NZ 1st homebuyers are ScReWeD...

[Mr_Market]

Just be patient and keep investing. Prices will not be 7x wages for the rest of your lifetime. Fear will hit the market eventually and will drive out the speculators. Bide your time and you will pick up a bargain.

[STRAT]

Hi Shrewdy,
I went back to your opening post to ascertain your position in this debate but couldn’t find one. If I was in the market looking for a house today to live in I would like yourself be waiting to see what happens over the next wee while ( weeks , months, year ) and adjust my decision to buy as things unfold. I agree we have hit the top of one of the longest property booms ever. If I was looking for an investment property it would be business as usual. If a property can wipe its own ars then its worth buying ( as a long term investment ) irrespective of whether the price dips in the next 3 months to 3 years. If you cant find a property that is cash flow positive then you have answered your own question as to whether you should buy or not but it really comes down to your individual circumstances. Live in or not. Flatmates or not, Joint venture or go it a lone, Deposit size, Current rent and living expenses etc etc. The key thing to remember is that long term RE is a stable investment so as long as you are using someone elses money to purchase and maintain you really cant go wrong. Second key point is with the way mortgages are set up these days ( may be changing soon with the credit crunch and all ) as your equity increases you gain access to credit at favourable rates.
I guess if you add a little detail about your position or create a hypothetical scenario it could be discussed in more detail. I haven’t read the whole thread so forgive me if this has already been done.

[HIDDENGEM]

Analysts were divided on housing market after the peak in2007. Some top investors are very cautious now.

We know property prices plummeted in USA, Some Europeancountries and DUBAI.

Fortunately both New Zealand and Australia escaped from residential housing market crash.

In New Zealand some Finance companies went intoreceiverships due to investment in overheated real estate markets by propertydevelopers.

I had to forget my first investment in stocks in a financialcompany in New Zealand.

Do you think is it safe to buy first home now or wait until 2012? I have some sort of worry about housing market in New Zealand andAustralia.

Even IMF said New Zealand residential market is over valuedcompare with income level.

Thanks.

http://www.stuff.co.nz/business/money/4984743/New-Zealand-property-market-over-valued

New Zealand property market 'over-valued'

Last updated 15:22 10/05/2011

New Zealand's house prices are over-valued by around 15 to 25 per centcompared to the average over the past 20 years, according to the InternationalMonetary Fund.
In its latest country report on New Zealand the IMF said there was someuncertainty though around the estimate which was based on the OECD's house priceto income ratio as at September last year.

That uses a combination of simple metrics and models and fails to take intoaccount Statistics New Zealand's recent upward revision to household income.
Under the OECD model real house prices rose by 150 per cent in the 15 yearsto 2007, the report said, making it one of the strongest increases amongadvanced countries.
Since then though, house prices have fallen by more than 10 per cent.

Alternative models show varying rates of over-valuation but in the sameballpark as that of the OECD.

A new model developed recently that takes account of income, demographicsand interest rates, suggests house prices here are over-valued by 20 to 25 percent, the IMF said.
Yet another alternative model that includes demographics, mortgage interestrates and the terms of trade instead of future income, indicates house pricesare overvalued by 15 to 20 per cent.
That model is sensitive though to terms of trade and interest ratemovements, for example, a 10 per cent fall in the terms of trade could resultin an 8 per cent fall in houses prices over the medium term.

When it comes to residential rents, the OECD's price-to-rent ratio shows amuch higher over-valuation of 43 per cent relative to the past 20 years.

''However, the measures includes government subsidised rents which haspushed up the ratio over time as subsidised rents decreased, most noticeably in2001''.
If you take subsidised housing out of the picture, the rent overvaluationdrops to about 15 to 27 per cent when compared to the historical averages.

http://www.bloomberg.com/news/2010-1...ket-gains.html


IMF Sees Risk in `Mild Overvaluation' ofAustralian Housing Market Gains

By Michael Heath - Oct 7, 2010 1:06 AM GMT+1300Wed Oct 0612:06:49 GMT 2010

The International Monetary Fund cautioned that housing inAustralia may be overvalued and a reversal in pricescould hurt consumers in one of the few advanced economies to skirt last year’sglobal recession. “Given assessed mild overvaluation, a potential correction inhouse” prices “could hit household wealth and consumerconfidence,” the Washington-based IMF said today in its World EconomicOutlook. Housing in many other parts of the world remains a “drag on growth”and a risk to lenders, the fund said.

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