NZ 1st homebuyers are ScReWeD...

[Mick100]

not sure why your haggling about construction costs
I expect that soon enough you will be able to buy a house well below the section and constuction costs - why do people assume that the minimum price of a house is construction cost?
When someone is forced to sell a house they'll have to take what the market is prepared to pay - that's hasn't got much to do with construction costs.
.

[George]

Minimoke, you say that your QV value is 50% off - do you
mean less than market value? If so, how do you know what
your market value is?
Our QV for rating is 315k while the 2004 value was 235k,
yet our rates only went up $140 for each year.
The 340k value was based on their latest report, which I
frankly find laughable.
George

[duncan macgregor]

not sure why your haggling about construction costs
I expect that soon enough you will be able to buy a house well below the section and constuction costs - why do people assume that the minimum price of a house is construction cost?
When someone is forced to sell a house they'll have to take what the market is prepared to pay - that's hasn't got much to do with construction costs.
.

MICK, Property is a long term investment for most people. When the price drops below construction cost, construction stops. The tradesmen are left with the choice of going overseas, or working for nothing, or changing occupations.
This is always followed by huge increases in property values when the market rights its self. Its happened to me more times than i care to think about. To buy below construction cost at any stage in the cycle ensures that your buy will go up in value at a higher rate than whatever the mortgage rate is, at that particular time. To place a large enough deposit on a property so that rent and other expences are covered, then refinance every three years to get your own money back you can sit back to the dumboes way to riches. Its a bit like shares buy when the market is low, sell when its high but dont be stupid enough to think you will ever pick the market at its extremities accurately. Macdunk

[duncan macgregor]

Minimoke, you say that your QV value is 50% off - do you
mean less than market value? If so, how do you know what
your market value is?
Our QV for rating is 315k while the 2004 value was 235k,
yet our rates only went up $140 for each year.
The 340k value was based on their latest report, which I
frankly find laughable.
George

QV, is a value taken from an office desk using a set formula which in most cases is well off the mark. To get a realistic value your property must be valued by a person qualified to compare your property with other similar recently sold properties after a rigorous inspection. The value of anything is in the eye of the beholder. Macdunk

[minimoke]

Minimoke, you say that your QV value is 50% off - do you
mean less than market value? If so, how do you know what
your market value is?

The QV is less than market value – with market value being my estimation of the value. My valuation is based on keeping an eye on the local real estate market which involves checking listing prices, sale time and sale price relative to the property offering. I’m one of the nosey parkers that turns up to open homes to check things out. I know the sale price of pretty much every property within a 1 ½ - 2 km radius of my place and I’ll look as far out as 5 kms for similarly valued properties to see what else a buyer could get with the same money and adjust my valuation accordingly. My latest QV is double what it was the previous time around and this is without a valuer stepping foot on the property – and they are still miles from value. Having already taken a hit on my rates I’m in no hurry to encourage them back again.

[Crypto Crude]

Mackdunk,
this is the first market crash ive been through and Im loving it...
I take it that you are far more experienced and have seen them all by now...
what was it like for you in the 1929 market crash?
were your houses falling in value then?
or maybe you came in for the sweep a few years after to pick up the road kill...?
not such a bad day on the market...

.^sc

[lakedaemonian]

not sure why your haggling about construction costs
I expect that soon enough you will be able to buy a house well below the section and constuction costs - why do people assume that the minimum price of a house is construction cost?
When someone is forced to sell a house they'll have to take what the market is prepared to pay - that's hasn't got much to do with construction costs.
.

Absolutely!

When people run out of rope, they swing from the neck until dead.

The same rule applies to any manufacturing or value added work......if inventory piles up, you burn through carrying costs, you drop your pants on price, or you do both....

[Dr_Who]

Property investments are usually long term.

IF one was to do the numbers for a long term property investment, then one would use construction cost as the model. If you can buy a house for below construction cost, in the long run you will have done very well and bought yourself a cheap under valued asset. Buy and hold. In a few years you will be laughing all the way to the bank cashing in on your capital gains once the market stablised and starts to pick up again.

[upside_umop]

Thats fair enough Dr, but the stock market is long term also and is usually a leading indicator of economic recovery, thus the housing market still hasnt seen the bottom yet.

As MickMinus100 says houses can and most likely will drop below construction costs. Stocks do this too...they tend to 'overshoot' what they're really worth...

MacDunk when you say 'below construction costs,' are you incorporating land costs aswell? Things dont look rosy for sections. Also, what kind of houses do you mean? If its a 1970's house, sure it wont suffer from leaky building but it wont have modern fixtures, so you would expect to pay less than construction costs?

[AMR]

Thats fair enough Dr, but the stock market is long term also and is usually a leading indicator of economic recovery, thus the housing market still hasnt seen the bottom yet.

Yes that's true, but a few of the LPTs on the NZX seem to have bottomed and stopped falling.