NZ 1st homebuyers are ScReWeD...

[foxysfolkfaced23]

$50k to $5k in a year ... don't EVER EVER put money in the stockmarket again !! ( I made 24.9% in Calendar 2008 ... how did you lose 90% ??? ) You seem to have bought well , well done.

three letters A, D, Y - thats where the bulk of my money went - then moved to PDZ who at the time were holding up well but.... later they got hit hard as zinc went tumbling down - so no i will not be putting any significant money into shares for a long time............

i have considerd fixing and floating various amounts for various time periods but i wrote a spreadsheet on excel to work out the optimal repayments for our situation.

i have based my repayments on interest rates (floating) being:

6% for year 1
7% for year 2
8% for year 3

they could be higher, could be lower - in the end i've decided not to gamble (funny considering the amounts i have gambled in the past) given that this way i know i can pay 30k off principle in 3 years - after those 3 years we can then afford 12.00% rates (if they were to go that high) even on todays income....

[JBmurc]

As an ex-Queenstown'er I have an affinity with the place plus an interest. It was one of the first places in NZ to start the property bull run! Vertical limit production crew took just 25 houses off the rental market to start it all off!

The news that Kawerau falls went into receivership sent a shiver done my spine, if they finish the current stage of development (best case) there will be 500 tradesman looking for work. Ngi Tahu's post office project will finish about the same time as will the Mountaineer redevelopment and downtown carpark building (large backpackers). That could double the the tradesman looking for work in a years time!

IMHO there will be a large number of properties for sale and rentals hit the market in the same, this is the next leg down for Queenstown. Queenstown has a history of down turn after big projects finish, this maybe a bit of a perfect storm.

Queenstown loss may be other cities gain!!

-Sounds like stage 2 may now be going ahead -Stage 2 is mostly the large conference areas which already have advance bookings(is the re

-I see Queenstown winter visitor numbers are up 5% on last year

-I see the New Zealand Golf Open, Queenstown, 28-31 January 2010

-from what I've seen town has been busy me mate's Queenstown business has been the busiest in years...


-the Queenstown resort of today is alot different to yesteryear's queenstown the village
If queenstown hasn't the projects to keep tradesmen here they will move to were they can get work ...the effect on the 19,800 rate paying Queenstown property owners will be minimum IMHO

-tourism is the main driver which is up on last year thanks to the Aussies

[minimoke]

point of this is that first homebuyers were screwed

First home buyers were never screwed.

If you had managed to buy a median property in north Christchurch in Feb 08 you would have paid $329,250. In June 09 the median had moved to $330,000 a negligible increase but an increase all the same. And you'd be in a position of having survived the hard times and be in a positon to look forward to some growth.

You would probably have fixed a lump of the loan for a year (indications were that interst rates were peaking around then) so in Feb 09 you would have gone from around 9.5% interst to around 5.6% - dumped right smack in the lows of interst rates. You would have been a whole lot better off - with all that extra cash in your pocket going into loan repayments and adding equity to your asset position.

But thats all on the back of hindsight.

Well done on making the plunge now and being on a position to make a place your own home. The revolving credit is a great facility - but it really does take discipline. Hopefully a person with a TAB account and losses on the sharemarket has that discipline.

[foxysfolkfaced23]

First home buyers were never screwed.

well we were screwed..........

we had $50k savings and with my income alone we were not able to afford (i.e. bank wouldn't lend) minimum payments on a loan on a modest house/unit in an average area due to high interest rates - the maths simply didn't work out - hence the screwing

now there has been a 10% to 15% fall in units in the area we were looking and the rates have dropped significantly - hence we are no longer screwed (for now......)

[minimoke]

well we were screwed..........

we had $50k savings and with my income alone we were not able to afford (i.e. bank wouldn't lend) minimum payments on a loan on a modest house/unit in an average area due to high interest rates - the maths simply didn't work out - hence the screwing

I still think not - but please don't take the following comments personaly. They are meant as a generalisaiton not a personal afferont.

Home ownership is not a god given right. Despite politicians and all sorts of other people thinking that it is. Thats not to say its something we shouldn't aspire to, but its not meant to be easy.

Owning a home is about commitment - and one of those commitments is taking responsibility for loan repayments. The potential home owner and the bank can often be at odds with their view on how this commitment can be met. I tend to think banks are relatively good (erring towards caution) with their lending repayment ratios. Wheras I think finance companies and Cash Converters are reckless. If the bank didn't think you could afford to repay there was proably a good reason for it.

Banks don't look just at income and deposit when making a decison. They will look at your credit history (and any loan defaults) hire purchase commitments, number of credit cards and credit limits. They will also look at spending habits. For example if you have an account with the Casino or TAB there is potentila for you to be a higher risk than someone who doesn't.

They will also look at your personality and look to see if you are exhibiting any yellow or red flags. These flags may indicate a more detailed investigation. In your case perhaps you were raising these flags - a thought formed on the basisi of your decison to place your home deposit into the stock market and pretty much loose it all. Your personality helped drive you to make the inital Buy decisons and for some reason you didn't have stoploss limits or other exit strategies in place when things started to go bad. When owning a property sometimes things go bad and you need to either not set yourself up for failure in the first place or know when to bail.

[foxysfolkfaced23]

I still think not - but please don't take the following comments personaly. They are meant as a generalisaiton not a personal afferont.

none taken

Home ownership is not a god given right. Despite politicians and all sorts of other people thinking that it is. Thats not to say its something we shouldn't aspire to, but its not meant to be easy.

agreed

I tend to think banks are relatively good (erring towards caution) with their lending repayment ratios. Wheras I think finance companies and Cash Converters are reckless. If the bank didn't think you could afford to repay there was proably a good reason for it.

no problem with the banks doing this - and this IS exactly why first homebuyers were screwed - particularly those in a similar situation to us - we had a very decent deposit and were earning average wages yet house prices were so over inflated combined with such high rates that it made it impossible (nearly) to get your first home - which IS my point

so thats why i feel (at that time) we were screwed (as were many other potential first home buyers) - however who knew what was about to unfold in the coming year and now here we are a year later and the picture has changed considerably.

[foxysfolkfaced23]

just to clarify i wasn't upset at the bank not lending money based on their criteria - thats fine

the main problem was the absurdly high price of property based on income to price ratios combined with high interest rates at the time

property is probably still overvalued and rates will probably rise again and soon BUT we have taken advantage of the conditions today and have a strategy to deal with possible rate rises in the coming months/years.

[duncan macgregor]

just to clarify i wasn't upset at the bank not lending money based on their criteria - thats fine

the main problem was the absurdly high price of property based on income to price ratios combined with high interest rates at the time

property is probably still overvalued and rates will probably rise again and soon BUT we have taken advantage of the conditions today and have a strategy to deal with possible rate rises in the coming months/years.

Property is never over valued, or under valued for long. The cost of building is the yardstick that sways the price pendulum back to a realistick cost price level. To pick the eyes out of the property market, requires you to understand the replacement cost structure value.
When the market shuts down with builders out of work, they simply leave the industry, or the country, which creates a shortage of builders, who in turn create a higher than should be price structure.
The Bricklayers in my area are undercutting each other simply to stay in work, the best brickies are now gone. Building red tape costs with compliance to keep up with the stupidity are still in a steep uptrend. The end result my friends is very obvious the price of property in the future will rise higher than the ten pc average in the last thirty years, unless the population flees to greener pastures. Macdunk

[fungus pudding]

Property is never over valued, or under valued for long. The cost of building is the yardstick that sways the price pendulum back to a realistick cost price level. To pick the eyes out of the property market, requires you to understand the replacement cost structure value.

The factors that sway property prices are supply and demand. Replacement cost just doesn't enter the picture when or where the demand is low.

[Nitaa]

[QUOTE=duncan macgregor;267281] The cost of building is the yardstick that sways the price pendulum back to a realistick cost price level. To pick the eyes out of the property market, requires you to understand the replacement cost structure value.
When the market shuts down with builders out of work, they simply leave the industry, or the country, which creates a shortage of builders, who in turn create a higher than should be price structure.
The Bricklayers in my area are undercutting each other simply to stay in work, the best brickies are now gone. Building red tape costs with compliance to keep up with the stupidity are still in a steep uptrend. The end result my friends is very obvious the price of property in the future will rise higher than the ten pc average in the last thirty years, unless the population flees to greener pastures. Macdunk[/QUOTE

Construction and material costs never realy come down or if they do its quite minimal. What has hit property prices the hardest is most likely the land its sitting on. A Clifftop with spectacular views may have fetched $5m 2 years ago but may only be worth $3m now. The building costs havent changed (unless it was subsequently found out to be a leaky) but the perceived land value has taken a huge hit in this area.