NZ 1st homebuyers are ScReWeD...

[Dr_Who]

Please do stay out of the porperty market and hold cash, so that supply exceeds demands. This will only make me buy these properties cheaper. With cash unconditional offers, I am KING and can neg a good price to buy.

[lakedaemonian]

You can lead a horse to water, but you can't make it drink

You can lead a bank to credit, but you can't make it lend

While you may have bought a bargain or three relative to prices from 12-18 months ago....it could take quite some time to see much if any capital gain again.

I reckon I'm still a good couple of years away from investing in residential property and even longer until I invest in commercial property again.

[Stranger_Danger]

I agree. I own no property of any type at this time You'd have to have rocks in your head to invest in property now.

For the last 12 months cash has been king. For the next five years acquiring assets that produce the most distributable (not capital intensive, not building castles in the sky) cash will be king.

Property only works with gearing. Ever heard of anyone getting rich in a career consisting only of buying property with cash, no gearing ever? Doubt it.

Dr_who - Property didn't crash with shares in the 1987 crash. In fact there wasn't really much of a ripple till 89-early 90's when everything ground to a halt. Hell, I remember that and I was a kid basically.

And the 1987 "crash" was a pimple in comparison - for a start, most households had mild or no debt levels in comparison to today.

I have severe doubts that in 2 years time todays property "bargain hunters" will have bought bargains.

It is currently possible to walk past a string of shops and see 40%, 50% then 70% off as they top each other.

Buying a fixed, illiquid asset, using leverage, at prices 10% lower than last years dodgy valuations? Insanity.

[Dr_Who]

Property only works with gearing. Ever heard of anyone getting rich in a career consisting only of buying property with cash, no gearing ever? Doubt it.

I bought with cash and have holding power, so bring on the cheap assets. I am a long term investor so short term fluctuations dont concern me.

Housing shortage forecast

By LIZ MCDONALD - The Press | Thursday, 16 October 2008

http://www.stuff.co.nz/4728571a13.html

[lakedaemonian]

I bought with cash and have holding power, so bring on the cheap assets. I am a long term investor so short term fluctuations dont concern me.

Housing shortage forecast

By LIZ MCDONALD - The Press | Thursday, 16 October 2008

http://www.stuff.co.nz/4728571a13.html

Yeah I read that article...and while I was thinking about it I was also thinking about how high a % of total revenue the property industry is for media.....and as it shrinks so too does the media bottom line.

Just a fortnight ago I had a well known Christchurch region media outlet trying to sell me ad space.

Our team was keen on an ad spend deal but conditional on some positive editorial interest being included in the package.

We were told editorial is not for sale and we told them we were not interested in advertising.

They responded by effectively telling us editorial is now for sale

This isn't anything businesses that purchase large volumes of ad space wouldn't already know on the quiet....but it was a first time meet and greet.

Ad spend has slowed considerably in print, radio, and TV...we are getting the best deals ever......surely media are under enormous pressure to put a positive spin on things.....especially if things don't turn for the better redundancies may not be far away for some.

[Tok3n]

If that report is true, we need to tell our MPs that NZ need a massive stimulus package that includes building lots of new houses and apartments.

[Stranger_Danger]

The report is bogus but lakedaemonian's is not - I've experienced precisely the same thing.

A lot of "special offers", "one off opportunties" and "last minute cancellations" in ad land, along with very kind offers to commit to 12 months or more on advantageous terms - for your benefit, of course!

If you want more anecdotal evidence about how things are out there, try advertising $14 an hour entry level (but fulltime and stable) positions and see how many current or former real estate agents apply. Seriously.

[spook]

This is fascinating discussion - it's such a complex subject it's great to hear all the different opinions, and there are a lot of different possible outcomes. If I subscribed to the "Hell in a handbasket" view of the current economic crisis then I would sell everything immediately because it will all be worth squat next year - houses, equities the lot.

This theory doesn't suit me because it suggests my personal situation will be so grim for the next ten years I may as well go and find a piece of rope with my name on it.

So what do I do? Assume things are close to bottom and could pick up in a year or two. A Simple fact with housing - if interest rates are low and prices are low there's no need for negative gearing, so property will sustain itself for the forseeable future. With the upcoming OCR review, if 2 yr rates drop to 7%, a mortgage of $250k will cost $336 a week in interest, with a tax saving (39%) of $131 leaving $205 nett. Fund that over 20 yrs and you only need to nett $316 pw in rent to pay off your mortgage. Your other fixed costs can be covered by your depreciation rebate.

How does this affect house prices? A well set up investor will snap up a buy, whether the price will be lower next year is irrelevant if it's self-sustaining. Lots of investors buying will support the market.

McDunk's right, get the good buys now, but make sure there's money left in case there's better bargains next year.

[Tok3n]

Wonder what % of NZ'ers would not be able to invest in property if you couldn't negative gear your tax losses etc.

[spook]

I don't believe in negative gearing for tax loss, but it does get a lot of people into the rental/investment market. Take that away and watch property values drop. Labour messed with commercial property rebates in the 70s and created a property recession (Just ask Bob Jones - I 'm too young to remember.

In Bob's opinion the Labour politicians back then were jealous of property tycoons making millions for nothing. I'll post the title of his book when I can find it.
"JONES ON PROPERTY (the property game for fun and profit) 1977