Wonder what would removing those generous tax breaks and slapping capital gain tax on property etc would do
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Wonder what would removing those generous tax breaks and slapping capital gain tax on property etc would do
Hi guys,
Just stumbled across this excellent thread. Haven't had a chance to read through most of the posts but wanted to add my 2c...
My own opinion is pretty much the exact opposite of what MacDunk is stating above: Housing markets have (and will continue to) crash, there has never been a worse time to buy, property is cyclical - there are times to buy and times to sell.
Throughout history there have been many examples of housing bubbles and housing market crashes. Look at the Florida crash in the '20's, Japan in the '90's, and what's playing out in the States now and gathering steam in UK, Ireland, etc. NZ is next in my opinion.
Home affordability is at all time lows in many parts of the world. Globally, we're in a classic bubble fuelled by easy credit, relatively low interest rates and irrational exuberance -- there's no way it can continue.
House prices always revert to their long term average and at the moment many countries are way above that.
I want to move my family back to NZ in 10 years or so and have got some money saved up for a house but there's no way I'm going to buy anytime soon. The time horizon I'm looking at is 5 years, I think thats when the next housing market bottom is going to form.
I agree that at most times in history housing has been an excellent investment. But there have been exceptions and I think that 'now' is one of these.
The levergae you get when taking on debt to buy a house works well when prices are rising but can cripple you when prices fall. We bought an appartment at the peak of the Amsterdam housing market in 2002. We needed to sell in 2005 but prices had dropped about 20% from their peak and we were in negative equity. It caused us a lot of financial stress, but it taught me a valuable lesson.... before then I bought into the commonly held belief that house prices only ever go up........ oh how wrong I was.
Hi Corran while we are speculating on the next bottom / leg up I think you might be late with 5 years. Next leg up 2011 I recon:D
Apartments are a different deal. Houses dont go up ( unless building costs go up of course ). The land under them goes up. Apartment prices in Auckland for example have shown price movement relating more to Supply and demand for student accommodation rather than following the general market trends.
[
Barfoot and Thompson Director said, "It is not a good time to buy"
Shrewd Crude said, "it is not a good time to buy"
Mackdunk said, "there is never a better time to buy than right now"
....haha....
.^sc[/QUOTE]
Jeez Shrewdie have not been ST for a while, interesting to see you still wafting on???
For the record I am with McD "there is never a better time to buy than right now". In fact although I vowed to stay out of the property market **, I bought a lovely 3 BR small investment home last week for my daughter. Market appraisel 165k. Reg. valuation 160k paid 140k. Vendors relocating Aussie. Already rented $230 wk.
Great posts above Arb. George. Serpie.
G'Day Dunk still pushing it uphill here I see....trust you are following AGM saga??
Cheers
JK.
** For those new to ST. JK used 20k equity in home and leveraged it into 37 properties over 3 years. (see earlier pages this thread) Since sold all but 6 and retired.
quote Zig Ziglar ... "The opportunity of a lifetime comes along every day"... today is no exception!
Thats a great story JK. May I ask out of interest when you made the 1st purchase as per your post and when you sold up?
PS at 165k today I assume you are on the mainland :cool:
Jeez Shrewdie have not been ST for a while, interesting to see you still wafting on???
For the record I am with McD "there is never a better time to buy than right now". In fact although I vowed to stay out of the property market **, I bought a lovely 3 BR small investment home last week for my daughter. Market appraisel 165k. Reg. valuation 160k paid 140k. Vendors relocating Aussie. Already rented $230 wk.
Great posts above Arb. George. Serpie.
G'Day Dunk still pushing it uphill here I see....trust you are following AGM saga??
Cheers
JK.
** For those new to ST. JK used 20k equity in home and leveraged it into 37 properties over 3 years. (see earlier pages this thread) Since sold all but 6 and retired.
quote Zig Ziglar ... "The opportunity of a lifetime comes along every day"... today is no exception![/QUOTE]
Where abouts was the house for $140k that rented for $230pw?
care to tell us what's happened to your 700k portfolio of extremely speculatives shares over the last 6 months JK - from what I remember, not a single company in your portfolio had any earnings. Even conservative investors have taken a hit recently but speculative investors have been hammered. Hopefully, for your sake, you have realised that your way out of your depth in the markets. Looks as if macdunk has come to this conclusion - (he's finnally got something right)
someone once said to me when i was younger "stick to what you know"
In yours and macdunk's case, that's realestate
,
Good one JK. 8.5% yield not bad for residential.
The rental market is interesting at the moment. Crockers just advised that preliminary rental data for December showed a kick in rental prices upwards. I just let an apartment yesterday with a 12.5% rental increase. Only advertised it once and it was gone within 24 hours. Even then some prospective tenants thought it was cheap.
Wait for the headlines screaming that rents are too high as the yields start to get back up to something reasonable.
joe King,
yes, Stick to what you know...It sounds like you have made the best move by selling your 31 houses...
...
If it was never 'a better time to buy', as you agreed with MD then why have sold 31 houses which you just disclosed in your last post?....
would you not be buying more?
..
Joe King,
I have put my career in New Zealand on the line by waiting off..... I've put myself in deep on this thread, standing up to the king pins like yourself and its all coming to plan...... ...Now The fact that I called it one year early, doesnot mean anything... The situation has now become much worse... In fact I would rather be seeing prices continue to rise as the downturn would then be more severe...
....
Auckland price drop in Jan, will signal the rest of the market. And in the next two months we will officially find out that national prices are falling and larger than predicted by most... Westpac is predicting 5% national downturn this year... Auckland got 50% higher than that in Jan...
Watch out....
...
It seems to me that strat has moved stance and backed away from MD as he said next leg up in 3 years...I tend to think 5 years, but re-adjust my thinking in a few years time to the changed market and continuing to persue open minded, balanced think, and ... you lot hang around in the mean time losing 10% on interest charges, any house price falls... It doesnot matter how rich you are and what you made in the past....
what is important is where is the housing market going to be in 5 years, and whats going to happen for the next five years...
....
anything else is really insignificant to the thread topic...
:cool:
.^sc
once again, very good posts by neopole, corran...
MD...
Ok, so no competition...
I reckon NZ national Median house value will drop to 250-270k, is my prediction in the next 5 years...
Just talking to my great chinese mate and he said China is having problems, 200 failing property businesses...
America Is having problems... AUS will have them if not already... UK....
NZ will lag...
....
From looking at the Mackdunk argument, I can only
see one situation that could occur so that housing Does not hit a big slump, downturn....
....
what is that only situation?
"NZ opening up borders and expansive immigration policy"...
...
Every signal other factor, and indictor points to a downturn, which will last longer than anyone in the market place is predicting.
:cool:
.^sc
Bargains for the brave in property market
Gilligan believes the residential property market is probably in worse shape than the REINZ's monthly sales figures suggest.
This is because the figures only reflect the trends of those homes which have sold. It can take 3-6 months before the growing number of unsold homes starts to show up in the statistics with lower selling prices. So the worst may be yet to come.
A better indicator is that the number of homes selling at auction is down to 30%, from 80% at the peak of the boom.
...
"But buyers will drive a hard bargain. There will be people who will be burned in this market," he warned.
And it takes a certain amount of courage to buy in a falling market.
"People with cash will swoop around and pick up bargains. But you need to be brave to run against the herd," he said.
shrewdy, JOE has been there done that. you have met me who has been there done that. Joe and i have both made heaps on the market last year i expect joe is out the share market like myself at the moment. Joe is like myself who gets followed round by idiots who have done nothing in real life, trying to minimise everything down to their level. I bought an 18 month old B&T inbuilt garage ensuite at randwick park at a mortgagee sale for cash about seven years ago. It cost me $120,000 . I leased it to the housing corp onsold it to my daughter for $140,000 who only visited it once. She onsold it two years later for $245000. That started her into a good house in a good area at a very young age. If you think the share market is for you then do it like JOE and I do it when the tide is coming in dont swim upstream. I am on the look out for super cheap properties right now. Joe sold at the top of the market not because property had its day but because he realizes as with shares its only the idiots that dont know when to buy or sell. I wont be around for a few weeks to busy up north to be bothered posting, but will catch up with you next Auckland meeting.
BUY A PROPERTY YA MUG NOW IS AS GOOD A TIME AS ANY. Macdunk
madunk..
"I am no idiot who has done nothing in real life, trying to minimise everything down to my level"....
....
What I am saying is contribute to the argument on what will happen to property prices in the next five years... and therefore where you think it will be then....what opportunity costs are there for current potential first homebuyers etc?
Im not overly excited about historical performance because I know its been good... Ive said long term housing remains a very good investment...I cant say I know of anyone that has lost money in the last upteen years... Im only really interested in future performance... I do not mind hearing other stories.... wheres the market going is most important?....
Ive taken my stance, you and others have gone against it...
I have heard it all before from JK, I know both you two are king pins, ive already said that...
JK talked allot about wraps, he just dissapeared when it was time to talk about the finer details of how they work, and how you set one up after he said he would go into more on his own account... he just vanished into thin air.... Im a Ok with that...
No doubt in a few years I will do my own study on Wraps as I have previously been aware of them...
see you in a few weeks also, I will also take a brake and give others a chance to post their thoughts...
I wait on a response why JK reckons its never a better time to buy than right now, when he disclosed a day ago he sold 31 houses?
lata....
:cool:
.^sc
your arguments don't stack up at all IMO. We've just been through the biggest property boom in history, it's clearly topped and coming back down.... consider:
- sales volumes are down significantly
- average sale price is trending down
- home unaffordability is higher than ever
- inflation is above target (rates unlikely to come down anytime soon)
- kiwis are leaving for Aus in ever increasing numbers
- prices need to fall by about 40% to get back to the long term average
Just like in a bear market in shares, there will always be some property investors who make money in a declining market. But most who buy now will be catching the knife just as it begins it's long fall.........
If we're talking median national house prices, I think 20% from the peak if the economy stays strong, unemployment remains low and inflation stays relatively low.... if those factors change I think we'll see a 40% decline in real median house prices.
On the contrary, I think that, because the housing bubble we're now in is unprecedented, the magnitude of the decline in prices will also be unprecedented.
shephejame..... Western Heights Rotorua
G'Day Mick100.... "care to tell us what's happened to your 700k portfolio...."
Remember I started with $40 equity in property, then paid that back a year later after selling dud NOG.... Well I got to $800,904, 16/05/07 paper profit then all turned to custard fell to 520k quickly. I pulled out $100k and watched the balance held keep falling ouch! Fortunaleyl dropped heap of ags at 185-200 (buy ave. 61) put into AGM at the right time. Sold all agm 102 when everything crashed about a week back, and ZFX propped AGM price up (thank you very much ZFX) and bought heap of pna at 67 (now 94) and DYL at 17.5 (now 28). So today have paper portfolio value 476,367 plus 100k cash (well, spent 28k on a lovely Pacific/Carribean cruise with wifey in Sept) for free. OK not gonna get my mill. within time frame, but happy non-the-less.
GREAT! post Dunk, nice to see your sense of humour made into 2008 HAHA!
Shrewdie....".. he just vanished into thin air...." Hey I'm not a bluddy aparition LOL! Simply got tired of silly arguements.
..."I wait on a response why JK reckons its never a better time to buy than right now, when he disclosed a day ago he sold 31 houses?"
Remember Shrewdie I set a goal to turn $20k equity (not 1 cent of my own cash) into a million. I did not set out to be NZ biggest Landlord, or richest man in cemetry. I reached my goal (unbelievably easy).... set some new goals and moved on... end of story. People ask me all the time when is the best time to buy property... my stock reply is always the same "TO-DAY!" I have said earlier it is always simple to find a hundred reasons NOT to... all you need is ONE reason TO.
Cheers
JK.
Not sure I agree. The housing market in NZ will be driven by three things. Demand and supply being the first two of course. The third being building / renovation costs.
Thanks to leaky buildings; local bodies keen to keep lots of administrators employed and the skill drain to Australia, as well as inflation in building products I can only see the cost of new houses going up – dragging the price of second hand along with it. This drag will help temper any drop in demand, making the price drops not as bad as they might otherwise be.
What would happen if one had not bought a house (when they could) and rented while saving for a bigger deposit and possible lower prices.
Many I am sure, would simply have frittered some of the savings away or got lazy and not pushed the overtime etc., simply because they didn't HAVE to.
Despite possibility of property values dropping in next few years, I am confident that with a good location in Auckland, a view and doing up house myself, we will be ok even in worst scenario (whatever that is). 65% drop would be a worry but wouldn't the govt step in. Anyway, we plan to be here for 10 yrs and I thank my partner for threatening she would buy a unit on her own if I didn't come in with her on the house (2 months before the sub-prime stuff hit the news so I have wondered if our timing was bad). Now I would try to convince her to wait or at least drive a harder deal for something we liked.
Someone mentioned that renewed immigration would boost property, well if John Key gets in he is definitely pro immigration but can we rely on that to keep prices up?
What will happen to property over next 5 years, I don't think anyone knows but my guess is that the provinces will come back more than the cities. Taranaki prices seem very inflated. Perhaps Auckland will move ahead while provincial towns stand still?
George
Dr Who
Totally agree with your above reasoning. You have come up with 9 reasons for failure. And any one will work.
How about just ONE reason for success..... IT! will also work with the right attitude behind it.
Cheers all winners
JK
Hi macdunk....
I hope you don't mind me borrowing a quote of yours (from today) from another thread...
I don't get how your "now is as good a time as any to buy" belief is consistent with your, in my opinion, spot on the money statements below...
could you please clarify?
Hi Shrewdy,
I went back to your opening post to ascertain your position in this debate but couldn’t find one. If I was in the market looking for a house today to live in I would like yourself be waiting to see what happens over the next wee while ( weeks , months, year ) and adjust my decision to buy as things unfold. I agree we have hit the top of one of the longest property booms ever. If I was looking for an investment property it would be business as usual. If a property can wipe its own ars then its worth buying ( as a long term investment ) irrespective of whether the price dips in the next 3 months to 3 years. If you cant find a property that is cash flow positive then you have answered your own question as to whether you should buy or not but it really comes down to your individual circumstances. Live in or not. Flatmates or not, Joint venture or go it a lone, Deposit size, Current rent and living expenses etc etc. The key thing to remember is that long term RE is a stable investment so as long as you are using someone elses money to purchase and maintain you really cant go wrong. Second key point is with the way mortgages are set up these days ( may be changing soon with the credit crunch and all ) as your equity increases you gain access to credit at favourable rates.
I guess if you add a little detail about your position or create a hypothetical scenario it could be discussed in more detail. I haven’t read the whole thread so forgive me if this has already been done.
CORRAN, A lot of uninformed people think that is a contradiction. Sell at the top of a cycle buy at the bottom is the best way to move forward and upward. Shares and property are both taking a hit right now, the smart money has moved to a buy when it bottoms position. With property, bargains can be had at most stages of the cycle, with super bargains to be had when the cycle bottoms. Banks are not landlords they sell to the highest bidder to recoup as much of the loss that they can. Now is the time to attend a few mortgagee sales to get the feel of what is available.
This is the beginning of the good times for bargain hunters, the banks are the ones you are dealing with, show them no mercy. There is no rush to buy anything, silly low offers take a bit longer thats all so the sooner you have educated yourself to what is going on the better. Macdunk
This wont help the market go down
http://www.nzherald.co.nz/section/1/...ectid=10491994
PM announces shared equity scheme for home buyers
ALthough I'm a bit of a Helen supporter (she's one of very few intelligent politicians) this is not the right approach and will only support the housing market boom by giving a few luckies an interest free loan. Dear dear Labour - this will aggravate the right wingers as it really is more meddling that will cause market distortions. Eg reduce the demand for rentals and increase the demand for 2nd hand homes.....
I find it hard to believe Cullen agreed to this.
Why do politicians always meddle in the housing market?
History shows that price crashes are often a result of govt intereference (eg Hong Kong and UK have both had major corrections downwards as a direct result of govt policy shifts). With the relatively free market in nz we have generally avoided major problems. Just let the market go.
fair enough.... I guess it depends on how long you think it's going to take before we see the bottom of the cycle. I think we've got a long, long way to go, so what might seem a bargin now may look very overpriced in a year or two's time.
I'm curious.... you seem to base your decisions almost purely on technical analysis when it comes to shares and then almost purely on fundamental analysis when it comes to property. Maybe thats a system that works for you but for someone who is quite outspoken on the advantages of technical investing, it seems a bit inconsistent to me.
My approach may be too conservative for many, but I've been burnt by buying at the top of the property market before and I'm in no rush at all to buy this time around...
Although there are a core set of analytical principles and techniques, the reality is that different 'markets' often require a differing criteria for meaningful analysis...
Yes, MACDUNK could use both fundamental and technical for shares AND property, however the reality is that the property market is not really suited for technical analysis.
Having said that, I believe that there are, or used to be, a property fund in the US that was based on technical analysis back in the 80s/90s. Don't recall what happened to it.
Help may well be on the way. If you want to get into housing and don’t want to do the hard yards you could sign up for Labours proposed Ghetto initiative.
Here you’ll get to live in a “modest” house, built to reduced building standards, in dodgy land areas by trades people not tempted by Australia or a profit motive. Your neighbours, and there will be lots of them, will be low or middle income earners.
You won’t need to save as much because the tax payer will take an equity share on your behalf. And nor will your neighbour. Stretched so they can afford the reduced mortgage, they’ll probably struggle to keep up with the maintenance – but that’s OK because you’ll be in the home you so desperately want to own.
If you want a view of your future just drive through any state or council housing estate built from the 50’s.
Renting may not look so bad!
I've got a 1940's state house surrounded by other 1940's state houses here in ChCh. It's on a huge section, and, being a raging capitalist, I wanted to subdivide the section and build another house on the back.
My efforts have been thwarted because the house is in a "SAM" or special amenities area. SAM 37 to be exact, for which the council description goes:
"The layout reflects the key elements of State-housing during the 1940s – 1950s. It includes curved streets, reduced road widths, street tree planting, direct access to a communal park and large front gardens with low fencing. The regular distance that the houses are set back from the street is also notable".
Sounds idyllic doesn't it!
I'm not sure about your claims regarding "built to reduced building standards" though MM. John Key was on the news this morning saying that one of the factors in increased build costs was the tightening of building standards. And the build quality, and materials used, in 1940's state housing was outstanding.
When I was in Rotorua recently a friend of mine showed me a recent state house, and it was awesome.
I’ve no problems with the build quality of state houses in the past. Owned one myself years back and it was built to last damn near for ever – and they came with decent bits of land relative to todays handkerchief sized parcels.
Today you can build a house for around $1,000 a sqm, getting down to $700 at the very low end – but I don’t think you get much at this level to meet modern living needs. For example, you’ll probably only get one electrical socket per room. So you could end up with a $100,000 build cost for a 100sqm house.
However the Dept of Build and Housing has a build cost of $1600 a SQM. Knock of 25% for mass production you are still left with a $1200 build cost. And say $100,000 for land you are looking at a total of at least $200,000 for a modest govt house.
If the shared equity works at say 30% the buyer still has to come up with $140,000 through deposit and mortgage – still, in my view more than those this package is aimed at could afford.
So how do you make it more affordable – you have to reduce the build cost even more. You either get cheaper land – which means it will be some swamp at the back of a sewer works and/ or cut the cost of materials/labour going into the build.
Footnote: and the other issue to consider is the value of this house in five years time. If the market drops in value due to additional supply these types of houses will, in my view, be the first to suffer. So say you buy your house for $200,000. In a few years it could be worth $190,000. You’ve “lost” $6,000 and the tax payer is out of pocket $4,000. Owners of low cost apartments in Auckland can probably recount their experiences which may have some parallels.
Why do people have to own property - with Kiwi saver a whole lot of people are going to retire better now!
I'll tell you why one has to own ones own roof , at least here in NZ.
Because it is the only way to secure tenure. NZ landlords are always selling the rental property to take their profits and if you are a genuine renter (which doesnt necessarily make you a loser - you may have decided to sock money into a portfolo or a business etc) then you will just get mucked around time and time again being asked to move due to a change of ownership.
Most NZ landlords are not in fact landlords but property speculators. A true landlord will never sell.
[quote=peat;185153]...
Because it is the only way to secure tenure. /quote]
Absolutely agree. Generally, landlords have little respect for tenants and have little idea of customer service. They’ll swear that making a loss or a 2% return is a genuine attempt to make an income. IRD don’t have the grey matter to see through this so Govt should look to itself for this rort. Conversely many tenants have little respect for other’s property.
There are two sides to this story for sure. From personal experience I have found that no matter how hard you try as a landlord to be kind, fair and prompt with issues you will still be thrown into the money grabbing slum owner category that all landlords must be simply because they are the landlord. The better you serve your tenants the more they demand and the law is stacked hugely in their favour.
That said, there are good tenants and being selective in critical to a trouble free relationship.
I could write a list of the kinds of people not to rent to but Im sure I would be breaking at least 10 PC laws and have all kinds on my back including the Political Party I most love talking about.
Well of course there is two sides to that story Strat (as with most stories) but its a completely different story to my point that as a tenant securing tenure is almost impossible, and the obvious implication that IF it was possible to secure tenure it may become a much more attractive option.
Very few who can afford to buy will ever choose to rent a family home even if its the sensible economic choice as it relinquishes control over their future to unpredictable factors such as the owner selling up to a owner occupier.
After a breakup I sold my house in 2001 and decided to rent for a while. It didnt last 3 months before it was up for sale and I was being asked to show buyers through and face uncertainty etc.... so I went back to owning. Anecdotes are merely that of course.... but I have a notion that in some countries people rent for decades from professional landlords who have owned the properties for generations. In situations like that the emotional factors of renting vs owning can be discarded and the economic factors may overule.
If economic factors had more weight in peoples decisions then perhaps we wouldnt see such a crazy property market here in NZ
I agree whole heartedly with your point on tenure Peat. My post was directed more towards a comment by Minimoke and perhaps nothing more than throwing my 2c worth in even if only partly relevant.
Owning your own bit of dirt is not important in all cultures but is well and truly ingrained in Kiwi mind set. There is nothing wrong with either perspective.
I guess my point is we need to get over the obsession with home ownership, some Blue Chip investors will have by now!
As a landlord who has never sold a property, I agree with your concern. The number of so called property investors who buy and sell must cause uncertainty in the rental market. I can see that there are genuine reasons for selling (eg death!!) but the golden rule of property investment is "never sell". You can argue for ever about this but even Bob Jones has been heard to admit that he regrets selling some buildings he has owned. I wonder whether many people look back and realise how much capital growth has been forgone (a friend discussed this 2 nights ago when he realised he thought he sold at the market peak 2 years ago and gave away 40% further growth on a mulit million dollar portfolio).
As for tenure, maybe we should look to Europe. I am not familiar with the tenancy/lease agreements, but a friend in Germany seems to have a very long term lease. They even put in their own kitchen, upgrading the existing one. There seems to be no reason why longer term residential leases can't be used in NZ.
Does anyone know how the European leases work?
Hi Arbitrage...
I'm currently renting a house in the Netherlands. Over here the laws heavily favour the tenant. Minimum term of a rental contract is 1 year, if the tenant stays on after the 2nd extension the contract becomes permanent.
During the contract it is virtually impossible to evict the tenant. If the landlord wants to give notice I think a case needs to be brought before some sort of court.
It's great for the tenants but can be difficult for the landlords, especially in small inner-city appartments. There the tenant can appeal to the housing commission to get the rent to lowered to a 'fair' rate.... this rate is often only about 1/2 of the market rate. I've heard of people who've suffered huge losses financially after their tenants got the housing commission involved.
As it's pretty much impossible to evict tenants often the ones with the controlled rent contracts stay there for ever....
We sold our house last year and have been renting for the past five months. The rental contract was a 1 year fixed term which seems to work well for everyone. Maybe the current flat market will work a little better for everyone as the speculators bow out and long-term landlords take over. I think that if I was going to continue renting I would negotiate a fixed term again - I would hate the thought of the property being on the market while you're still in it. Bad enough when its your own place let alone someone else's.
Remind me not to buy rental property in the Netherlands! Thanks for the comment. It begs the question as to how you strike a balance between surety of renting vs encouraging investment in residential rental property? Maybe a leasing arrangement more like NZ commercial property would work. That is fixed terms with a possible right of renewal?
Arbitrage Lease it to housing corporation New Zealand some of these properties net 7% if you buy one that is all ready leased to them but they are very hard to sell
I have always rented, and intend to always rent (which is not to say I will not invest in property). But not once in the last 12-or-so years of renting have I have ever been "mucked around" or left a tenancy other than at my own volition (none of which have been less than 2 years). In fact, landlords have actually chosen to sell the property when I left, rather than the other way around. If you are a good tenant, you make your own 'luck'.
While some people might see owning their own home as security, looks like a big fat albatross to me.
TGM
thats fantastic to hear The Grandmaster (I so want to type Flash after that heheh)
But I cant accept any degree of usefulness about the comment "you make your own luck", as regards a tenant securing tenure.
Sure thats a valid perspective on life but we know it only goes so far - everyone is subject to the whims of randomness , renting is decidedly ten-u-ous.
it is good to hear that someone is taking the 'other' approach about home-ownership though, almost everyone who rents aspires to own. I've often said 'you either rent the place or you rent the money' and compared the cost of the two as a point of discussion but only academically.
I hate moving.
peat, I made the "you make your own luck" comment as a pre-empt to the inevitable comment that I had been "lucky". My point being, that if you seek good places to rent and are good tenants, I think more often than not you will not have any problems.
Could not the "whims of randomness" just as likely be annoying neighbours moving into your street, an ugly development going up next door, etc. I enjoy the freedom of knowing I can always move with relative ease if I want a change of scene - whether it be because of external factors or just wanting a change.
You hate moving, I hate the thought of being stuck in the same place.
Each to their own of course, but I always hear much of this unpredictability of renting and I think much more is made of it than is the reality of it (of course, if it helps people to rationalise why they base their life around mortgage repayments for a house/area they don't really want to live in, good for them).
Tongue firmly in cheek of course....
TGM
BULLS VS BEARS
...
Some rather interesting posts over the last few weeks since ive stood back and watched the thread... I am not naming names anymore.... As the reader or participant of this thread, it is up to you to determine who the bulls are...I believe that there has been a change of thought and definately a change of tone from this select group of house 'buffs'... sentiment is changing and Im surely not the only one to realise this, am I?
Slowly these raging bull's are beginning to accept that a crash is coming, but they are still not prepared to use big words such as 'Crash'...a few weeks ago, Two of these posters said BUY now, they also said they had sold their investment propertys on the market too...;)...
weeks ago I had articles flying off the press so much so that I just gave up posting them... I did get one chance to post some very important information about the situation in Auckland....
Every single indicator points to big down...
7.5% fall in Jan for Auckland... this has just begun...
I would say that the flow of information has slowed down now, and I wait on more definitive news about this looming fire sale.... I see for sell signs everywhere I go now...
The smart king pins around here have already sold!....
who's selling and going to rent?
Dont make a mistake and let the shrewd buy your house in a few years at the bottom... looking to buy 3 houses under the right circumstances, ie- if this falls to where I think it will then im going shopping multiplied by 3...
Yeeeeeeeehhhhhh hharrrrrrr....
:cool:
.^sc
Shrewdy, would not the vast army of young couples waiting to get
their first house provide a strong support for house prices?
The difference maybe, and might do is nil. The people that do things are never the might do, or maybe brigade. Houses are a bargain at any time of the cycle, as any shrewed investor in that business knows. It costs nothing to place ridiculous low offers on everything in your price range. Mortgagee Auctions are a good starting point, with the banks selling trying only to recoup as much of their loss as they can. In bad times there are a few more opportunities than the good times. You dont want a good buy you want a great buy which is available at any stage in the cycle.
More money has been lost with people trying to time the cycle missing out than was ever made timing it right. If you want a super buy stick the super low offers in right now one day you will get surprized. Macdunk
Many property investors who have been around awhile are smiling. The equity that has built over the past few years has been impressive and provides banks with good security for borrowing to buy more property in the future. In the meantime rents are increasing dramatically. Rental incomes are usually factored on a conservative basis in any property investment, therefore when they surge ahead, this can provide a nice, albeit taxable, windfall.
So you can keep arguing the toss about when to buy, but some of us can't get this grin off our faces.
This is true macdunk, however it is as frustrating as hell when you put forward a fairly low, but not unreasonable offer, only to have the vendor go off in a huff (and in one case for me, the Estate Agent also went off in a huff) and wouldn't even counter-sign. So I walked away. In this case in particular, the Agent came back to me six months later to see if I was still interested in the property but I said no. I had already bought something else. The property sold a couple of months later at $15,000 below my "low offer" of 8 months before.
I've had this happen a couple of times but I prefer not to let emotion get in the way of value. I guess this sounds pretty hard-ar$ed but it is what business is all about. :rolleyes:
YOTT
BINGO... great first paragraph here....2nd paragraph well done...Quote:
corran-
I'm curious.... you seem to base your decisions almost purely on technical analysis when it comes to shares and then almost purely on fundamental analysis when it comes to property. Maybe thats a system that works for you but for someone who is quite outspoken on the advantages of technical investing, it seems a bit inconsistent to me.
.....
fair enough.... I guess it depends on how long you think it's going to take before we see the bottom of the cycle. I think we've got a long, long way to go, so what might seem a bargin now may look very overpriced in a year or two's time.
I think the first paragraph is wrapped up nicely....This is exactly what I have been thinking when I said... "This is not the trading mentaility MD has taught us all"... HE is usually a fundamental analyst.... BUT, HE Invests in housing on a new set of rules....all His fundamentals have blown out the window...
....
Readers must pay extreme caution when They listen to some of these bulls... If Mortgagee sales are around now, then whats going to happen in a years time?... You will get fleeced if you take on a mortgagee sale now, no matter how cheap it appears... look at whats to come, personally I take on no risk by sitting back, waiting and placing my money at a later stage on a sure bet, and a bargain....
As we all know MD, when panic sets in fundamentals fly out the window...
This was quoted from a flamboyant ST poster...Quote:
Houses are a bargain at any time of the cycle, as any shrewed investor in that business knows.
This is so wrong that im actually chuckling over here...
are you for real? that 300k house, I will pick up for 200k....
that 560k auckland average house price value will be 350-375k when this is over....(big call)
are you yanking my chain? what Im talking about is a dead cert here... We have a crash coming... I got this game down, all that and a bag of chips... We have a crash coming, someone sees an early mortgagee sales, starts jumping up and down rubbing their hands...
Oh golly gosh, It really proves that you dont have to be smart to be rich off housing...
....
All I can say is listen to me, I'll let you all know when Im getting in, when Im getting ready to get in... Hopefully the real brains will come together and make some mighty good calls on entry times as we start to see this unfold and gather in more information... at this stage im thinking 4-5 years...
These things always go on longer than anyone (apart from myself) first think.... I am not biased, because I am not currently in property...
I will readdress my position as new information comes along...
walk around your neighbourhood and tell me if you think it is time to prematurely start rubbing your hands...?
Im telling you... when this is over there will be no groves left on my hands for all that rubbing...
lata...
:cool:
.^sc
Hi Shrewdy,
I suspect he didnt mean what he wrote and probably meant
" A bargain can be found at any time in the cycle, as any shrewed investor in that business knows. "
Exactly right STRAT. There is always an excuse to delay looking to find your first property investment. All the winners i seem to know have property bought at various times in the cycle. All the losers i meet always find an excuse not to own property.
Its a pointless debate in bad times builders stop building property then rises in price followed by the over supply and downtrend. SHREWDY YOU CAN FIND A BARGAIN AT ANY TIME END OF STORY. Macdunk
Hi Doc, I think this debate could go on forever with no conclusion but no harm in going a little further. The key point in your post for me was "my money' and for me there in lies the key. While Im not advocating extreme negitive gearing and such like. The point is a property bought at a good price ( a bargain ) at any stage in in the cycle that is cash flow positive is a fairly safe investment with great leverage.
40k invested in the bank at 7% pa will return $2800pa. As a 10% deposit on a cashflow positive/neutrol property valued at $400,000. average anual capital gains would only have to be less than 1.0% pa to beat the bank.
Except you'd need to be pulling in at least $700 a week in rent. Is this realsitic? If you can get $350 in rent you would need at least a 4% growth in your property value to beat the bank. And that doesn’t include repairs and maintenance, rates and insurance and the hassle of tenants.
Hi Minimoke. The answer is probably not depending on where you are looking and what you are looking for etc.and numbers can be adjusted ie deposit total price etc.
As I remarked in an earlier post to Shrewdy. If you cant find a property that wipes its own **** then that in its self answers the question, wether to buy or not. I also asked Shrewdy to supply or create a set of individual circumstances for further discussion as these directly and dramaticly alter the bottom line.
I agree. But I reckon 99.9% of property investors have had their sights set on capital gain while pleading they are in it for the income. These folks will start to come unstuck as their fixed rates come up for renewal and rents haven’t risen enough to cover the rise.
Getting 7%+ return on your first property investment today is going to be a hard one – the house bargains will be out there but you still need the rent to cover the costs. But buying your first house investment is a totally different discussion from buying your first home.
Absolutely its all about the capital gain and any property investor who says othewize is full of **** but its a longer working time frame than the likes of Share Trading for example and if done right much easier to manage both in terms of expences and time IMO. Most people investing dont look further ahead than a few years.
Probably but if its the first one and the person is say 22yo other things need to be taken into account. For example. The weekly rent bill is gone. If one takes on flatmates the overheads change. This is how I looked at it when I was that age and managed to make it work. Back then the same talk of "the market will fall" was all around and interest rates were at 18%. They did fall back a small amount over a year or two and then flat for a few more then on up again. Thing is I didnt even notice I was to busy living to worry about the annual fluctuations in a ten year plan.
This is how I did it too with one of my earlier properties (and I recall the pig ugly flatmate in desperate times - but that's another story). However you can't do this and expect to get any tax relief. This is essentially a path towards owning your own home - which hopefully leverages you into bigger and better homes in the future as well as equity on which you can borrow. It isn't an "investment" property.
I think thats a matter of perspective Minimoke. For most kiwis their home is the biggest single investment of any kind and Shrewdy who started the thread is certainly looking at his first purchase as an investment I would say. At the end of the day there is more than one way to skin a cat and no reason why someone should use the same strategy each time they buy. For me my own personal situation has taken presedence in any purchase decision over the state of the RE cycle and I guess thats my underlining point .
We are not looking for businesses, we are looking for a foot in the door... we are first homebuyers.... you businessmen, and business woman need to take note of the difference...One foot in the door now looks better than ever for us....Quote:
I guess this sounds pretty hard-ar$ed but it is what business is all about.
" A bargain can be found at any time in the cycle, as any shrewed investor in that business knows. "
at very very worst housing will drop 10-20% over the next 2 years and sideways for a further two years...
:cool:
.^sc
Hey Shrewdie, I wasn't talking about looking for businesses... Everytime I get money in or pay money out, I look at it as a business transaction.
If I want a new plasma tv, I get around to see where I can get the best value for money, same with buying a car or a house to live in. It might be a private transaction to me, but you can guarantee the person on the other end of the transaction is looking at getting the most dosh for the deal, just as I'm looking at paying as little as possible....
It's all business to me..
YOTT
Hi Strat. My home isn’t an investment and here’s why.
It doesn’t create an income, indeed it is cash flow negative and always will be.
It doesn’t increase in value. Because I am likely to sell / buy my next home in the same market which will also, hopefully increased in value.
I’m emotionally tied to my home. I actually think I have quite a nice one.
I won’t get a return from it. My kids might when I depart this world, but I won’t.
Is there a point where it drops in value that I would quit it. No
But what I do have is a tool with which I can gear my assets and liabilities – enabling me to focus on real investments.
And there in lies the answer to your problem. Shrewdy – what does having a “home” mean to you. If it means you get to choose where you live, how long you live there, the colour of the walls and who you have living with you then buying can make sense.
One thing’s for sure – you won’t be in your first home forever - from your posts I give you three years. It doesn’t matter if the market drops 30% in the next few years if you want to buy another home because all other homes will have dropped in value as well.
However if you are thinking of travelling you need to be in a position to either sell your house and recoup your expenditure or rent it out to cover your costs. You are also using the “we” into your posts which suggests some thought has to be given into putting your money into a pretty illiquid asset.
And YOTT is dead right – once you’ve made the decision to buy shop around for the best value. I got my plasma by working out exactly what I wanted and waiting for the xmas sales, whereas a rellie waited till a few weeks ago, got suckered by the salesman and bought one that was way over specced for 2.5 times what I paid. Same applies to homes and housing.
SHOPPING ABOUT FOR THE BEST VALUE. that is what it all boils down to at any time in the cycle. I wanted to buy an airconditioning system for my house. Looked up google for make and model with recommended price. Phoned up one retailer asked them to fax me the builders price for cash and carry. Phoned up three or four other retailers giving them the cheapest cash and carry price and asked them to beat it.
I then took the very lowest price to my local outlet told them what i had done and said get five bucks under that price and get me one in. I saved a few hundred dollars making a few ph calls. Buying a house is like that. You must get in with a few agents to keep close watch. I had dealings in a block of land that was being listed at a ridiculous low price in a family fued. it was listed and sold in half an hour then resold a few weeks later.
To have agents on your side looking out for you is the way to find real bargains at any time in the cycle. Most people wont make the initial sacrifice, bleat on about how hard it all is, get married and have kids before they have a house. Even a stupid bird knows to build a nest before it lays eggs. Macdunk
hmmm..... maybe I need to start wearing a tin foil hat but I reckon a 20% drop will be the minimum, I think prices in many areas will drop by 30% or more.
In NZ, someone on the median income needs to shell out 6.3 times their salary to buy the median priced house. I reckon there's no way that level of unaffordability can continue, maybe it can for a while but not indefinitely... Even if it dropped down to 4.3 that would still be rated as seriously unaffordable.
I think we'll see nominal house prices suffering relatively small drops, but real house prices dropping significantly (>30% from peak) due to rising inflation.
I find this thread most interesting in that it seems to be sorting the do-ers from the gunner-dos.
I also find it interesting that there is so much focus on 'the market this' and 'the market that'.
In reality the housing market is a bit of a dog eat dog world out there. So much depends on how urgent a buyer's or seller's need is. I will use as an example a house for sale in a small new Nth Shore subdivision close to me.
A spec home was built last year by the developer, four bedrooms, double garage, small section, 13 minutes to Auck CBD in off peak traffic. House sold in Sept/Oct '07 for $590,000 to a well educated, senior position new immigrant. (Sorry, can't be more specific than that).
Moving to NZ from a rural environment in England, the owner and family decided that they didn't like living in Auckland, so they transferred to ChCh and bought a few acres close to the city. The house is now on the market. I wandered in to have a look last weekend during an open home and was told that the owner realised now that he would have to take a loss on the place. He bought it 2 weeks after arriving in NZ and offered a cash deal $1,000 more than the current offer that was on the table.
He is hoping to get about $550,000 for the place that now sits empty.
If I was looking for a place around that sort of price, I would be hitting it with a real low-ball offer and then wait and see what happens.
In essence, I guess what I am trying to say is, and I agree with macdunk, there are bargains everywhere, you've just got to look for them, make a move... then wait.
YOTT
A few weeks back I got very lucky...
My cousins flatmate is a mortgage broker and I found out all the answers to my questions in just 10 minutes...
I know just how to get a mortgagee sale, where to get one, and what I have to do to get one...
Mortgagee sales maybe one exception to the rule as we go forward over the next few years...
SO I will give alittle back to the bulls for pulling this one out of the bag...
I have much respect for my business men and woman on this thread who continue to remain bullish on housing.... over the next 15 years I only see the baby boomer issue as the underlying issue to how the housing market and in particular how the stockmarket will perform...
I suspect foreign ownership will drive this market...
I am extremely bearish on the long term prospects of the stockmarket because of baby boomers and my time is running out for investment...
....
I personally will remove all the risk of current small windowed opportunities in the housing market (bargain buying) by holding out....I will chance my hand at much better deals as the next few years roll on.... Im flush with cash, and I can raise substantial amounts of cash without the need of my friend Mackdunk...:D
I apologise for not being able to answer all questions...
This thread is just chokka full of comments and needed replys...
comments are welcome...
:cool:
.^sc
Hi Shrewdy,
At the end of the day the way you play this out depends on all other aspects of your financial situation as much if not more than the state of the Market. Wether they believe or admit it everyones opinion is derived from their own personal circumstances. You are a smart fella and Im sure your plan will work for you.:D
The fact you are up to your eyeballs in cash at your age is testimony to that ;)
By the way, Serpie said the Duct tape is in the mail and that I have to apply it myself :eek:
YOTT "I find this thread most interesting in that it seems to be sorting the do-ers from the gunner-dos." Actually I find it disappointing the same old procrastinators are still posting the same old excuses...
".....I agree with macdunk, there are bargains everywhere, you've just got to look for them, make a move..." Yep there's a bargain around every corner, you just have to be able to recognise it. Check my post here...http://www.sharetrader.co.nz/showthr...?t=4419&page=5
Cheers all
JK
I reckon property is stuffed for now, REINZ can put all the spin they like, sales were down about 30% in January 2008 from Janaury 2007 and they say it was because its holiday season. Sorry REINZ its holiday season every January for as long as I can remember!
Come on steve,
we have the BuSiNeSs community reading/watching/listening... im not about to steal their thunder... the idea ive been told is very simple and theres no doubt that thinking through the idea is straight forward, I guess its abit easier when being told........ To be honest the idea is so simple that I would look stupid for saying it....
When, I was In America Last year in the first half, west coast only... Housing was so bad that these mortgagee sales were advertised regulary on the TV... This was a bad time for these types of sales as the problem has only gotten worse as time has passed...
AND, From what we have seen here, it doesnot take a real brain to make it in housing as long as you can create abit of leverage, and have time to ride out a Bear market which never exceed a bull... The current bear is years late... The bull has been pushed further which inturn will push the bear for longer and harder..
In the History of Housing NZ it has never been a better time to be a bear than Right now...
Im going to hang this JOE KID out to dry, sorry to speak...
I hope he is around to face up in one/two years time...
:cool:
^sc
shrewdy, let me stand in for JOE KING and tell you how this mysterious mortgagee system works from his position. I know this is how you go about it JOE, its how we all do it.
Mortgagee auction is a cash sale with no conditions. Chattels are not gauranteed. FIRST STEP, JOE arranges finance on another property to uplift if required.
He has been in touch with the various agents who specialize in this, plus keeping close watch on advertised auctions and open homes.
Anything of interest he contacts the poor bastard being turfed out, gets his viewpoint, and intention going forward.
He then sits down at the auction as a cash buyer, and bids up to one third less than market value. If he gets it, he knows and is friendly with the past owner, who might want to be a tenant.
The bastard in this is the bank, Joe gives his new tenant a chance to buy back.
Thats how JOE works shrewdy at any stage in the cycle. Come back at me JOE thats how we all do it no secret system, time the market, or whatever,the people that cant see it never do it so who cares. Macdunk
A mate of mine who operates from Harcourts Papanui told me target for the month was 70 sales down from 120 Febuary last year. It was unfortunate because I rung him to get some MAKO @ .50 cent but has been so busy listing properties that he hadn't the time to look into it. Quite gutted now so I would guess he knows hes will take a severe haircut in commissions.
Joeking is a smart man, he disclosed that he sold 31 of his houses...Quote:
Thats how JOE works shrewdy at any stage in the cycle
:p
.^sc
You can take alot of risk out of housing investment by waiting... let me explain...
whats the point of sticking your neck out now and having to search hard for a bargain.. In a few years bargains will be all over...
interest rates will top out and fall which will lower interest payments...
Bargains at the bottom of a bear cycle beat any bargain in any other part of the cycle... I have accepted that bargains can be found at any stage of the cycle including at the very top of a bull, as posters here say....
The bulls and Buffs here are in the top echalon in the field of housing investment... for all other potential 1st homebuyers like myself.... why take the risk of sticking your neck out?
and aaahhhhh harrrrr.... at the bottom I will be able to start leveraging one house off the next... Wheres the leverage going if you buy now and house prices are falling...
:cool:
.^sc
Sector Surfa They really need to hammer the lesson home with A 0.5% rise next meeting then they can posibly sit on there hands until 2009. Otherwise the housing market will just pick up again in a couple of months time.
Well it looks like this time it might be for real...
Auctions take a hammering
By Esther Harward, Kevin Stent and Lois Watson - Sunday Star Times | Sunday, 02 March 2008
The cooling property market was evident in house auctions across the country last week.
The Sunday Star-Times went to auctions in Auckland, Wellington and Christchurch and watched 21 homes go under the hammer.
But not one sold and many struggled to attract any bids.
The properties ranged from low-budget apartments to upmarket mansions and by Friday none had been sold.
Barfoots' Auckland auction manager Tim Carter said so far this year about 30% of homes had sold at auction compared to 60% last year.
AUCKLAND
14 Scarborough Tce, Parnell
Three bedrooms, study, landscaped gardens, designer kitchen
CV: $860,000, passed in, no bids
121A St Johns Rd, Meadowbank
Two-bedroom bungalow, modern kitchen
CV: $330,000, passed in, no bids
53A Clarendon Rd, St Heliers
Three bedrooms, rumpus room, landscaped gardens and private courtyard
CV: $810,000, passed in, no bids
5R Dryden Pl, Ellerslie
Two-bedroom terraced apartment on two levels, two car parks, sunny courtyard
CV: $240,000, passed in, no bids
19A Riddell Rd, Glendowie
Two-level stucco townhouse with four bedrooms, two bathrooms
CV: $570,000, passed in at $560,000
54 Taniwha St, Wai o Taiki Bay
Ex-state weatherboard house, large 837sqm section, new kitchen and marketed as a "do up", two bedrooms
CV: $320,000, passed in at $350,000
14A Challenger St, St Heliers
Large stucco family home on two levels, tropical garden and outdoor dining area, walk to beach, four bedrooms
CV: $1.5 million, passed in at $1.75m
3 Edwards Rd, Grey Lynn
Renovated weatherboard bungalow with polished floors and outdoor entertaining area, three bedrooms
CV: $590,000, passed in, no bids
205/20 Upper Queen St, Auckland City
Two-bedroom terraced apartment with courtyard and car park
CV: $230,000, passed in at $220,000
165 Paritai Dr, Orakei
Two-bedroom weatherboard cottage with views to Hobson Bay
CV: $1.17m, passed in, no bids
5, 5A and 5B Speight Rd, Kohimarama
Large level section divided into three separate flats, close to beach and cafes
CV: $1.115m, passed in at $1.1m
CHRISTCHURCH
578 Madras St, St Albans
A three bedroom renovated character cottage, polished wooden floors and french doors opening to a sunny garden
CV: $301,000, passed in at $292,000
326 & 330 Papanui Rd, Merivale
Four-bedroom house with library and formal living area, plus a self-contained two-bedroom flat on 2670sqm of park-like grounds
CV: $2.5m, passed in, no bids
45 Cox St, Merivale
Five-bedroom house with a games room, temperature-controlled wine cellar and inground pool
CV: $1.5m, passed in, no bids
384A Memorial Ave, Burnside
Two storey two-year-old home with four bedrooms
CV: $605,000, passed in at $650,000
302 Gardiners Rd, Belfast
Four-bedroom family home on a 1492sqm section
CV: $946,000, passed in at $625,000
WELLINGTON
140 Onslow Rd, Khandallah
Three-bedroom renovated single level villa
CV: $560,000, passed in at $550,000
64a and 64b Barnard St, Wadestown
Home and income property on two levels and a large section with spectacular harbour views
CV: $535,000, passed in at $450,000
3A Madras St, Khandallah
Two-bedroom flat
CV: not available, passed in at $268,000
37B Ngaio Rd, Kelburn
Three-bedroom executive townhouse
CV: $740,000, passed in at $660,000
3B Rangoon St, Khandallah
New two-bedroom townhouse
CV: $340,000, passed in at $360,000
http://www.stuff.co.nz/sundaystartim...2352a6442.html
Bad advice based on retrospective data. Most economic data is a few months behind. Things like the housing downturn is happening now and looks to continue at these levels of interest rates.
Also it is election year this year, and the banks are doing the job for the RB.
So, until I am asked to be governor of the reserve bank, I believe that interest rates will stay as they are. If was in charge I would drop them back 0.25%.
I posted this on the other channel, but will repeat it here cos it sits better on this thread...
This is probably more for comment on the property market threads, but in for a penny... :D
Wife and I have been tyre-kicking the housing market for a few years. Now that we've got another sprog on the way it really IS time to upsize. Problem is, price expectations are now extremely high. My sense is that this is at least in part to agents giving sellers unrealistic expectations.
What we have now is a large and growing disconnect between what the vendors expect, and what the buyer is perceiving as value. Vendors want high prices, buyers see those high prices, aren't prepared to pay them and simply won't engage in the commercial process. I saw this nicely expressed in a recent Dom-Post sharemarket column which described this phenomenon and called it "market inertia". I think it very accurately describes the current property market.
Comment earlier about how much of a drop it would take to knock out people's equity is very relevant. This is exactly what occurred in UK in the early 1990s. There was a rush on purchasing, fuelled by Thatcher govt policies, cheap money etc. Then the economy stalled (around the pound crisis of 92), and huge numbers of people went into negative (my wife's cousin among them). Their market was in the doldrums for about six years.
The bugger about the current situation is, my rateable value has just gone up, and so have the rates. Now the market's tanking, my rates should go down too ... shouldn't they :(
Hi Placebo
Thought I'd just respond to one or two of your comments and queries. Incidently, I'm out of the property market and have no vested interest in the subject.
First, if your rates went up by more than the average for your area, you should be pleased because it means your RV went up by more than average.
The market at present must be frustrating, because, as you say, there is a refusal to engage and face realities. You can save quite a bit of frustration by making it quite clear at the outset, to the vendors' agent, that you believe the market is in decline, that you will be looking for very good value, that you study the market closely via internet sites, and that you do not want to deal with vendors or agents who have unrealistic expectations. Saying this clearly, and firmly, but politely, is a bit of a skill. One method I have found useful is to have it written down, along with info about what you are looking for and your personal circumstances. It takes the emotion out, and the agent can consider things at their leisure.
I well remember that negative equity situation in England. One of my english relatives who I went to visit around then, took 2 years to sell her nice little house in a nice London suburb!
If you are still based in the Wellington area, be very careful. The influence of demographics on the housing market is huge, and Wellington has already got net population outflows. John Key has made it clear that he believes there is a lot of unnecessary govt spending in Wgtn, so the outflow may grow.
Friends still in property in Chch tell me that some places are on the market below RV.
Good luck and luv your Spike quote
Comments from agents I have talked to said the phone is dead at the moment. But I went to an open home in a nice villa in inner city Auckland on Sunday and quite a few people had been through. To talk about the market as one beast is a bit simplistic. Dare I say location location location is a well worn saying but I noticed three places valued in the $800k's have sold in the last few weeks near this nice villa.
I recall the English situation too. My inderstanding is that it was caused by the Thatcher govt meddling in the property market causing over-valuations, then policies changed and the market collapsed. Hopefully the Govt will stay out of the NZ market and the ride won't be so wild.
Placebo
I’m not sure you should be too concerned. You are essentially buying and selling in the same market. Your situation is different from the first home owner who is risking taking a drop in value on the chin.
I’d be suggesting you sell now. You can then rent then buy at your leisure. Sure you’ll have a bit of a hassle moving twice but you’ll bin a pile of junk along the way. And you’ll save yourself the stress of finding a place you love when your current place isn’t sold. Shopping at leisure when cash is king puts you in a strong position – especially if values do drop.
And remember RV is an arbitrary figure that simply determines your cut of financing council activities - it has little to do with the real value of your home.
For all of you waiting for a significant drop in the property market, Helen says that it isn't going to happen.
Clark plays down property fears
The Government is not expecting a property crash, Prime Minister Helen Clark says.
Well, not before the election at least! ;)
Hi Ned, minimoke,
Yes I have to say the current situation for homeowners wanting to shift is bittersweet. You are in essentially a buyers' market.... but you are also a seller! I know that I will probably have negotiating power in looking for a new house... but will have to lower my expectations of selling my current house. And I will be faced with purchasing an asset that I am convinced is going to depreciate...
The prospect of selling to rent doesn't appeal, though you can argue it makes good economic sense in a declining market. It's the thought of shifting twice with three kids in tow... but as you say, there will be the mother of all garage sales en route!
I've always had a chuckle at published RV levels - they are fairly meaningless to me until I come to sell... at which point they are still meaningless, if an interesting comparison to what the market actually thinks of value. In the meantime the council takes great interest in RV levels in deciding how much to tax me. In that respect I would much rather the RV stayed low as it has little to no bearing on sales prices but much impact on the cost of living.
Been there, done that and would absolutely, unreservedly do it again. A whole pile of reasons but there was some satisfaction in sitting back in a place that needed me to spend no time on it other than cleaning and gardens was very satisfying. Kids look back on it as an adventure and we remember with joy the experience we had while renting. I also will never use a real estate agent and will never buy without having sold first – some of my simple lessons learnt in life.
Never say never. We sold a house in 1999 when the market was in the doldrums for $10k less than we paid for it 2 years earlier. We had already bought a house and had bridging finance but it was the best thing we ever did. Sold it last year to a developer for over 4 times what we paid and the real estate agent was brilliant. Argue about the high fees if you like but her marketing skills really paid off. Mind you, she was the 4th agent we had...
Currently renting and not liking it that much (enjoying the interest rates though) but prepared to wait for the right house at the right price.
Minimoke, your attitude towards renting in the interim is great! If the kids can see it as an adventure of some sort, you're in a great space. We bought a camper van and went on the road for seven months, the kids thought it was great, so did we. So did the dog.
Expert advice: Wait for housing crisis sales
5:00AM Sunday March 09, 2008
By Anna Rushworth
Jana Dixon has looked at more than 100 properties. Photo / Herald on Sunday
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Don't buy yet, don't sell right now, and polish the nugget you're sitting on. That's the key advice from three property gurus who claim to have the good oil on how to prosper in New Zealand's slumping housing market.
With the number of sales down across the country and prices beginning to fall in some areas, investment experts say the time is ripe to study the market and wait for the bargains to hit.
They say first-time home hunters should use the next six months to save a better deposit.
Investors should improve the properties already on their books and look at raising rents to make up any shortfalls.
http://www.nzherald.co.nz/section/1/...ectid=10497016
A little off topic but thought worthy of mention a news item on TV1 tonight showing the shameful way TV manipulates the facts to suit their slant on things. It would seem a whole bunch of people in Christchirch are up in arms about a 24% rent rise by Christchurch Council for their stste houses. Sounded bad and unfair till they ley slip how much of a rise that was.
$22 per week
Yup thats right, a 3 bedroom house for $88 a week will now cost $100.
Not sure what a house costs down there on the mainland but you couldnt rent a tent for that up here.
So all you state home dwellers welcome to the almost real world, You are still getting a 50% discount.
Median rent for a 3 bedroom house in Addington is $300 per week. See:
http://www.dbh.govt.nz/market-rent?L...0/%20Addington