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  1. #21
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    My House, My Castle
    As the number of people able to afford luxury homes grows, real estate agents face another problem - how to separate real buyers from those merely pretending to have the cash.

    Astonishing as it may seem, a small group of "Walter Mitty" types regularly attempt to deceive agents and raise their status in society by demanding circuits of exclusive properties.

    Even if you can't afford it, you can always try and make yourself feel better!
    Death will be reality, Life is just an illusion.

  2. #22
    Senior Member Halebop's Avatar
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    quote:Originally posted by Steve

    My House, My Castle
    The real story here is the increase in high priced sales. Skewing both sales volumes and values at the upper end increases both the median and medium values, "proving" rising or stable values in REINZ blurbs when the overall market is not quite so robust. High end purchases of assets like houses and boats can be counter-cyclical indicators rather than proof of growth. When the business game gets tough, high-end purchasers extract dividends and invest in lifestyle instead of reinvesting in their businesses and investments.

  3. #23
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    If you put aside the love affair/special investment nature of property, and break the options down to a simple choice of renting or mortgaging to buy, then most of the time the answer should be that you are better off renting when you consider rates costs + interest costs vs the cost of renting (even allowing for a fair "comfort" premium/value when taking into consideration the value of owning your own home).

    The question then turns to whether these discrepancies between housing prices and affordability or housing prices and incomes can be sustained. My own opinion is that they can not, at least over the medium to long term, taking into consideration the adjustments we'd expect the market to make as fewer people are able to afford a fixed/growing (in the real sense) pool of housing, and also given the political clamour that will eventually arise if these discrepancies continue (and the current govt we have).

    But my advice to friends is always the same. Rationally, if it is relatively cheaper to rent, then do so and save for a deposit for when this is not the case. I can't see a scenario where house prices continue to rise and we return to a class situation of "landless" and "landed".

    The only thing a prospective home buyer needs to consider at any time is whether buying a house at that stage makes sense to them, at that stage; or whether the value they place on home ownership is in equilibrium with the current market conditions.

    Take the fear that comes when considering a good such as housing out of the equation, and the current situation is simply a matter of current house prices being out of synch with the market that moves those house prices.

    All just my opinion, though.
    Undisputed 2006 World Cup Premierleague Champion

  4. #24
    Senior Member Halebop's Avatar
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    quote:Originally posted by Shrewd Crude

    gidday halebop...

    ...has anybody actually started a BB thread?
    I probably mention Baby Boomers in 50% of my posts. Many demographers and a few demographically focussed economists believe Demographics is the only game in town. They have a huge impact on both long and short term cycles - in any aspect of life that can cycle.

    If you think back to your basic economic theory, there are a number of cycle concepts offered - mostly around the notion of snaking lines cycling up and down on a run chart. Kitchen, Kuznets and others I can't remember right now. There is also the Kondratiev wave (I think called K-Wave but the others start with K too!) - this metric contends that cycles themselve cycle in size over 50 or 60 years. At the moment we are at the top of the last Kondratiev wave that began in the late 70s / early 80s. Being at the top of the Kondratiev cycle is a once or twice in a lifetime event. Lows are higher and highs are highest. Down periods are soft or just don't happen. Up periods are extended and stronger.

    If you overlay demographics on the K Wave you see Baby Boomers as a group entered the work force or at worst university & probably part time employment by 1982. It's no coincidence that this is when both share markets and property markets began a 30 year bull run in most western countries. Just when we were thinking the party must one day end, property and share values accelerated in most countries over the last few years. This is because Baby Boomers are now aged 61 to 43. At worst their children are likely at high school. Mums have gone back to work. As a group they are now in senior management positions, peaks of professional knowledge or have established and properly capitalised their businesses. Earnings and disposable earnings have peaked. This feeds both consumption and the availability of risk capital. Down cycles all but disappear or at least lack conviction.

    Push forward 10 to 15 to 20 years. More Baby Boomers have retired than are working. While with-holding their labour has made you and I feel richer at work, with-holding their risk capital for less risky, income generating assets means our employers have less capital to innovate and invest. To attract investors they take less risks and invest less to maintain profits. Cycles are now more pronounced because investments are only made when the trading environment is clearly positive, exaggerating the cyclical nature of economics and investing.

    The boomers are now costing more in retirement benefits and healthcare. Additionally, infrastructure built by government in the "make hay" boomer years is inadequate for an aging population - it was built for a Boomer aged population. Substantial infrastructure investment is required against a backdrop of falling growth. The children of Baby Boomers are having children themselves, great for the future, but expensive in the moment as this costs more in health care, education and lost labour. Despite the Cullen Fund, Government borrowing hits an all time high. Inflation is difficult to control. Cycles really cycle. In 2028 the bottom of the K wave is reached and the cycle starts up again.

  5. #25
    Member skinny's Avatar
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    HB et al. you might find some of the papers here interesting.

    http://www.rbnz.govt.nz/research/wor...6/2823686.html

    p.s. the Barfoot&Thompson recent sales do not reflect NZ's average agent's sales which have been, erm, average!

  6. #26
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    quote:Originally posted by Shrewd Crude

    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?
    Wait 10 to 20 years and buy the dying Baby Boomers houses is a good strategy in my opinion - However what if I'm wrong and pirces don't come down much?

    Then you've lost 10 - 20 years.

    For a young graduate now this might be okay but I'm 38 and in 20 years I'll only have 15 years left.

    See http://www.sharetrader.co.nz/topic.asp?TOPIC_ID=23675

    for a discussion of Population Growth and Growth in Property Values - it includes some BB stuff.
    \"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>

    The information you have is not the information you want.
    The information you want is not the information you need.
    The information you need is not the information you can obtain.
    The informaton you can obtain costs more than you want to pay.

  7. #27
    Guru Crypto Crude's Avatar
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    In terms of cycles the BB will be termed the DG cycle... doom and gloom cycle... I must say that NZ is starting to prepare for it quite well with the Cullen Fund which is also making healthy returns... 17 odd % last year.... but in America they have massive all time high debts,.. housing is already starting to go peer shaped, those current BB's that are expecting 401k plans willnot get them...
    And I no that I definately wont, and not expecting nothing....
    It is such a concern that In Auzzie savings is compulsory...
    BB's hold most of the wealth, and will have to pull out of shares, housing ... because they wont get their superannuation or only a small part of it... which will cause a decade of recessions... I have great fear, but people I tell, just laugh it off, or dont take me seriously,
    It is a real factor and we must wake up... coz even if we in NZ are positioned quite well to take it, If USA sneezes, we all catch a cold...
    Or then again If China is the superpower in 20-30yrs it may not be so bad, they have an inpeckable savings record... (50% of GDP, or something like that) and retirees get nothing... whole generations of families live together..
    If we do have a 15-20% drop in popualation, then it is safe to say that property will slump big time...
    stocks like Ryman will do very well for the BB's, but once BB's are gone these stocks will crash... (genesis research)
    Commdities will be the way to go... and we are only at the start of a 30plus year run on gold,silver, and the lot...
    adjusting Gold for inflation over the long term should put it at $2800us per
    ounce right now... so there is alot of upside scope...
    Kitco.com is quite bullish on comodities, check it out...
    [8D]
    .^sc
    Nakamoto means of Central origin ...

  8. #28
    Guru Crypto Crude's Avatar
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    whats up rmbbrave.... you said
    "for a young graduate now this might be okay but I'm 38 and in 20 years I'll only have 15 left"...
    we will get early signals...so not 20years but earlier... for most it will be tooo late to start saving...but in say 10 years the smart BB's will sell early... so there will be many years of no growth, but fairly stable before all BB's are retired and then the big crash...
    and remember its not when the BB's die... its when they start to sell out of housing because they need the cash to survive....
    [8D]
    .^sc
    Nakamoto means of Central origin ...

  9. #29
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    Shrewd dude
    You started a bl00dy good thread.
    Lots of good points and thoughts coming out
    Especially yours
    Running with the Bulls!!
    Go with the flow
    slimbo

  10. #30
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    quote:Originally posted by Shrewd Crude

    whats up rmbbrave.... you said
    "for a young graduate now this might be okay but I'm 38 and in 20 years I'll only have 15 left"...
    we will get early signals...so not 20years but earlier... for most it will be tooo late to start saving...but in say 10 years the smart BB's will sell early... so there will be many years of no growth, but fairly stable before all BB's are retired and then the big crash...
    and remember its not when the BB's die... its when they start to sell out of housing because they need the cash to survive....
    [8D]
    .^sc
    Not to shrewd crude. They dont sell to survive they take out a reverse mortgage to survive. You pay it all back when you die.MACDUNK

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