NZ 1st homebuyers are ScReWeD...

[minimoke]

....These M&D landlords constitute part of National's core vote bank,

Oops - looks like I mis read your post. I thought your reference to M&D was to people just selling their family home. But if you mean M&D's that are a lanlord then thats a different matter - I'll just put thme in the same category as the Small Landlord.

[beacon]

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+.

And with nary a hope of collecting. Meanwhile, the lending banks are not giving any quarter. In many situations and after jumping a lot of legal hoops, if landlords bothered jumping them at all in the first place, creditor landlords will get instalment payments that won't even cover the cost of interest. I have heard a landlord say recently that after chasing their tenant for 8 months, they had the Tenancy tribunal Adjudicator just write off their case because "You're running a business, you can claim it as a loss. This guy just hasn't got the money. As far as damages are concerned, you really need to bring photos and records of the damaged places to show they were not damaged before the tenancy started". The fact that no damages were recorded on the Tenancy agreement meant nothing. The Adjudicator didn't even ask the tenant if they had done the damages or not. The vandal tenant walked out of the Tribunal scot-free. He had under the table income while collecting dole, and now nothing to pay for damaging somebody's retirement asset. As a landlord, try saying the same things to the lender and see how far that gets...

The point is things are already tough in this sector. The urgency to "even the playing field" seems to me to be just a show that the Government is doing something...

[upside_umop]

Still falling, but for how much longer? Rentals are becoming short from what I have heard. Perhaps, yields will catch up and therefore make rental properties more attractive again.

This latest article "House prices hit low as prices snag" shows that prices are now down 7.7% from the peak in November 2007. That is taking into account that many first home buyers are infact out of the market, so the median is skewed to the higher end of the market.

Combine this with the fact that consumer prices are up 10.9% since third quarter 2007, prices are down in real terms:

( 1.077 * 1.109 ) - 1 * 100% = 19.43%.

I expect this to continue to decline as first home buyers enter the market, skewing median prices downwards. The actual number should be further downwards, given the CPI basket is majorly made up of housing. I will find out some more, and adjust it. I would expect housing to be down in the early 20% taking this into account.

[POSSUM THE CAT]

Upside umop to make rentals a reasonable business to be in Rents have to double or house prices halve IE $400000 house interest on $400,000 term deposit 5-25%=$21,000 rates, insurance & maintenance $5.000 total =$26,000.
Rent At $400 per week 52 weeks $20,800 even if you payed no management fees why would you bother. You have to either buy house for $200,000 or rent for $800.00 per week

[Pumice]

Upside umop to make rentals a reasonable business to be in Rents have to double or house prices halve IE $400000 house interest on $400,000 term deposit 5-25%=$21,000 rates, insurance & maintenance $5.000 total =$26,000.
Rent At $400 per week 52 weeks $20,800 even if you payed no management fees why would you bother. You have to either buy house for $200,000 or rent for $800.00 per week

This is exactly how I see it. many of the younger generations arent looking at LAQC's or any other schemes. they just want the investment to stand as is. Given that the median income is far below $800 after tax, I can only conclude house prices will drop further as apposed to rents increasing. In Wellington I recently had my rent dropped, the landlord seemed pretty desperate for cash.

[upside_umop]

I agree, yields are low. There will be a crunch somewhere along the way, whether it's a decline in prices or an increase in rents or both.

There is the potential for shortages in housing stock given the lack of consents in the last few years. This will support prices a little in future (when, I don't know - I think housing is relatively flexible. I.e. stay with the parents a little longer or downsize your house/rent the spare room). I don't see a mass amount of new houses being built given the financial situation and the amount labourers charge (Chch earthquake didn't help!).

With the constant increase in monetary supply, and efficencies still driving through (multiplying factor doesn't occur overnight)...this relationship translates long term through to house prices a lot more consistently than it will to gold. Although, watch for basel III requirements.

[Tok3n]

What's the verdict so far now in 2011, still difficult for 1st home buyers? interest rates have gone down and looks like the banks are more relax towards lending e.g. 90% lending is back (though with more conditions)

I am a 1st home buyer in my early 30s, seems like every open home I go is basically full of baby boomers or slightly younger.

[stanace]

Slightly off topic. If you are renting in a quality property on a periodic tenancy, particularly in Auckland, I suggest that you convert to a fixed tenancy asap, as you may shortly get a 90 day notice to vacate, as the World Cup is soon to be on us. Rents are about to be raised, 60 day notices, as the shortage hits Auckland. I spoke to a Building Manager last week, and he is turning away 10 requests a day, there are few spare quality rentals available, and it is about to get a lot worse. How this will affect the price of housing in the short term is anyones guess.

[bung5]

I was nervous about buying a house last July so I allowed for that by
locking in the certainty of 8.3% for 5 years. I am paranoid about paying
off the lump sum principal each year as in 5 years if interest rates go
to say, 15%, I want to have as much equity as possible. How can anyone
know what rates will be, I remember 21.5% in 1988.
George

Back from 2008... Geroge you still paying 8.3% or how much you pay to break that?

[George]

Hi bung
Yep, still 8.3. Had a 2 week window abt november 08 I think to go to 6 month fixed for no charge but by the time we got back to them it had gone to $3000 break fee, eventually as high as 8 grand so not worth it we felt. Hindsight shows I was wrong. Floating rates actually went as high as 10% late 07 so for a while we were laughing.
We have 10 months to go at 8.3 (2,600 to break it now) but will have paid off the house by Dec 2013 all going well. So less than 7 years to pay back 250 grand with 5 of those years at 8.3%. And for most of that time our combined income was less than 100 grand.
Younger couples may not want to sacrifice to that extent but this was our last chance to get on the property ladder after having got off it (foolishly). Just bad luck the greatest property boom in history happened at the same time and we had to buy near the top. Wonder how other previous posters view the current property scene now.
George