Which way will the property market go now?

[Ricky-bobby]

Property weakening?.. know someone who just bought in Wellington @ 600k under RV. Only offer on the place… it was a multi-million dollar property in a nice area. Also a few higher end properties here are not moving… feels like a rapid cooling is approaching.

[Logen Ninefingers]

Looks like nobody wants to talk about property these days. Wasn’t that long ago it was all people could talk about, excitedly gabbing away to each other about the huge prices they were paying and the huge mortgages they were taking on.

[Shareguy]

We are in interesting times. What will happen to the property market is a common question these days. In fact in boom times it seemed to be a topic that dominates conversations, not so much in down times.

My thoughts are that property will continue to go up and down but as a general rule will double every 10 years, based on historical figures. Will history repeat itself no one really knows.

We started buying investment properties about 18 years ago in Auckland. In those days it was very easy to get money. With some of our properties we were able to get 110% mortgages. The banks were literally giving money away. Properties then seemed to be way undervalued. In places like Otara below replacement cost, which just didn’t make sense. The tax advantages were huge.

Our friends and family thought we were mad as we continued buying until the bank said no more. Gareth Morgan was saying at that time on the Holmes show that property was going to crash 40 percent and we had huge debt and had signed personal guarantees. We had young kids at the time and I remember feeling absolute dread thinking what have you done “we are going to lose everything”

These days you’ve got huge development happening not only from the state but also from the private sector. Large sections have been cut up and replaced with eight townhouses. If this level of development continues it is not going to be long before there is an oversupply.

For anyone wanting to get into property investment like any investment research is important. To make the big bucks you have to take risks. Its a lot harder to do these days with plenty of storm clouds on the horizon. But you know there is always something and I still feel that property investment is the key to achieve long-term wealth.

[Logen Ninefingers]

Credit crunch on its way, and property is an illiquid investment. Shares you can flick off at the drop of a hat in a falling market, houses you can't. Rich can 'happily' stay in and watch their equity (on paper wealth) drop while the desperate have to take whatever the shrinking pool of buyers offer. The economy just contracted in the first quarter while The Fed has just raised interest rates by 75 bps. I cannot imagine how bad things are going to be come 2023 but we are careening towards a very ugly recession.

The negative issues with ultra-low interest rates are many -
1/ They create dangerous asset price bubbles.
2/ They cover up for 'zombie' companies and unprofitable businesses that are exposed when interest rates rise.
3/ They promote malinvestment.
4/ They encourage people to invest in risky investments, since the safer option of income provided by saving / term deposits is no longer available.

Many Kiwi's will see their latent wealth vaporised, it is already happening to the crash in crypto and equities. These were never 'safe' investments. They were pumped up by excessive speculation caused by grossly irresponsible central bank policies.


'One in 10 Kiwis are now holding crypto assets, according to the latest survey conducted for markets regulator the Financial Markets Authority.

And direct investment in shares has overtaken term deposits in popularity for the first time in the survey, although KiwiSaver remains by far (64%) the most held type of investment.'

[JBmurc]

We are in interesting times. What will happen to the property market is a common question these days. In fact in boom times it seemed to be a topic that dominates conversations, not so much in down times.

My thoughts are that property will continue to go up and down but as a general rule will double every 10 years, based on historical figures. Will history repeat itself no one really knows.

We started buying investment properties about 18 years ago in Auckland. In those days it was very easy to get money. With some of our properties we were able to get 110% mortgages. The banks were literally giving money away. Properties then seemed to be way undervalued. In places like Otara below replacement cost, which just didn’t make sense. The tax advantages were huge.

Our friends and family thought we were mad as we continued buying until the bank said no more. Gareth Morgan was saying at that time on the Holmes show that property was going to crash 40 percent and we had huge debt and had signed personal guarantees. We had young kids at the time and I remember feeling absolute dread thinking what have you done “we are going to lose everything”

These days you’ve got huge development happening not only from the state but also from the private sector. Large sections have been cut up and replaced with eight townhouses. If this level of development continues it is not going to be long before there is an oversupply.

For anyone wanting to get into property investment like any investment research is important. To make the big bucks you have to take risks. Its a lot harder to do these days with plenty of storm clouds on the horizon. But you know there is always something and I still feel that property investment is the key to achieve long-term wealth.

Yes we have seen the growth in NZ Property values used up this 2020's decade thanks to ultra low rates in just couple of years .. No way NZ Property doubles by 2030.... ZERO . the Property pumpers , RE agents purely selling a dream using once in a lifetime historic reason why it must happen again =Pure BS

.. As rates go higher holding Negative Yielding Investment Properties esp. now with new laws on ZERO Interest deductibles becomes a massive Liability ..Higher Council rates + Insurance costs ....

We have a perfect storm coming for NZ Property ... and as we have seen overseas ...and briefly here in 2008-09 ... the over-priced unliked by the banks
-Leasehold , Apartments ,Units , townhouses will be worse affected ....

I look back over the years and at present you can Buy a LARGE 700+ acre non Diary Farm in prime high rainfall area of NZ for $3-$4million .... less than pricing several years ago ... same time units have more than doubled??

[Logen Ninefingers]

Yes we have seen the growth in NZ Property values used up this 2020's decade thanks to ultra low rates in just couple of years .. No way NZ Property doubles by 2030.... ZERO . the Property pumpers , RE agents purely selling a dream using once in a lifetime historic reason why it must happen again =Pure BS

.. As rates go higher holding Negative Yielding Investment Properties esp. now with new laws on ZERO Interest deductibles becomes a massive Liability ..Higher Council rates + Insurance costs ....

We have a perfect storm coming for NZ Property ... and as we have seen overseas ...and briefly here in 2008-09 ... the over-priced unliked by the banks
-Leasehold , Apartments ,Units , townhouses will be worse affected ....

I look back over the years and at present you can Buy a LARGE 700+ acre non Diary Farm in prime high rainfall area of NZ for $3-$4million .... less than pricing several years ago ... same time units have more than doubled??

It was a classic 'speculative mania' with irrational exuberance at all times highs. All this talk of property prices doubling every few years - with no thought at all given to underlying incomes - and it is clear people lost their heads. It was a mass delusion. Even the TV ads talking about 'yeah, this is a great buy' and levels of 'capital growth' that areas were experiencing....all feeding the mania. I take your point about farms: productive land sustaining a profitable business going for a certain understandable price, and here comes a sheetbox in Auckland selling for $1.5 million. Ridiculous. I can't imagine what people were thinking, but I do know that for a time there all people could talk about was property and property prices; excited and animated conversations, huge smiles, gesticulations......it was like if you mortgaged yourself up to the eye-balls and bought a wildly inflated bog standard house you had just won Lotto.

Amazing times, would be good to hear stories from others who experienced it & how they found it to be living through it, witnessing a full-blown speculative mania playing out. Historic really. Did anyone else find it as bizarre as I did?

[JBmurc]

I was a very small time property Developer in Queenstown from early 2003 to 2007 ..not only developing new homes but units to land banking for future developments .. also into rental properties
Last property took me 14months to sell ... many low ball offers .

. wasn't too bad as me and my girlfriend lived in the house.. but I seen many very wealthy much larger developers hit the wall and go belly up ... I seen lake view close to CBD units that were sold for $700k++ go out the door for as low as $350k only months later during the GFC period..

Seen great sections that punters were fighting over for 300k+ got out the door by the streets for $175-200k...

And the GFC was pretty mild for NZ Property mainly because interest rates dropped like a stone ... I can recall paying 9% Floating rates prior to the GFC..
compare that to know where we have lending rates more than double like 1yr fixed ...1.99% to 2.19% going to 5%+ soon

Perfect storm coming

[Logen Ninefingers]

I was a very small time property Developer in Queenstown from early 2003 to 2007 ..not only developing new homes but units to land banking for future developments .. also into rental properties
Last property took me 14months to sell ... many low ball offers .

. wasn't too bad as me and my girlfriend lived in the house.. but I seen many very wealthy much larger developers hit the wall and go belly up ... I seen lake view close to CBD units that were sold for $700k++ go out the door for as low as $350k only months later during the GFC period..

Seen great sections that punters were fighting over for 300k+ got out the door by the streets for $175-200k...

And the GFC was pretty mild for NZ Property mainly because interest rates dropped like a stone ... I can recall paying 9% Floating rates prior to the GFC..
compare that to know where we have lending rates more than double like 1yr fixed ...1.99% to 2.19% going to 5%+ soon

Perfect storm coming

I can remember the GFC being a real shock for many people, the fear was out there. But interest rates were cut massively in NZ and the government just borrowed to get through it without making any spending cuts, and we basically got through it quite quickly learning zero lessons while countries like the US and Ireland experienced a genuine property market crash.
It's an odd quirk of human psychology that until something happens, you have a very hard time convicing people that the event can or will happen. Humans are great in hindsight, but foresight is infinitely harder - particularly during the grip of a full-blown speculative mania when anyone sounding a note of caution is considered to be an insane outlier.

[clips]

" and at present you can Buy a LARGE 700+ acre non Diary Farm in prime high rainfall area of NZ for $3-$4million .... less than pricing several years ago "

where is this property ??

[JBmurc]

" and at present you can Buy a LARGE 700+ acre non Diary Farm in prime high rainfall area of NZ for $3-$4million .... less than pricing several years ago "

where is this property ??

Southland ... My wife's family run a farm in the area ... neighbouring farm have been on the market for some time one sold recently 4mill ..another one still on the market not sure if its this one but in the area... great farming land

https://www.trademe.co.nz/a/property...ing/3591998008

another just under 3mill

https://www.trademe.co.nz/a/property...ing/3617915404