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  1. #11
    Guru Crypto Crude's Avatar
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    I see your point macdunk...other peoples money or not... it dont matter.. us newbies are priced out of the market, so it doesnt matter where the money came from....
    My point is that 1st homebuyers are screwed...(usually the younger ones)
    My deposit for a house has gone all into shares... I can afford a deposit, but I cannot afford 15, 20, plus years... or in my example 30 years...

    hey Rmb... u raised a good point.... and that is that we are less likely to get 100% capital growth from property than ever before..

    our property market is run by foreigners that buy up our houses, push up prices, and yet the new generation coming through are screwed on like 11, 12,13 dollars an hour...
    what good can you do with $400 after tax per week... and $512 weekly loan payments is too large even with two flatmates...
    so house prices have been rising through more wealthier internationals..who consider our property cheap... cheap for them expensive for us... expensive for us unless you are already on the property wave of course....
    Government raised minimum wage last year and in April this year, and propose again next year... this is a clear signal... lower paid jobs are at the lower aged end of the market...
    and the youth need all the help they can get if property is their life long debt ridden goal

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  2. #12
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    SHREWD CRUDE, Most people start with nuthing everyone leaves with nuthing, its what you do in between. The cream always reaches the top my friend in any generation. MACDUNK

  3. #13
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    I might be egyptian macdunk.... I may want to take everything with me to the afterlife..haha []...
    does anyone agree with my summation???, because there aint no way that even at 450 after tax plus two flatmates say 100 a pop each equals 650 less weekly loan payments of 512 equals $138 to survive on...

    maybe foodee, you could do it real hard for a few years... get your pay rise and then just, use that extra cash to live on... take the 30year loan, and breeze through until your 52 without kids, because you need their rooms for the dough... []...lol

    Yes I have a plan macdunk, it aint nuffin to do with property, the cream at the top dont spend 20plus years to gain a 300,000 investment... so nor shall I... and even if your investment doubles... you are still paying $799,000 in total over 30 years...

    my argument has nothing to do with the outlook on property... it is to do with the first homebuyers outlook on their life long debt ridden goal...


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  4. #14
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    quote:Originally posted by Shrewd Crude

    I might be egyptian macdunk.... I may want to take everything with me to the afterlife..haha []...
    does anyone agree with my summation???, because there aint no way that even at 450 after tax plus two flatmates say 100 a pop each.
    SHREWD If you really were crude at a $100 bucks a pop you would pay the bloody place off in quick fashion.macdunk

  5. #15
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    Just be patient and keep investing. Prices will not be 7x wages for the rest of your lifetime. Fear will hit the market eventually and will drive out the speculators. Bide your time and you will pick up a bargain.

  6. #16
    Senior Member Halebop's Avatar
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    quote:Originally posted by Shrewd Crude

    My argument has nothing to do with the outlook on property... it is to do with the first homebuyers outlook on their life long debt ridden goal...
    Shrewd Crude you aren't the only person to come to this conclusion. The relative rise in property capital values to take home pay (compounded by a secular demographic shift from single income to dual income households) cannot be sustained. Unless society moves to three or more income households the impetus provided by the 2nd income is reaching maturity and may even go into decline with more family friendly tax policies prompting new mums or dads to stay at home. Home ownership continues to concentrate into the hands of Baby Boomers who largely did not experience the least profitable periods of home ownership in New Zealand. People in their 20 somethings earning closer to the average wage or less have limited scope to buy the same sort of 1st home their parents could afford in the 60s or 70s. I suspect the consequence will be a prolonged demographic "lag" in learning the wealth building disciplines of saving, budgeting and delayed gratification.

    The original "mainstream" two income family is unsurprisingly the Baby Boomer family. They have reached a mature earnings profile which is likely to go into permanent decline in the near future (if it hasn't already started). More than ever this demands more traditional (and cyclical) drivers of real estate outperformance:

    Demographics (Birth Rates, Survival Rates, Net Immigration).

    Productivity Growth (Technological Improvements, Education, Innovation, Employment Environment and a host of extraneous inputs but particularly downstream impacts of the availability of risk capital).

    Wage Rates and Employment Levels.

    Inflation (Counter-intuitively property underperforms during high inflation as key triggers like Employment, Productivity etc worsen. On the plus the mortgage "decreases" by the rate of inflation adjusted income increases although this may be swallowed by higher interest costs).

    Interest Rates and the availability of risk capital (Changes in banking regulations and prudential requirements have had a huge impact on the attractiveness of home lending in the eyes of bankers - with a consequential "blinkered" shift in the true rather than perceived risk as capital values have increased versus incomes and proportional wealth).

    New Zealand (and cities like Auckland in particular) have demographic advantages that will cushion some of the consequences of an aging Boomer population. With high'ish immigration, natural economies of scale and productivity benefits concentrating populations in larger centres and a less proncounced baby "bust" here in NZ, high priced locations like Auckland are likely to remain supported. It would require an important external shock (Weather related? War? Health Shock?) to shift this trend.

    Can we expect to see the relative "price earnings" multiple of housing continue to expand at a fast rate without the wealth effect of growing incomes (3+ Income Families? Baby Boomers not cutting back their paid hours until well into their 80s - and not dying?)

    As long as you maintain focus, I suspect a program of saving and actively investing your rental vs mortgage payment differential will pay better fiscal dividends as long as you accept the inevitable volatility that comes with it. The emotional benefits of financial wealth versus home ownership is still open to debate. There may come a point in life where you just "want" to own a home more. Keep that in mind when considering demographics. You won't be the only one when that time comes. If it's part of a trend, you are better off being in front of it rather than behind it.

  7. #17
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    SC
    As I said you're a 'shrewd' observer. It ain't nice out there is it; but if you want it bad enough you'll work through it. Let us face it, no one out there is going to make it easy for you or any one.

    Cheers

  8. #18
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    A house costing 7 times the average wage is historically high - suggesting NZ houses are overpriced

    Another ratio is rent versus mortgage repayments.

    Historically it has been cheaper to pay a mortgage then to rent. In Shrewd's example the mortgage repayments are $500 a week. You can rent a basic 3 bdrm house for $300 a week in Manurewa, A nice 4 bdrm place for $400 and a luxury house/small farm in Alfriston/Takininni/Papakura for $500 a week.

    Again suggesting houses are too expensive in Auckland.

    Is a house a good investment?

    Property owners are now getting 5% yeilds gross - A $300,000 house rented for $300 a week. This is a poor investment.

    Of course property investors are hoping for capital gains - whether they will get them or not - who knows?

    Complicating matters of course are the tax breaks available to property investors and the ease with which you can use equity in one house to buy another.

    However if you are leveraging you really, really, really need the value of your houses to be growing. If the growth stops or goes backwards you are in big, big, big trouble.

    I will go back to NZ in a year and will probably be a first home buyer so I have been thinking about this a great deal.

    I could buy a house with cash but all these over priced houses are really pi$$ing me off because I will have $300-$400,000 less to invest in shares.
    \"The overweening conceit which the greater part of men have of their own abilities [and] their absurd presumption in their own good fortune.\" - <b>Adam Smith</b> - <i>The Wealth of Nations</i>

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    The information you need is not the information you can obtain.
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  9. #19
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    Sydney's inner-city property blues
    January 3, 2007


    Sydney's property boom has been dead for three years, but that hasn't improved things much for first-time buyers interested in a well-located family home. Changes to the city's median house price over the past decade explain why. It rose an eye-popping 250 per cent between 1996 and the peak of the boom in late 2003. And it is still 2.3 times the 1996 level. So the recent weakness in the housing market has done little to repair the damage caused to housing affordability during the previous decade.

    A Macquarie Bank economist, Rory Robertson, showed just how far out of reach the bands of suburbs close to the city centre and close to the coast have become for most new buyers. He chose five popular suburbs within 10 kilometres of the GPO - Bondi, Bellevue Hill, Bronte, Mosman and Paddington - and calculated the average median price for those neighbourhoods. It was $1.6 million, almost $1 million higher than before the boom.

    The event that made owning a home in a big city so difficult was the halving of interest rates during the 1990s. That structural change in rates, made possible by low inflation, boosted the purchasing power of home buyers by 60 per cent and triggered a surge in demand for well-located houses. The result was a once-in-a-lifetime price increase that permanently downgraded housing affordability for newcomers.

    Robertson estimates that home prices have risen 75 per cent faster than wages over the past two decades. Since buying and paying off a house is the biggest financial event in most people's lives, the gap between the growth in property prices and wages has greatly devalued the lifetime earnings of non-home owners, particularly young people.

    The average price of an Australian house, including land, has risen from four times pretax annual wages to about seven times in 20 years. That means an aspiring first-home buyer on average earnings of about $55,000 a year must contemplate borrowing $350,000 (assuming a 10 per cent deposit), rather than $200,000, to buy an average house.

    Those with average incomes who brave the housing market for the first time must make what Robertson calls the "never-satisfying compromise between house and yard size and proximity". They have been pushed towards the periphery of cities and beyond, priced out of the market for well-located family homes.

    A new housing index in Queensland has highlighted this national trend. The Urban Development Institute of Australia (Queensland)/Matusik Affordability Measure uses average income, interest rates and assumed borrowing capacity to estimate what proportion of housing in 22 urban centres in Queensland is within reach of those wanting to buy their first home. In 2001 the average household could afford 74 per cent of the homes being sold across the state, but that had fallen to 15 per cent by the September quarter last year.

    In Brisbane, just 7 per cent of homes were classified as affordable to first-home buyers and those were probably on the urban fringe.

    "Something similar has happened in the major urban centres of other states as well," Robertson says.

    Despite the compromises being made by first-home buyers, they are being forced to take out bigger mortgages that stay big for longer periods. That means today's young home buyers have far greater financial risks than was typical in earlier decades. They are much more exposed to things such as illness and sudden job loss for more of their lives than people were in the past.

    There are predictable signs that home ownership is falling among those aged under 45. The ratio of owner-occupiers in the 25-35 age group has dropped by 10 percentage points in the past two decades and the rate for 35- to 44-year-old owner-occupiers is also edging lower. For most of the 1990s first-home buyers accounted for more than 20 per cent of home loans but this ratio slumped as the boom approached its peak. By early 2004 the proportion of first-home buyers crashed to just 12.6 per cent and even less in Sydney. The proportion ha

  10. #20
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    gidday halebop...
    You raise a very interesting point, and especially around the whole Baby Boomer thing which I can see will be the biggest issue in my life time...I think the next stockmarket crash, house slump will be contributed by BB's ... In New Zealand our soon to be retiring BB's crisis could be offset by an expansive immigration policy, other countries like the US will be hit hard, where a census estimated that there are currently 78.2 million BB's... roughly 25% of total population... If you have 20-25% people pulling out of property, shares then we are looking at decades of recessions in all forms of investments...

    I can see it starting to begin with my own eyes... I live in Christchurch and the amount of retirement villages pooping up is just amazing... these BB's are selling there houses, internationals are making up with the shortfall at the moment... in 10 years there maynot be enough overseas investors to make up the difference... which could and will lead to house price falls... this could be my entry...

    has anybody actually started a BB thread?
    BITCOIN certified rat poop. NSA created, Expensive to send, slow, can only trade on cex, no autonomy, spaghetti code, has been hacked, accidental Backdoor brc20s whoops, no one building on it, alienated all cryptos against it, volume is fake, few whales control large supply... it will perform though

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