Now is the time to buy property

The economy is in dire straights with the only likely out come being, high inflation. To take advantage of this depressed market, and low interest rates means that now is the time to lock in for as long as you can get, that mortgage, at these low rates on self supporting properties.
Most western economies are at a point of no return, whose only answer is to print more money to pay the interest bill. The end result is either total economic collapse, or high inflation. Money in the bank or the share market are all high risk with the only safe investment left is property.
What ever eventuates will see property as todays wisest investment.
Macdunk

you heard it first on Sharetrader from mcdunk , if his other calls are anything to go by we should take note.

certainly hasnt been any pullback in the long term mortgage rates since the OCR cut.

Colin twigg (from incrediblecharts) noted in his latest commentary on inflation that long term bond yields were starting to rise - however he still saw deflationary forces as strongest right now.

perhaps a bit off topic but gold (comparable to property in that it is perceived as an inflation hedge) closed above 930 last week.

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Originally Posted by duncan macgregor

with the only safe investment left is property.
What ever eventuates will see property as todays wisest investment.
Macdunk

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Myself, owning a residential construction company. I certainly hope people take your words onboard.

Macdunk,

I agree it is a good time to buy (there are some great bargains out there) but you were also telling everybody back in July 2008 that they should be buying & locking into a 3 year mortgage when the OCR was 8.5%. I think if you keep saying the same thing you will eventually get it right?

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Originally Posted by Brut

Macdunk,

locking into a 3 year mortgage when the OCR was 8.5%.

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And when at the time Fixed 3 year was around 9.0% and the floating rate was around 10.6%. The OCR is now 2.5% with floatingt 6.5% and 3 year fixed at 6.6%

Quote:

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Originally Posted by Brut

Macdunk,

I agree it is a good time to buy (there are some great bargains out there) but you were also telling everybody back in July 2008 that they should be buying & locking into a 3 year mortgage when the OCR was 8.5%. I think if you keep saying the same thing you will eventually get it right?

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BRUT Only a fool gambles on what mortgage rates will do when it comes to risk in the business world. Always and i mean always do the numbers sometimes you win some times you lose but you never risk being in the position of looking at a losing position bankrupting you to try and time the market. Come back in three years time it might be you with a 20% mortgage.
I once paid 16% i think on a block of land and made good money with the banks money, so dont worry about percentages, think about the numbers. Keep it at understandable affordable levels.
I also said the market would downtrend leading up to the olympics, then crash and got ridiculed for that. I now say the western economies are in great danger of collapse, or at least rampant inflation, and to stick your money in material assets.
Most western economies would be declared bankrupt if it were you and I. NZ for instance with its rush into free trade agreements with poorer nations gaurantees us that our factories move overseas to slave labour countries where the trades person gets paid less than the guy sweeping the floor here. America another example imports cheap cars yet spends billions propping up its own industry. A friend of mine relocated his furniture factory overseas simply because in order to compete here, he had to move over there.
The rich countries get poor, and the poor countries get richer, then one day we end up in an equal state where we all work for nothing in order to buy goods for nothing.
If you think i Jest try phoning up telecom, or air NZ, and ask what country the operator is in, or ask AIR where the planes get serviced.
Money is printed on a bit of paper with a promise to pay, thats all its worth, a polititions promise to pay up, I think the the piper will come along, and demands payment sooner rather than later. Macdunk

I do see the inflationary asset [ property values] senario as a possibility, but the other side of this argument is rising unemployment, dumping more property on the market as highly leveraged property owners, unable to meet their mortgage commitments are forced to sell.
Especially as nervious banks are looking hard at owner equity ratios.
The way i see it, the outcome to all this is dependant on just how high unemployment rises, and looking forward, its not looking that rosey.

...about the New Zealand Housing Market:

The New Zealand Zinger

Though the local housing market looks unlikely to pose an existential threat to Australian banks, New Zealand's housing market may give some banks a run for their money. Australian banks own most of the banks in New Zealand, where the housing market is undergoing a deeper correction as immigration to New Zealand slumps. With HOUSING ASSETS 5.7x HOUSEHOLD DISPOSABLE INCOME, NEW ZEALAND PROPERTY MARKETS ARE EVEN MORE LEVERAGED THAN THEIR US COUNTERPARTS. As the Australian Financial Stability Review states: “As at December 2008, the Australian banks’ overseas exposures accounted for around 30 per cent of their total assets, with New Zealand and the United Kingdom together accounting for about two thirds of these foreign exposures.” Considering the relative outlooks for housing markets in Australia and New Zealand, external assets are a more significant danger to Australian banks than domestic assets. This could be the hidden dragon that swallows up Australian banks in the years ahead despite its ostensibly more comfortable position versus European and American banks.

Kind Regards

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Originally Posted by duncan macgregor

. I now say the western economies are in great danger of collapse, or at least rampant inflation, and to stick your money in material assets.

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I think your on the right track macdunk
But i'm not sure if realestate is the best material asset to buy right now
I think property prices will remain flat for a few yrs yet
I prefer gold and commodities as an inflation hedge
I wouldn't be surprised to see $1500 gold this time next yr (50% increase)
your not going to get that sought of increase in property in the short term.

Quote:

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Originally Posted by duncan macgregor

The economy is in dire straights with the only likely out come being, high inflation. To take advantage of this depressed market, and low interest rates means that now is the time to lock in for as long as you can get, that mortgage, at these low rates on self supporting properties.
Most western economies are at a point of no return, whose only answer is to print more money to pay the interest bill. The end result is either total economic collapse, or high inflation. Money in the bank or the share market are all high risk with the only safe investment left is property.
What ever eventuates will see property as todays wisest investment.
Macdunk

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I'll go on record and bet a case of decent beer or a decent bottle of wine/spirits that you've got it wrong.

On average, property tracks inflation......then you subtract rates, insurance, and repairs as it slowly rots.

There are periods of time where buying into property is a no-brainer to use easy leverage to produce capital gain......2001-2007 would be a great example of where property prices exploded on the back of historically easy credit access following a LONG period of property price stagnation.

I believe we will face up to a decade of real estate doldrums in real terms........AT BEST.

At worst, I think we could see further and possibly substantial downward legs with big flat patches in between.

I agree that a period of substantial inflation is on the way........I believe it's only a question of how soon it arrives and how nasty it gets.

The majority of folks will only own or co-own one property at a time in their lives.

You have to live somewhere.......if you sell a home, you have to either buy another, rent, or move in with family.

The LAST place I would invest ANY of my money right now is real estate.......New Zealand's investment culture is overweight property...which requires leverage.....which requires savings...which NZ does not produce enough of.......sourcing the credit required to pay these still very high property prices is going to be a BIG problem.

The average multiple of the average wage for buying the average house is still too high according to my cocktail napkin...especially if credit is further tightened combined with rising unemployment keeping wage inflation in check.

Think about it.......all the paper printing so far has yet to even STOP the real estate price decline.....the biggest chunk of paper printing in history hasn't even halted the destruction....what's it going to take to get it even moving slightly north again?


Coincidentally, I have been putting my money where my mouth is......my family's financial plan has recently achieved it's minimum property exposure target of just our family home and our dairy farm.

NO residential investment property and definitely NO commercial investment property.

Property is far too illiquid in the best of times....we are most definitely NOT in the best of times...nor will we be for a good number of years.

I'm going with inflation protected liquidity.........gold/silver/energy/agriculture is the end state for it after making a very BIG exit out of the NZ dollar at approx .60c

My target for going back into property BIG is roughly 2014-2019, repatriating funds once the next "currency commodity" payoff has occurred.

In REAL terms, I don't know if I will see substantial gains...in NOMINAL terms I think I probably will......at the end of the day...if I can effectively shelter my family's capital/purchasing power longer than most everyone else....we will win by purchasing assets at possibly high nominal prices, but low real prices.

Equities, bonds, and Real Estate are zombie asset classes for the foreseeable future, barring very rare exceptions.

I'm not expecting to outrun the bear.....but I am expecting to outrun you.

Just my 0.02c.....and I've put it where my mouth is.

Quote:

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Originally Posted by ananda77

...about the New Zealand Housing Market:

The New Zealand Zinger

Though the local housing market looks unlikely to pose an existential threat to Australian banks, New Zealand's housing market may give some banks a run for their money. Australian banks own most of the banks in New Zealand, where the housing market is undergoing a deeper correction as immigration to New Zealand slumps. With HOUSING ASSETS 5.7x HOUSEHOLD DISPOSABLE INCOME, NEW ZEALAND PROPERTY MARKETS ARE EVEN MORE LEVERAGED THAN THEIR US COUNTERPARTS. As the Australian Financial Stability Review states: “As at December 2008, the Australian banks’ overseas exposures accounted for around 30 per cent of their total assets, with New Zealand and the United Kingdom together accounting for about two thirds of these foreign exposures.” Considering the relative outlooks for housing markets in Australia and New Zealand, external assets are a more significant danger to Australian banks than domestic assets. This could be the hidden dragon that swallows up Australian banks in the years ahead despite its ostensibly more comfortable position versus European and American banks.

Kind Regards

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I believe the Centro saga was about the first big "canary in the coalmine".

There have been and will continue to be others.

My biggest concern about Depression 2.0 is not barriers to trade, but barriers to credit.

NZ is short on savings.......what happens as increased blowback from tax-payer bailed out and nationalized foreign banks results in pressure for more domestic and less international lending?

I have been looking long and hard everywhere around Auckland for property...

Cashflow positive ones are still a rarity, it seems the market has become more efficient over the years (I'm reading posts on another forum about how someone bought houses for 16% yield in southland many years ago. WTF!!)

Ananda and Lake...provide some common sense...McDunk...still tugging like a fervent schoolboy.

Interesting comment...

“Capital is now available,” said Peter Sorrentino, who helps manage $13.8 billion at Huntington Asset Management in Cincinnati. “Indicators of stress in the financial system are getting back to their historical relationship. That’s bringing investors back into the marketplace.”

its a different ballgame now and for the forseeable future...a paradigm shift in residential property as an investment vehicle delivering cap gain.

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Originally Posted by The Doctor

its a different ballgame now and for the forseeable future...a paradigm shift in residential property as an investment vehicle delivering cap gain.

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I nearly broke my neck tripping over the ambiguity ....do you mean for the foreseeable future it will return to delivering capital gains; or do you mean it will no longer be seen as a capital gain investment?

it was verbose...the 2nd scenario....no more cap gain.

Now is the time to stick to your knitting
Get back into the commodity stocks macdunk
Nickle stocks are going bullistic
The bull market in realestate is well and truly over - it will be 5-10 yrs before you'll get good cap gains in realestate again

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Originally Posted by duncan macgregor

The economy is in dire straights with the only likely out come being, high inflation. To take advantage of this .. (sic) ..left is property.
What ever eventuates will see property as todays wisest investment.
Macdunk

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Totally agree. Well mostly - The dire straights bit is a little strong. But the flat out inflation will eventuate, (By the way - my daughter has a Zimbabwe Trillion dollar note - proof positive of what extreme quantitative easing does). Anyway, dust off your pocket calculators folks - there are cash positive properties out there now. Inflation is going to rip the bottom out of value of borrowed money and real increases in property is going to make even the dopiest investor appear to be a total genius.
As the world turns to schist because of population pressure and all the slings and arrows that goes with it - - lifeboat NZ is going to have strong immigration… and they ain't making any more land.

I've got my snout in the trough - - suggest you do too.

(Still holding and increasing equities, McDunk - they will be stellar too).

(Hardly got any cash - all cash will do a Zimbabwe this or next year.. I might have enough to buy this weeks' groceries - but that's all I need)

PLENTY of land in NZ...very low pop density...Mr Cropper.

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Originally Posted by The Doctor

PLENTY of land in NZ...very low pop density...Mr Cropper.

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Not necessarily good land though. Take the new residential going up around Marshlands - now I wonder why they call it that. Or Pegasus town - being built on one great big sand pit.

'Plenty of land", -Doctor,
'Not necessarily good land' -Minimoke.

Both true.

Even if NZ went to 'only' 8 million people - that's still low, but the price per acre was low to start with and then going to only some small fraction of Tokio prices still brings a high proportional yield - the usual thing input cost vs return.

And then again - a lot of NZ is swamp, mountain, scree slope, terminal moraine, flood area, sunken ria, or fjord.

From memory, NZ is about 15 people per sq km, UK is 620 odd - - but I can't see the UK going from 620 to 1240 per sq km without a truck load of trouble, whereas it wouldn't be too much of a stretch to imagine NZ going to 30 per sq km. About 8 million people wouldn't be an insane proposition(?)

PS - When I was born in (mumble mumble) I think the population was around 1.5 million - it's a bigger jump to 4 million since then.

Errata:

The population density for the UK is 'only' 426 - not the 620 I took off the top of my head stated above. Sorry folks for not checking figures before chucking them all over the net.
(Still doesn't change the basic story though).

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Originally Posted by Casa del Energia

Even if NZ went to 'only' 8 million people -.

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I'm with Dunc on this thread - but lets not get too excited. The number of households is projected to increase from 1.55m in '06 to 2.09 in 2031. But thats around the max projection with population tapering off a bit after that.

From the NZ Herald:

"Migrant growth could mean good news for property market , say economists.
A migrant-driven boost for the New Zealand property market is being tipped by economists studying new visitor arrival numbers released this morning. "

http://www.nzherald.co.nz/business/n...ectid=10573704

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Originally Posted by minimoke

But thats around the max projection with population tapering off a bit after that.

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Do you know why this is? I saw a graph the other day that showed at around 2050 or something population declining from it's peak, and I couldn't figure out why population would start decreasing. I guess it could be scarce resources constraining the population?

in the meantime, people are losing their jobs, or wages are frozen,
and houses are still out of reach of most younger buyers.
it still takes hubby and wifey working really hard on good money to purchace a house.

still lots...... if not most young people unable to afford their first home.
govt is getting into the red big time, so housing suppliments (rent payments) will be targeted at some stage.
house prices going up?
i wonder who is buying them?
speculators jumping in hoping to beat a dead market..........
untill an average worker can buy an average house close to his or her factory, like all the 40 year old plus folks could do 10 - 15 years ago, property is/ will be out of reach for all but the rental investors, and the older generation that bought when homes were affordable for the average worker.

sooner or later the oldies have to sell, and the new generation have only so much buying power.

disc........
begining the process of adding 120sqm to our house......
suppliers and tradesmen are bending over backwards to offer great deals.
looking forward to seeing the final build costs.

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Originally Posted by axion

Do you know why this is? I saw a graph the other day that showed at around 2050 or something population declining from it's peak, and I couldn't figure out why population would start decreasing. I guess it could be scarce resources constraining the population?

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I'd have to recheck - but something along the lines that the breeding generations aren't producing enough kids and there is a wave of people coming through who will be dying around then. Immigration isn't expected to make up the balance.

As a bit of an aside it is this, and other governments aim to keep the aging population out of the healthcare system. This measn that as we get older we will have to stay in our homes (and not vacate them to go to old folks homes and hospitals). Its likely we'll also have to house our Careres who will live with us - or will want accomodation nearby - so this will keep demand for housing up particular those properties which are "elderly friendly".

Quote:

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Originally Posted by minimoke

As a bit of an aside it is this, and other governments aim to keep the aging population out of the healthcare system. This measn that as we get older we will have to stay in our homes (and not vacate them to go to old folks homes and hospitals). Its likely we'll also have to house our Careres who will live with us - or will want accomodation nearby - so this will keep demand for housing up particular those properties which are "elderly friendly".

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I think Ryman might argue with that....;)

more 'immigrants'....an increase in the refugee quota will definately boost the housing market!

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Originally Posted by The Doctor

more 'immigrants'....an increase in the refugee quota will definately boost the housing market!

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Is that a sarcastic comment?

I personally know a number of refugees in NZ who have worked from nothing to owning a portfolio of investment properties. In fact, one refugee I know now owns a property portfolio of over 30 residential houses.

Refugees tend to work much hard and save more. They keep a low profile and are usually under the radar.

he get a $27,000 kickstart from the gummint to fund his foray into property speculation?

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Originally Posted by The Doctor

he get a $27,000 kickstart from the gummint to fund his foray into property speculation?

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Nope. These guys come over here with nothing and starts working 2-3 jobs to build up some savings. With their hard earned savings they start a small business and/or invest their money. After a number of years they become successful and build up a nice little investment portfolio. With the capital base and businesses they create wealth and jobs for NZers.

Most refugees dont need handouts. They came from nothing and understand the importances of hard work. They value an opportunity and they will not lose this opportunity to create a life for themselves and their family. Most people fail to see this.

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Originally Posted by Dr_Who

Is that a sarcastic comment?

I personally know a number of refugees in NZ who have worked from nothing to owning a portfolio of investment properties. In fact, one refugee I know now owns a property portfolio of over 30 residential houses.

Refugees tend to work much hard and save more. They keep a low profile and are usually under the radar.

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Couldn't agree more with one particular refugee I know.

He's an Afghani taxi cab owner, working his @ss off and reinvesting it all and reinvesting it prudently.

Starting with absolutely NOTHING 8 years ago, he's doing quite well for himself......successfully self-employed, NZ citizenship, married, making babies, and clearly an enthusiastic member of Team NZ.

He's like a couple of South Africans I know....except he doesn't whinge as much :)

If only every refugee and migrant NZ receives were made of the same stern stuff!

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mackdunk-BRUT Only a fool gambles on what mortgage rates will do when it comes to risk in the business world. Always and i mean always do the numbers sometimes you win some times you lose but you never risk being in the position of looking at a losing position bankrupting you to try and time the market. Come back in three years time it might be you with a 20% mortgage

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You make some good points in that post mackdunk, but I am very very skeptical of NZ ever having super high interest rates/inflation, (ever again)...
The Policy targets agreement PTA, has made major in roads since the early 1990's...
I know you say " never say never"... well...
If you have studied NZ Economic history like I have, then I bet you would not post like that

whats that, you saying to never risk being in a losing position bankrupting yourself...?
thats what investing for a newbie a few years ago would have done mackdunk...

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mackdunk-The economy is in dire straights with the only likely out come being, high inflation. To take advantage of this depressed market, and low interest rates means that now is the time to lock in for as long as you can get, that mortgage, at these low rates

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I thought the time to lock it in was two years ago at 10% ?
hehehehehehe...
:D
.^sc

Quote:

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Originally Posted by Shrewd Crude

...but I am very very skeptical of NZ ever having super high interest rates/inflation, (ever again)...
The Policy targets agreement PTA, has made major in roads since the early 1990's...
I know you say " never say never"... well...
If you have studied NZ Economic history like I have, then I bet you would not post like that

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We are just about to begin the next inflationary cycle. It's predictable because it is tied to demographics. Retirement and birth bubbles drive inflation because these two demographics put pressure on taxation and non or delayed productive expenditures. While we pay new hospitals, schools, retirement benefits etc we put pressures on a proportionately smaller taxable pool. The typical solution is to raise tax rates. But because that tax money is being spent on the very old and the very young, there is little immediate productive benefit. With the baby boomers we enjoyed the reverse of this once they had finished with school and university. This is why economic growth, investment, productivity growth, tax rates and inflation all came under control after the late 80s - the boomers had all joined the work force and started consuming and investing in earnest.

For economic historians the trend between demographic cycles and economic cycles is compelling for at least the last two hundred years (basically since we started getting better at documenting economics and demographics).

The output from the looming cycle will be lower real growth, progressively higher taxation, declining productivity growth (god help NZ here), lower investment returns, government deficitis, higher inflation.

At present most of the Boomers are still working (Current economic recession aside). From demographics we know that work force participation begins to decline at age 55 and goes into terminal nose dive at 65. The mid point of the Baby boom is now about age 53.5. The oldest Baby Boomers are 63. Guess how long before the pressure really comes on?

Quote:

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Originally Posted by Shrewd Crude

You make some good points in that post mackdunk, but I am very very skeptical of NZ ever having super high interest rates/inflation, (ever again)...
The Policy targets agreement PTA, has made major in roads since the early 1990's...
I know you say " never say never"... well...
If you have studied NZ Economic history like I have, then I bet you would not post like that

whats that, you saying to never risk being in a losing position bankrupting yourself...?
thats what investing for a newbie a few years ago would have done mackdunk...




I thought the time to lock it in was two years ago at 10% ?
hehehehehehe...
:D
.^sc

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A lot thought rates would not go as high as they did, but looked what happened and how fast they retreated and then the longer rates shot back up again.

Let's hope you are right SC.

Rates coming off a low OCR and maybe to go lower, but the OCR does not have as much influence as it use to in these times.

Quote:

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We are just about to begin the next inflationary cycle. It's predictable because it is tied to demographics. Retirement and birth bubbles drive inflation because these two demographics put pressure on taxation and non or delayed productive expenditures. While we pay new hospitals, schools, retirement benefits etc we put pressures on a proportionately smaller taxable pool. The typical solution is to raise tax rates. But because that tax money is being spent on the very old and the very young, there is little immediate productive benefit. With the baby boomers we enjoyed the reverse of this once they had finished with school and university.This is why economic growth, investment, productivity growth, tax rates and inflation all came under control after the late 80s - the boomers had all joined the work force and started consuming and investing in earnest.
For economic historians the trend between demographic cycles and economic cycles is compelling for at least the last two hundred years (basically since we started getting better at documenting economics and demographics).
The output from the looming cycle will be lower real growth, progressively higher taxation, declining productivity growth (god help NZ here), lower investment returns, government deficitis, higher inflation.
At present most of the Boomers are still working (Current economic recession aside). From demographics we know that work force participation begins to decline at age 55 and goes into terminal nose dive at 65. The mid point of the Baby boom is now about age 53.5. The oldest Baby Boomers are 63. Guess how long before the pressure really comes on?

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Halebop
that was a thought provoking post...
I think that post is mostly Right and a few points wrong, or at least it doesnt all add up...
Inflation came under control in the late 1980's 1990's because of The Policy Targets Agreement (alone)... Demographics had little to do with it...
I would like to show you why, but I cant remember my password for Flickr.com to post my home made charts...

The make up of Inflation is much more than just Demographics...
ok lets start at the beginning...
Inflation is made up of many different factors... macroeconomic policy, Monetary policy, and yes demographics... if Demographics were so important of inflation then how come Statistics New Zealand only predict 22% of the population will be over 65 in 2030?
...
..
.

If you think about this on a basic level, inflation is a function of supply and demand framework, excess supply, excess demand...Its a process where consumers bid for goods and services in the market place... Through this process, consumers send signals to producers on how much to supply and at what price etc...
This is inflation at its finest...
comsumers basically bid up/down the price of goods and services through their consumption...
Halebop,
I agree that the next cycle will be higher inflation, (not out of control inflation)... I dont understand your logic behind why?... you are saying that baby boomers in retirement is inflationary, but I dont see it like that because they are putting less pressure on inflation as they are not bidding up prices of goods and services... but they are putting more pressure on the public sector... so there is clearly some cancellation.... as to the extent, Im not sure...
in your post you are saying that while baby boomers were studying at school and Uni, there was pressure on inflation, and when they entered the real World it came under control...If you think about what I've said, then something does not add up?

heres another post..

mackdunk said this yesterday

Quote:

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We are about to get into a high inflation period later in the year so interesting times old buddy

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first of all Mackdunk...
what do you define as high inflation...
5%? 10% 15%?

anyway,
This post could not be more wrong...(this year, and next year anyway)....

I have said this before...
After many years of speculators profiteering from NZ's closed economy, the PTA was all about open, fully disclosed markets, so that speculators could not control for example the exchange rate under fixed exchange rate targeting...
Here in NZ we now have the most open Central Bank in the World...
So mackdunk, all I can say to you, is to read the last OCR statement on 30th April... rbnz.govt.nz
and in that announcement it clearly says.............................
.........................
hehehe... go read it mackdunk...
:cool:
.^sc

Those that have been going around to open homes, auctions and negotiated for a property recently would have noticed that the houses in the good areas of Auckland have been snapped up at a premium to the CV.

Open your eyes and you will see.

SHREWDY, You missed your chance to get one foot on the ladder with a low deposit.
Like so many other people i met in the past you are now forced to throw your money away paying rent, bleating on about how tomorrow will be a better time to buy. All those people in the past lived to regret missing their first opportunity. You will in the future wil regret missing yours.
NZ is in a bad way, Factories relocating overseas, America reintroducing subsidies to farmers, which will be followed by the more enlightened countries to protect their industries. Interest rates will sky rocket the NZ share market will end up a big nothing the only thing left holding its worth is property for all the people coming back to retire.
Macdunk

Duncan,
Sounds like you will be leaving the country soon. You forget to mention that NZ is a small nimble economy with an educated population. Read page A2 of this mornings herald and you will see previous doom and gloom merchants (previous finance ministers) chanting a similar mantra to yours. Thank goodness many of us have a positive and entrepreneurial attitude to living in this country and striving to make the future better for all of us.

Dunc,

Wanna answer me a question?

If the answer to factories closing and businesses failing is buying residential property, then why was the average price of residential property sold in Detroit in December $7,500 USD?

Maybe - just maybe - the state of the residential property market there reflected demographics, business conditions, and the wider economy of the area?

If you predict a future of mass unemployment and business failure, the answer is NOT to buy residential property as an investment. This is merely a leveraged play on how the bigger picture is doing.

Mackdunk
Ive seen Braveheart... and I completely understand where your coming from Mate.... after decades of supression from Longshanks, (Edward 1 of England), yourve decided to go out hell bent on blood, even if it means attacking friendly, local online posters (who are right)...
after decades of murder, rape, pillage of your countrymen, it would be enough to make any grown man blood ravenged...

yourve sacked countless towns... and yourve destroyed countless threads with your dribble...

do you want another destroyed thread...?

You what happens to William in the end...?
:cool:
.^sc

Quote:

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Originally Posted by Stranger_Danger

Dunc,

Wanna answer me a question?

If the answer to factories closing and businesses failing is buying residential property, then why was the average price of residential property sold in Detroit in December $7,500 USD?

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I'll leave Dunc to answer that question. But I do think there is an inherent danger in comparing the US (sub-prime) property market in one isalated city whose population has shrunk (halved) regularly over the past 4 decades whose economy is somewhat reliant on a dinosaur age motor industry with little old NZ.

But people have to live somewhere. The population of Auckland is around 1.4 million. Growth rate is 1.5.% per year which is driven by both net natural growth and immigration. That means 21,000 extra people need somewhere to live each year. Nothing much is being built at the moment here as reflected in the building industry, and the transport system limits the spread of the city so puts more pressure on the existing housing stock nearer the central city. Houses aren't selling so more people are renting. I enjoy being a long term property investor in Auckland.

people need homes to live in.Its high time the tax breaks for speculating in property were closed.

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Originally Posted by The Doctor

people need homes to live in.Its high time the tax breaks for speculating in property were closed.

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There are no 'tax breaks' for property investors. It's a myth. Tax treatment is the same as any other business activity in NZ. Same goes for any other investment activity such as shares.

Perhaps the Doctor could be more specific about what these tax breaks are and how they are different from any other business?

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Originally Posted by Arbitrage

But people have to live somewhere. The population of Auckland is around 1.4 million. Growth rate is 1.5.% per year which is driven by both net natural growth and immigration. That means 21,000 extra people need somewhere to live each year. Nothing much is being built at the moment here as reflected in the building industry, and the transport system limits the spread of the city so puts more pressure on the existing housing stock nearer the central city. Houses aren't selling so more people are renting. I enjoy being a long term property investor in Auckland.

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Has anyone ever thought of the elasticity of people to stay an extra few years in a flat environment? Or to consolidate to save?

What about changing of peoples behaviour?

I dont think we'll ever see houses as cheap as the early days like you older folk had, and our generation will just have to get used to that. Easy credit and deregulation has taken care of that those days wont exist.

You do have to admit that house price has overshot the mark a bit in this last rally dont you?

Also, it depends what your wanting to buy that depends on the right time.

If we could separate the statistics, I think you would find first home buyers typical houses will be reducing in value at a faster rate than say the mid-market properties. Most people in the market for mid-market properties will have no trouble with a deposit whereas first home buyers are now restricted by the 20% threshold imposed by most banks. This equals less demand for the typical first home buyer property. If you talk to a few honest real estate agents who are actually objective, they will tell you thats what they have seen.

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Originally Posted by funguspudding

There are no 'tax breaks' for property investors. It's a myth. Tax treatment is the same as any other business activity in NZ. Same goes for any other investment activity such as shares.

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I think hes talking about 'ring fence property losses.' Its not in other countries that im aware of...

Housing is unproductive...we need policies that reflect that.

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Originally Posted by upside_umop

, I think you would find first home buyers typical houses will be reducing in value at a faster rate than say the mid-market properties.

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I think the Welcome Home Loans will help prop up this end of the Market.

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Originally Posted by upside_umop

I

Housing is unproductive...we need policies that reflect that.

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Housing is "productive" insfar as people need somewhere to live. Putting your money into finance companies that go bust is arguably unproductive as is a sharemarket that is collapsing. Investing in offshore stocks isn't productive for the local economy and putting your money on term deposit in a triple A rated institution, while perhaps productive for the recipient of those funds is not necessarily benificial to the depositer.

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Originally Posted by upside_umop

I think hes talking about 'ring fence property losses.' Its not in other countries that im aware of...

Housing is unproductive...we need policies that reflect that.

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Ring fencing any taxable activity flies in the face of common sense. It will never happen for the very sensible reason that it could leave tax payers having to pay tax out of money they do not have and never have had. Muldoon tried a similar bit of nonsense with interest claims. He also tried claw back tax, which was nearly, but not quite as disastrous as
Rowling's spec tax. All have acheived the opposite of what is intended. NZ already has an extremely high rate of home ownership, so something is working and doesn't need 'fixing'.

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Originally Posted by funguspudding

Ring fencing any taxable activity flies in the face of common sense. It will never happen for the very sensible reason that it could leave tax payers having to pay tax out of money they do not have and never have had. Muldoon tried a similar bit of nonsense with interest claims. He also tried claw back tax, which was nearly, but not quite as disastrous as
Rowling's spec tax. All have acheived the opposite of what is intended. NZ already has an extremely high rate of home ownership, so something is working and doesn't need 'fixing'.

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Its one of the many recommendations of economic think tanks. By ring fencing, it essentially makes housing a better investment/business, when we all know how unproductive it is. Therefore it would be better to scrap the ring fencing in order to improve investment into more productive areas and innovative industries. This is what will lead to a higher standard of living in the long run.

I guess its whether you define it as a problem, or an area of improvement for NZ?

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Originally Posted by Arbitrage

I enjoy being a long term property investor in Auckland.

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And I enjoy being a long term renter in Auckland...

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Originally Posted by minimoke

Housing is "productive" insfar as people need somewhere to live. Putting your money into finance companies that go bust is arguably unproductive as is a sharemarket that is collapsing. Investing in offshore stocks isn't productive for the local economy and putting your money on term deposit in a triple A rated institution, while perhaps productive for the recipient of those funds is not necessarily benificial to the depositer.

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Housing is unproductive. Fact.

Your also failing to take into account the leverage affects. Most people wont 105% leverage themselves in the sharemarket! But a lot of first homebuyers would have through westpac...yay 105%*-10%*380k = a nice bit of negative equity would you not think!

Investing in offshore stocks is productive if in fact the investment is on offering is more attractive than local, as in the long run, that money will be returned to NZ and in greater proportions than could have been achieved in NZ. Would you have told someone not to invest in Apple/Microsoft/Google even if you knew it was going to go gangbusters, because of the fact it wasnt going to create jobs in NZ? I sure hope not! That increase in real wealth will benefit greater in the long run than any socialist view of helping factory workers out would.

Depositing with a AAA depositor is efficient as the depositor has low risk and a reasonable amount of certainty of return of that money. The bank will then go and lend to housing or business. What do you think is more productive? Housing or business?

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Originally Posted by upside_umop

Housing is unproductive. Fact.

Your also failing to take into account the leverage affects. Most people wont 105% leverage themselves in the sharemarket! But a lot of first homebuyers would have through westpac...yay 105%*-10%*380k = a nice bit of negative equity would you not think!

Investing in offshore stocks is productive if in fact the investment is on offering is more attractive than local, as in the long run, that money will be returned to NZ and in greater proportions than could have been achieved in NZ. Would you have told someone not to invest in Apple/Microsoft/Google even if you knew it was going to go gangbusters, because of the fact it wasnt going to create jobs in NZ? I sure hope not! That increase in real wealth will benefit greater in the long run than any socialist view of helping factory workers out would.

Depositing with a AAA depositor is efficient as the depositor has low risk and a reasonable amount of certainty of return of that money. The bank will then go and lend to housing or business. What do you think is more productive? Housing or business?

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PAra 1 - You'll find coment on teh Westpac 105% loans. Eseentially ther view at teh tim was "Madness!". I don't know how mnay wanted or took up this loan..

Para 2 I understand that investing offshore is productive - but arguably more so for that local economy than ours. Equally we could say that investment in say Enron isn't that great an idea.

PAra 3. And just how many sub-primes had a AAA rating?

Investment in business is obviously productive. But if you don't have people investing in houseing to house those workers in these businesses they aren't going to be very productive.

I meant off setting losses....I concur with upside umop.

Shrewdie .... have you read this guy (pretty esteemed gentleman) saying the only real way for US to get out of the ****e is high inflation .... if we ran the numbers for NZ probably the same story .... don't think that a target policy will help

http://www.ft.com/cms/s/0/71520770-4...nclick_check=1

Quote -Inflation will do it. But how much? To bring the debt-to-GDP ratio down to the same level as at the end of 2008 would take a doubling of prices. That 100 per cent increase would make nominal GDP twice as high and thus cut the debt-to-GDP ratio in half, back to 41 from 82 per cent. A 100 per cent increase in the price level means about 10 per cent inflation for 10 years. But it would not be that smooth – probably more like the great inflation of the late 1960s and 1970s with boom followed by bust and recession every three or four years, and a successively higher inflation rate after each recession.

Thats exactly what the central banks around the world is doing, inflating our way out of this recession by using the printing press. The recent bottoming and steep climb of the commodities is a big flashing sign right in front of our eyes.

We can talk till the cows come home about all these fundamentals that will keep asset prices down, but if you are not in it, then you will miss out. A good example is copper and copper stocks that have put on nearly 100% in a few months.

The housing sectors is very productive in the NZ economy and makes up a large percentage of our wealth. Alot of jobs are created in the building industry and the flow on effect from it to other complimentary industries. FACT!

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Originally Posted by Dr_Who

Thats exactly what the central banks around the world is doing, inflating our way out of this recession by using the printing press. The recent bottoming and steep climb of the commodities is a big flashing sign right in front of our eyes.

We can talk till the cows come home about all these fundamentals that will keep asset prices down, but if you are not in it, then you will miss out. A good example is copper and copper stocks that have put on nearly 100% in a few months.

The housing sectors is very productive in the NZ economy and makes up a large percentage of our wealth. Alot of jobs are created in the building industry and the flow on effect from it to other complimentary industries. FACT!

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Central banks inflating our way out of this? There is only one central bank that can do that without too many adverse effects...and its not NZ's.

Have a guess and why that it is Dr.

Housing is not as productive as say, dairy. The NZ economy is too focused on housing and it doesnt make sense to have apprentices charged out at $60 an hour plus. That is unproductive. Its not productive to pay real estate agents 4%+GST of a house price They're not creating an efficient market. Real estate agents are one of the biggest beneficiaries of a housing boom. They are unproductive.

Who cares if owning a property is productive or not?. Who cares if NZ has a larger proportion of its population owning their own homes than comparable countries. Some one has got to own the house you live in. Whats the difference between you the Govt or the council, or a private landlord? owning it you still gottahavahome.
The money still has to come out of circulation that otherwize might have been invested in some factory business relocated overseas in order to exploit slave labour conditions.
In the great scheme of things, it makes little difference who owns it, as long as it houses a productive worker and his family. The only question is do we or dont we have to many houses, and if so market forces will drive the price up or down.
When i see families living in garages in this day and age, i know that we have got it very wrong in the past. The social cost of poverty is a high price to pay if we all get to smug to even see it coming. Macdunk

The equities market is a crystal ball to the future of the property market.

Abit like equities, if you are not in, then you will miss out.

http://www.stuff.co.nz/business/indu...s-property-tax

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Treasury suggests property tax

Treasury Secretary John Whitehead today risked the wrath of property investors by suggesting New Zealand address the long standing issue of taxing capital gains from property investment.

In a speech to the Institute of Directors, he called for a debate about "significant adjustment and change'' so the economy can emerge strongly from the current recession.

He focused on taxation, regulation, the role of the public sector and making New Zealand an attractive investment destination.

"At the risk of being chased down by an angry crowd with pitchforks and flaming torches, yes this should include consideration of moving the boundaries to tax more capital gains - for example on investment property - and shifting more of the tax base towards consumption,'' he said.

Capital gains, or property taxes, would encourage investment into productive activity.

Also, New Zealand's company tax rates were at the upper end of the scale by the standards of the OECD and other small open economies.

"The pressure on us will be even stronger if the review of Australia's tax system currently under way leads to further company tax cuts across the Tasman.''

The call for more fundamental policy changes comes at a time when the Government has been seeking advice outside Treasury and after a budget that was seen as tackling immediate fiscal and economic pressures.

Mr Whitehead said that for New Zealand to come out of the recession stronger than other countries it had to tackle long standing constraints on growth.

"Our judgment is that many of New Zealand's current policy settings will not deliver the performance we need,'' he said.

An era of cheap credit was over and investors were more risk averse. New Zealand needed to work much harder to attract foreign investment, Mr Whitehead said.

The Government is reviewing the Overseas Investment Act, the Building Act and the Resource Management Act, with the aim of removing barriers and improving productivity.

Mr Whitehead suggested creating independent entities to assess the costs and benefits of policies and regulation.

"This is one of the roles the Productivity Commission plays in Australia,'' he said.

Commenting on the role of the public sector, he said any further spending by it needed to be justified.

"Put simply, we need to shift the onus of proof and focus government spending where the benefits are greatest''.

There were opportunities to do things better in the public sector, in the international environment, in the tax environment and in the regulatory environment.

"The time to grab these opportunities is now,''' he said.

- NZPA

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There we have it Dr.

And why care about it macdunk? Because things like this will pop up and poop all over your investment strategy. Now is not the time to buy property.