NZ 1st homebuyers are ScReWeD...

[minimoke]

Im convinced he will go floating on my advice... I will free carry him if im wrong, its just not possible (with one more rate cut this year)...

Hopefully you have deep pockets! Here’s why: currently ANZ rates are 10.95 floating and 8.95 for a 2 year fixed.

If your mate fixes for 2 years he’ll pay $35,800 on a $200k mortgage.

If he takes your advice he’ll pay $21,900 for the first year interest on a floating rate. And say the rates drop a whole 1% (which I don’t think they will) he’ll pay $15,900 if he fixes for 2 years in a years time. This means you’ll have him paying $37,800 over the next two years.

So on your advice he’ll pay $2,000 more and he’ll be playing the interest market and wondering when to best time his move – only to find he’s miss timed it and lost a couple of K along the way.

Each month he follows your advice he’ll be paying $333 more in interest. Any drop in interest rates has to be large enough to recoup that loss – and this is without factoring the compound effect of reducing his mortgage by this amount each month in the meantime.

[Cooper]

Hopefully you have deep pockets! Here’s why: currently ANZ rates are 10.95 floating and 8.95 for a 2 year fixed.

If your mate fixes for 2 years he’ll pay $35,800 on a $200k mortgage.

If he takes your advice he’ll pay $21,900 for the first year interest on a floating rate. And say the rates drop a whole 1% (which I don’t think they will) he’ll pay $15,900 if he fixes for 2 years in a years time. This means you’ll have him paying $37,800 over the next two years.

So on your advice he’ll pay $2,000 more and he’ll be playing the interest market and wondering when to best time his move – only to find he’s miss timed it and lost a couple of K along the way.

Each month he follows your advice he’ll be paying $333 more in interest. Any drop in interest rates has to be large enough to recoup that loss – and this is without factoring the compound effect of reducing his mortgage by this amount each month in the meantime.

Yes... and you also have to factor in how much of the bank's borrowing is tied to the OCR; remembering that around 40% (from memory) is borrowed offshore, in an environment which is set to see increasing interest rates.

[Dr_Who]

There must be some crazy people then because houses have been selling in Rotorua for $500, $600, $700K without a glimmer of a waterfront.

$700k with not views in Rotorua!!??? You can get a nice place in Mission Bay, Orakei, St Heliers, Remuera for $700k.

I think maybe it is time to start looking at property again for the long term portfolio. I cant guess the bottom of the market, but the interest rate continue downtrend should help stimulate the market.

[Crypto Crude]

minimoke...SC – looks like we still haven’t gotten the distinction sorted yet. You can only own one home at a time – the rest are “investment “ properties. Both two quite different things!

what about this example,
three homes...Live in one home, Monday through wednesday....Thursday and Friday in the 2nd home... and the weekend at the third...

.^sc

[axion]

Or a normal home, a weekend 'country' home, and a holiday home ;P

[Dr_Who]

The lack of property development will have a supply crunch of new housing onto the market in the near future. I cant really see any properties being developed in this environment. Any thoughts?

[lakedaemonian]

The lack of property development will have a supply crunch of new housing onto the market in the near future. I cant really see any properties being developed in this environment. Any thoughts?

Personally, I think builders will be in limbo for a few years.

The cost of materials isn't dropping.

The cost of building labour isn't dropping.

BUT the cost of existing homes IS dropping.

I reckon quite a few builders are going to be living pretty thin off of buyers who purchase existing homes cheap and retain a builder for SOME renovations to suit.

I just don't see the immigration "tap" or overseas homesick Kiwis turning on in any level of volume that will help builders in the short-to-medium term.

And I think it's due to two reasons:

1.)a massive overbuild in new housing....with yet more to be delivered and in the planning stages....at least that's the way I see the greater Christchurch area.

2.)residential property prices reverting to the mean(and quite possibly overshooting to the underside along the way)

The property market is in the process of attempting to digest a gigantic bowling ball of both new and existing home inventory.....a bad case of indigestion is inevitable.

One thing that could help in 3+ years would be a new government turning on the immigration tap in a fairly significant way as the Kiwi drops in the toilet...I'm not condoning such a policy, but it would likely help builders still solvent in several years time.

Just my 0.02c

[Dr_Who]

I have started looking seriously into the property market again. Property is long term, who knows where it will go in the short term. It is impossible to pick the bottom. As long as the numbers work for you, then it is a good investment.

I think National govt will turn the immigration tap again to stimulate the domestic economy. Without immigration, Auckland is stuffed.. LOL

[Crypto Crude]

dr who,
Perhaps we have our first bear turning buff?

Humm... You are on the right track, I still think you are toooo early
At this stage, late next year I will buy (I have no choice until at least Jan/Feb/March when I start to have an income)....wait my friend...
You will be well rewarded if you do.The US house market is 2 year ahead of us and houses have only been falling here for 6 months... market still way overvalued...(in the near term- not in the long term)...
... if you dont mind it falling in value abit more then buy now... long term you will be up regardless...

With Technical analysis there is a simple rule.. buy when the asset is rising... sell when the asset is falling... If you wait for the asset to stop falling and start rising then you will get in on the uptrend, and you will still buy it below todays price...
theres no telling how oversold housing could become if it really got bad...
My good buddy made a bad move even though he bought at a cheap price (as per my example)... the only way to really know, is to wait and see...
all the best... later...

.^sc

[STRAT]

dr who,
Perhaps we have our first bear turning buff?

Humm... You are on the right track, I still think you are toooo early
At this stage, late next year I will buy (I have no choice until at least Jan/Feb/March when I start to have an income)....wait my friend...
You will be well rewarded if you do.The US house market is 2 year ahead of us and houses have only been falling here for 6 months... market still way overvalued...(in the near term- not in the long term)...
... if you dont mind it falling in value abit more then buy now... long term you will be up regardless...

With Technical analysis there is a simple rule.. buy when the asset is rising... sell when the asset is falling... If you wait for the asset to stop falling and start rising then you will get in on the uptrend, and you will still buy it below todays price...
theres no telling how oversold housing could become if it really got bad...
My good buddy made a bad move even though he bought at a cheap price (as per my example)... the only way to really know, is to wait and see...
all the best... later...

.^sc

Wow Shrewdy you are really taking this TA thing on board. Dont let Tricha find out

May I ask what stats you are using for your TA analisis in the housing market?