QUESTIONS FOR Mc DUNK

[minimoke]

... im 20k in shares with my path...
thats a 70k difference...
When I buy my first house in 2009, most likely 2010 ....

Hmm – good luck. When you started your thread back in 07 getting money from the bank was easy. We can even remember when Westpac was offering 110% mortgages. Now where are we? Finance has tightened up, banks are a lot more risk adverse. When you come to buy next year the bank could well be saying “we want a 20% deposit and repayments no more than 40% of income”. Your $20k in next years market will get you a $100k house – and I can’t see the market dropping that much. Oh- and my floating mortgage is working well – I’m getting a 9.5% net return out of my cash which is less than the 10.5% I was recently getting. But that’s a whole lot better than bank deposits, share dividends or what growth I could get in stocks at the moment. And its guaranteed – no risk at all. A property mortgage isn’t a bad place to be at the moment.

[Crypto Crude]

thanks serpie and minimoke... I guess I have saving to do... oh well, I have some time...more than a year I guess...

in that last post from mackdunk--> I have replied to all mackdunks pointers, statements of that post in other posts very similar to that one and I see little point explaining myself over and over... im sure theres an answer to that exact post from me if you want to find it, just troll through the threads... hehehe... (for-real)....

Im nothing like snoopy, dont even go there...
if you dont watch it I will start comparing you to Nita...

.^sc

[Nitaa]

Houses will never be built cheaper than they are today. What happens is the building game stops the demand increases and house values increase at a much faster rate than ever. I have always said buy a house cheaper than construction cost at any stage in the cycle and you are on to a winner. Macdunk

I dont agree with you. Falling prices of raw materials, unemployment go to 20% as an example then all of a sudden building a house may become cheaper.

Raw materials and commodity prices are colapsing. look at fontera with a 24% drop in titty prices. Oil dropped 66% in just a few months. WOOD prices are falling as demand drops. Possibly you may end up with unem,ployed workers willing to accept 50% or the normal standard just to get some income. Your Nat party and Hide may want to scrub the minimum wage entitlement althougher.

Now do you think its possible that building costs can come down?

[duncan macgregor]

NITA, I have been a builder all of my working life seen downturns depressions etc. I have still to see falling construction costs other than mortgagee auctions in timber yards or hardware companies going bust. The cost of compliance has rocketed up so with any luck that might change. Nobody builds a house for no profit in the building game to on sell it at a nil profit. We in NZ are about to witness a great exodis of skilled tradesmen who wont come back.
If you think otherwise then good luck to you you will find out the hard way.
Builders have one of the highest bankrupsy rates in any market, simply because of the tender system forcing the inexperianced ones into uncompromizing positions. If the system falls over then the only thing worth owning is material assets.
The American system is falling over we are in a better position to with stand the storm but not by much. Some people might be left with only a house, and the other material assets that they own. When i was in rhodesia the asking price for a large farm would not buy a hamburger today in Macdonalds. Dont think it cant happen here. Macdunk

[Nitaa]

NITA, I have been a builder all of my working life seen downturns depressions etc. I have still to see falling construction costs other than mortgagee auctions in timber yards or hardware companies going bust. The cost of compliance has rocketed up so with any luck that might change. Nobody builds a house for no profit in the building game to on sell it at a nil profit. We in NZ are about to witness a great exodis of skilled tradesmen who wont come back.
If you think otherwise then good luck to you you will find out the hard way.
Builders have one of the highest bankrupsy rates in any market, simply because of the tender system forcing the inexperianced ones into uncompromizing positions. If the system falls over then the only thing worth owning is material assets.
The American system is falling over we are in a better position to with stand the storm but not by much. Some people might be left with only a house, and the other material assets that they own. When i was in rhodesia the asking price for a large farm would not buy a hamburger today in Macdonalds. Dont think it cant happen here. Macdunk

You missed my point here Macca.

Ask yourself this question. If there is no demand for raw materials such as wood, steel, concrete, oil etc what happens to these prices? They come down as we are witnessing already. If unemployment was to increase to 25% do you think employers will want to pay top dollar. You will have workers willing to build a house for you just to put food on the table.

You make the comment about Rhodesia. As it is now, that country has fallen apart with over 1,000,000% inflation pa. My comparision i am talking about is inflation adjusted.

Going by your post you must beat least 75 years old as you have expereinced a depression. If i am not wrong the last depression started in 1929 and continued for a few years. The rest have only been recessions.

[minimoke]

If there is no demand for raw materials such as wood, steel, concrete, oil etc what happens to these prices?

Nita
There will nearly always be demand for building materials. Old houses need repairing, migrants and siblings need somewhere to live. The worlds population is continuing to unrelentingly expand. China, for example has slowed down – but culturally there is a huge shift from rural to city living which won’t be easily slowed. City people need more than country folks – this will create demand – and the same is in NZ.

As for unemployment, the first to go will be the unskilled. They will be replaced by temp workers and contractors. Next to go will be a bloated middle / senior management. I wouldn’t want either of these groups working on my house. Young trades people who loose their jobs will up sticks and head to where there is work – unemployment / redundancy is a great time to reassess life and head to greener pastures. So they will go off shore. Your older trades people will look at this as an opportunity to re-evaluate their life. Builders faced with hours in the baking sun or tillers looking at another 40 hours a week on their knees might decide there are better opportunities elsewhere. The remaining tradespeople will then become a scarce commodity – and their costs will go up.

Prices will go up – because that is what they do. Maybe not tomorrow but they will go up.

[Nitaa]

Long term yes you are correct. Dont know about NZ at present but where i am living, transportation prices have come down, paper pulp, plastic and other raw materials have come down as well. That is my point. This has been caused by lower oil prices and a slowing demand. Most coutries are now in a recession which is further proof that demand in certain areas are dwindling. Let not forget the strong possibility of actual wages going down short term especially in some sectors. The new goverment may even be as bold to lower the minimum wages should unemployment go through the roof. Skilled tradespeople may not find the work overseas either therefore they may have to lower the cost to attract business.

Some of the above are possibilities only and would require a severe recession or depression.

Just for your information i remember coming back to nz around 1990. It was at a point that some sectors offered such poor wages/salaries that i was better off on the dole and work 1 day a week than a full 40 hours for a company.

[duncan macgregor]

NITA, In 1966 the building game sunk to an all time low in NZ with no work or very little for carpenters. I and people like me, who were qualifief tradesmen, went over to northwest australia where we worked seven days a week, at three times the rates that we had in NZ.
It takes five years hard slog to become a tradesman, who are educated enough to chase the top dollar.
When i returned to NZ in 1972 i could name my own price, simply because all the qualified builders had left, and were replaced by the cowboys. The price of houses was skyrocketing the leaky home era was about to get underway. History repeats, we will see an exodis of qualified trades people, followed by skyrocketing house prices. I never would take a reduction in my rates, i simply left, and went where they were not that stupid and blind to not know what the end result would be.
Young SHREWDY in his inexperience compares the property market to the share market. He thinks that the price of building a new house has very little to do with the general level of the property market. New houses stop being built, then when the demand increases the tradesmen are gone. The yardstick in buying a property is construction cost with remaining life of material and replacement cost.
Example. A 15 year old iron roof with a replacement cost of $10,000 is half way into its life span, so deduct $5,000 from the new price and so on. Thats how to work out a bargain you must compare the life left, deducted from the new property cost of building. If you buy a property below construction cost, or replacement cost you can do it at any stage in the cycle. Macdunk

[Crypto Crude]

that is right...
Mackdunk,
at the end of the day House prices are going to keep falling for quite possibly years to come... You must understand that it is all about sentiment, fear, and all that...
You are focused on the fundamentals of housing....
you have not thought about sentiment my friend... I mean who really cares what builders will or wont be doing in years to come...I could not give a cock a hoot about that sort of stuff... Or building costs, blah blah blah, 'yourve got to have a home', hoolie talk...

comparing sharemarket to property
...I do have opportunity cost decisions...
I am trading off between shares and housing... Portfolio theory says that risk adverse investors will hold cash and/or bonds.... Well my investment decisions are between shares and housing...
right now I could lose much more money in housing because of all the leverage that gets built up by taking out a big juicy sized debt facility at interest rates much higher than they will be in 6-12 months time...
Maybe my inexperience of housing has been my greatest asset...
Remember, its all about making money as macdunk would say regardless of what you invest in... Mackdunk has openly said he would invest in unethical companies, if there was money to be made from it....
In reality mackdunk has jumped out of the sharemarket, but it just makes me wonder if he had of held a few oilers then it would not have been as if he had held all his houses through the downturn fixed at higher interest rates...
Mackdunk, I never fall in love with no investment as you say,"I do"....
I just see things alittle differently, and post positive at times because that is what my outlook is... Sometimes im going to make bad stock picks... pity I had to start making them when 1929 came knocking at the door...
Remember, its all about money as mackdunk tells me...
So what ever you do make sure you 1) weigh up your differing investment decisions
and 2) which path will make you the most down the line, Ive asked mackdunk what house prices will be in one year, over the next few years, 5 and ten years away, right now... and he cunningly does not answer the questions... So I give up....I will prove to you this is no fluke...I will change my sentiment and tip housing when I see fit...
NZ housing market is only one year in of slumping prices...
be realistic, here... come on mackdunk, you tell us newbies what we should be doing when it comes to housing...
Should I have bought a house any time this year?
Should I be buying next year?
I dont think so... No... wait for a confirmed uptrend as mackdunk tells me in the stock market... In time we will show who was proved to be the inexperienced one...hehehehe
chao...

.^sc

[shasta]

that is right...
Mackdunk,
at the end of the day House prices are going to keep falling for quite possibly years to come... You must understand that it is all about sentiment, fear, and all that...
You are focused on the fundamentals of housing....
you have not thought about sentiment my friend... I mean who really cares what builders will or wont be doing in years to come...I could not give a cock a hoot about that sort of stuff... Or building costs, blah blah blah, 'yourve got to have a home', hoolie talk...

comparing sharemarket to property
...I do have opportunity cost decisions...
I am trading off between shares and housing... Portfolio theory says that risk adverse investors will hold cash and/or bonds.... Well my investment decisions are between shares and housing...
right now I could lose much more money in housing because of all the leverage that gets built up by taking out a big juicy sized debt facility at interest rates much higher than they will be in 6-12 months time...
Maybe my inexperience of housing has been my greatest asset...
Remember, its all about making money as macdunk would say regardless of what you invest in... Mackdunk has openly said he would invest in unethical companies, if there was money to be made from it....
In reality mackdunk has jumped out of the sharemarket, but it just makes me wonder if he had of held a few oilers then it would not have been as if he had held all his houses through the downturn fixed at higher interest rates...
Mackdunk, I never fall in love with no investment as you say,"I do"....
I just see things alittle differently, and post positive at times because that is what my outlook is... Sometimes im going to make bad stock picks... pity I had to start making them when 1929 came knocking at the door...
Remember, its all about money as mackdunk tells me...
So what ever you do make sure you 1) weigh up your differing investment decisions
and 2) which path will make you the most down the line, Ive asked mackdunk what house prices will be in one year, over the next few years, 5 and ten years away, right now... and he cunningly does not answer the questions... So I give up....I will prove to you this is no fluke...I will change my sentiment and tip housing when I see fit...
NZ housing market is only one year in of slumping prices...
be realistic, here... come on mackdunk, you tell us newbies what we should be doing when it comes to housing...
Should I have bought a house any time this year?
Should I be buying next year?
I dont think so... No... wait for a confirmed uptrend as mackdunk tells me in the stock market... In time we will show who was proved to be the inexperienced one...hehehehe
chao...

.^sc

You really are the "shrewd" one, just as people thought property would only go up, & the sharemarket wouldnt fall so low...

Reality is house prices will be cheaper in 12 months time than they are now. I'm thinking in 2 years time there will still be bargins galore.

Some selective areas may do better, but like the stock market the easy pickings aren't as obvious anymore...

Consensus seems that the market will go sideways for a while, & the property sector isn't immune to the economies downturn...

I'll look at buying a house in a couple of years, just don't know if that will be in Wellington or Australia