Final bullet into a dropping property bull?

[skinny]

quote:Originally posted by belgarion

On April 24, the National Association of Realtors reported that sales of previously occupied homes in March dropped 8.4% from the prior month to a seasonally adjusted annual rate of 6.12 million units -- the largest monthly drop since 1989. The trade group said the median price for homes was $217,000 in March, down 0.3% from a year earlier.
House Prices Slide as Property Glut Grows

Would that mean that NZ median and the US median were about at par?

Well I don't know for sure but an anecdote....my in-law returned from a business trip to San Francisco last month where he had dinner one night with a local real estate agent. The next day he was shown around some pretty nice properties in solid upper middle-class neighbourhoods. He came back raving how "cheap" SF was and impressed with what he could get if he sold his house in....wait for it.....Hamilton [:0]

Maybe I am prejudiced but something is seriously out of kilter when Hamilton is more expensive than San Franciso!! And SF is supposed to be one of the more expensive US cities; I was reading in a recent edition of The Economist you can get a McMansion in some of the Southern States now for around $250k US.

[Crypto Crude]

quote:trackers-I just think the actions by the Reserve Bank are bordering on irresponsible, and are certainly not helping the majority's situation one bit

as You know the most important goal for the RBNZ is to contain inflation in the 1-3% band....
when inflation is controlled then growth as in GDP can perform at its best over the long term...
short term GDP is not effected by inflation...
so in away RBNZ is looking after us by spurring growth which impacts dirrectly on wages...
although this maybe hard for others to see when exporters are being killed...
the other side of the dice is cheaper imports...
NZ is a net importer, so cheaper imports is better for NZ consumer...
expect a 50% chance of one more OCR rise trackers...
[8D]
.^sc

[Crypto Crude]

quote:minimoke-
1....By continuing massive growth in the public service with lots of well paid office workers who don’t add any productivity to the economy but who are in a position to afford better and better housing ?driving demand.

2....By giving the reserve bank one tool (interest rates) to control inflation. Funds flow out of savings (which get taxed) into areas where a greater return can be made ?like capital gains on property

1....every working person adds productivity to the economy regardess of which sector they are in...

2...in current market conditions money actually flows into savings..
with higher interest rates lead to bigger savings deposit rate, which creates more incentive to save rather than spend...
this is how inflation is controlled through the cycle of less spending disencourages prices to rise because less people are bidding up prices...
[8D]
.^sc

[minimoke]

2...in current market conditions money actually flows into savings..
with higher interest rates lead to bigger savings deposit rate, which creates more incentive to save rather than spend...
this is how inflation is controlled through the cycle of less spending disencourages prices to rise because less people are bidding up prices...
[8D]
And this is why I love our Government. They enable me to work hard and pay lots of taxes with heaps left over to save at 5 – 6% interest which is then subject to more tax. Silly old Bollard – no way would I want to be paying my mortgage off when he puts rates up to 10%.

[Halebop]

quote:Originally posted by Shrewd Crude

1....every working person adds productivity to the economy regardless of which sector they are in...

Shrewd productivity is a measure of efficiency, not production. The trick with productivity is to do more with the same (or better yet more with less). As a generalization New Zealand business owners, managers, staff and government officials don't tend to understand productivity. What tends to happen is that problems or needs get bodies thrown at them. This rarely lends to higher productivity, although sometimes masquerades as the same via more than usual over-time performed by an existing workforce. Little about it generally makes a company or country more efficient or competitive unless the output materially exceeds the inputs.

Higher employment is not necessarily good for everyone (except perhaps for that "next" person employed). Imagine a company produces widgets. They sell 1,000 widgets around New Zealand each year. The economy is strong and the company has high confidence that it will sell 1,000+ widgets next year too. It has some operational problems though, it's staff require lots of training and in a tight labour market it takes longer to find new people. Management decide to hire an additional "Production Cadet" to help pre-empt the downtime gap when the next, more prized, "Production Senior" leaves. This improves the company's position from a risk management perspective (They can hopefully keep producing widgets to order without incurring any late delivery penalties and customer losses), but adds to overhead with little augmentation to their offer. So either prices must rise to compensate or the company will make less money. In either instance economic productivity drops (The company makes lower profits on higher capital or their customers pay higher inputs for the same outputs).

The smart company would have focussed on productivity enhancements rather than production issues. They would look at existing processes and work out how to do the same or higher volumes with less or the same staff. They might also look at their existing staff and develop a retention strategy for the more valued "Production Seniors" and training strategies to cost effectively get their other staff up to that level. None of this need involve throwing another body at the problem.

This may seem obvious but most corporate managers and a horrendously high proportion of SME entrepreneurs don't have a strong grasp of methodically improving the customer offer combined with operating efficiency gains.

[Jess9]

Well said.

[Crypto Crude]

cheers Halebop...
your arguement is correct, but if your not working then you cant be productive! and then add nothing to productivity...

quote:What tends to happen is that problems or needs get bodies thrown at them. This rarely lends to higher productivity

is it not true that as you throw more bodies at a problem you get closer and closer to economies of scale... as you increase output, you get lower and lower average costs... this is productive right..

let me give you another example... In China the people are not productive at all... but it is the sheer number of people thats making their economys wheels lubrucated...which is giving them higher average wages year on year.... can Increased wages be a measure of productivity?...
without workers then theres nobody to lubricate these wheels...
[8D]
.^sc

[Dazza]

yeah i read somewhere to that a good house in US costs around 200k..

obviously its in perspective to them earning USD as well.

so u cant say oh 200k USD = 300k NZD

cause u will be earning USD too..

nzl sure is getting expensive.


im sure others have said this as well...

but.....
wait till kiwi drops...

petrol at pumps get higher... $2 a litre? def possible with 10c tax on it...
.
that will be $80 a week for me!!!

a big increase... considering i only pay around 60 at the moment...

feel the squeeze anyone

[George]

Hi all
Get confused with all the opinions on property.
If, or when, our dollar drops, won't that mean that overseas folk will travel more and perhaps also, to buy our property, which would put a floor under values at not much less than they are now?
If that is true, how high would our median property have to go before overseas investors consider it too expensive?
George

[Crypto Crude]

quote:George-Hi all
Get confused with all the opinions on property.
If, or when, our dollar drops, won't that mean that overseas folk will travel more and perhaps also, to buy our property, which would put a floor under values at not much less than they are now?
If that is true, how high would our median property have to go before overseas investors consider it too expensive?
George

when the dollar drops then a new wave of foreign investors will invest... the smart ones are waiting for imminent dollar drop... the floor that you talk about is possible... it may just be a sideways market for 5 years or something like that, or a minimal drop of 5% as trackers talks about...
I cant give you a price that foreign investors would cap our Median prices at, but NZ housing is cheap as compared to the rest of the world... most likely the cheapest for a secure western country, when taking into account foreign exchange and just how far NZ dollar goes for them...
[8D]
.^sc