Inflation and real estate prices have never travelled at the same speed. Real estate, particularly residential, tends to go through bursts of rising, then long periods of stalling.
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even with the stalls our 64000 house (bought in 1984) is now 1.2mill (last valuation)---There is no doubt that property has far out paced normal inflation---(whether thats a good thing is another debate)
Is 18000 a comfortable place for the Dow to sit?
http://www.marketwatch.com/story/chi...cks-2016-04-18
True - I guess most investment markets overshoot and undershoot from time to time. Perhaps it should be up to central government to introduce policies to reduce the swings and to ensure its people have affordable housing? In real (after inflation) terms (Auckland?) house prices are three times what people were paying in 1965! So over the long term that was a successful way of beating inflation and growing your major investment. Does anyone have any information on the capital return for NZ shares since 1965?
http://www.stuff.co.nz/business/7638...erve-Bank-says
I know several mid-20s people who have given up looking for an Auckland house as even though they have invested in NZ shares part of what is going to be their deposit, despite the growth in share values. the amount they fall short of a deposit keeps on growing. They are galled by the investors who seem to be snapping up the starter homes/flats they've been interested in.
The public have to realise that all participators of that Market have to share the blame when the that market spirals rapidly upwards (downwards)...It would be interesting to see a breakdown of buyer/sellers to see who's participating...unfortunately this breakdown will fail to pick up the house flickers...and also unfortunately the media is an unreliable source to find that statistic..It's easy for the media to publicly bash the property investor as they are the publics whipping boy during tough times...but is this market participator group the major problem causing this price spiral?
In normal situations, property investors offer housing for people who can not or chose not to buy a house...so investors are useful market participants....
But these aren't normal times ...During rapid rising prices there are worse groups of market participators..The black underground world of house flickers are a destructive group of market participants, they fly below the media radar and hard to identify, they could be anyone from upward mobile 30 something couples to a scruffy looking character living in a state house .....buying a house, doing minimal do-up repairs, leaving it untenanted then sell it later on in a rising market and receive quick capital gain may be good investing but its bad for the market as it shortens supply....The market only realises the number of House flickers operating in the market when the market turns down...at the moment we don't know if house flicking is a serious unseen problem..maybe there's not enough of them to warp the number of house shortage figures..who knows??
Time will tell when the tide turns and all market participants groups are exposed...As Buffett once quoted "After all, you only find out who is swimming naked when the tide goes out."...
So the financially careful young professionals will have to settle for being tenants? When was the Auckland and NZ residential property market last normal? In 1987 after the share market imploded, and a generation were more or less put off share market investments, and in the absence of meaningful superannuation schemes, did that mean that residential property became the default pension scheme in NZ. Whereas in most other countries, pension schemes helped provide investment capital for companies.
That's the million dollar question..eh :) ...I guess if they are in large numbers that affect the supply...but are they in large numbers??
Don't get me wrong I'm don't hate house flickers...If your'e into the DYO thing and have Tradie mates then this current situation is an easy opportunity..If you don't take that opportunity someone certainly else will....Then you have these TV series which promote this sort of thing..eh
I don't make the rules Bjack....
success is how well you play the game, My generation are full of the accidental millionaires who thought the property market always went up and the very long property market wave accommodated that belief nicely, so our generation were lucky, because no matter how badly you played the property game most of us still ended up being successful...At some stage the future generation have to pay for what the past generation did ..whether it's finding it very tough to buy a home or buying a home as the price rises or flattens out but stays too high, or watch house prices slowly fall eating away your 20-30% deposit for the next 20 years or so..
Normal?....normal is a state of mind.. but the best situation is that fleeting moment in time when demand = supply.
Owning property a Quasi superannuation scheme ? yeah..due to that self fueling belief I highlighted above..and locking up too much countries wealth/debt (GNP?) in lesser efficient assets (rate of return) such as residential properties and causing a lowering of spending power.