NZ 1st homebuyers are ScReWeD...

[Skol]

If you do a few calculations, the gross return on a rental in Auckland for example, is about 5%. After rates, insurance, water, and maintenance (no management fees included) the return is about 3.5%. You can get over 5% at the bank. (All before tax)

Doesn't stack up. ONe of 2 things has to happen, a fall in house prices, or a long period of stagnation as rents catch up.

[duncan macgregor]

If you do a few calculations, the gross return on a rental in Auckland for example, is about 5%. After rates, insurance, water, and maintenance (no management fees included) the return is about 3.5%. You can get over 5% at the bank. (All before tax)

Doesn't stack up. ONe of 2 things has to happen, a fall in house prices, or a long period of stagnation as rents catch up.

You seem to think that house prices remain constant doing your sums. House prices double every ten years at least during my life time thats what happened. By placing a deposit large enough so that return equals out going you use the banks money as the fools way to riches. Landlord little empires have been built up with little or no money after the first property is up and running with a similar ammount of fools saying it cant be done. Macdunk

[Skol]

Yep I know it can be done. A woman in Saturdays Herald had 53 houses, did have 65 but sold a few off. I know what you mean about house prices doubling, I've done well out of it myself, but rents haven't caught up. There has to be a day of reckoning, don't know how many land agents, farmers, and other punters have said to me over the years not to worry about anything else but capital gain.
A farmer recently told me the same thing, numbers don't add up. His farm was worth over $2 million but last year after a few bad things happened the net profit was $5000.

[minimoke]

Had a look around Chicago lately? Or for a real bargain pop over to Detroit.

Dead right there. Detroit rated as the No 1 most affordable place in the States with a median house coming in at $81,600 - indeed its the No 1 most affordabale place in the States, NZ, Aus, UK, Canada and Ireland. There is one wee drawback - and thats unemployment which is arund 30% with those who are jobless closer to 50%. So while houses are cheap you may not have a job to pay the mortgage.

Chicago though is a different story with median values there coming in at $210,000. On the affordability rankings it drops to 118 in the States and 128 internationally out of 272 markets. Thats closest to Palmerston North which came in at 188 internationally.

What I'm still trying to figure is why do Kiwis head to the east Coast of Oz when this neck of the woods is the worst amongst surveyed countries for affordability. The Gold Coast is pretty much the most unaffordable anywhere. Closely followed by the Sunshine Coast, Sydney and Melbourne.

First home owners might find it hard here - but if they think they can head to Oz for their dream home they have another thought coming.

[fungus pudding]

What I'm still trying to figure is why do Kiwis head to the east Coast of Oz when this neck of the woods is the worst amongst surveyed countries for affordability. The Gold Coast is pretty much the most unaffordable anywhere. Closely followed by the Sunshine Coast, Sydney and Melbourne.

It's known as 'The grass is greener' syndrome.

[CJ]

There is one wee drawback - and thats unemployment which is arund 30% with those who are jobless closer to 50%.

I would have thought unemployment amoung the jobless was closer to 100%???

[neopoleII]

quote

""House prices double every ten years at least during my life time thats what happened.""

and the public and private debt, borrowings and credit has done what?.............

waiting for the pop

[The GrandMaster]

""House prices double every ten years at least during my life time thats what happened.""

I'm a bit tired of this statement myself. This is based on what - the last 5 decades. So the sample size is five. Anyone using this sort of statistics to predict the future direction of house prices is just foolish. Obviously NZ property has been significantly undervalued in the past, and this has gone through a significant realignment over the course of the past 50 years, of which many people have benefited (at the expense of others, I will add - this is no win/win game).

So lets stop this "property doubles in value every 10 years" drivel...

[duncan macgregor]

I'm a bit tired of this statement myself. This is based on what - the last 5 decades. So the sample size is five. Anyone using this sort of statistics to predict the future direction of house prices is just foolish. Obviously NZ property has been significantly undervalued in the past, and this has gone through a significant realignment over the course of the past 50 years, of which many people have benefited (at the expense of others, I will add - this is no win/win game).

So lets stop this "property doubles in value every 10 years" drivel...

It only becomes drivel when it ceases to happen. Take it back further if you like, history repeats as every wised up investor should be aware off. Property costs are much higher to replace due to the extra unrelated burden of consent and related costs sky rocketing out of control which ends up sooner or later in a steeper increase than the past. Macdunk

[Skol]

Even if the cost of construction is more than it was a while back it's defying gravity. There will be a day of reckoning, but what will bring it about is anyone's guess. 3.5% return? Residential landlords must be out their minds, the risk/return equation doesn't stack up. Might not be capital gain, might be capital loss.