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  1. #1
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    Default Rent - Don't buy

    Good advice from the economists. Let the fools looking for huge returns from residential property pay the mortagage, rates, insurance, R&M. I read an article saying you'll get a greater return in government bonds than houses at the moment. How much risk is there in owning government bonds ??

  2. #2
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    Default

    Don't buy - house prices set to fall, banks warn

    23.03.05
    by Anne Gibson


    First-home buyers are being warned to stay out of the housing market as property prices are set to fall.

    Bank of New Zealand chief economist Tony Alexander has predicted a 10 per cent drop in the next three years and Westpac economist Donna Purdue has predicted a 5 per cent drop this year.

    Keen buyers should cool their heels and continue paying rent to take advantage of the market, Mr Alexander suggested.

    House prices rose 55 per cent in the past three years, but rents were up by less than 10 per cent.

    "In the previous housing boom, from 1993-97, both rents and house prices broadly rose together," he said. "This time only house prices have moved strongly."

    Mr Alexander cited tumbling net migration, which had gone from a record 12-month gain of 43,000 people in May 2003 to just 12,800 in January.

    He also said sales figures from Auckland's Barfoot & Thompson showed the average sale price fell from $443,000 in January to $429,000 last month, if one large sale was excluded.

    The capacity for Auckland house prices to fall was much less than that of other regions, particularly Nelson, the Hawkes Bay and Taranaki, where the price drops would be steepest, he said.

    "But young Auckland home buyers looking at gearing themselves up to the hilt should wait," he said.

    Donna Purdue said Westpac forecast a 5 per cent drop in house prices this year.

    But competitive mortgage rates at the end of last year had given the market a second wind, delaying the predicted slow-down, she said.

    Next year, prices would continue falling because of higher interest rates, low migration and increased supply of housing from record construction.

    ANZ National Bank chief economist John McDermott was more guarded. "The market is defying gravity and it's had a good run but it can't keep being repeated. To say everybody should rent is overdoing it. People buy houses for reasons other than simply as an investment."

    Bryan Thomson, chief executive of the 170-office Harcourts, hit back at criticism of the housing market, and particularly the Reserve Bank's attempts to cool it.

    "Moves by the bank to slow the market by lifting interest rates appear to be having little effect apart from the impact on our exporters," he said. "The residential property market is driven by several factors, including job security and income."

    Listings in Harcourts' northern region, which includes Auckland, fell for the second month in a row last month. But prices were up from an average $328,000 in February last year to $398,000 last month.

    Auckland investment adviser David McEwen last month warned clients about residential property, saying signals such as overheated prices and low rental yields were cause for concern.
    \"The overweening conceit which the greater part of men have of their own abilities [and] their absurd presumption in their own good fortune.\" - <b>Adam Smith</b> - <i>The Wealth of Nations</i>

    The information you have is not the information you want.
    The information you want is not the information you need.
    The information you need is not the information you can obtain.
    The informaton you can obtain costs more than you want to pay.

  3. #3
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    Default

    Take it from me guys an old time builder with years of experience. Any time is a good time to buy a property. Average property values never fall to far, they only stall at that point. However if interest rates increase placing people in vulnerable positions, then the mortgagee basement bargain section opens right up for the bargain hunter. People are very reluctant to sell below cost, and hang on. The highs and the lows on the property market average out out at 10pc up pa over the long term. It is better to pay slightly to much and get exactly what you want, as buy for something cheaper because you think it is a bargain. Down the track in one years time the property you bought that was over priced is now under priced and you get what you wanted. macdunk

  4. #4
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    Default

    Personally I think what will happen is the major centres AKL, WELL & CHCH will stagnate over the next couple of years & the smaller regional centres such as Nelson will fall but who knows how much.

    Of course there will be areas which will rise as well.

  5. #5
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    Default

    Opportunity cost of investing your money somewhere else with better return is the key to wealth that is better than the average Joe.
    This stock shines so bright that it \"Bling Blings\"

  6. #6
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    Default

    The only risk of Govt. Bonds is the risk of not making a profit.

    You will (almost) never regret buying decent property. People always need somewhere to live.

  7. #7
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    "You will (almost) never regret buying decent property. People always need somewhere to live."

    If everyone is doing it, such as now, the law of dimishing returns kicks in. An ever expanding pool of properties to rent from an ever decreasing pool of renters + interest rate rises + rates rising faster than inflation + shortage of tradesmen and you start to realise it ain't that smart afterall at the moment. I'm not slagging property off as an investment, I've made far more money out of property than shares. I'm just saying now is a good time to cash up and look for new markets.

    I'm not promoting government bonds as good investments, the returns are pathetic. What I'm saying is property at the moment & government bonds provide the same returns for two completely different risks. Who would you prefer to owe you money, the government of NZ or a the first beneficary/shift worker/solo mother that comes along as you are so desperate to rent your house out as you're competing with half of NZ for their custom.

    And don't even think about calling your own house an investment, it just takes money out of your pocket.


  8. #8
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    Default

    Cdt18 - Use the equity in your own house to fund other investments. I have very succesfully. Nuts to have 100's of thousands of lazy capital.
    Duncan - While you may not lose on property you may be buying at the top and then have little appreciation (equity) for years - as happened in the late 90's locally.
    The poxiest dumps on 350m2 sections in ChCh are being snapped up by mates for around $125,000, having $10-15,000 being spent on them then being rented for $250+ per week. The numbers stack up and while the tenants can be a challenge the cash flow is positive - not great but positive.

  9. #9
    Senior Member
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    Default

    It doesn't even seem that difficult to borrow money to buy shares. The current interest rate is 9.65%. Here are the Lending Ratios for ASB Securities. NOG is not on their list though.

    ******************************************

    ASB Securities allow borrowing on over 200 approved New Zealand and Australian shares. For each approved share a Lending Ratio is attached which is the percentage of the market value of a particular security that we are prepared to lend against.

    These Ratios are set by ASB Securities for the purpose of managing the business and should not be taken as an investment recommendation.

    ASB Securities has the discretion to change or withdraw any Lending Ratio from the approved list of shares without prior notification.

    Click here for New Zealand Shares
    Click here for Australian Shares

    New Zealand Shares
    A | B | C | D | E | F | G | H | I | J | K | L | M | N | O | P | Q | R | S | T | U | V | W | X | Y | Z |
    <pre id="code">
    Code Security Name Lending Ratio %
    10001 ASB MONEY MARKET TRUST 90 %
    10002 ASB FIXED INTEREST TRUST 70 %
    10003 ASB NZ PROPERTY TRUST 70 %
    10004 ASB NZ SHARES TRUST 70 %
    10005 ASB WORLD FIXED INT TRUST 70 %
    10006 ASB WORLD SHARES TRUST 70 %
    10007 ASB EMERGING MARKET 50 %
    AIA AUCKLAND INTERNATIONAL AIRPORT LIMITED 70 %
    AIR AIR NEW ZEALAND LIMITED 50 %
    AMP AMP NZ LTD 70 %
    ANZ ANZ BANKING (NZ) ORDINARY SHARES 70 %
    APT AMP OFFICE TRUST LIMITED 55 %
    ASBPA ASB CAPITAL PERPETUAL PREFERENCE SHARES 80 %
    ASBPB ASB CAPITAL NO 2 LIMITED - PERPETUAL PREFS 80 %
    AXA AXA ASIA PACIFIC ORDINARY SHARES 60 %
    BCA BAYCORP ADVANTAGE LIMITED 55 %
    BGR BRISCOE GROUP LIMITED 60 %
    CAH CARTER HOLT HARVEY ORDINARY SHARES 70 %
    CAV CAVALIER CORPORATION ORDINARY SHARES 60 %
    CEN CONTACT ENERGY LIMITED ORDINARY SHARES 70 %
    CHP CALAN HEALTHCARE ORDINARY SHARES 60 %
    CNZ CAPITAL PROPERTIES - ORDINARY SHARES 60 %
    DBB DB BREWERIES LIMITED 55 %
    EBO EBOS DENTAL & SURGICAL SUPPLIES ORDINARY SHARES 50 %
    FBU FLETCHER BUILDING 70 %
    FCGHA FONTERRA CO-OPERATIVE GROUP LTD CAPITAL NOTES 60 %
    FCT FOREIGN & COLONIAL INVESTMENT TRUST PLC 65 %
    FPA FISHER & PAYKEL APPLIANCES HOLDINGS LTD 70 %
    FPH FISHER & PAYKEL HEALTHCARE CORPORATION 70 %
    FRE FREIGHTWAYS LIMITED 60 %
    FTX FELTEX CARPETS LIMITED 60 %
    GPG GUINNESS PEAT GROUP ORDINARY SHARES 70 %
    HBY HELLABY HOLDINGS ORDINARY SHARES 60 %
    HLG HALLENSTEIN GLASSON ORDINARY SHARES 60 %
    HQP HIREQUIP NEW ZEALAND LTD 60 %
    IFT INFRATIL LIMITED - ORDINARY SHARES 65 %
    INL INDEPENDENT NEWSPAPERS ORDINARY SHARES 70 %
    KFL KINGFISH LIMITED 60 %
    KIP KIWI INCOME PROPERTY TRUST 70 %
    LNN LION NATHAN ORDINARY SHARES 70 %
    LPC LYTTLETON PORT COMPANY ORDINARY SHARES 50 %
    MET METLIFECARE LIMITED - ORDINARY SHARES 50 %
    MFT MAINFREIGHT LIMITED ORDINARY SHARES 60 %
    MGP MACQUARIE GOODMAN PROPERTY TRUST 55 %
    MHI MICHAEL HILL INTERNATIONAL ORDINARY SHARES 60 %
    MWL CANWEST MEDIAWORKS (NZ) LIMITED 70 %
    MZY NZX AUSTRALIAN MIDCAP INDEX FUND (NS) UNITS 60 %
    NGC NGC HOLDINGS LIMITED 70 %
    NMNPB NEWS AND MEDIA NZ LTD -- PREFERENCE SHARES 70 %
    NPX NUPLEX INDUSTRIES ORDINARY SHARES 60 %
    NTH NORTHLAND PORT CORPORATION ORDINARY SHARES 40 %
    NZR NZ REFINING COMPANY ORDINARY SHARES 55 %
    NZX NEW ZEALAND EXCHANGE LIMITED 60 %
    OZY TORTIS - OZZY FUND 60 %
    PBG PACIFIC BRANDS LIMITED 60 %
    PFI PROPERTY FOR INDUSTRY ORDINARY SHARES 65 %
    PMN PROMINA GROUP LIMITED 65 %
    POA PORTS OF AUCKLAND ORDINARY SHARES 65 %
    POT PORT OF TAURANGA ORDINARY SHARES 65 %
    PPL PUMPKIN PATCH LIMITED 60 %
    RBC RUBICON LIMITED 60 %
    RBD RESTAURANT BRANDS ORDINARY SHARES 65 %
    RCL REPCO CORPORATION LTD 60 %
    RYM RYMAN HEALTHCARE ORDINARY SHARES 60 %
    SAN SANFORD LIM
    \"The overweening conceit which the greater part of men have of their own abilities [and] their absurd presumption in their own good fortune.\" - <b>Adam Smith</b> - <i>The Wealth of Nations</i>

    The information you have is not the information you want.
    The information you want is not the information you need.
    The information you need is not the information you can obtain.
    The informaton you can obtain costs more than you want to pay.

  10. #10
    Member
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    Default

    as in any markets buying quality is best..borrow to buy shares ?? well shares can double in value but they can also go down to zero,while property will always have a value.. anyways ... yep renting is a much better option, i would recommend people don't buy their own homes but rent for many years (spoken by a landlord).
    if not you now who when..

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