NZ 1st homebuyers are ScReWeD...

[fungus pudding]

Does anyone else think its strange how we are comparing the NZ market with the US market (which is apples and oranges anyway) but we didn’t hear a peep from these “experts” on how big our gains would be here in NZ on the back of the rapidly rising US market?

There's nothing strange about it. Eventually affordability rules, which means house prices will settle at a more normal multiple of annual earnings. It's not possible to predict when it will rise above it, but we know with certainty that it will return to a lower level. And that is what is happening in the U.S. When it's below that level - buy, buy, buy.

[upside_umop]

There's nothing strange about it. Eventually affordability rules, which means house prices will settle at a more normal multiple of annual earnings. It's not possible to predict when it will rise above it, but we know with certainty that it will return to a lower level. And that is what is happening in the U.S. When it's below that level - buy, buy, buy.

And when its above, sell sell sell...

I believe there is also a certain amount of psychology in it aswell. Of course that psychology would change if there was long run changes in tax rates, credit access, or anything that affects the ability to buy a house.

Your right Minimoke...this thread is about buying your first home. It is also about timing of buying your first home. You buy at the peak and you will not be able to use that house for collateral as there won't be equity in it for a long time....you know what I'm saying? I think I speak for most first home buyers on ST who would not only be looking at a home, but the ability to use it as better access to future investments.

[Dr_Who]

Does anyone else think its strange how we are comparing the NZ market with the US market (which is apples and oranges anyway) but we didn’t hear a peep from these “experts” on how big our gains would be here in NZ on the back of the rapidly rising US market?

NZ property is nothing like the US property market. To compare it is totally wrong. I have been looking at both markets and there is clear differences. This was highlighted in an article I posted a few pages back. US property investors have no recourse on the property and can walk away without the fear of the bank coming after them.

Our property market is more similar to the Aussie property market. NZers will always love properties. This will never change, especially with the lack of protection for the average investors in the equities market and recent finance market. The average "investment advisors" out there are from car sales and insurance back ground with no knowledge of finance or business.

Housing heads for a soft landing

http://business.smh.com.au/business/...f0.html?page=1

[fungus pudding]

NZ property is nothing like the US property market. To compare it is totally wrong. I have been looking at both markets and there is clear differences. This was highlighted in an article I posted a few pages back. US property investors have no recourse on the property and can walk away without the fear of the bank coming after them.

Not always so. State laws vary and so do lending terms of mortgagees.

[minimoke]

You buy at the peak and you will not be able to use that house for collateral as there won't be equity in it for a long time....you know what I'm saying?

And that’s the difficulty. The “experts” didn’t know when the peak was, nor do they know when the trough will have bottomed out. If they don’t know it makes it a tough call for the first time buyers. I don’t think the situation is helped by “experts” trying to compare the NZ market to the US market, nor when they talk about apartments and second homes. The dynamics are quite different. A lot of it is speculation and best guessing – and hindsight is great. Which is why if we go back to Shrewds original question, Jan 07 was not a bad time to buy because the market hadn’t peaked. He would have been better off today than he was back then. Its a mute point if he will be better off in 6 – 18 months time. Houses values will have moved over that time.

[upside_umop]

And that’s the difficulty. The “experts” didn’t know when the peak was, nor do they know when the trough will have bottomed out. If they don’t know it makes it a tough call for the first time buyers. I don’t think the situation is helped by “experts” trying to compare the NZ market to the US market, nor when they talk about apartments and second homes. The dynamics are quite different. A lot of it is speculation and best guessing – and hindsight is great. Which is why if we go back to Shrewds original question, Jan 07 was not a bad time to buy because the market hadn’t peaked. He would have been better off today than he was back then. Its a mute point if he will be better off in 6 – 18 months time. Houses values will have moved over that time.

Experts have been wrong yes. So was the first home buyer buying in November last year - or anyone else for that matter.

I'm not trying to pick the bottom...just going to wait until things are a little more inline with the long run average.

Housing dynamics are different, yes. But we have many common factors...I'll reply to the doctors comments later on as I'm at work at the moment...

If you refer to my post earlier, he wouldn't have been any better off financially than he is now...infact he would be approximately $30000 less well off than if he had bought then.

[minimoke]

If you refer to my post earlier, he wouldn't have been any better off financially than he is now...infact he would be approximately $30000 less well off than if he had bought then.

If we can put aside the semantics of first home average / median/mean prices for a moment then you might want to reflect. Not than I’m not happy discussing averages etc – but it is hard to find the data and trends on these figures so a lot is conjecture and anecdotal evidence based on one-off observations.

Simply put SC could have bought a median house for $327k in Jan O7. That median is, at Oct 08 $335K. The media is banging on about “house values” – well here are the values – and they have gone up during the time this tread has been around.
That interest rates have fallen also has to put the “07 buyer in a good position their repayments have gone down.
Even if interest rates were locked in at 8% - you would have ridden through the highs without worry and going into Christmas 08 rubbing you hands think “great they are coming down - what can I get in the new year”
SC reckons having a $20k deposit isn’t an issue as he can find some one to lend to him. Well good luck – but he hasn’t said if he would be expected to pay a premium on his interest rates for the pleasure.

Looking back to Jan 07 to today – I’m struggling to see why the first home owner would think they are being so hard done by. But I’m happy to check things out again in Jan 09 when we will have a whole two years of data – when we might like to pose exactly the same question but in the context of 2009.

[fungus pudding]

If we can put aside the semantics of first home average / median/mean prices for a moment then you might want to reflect. Not than I’m not happy discussing averages etc – but it is hard to find the data and trends on these figures so a lot is conjecture and anecdotal evidence based on one-off observations.

Simply put SC could have bought a median house for $327k in Jan O7. That median is, at Oct 08 $335K. The media is banging on about “house values” – well here are the values – and they have gone up during the time this tread has been around.
That interest rates have fallen also has to put the “07 buyer in a good position their repayments have gone down.
Even if interest rates were locked in at 8% - you would have ridden through the highs without worry and going into Christmas 08 rubbing you hands think “great they are coming down - what can I get in the new year”
SC reckons having a $20k deposit isn’t an issue as he can find some one to lend to him. Well good luck – but he hasn’t said if he would be expected to pay a premium on his interest rates for the pleasure.

Looking back to Jan 07 to today – I’m struggling to see why the first home owner would think they are being so hard done by. But I’m happy to check things out again in Jan 09 when we will have a whole two years of data – when we might like to pose exactly the same question but in the context of 2009.

The median may have risen, but that's not the whole story. A burst of higher priced sales, or a slow down in sales (which tends to drop off the bottom priced properties) will raise the median. The same house valuation has dropped in many properties in most areas.

[Financially dependant]

A few more views on the future prices of residential property...

http://www.stuff.co.nz/4782143a13.html

Looks like Bernard Hickey view isn't too negative

I don't count real estate agent views as anything but the usual BS.

[minimoke]

So here’s what Bollard reckons: “If you want to be technical about it we believe the recession has ended and we have positive but very low growth for the next four quarters.”. Bollard in the past has raised interest rates to slow a hyperactive property market. He has today lowered rates in the single biggest drop ever to the lowest rates in five years. The expected outcome is greater fiscal stimulus – of which the property market is part. Analysts appear united that the worst is over- there will be a period of stabilising and then slower growth. There are still inflationary expectations, down from 5% and that will help bolster property values.

Today ASB, Kiwibank, SBS, BNZ and Westpac have all dropped their interest rates – making housing more affordable for those with a deposit. Those rates have also got to be looking good for those with solid property equity or cash to get back into the old rental market – the yields are looking much better. If all these people are supposedly selling their houses then the rental market has to be improving.

All in all, not looking as gloomy as some make out.