NZ 1st homebuyers are ScReWeD...

[fungus pudding]

I am interested in those here who think property is set to double in the next 10 years views on affordability. All I usually hear is that their is no supply, demand is high, property always doubles every 10 years etc etc. But never any discussion on people ability to pay for it.

It is that last point that will control the market - no matter what. The market cannot rise to a point where there are no buyers - it's impossible. The market rises and falls on it's way up. often likened to playing with a yo-yo while waking upstairs. At the moment the NZ market is too high and out of kilter with incomes. It may not fall much, but it is unlikely to rise much either. Through the early nineties price levels were too low and hadn't moved significantly for years. So it's not a smooth pattern. In my opinion there is absolutely no possibility of house prices outpacing inflation or general wage rises in the next decade. In other words they will not become less affordable.

[minimoke]

Seems no-one wants to try and have a go at working out the affordability of a home in 10 years if houses double in price as they are forecast to do by some here.

I'm not going to cos I don't but into Duncs doubling every 10 years idea - but he's more on to it than others.

Lets look at just the last decade cos thats probably more meaningful since we were all probably around then. Its a decade thats had financial problems like the previous decade/s. These problems will continue in future decades and values will continue to rise.

10 years ago median value was $170k. Today its $360k. Average sale was $198,792 - now its $418,101. Total sale values in Dec '99 = $906m. Last month total sales were $2,072m - and there you have your answer. Despite property values being at all times high people are still finding ways of coming up with the cash to buy. Somehow today they are finding it affordable. They will do the same thing in 10 years time. Fancy modelling won't change human behaviour.

[The GrandMaster]

If housing is still affordable in 10 years time - it will invariably come at the expense of people's disposable income and/or leisure time (as it has over the past 10 years).

If that's what is required for a good investment...you can have it.

[Arbitrage]

Here is the link to the latest Demographia International Housing Affordability Survey. Makes interesting reading. http://www.demographia.com/dhi.pdf

Table 5 shows the Severely unaffordable housing markets. Auckland ranks alongside Brisbane.

[Dr_Who]

NZ is like most of the developed desirable countries around the world. It will always be unaffordable to purchase on a fundamental basis. NZ is viewed as a desirable place to live and everyone wants to migrant here. There will always be demand for people wanting to immigrate to NZ. You can do as much numbers as you like, but thats the reality.

[Ptolemy]

NZ is like most of the developed desirable countries around the world. It will always be unaffordable to purchase on a fundamental basis. NZ is viewed as a desirable place to live and everyone wants to migrant here. There will always be demand for people wanting to immigrate to NZ. You can do as much numbers as you like, but thats the reality.

What utter rubbish, that is that the supposition that NZ real estate is somehow immune to fundamental factors. That is the sort of argument that you would hear from a real estate agent or insider in the industry.

Can I ask whether you make you share purchases on the same basis.

If you took the trouble to read the report it actually says why NZ real estate is unaffordable. It also has excellent insight into similar markets and what has happened since their markets have adjusted.

People who immigrate to NZ still have to pay from their housing out of their income. Or do you honestly believe all immigrants to NZ are cashed up millionaires who don't need to work?

[Dr_Who]

Hey Ptolemy. I dont think anyone gives a hoots what you think about a Porsche being overvalued fundamentally compare to a Nissan GTR. My neighour just bought a Aston Martin and you wont get much change from $500k. It is all Demand and Supply.

Just open your eyes and you may actually see alot of overseas money coming into NZ property residential market. And no I am not a realty agent, but I did buy a number of properties during the financial crisis.

[AMR]

Here is the link to the latest Demographia International Housing Affordability Survey. Makes interesting reading. http://www.demographia.com/dhi.pdf

Table 5 shows the Severely unaffordable housing markets. Auckland ranks alongside Brisbane.

Fully agree with the sentiments in that report. Auckland city does not have much land left in the isthmus however (but Waitakere, North Shore, and Manukau have plenty).

Maybe if investors were to buy in suburbs where there is no new land, this would be Auckland Central and the southern parts of the North Shore?

[Arbitrage]

If you are looking for good investment with steady cashflow, buy within 5km of Queen Street in Auckland. With the large office worker population, and the limited transport, rental properties are always in demand.

[Ptolemy]

If you are looking for good investment with steady cashflow, buy within 5km of Queen Street in Auckland. With the large office worker population, and the limited transport, rental properties are always in demand.

How are the rental yields in these areas?