NZ 1st homebuyers are ScReWeD...

[miner]

"Two years ago is when first time buyers should have been saying “woo hoo”!"


Mate who's mother is an agent was telling me of 3 places that have sold lately for half what they did two years ago,not sure if they were going woohoo as they just lost between 100-300k.

The US had been going down and had been for a while while we were still going up,they are still going down,we lag behind and have only been going down for two odd years.

Each to there own but no rush for me,sit on hands watch and wait,more to go yet.

Cheers
Miner

[outspoken]

If you are on a fixed rate with Westpac, National, ANZ then you only have tomorrow to act.

If you don't break tomorrow, then after the OCR drops you will pretty much lose out.

The reason is: The above mentioned banks charge the difference between the rate that you are on now and THE WHOLESALE RATE that they get x the loan amount x the time left on the loan.
Therefore when the OCR drops Thursday, your break costs get higher.

This is obviously only an issue IF long term retail rates are going to get lower (almost certain) and you have a fair amount of time left on your fixed rate, And you are on a fixed rate of around 9%.

The other banks such as ASB BNZ Kiwi charge the difference between the rate you're on and the retail rate they offer at the time.

IMO, the first mentioned banks are gouging, as they will still borrow at OCR and lend at retail. If it was me personally experiencing this I would lodge an official complaint with the banking ombudsman.

Not sure if this has been discussed, but in case it hasn't Heads up Guys & Gals

[minimoke]

Mate who's mother is an agent was telling me of 3 places that have sold lately for half what they did two years ago,not sure if they were going woohoo as they just lost between 100-300k.

Well, what can you say. Market peaked in Nov 07 (only a year ago) with a mean value of $352,000. This suggests to me that when they were buyers they paid way over the odds and that they are now severely distressed sellers. Or the Real estate agent is telling porkies. I don’t think anyone (not even Bernard Hickey – the biggest doomsayer around at the moment) is saying the market has dropped well over 50% (yet). Who knows – the agents sales data will feed into the November stats and we’ll see if this is part of an overall trend. Perhaps its a measure of your mates mums competence – or she is doing one of those dodgy deals where the agent buys low and flicks off at market rates.

[upside_umop]

Except over the past three months to October, we’ve seen figures which show there are increasing numbers of sales; the time on market is reducing and the median price appears to have bottomed out and is on the slight increase. Too early to suggest a trend, and some of this may be seasonal, but it does indicate no rapid bottoming out of the market.

Except last three months prices have fallen and peoples expectations of future prices are for them to continue to fall. So yes your right, too early to suggest a turn around in trend! I will go with further falls..

Add to this reduced interest rates and improved housing affordability there to stoke demand, summer encouraging buyers to the market and school zone / job transfers over the new year may all lead to higher sales values.

Add to this 60-70% of overseas debt being rolled over in the next 4-6 months which banks rely on for 50% of their funding combined with a 'frozen' credit market and you will see interest rates rapidly stop falling.

Summer stoking demand? How about worries of and increased unemployment stoking fears of not being able to maintain a mortgage. How about extremely low net migration, how about lower costs of materials and downward pressure on construction costs....the list goes on.

Check the RBNZ statements for their view on construction costs...the flow on effects from commodity crash will occur its just a matter of time.

Not a good place for the first time buyer.

If you look at SC and my profile you will see we have time on our side. I'm looking for entry between 1 and 3 years away...depending on what the outlook is at the time, but at the moment 1-3 years seems safe to plan around. Because I'm a student it wouldn't be prudent to put myself into a situation of buying house with no fixed income! We haven't got 10% yields like historically, but that may be coming back for certain properties with a few value adding activities. So yes, not a good place right now for first home buyers, maybe in 1-3 years it will look much better...when prices drop - which they will do.

Since Shrewd Crude is looking a few years out it might be worth pointing out that the market is not a lot different to where it was two years ago. Back in Jan 07 when he first posted the median price was $327,000, at Oct 08 its $335,000, He would be a lot better off now than then as he still has increased value in his property, he would have paid two years worth of principal off (not much – but it helps) and his interest rates will have dropped a third giving him a pile of extra cash in his hand. Instead he’s lost 50% in the share market, now needs a bigger deposit and he has to find more cash to pay a Valuer.

Thats rubbish. Why would you wish yourself to have bought one of the most illiquid assets with what we know today of the financial crisis. If you want to offload that asset (house) quickly for personal reasons you would be stuffed. You would lose big time. Those figures are skewed, as you know. House sales have declined massively, being down over 50% while higher priced sales have faired better, thus the median hasn't dropped to the same extent as whats being shown...

Even going by your logic, the average house price was $327,000, you would have locked in at a rate of 8%, you would have paid $5000 for rates, you would have only been getting a 4% return if you rented out your other rooms, you would essentially be cash flow negative over the last 2 years to the tune of $31000, and thats excluding any repairs/maintainance and value adding activities you may have performed to get it to where you want.

And thats if, and only if you rent your rooms out...you may not get occupants, you may get shafted, you may only guess what might happen in your own home. But then it wouldnt be your own home would it? It would be just like having a flat, and you wouldn't quite have all those 'intangible benefits' of owning your own home that you talk about if you rent it out to make ends meet...and you would ask yourself 'why didn't I just continue paying $80 a week for a room and saved myself over $20,000 rather than waste it when it was so obvious I could enter at a cheaper price and better time...'

I think you'll also find that SC has doubled his money on the market from 2006 till today, even after the events of this year. So...he's really $30,000 better off and has luxury of picking when its ripe...because house prices will get riper! Even if they stand still for 2 years, inflation will eat away at it somewhat.

Two years ago is when first time buyers should have been saying “woo hoo”!

So given that what I've said...I'm still saying 'woo hoo' as I know I've got a competitive advantage against other first home buyers and can time my entry when its right for me...which coincidently will be around the bottom of the market! 'woo hoo' I say again!

[outspoken]

I am seeing 10-15% yields in the market on a daily basis now. No doubt about the fact that prices have dropped in certain areas but why buy a 10% yield when it may have further to fall and tennants may not have jobs?

The deflationary spiral?

[minimoke]

If you are on a fixed rate with Westpac, National, ANZ then you only have tomorrow to act.

If you don't break tomorrow, then after the OCR drops you will pretty much lose out.

Interesting post – expect NZ banks are net offshore borrowers and subject to foreign interest rates. The OCR will influence interest paid in NZ based overnight settlement accounts.
Some of us on fixed rates just sit back and let all this kerfuffle float over us – that’s part of the deal with being on a fixed rate.

[outspoken]

Interesting post – expect NZ banks are net offshore borrowers and subject to foreign interest rates. The OCR will influence interest paid in NZ based overnight settlement accounts.
Some of us on fixed rates just sit back and let all this kerfuffle float over us – that’s part of the deal with being on a fixed rate.

Yes, of course, I should have said. For those whose cashflow is good and are not overly highly geared, you're right.

For struggling investors and over leveraged 1st home buyers it's a different story. Strategies like I've posted may make a difference.

As for being offshore borrowers, not so much at the moment. Banks are flush with cash due to the flight to TD's and Govt Guarantees. What they are doing is maintaining the margin & fees to recapatalise the pounding they take from settling offshore debt.

[miner]

Well, what can you say. Market peaked in Nov 07 (only a year ago) with a mean value of $352,000. This suggests to me that when they were buyers they paid way over the odds and that they are now severely distressed sellers. Or the Real estate agent is telling porkies. I don’t think anyone (not even Bernard Hickey – the biggest doomsayer around at the moment) is saying the market has dropped well over 50% (yet). Who knows – the agents sales data will feed into the November stats and we’ll see if this is part of an overall trend. Perhaps its a measure of your mates mums competence – or she is doing one of those dodgy deals where the agent buys low and flicks off at market rates.

No Mini they just bought at or near the top of the bubble(like you have just said people should have been woohooing about) and are now paying the price.

As for those property's I knew it already as I keep and date(as the cunning buggers don't) all the realties rags,so I can look back and see what has been bought-sold and at what price(asking that is),or what is just dropping and not selling.

One of the above sold for 350k couple of years back,just went to auction,highest bid was 150k.

Had a wee laugh the other day as one of them has started putting "listed at" on the few they have sold,but then we all no that means zip ay ?,as what you ask and what you get are often two different things especially at the moment,I read it as where not selling Fall maybe this will suck a few buyers in.

As say each to there own,but I have a VERY long list of property's that have dropped substantially in price in the last few years, you usually just end up with cut bleeding hands when you try to catch falling knifes.

Cheers
Miner

[upside_umop]

As for being offshore borrowers, not so much at the moment. Banks are flush with cash due to the flight to TD's and Govt Guarantees. What they are doing is maintaining the margin & fees to recapatalise the pounding they take from settling offshore debt.

No...the flight has been to finance companies as they are now essentially risk free. The Govt Guarantees have not added any extra funds to the market, only confidence, and infact probably harmed banks more, but only minutely as the flight has been away from them to Finance Companies paying higher rates. Overseas debt still remains. We have run current account deficits for the last umpteen years and have one of the highest amounts of public debt of GDP per capita in the world. That debt has to be financed from somewhere right? Where did you hear that banks have closed their overseas positions?

That's where the margin has come from over these fine, fine years for borrowing. Margins were high from low cost overseas debt. Margins will now be squeezed...I haven't looked at banks balance sheets but I would be guessing they would have had some sort of interest rate swaps arranged to hedge against the 'poundings' that have taken place. That is why the squeeze will be on when this funding rolls over...

[Crypto Crude]

wheres mackdunk gone? wheres joeking?
its just Minimoke holding the fort up now...

Hey mini... Id reply but Im

1)tired of being warn down, when the truth is different

2)sick of saying the same thing over and over.... so instead I will quietly agree with others

3)sick of being told we cant get mortgages when we can... we are not dumb so dont treat us as if we are...

4) Im sick of us being told (by the king pins) "to find reasons to invest, to not find excuses"
And now being told the exact opposite ...ie..."here are reasons why you can not invest"... (big change in what buffs recommended to us early on on this thead)..

5) im sick of us being right, and others being wrong

6) im sick of others not admitting their wrong calls, and recommendations to first homebuyers....

7)im sick of interest rate cuts after cuts after cuts (and cuts expected into 2009)...
and fixed terms still saying they are right and we are wrong...

7) And most importantly, im sick of seeing house prices fall and others telling me that it is not the case...

what am im learning?... absolutely nothing....
okokok.... im learning how to argue...

If you are a first homebuyer, then please do not listen to long term house investors because their view is biased and blurred because of their
historical performance... For us newbies, entry is critical... All the factors around entry price are critical... interest rates are critical...
timing is critical...

The only time to invest is when prices are rising...

This is what Technical analysis experts have told us for years,
why the change all of a sudden?

Im out... I wont return until I have an update on my position as to
when first homebuyers should make a purchase...
see you all in 2009 when I readdress entry point into housing...
Im now no longer here to argue with others... I am here to support my best view on entry into housing for a first homebuyer...

lastly, It is time for buffs to step up and tell us that they were wrong...
Dont wait until 2010 to tell us where you went wrong...
tell us now...
It only gets deeper as time passes... save yourself now and take our side because we wont be wrong...
it gets deeper on Thursday OCR decision...

Im out of here...
Peace out...
whats the point any more?

Thank you... peace out...

.^sc