NZ 1st homebuyers are ScReWeD...

[Steve]

Another "feel good" property story. As an aside, does anyone know REINZ's reasoning for preferring MEDIAN over MEAN other than trying to make prices sound better?

Property boom set to continue
And now for the good news: New Zealand's property market boomed again last year, is still booming now and looks set to continue into 2008.

[Heavy Metal]

quote:Originally posted by Hommel

BUT if you factor in the not inconsiderable sums spent over the time period on renovations, improvements, new roofs, painting, landscape work, the TRUE increase was about 6.5% pa on both properties.

And when you factor in inflation over the past 30 years at 6.5% the TRUE return is then zero!

[Halebop]

quote:Originally posted by Heavy Metal

And when you factor in inflation over the past 30 years at 6.5% the TRUE return is then zero!

In fairness it's about +1.5%, which in the scheme of things isn't that bad. After all, it grows by 1.5% just for being there. Although you'd expect a business or share to do better in real terms, it has to be worked on a lot harder by the employees. A business doesn't make money by just having a foot print.

[Heavy Metal]

quote:Originally posted by Steve

As an aside, does anyone know REINZ's reasoning for preferring MEDIAN over MEAN other than trying to make prices sound better?

Using the MEAN would actually make prices sound better! This is because the value would be skewed by including all the $1000000+ properties.

Say for example there are three properties worth $10000, $100000 and $1000000. The mean is $370000 yet the median is $100000 (the mid-value house).

[Heavy Metal]

quote:Originally posted by Halebop

After all, it grows by 1.5% just for being there.

I suggest you need to factor in maintenance and renovation costs to achieve your 1.5% real return. If these are not done the real return for 'just being there' is probably more like zero.

[Crypto Crude]

quote:Halebop
Advanced Member
2065 Posts
Posted - 28/01/2007 : 09:52:59 AM
1.....I agree the NZ dollar is too strong but it's stubbornly proved me and quite a few others wrong so far.

2......Not sure about no skill in housing. I've got several friends who either trade or invest in both residential and commercial real estate. Suspect there is a lot of skill in picking up "bargains" in a market where you are competing against a lot of bank financed amateurs. Skill again in making them look like +$80,000 on a +$20,000 budget.

3......At the more passive end I personally look for boring companies on predictable paths so maybe that isn't so different either?

1..... I hope exchange rates stay higher for longer, and the OCR aswell.... the higher and the longer they are up there, then the bigger the fall off when the market swings...

2....."suspect there is alot of skill in picking up bargains"... my mum seriously looked at 100plus houses before she found the right one... (it took her over 6months)... she was no property buff...
its all about timing, luck, patience
I know exactly what to look for, and I have been told zilch... what I am looking for is...
a four bedroom house, spacious, land area (maybe enough to sub divide), the location and the neighbourhood....
yes their is skill in buying the right house, fixing it up, flicking it off for a profit...

3..... a companys outlook changes all the time... you have annual reports, AGM's, quarterly statements, public announcements, public commentary, Mergers and acusitions,
market statistics which effect your stock,
In stocks you can watch the value of your portfolio change daily... I just love it...
The only real way to keep revaluing your house is when you either sell it... or a government valuation....
[8D]
.^sc

[wns]

quote:Originally posted by Halebop

quote:Originally posted by Heavy Metal

And when you factor in inflation over the past 30 years at 6.5% the TRUE return is then zero!

In fairness it's about +1.5%, which in the scheme of things isn't that bad. After all, it grows by 1.5% just for being there. Although you'd expect a business or share to do better in real terms, it has to be worked on a lot harder by the employees. A business doesn't make money by just having a foot print.

There's been a lot of talk about "on average". The average % return of investing in property & shares etc.

I personally don't find 'thinking in terms of averages' as very helpful. Instead look at specifics - specific listed companies or a specific property that you could invest in.

I'm surprised there hasn't been more interest in getting JoeKing to explain his wrap stategy. You can typically earn 40%+ on your money - or infinite returns on your money if you structure the deal so that none of your money is in it.

[Halebop]

WNS an average is the basic building block of benchmarking. Benchmarking is a basic building block of performance excellence. This is why I often comment on market "average" performance benchmarks like share indices. Knowing an average score is a key criteria for recognising, determining and emulating out performance. Something as simple as a control chart using a single standard deviation above average can help identify the out-performers.

Because with wraps you are taking operational and leverage risks, I'm not certain that knowing you might earn 40% is actually an acceptable risk / reward trade. What is the benchmark? For me it could be my own returns during this bull market phase. They have "averaged" above 40%pa without any leverage.

[Mick100]

specifics

Buy $100,000 worth of GPG shares on margin

ie borrow $70000

average annual return on GPG over the past 10 yrs is 18% pa

thats $18000 return on your 100000

interests expence is 7000 @ 10% pa

that gives you an $11000 return on tour $30000 money invested

Thats 37% pa - not too bad aye

In reality you would want to give yourself a buffer on your margin account. So you put up $35000 but leave the investment at the same size of $100,000

11000/35000 * 100 = 31% return

other advantages:
- you can liquidate you position in under 30 seconds unlike a house which would take weeks or months to sell
- don't have to deal with loser tenants
- don't have to do wrap deals with people the banks consider unsuitable borrowers.

,

[cantab]

Vacancy rates in OZ are incredibly low, take Brisbane as an example, vacancy rate is 1.7%, BIS Shrapnel expect rents to rise 20 to 25% in Brisbane over the next two years. People are forced to rent so pushing up demand.