NZ 1st homebuyers are ScReWeD...

[Snapper]

I can understand people buying a home of their own at the moment( as long as they screw down the price) but I don't understand why anyone would contemplate buying an investment property unless its cashflow positive from day one on 100% borrowing. The only rationale for buying on lesser terms than these is if you think that the market is going to show significant capital gain over the next 5-10 years. Otherwise I just don't get it.

On the other hand, though, the Auckland apartment market is starting to look interesting...

[minimoke]

Have alittle forsight mate... lets think about this.... The banks are increasing requirements because they are fearful that house price falls/expected price falls/continuing price falls will put pressure on the banks if homeowners become negatively geared in housing...

Hmm – I suspect the banks are more fearful of a person losing their job and not being able to repay the mortgage. It might be of some concern if the value drops but its not a biggy. The first thing the bank will do is put pressure and provide assistance to get the person paying the debt – like for example interest only or payment holidays. They’ll look at your expenses and put pressure on you to cut back on some of the luxuries in life.

If all else fails then they’ll put the house on the block – but that’s not the end of the story. Even if it sells for less than the value of the loan the bank still has a hold on the borrower. Its just that a debt was secured by the property – just because the property devalues doesn’t mean the debt goes away. So then what you’ll see is a person who has lost their home and still owing the bank money – perhaps pushing the person to bankruptcy.

Its going to get harder for the potential first home owner to buy because they don’t have the track record of a commitment to repaying a loan. The lack of evidence of this raises the risk profile of the borrower which means the bank has to put in place things that mitigates that risk

[Dr_Who]

On the other hand, though, the Auckland apartment market is starting to look interesting...

Its been looking interesting for 15 years. I dont know anyone who have money from apartments apart from the developers. Dont even go there.

[Snapper]

Its been looking interesting for 15 years. I dont know anyone who have money from apartments apart from the developers. Dont even go there.

Been there already about ten years ago and did OK. Didn't know what the hell I was doing but just had beginners luck. I agree with your general sentiment though as I seem to know a lot of people who've had their fingers burnt. Still, there comes a point when it msut become good value and there have been some sales recently which smell of capitulation.

If you can buy someting reasonable where the rent covers mortgage P & I and depreciation (a real cost especially with apartments) and have a bit left over then it starts to look a bit better as an investment.

[Dr_Who]

Be very careful about body corporate rates and agreement.

I prefer to stick with residential in a good area close to the beach and/or close to a good school.

Best of luck.

[Serpie]

hey upside down...
which option would you prefer mate...

1)a 350k house... 9% fixed loan....10% deposit -> 35k deposit...

2)the same house when this is over for 200k....
fixed at 4% for a decade... with 25% deposit -> 50k deposit...

not a whole lot of difference between deposit rates.... eah dude...

what do others think...
option A or option B...

???

.^sc

Is that a prediction Shrewdy?
40%+ fall in house prices, and 4% mortgages fixed for 10 years?
That's pretty extreme - but I'd expect nothing less from a crazy cat like yourself!

I was telling Strat and FD at Saturday's meeting how 2 years ago I could borrow as much as I wanted just by signing on the bottom line. Now that I'm reducing debt and unwinding the loans the bank suddenly brings out the anal probe! My, how times have changed!

I'm all in favour of it though - it's a better way to move forward for everyone.

[minimoke]

what do others think...
option A or option B...

.^sc

Neither is based on any current reality so its all a bit hypothetical.

[minimoke]

bonus bonds have the highest possible credit rating...
In this crazy crazy world, if things were to start falling around us, then Bonus Bonds would be one of the last standing investment classes...

Bonus Bonds!. BB aren’t an investment scheme they are a saving scheme by which you get your money back but no interest. You don’t even get anything to cover inflation. So you get no earnings and no capital growth. They are not even covered by the Government deposits guarantee scheme.

You’ve got 1 chance in between 9,600 and 11,000 of winning a prize – with prizes starting at $20.. You have 1 chance in 363 of winning $20 on Lotto – but if you don’t win you don’t get your money. So Bonus Bonds is really a vehicles for gamblers not investors.

[fungus pudding]

Bonus Bonds!. BB aren’t an investment scheme they are a saving scheme by which you get your money back but no interest. You don’t even get anything to cover inflation. So you get no earnings and no capital growth. They are not even covered by the Government deposits guarantee scheme.

You’ve got 1 chance in between 9,600 and 11,000 of winning a prize – with prizes starting at $20.. You have 1 chance in 363 of winning $20 on Lotto – but if you don’t win you don’t get your money. So Bonus Bonds is really a vehicles for gamblers not investors.

Very true - but all investments are a gamble to some degree .

[Crypto Crude]

serpie-Is that a prediction Shrewdy?
40%+ fall in house prices, and 4% mortgages fixed for 10 years?
That's pretty extreme - but I'd expect nothing less from a crazy cat like yourself!

I was telling Strat and FD at Saturday's meeting how 2 years ago I could borrow as much as I wanted just by signing on the bottom line. Now that I'm reducing debt and unwinding the loans the bank suddenly brings out the anal probe! My, how times have changed!

I'm all in favour of it though - it's a better way to move forward for everyone.

hey my main man serpie... yup, your one savage cat, I agree.....
My friend bought a house for 230k that was a tiny bit over 300k at the top...
I think 40% falls are in line with whats coming...
30% falls were fair until the financial crisis...
my dads house was 600k, sold at 500k, now its 450k, at the bottom will be 400k.... thats 33%...
simple as that really...

Its not hypothetical Minimoke, my example is very real...

option 1) was the example of when I was told "it was never a better time to buy a house than now", at the beginning of the thread...

and option 2) is a forward looking prediction on what im expecting a similar sort of house to be down the line...perhaps slightly exagerated...
In my first example 350k was abit rich for a house, as I could have got a decent entry at 250k in chch... so the fall will be less in percentage terms...
the 350k example was from a national average point of view at that time...
I think there will be these sorts of examples in option 2) but rare...

The reason why I mention fixed, was 1) us newbies were told to do so by the power house buffs on this thread..
2)my friend had to go fixed term, forced by the bank to get the loan...

Hummm.... I think its time to crunch some numbers and see what I come up with....
humm.... will go through a couple of examples next week....

.^sc