QUESTIONS FOR Mc DUNK

[duncan macgregor]

SHREWDY, Let me first start you off on your share investments, which have now lost you nearly half your gains. Learn what you did wrong, and never do it again. Read the commodoty price chart first, and the company second. Never fall in love with a company, or a commodoty, the shares all make money in the good times, to lose it in the bad times.
You missed your big chance to get into property, which is a long term investment through your inexperiance, and always being right attitude.
You now cant afford to buy, with deposits rising from 5%, to at least 20%. If you had bought a house at 10% deposit with a fixed interest rate of 8%, and lived in it with a few like minded people to pay rent this is what would happen.
The price of the house long term would increase in value by at least 10% PA, as they have averaged out over decades. You would have been 2% better off using the banks money.
You now find that you were smart enough to miss the opportunity like so many other people before you that try to bottom pick only to get covered in the crap of their own making.
Always get the figures to a level of affordability for the short term set in concrete, regardless of the market sentiment. Some times you win, some times you lose, but you never risk losing big time by trying to be smarter than the market.
So what if the market goes down it only creates buying opportunities in the short term, long term this market will rise faster than ever with you having missed your best entry point.
The construction cost is the yard stick in this game Shrewdy, get with it mate, dont miss out next time, this time you missed the opportunity. Macdunk

[fungus pudding]

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?

You missed the biggie, which is falling undeveloped land prices.

[George]

MacDunk
How long is longterm? After say, 10 years, a 300,000 house now would be worth about 777,000 with a 10% pa increase in value. Is that feasible? Some may argue that prices were too high and should be say 250k in which case one could expect an increase to 'only' about 610,000.
George

[duncan macgregor]

MacDunk
How long is longterm? After say, 10 years, a 300,000 house now would be worth about 777,000 with a 10% pa increase in value. Is that feasible? Some may argue that prices were too high and should be say 250k in which case one could expect an increase to 'only' about 610,000.
George

GEORGE, We can only go from personal experience. When i first arrived in NZ i could have bought a standard every day 3brm house for 3500 pounds or in todays currency $7000 in 1965. I have always made higher than 10% pa gain, but being a builder have an advantage edge over the average person. I know so many everyday people with not to flash occupations that are now filthy rich, simply because they understood the consept of using the banks money in a safe controled way to forge ahead.
Being in the building game i have met so many losers who never seem to buy their first house, because this or that, and end up paying people like us to place a roof over their head. Property increases in value at 10% plus rent pa less upkeep, rates etc. You can after three years refinance get your origional stake back and buy another self funding property. The secret is when its at the self funding stage lock it in regardless of market sentiment at that point in time.
The losers dont understand the consept, and try to pick the markets next move then miss out all the time. Look at SHREWDY for instance, he could have bought a house on a low deposit, and has now missed out. By the time he saves up the larger deposit the prices will have moved up to a higher level. Buying a property is any time you find one below construction cost that suits your needs, which is anytime in the price cycle. Macdunk

[Crypto Crude]

mackdunk-
SHREWDY, Let me first start you off on your share investments, which have now lost you nearly half your gains. Learn what you did wrong, and never do it again. Read the commodoty price chart first, and the company second. Never fall in love with a company, or a commodoty, the shares all make money in the good times, to lose it in the bad times

mackdunk,
In a previous post you told me not to compare shares to housing... What are you now doing...?
I will explain all, because mackdunk could not keep his hand out of the cookie jar... Curiosity killed the cat...
his....
Infact as I said... my portfolio is down from an ultimate peak of 42 last year...... to now around 20, but I did spend 5k for china (which lasted 1 month easy living, which included flight ticket)... and I did start with 3k 5 years back... and I have lived life and all that...
That ultimate peak was a major tip in my portfolio, when my portfolio ran up 10k in one month... and then in a two week dramatic spell, lost that 10k back on the market last year....
... hehehe...does not really count to me.... I had 42k for less than one day...

okok... Had I got into housing, I would be in an ultimate ILLIQUID market... Its the same thing they harp on with me and CUE (opppss?) hehehe....
if you are in housing you are 'locked' and loaded...

Suddenly that house that was 240k when mackdunk told me to buy is worth less than 200k now...
add on higher locked fixed term interest rates, and laggin floating rates (I will explain soon)...

minimoke, many large banks dropped floating rates .75% last week...Next OCR announcement is 10 days away...another cut early next month...

yes, there is still lag in time between real movements, (the OCR)... and between banks adjusting their rates...
this is called creaming,
heheehe... ...
..!
we can hopefully do the creaming when the ball is in our court, when you can fix at a minimum and see what position the bank takes to offset that position......
its very interesting... banks have two stances they can take when they take on extra (public debt)...
Will they open up an offsetting position within the market place , major strategy... or will they gamble that OCR cuts will continue and ride with the position...?
They should be creaming right now I tell you...
This will help offset some of the other worries currently in the banking sector......

Mackdunk, you are paying for this just like I am...
I Dont think yourve missed the market crash like you say you have.. with what you have told us about fixed term interest rates, we have debated the merits of fixed terms over and over.... a peak of what 9-10%... to an expected 5-6% floating within one year, and at ease in 2010 ...what a difference this is even after one or two years... compounding is a mumma... and what about if your fixed for 5 years.? are you mackdunk?

My dad told me there was real panic in Americ when he was there this and last month...
We should mainly be ok here in New Zealand, (apart from falling dairy prices), remember we are in love with housing... and will sometimes go out and panic buy...

Maybe it will now only take a major market meltdown to convince us how wrong we were in our past thoughts, eah......
This will bring us into totally uncharted territory that even it would seem Mackdunk has not experienced before......

if in Housing id be down 50k, on top of the share funds transferred into housing at the time mackdunk fully recommended I buy.... this is very likely to get worse...
so why would I do it mackdunk?

That decision would have effectively bankrupted myself... -50k owed after selling house...

what a start in life that would have been mackdunk?...
I can dodge bullets baby...
give it up to me mackdunk... dont have pity for me...
dont worry about my shares...
I can save 10k in the next year easy to top the current funds up for that house easy...
house dream is still alive...
and I will do it in my time...

as you said, lets not compare shares with housing..
I agree... I dont even know where to begin...
? hehehe.... I got you on that one mackdunk...

.^sc

[Crypto Crude]

mackdunk-
The losers dont understand the consept, and try to pick the markets next move then miss out all the time. Look at SHREWDY for instance, he could have bought a house on a low deposit, and has now missed out. By the time he saves up the larger deposit the prices will have moved up to a higher level. Buying a property is any time you find one below construction cost that suits your needs, which is anytime in the price cycle. Macdunk

This is where mackdunk usually fails to understand the differrence...
He is a long term buff that has done very well...
He is not the new kid on the block thinking about entry price...
He may think a hardline approach is best for my development...

The truth is... Mackdunk and a few others keep going on about how I now need a 20% deposit to get into housing...which is true...
This is of no concern at all....
House prices are falling also, which makes that deposit smaller, and ultimately the future committments to retire the debt on time...
also, falling interest rates over the next year will make it better again... double whammy people...If you are a first homebuyer, make sure you understand that a bigger deposit is now required...
save... great... you very well could have two years to save for that deposit...
Chance of a life time coming in a few years...

.^sc

[MrDevine]

Shrewd, you can't live in your shares. As you might know, there is never a good time to be in the market, and never a good time to be out of it, it depends on so many things.

Providing I don't lose my job, and interests rates come down to something around 5.5–6% (which is feasible if OCR goes to 4% as some economists predict) I'm going to halve my mortgage from 28 yrs, to 13. Sounds good to me.

I think market has got a bit more to go in some areas. Doomsday scenario if unemployment spikes to 10%+ and banks start calling in mortgages, then yes you'll get your bargain, but will you have a job?

[George]

You may be right SC about uncharted territory. If so, would not the new govt. take steps to modify any widespread pain. eg. Banks may give unemployed mortgage holders a break for a couple of years. If prices go up in the future they will still come out ahead. We are waiting for a possible reduction in interest rates next month and may be able to fix lower at no cost. I don't think that was possible before, but I could be wrong. A 16 year tailored home loan of 249k which can be paid off in 9-10 yrs by whacking 5% (12,450) each year for no charge, could be reduced further if rates drop. You need that job of course. I consider all this outlay punishment for not buying a house when I sold out at the end of a marriage in 1999 - right at the bottom as it turned out. Good luck with your bottom :o

[minimoke]

Suddenly that house that was 240k when mackdunk told me to buy is worth less than 200k now...
add on higher locked fixed term interest rates, and laggin floating rates (I will explain soon)...

minimoke, many large banks dropped floating rates .75% last week...Next OCR announcement is 10 days away...another cut early next month...

Still missing the point SC. A home has no value at all – until you either want to sell it or use it as collateral to leverage more money from the bank. The only people loosing at the moment are those that bought high and are having to sell low. We’ve covered this off before – they are selling because they have over extended their credit, borrowed on depreciating capital (the new car / boat), frittered it on overseas holidays (yours being an exception – China ought to have had a significant return on expenditure); bought the holiday home in Queenstown ; that “off-the-plan” Apartment being spruiked off the radio; the rental with a 3% return or they have lost that second income. All risks people could have could have avoided if they hadn’t got caught in the property market hype.

The same kind of idea goes with your shares – you haven’t lost a cent on them until you sell –likewise they aren’t worth anything until you sell. Except try going got the bank today and using a share portfolio as collateral – you’ll have no show now. But with shares you have to decide at what point are you going to quit because shares can end up being absolutely value less – like FTX. Property, no matter had bad a state it is in always has some residual value.
And those damn banks – I’m only going to get a 8 ½ % net return on my cash next week! But my ownership ratio (me:bank) will go up, so that’s not so bad. Can’t do that when you are renting!

[duncan macgregor]

What has to be considered is your position in the playing field for the individual player, when it comes to property. The long established players who understand the game can afford to sell at the top of the cycle, and bide their time buying at below construction cost.
The new potential players get a limited window of opportunity to even start playing the game. For one of those players to start trying to pick the bottom of the market, then get low interest rates stands the risk of finding higher deposit levels followed by a steep trend in the market. The non players will have so many excuses for not taking the field, that they risk not playing the game at all. The established players understand its a long term industry that you get on board as soon and as safely as you can.
Interest rates can get to 20% if you look back in time thats what you must protect yourself against. Safety is the key word, protect your backside at all costs. So what if the smart people say interest rates will drop you lose out on a few bob but if they go the other way you dont get bankrupted.
Young SHREWDY missed the bus, thinks that there is another one coming with cheaper fares which places him in the high risk category of not playing the game until he wakes up to reality. If anything can be bought at the right price then buy it, the property market has always had real bargains at any stage in the cycle. Macdunk