A profound inflection point?

[miner]

Not sure if the guy down the road from me would agree with you Tok3n as his house that went on the market two years ago for just under a mill that dropped to 750k six months ago is still not sold,or the one the other day that after a year at 300k just dropped to 250k or the one at 530k now 500k after a year of sitting there or the four the other month that dropped between 20k-50k,I could go on but you get the idea ?,NO rush to buy at the moment as there's a ways to go yet.

The graph will be like a ramped share you know heads up steeper and faster as word of easy money spreads until there is a near vertical climb,then the music stops,people think hang on it's not worth this(smart money and rampers long gone by now) then it falters,starts to drop,up a tad as a few buy the cheap dip ?,then slowly down again,then it does what we used to call "fall off a cliff",bounce a bit then slowly (years) head back up.

Obviously we are talking about to different thing as most ramped shares die a nasty death were as property will recover in time,but when this all plays out the chart will look the same,property turned a year ago and has ways to go to the bottom of the cliff yet,the smart money is waiting patiently with NO emotion at the bottom for the scraps.

What people are doing now is chasing a dropping market,as in the guy that dropped from 300k to 250k has left it too late,he held out for the hyped mental price for too long then thought o sh*t better drop,but he left it too late and the market has dropped his 50k already.
So he has to chase again to sell but if he leaves it too long he will be behind the market again,and before he knows it a helpful person at the bottom off the cliff will offer him stuff all to pick him up which he may have no choice but to accept by then.

We are at the top of the cliff now.


Cheers
miner

The above house is now 225k and he is still chasing a dropping market,but would say he has left it to late again,give it time and you will probably get it for 150-175k,if not there will be another.

In the boom this house would have been snapped up in 2 seconds as an absolute bargain,a bargain that now has lost the better part of a 33% in a year,this is only one example there are plenty of other ones.

No rush just sit on your hands and watch.

Cheers
Miner

[Sauce]

Hi Dimebag, I am involved in residential property sales in Wellington, and I am convinced you are correct that most property has dropped a lot further than the statistics indicate. The QV stats shows wellington as being nearly neutral growth, this is rubbish, there are very few homes in Wellington that would get the same price as early last year and I have seen people already realise losses.

My guess is that higher priced homes are making up more of the volume and skewing the stats. My experience has been that desirable second homes (i.e. $500k - $800,000k - family demographic) are selling faster (relatively!), whereas cheaper first homes and small apartments are not moving. The reason for this seems to be that First home buyers are so worried about declining prices they need a HUGE margin of safety before they will take the leap (wise of course) whereas families with more equity and family type needs who are buying and selling in the same market are less concerned.

I think you could be right about a 30% drop and if I had to guess I think we are half way there already - as always some locations will do better than others and id rather be owning in NZ rather than in the US right now. I doubt we will have too many ghost towns and tent cities. I have been told that in the US there are approx 2,000,000 more homes than are needed to house everyone in the country. At least we don't have a supply issue like that here.

I can't tell you how many people I have met in the last 8 years since I began selling property who had the view that property never falls in value. Peoples memories are so short. Historically property fell in value for 5 years after the first oil shock of 1974 among many other periods and it is pretty damn easy to find this stuff out even if you werent around then!

It will be fascinating to see what happens in the commercial property sector. My feeling is that it will take longer for rot to really sink into commercial but it will happen. The real bargains in commercial property after 87 did not appear until the early 90's. For different reasons than 87 I am sure commercial property is set to take a big bath.

I also predict things will be worse and for longer than people expect . Just like the boom was bigger and longer than everyone thought. These things snowball and feed on themselves. Not to mention that one of the fundamental issue we are facing is credit, the lifeblood of economies - This is some scarily endemic stuff that is not going away in a hurry with or without a trillion dollar cheque.

I have to admit to finding current world events immensely exciting. It's a guilty excitement because I know a lot of people are going to be hurting and I do feel for them. However it's fact that we are watching a historic once in a life-time world event unfold and one that will present huge opportunities for the patient. I find it weird more people do not seem to be enjoying this as much as me! Perhaps it is because I am a young net saver so I have the most to be happy about...

The official QV statistics now show house prices have fallen 7% from their peak, which, for any property investor using say 75% leverage, would have wiped our 28% of the relevant investor's equity. Furthermore, anecdotal evidence seems to suggest conditions are much worse than the official statistics would suggest - particularly in areas where speculative activity has been most concentrated (such has holiday homes in Queenstown and beach-homes in places such as the Coromandel), where some prices have reportedly fallen more than 50%.

Even in central suburbs in Auckland, I have heard of asking prices being cut up to 30% from last year's asking prices, and these homes are still struggling to attract buyers. My feeling is that the lack of transactional activity (i.e. sellers holding out for yesterday's prices) has resulted in the official statistics still understating the full extent of the price adjustment that has already occurred, and is ongoing.

[AJ]

http://www.telegraph.co.uk/finance/e...on-record.html

More fuel for the fire

Largest drop on record in the UK market.