NZ 1st homebuyers are ScReWeD...

[duncan macgregor]

Skol, What renters pay for rent is topped up by the Govt otherwise we have people living in garages or tents.
When people cant pay the Govt of the day pay either in subsidized rents or in grants to allow them to pay the market price. Nz will atract rich retiring investors and get rid of upskilled young people simply because of the way things are at this moment in time.
To change this trend in the short term seems unlikely so we must look at the likely outcome of what looks like the general trend. The general trend looks like young educated people leaving with rich retirees taking their place simply because of life style. Very few young highly skilled people will remain to buy first homes leaving behind the residue for the Govt of the day to house. That is how I see it the Govt of the day will advertize the lifestyle to attract rich retirees who will subsidize the residue that remains behind. To look at housing as an investment remains keeping an unbiased view point on the reality of what is likely to happen. Macdunk

[fungus pudding]

Skol, What renters pay for rent is topped up by the Govt otherwise we have people living in garages or tents.
When people cant pay the Govt of the day pay either in subsidized rents or in grants to allow them to pay the market price.

When people can't pay the market rent falls. That is why it is called 'the market rent'.

[Arbitrage]

Interesting to note that the Herald reported to day that in 2008, 15000 of Aucklands 20000 population increase in 2008 was "natural", i.e. babies. Maybe we don't need more houses, just an extra bedroom?

[duncan macgregor]

When people can't pay the market rent falls. That is why it is called 'the market rent'.

The market rent gets propped up by the GOVT making it a subsidized market rent which you and I pay for. The market rent then is not fixed by a supply and demand level that in normal circumstances would dictate. The number of solo mothers living in high class areas paying high rents with no earned income or savings might surprize you. Macdunk

[fungus pudding]

The market rent gets propped up by the GOVT making it a subsidized market rent which you and I pay for. The market rent then is not fixed by a supply and demand level that in normal circumstances would dictate. The number of solo mothers living in high class areas paying high rents with no earned income or savings might surprize you. Macdunk

Social welfare assistance does not make the market. The vast majority of tenants pay rent from their earnings - and at present it's screwing many of the mto death, and you can't get much rent out of dead tenants. The govt. won't ever run a charity for landlords.
I think I've posted this url before but it's a classic illusrration of house prices over a lnog period.
http://www.youtube.com/watch?v=kUldGc06S3U

[Jay]

Interesting to note that the Herald reported to day that in 2008, 15000 of Aucklands 20000 population increase in 2008 was "natural", i.e. babies. Maybe we don't need more houses, just an extra bedroom?

Totally agree, among acquaintances and work colleagues I now there has been a population explosion from around 2007, and another appears to be forming from the number of pregnant looking women you see around

Definitely good for the renovators!

[beacon]

Rents are not linked to what the landlord pays in tax. They are set by supply and demand. So unless the owners burn their houses down because they don't like the change there's no reason that the possible tax changes (if any) will affect rents. And what is 'an economic range'?

Only time will tell fungus. By economic range, I meant 3 bedroom houses less than 300,000.

Meanwhile, looks like the Government has been alerted. http://www.landlords.co.nz/read-arti...rticle_id=3675

Will they still press on regardless of collateral damage, postpone changes or abort tinkering with property. There is no shame in recognising a wrong move. Courage and wisdom ... here's to hoping.

[beacon]

Meanwhile, looks like the Government has been alerted. http://www.landlords.co.nz/read-arti...rticle_id=3675

Will they still press on regardless of collateral damage, postpone changes or abort tinkering with property. There is no shame in recognising a wrong move. Courage and wisdom ... here's to hoping.

Dunne wishes to press on regardless...

[Skol]

My thoughts exactly.



Add By Martin Hawes 4:00 AM Sunday Mar 28, 2010


Housing is not a good investment currently. At present, houses make lousy investments. I am referring to the very low yield houses provide someone buying a rental property.

Yield - the cash that you can take from an investment compared to what you pay for it - is the arbiter of investment value. Yield determines how much wise investors would pay for their investments.

Yield is always calculated as if the purchaser did not borrow. This allows us to compare one investment with others (bonds, shares, bank deposits) without the distortion of different amounts of debt.

It is also done before any capital gain is taken into account - smart investors always make sure their investments stack up solely on the income that they provide and capital growth is regarded as an extra.

So, what is the yield from a typical house? To make this calculation, I have used the same method as I did in this column last year: I have taken the median house price of $350,000 (as provided by REINZ for January) and the median rental for a three-bedroom house of $325 a week (as provided by Department of Building and Housing).

A weekly rent of $325 translates to annual rent of $16,900. I then deduct the investor's costs for rates, insurance and maintenance ($3000) and also assume two weeks' vacancy. This would give a net annual rental income to the investor of $13,250 a year.

Now let's look at this as a percentage to give us the yield:

This yield is worse than when I did this last year using December 2008 figures. At that time, the yield for residential property was 3.95 per cent - rents are now a little higher but values are much higher.

This yield is far too low to give a decent investment return. To properly compensate an investor for the risk and work of owning investment property, the net yield needs to be around 7 per cent.

That means that either rents have to rise or values fall. I suspect both may happen to some degree as yields gradually come into line with what they should be but this will take some years.

It is true that these figures will not be a precise reflection of the market but if they are used consistently they give a fair indication of the direction of yields.

A few investors are speculating on price increases but any astute investor will know that there is little or no value in residential investing.

[peat]

just to be devils advocate here( because I dont really disagree) , by the same single criteria i.e yield, gold and silver are terrible investments as well and yet gold will have performed well for people over recent years.... by that single criteria Telecom is a brilliant investment now as well.
I think this article is a little simplistic though probably still relatively good advice.