NZ 1st homebuyers are ScReWeD...

[upside_umop]

Isn't that because the LPT's are at nearly 50% discounts already?
The Dr is talking about residential property I think..Dr?

[George]

A fellow I know in Wanganui said their house price hardly rose
in 20 YEARS up to about 2000 then nearly tripled. Went from 50k to 140k
so it must have been under construction cost for all that time!
Any reason why Auckland's house prices can't stay flat for
say, 10 yrs??
George

[duncan macgregor]

A fellow I know in Wanganui said their house price hardly rose
in 20 YEARS up to about 2000 then nearly tripled. Went from 50k to 140k
so it must have been under construction cost for all that time!
Any reason why Auckland's house prices can't stay flat for
say, 10 yrs??
George

It depends how long the local economy stays flat. Its a supply and demand situation, like your friend found out in Wanganui. When the demand is there the price has to play catch up with building costs, which have increased at a higher rate than material cost.
Material cost is slightly higher than general inflation due to the increase in stainless steel and other imported products now demanded by the powers that be. When this latest crash ends people will still demand bigger and better homes making the bargains of today into real bargains. I always advise people to buy what they really want first, then worry about the price second. The house might be over priced today, the right price next year, and a bargain the following year. Construction cost should be your yardstick,buy below that, and have yourself a bargain at any stage in the cycle. Macdunk

[lakedaemonian]

It depends how long the local economy stays flat. Its a supply and demand situation, like your friend found out in Wanganui. When the demand is there the price has to play catch up with building costs, which have increased at a higher rate than material cost.
Material cost is slightly higher than general inflation due to the increase in stainless steel and other imported products now demanded by the powers that be. When this latest crash ends people will still demand bigger and better homes making the bargains of today into real bargains. I always advise people to buy what they really want first, then worry about the price second. The house might be over priced today, the right price next year, and a bargain the following year. Construction cost should be your yardstick,buy below that, and have yourself a bargain at any stage in the cycle. Macdunk

No offense, but I disagree.

I think your suggestion of construction cost as the yardstick is too simplistic.

The massive unwinding of availability and accessibility to credit is going to have huge ramifications for the RE market.

In regards to "yardsticks" we are still far, far above the mean of X multiples of the average wage to purchase the average house.

Unless we see so much liquidity reinjected into the market as to make us look like the South Pacific version of Zimbabwe, I think we are heading back towards a more reasonable X multiple of average wage for the average house.

In times of long-term financial stability I think your yardstick carries some weight, but we are potentially dealing with a black swan type of event that could destroy the foundation of your argument.

If in times of financial stability it may only take X years for your construction cost yardstick to ring true, in times of extreme financial turmoil it may take 5X years for your yarstick to measure correctly.......will the vast majority of people be able to wait that long before a different direction in life DEMANDS that they sell their property?

Net migration flows, tax policy, and existing residential investment inventory(or changes to them) all also play a significant role in how accurate or inaccurate your yardstick may be.


If we see Zimbabwean economic policies implemented TOO successfully, then I think your idea will work.

But if real estate deflation and credit contraction continues unabated and we return to more sensible, conservative, and strict credit availability and access....then RE could be dead for quite some time as in George's Wanganui example.

[Tok3n]

So 1 year one

Whats the verdict, is the property market falling or not?

To me, doesn't like it, if you compare it to all other markets e.g. the sharemarket

[Financially dependant]

So 1 year one

Whats the verdict, is the property market falling or not?

To me, doesn't like it, if you compare it to all other markets e.g. the sharemarket

IMO It is falling and with gather speed through out the year, if is just in a different part of a slower cycle.

[Crypto Crude]

tok3n,
Theres much much more house price falling to come...
some will go on and on about construction costs, but they know that its about sentiment...
They just choose to ignore the main argumennts of why house prices are falling, and go off on a tangent as they wont give an inch on the truth...
They perform in any cycle, so thats all good if you are an outlier (performer) in the property market...
theres no point preaching that stuff to the general population as most of us are not outliers...

.^sc

[duncan macgregor]

tok3n,
Theres much much more house price falling to come...
some will go on and on about construction costs, but they know that its about sentiment...
They just choose to ignore the main argumennts of why house prices are falling, and go off on a tangent as they wont give an inch on the truth...
They perform in any cycle, so thats all good if you are an outlier (performer) in the property market...
theres no point preaching that stuff to the general population as most of us are not outliers...

.^sc

SHREWDY, look at this another way. Your Cue fell from your buy price of 21.6c to 14.5c in about three weeks. Lets presume your CUE is a house on the market.
You will always find someone to sell you the house at 14.5c or lower at any stage in the market unlike shares. To say that house prices are dropping is to generalize. The average might drop making it harder to sell and easier to buy thats all. Your oil stocks have plummeted the average house price has only gone down. If the house prices didnt rise and fall it would not be worth investing in them. The bigger the drop the better i like it. Macdunk

[Crypto Crude]

Hey underdog,

No, lemons with lemons... haha...
or rotten eggs with rotten eggs... haha...

this new kid on the housing block will show these buffs how its done...
1.5 to two year wait is required for ultimate strutting...
a walk with a slight lean, in perhaps one year...
crump-> 2 years min... whats it to be buff?

im sure the RBNZ is meeting on the 23rd... be prepared for two interest rate cuts, to rub it into the fixed termers...

underdog-->I will deal with that shady character when I get back...
later all... yeaaarrgghhhh hhharrrggghhh...

.^sc

[minimoke]

... be prepared for two interest rate cuts, to rub it into the fixed termers...

Fixed termers won’t be concerned. They understand that their fixed term rides out the ups as well as the downs. They have security in knowing what their regular repayments are without the wild fluctuations that occur over the term. But what some may find is that if rates drop low enough it will worth their while breaking their loan and paying the penalty and refixing at the new low rate. You can do that with a property as equity. I’m not sure the bank would be so keen if they’d secured a loan with a share portfolio – in fact I suspect if you remind them of your security they may be looking at calling in some more cash.