value of a home is related to what someone will pay for it.
what someone can pay is related to the value of the income.
income is related to how many widgets are made, sold and serviced.
the western world has pushed its self into a corner by narrowing its manufacturing base,
NZ has fallen through the gaps in the floor boards, and survives by hanging onto its debt balloon.
when it pops, land values will drop, tradesmens rates will drop, construction materials will drop, the economy will drop house prices will drop.
how far it will drop depends on the government, but the higher the debt the bigger the fall.
NeoploeII, I started this "Good News" thread as a counter to all the doom gloom storires that were happpening on the other threads. Consequently you'll only get a positive spin from me on this particular thread - and there are other threads that can be used for the misery stories.
The good news is that while we have lost a lot of our local manufactuing factories we have replaced them with call centre factories.
And just to be clear I'm comfortable picking property prices will continue upwards over the longer term - but I'm not suggesting we are about to see another bubble.
Sorry, can't get the hang of this quote thing. Hey, it worked this time.
Hi MM,
Can you provide a list of what those certain things are? What I have seen as the main reason by posters on other blogs is that supply will continue to outstrip demand beacuse of increasing population (immigration etc). I was wondering if there were any other reasons that you think they might keep going up except that is just always has?
I agree that it is remarkable NZ has avoided the property price declines of other Western countries but I believe we both agree on why that is - or at least I think you agree based on your post.
cheers
heres a few:
NZ'ers have an inter-generational love affair with owning property - it is in our blood so a basic yearning to "own" isn't going to be diluted easily. This equals "demand"
The governement (doesn't matter if it is Labour or National) have a desire to see people in their own owned homes. They provide subsidies/incentives like "Welcome Home start" and Kiwisaver = demand.
Govt regulations / spending on things like insulation. That spend will get refelcted in a higher valued home.
The "Accomodation Supplement" will keep cash in the system to keep rents up and prices up.
Population growth = demand
Relatively stable employment / wages / governement / banking = more comfort when borrowing = demand.
Aging stock which needs replacing = demand for better property along the chain. = demand
Stock not meeting demand. If building consents/construction don't keep up with demand = values up.
Where do you park your investment money. Dodgy Finance Companies, Dodgy Wild West NZ stocks, Long term deposits. NZ'ers prefer property = demand.
Aging population: moving from 4 bedroom family homes to two bedroom villas but not wanting to make a "loss" on family home will see values hold. Construction of 2 bedroom villas provides balance to market which shows value of 4 bedroom keeping prices up.
No Capital Gains Tax or Duty on property transaction = easy investment option = demand (and when these do come in the acountants will get creative on ways to avoid paying)
Land - you can't grow more of it (yeah I know - don't comment!) but the resource consent and compliance costs of developing new land will keep new building costs up which need to be reflected in the value.
Nesters will eventually move out of home and want their own and dumb parents will help finance the dream (well they helped finance the lazy kids by keeping them at home) which will see cash keeping flowing in this sector.
NZ$ makes ownership by foreigners attractive ( I can't see the current rates staying high for the long term) = demand
Inflation through trades - people not wanting to get their hands dirty or do "hard labour" (go to universitry to be an accountant or IT specialist) will see less skilled trades = higher wages for those trades = higher values.
Inflation - it will be back.
Gloabal warming / Terrorism / Bird Flu - whatever. NZ looks a pretty attractive place = demand.
Technology / time zones. means northern hemisphere companies can get people to move to NZ and use their brain power locally = demand.
People need a roof over their head - means that they either own or they rent from someone who owns = demand
Now if we get all these things happening at once we can expect a bubble. But it only takes a few of these things to offset any negatives to still see property values increasing over the long term.
Thanks MM. That is a pretty useful list to chew through.
I could try and refute most of them but won't. Some of them I even agree with.
My main argument against prices going up materially from here has always been affordability (which I know we have discussed on another thread)
On another blog site there has been much debate about property prices. One of the pro property bloggers had a home grown formula which showed that home affordability had reached a level where it was at levels not seen since the late 90s. His formula was based on interest rates, prices, average wages and average wages per households. The average wages per household figure was at 1.6 from memory and had been steadily been rising since the early 80s when it was close to 1. The debate centred around whether prices were causal in the numbers of workers per household rising or because of lifestyle and intergenartional changes. The question I pose is what happens when it gets to 2? Send the kids to work, two families per household etc.
Anyway, only time will tell. I will leave you with one thought. If the average Auckland house doubles in the next 10 years (general RE rule of thumb) and wages only grow by 50% (unlikely to be so high unless the economy really kicks on), the average house price will be approx $1 million and the average wage will be approx $68k. Even with two workers per household there is no way they could raise the deposit let alone the service a mortage at long term average interest rates.
My crystal ball gets a bit fuzzy bute heres what I reckon might happen.
Firstly banks will increase the term of the mortgage. Rember it wasn't so many years ago the max term was 25 years. Its now out to 30 as a norm.
Banks products will include "interest Only" - rather than the current and predominant interest principal arrangments.
Banks wil also introduce "Buy back" type schemes. So they claw back the principle on the sale of the property or on your death from the estate.
It is in the banks intersts to see property prices increase becasue this gives them exposure to the lucrative mortgage business. If there is any doubt on the powers banks have you only need to look at the GFC to see how governements are more than happy to prop up this dodgy sector and here in NZ financial institutions (like Kiwisaver) are just handed money hand over fist with no effort at all. Money lending has been around since Moses could grasp a Shekel - I don't see anything changing that except they will just get cleverer at getting the loot to an instatiable demand.
And the good news keeps rolling in (Ptolomy and Neopole I appreciate this is only good news for those with investments in property)
REINZ figures out and what do we have.
Median Prices for the month UP 0.9%
Median Prices from January UP 13%
Average Prices for month UP 2.3%
Average Prices from January UP 11.6%
Values now ($350,000) down ONLY 0.57% from Nov 07 "High" ($352,000 - Bernard - what happened to 30%)
Values now up to pretty much historic high levels.
No. of properties Sold UP
Days on market DOWN
No of sections sold UP (highest level in 21 months)
Average price per section UP
None of this applies to our area out West Ak, but as QV say,
some areas are stagnant. Just as well we don't have to sell.
Not one person to the 2 open homes next door again and Sunday
was a beaut day.
Strange?? Henderson (for example) is up from January.
jan = $355k, Sept = $360. No of props sold - Jan = 75 Sept = 197. Days on market. Jan = 57, Sept = 27
There simply isn't enough data for the Waitakeres but if you want good news Median has moved from $470k to $557k in the past month. A couple of sales a month suggests there just isn't the demand for people to go out there. I don't know this area, but based on sales people either don't want to be there or they dont want to sell.
I'm a happy camper because my area has lifted 24% since January (average up 15%) with sales numbers doubling and time on market down to 26 days from 68 days.
I've no idea what that foumula is or how valid and reliable it is. The question I'd be asking though is did he build in Working For Families "income" into his net income figures. Looking at "wages" doesn't tell teh whole picture on income.
If someone has WFF then this could just about pay the mortgage on its own without any other income. Take a family with 3 kids and an income of $50,000. Thats $215 a week WFF. Which means the Tax Payer is going to give your person the ability to fund a $165,000 loan. Heres a 3 bedroom house in Manukau for $175,000. http://www.trademe.co.nz/Trade-me-pr...-241357122.htm Negotiate hard and you might get it for $165 - all on WFF! Thats affordable and thats good news!
In todays news from Barfoot and Thompson:
"
A massive 5.8 percent surge in average house prices in the past month has sent Auckland house prices to a 22-month high.
Rental prices also shot up - by the biggest monthly amount in seven years.
Real estate firm Barfoot & Thompson, which lays claim to selling around one in three homes in the country's largest city, said today the prices achieved in the Auckland market in October were "exceptional".
"We have not seen average prices comparable to this since December 2007," managing director Peter Thompson said.
According to the firm's figures the average sales price across the Auckland region in October was $544,745.
The new figures are further confirmation that the housing market is bouncing back extremely quickly from its slump last year.
Buyers are being encouraged by low floating mortgage rates, while the big downturn in the construction industry that started in 2007 is leading to a shortage of new homes. Strong population gains through migration are also contributing to upward pressure on house values."
[QUOTE=belgarion;277405]That sucks! Why are high incomer earners with just one child (or no children) being so roundly descriminated against.
I was never a supporter of WFF, and not just becuuse my family and I do not qualify and pull out weight funding it.
It just feels like recycling tax dollars through a high friction meatgrinder.
Surely it would be more efficient to adjust the tax rates to accomplish the same/similiar with fewer minions employed to do so, via PAYE?
Having said that, I think an intelligent immigration system combined with intelligent support for productive folks who want children should be used to help "shape" our national demographics for the long-term to try and avoid or mitigate the demographic "wall" the likes of Japan will be hitting at 100KPH.
While I would prefer to pay less tax than more tax.......I don't mind paying more(which we surely will be in the future) if it's well spent...but then we will have 4+ million opinions on the definition of well spent.......I think WFF fails to qualify myself.
mm,
We all like "Good News"
It really does not matter which way prices go.
If UP it will be good for you and some others.
If DOWN it will be good for some of those who are currently waiting to get on their own ladder.
So roll on the Good News!
Gummint steps, if done and if enterprising enough will trend us all to more STABILITY and that is what we all need in the end.
Frankly, I do not care if my house is worth $700k or $1m. I still am going to live in it.
Different strokes for different folks.
I don't even have a mortgage BUT for my borrowing needs (if any) would always be available.
Good news is not having any borrowings and knowing that I can.
Bad news is that I am subsidising excesses of the system unless I keep my surpluses out of the way.
Yes I do have other projects but not in property.
I know this thread is a subtitle of the Property thread so I would not go into any discussion about other options. I would just comment that the good news is only relative.
Best of luck to all who are here.
Make your own luck.:)
REINZ Oct 09 values are out and the median is now at $355,000, $3,000 more than the high everyone refers to in Nov 07. Up 1.4% for the month on reduced sales volume. Up 9.2% since January. Days on market the lowest since July 07.
Not really - the only people talking about a "Mini-boom" are real estate firm First Nartional in a clear attempt to get some publicity. There is no Mini boom just a nice and steady increase in values. But more importantly the 30% drop "expert" commentators were predicting never happened and values are recovering for those few people who purchased right at the peak of an over blown boom in Nov 07
Minimoke They are only using Figures from sales not properties on the market and the lower the volume the more skewed the median or even the average price can be .
Values on anytihing is typically taken from sales - and its probably no different from the share market. The market places a value on a company and this value is the price paid for its shares which then converts to the market capitilsation. You don't hear of people valuing a company by the number or size of Bids / Asks. The number and size of Bids / Asks may help determine the future value - but not the current value. And property is pretty much the same.
It may be a shortage of properties skews the market - but the median / average prices will be adjusted in the future when the shortage changes. We can hypothesise on how the median may be skewed but we'd end up in a subjective discussion around where the shortages are (eg shortages of $200,000 properties or shortages of $1m properties) or perhaps where those shortages are - Is it Auckland short or is there a national shortage. We could speculate that there was a glut in Nov 07 or maybe there wasn't. All usefull discussion but they don't value the market at a point in time.
I supose we shouldn't let November go by without comment. No surprise to see avergage sale price up $11,200 from last month and $51,700 from January.
Looks like all the "Bad News" has been flushed out so probably time to close this thread down. Lets look to update on Shrewdys thread next month to see if he made the right call.
with the 10's of millions, if not 100's of millions of dollars dished out by the government every week in benifits, housing supliments and working for families....... no wonder there hasnt been a property crash.
in the meantime the government is borrowing 250 million a week to support the residential housing sector............
sooner or later, the bubble has to pop.
And the country will pop with it. we've just begun to witness the aftermath of the destruction of US property values. Like dominoes they fell, and yet we are none the wiser. Like lemmings (or sheep) we just know to follow. When will we wake up and start thinking for ourselves? I'm beginning to agree with Col. John P. Stapp who said :The universal aptitude for ineptitude makes any human accomplishment an incredible miracle
Bollard was holding the dogs at bay, yet he looks like wavering to give in too. When you bust property as a store of value and the capital markets are a shambles, what alternative to store value do you offer to Mrs and Mr. Ordinary. Discipline the banks I say, make them lend. Inflation is a cheap cost to pay in the interim. And give some teeth to our capital market enforcers...
whats that saying?.........
its hard to teach an old dog new tricks.
but if it really hurts........ they learn.
look at the all the finance co's that have collapsed...... i think alot of them have learnt........
most of that cash went into property speculation....... so that source of cash is gone.
the banks have also had a feel of heat as well.
the politicians have had a big scare........
the reserve bank is making public recomendation!!!!
and this country is still massively indebted.....
add it up, a change is on the way.
the discussions regarding residential property investment is in the public forums, ie, tv, newspapers, internet, goverment working groups, rbnz, etc is a clear signal and warning that change is coming.
Beacon He is to gutless to stop the housing bubble the sooner he makes 20% deposits compulsory & gets the banks paying higher interest to depositors to encourage saving the better. Most savers would like 6% plus deposit rates from banks & 205 reduction in house prices.
This is the same guy that called the property market to crash 30-40% during the financial crisis and now he is warning there maybe another crash coming... LOL. What a laugh!
Bernard Hickey: Caution on a housing 'boom'
http://www.nzherald.co.nz/business/n...ectid=10617532
No Bernard was talking about the Westpac reports regarding the effects of a land tax and ringfencing.