Hes ameliorating his views here
http://www.interest.co.nz/ratesblog/...-than-to-rent/
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Hes ameliorating his views here
http://www.interest.co.nz/ratesblog/...-than-to-rent/
BH really is. In that article he wrote he reckons its cheaper to own providing you exclude rates , insurance and maintenance. Duh!
And he hasn’t found a standard measure for valuing rates, insurance and maintenance. Well he was able to find a standard measure of the preferred market peak (Nov 07 median price). By taking this data point in an over inflated market he’s spruiked his views relentlessly for the past year and a half. He must be loosing his touch if he can’t make up a value for RIM.
Try getting a decent house in a decent area for a discount now. I dont think you can, there are plenty of people looking at open homes.
Big drop? What big drop? Your assumptions are just that, assumptions with no substantial evidence.
The evidence is in the pudding. Just have to go to all the open homes and auction for good quality properties in good areas and you will see the interest. In fact, a number of quality properties in good areas are selling at above CV in auctions recently. Good interest from buyers coming out of the woodworks with all time low interest rates. The housing markets in US, Hong Kong and Aust are also seeing evidence of stablising.
You now cant negotiate favourable discount prices like you could a few months back.
1st home buyers who have waited too long will soon, yet again, miss out.
Or perhaps you are seeing how property markets fall. It's never a straight line down, but the drop, or downward slide, is coming. Of course it's an assumption - isn't everything about the future? But the evidence is overwhelming. There will be an exodus from inexperienced landlords soon, and with rentals almost certain to drop - there won't be many buyers. A lot of the market of the last few years has been driven by new investors who seem to think that all you do is buy a property and bank the rent, fuelled of course by low-equity bank loans which have tightened up and will stay that way for a long time. Judging the market by last month's or the last quarter's performance is extremely risky.
volume is up but price is down......If I needed to sell I would negotiate/discount to get it sold before winter, before the prices start to really drop on much lower volume.
I'm with fungus, patience will be well rewarded.....mortgage rates are going lower, so are 1st time homebuyers houses!!
I am with Dr Who! There are alot of cashed up buyers out there waiting for the right property (ie. quality properties in the right school zones etc) or Investors looking for cash-flow properties.
From my experience I have seen a huge influx of buyers at Open homes in the last few months. We recently listed our property at $769,000 and had 4 cash offers (between $740 - $755,000) in the first week of marketing.
I have attended 3 auctions in the last month,
1. Renovated house in Ilam, CV only $430,000 but sold under hammer for $900,000.
2. Renovated house in Bryndwr with CV $520,000 sold under hammer for $725,000.
3. 2 year old house in Prebbleton on 1 acre of land. CV $600,000, sold under hammer for $895,000.
Properties that have been on the market for awhile were probably overpriced to start with?
1st homebuyers are STILL SCREWED!
Interesting. But you are looking at one price bracket in one city. The overall story is quite different. Median prices are up - certainly, but that tells you very little. It's because first homes, the cheapies, are not selling. They are piling up.In which case the median price acts like the average price. So the only real test is what would each of the properties mentioned have sold for one year ago? More? Less? The same? It's only possible to summise, but a couple of simple irrefutable facts are that there are fewer buyers because of bank lending criteria. And the number of sales in the last 12 months has halved - a 50% drop. So the market has far fewer buyers overall - and far more listings. One thing you'll notice in most towns and cities, probably even in Ch-ch although I haven't looked for a while, is the ridiculously high level of adverising is around about half what it was. That's because agents are just not generating anywhere near the revenue they were. But look at the poms and the USA, drastic levels of mortgagee sales as properties revert to a more normal multiple of annual incomes. We lagged behind them on the way up - and will do so on the way down.
Actually volumes are increasing as are prices. March was the second month in a row that saw price increases. And this is problematic for the Bernard Hickeys of this world. As the sale prices creep up it will take longer to swing around and drop to their predicted lows.
We may already have had our low of $325,000 in January 2009. For all the hand wringing that’s gone on that’s was just $5,000 down on Shrewdys price point of $330,000. But since then prices in 09 have increased to $335,000. Total March $ sales were the highest we’ve seen in 13 months and total number of properties in 16 months – so this suggests to me that buyer sentiment has changed – people are preparing to come back to the market. They are now more prepared to buy and they are prepared to pay a bit more – that’s not a sentiment consistent with a falling market – unless we are seeing a dead cat bounce.
Of course the median price is up, but that means nothing. The thing that matters is whether the same property will sell for more or less than it would have previously, and that's difficult if not impossible to measure. But drop lower priced sales out of the equation and of course average and median will rise. Lower priced sales have contributed heavily to the drop in sales, simply because low equity buyers are no longer able to obtain mortgages. The overall number of sales is half what it was one year ago - a massive 50% drop in month to month numbers. That is a statistical fact. Don't believe the spin the Real Estate institute puts on ststistics by reporting selected information from their returns.
Hi , I am currently selling a rental property in Blenheim that we purchased in Dec 2007 ... so this is REAL data.
We paid : $380,000 current RV $350,000
Marketing started last Wednesday ...
6 private viewings
10 thru open home on Friday
15 thru open home yesterday
1 cash unconditional offer so far at $355,000 ... rejected
I will keep you all informed.
Funds required to help pay for purchase of new family home in Devonport.
Strange how we can be discussing property but possibly comparing apples with oranges. I tend to go with REINZ data if for no other reason that it is freely available. It does of course have its limitations. Like they report median price of unconditional sales and that they only report transactions through a real estate agent. But what I can do is look at data over a very long time and their data tends to be quite timely (eg reporting March sales by mid April)– something I can’t do easily with QV.
QV also has its own limitations – they report averages and only get their data from councils once the sale has gone through from all sources – this means the data reflects settlement date which can be a few months behind buyer sentiment – which REINZ probably better reflects.
Regardless, the joy of statistics is we can each drag out what ever we like to support our position. But at least we can get hold of these stats which has to be a whole lot better than anecdotal information.
A bit of anecdotal info in our Christchurch beachside suburb.
For approx 8-9 months our two homes(old house sold, new home purchased) were the only transactions in our suburb(as best we can tell).
There's been the odd transaction since....but far higher than average number of listings.
Some homes have been listed well over a year.
We've even just had our first "3 homes for sale in a row".
Suddenly within the last 1+ month we're seeing "Sold!" signs everywhere.
Good news I'm sure for the vendors.
I'm still not changing my negative opinion on residential and commercial real estate one iota.
So you bought one month after the “peak” of the market. QV reckon the market has fallen 9.2% in the past year. It gets a bit confusing around March 08 since the market fell away a bit from Nov 07 before recovering a bit in March ’08. Shall we just round it out at 10% as what you should expect as a drop in value if we are to use QV as a guide. So this means any offer over $342K would be in line with QV press releases.
Hi all,
Approx 50 pages ago I asked for some advice on buying my first house. Have been following the thread and reading everyones views. Been great reading.
My wife and I have spotted a house we are quite keen on. We weren't actively searching but this one popped up so we went and had a look at the open home last week and we quite like it.
Its a brick place built in 1957. 3 bedrooms one bathroom, single garage 2 carports. Rooms are of a good size. 9 foot stud. Big windows (wooden) and some of the other features makes it look like is was an expensive house at the time. Flat 1330sqm section. It has insulfluff? in the ceiling and a couple of heat pumps. Fairly new hot water cylinder and has some new piping coming out of it. The roof is a decramastic tile I think ....that has been recently repainted/resurfaced?...could be hiding something??
Is there anything else I need to closely look at with a house of this vintage??
Will get a builders report regardless anyway. But just after some views from the "experianced" home buyers on here.
Thanks in advance :)
Sounds like a very nice house CAM.
Make sure you get a LIM report and a good solicitor. Have your agreement subject to builders report assuming you have your finances sorted.
I love character homes. Cant go wrong with a good quality character hardwood home.
All the best. :)
house prices HAVE to fall...
or Wages have to go up at least 30% to keep pace...
One or the other will give...
It will be housing...
Falling interest rates adds to housing attractiveness, so slowly it is coming in favour... still far off...
:cool:
.^sc
Evening folks, my first post here, altho I have been following the site with interest as an observer.
My last weeks experience may be of interest...
I listed one of my rentals in Chch on Monday. This particular property was purchased in '03 for 162K. I rejected an offer in '05 for 340K. My RV peaked in '07 at 370K.
Multi offer on Thurs with 4 bids ranging from 210K - 310K. Currently under offer.
Lot's of interest, excitement even, but the price has certainly moved back.
My gut has been telling me values may have dropped more than the stats are showing, last weeks offers have only helped to strengthen that instinct.
My belief .. is that market sentiment is changing quickly and will bottom this winter. Maybe another 5% drop? 10% MAX.
We'll see.
Look out 2010, the game is back on - I think the traditional fundamentals, when balanced, are pointing at a 'return to business as usual' - including (slow) capital gains. It shouldn't, it's crazy - as the topic of this thread rightly suggests it makes life very difficult for 1st home buyers, but I think it will.
HOWEVER, If - the CC/GFC worsens, recession becomes depression, unemployment hits 9%, or if bio threats kick up a couple of gears then I'll eat my words ;)
Like The Great Gold Guru, I'm releasing some equity to stake my claim in Devonport before the top end takes off again.. And holding my portfolio in Chch where the yields are better.
Thanks everyone for the interesting reading and many informed opinions - I think this is a great online community and a useful educational tool!
Disclaimer: I could be completely wrong.:o
Thanks for sharing your experiences Shambles, it is always good to get first hand accounts......& welcome aboard!
Flu scare has passed its peak going by latest news - they must
have sold most of the tamiflu that was nearing its expiry date:)
A woman from 'Whatpricemyhouse' is coming Saturday to appraise
our house even tho told her we are not selling in the near future.
She emailed us earlier and said it was worth close to CV of 315k,
we will see what she says but surely the price is pure guesswork
until its tested in the market.
That is what most of the people dont catch on is how good an investment property is. If the person bought the house on a deposit just high enough to make it self supporting with rent covering interest, rates etc then refinanced in three years time to get their initial deposit back its an investment hard to beat. Let us presume looking at the above figures that this is what happened.
1, National median price$200,000 in 2003 gained $135,00 in six years or $27,500 PA
Initial deposit lets say $40,000 to make it self supporting
$40,000 for three years then get your money back and do it with your second property.
The mugs in the game fail to understand the simplicity of doing that and try to time the market or gamble on interest rates.
Tomorrows interest rates can do anything always keep the figures to what you can afford and understand.
The opportunity to buy your first property is your first priority dont get to smart or you will miss the bus. Its the banks money you use not your own in the end its money for nothing.
Macdunk
was an abberation...and the correction has still not occurred.It will.
so mackdunk,
in hignsight,
Should I have bought a 250k house, for 300k...?
should I have also fixed interest rates at 9-10%...?
welcome to the board shambles...
:cool:
.^sc
SHREWDY lets put it this way you missed the bus so no point in wondering where it might have taken you. Or to place the answer in a more brutal way it would be better doing that than buying a share at 21.6c and watch your half savings go down the gurgler. Short term no long term yes. Property is long term you will regret your limited short term outlook. Property averages 10% rise over the years so long term your house would be at least worth double with none of your money involved in ten years so yes you made a stupid mistake. Macdunk
I disagree... your advice, would have added something like 10 years to the total loan term....Quote:
mackdunk
Property averages 10% rise over the years so long term your house would be at least worth double with none of your money involved in ten years so yes you made a stupid mistake. Macdunk
It hurts that you wont own up... :confused:.....I tried to give you a nudge on the TEL thread....
your advice, had anyone listened, cost them lots of money... and in some cases their livelihoods...
my livelihood would have been ripped away... (for the near term, as long term house prices would have rebounded)... BUT, why the need for that...
as for the quote...
thats a load of crap...... the house value doubles ok... but look at the first example on this thread... you own a 330k house, but you pay 799k in interest payments.....
what happens if the house price doubles?
It was this very assumption that house prices were going to continue to go up, this is why we got ourselves in the mess of this financial crisis...
It was those investment banks, and consumers who assumed house prices were only going to go up...
as if it were in perpetuity... just like your assumption...
it was people like you....
sub prime borrowers who took on home loans tlhey couldnt afford, because they thought house prices would go up...
lenders who accepted sub prime borrowers because US house prices had not fallen nationwide since the great depression of the 1930's...
when will they learn? learn that house prices do fall...
Also note... that I could never have bought a house before anyway, because I just finished full time study last year in November... so I couldnt buy a house...Im really only in the position to buy a house now... and Im
definately waiting...
im no mug... so dont treat me like one...
:cool:
.^sc
No – you could have bought a $330k house for $330k, pretty much no deposit and around 9% interest. Today it would be worth $335k, your two year fixed would be off and you’d’ be able to pick up a rate around 6% and your mates would be left in the cold because they can’t get the 20% deposit together.
If you had bought a few years ago you might now have $100 a week extra cash which you could pay off your debt for an immediate 6% net return. You renting mates would be putting their money into a 4% gross deposit account and saying goodbye to 25% of interest recieved to the tax man.
And I agree – it would be more helpful if people started their own thread if their comments are off tropic rather crapping this one.
One of the simple facts of life is you need a roof over your head and you are going to pay for it one way or another. In my mind you’re better to pay for it now and have it paid off by the time you retire. When I retire my rates, insurance and maintenance will cost me a whole lot less than the rent of a decent place. My debt will be self funding. Alternatively I might sell up and let the rents that come in pay for the rent I might pay for the different places I could be living in. Who knows but I’ll have options. A renter at retirement (unless they have put a pot load of cash aside) won’t have those options.
Thanks for the welcome guys.
I've posted a new thread on rental yields - would love to hear what some of the analytical minds on here have to say about where rents are headed..
(I hope that's not too presumptuous for a newbie ?) :o
...shambles
It's an interesting argument, and a great forum for making valid points, but this thread is not going to produce a winner.
The reason is that you're all talking about an issue that has a (notional - but again open to argument) 25 - 30 year lifespan. And to argue about who's right or wrong every week is futile. It's like arguing about who's winning a horse race when the horses are on the first bend.
With each fluctuation in the property / mortgage market we hear from the posters whom that fluctuation favours. Nobody knows what's going to happen over the next 30 years, and only time will tell which decision (in hindsight) was the right one.
I believe (as I've always done) that the real issue here is one of sacrifice. There's always a reason not to buy, and not buying is the easiest thing to do. But if you're not buying then you'd better be doing something pretty meaningful with your income, otherwise you'll never be in a position to buy.
I've got a tenant who's on a pension. Great guy, and he seems happy enough, but a pretty big chunk of his income pays my mortgage each week. By the time I retire that unit (and the one next to it - both now cashflow neutral) will be mortgage free, and providing an income for me.
For what it's worth,
If I was a young fella with a good job and no house I'd be jumping all over these Welcome Home Loans right now, getting a flatmate in to help with the rent, and slowly but surely adding value to my own quarter acre paradise.
Well ....our offer was accepted...subject to builders report, LIM and finance. Getting the builders report done next Monday...icludes moisture testing etc etc...about 22 pages long. Not expecting anything major. Its a heart rimu, one old lady owner house since new, in immaculate condition.
I basically have the verbal from the bank on the finance just need to go in and sort it all out.
My question now is what way to structure the mortgage.
The situation is that my wife is due our second child at the end of August so we will be back to one income. Finance has been done on my income. She will look to return to work full or part time in a year to 18 months...bu that could change ...you never know.
I think interest rates might come back a bit yet but I like fixed for the certainty of payment amount. So was thinking of fixing half for 2 years and float the other half with maybe looking to fix it when rates drop back a bit. (6 months to a years time??)The reason for the 2 year fix is that when the wife goes back to work we may look to restructure to pay it off more quickly.
any advice appreciated
cheers
Cam
I agree in part with the inference that none of us can tell what property will be like in 30 years. But your argument fails because the same could be said of anything – we just have no way of telling precisely what something will be after the passing of time. I know its a cloudy morning today, it was wet yesterday so there’s a good chance it won’t be blue skies this afternoon – but who knows for sure. At least with property we know the long term trend is up.
But I do absolutely agree that if a person doesn’t ‘t buy they must do something with the difference between their rental payment and what it would have cost them finance a home. There are still too many conversations in posh bars over a Steinlager Pure “ I can’t afford to get into housing”. Well boo hoo hoo – the answer to those sukky bubbers is going down your throat!. But the flip side is these people have to live somewhere – which will drive demand for rentals which will help drive property values – and in my view that will help see values go up.
[quote=CAM;254002
My question now is what way to structure the mortgage.
[/quote]
My personal preference is to have a lump on fixed term – usually two years. That way you have absolute assurance on your weekly outgoings. And unless you are an expert on interest movements (and lets face it – no-one is) then there is no point in worrying about the up and down fluctuations over the short term. Even today we might argue the toss on ½ a percent so either fix now or in a few months – I can’t see significant changes over the next 6 – 12 months. Its not a lot to worry about over in the greater scheme of things. I know some people are going to sweat the difference between deciding on 5.75% or 5.95% but I can’t be bothered. I come from experience where I’m now paying around 6% but have paid 25%. A smidge here or there doesn’t make a lot of difference – its the commitment to repay which is important.
The other thing I do is to take the remainder lump on floating interest only. I pay a bit more but it gives me the opportunity to throw extra cash off the mortgage which I can’t do so easily with the fixed. Its also great for cash flow (because I can draw down anything up to the limit of the debt) and commitment ( I still get to use the banks money – but I don’t have to pay principle off if I don’t want to – but then if you’ve read all this thread you’ll see I intend dying in debt). When you go down to one income you know you’ll be able to afford the mortgage and when you get additional income you can throw it at the floating loan. A side benefit is if you do have extra cash and pay it off this mortgage you are getting a pretty much unbeatable return on that cash.
You can also throw your upgraded Beneficiary status into the pot as well. You might like to try to structure your loan repayments on your income alone, throw your wifes Parental Pay into the variable loan and your upgraded Working For Families payment off it as well. Build up that equity and your wifes income when she returns to work will help you increase your equity position and perhaps if you’re up for it start leveraging for the next property. Now that’s a bit harder to do if you’re renting!
Good luck Cam - lots of exciting things on your horizon!
Hi , I am currently selling a rental property in Blenheim that we purchased in Dec 2007 ... so this is REAL data.
We paid : $380,000 current RV $350,000
Marketing started last Wednesday ...
6 private viewings
10 thru open home on Friday
15 thru open home yesterday
1 cash unconditional offer so far at $355,000 ... rejected
I will keep you all informed.
Funds required to help pay for purchase of new family home in Devonport.
I posted this a week or so ago ....
We had a set sale date yesterday , four offers in total after 62 parties thru 4 open homes in the last 11 days.
Best offer is a house swap at $290,000 + $110,000 cash , house has RV of $280,000 and will rent out for about $325,000. I am negotiating today to try for another $5-$10k cash but am realy pleased at this level whatever happens.
Best cash unconditional offer was $372,000
OOOpppps ... will rent for $325/wk ... not $325,000 !!!
All I can say is that you must reject this offer. It is offers like this that just distort the views of Hickey and Morgan (especially as Morgan is relying on his reputation to spruik his Global Warming book in Christchurch this week) and all those other doom/ gloom chicken little’s. You must accept an offer BELOW $340k to give them a sense of self worth and credibility to the gullible..
Otherwise brilliant! 62 open home visits (in Blenheim!) suggests great potential local buyer interest; 4 offers suggests buyers are actually out there. What a great offer (assuming the house is worth $290,000 – ignore the RV!) - not only have you not lost on the deal, you’ll make a bit as well . Not a bad result in these tough times.
Just had a call from the agent .. no more money on the table, young couple with another baby on the way so need extra bedroom and have absolutely put their best foot forward. So I am happy with that. I used to walk passed the swap house every day ( 5 doors up from where we lived for 12mths ) so know the property quite well. Very happy with swap and SBS Bank will lend us 80% on new property . Everyone wins.
passed ??? past !!!
Thanks for those kind words Minimoke ... gotta find some new tenants now for our new rental ...
TGGG stikes again. Good on ya mate. :)
Those that cant see that the market has bottom are either blind or/and in denial. And those that listen to the commentators that say the market will drop another 30-40% will have to wait another 10-15 years for the next cycle... ROFL!
no where near the bottom.Once interest rates start to rise ,reality will set in.Prices are being artificially propped up by govt stimulus and low interest rates...and the banks 'soft' options for distressed borrowers.NZ is heavily in debt,ave houses requiring 6x ave earnings to service are an aberration....there is only one way for property prices...DOWN..the halcyon days are OVER.
My 6th form economics teachers taught me that when demand exceeds supply prices will tend to rise ....
Immigration up >>> demand up.
Emmigration falling >>> demand up.
New home building consents collapsing >>> supply down.
Real Estate listings down 34% in April >>> supply down.
I'll leave it up to you all to figure it out ...
I wonder what April sales volumes will be like. They are pretty much always lower than March. I guess as people have completed their summer rush and put off winter buying until next spring. I reckon there needs to be at least a 20% drop in volume for there to be any hope of a devaluing market. If volumes around 10% less then that’s just pretty well typical for this time of year. Prices also need to drop back significantly. We’ve had an approx 3% growth in the past two months of positive growth. The doom gloom people need this to be clearly a dead cat bounce otherwise their predictions are going to founder.
Over the past few years I reckon the property market has been under extreme pressure – but it is just so resilient. Even Shrewdy would have been a bit better off if he’d made the leap of faith. If the market can’t capitulate under the pressure its been under then what does it need to create the drops others are anticipating?
immigration-down
emigration-constant
bldg consents-down
listings-down
rents-stable
land supply---huge
tradesmens hrly rate-down
availability of funding-down
equity required -up
unemployment-up
living costs-up
govt debt-ott
consumer debt-ott
I'll leave you to work that out.
Mass unemployment. The people who are buying sure aren't those out of a job.
I don't actually think the market has been under pressure except from the media. Your average kiwi in a job with a mortgage of $250k is $10k a year better off than he was 6 months ago.
Pros for property recovery
* Low interest rates
* Allegedly higher net migration (I would like to see stats on that - is it sustainable as unemployment rises)
* Supply of available land for building and low building starts
Cons for Property recovery
* Affordability on a historical basis
* Rising unemployment (and as a result mortgagee sales)
* Interest rates are likely to rise if inflation starts to kick in (watch Oil prices). Also, I suspect bank mortgage rates will also have to rise as foreign lenders are less willing to fund our unproductive debt.
I guess I'm not in either camp in that I'm not sure whether prices will rise or fall. If pushed for a prediction I would say that prices are likely to stay flat or drift lower by 5%. I certainly don't think that prices are likely to suddenly spike up like some are suggesting here, and if they do once interest rates do eventually start to go back up it is then that we may see the slump.
Many of those currently being made redundant probably aren’t home owners anyway. They were renters, will remain renters in the short term and will probably always be out of the property market regardless of employment status.
Then we have the public service redundancies. These people are leaving with redundancy packages which will see them keeping their mortgage for a while yet. By the time their redundancy pay runs out most will have found alternative work which will keep their mortgages going. So the low paid unemployed aren’t going to impact the demand side and the high paid unemployed aren’t going to impact the supply side.
Unemployment will increase but not I think to an extent that it will significantly upset the status quo.
The exception being the high paid unemployed who over exposed themselves to other properties – we can expect supply to increase here. But given current interest rates the yields for new people entering the investment market look better so there might be a bit of self balancing there.
I think some of the property buffs are going to have problems distinguishing nominal prices from real pices.
I'v made this argument before but it's worth repeating
If most things go up in price, including wages and int rates, while nominal property prices remain flat then the real price of property is actually falling.
This is what I expect to see happening in coming yrs - inflation increases but nominal property prices don't keep up with inflation. This is how affordibility will improve for home buyers. Nominal property prices do not neccessarily have to come down to make housing more affordible.
Yes - but this proccess is going to take years to play out
another thing - if you can get 10-12% on bank deposits then a 10% yeild on a property will not appear that attractive to you
I expect inflation to begin to pick up late this yr-early next yr (slowly at first). Commodity prices are beginning to pick up-particuarly copper- which is a good leading indicator that inflation is around the corner
If nominal property prices stay the same for next say, 3 years,
a first home buyer waiting for a downturn will still have to
pay the same amount as today. Our 300k house may still be at
the same price but we will only have 145k to go plus another 20-30k
to take off principal if we can save that extra.
A first home buyer will be behind in 3 yrs under that scenario
unless he/she is working hard and saving as if they already
had a mortgage so as to have about 150k in the bank for a deposit.
George
I think I'm in agreement here.......
I see residential/commercial yield's climbing while property prices continue to fall.
Our first local "3 in a row for sale", all have sold signs on them!
A couple of the young folks I've been working with over the last few years in trying to get them savings and patiently waiting are now deep in their search for homes.....one is about to pull the trigger with a few offers after spending the last 6 months deeply researching their targeted suburb.
I still think they are moving too soon, but they are basing their buying decision on staying in the home long-term, high deposit, low multiple of wages...so they are buying WELL within their means......so I can see their perspective.
Our ongoing saga with our last commercial property has ended...after eleventeen offers collapsing due to inability to find finance, we finally have one that has gone unconditional....transacting next week....we're selling under 8%.....5-1 point higher than last year, but FAR better than the 10-12%+++ that's coming down the track.
Commercial has some movement very recently, but without VERY strong national tenants and LONG leases not much is actually moving in my opinion.
Just my 0.02c
Must be a few peeved dairy farmers in your neck of the woods Lake ... Westland have had a shocker season and looks like payout might be as much as 80c less than Fonterra , that hurts ! How much has dairy land fallen from the peak in your opinion ... $5k/ha-10k/ha ?
Hard to say about land values......they are certainly not moving many properties at the moment.....the good news is:
Westland still has the cheapest "value for dollar" pasture in the country.
The Westland co-op members I know, while a bit upset about the payout, are fiercely loyal to the company.
They made a stuff-up.....but it's still a great outfit :)
Personally, this is a challenging year of course......but we have been driving down our cost of production incredibly fast.
We are just over $4 KG to produce, we will likely end the season with a loss this year :(
But we will probably be in the high $3's cost of production next season.
Early signs of commodity inflation are good news for us.
My best GUESS is payout will be solidly in the $6's within 2 seasons, making VERY good money again.
Quite a tough season, but the switched on farmers are grinning like cheshire cats at the opportunities going forward.
Some I talked to are thinking about smart farm consolidations that make sense.
We are looking at a POSSIBLE merger of a couple properties that, if we can agree on valuations, could see us with even greater economies of scale and lower cost of production if we can get the stars in alignment.
I'm scratching my head on farm values though in the short-to-medium term
Exciting times!
Well Shrewdy, your $330k home would now be worth $340k. Third month in a row of increased value.
Who are you going to believe? The REINZ saying that house prices have only fallen 1% from their peak, or a more realistic QV which states over 10%.
Volume was certainly up, but lets see what starts to happen in the coming months with long term interest rates not pulling back like everyone thought. I stated about 6 months ago that we wouldnt see them below 5% and I was virtually laughed at. Remember, the RBNZ is very hawkish on inflation --> I dont know that I can believe they will hold rates low till end of 2010. If we see continuation in spike of oil prices, watch out. Also credit rating downgrades.
I prefer QV. So does the RBNZ, so do the economists. Why work with numbers that have been prepared by a group with an interest to see them go up?
Have they?. I reckon its a 3.4% drop from $352 in Nov 07 to $340 in April 09. You’ll find my rationale for using REINZ data earlier in this thread. But regardless of preference (we know both sets have their limitations) its probably more important that we benchmark against one set or another. I’m just as happy to benchmark against REINZ.
Funguspudding - I think I see some confusion. You seem to think REINZ figures are "Median" figures - which in part they are. These are the figures I use throughout this thread - unless I refer to Averages. The REINZ data also enables you to work out the Averages - it just takes a tad more work to get there. You can even work out the average of the medians if you want to. Where as QV provide extremely limited delayed "Average" data over the whole property market, REINZ provide wonderfully wide realtime "Median" and "Average" Data in the vast majority of property transactions.
If we go back to Shrewdys original post I have taken his price point as the Median and then referenced his benchmark against all later Medians - unless, as I have mentioned I have referered to Averages. But then I tend to compare Averages with Averages - it just gets too nonsensical to start comparing Medians with Averages when there is no real need.
Oh Dear mm. The Reinz figures are median - they haven't provided average for years. It is the largest database of sales which is why it is so widely used. The index system they will be moving to, has been promoted by various economists and banks for years because the median is useless and does not reflect the average which is also useless, let alone 'value'. Median is distorted and here's a simple example.
1st month 3 sales. 200k, 200k and 800k. Median is 200 k. Average is 400k.
2cnd month 3 sales 200k, 300k and 800k. Median is now 300k Average is 433k, which would be heralded as a 50% increase in the median price. (200 to 300) and a 30% increase in average sales price. All along the market could have fallen. To know what the market is doing we need to know what those same properties would have fetched on a previous occasion. Therein lies the danger of these desktop assessments of the market overall.
The problem with desktop assessments is that speculation will always be based on bias of the assesor.
They sometimes provide monthly sales from a region or two along with total $ amount. The overall $ amount and sales numbers are often only published annually which makes it hard to trace the averages over the monthly ups and downs.
You might sometimes see national monthly $ and number, but it doesn't matter. Neither median or average tell you what you need to know about the market, which is will your dollar buy a superior or inferior poperty to what it would have bought at a prior date.
Took advantage of a flyer left in our box about 'whatpriceyrhome.com'
and an agent came round and told us she would ask 349k compared
to a cv of 315k. It's only a 2 bed bungalow with views, sunny aspect,
close to Henderson town, transport, schools etc and has been
redecorated and made nice. She even sent a card stating that
price in writing but we are nowhere ready to sell yet.
Even if that price is just a teaser to get us interested it
shows that some properties have at least held value.
George
If you get a cracker of a deal, who really cares about averages and what interest rates might do next month, those are just excuses not to buy.
For those who want to buy their first house...
How many houses have you looked at?
How well do you know market value in the area(s) you're looking to buy in?
How many offers have you made?
Do you have a budget for your living expenses?
Have you spoken to mortgage brokers and / or lenders to find out your borrowing capacity?
You are on to it wns.
It separate the dreamers from the doers.
...and the astute from the sheep
As an ex-Queenstown'er I have an affinity with the place plus an interest. It was one of the first places in NZ to start the property bull run! Vertical limit production crew took just 25 houses off the rental market to start it all off!
The news that Kawerau falls went into receivership sent a shiver done my spine, if they finish the current stage of development (best case) there will be 500 tradesman looking for work. Ngi Tahu's post office project will finish about the same time as will the Mountaineer redevelopment and downtown carpark building (large backpackers). That could double the the tradesman looking for work in a years time!
IMHO there will be a large number of properties for sale and rentals hit the market in the same, this is the next leg down for Queenstown. Queenstown has a history of down turn after big projects finish, this maybe a bit of a perfect storm.
Queenstown loss may be other cities gain!!
Queenstown has always been speculator driven. Quite a different thing than a market driven by owner occupiers, or even investors. Like prime resort areas worldwide, they tend to behave more like the share market than the property market, in as much as the buyers all rush in at the sign of rising prices, totally overlooking returns, then all want out on the same day.
i've taken the plunge and used the welcome home loan scheme to buy our first home, i don't think the welcome home loan scheme will be around forever - doesn't exactly seem like national's cup of tea so i'm picking it will be gone soon, maybe next term....
anyway my situation is that we had $50k in savings (built up from savings, shares, and tab winnings) which i squandered in the sharemarket from february 08' to march 09' is a series of disasterous picks and trades which i wont go into - anyway long story short $50k turned to $5k in just over a year :cool:
at february 08' house prices were high and rates were too high that the bank would not lend us enough to buy a modest home even considering we had $50k cash (based on my income alone - my wife was preganant and not going back to work) so naturally me and wife were pretty devastated that our potential house had gone down the gurgler.....however during this time of course interest rates have come down as have house prices and the supply of modest units in christchurch has increased (it seems) - at the start of 08' we couldn't find anything for less than $230k-$240k - except linwood etc.
anyway 2 months ago i looked at the sums and whatdoyaknow we can afford a home......so we bought a modest 2 bedroom unit in the north of christchurch for $215k
our unit is 1 of 2 facing north with both houses the street with their own driveways. unit next to ours was on the market and has been done up and had offers of $250k and $259k which the vendor turned down and then pulled it off the market- so we know given some improvements we can add a lot of value - although we are planning to be there 10 years or so.
i am going to fix $180k for 3 years at 6.85% and cream the other $30k on revolving which we plan to pay off in 3 years - meaning in 3 years time we will have a mortgage of approximately $174k
point of this is that first homebuyers were screwed - but now not so - as long as you dont stretch yourself - and make sure you can afford repayments even if rates double from here - which they could...........
$50k to $5k in a year ... don't EVER EVER put money in the stockmarket again !! ( I made 24.9% in Calendar 2008 ... how did you lose 90% ??? ) You seem to have bought well , well done.
PS ... Why not put your $30k Revolving Credit on a 1Yr fixed rate mortgage at 5.50% ... I bet you are paying more than that for your Rev Cr ... pay it off hard for the 1Yr period and then either re-fix for another 12mths or then put balance on Rev Cr ... you can't lose and no temptation to put a new flat screen TV on the mortgage via the Rev Cr !!!
three letters A, D, Y - thats where the bulk of my money went - then moved to PDZ who at the time were holding up well but.... later they got hit hard as zinc went tumbling down - so no i will not be putting any significant money into shares for a long time............:rolleyes:
i have considerd fixing and floating various amounts for various time periods but i wrote a spreadsheet on excel to work out the optimal repayments for our situation.
i have based my repayments on interest rates (floating) being:
6% for year 1
7% for year 2
8% for year 3
they could be higher, could be lower - in the end i've decided not to gamble (funny considering the amounts i have gambled in the past:D) given that this way i know i can pay 30k off principle in 3 years - after those 3 years we can then afford 12.00% rates (if they were to go that high) even on todays income....
-Sounds like stage 2 may now be going ahead -Stage 2 is mostly the large conference areas which already have advance bookings(is the re
-I see Queenstown winter visitor numbers are up 5% on last year
-I see the New Zealand Golf Open, Queenstown, 28-31 January 2010
-from what I've seen town has been busy me mate's Queenstown business has been the busiest in years...
-the Queenstown resort of today is alot different to yesteryear's queenstown the village
If queenstown hasn't the projects to keep tradesmen here they will move to were they can get work ...the effect on the 19,800 rate paying Queenstown property owners will be minimum IMHO
-tourism is the main driver which is up on last year thanks to the Aussies
First home buyers were never screwed.
If you had managed to buy a median property in north Christchurch in Feb 08 you would have paid $329,250. In June 09 the median had moved to $330,000 a negligible increase but an increase all the same. And you'd be in a position of having survived the hard times and be in a positon to look forward to some growth.
You would probably have fixed a lump of the loan for a year (indications were that interst rates were peaking around then) so in Feb 09 you would have gone from around 9.5% interst to around 5.6% - dumped right smack in the lows of interst rates. You would have been a whole lot better off - with all that extra cash in your pocket going into loan repayments and adding equity to your asset position.
But thats all on the back of hindsight.
Well done on making the plunge now and being on a position to make a place your own home. The revolving credit is a great facility - but it really does take discipline. Hopefully a person with a TAB account and losses on the sharemarket has that discipline.
well we were screwed..........
we had $50k savings and with my income alone we were not able to afford (i.e. bank wouldn't lend) minimum payments on a loan on a modest house/unit in an average area due to high interest rates - the maths simply didn't work out - hence the screwing ;)
now there has been a 10% to 15% fall in units in the area we were looking and the rates have dropped significantly - hence we are no longer screwed (for now......)
I still think not - but please don't take the following comments personaly. They are meant as a generalisaiton not a personal afferont.
Home ownership is not a god given right. Despite politicians and all sorts of other people thinking that it is. Thats not to say its something we shouldn't aspire to, but its not meant to be easy.
Owning a home is about commitment - and one of those commitments is taking responsibility for loan repayments. The potential home owner and the bank can often be at odds with their view on how this commitment can be met. I tend to think banks are relatively good (erring towards caution) with their lending repayment ratios. Wheras I think finance companies and Cash Converters are reckless. If the bank didn't think you could afford to repay there was proably a good reason for it.
Banks don't look just at income and deposit when making a decison. They will look at your credit history (and any loan defaults) hire purchase commitments, number of credit cards and credit limits. They will also look at spending habits. For example if you have an account with the Casino or TAB there is potentila for you to be a higher risk than someone who doesn't.
They will also look at your personality and look to see if you are exhibiting any yellow or red flags. These flags may indicate a more detailed investigation. In your case perhaps you were raising these flags - a thought formed on the basisi of your decison to place your home deposit into the stock market and pretty much loose it all. Your personality helped drive you to make the inital Buy decisons and for some reason you didn't have stoploss limits or other exit strategies in place when things started to go bad. When owning a property sometimes things go bad and you need to either not set yourself up for failure in the first place or know when to bail.
none taken :cool:Quote:
I still think not - but please don't take the following comments personaly. They are meant as a generalisaiton not a personal afferont.
agreedQuote:
Home ownership is not a god given right. Despite politicians and all sorts of other people thinking that it is. Thats not to say its something we shouldn't aspire to, but its not meant to be easy.
no problem with the banks doing this - and this IS exactly why first homebuyers were screwed - particularly those in a similar situation to us - we had a very decent deposit and were earning average wages yet house prices were so over inflated combined with such high rates that it made it impossible (nearly) to get your first home - which IS my pointQuote:
I tend to think banks are relatively good (erring towards caution) with their lending repayment ratios. Wheras I think finance companies and Cash Converters are reckless. If the bank didn't think you could afford to repay there was proably a good reason for it.
so thats why i feel (at that time) we were screwed (as were many other potential first home buyers) - however who knew what was about to unfold in the coming year and now here we are a year later and the picture has changed considerably.
just to clarify i wasn't upset at the bank not lending money based on their criteria - thats fine
the main problem was the absurdly high price of property based on income to price ratios combined with high interest rates at the time
property is probably still overvalued and rates will probably rise again and soon BUT we have taken advantage of the conditions today and have a strategy to deal with possible rate rises in the coming months/years.
Property is never over valued, or under valued for long. The cost of building is the yardstick that sways the price pendulum back to a realistick cost price level. To pick the eyes out of the property market, requires you to understand the replacement cost structure value.
When the market shuts down with builders out of work, they simply leave the industry, or the country, which creates a shortage of builders, who in turn create a higher than should be price structure.
The Bricklayers in my area are undercutting each other simply to stay in work, the best brickies are now gone. Building red tape costs with compliance to keep up with the stupidity are still in a steep uptrend. The end result my friends is very obvious the price of property in the future will rise higher than the ten pc average in the last thirty years, unless the population flees to greener pastures. Macdunk
[QUOTE=duncan macgregor;267281] The cost of building is the yardstick that sways the price pendulum back to a realistick cost price level. To pick the eyes out of the property market, requires you to understand the replacement cost structure value.
When the market shuts down with builders out of work, they simply leave the industry, or the country, which creates a shortage of builders, who in turn create a higher than should be price structure.
The Bricklayers in my area are undercutting each other simply to stay in work, the best brickies are now gone. Building red tape costs with compliance to keep up with the stupidity are still in a steep uptrend. The end result my friends is very obvious the price of property in the future will rise higher than the ten pc average in the last thirty years, unless the population flees to greener pastures. Macdunk[/QUOTE
Construction and material costs never realy come down or if they do its quite minimal. What has hit property prices the hardest is most likely the land its sitting on. A Clifftop with spectacular views may have fetched $5m 2 years ago but may only be worth $3m now. The building costs havent changed (unless it was subsequently found out to be a leaky) but the perceived land value has taken a huge hit in this area.