NZ 1st homebuyers are ScReWeD...

[Arbitrage]

QV's latest:
"Auckland Property Trends

Property values in the Auckland region declined by 9.0% over the past year (calculated over the three months ending January 2009 in comparison to the same period last year), deteriorating further from the 8.0% decline reported in December 2008. The average sale price for the region increased slightly from $489,737 to $496,618.

Glenda Whitehead of QV Valuations said; "Property values continue to ease in stark comparison to levels this time last year. Some are feeling that values are now stabilising, but each area and type of property is affected differently. Generally speaking, values are definitely well down, presenting good buying opportunities. However, our current property valuation work indicates more people are re-financing their present positions, rather than moving property".

"In the typical investor suburbs such as Otara, Manurewa, Papatoetoe and Mangere, property values have declined to levels where $220,000 will buy a well presented three bedroom home with garaging. Mortgagee sales have driven the low values in these areas. Buyers are bargain-hunting and unwilling to pay full price in these areas, as many believe there is no need to" Glenda said.

"Activity during this December and January season has been light as it typically is at this time of year. Although uncertainty remains in the property market, much of the focus has shifted to other demand-determining factors, like job security. Reduced interest rates are certainly a talking point, but we are yet to see increased buying activity as a result" Glenda said.



NZ Property market continues to ease

The signs of a slight recovery in property values we saw at the end of 2008 have not continued into 2009, with the market dipping further. The number of properties selling remains at low levels which is also typical of activity around the holiday period. "

[fungus pudding]

QV's latest:
"Auckland Property Trends

Property values in the Auckland region declined by 9.0% over the past year (calculated over the three months ending January 2009 in comparison to the same period last year), deteriorating further from the 8.0% decline reported in December 2008. The average sale price for the region increased slightly from $489,737 to $496,618.

Glenda Whitehead of QV Valuations said; "Property values continue to ease in stark comparison to levels this time last year. Some are feeling that values are now stabilising, but each area and type of property is affected differently. Generally speaking, values are definitely well down, presenting good buying opportunities. However, our current property valuation work indicates more people are re-financing their present positions, rather than moving property".

"In the typical investor suburbs such as Otara, Manurewa, Papatoetoe and Mangere, property values have declined to levels where $220,000 will buy a well presented three bedroom home with garaging. Mortgagee sales have driven the low values in these areas. Buyers are bargain-hunting and unwilling to pay full price in these areas, as many believe there is no need to" Glenda said.

The price they are paying is full price whether Glenda thinks so or not.

[Arbitrage]

True. Todays price will be tomorrows value.

[Crypto Crude]

great post Upside down...
Ive said this before, and I will say it again...

Last year the buffs were telling us to find reasons to buy a house, and to not find reasons why we should not be buying a house...
now they are telling us reasons why we cant buy a house, when they should be looking at the reasons why we can...

all in all, we are not the suckers who have been talked into paying ridiculous prices...
Never bought into those ideas... never wanted to be bankrupted...

If you remember last year my dad sold his house for 500k...
he would now only get 450k...
when this is over he will only get around 400k, maybe less.....
at the top of the market he would have gotten around 580k

Im going to standby this big cat Upside Down...
He's one giant tiger on the prowl...
rrraaaaahhhhhhhhhhhh.... meow....

.^sc

[minimoke]

....now they are telling us reasons why we cant buy a house, ....

Nope - still suggesting you can buy a house. Just that there are now a few extra challenges which you didn’t have last year.

[minimoke]

On call at national bank is currently 5.25%, but I'm sure will fall also. Since we're around a year out, we could use a term deposit which kiwibank is offering 4.75% interest.

\According to this http://nationalbank.co.nz/personal/r...#onlineaccount you'll get 3% on call at National Bank. I'm not sure Shrewdy would agree with you using the fixed interest rate - he much prefers to take the current rate option.

[Arbitrage]

Upside down makes an interesting call on investing in Ilam. Rental yields tend to be less in more expensive suburbs whereas capital gains are usually greater. So you need to be careful to ensure you are clear about your investment goals. That is whether you are looking for income to easily cover your interest payments (eg old renters near Otago University or a nice place in Fendalton for capital gain). I am not sure where Ilam would fit.

[upside_umop]

\According to this http://nationalbank.co.nz/personal/r...#onlineaccount you'll get 3% on call at National Bank. I'm not sure Shrewdy would agree with you using the fixed interest rate - he much prefers to take the current rate option.

Haha Shrewdy was bearish on fixed interest rates when borrowing - which would mean he would be bullish on fixed interest rates for deposits. I was looking at the eSaver, which is pretty much oncall...but if you take money out you do lose your high interest for that month. 5.40%. If I'm not to touch my money for a year, I'd put it in a guaranteed well financed, finance company or a sustainable dividend yielding stock (are there actually any atm?! - im still to start a thread on it...perhaps tommorow, keep forgetting!)

Arbitrage, I say Ilam for the following reasons:

-Risk free yields - you will always get tenants around University area and can demand a premium if the house is close. You can then choose your tenants if the house offers benefits over others. Our landlord had all of his houses rented out by the end of July for the 2009 year, and didnt even have to advertise.

-Upward pressure on rents - Rents will track close to the increase in student allowances and living loans, and the way some parties are motivated is moving towards offering universal student allowance....students will just spend spend spend..

-Buildings are solid and in this suburb generally approx ~30-40 years old - still have life left in them and can handle a little bit of biffo if it occurs.

-Section sizes are larger than Riccarton from what I've seen? Can someone verify this? Given this, offers potential for value adding activities by adding a sleep out and still at high rents approx ~ 110 per additional room.

Given this, its still possible to buy a house, for around $400,000 and have six rooms bringing in $660 per week in rent.

There is the problem with picking the right tenants as houses can get trashed.

Ways around this:

-Charge a large bond - our flat is $2560 for a 6 bedroom house. It offers a deterrent as a little bit of money is actually at stake.

-Well maintained house, appropriate heating, and regular inspections being strict but fair. Word of mouth goes a long way which then lets you choose the tenants.

Theres heaps more things obviously, but I like the university area as one of my first purchases, particularly Ilam, although prices are still have abate a little more. Purchasing in this area is not for everyone as it does require a strict, dedicated approach and some people just dont like to deal with students!

Shrewdy, we'll be fine mate. Just gotta rough it out for a while...5.90% at bank direct for 5 years is amazing however. I'd love to see 5.00% at year end for that time period, but I'm not sure we'll get there....

[Crypto Crude]

upside,
Im not so sure about buying near University of C, in Ilam...
When I left home I moved just round the corner of Uni onto Waimari Road and there was serious problems...
Neighbours were drug dealers (I think)...
undercovcer police parked on street weekly...
one night another party had a big fight, and it rumbled into our garden, on the street bottles were being thrown right next to my car...
Always noisey at night...
I wouldnt want students in my house...and anyway, what about the few months at the end of the year when students move out and go back home... 2 months without rent right?

as of now, Im not thinking of where im buying... I just know that there will be a time to buy and you will generally make money in any area... Or if you are a buff, you can find a bargain in any cycle which is true... but not for a first homebuyer...
wheres my mate mackdunk...

start that new thread upside, and I will post my suggestion on where to put money...

.^sc

[minimoke]

Arbitrage, I say Ilam for the following reasons:

I looked very closely at Ilam when I made my last purchase but decided against it for a number of reasons.
- sure properties are in the 30 – 40 year bracket but money isn’t being spent on their up keep. The area is deteriorating which will drag values down. They are at a point where the big money needs to be spent – new kitchens / bathrooms, roof recoating – stuff you need $10k a pop to do.
- students are migrating there from Riccarton. With all due respect to you and Shrewdy, students are not the best of neighbours – unless you live in a student neighbourhood where no one minds the late night parties, the drugs, the vandalism, the street litter, wrecked letter boxes and fences, vomit, condoms and the graffiti.
- Property values are still high relative to what you get and what you can earn.
- on street parking is getting to be more of a problem as more students travel by car.
- Likely tenants are students – they are high maintenance. You need to regularly inspect the property, be prepared for phone calls at all hours of the day and night, and repair damage that a bond may cover but opportunity cost doesn’t. (of course there are landlords who don’t mind students – I figure there is an easier way to make a buck)
- Other tenants are likely to be University staff – and some of these aren’t much better than the students.
- land sizes are generally larger but house site leaves little in the way of economic expansion .The alternative being bowl it and rebuild – but the return is hard to get.
- Its handy to the university and riccarton mall but not much else.