NZ 1st homebuyers are ScReWeD...

[Arbitrage]

As I have said before, Martin is a value investor. He would not define buying and selling gold as an investment but as speculation. Therefore to be avoided.

Based on his advice everyone should stop investing in property and sell now. But hang on a minute, haven't house prices gone up over the past 12 months? Therefore the astute investors value has gone up a few percentage points which on a $500k property isn't to be sniffed at, especially if leveraged against a deposit. Plus rental income, it is not looking too bad, even in a tough year.

Another point, he calculates rental income over 12 months to be 52 times the weekly rent. Perhaps someone can recalculate this for me as the rent is paid weekly and invested at say 3%, the actual rental related cashflow income is slightly higher even of a mortgage takes away some of this each month... Any mathematicians out there?

[JBmurc]

No Martin wouldn't buy silver or gold neither would 99% of the western world population but that doesn't mean It won't be a great investment with the massive inflation of fiat currencies
Can't see property returning much capital growth over the next decade unless NZ's average income increases alot-we have the 2nd highest household debt to income in the western world.
can't say I'd want to take on a 400k mortgage 100k dep on a 500k property with week costs on a 30yr payback 700pw-750pw while rates are low +insure+rates+maintenance say another
$50+pw now going off local rents-- we rent a house at the moment here worth 600k it costs us $500pw so going of the above numbers an at low rates the investor would have to pay on average $400pw+

in 30yrs your'd have a paid off home worth $$$,$$$
But in 30yrs silver mines will have to be mining under the sea with massive costs in turn meaning silver will be worth many mutiables of todays prices

Now whos going be the valued investor the 1 guy in a thousand that held real silver a precious metals with very few m,iners but million's of uses

Or the guy that followed the crowd an ticked up a investment property because in the past few years they went up.

[AMR]

I would not invest in any "average" houses right now unless there was a twist to the property which allowed the investor to add value or it is at a massive discount.

Rumours are the mortgagee sale situation is a lot worse than the bank is letting on and they are stockpiling sales.

Now, this has already happened to the CBD apartment sector so that gives me a little bit of comfort.

[Arbitrage]

Interesting comment about the mortgagee sale situation AMR. It wouldn't surprise me at all. There are a lot of properties that have been withdran from the market because vendors haven't been able to sell them. I am sure that the banks would also hold their unsold properties if they were going to have to take a major loss.

[minimoke]

I would not invest .... unless there was a twist to the property which allowed the investor to add value or it is at a massive discount.

Those are pretty much a couple of my "Golden Rules" regardless of what stage in a property cycle we are in.

[Arbitrage]

Exactly right MM.

[beacon]

listings in Waitakere since jan 09 up 20% now
listings in Waitakere since jan 09 up 35% now (M&D and small landlords)
listings in Manukau since jan 09 up 11% now
listings in Manukau since jan 09 up 25% now (M&D and small landlords)

Rents to follow up ... watching this space ... hope the powers that be are noticing the pain and desperation ...

here is an update:
listings in Waitakere since jan 09 up 27% now
listings in Waitakere since jan 09 up a whopping 52% now (M&D and small landlords)
listings in Manukau since jan 09 up 15% now
listings in Manukau since jan 09 up 30% now (M&D and small landlords)

Be interesting to see, how much of this migrates to NZ capital markets (excluding NZ Super + Kiwisaver) ...

PS Please note these posts have a typo. data is since jan 10. haven't altered original posts...

[minimoke]

here is an update:
listings in Waitakere since jan 09 up 27% now
listings in Waitakere since jan 09 up a whopping 52% now (M&D and small landlords)
listings in Manukau since jan 09 up 15% now
listings in Manukau since jan 09 up 30% now (M&D and small landlords)

Be interesting to see, how much of this migrates to NZ capital markets (excluding NZ Super + Kiwisaver) ...

PS Please note these posts have a typo. data is since jan 10. haven't altered original posts...

I'm not sure I undersatnd the comparrisons. But the M&D part of the figures are interseting though irrelvant - they have to live somewhere so while they may be selling they are also in the market to buy. While people say they will "trade down" once they have the cash in hand they invariably don't.

As for the small landlords I wouldn't expect any migration to NZ Capital markets. I suspect these people are so heavily geared that here is an insignificant amount of capital at stake.

[beacon]

M&D part of the figures are interseting though irrelvant .

Maybe not for you minimoke, but are they as irrelevant to National? These M&D landlords constitute part of National's core vote bank, and they are bleeding. Especially as credit remains so tight. I list only Waitakere and Manukau figures, as some earlier posters on this thread asserted minimal impact on relatively lower socio-economic demographic areas. Here is data that they are welcome to use, as their speculative statements about the aftermath of this legislation seemed to me to be without any grounding to facts or rationale ...

they have to live somewhere so while they may be selling they are also in the market to buy.

Aren't you speculating too now? The data shows selling intentions. Where do you get the buying or "trading down" intention from ?

As for the small landlords I wouldn't expect any migration to NZ Capital markets. I suspect these people are so heavily geared that here is an insignificant amount of capital at stake.

If potential Equity released on sale of these negatively geared properties is really considered that insignificant, then why is the Govt bothering with this segment in the first place? When first world countries are trying to support their property market with first home loans, principal and interest writeoff on mortgages and securitisation reopening efforts, NZ has declared intentions to do exactly the opposite, especially when impending GST and interest rate increases are bound to have an adverse impact on economy, property market and struggling households anyway.

Wasn't National and some posters here wishing NZ to rebalance capital allocation by "picking on residential landlords". If depreciation is to be disallowed, why pick on one sub sector. Apply it with equanimity to all sectors. But no, the backlash would be uncontrollable. So pick on the small guys. And by Government's own admission, the rewards of this tinkering are minute.

With the NZ capital markets suffering from erectile dysfunction despite consistent stimulation provided by Kiwisaver and NZ super, I can't see that "capital allocation to more productive uses"
happening by squeezing this bone dry skeleton of an industry in the immediate economic environment. I only see exacerbation of the already precipitous state of residential property markets, and reduction of "feel good" factors with adverse flow on effects on NZ Capital markets as well as employment intentions, emigration intentions, investment intentions, saving intentions and on economy in general. What will the Government have achieved, I wonder?

[Skol]

I've got a mate who's a debt collector, gave me a call today. Says he's got heaps of work especially in the residential landlord sector, probably the the least who can afford it. Says he has a number of cases where the outstanding amount is $10,000+.