NZ 1st homebuyers are ScReWeD...

[Sideshow Bob]

George, you have to be congratulated to pay back that much that quickly!! The challenge now will be to continue on with that, in a perhaps slightly more relaxed manner.......

[bung5]

Property is never over valued, or under valued for long. The cost of building is the yardstick that sways the price pendulum back to a realistick cost price level. To pick the eyes out of the property market, requires you to understand the replacement cost structure value.
When the market shuts down with builders out of work, they simply leave the industry, or the country, which creates a shortage of builders, who in turn create a higher than should be price structure.
The Bricklayers in my area are undercutting each other simply to stay in work, the best brickies are now gone. Building red tape costs with compliance to keep up with the stupidity are still in a steep uptrend. The end result my friends is very obvious the price of property in the future will rise higher than the ten pc average in the last thirty years, unless the population flees to greener pastures. Macdunk

The drivle you come out with . How can property prices sustain 10% growth for another 30 years. You think wages will increase so much to support mortgage payements on an average house price of 6million in 30 years??
If wages grew at 4% per annum then the averave wage would be about 150k per year in 30 years, so 40 times the average wage to buy an average house...
You are blinded by your past success. House prices will most likley be stagnant for years.

You can keep raving on about house prices being good buying under the construction cost but you fail to factor in that the land value underneath can drop. Unless of course you are assuming the land has no value in which case property has a long way to fall before it reaches that scenario.

[stanace]

Well property has increased at about 8% for the past 30 years, so on that note your average house will cost about $3,000,000 in another 30 years. However 30 years ago the majority of homes bought were paid for by one wage earner, this has now changed, so that is why the prices can continue to rise, because they are "affordable".

[bung5]

More drivle... they can't continue to rise when we are at a point of two incomes stuggling to afford the house with 30 year loans .

You can't even justify 3 million doller average house in 30 years.

[bung5]

http://smh.domain.com.au/tsunami-to-...911-1k413.html


Starting in Europe, the downturn will spread to the US, China and eventually Australia, he said.


At the centre of the coming debt crisis is real estate, the forecaster says.

"People in places like Sydney or Tokyo or Miami say, 'Hey, real estate can never go down here, we're a great place, everyone wants to move here, there's not much land for development', and what I say is that is exactly the kind of place that bubbles," Mr Dent said.

"Outside Hong Kong and Shanghai, Australia is the most expensive real estate market in the world compared to income."

Mr Dent said Australia's house prices would return to late 1990s or early 2000 levels.

Driving all these changes is simple demographics, specifically the peak of the baby boomers' spending, Mr Dent said.

"We predicted this (current) downturn in the US 20 years ago," he said.

"We said that in 2007 the peak number of baby boomers will reach their peak spending. They would have bought all their homes and then they will start saving for retirement ... and that you are going to see this downturn."

The drop-off in spending will affect everyone, even mighty China, Mr Dent said.

To survive the incoming "economic tsunami", Mr Dent said investors should sell their excess real estate and buy up assets in US dollars.

"Gold and silver are going to crash, they're a bubble," he said.

"Once we write down all these crazy debts, we are going to destroy a lot of dollars that were created in the boom and that makes the (US) dollar a lot more valuable."

Mr Dent is in Australia to promote his book, The Great Crash Ahead - How to Prosper in the Debt Crisis of 2010-2012, and will be speaking at the Secure the Future conference in Sydney and Brisbane in October.

[bung5]

I don't think most are predecting the end of the world belgarion more so a correction which is healhty and normal in any market. A 20 -30% drop would not be out of ordinary and has happenend plenty of times in the past and everthing is pointing to one. If not a drop will be the equilvent of one by the way of flat prices and inflation doing the same thing over some years.
Of course it could go anyway but this is my arm rest chair opinion :P .... only the people with property portfolios disagree

I'm not against property investment but will not invest at the top of the cycle.

[bung5]

http://en.wikipedia.org/wiki/United_...housing_bubble

http://www.marketoracle.co.uk/Article9297.html

Just a quick google around the world.

[bung5]

NZ house prices also stayed flat between 96 and 2001

[bung5]

For the same reasons you have rebutted my point most of your argument is flawed. Getting a bit side tracked on the US housing market which is for a separate thread anyway. I'm not to sure where they are going but the point is it did crash and statistics can be misleading because in many areas houses were down below 40%. It may well bounce back up but the point is there was the opportunity to buy houses a lot cheaper.
The property market in Wellington city is already under a lot of selling pressure with the probability of 150 houses coming up for mortgagee sale shortly with the collapse of a property "investor"/developer here. (I’m not sure if he should have the honour of even been called an investor with his business plan). That will be the start and knock on effect of when these over leveraged investors start to lose a bit more equity they are going to need to sell some to pay back some debt as most are not cash flow positive and subsiding their "investment" with their wage.

[bung5]

Oddly bung, I'm finishing building three properties at the moment and have just recieved building consent for another and expect one for another in about 2 week.

I'm guessing you have a lot more capital than most , and after the additions of these to your portfolio you have more then 20% equity ?