What about replacement cost
Great thread , Dimebag always was a class act ! ... although could never agree with him that Pacific Retail Group was the best stock on the NZX !!.
I've purchased 8 residential investments over the last 24 months , 4 in Wanganui all under $175,000 ... 1 in Maori Hill, Dunedin for $367,500 and 3 here in Blenheim where I live for $290,000 , $380,000 and $325,000. All are villa's or California bungalow 1930's style houses.
A new housebuilding company ( Highmark Homes ) has just arrived in Blenheim and have been advertising heavily on the local radio ... 160sqm brick and tile for $187,000 , the chaepest in the market they say ... the average section price here in Blenheim is around $160,000 so with a bit of land-scaping, fencing, drapes and appliances there is not going to be much change out of say $375,000 ... add in the carry cost of owning the section for approx 9 months before you move in and paying for half the house for 3 months before you can use it and you could see with a few delays just the financing of the thing before you move in could easily be $25,000. So there you have it a small bog stand 2.4 stud 3 bed brick and tile piece of boring rubbish in a sub-division where everyone is trying to "keep up with the Joneses" for $400k.
I cannot see how my well located in nice suburbs , beautiful character villa's with heaps of charm all well under $400k generating rent instantly the day I buy them can fall 25-30% in value. There is no way the major cost components of that new house such as land, wood, wiring, glass, brick and labour is going to fall 25% in cost in this environment. So will new houses just stop being built ... possibly .... great , the demand for all existing homes will exceed supply and guess what happens when that most basic of economic principles occurs ....
Just my 2c worth.
PS , The listed property trusts are the cheapest place to buy property at present. KIP nav about $1.70 at last reval ... current SP ... $1.21 ... ridiculous.
Disc: Bgt 25,000 KIP today at 120