NZ 1st homebuyers are ScReWeD...

[Halebop]

quote:Originally posted by aspex

c. A misture.

Lots of crying on a hot day? []

I'm certainly not a property bull but I don't see terra firma apocalypse in the offing. There are no obvious triggers for the kind of income expansion that working women have created. Gareth Morgan has it right that the 2nd income hasn't been that beneficial - most of it has flowed through to mortgage payments. Pay Parity (between sexes) offers the prospect of somewhat rising incomes but with any sort of birth rate parity is not really practical - a proportion of partners will leave one parent at home at least part of the time - this impacts career prospects and earnings.

In practical terms we are probably close to full employment. There is a base of unproductive labour that will always be too stupid, lazy, undereducated or even physically / mentally handicapped to provide the same sort of benefits to the economy and the household that most of us take for granted. Even if unemployment drops from 4 to 2%, the incremental impact is little compared to the original drop from 10% and the benefits likely mixed given many of them will be the least productive labour available.

This tells me there needs to be a seriously different trigger* to the ones we have had to maintain real property growth. With Baby Boomers retiring and dying, we'll be competing hard with other countries just to maintain status quo. Immigration may achieve this but it will require a very different local mindset to double the number of immigrants each year even as locals (dare I say "pale skinned"?) are diminishing.

In short, no property implosion, just a reordering of "hot" versus "has been" and perhaps even extended periods of no or even negative real growth (but still managing nominal growth in dollar terms) without lots of new arrivals in one form or another.

Given even recent property performance is anemic compared to an actively managed equity portfolio, I see little need to switch from equities to real estate. While I fully expect equities to underperform current norms in the future, my expectation is that performance over longer time periods will remains at relative parity- i.e. both will be relatively subdued. I have an equity portfolio (Should call it a cash portfolio at the moment) worth many times the average house. When I double the value of that portfolio (as I have several times over the last few years without any debt), on a purely financial analysis opportunity cost of even 20% housing gains become apparent.



* I am interested in the "seriously different triggers" though! If such a thing exists in a positive form ...Robotics & AI? Transport improvements? whatever other productivity tools? ...there will be much more money to be made in those than in real estate.

[trackers]

quote:Originally posted by aspex

Realism will ultimately prevail.
Income increases have not matched property i ncreases.
Whatever the reasons forthis one of a number of scenarios will work through.
a. property prices will fall.
b. Incomes will increase.
c. A misture.
Depending on the rate of correction an overshoot is possible and probably more certain if the correction is more severe.
With landlords unable to depend on capital gain, negative gearing will force the hand of some and many bargains will eventuate.
Steady hand on the tiller through rough waters will work out well.
Until the last few months buying to reside would be my choice. Now I believe that renting is the answer for the next three to five years or choosing to buy non-residential only.

Or D. Prices stagnate for several years

[wns]

quote:
Wns you've done this before )

I haven't put any deals together myself but I was the money partner on 4-5 deals with another guy (who has done 50+ deals). A couple of the deals were installment contracts (wraps), one was done as a second mortgage deal and the other was a lease/option deal. The last two deals just cashed out completely in the last couple of months and we've put the $50k or so into our home loan interest saver account.

The longest deal went for about three years. Like you say, you want them to cash out quickly coz that's a win / win - the buyer gets conventional finance coz they now qualify, and your ROI is good coz you make your profit quicker.

[JoeKing]

quote:Originally posted by coge

... Most people will say buying their first property takes sacrifices, & it is still true today. If it is important to you, you can find a way to do it. Don't dwell on it taking thirty years to pay off, if you're into investment at 22, that concern won't be an issue.

Worrying about various disasters is a waste of time, if one occurs you'll be screwed whether you hold property or not. Having faith in the future goes hand in hand with success. Watch people around you over a few years & this will be confirmed to you. Fretting is for losers. Don't get sucked in.

So here endeth the sermon.

CLAP! CLAP! CLAP! Well said Coge!

[cantab]

Canterbury Property Investors Association magazine December 2006/January 2007

The Star 29/09/06
Steve Brooks is not old enough to go to the casino, but the 19 - year - old has been playing the property market since he was 14. Last week he signed up his biggest deal yet: a 3800m2 block of land on Buchanans Rd and now owns nine houses in Christchurch. He has recently set up his own business and is getting a book published, A Young Punter's Guide to Property Investing.

[Steve]

quote:Originally posted by cantab

Canterbury Property Investors Association magazine December 2006/January 2007

The Star 29/09/06
Steve Brooks is not old enough to go to the casino, but the 19 - year - old has been playing the property market since he was 14. Last week he signed up his biggest deal yet: a 3800m2 block of land on Buchanans Rd and now owns nine houses in Christchurch. He has recently set up his own business and is getting a book published, A Young Punter's Guide to Property Investing.

Good on him! I wonder if he knows how to cope with a downturn?

[JoeKing]

quote:Originally posted by Steve
The Star 29/09/06

Steve Brooks is not old enough to go to the casino, but the 19 - year - old has been playing the property market since he was 14. Last week he signed up his biggest deal yet: a 3800m2 block of land on Buchanans Rd and now owns nine houses in Christchurch. He has recently set up his own business and is getting a book published, A Young Punter's Guide to Property Investing.

Good on him! I wonder if he knows how to cope with a downturn?
[/quote]

mmm. 2 Steves, 2 attitudes, 1 winner. I wonder which one )

[coge]

What an inspiring story of young Steve Brooks.

My advice for Shrewd Crude & other young punters, don't put on a hair-shirt & cloister yourselves. Abandon all thoughts of bird-flu, global warming, premature baldness, yellow peril, Y2k or whatever etc. Rather, spend your time thinking & creating positive things. And for Gods sake toughen up!.

[Bel]

I want to hold proprty just not a mortgage.

From my future radar i can see property continueing to make 9% gains for at least another 2 years. We are about to hit a re-influx of liquid capital just waiting to find a new home. COmbine that with realestate popularity, population growth and steady economy...

[coge]

We're in agreement Bel. The current momentum should continue for at least two years, although maybe not 9% PA across the board. If they want to slow it down they need to reduce interest rates a little, to limit the demand for the NZD & induce a mild credit squeeze. Instead Dr Bollard is tub-thumping about putting them up.