Looks pretty variable down one month up the next.

I do believe as we are now in November 2009 we are at the point in time that Bernard predicted a 30% fall would have occurred (later revised to 15%)

Could we get a figure on what the actual fall was in this 2 year period.

Interestings - sales down, listings up, price up. I would say Barfoots are doings a good job on the face of it talking up the market.

Anecdotally, from what I see in Christchurch it appears to be the high end properties looking to sell ( and trade down?). So it makes sense that the median price will be up, as sales fall in that environment.
And I take your point above ( who knows?!), Murray. But I'm not sure, even Bernard, saw the GFC meltdown and slashed interest rates coming when he made his call . Oct '07 - Sept '08 ? A LOT happened.

@martin

I believe it useful to see a track record on commentators so you can use that information the next time it happens. Every so often I think that a website where people can log commentors predictions and then update them with what actually happened would be useful (one may exist I'm not sure.)

I also dubious about open ended predictions with no timeframe (which to his credit Bernard didn't do.) Lots of people will say 'just wait the crash is coming' but that can often not be helpful because we don't know if the crash is coming in 2 months or 10 years. Advice to sell your property in 2008 was bad advice as you could have sold in 2009 and got a better price. And if the crash happens in 2011 then selling in 2008 was really bad advice

i'd say over procrastination with the rise in stock, the dumbstruck bug kicks in and it's information overload shut down mode - less stock - easier to make a decision, but prices still on the rise which is good to see, once people stop stalling and see that action is really taking place all the gears will start spinning and it will be game on...

I agree with Harriet. Potential & active landlords will be avoiding doing any buying, until they see what changes Wild Bill brings in regarding taxation for rentals & the various rorts that have kept the floor under the rental market. After all, he has been providing plenty of signals. However, the upper end of the market largely unaffected. That would correlate with "price up, sales down"

I've got a question on this. Was watching the news last night and saw Bill English once again alluding to future changes in taxation that would be designed to shift NZ's investment focus away from property, property, property and onto more productive areas of the economy. I largely agree with the concept, but I don't see how it is going to work.

Example: we had a guy come around yesterday to give us a quote on installing a heat-pump. Just chatting away, he told us that he has bought and sold 6 properties in the last 2 years and made a small fortune doing it.

This is a chap who strikes me as being representative of many Kiwi property investors. As a day job he installs heat pumps. On the side, he makes his real money buying and selling property. He was a nice bloke, handy with his hands (like most Kiwi's) and probably installs a mean heat pump, but he was certainly no financial guru.

Now if the government succesfully discourage our "heat pump installer" demographic from investing in property, what are they going to invest in as an alternative? Turn to stocks and shares? No chance, it's viewed as too risky and confusing. Turn to investing in small business? No chance, it's too risky and very difficult to raise any funding anyway, unless it's backed by property. I'm guessing that they'll just carry on investing in property, but maybe to a lesser extent.

What I'm trying to say is that surely there needs to be a multi-pronged approach by the government? Yes, on one hand increase investment property associated taxation by all means. But on the other hand, can you please provide some kind of investment scheme that the masses can understand, get excited about and involved in?

I don't know what it needs to be, but it'll probably help if you can see a 15% return in the first year just by painting it.

@ Mozart:
Maybe it's just a case of rewarding savers by upping the interest rates across the board ( capital ratios upped for the banks), and dropping the tax on interest receieved. Sure, it's another tax distortion, but it may be worth a short run of that policy to 'educate' your aircon man? Even my boss, who runs an SME empoying the 10 of us, absolutely refuses to believe that its even possible for property prices to fall in NZ...and he's Japanese! You'd have thought that he would have seen it first hand!

Mozart,
If there is a determination to do something, then it could be. Do you agree?

Martin, Actor and other bulls,

"Yeah I'd like to know that too. It's all very well for various bloggers to make statements in other blogs about impending housing doom and bemoan the ignorance of the general public who are "unaware they're in a housing bubble" but nevertheless those people who purchased property still seem like they're going to be the winners "“ again."

Surely you cant expect existing prices to be a good indicator of long term health given they are bouyed to a large degree by historically low interest rates. The market was falling BEFORE the GFC. Stupidly low interest rates deisgned to stimulate the economy has reinflated the housing bubble again. When they start rising quickly again nextyear and mortgage rates are over 9% THEN we can be in a position to judge the health of the market.

and lets not forget the other factor hanging over property, policy changes. There now seems to be near universal acceptance in the media that sky high house prices are killing the economy, Bill English is admitting the same. This new sentiment combined with a need to get additional tax from somewhere means there has to be a BIG chance of some kind of tax clampdown on the residential property market. This will apply further downward pressure. Whether its land tax, proper CG tax or ring fencing ppty losses is immaterial in my view. So if you are an investor you need to be on notice that your free ride from the IRD may be coming to an end. Could not happen soon enough.

Mozart

It isn't up to the government to provide schemes for the average bloke to make a fortune in investing. It is their job to provide a regulatory and tax environment where businesses and indivduals are genreally treated equal - a level playing field.

The problem with property in NZ is that the field has been tilted so that it is seen (and largely has been) more rewarding than other assets and forms of investments. People see it as a free lunch becuse of all the things discussed ad finitum on this site.

What is creating is a huge rift between the property haves and have nots which is unsustainable without further distorting the economy. Your heat pump man (along with other property investors) may just need to educate themselves on other forms of investment or accept lower returns (banks deposits) in the furture.

It certainly isn't up to the government to take a role in providing alternatives - although if Labour was still hear I am sure they would have a crack (oh that's right they did - by taking higher taxes to invest in bigger government).

Actually, thinking about it, I personally know a bunch of people who have decided to invest in property just to reap the benefits of capital gains and boost their nest egg.

One family bought a little place on the Kapiti coast and used it as an opportunity to teach their 12 year old son the benefits of investing. He stumped up a $1000 (yeah, I know, what 12 year old has a $1000?) and was given a percentage of the property in conjunction with the parents. They would all then zoom up to the Kapiti Coast from Wellington every weekend and renovate - the son included. 12 months later they sold it and turned a tidy profit - their son is now a huge fan of investing in property and he hasn't even got a job yet.

It's great to teach your kids the value of money and investing, but it highlighted to me how entrenched the Property Investment culture is in NZ. It's going to take more than a few changes in tax law to turn things around, in my humble opinion.

Alex,
Yes, that is why I prefer to read this website before reading some other media. I think for this case, you have got a good reporting especially to put up the drop of the sales of 5% in October etc. I heard from news about the rising house prices but not the drop of sales as your indicated here.

Alex, this is great reporting. Keep it up.

Do you have any data on the latest unemployment rates? Do we not have unemployment data as frequently as the housing news?

veedub,
It seems that what you illustrated the kind of life is "a dream". Maybe, a dream that is going to be everlasting, feeling great/high and hard to be awaken.

Quiz question: What could break such a dream?

Russell,
agree on the trend. Its a frenzy in Central Auckland at the moment.

Any bets on the month to month increase Oct to Nov?

Investing in property is too easy. It has dumbed-down Kiwis in general. Just because it is hard or not fair, does not mean the Govt shouldn't try to pull back Kiwi's appetite on property. It won't be popular with the rich, but it will be better for those that can't afford property right now. If you have spare cash and don't know what to do with it, then educate yourself on where to invest it.
Interesting story on the kid, Mozart.

I'm tired of hearing articles from Barfoots and Tony Alexander harping on about the property market.. People need to listen to their own bank account balance and listen to unbiased, responsible advice - rather than listen to the market. The lesson to be learnt is the one that no one is talking much about - and that's losing your home because you lost your job or you didn't account for the interest rates and inflation.

Anyone out there in real estate land have any idea what costal property prices around Auckland is doing at the moment esp the west coast of auckland and omaha?

@Mozart:
I could put my finger on it, re your Aircondtioner man and his R/E, but I recall it now!
Back in ( pick a month mid year, here) '29, market ramper extraordinaairre, JP Morgan's, stock broker asked him why he has sold ALL his stocks, as " Look, the stock market is still gone up ever since you sold!". JP turned to him and said" when the cab driver tells me about how much he has made out of the stock market...It's time for me to get out"

Bevan : Decades of socialist governments ( both Labour and National ) have dumbed down Kiwis in general . You don't have to think , plan , take any responsibilty for your actions . Nanny state will support you cradle to grave . ACC / WINZ / take your pick , there is a smorgasbord of ministries to hold your hand , and guide you tenderly through life . The last Labour Gumnut got 3 terms , 'cos they kept offering ever bigger bribes to the gullible voters . And because National , in opposition , were as pathetic , as they now are in power . Labour / National : Dumb & Dumber !

Tony Alexander is particularly annoying when he refers to the prophets of doom and their predictions of 40% falls in property prices. Much the same is heard across the Tasman who have their own high-profile bank economists cheer-leading property and peripheral academics and commentators who had similar stories of mortgage armaggeddon.

I would suggest that TA is more concerned about his own ego and reputation than actually presenting a balanced opinion on the property market. But who gives a toss really. If people can't understand that there's a huge disconnect between what the average man is being told about the supply of property; the bank's fiscal positions; and the relative health of the Antipodean economies, then they need to stand by their own decisions. There is still a strong case for taking a contrarian position on this.

The single biggest factor during the working life of a Kiwi that will ultimately lead to retirement wealth is owning property. Without it you will be living on breadcrumbs at age 65. It's always been that way and always will in the future.

@ Russell

Spot on!

@ Veedub

All of your research based arguments make sense - but I just don't think you'll move the mountain to Mohamed. Instead of fighting the inclination of many NZ's to invest in property (solid, real, tangible and even when collapsing still worth something) why not buy a property yourself - maybe not in central Wellington - but somewhere and in a few years time be glad that you didn't heed your own advice?

@GBM - there are houses here in Wgtn that have been on the market for nearly a year now. The vendor obviously isn't prepared to "meet the market".

According to my modest kiwisaver calculator I should be able to comfortably buy a house freehold when I'm 65. No mortgage ever. Hopefully the economy should be balanced by then (2050).

Fine wally ...all calculators are time adjusted and I did mention a balanced economy.

jimmy - "the MOST important component is the PRICE you pay now" - as an investor, I agree, since to me yield is what matters NOW - however, the equation of inflation over time does dramatic things, and after a certain amount of time it becomes irrelevant. I'm not sure someone that bought a property in 1990 really cares whether they paid $80k, $90k or $100k for it.

veedub/Marky Mark - "We seem to have reached the point where most people equate "getting on with life" with 'spending the maximum amount you can possibly afford on buying a house'." - you don't have to spend everything you've got to buy a house, the people that do are the ones that come unstuck. It pays to start with what you can afford, many here want to start half way up the ladder. There's no point complaining about the prices of SUVs if all you can afford is the repayments on a hatch-back....

Would Tony Alexander give suuport to me to borrow $400k against my $100k cash to buy a house? The chances are he would be delighted.
Would he support my request to borrow that same $400k to help me build my share portfolio? Stupid question.That is the difference that most of us never even think about when comparing investment options.
But there are ways to do so with investment other than property to those with the will -and the reward for risk can be much greater.

To turn around the reliance on property to create your own retirement benefit needs the shock that some have promised. Right now the Barfoots and the Tony Alexanders still sit comfortably on their tuffets (apologies to Miss Muffet) because the spider is still out of sight.
Personally I don't think Bill English is a hairy enough spider to frighten anyone.

I get what you're saying Murray about wanting to start 1/2 way up the ladder. The type of house I would settle for here in Wellington is priced below average so I don't think my sights have been set too high. I've owned 3 houses in my lifetime so far, (two in provincial NZ and one in Brisbane, not all at the same time!) and each one I could afford the repayments on my income alone, in fact the one in Brisbane I took out the mortgage on my own. It was always totally doable, and I lived comfortably. That would not apply now though. I have more deposit (as a percentage of the house price) to throw at a below Wgtn average priced house and it's tight on two above average incomes, and that's in the current low interest environment.

Don't get me wrong, I'm happy for all you people that have made squillions out of property (as I was happy for myself when my Aussie Super BOOMED a few years ago) - but there's something fundamentally wrong when a couple earning good coin, in their mid to late 30s, with $100k deposit have to resort to living in a dump or miles out of town.

Here we have a sad but classic case of delusion. No different to the belief that property prices always go up. That they cannot fall.
http://www.nytimes.com/2009/11/04/world/middleeast/04sensors.html?_r=1

And before you say I should've bought earlier this year, trust me, I was looking hard. It was still unviable, not helped by the fact that the rent we pay is so cheap and I figured that as long as we kept saving hard that doing it the "right way" (saving as much as you can to lessen the amount borrowed) would end up serving us better.

Do I regret not buying earlier this year, now I have the benefit of 20/20 hindsight? No, not at all. Just because something might have been 10% cheaper (or should I say less expensive) it still doesn't make it a bargain when you're racked up to the hilt with debt. What if one of us lost our jobs?

veedub,

you were right not to buy. Its not like the sharemarket. I bought in tot eh ASX in Feb this year because at that point the market was undervalued (eg 8-9% dividends from blue chip companies). 50% gains later its now overvalued so I am selling out. The property market was only slightly less than being the most expensive in history a year back. Even if you could predict a mini bounce, you would face massive transaction costs, hassle etc buying back then and selling now to avoid upcoming falls. Thats another issue with housing, you cant really take advantage of short term fluctuations affected by fear/credit shortages. once bought, you need to hold for a period of time to compensate for the large costs.

veedub - can a "couple earning good coin" not afford a $400k mortgage? At current interest rates, + council rates & insurance you'd be looking at about $550 per week. Ok, so interest rates might hit 8 - 9% in the next year or 2, then you could be up to $700 to $800 per week. I would have thought one income could cover that, with the other income to live off. That's the way my parents always did it, lived off one income, paid mortgages with the other. Or you could aim a bit lower, maybe a $400k house with a $300k mortgage?....

jimmy - "They might have cared if they paid 250,000 for it" - I bought my first house in 1992 for $100k on an income of $10k, 10 times my income, unthinkable..... & at the time I was told inflation was history and property prices were unlikely to rise again....

Murray,

400,000 * .9 = 36,000.
Rates = 1500
maintenance = 5000 per year (if you are lucky)
insurance = 1000
Transactional costs averaged out over 8 years assuming you buy and upgrade as per normal = 16000/8 = 2000

so i come up with about 45,000 - thats about 900 per week BEFORE starting on the principal (I am assuming Veedub wants to own it one day).

the next question is, how much would Veedub have to pay to rent the same place?? 350-400 per week?? Enough said. Housing is a nonsense investment.

"I bought my first house in 1992 for $100k on an income of $10k"¦.."

so what. Its not what you personally earn relative to a house that makes it a good investment, its what the average person earns relative to the average house that matters. Is Bill gates getting a good deal if he pay 15 mill for a place in Glen Innes?? Very affordable.

@ Jimmy, mortgage repayments alone on a $400k mortgage are over $600 p/w! Plus rates and insurance and maintenance (I used a 6.5% interest rate BTW).

That's by the by anyway - my personal decision to not throw about $700+ a week at an average house. Yes, you're right in that we could house ourselves with one income and live off the other - if we wanted to buy a house that desperately. But we don't. And you've entirely missed my point about how with my previous three houses I've bought that it never came to that, in spite of the fact that I had much less of a deposit and interest rates were much higher than they are now. Can you not, even for a moment, see the absurdity in that? Do you honestly think it's wise to commit to purchasing a below average house that sucks up one entire income? Again, what if one of us lost our job? Oh yes, we could sell our house and make a tidy profit!!!

Harriet - the median price for the Canterbury region was around $150k in '99, so you must have bought at the lower end? My first house bought for $100k, spent a further 20k on it and sold in '95 for $155k. Wish I still owned it, as it's now worth about $400k, my mortgage would be almost gone and it would rent for around $300 per week. It took me a while to learn you're better off keeping them than selling them in the long run!....

@ Harriet - that article you supplied the link for makes a lot of sense. There is one thing that could tip the scales though - immigration! Rich immigrants could buy all the BB's houses. Plausible?

@ Small Kev - you're absolutely right. It doesn't help anything. But it's good to be able to discuss different points with like and not-so like minded people :-)

I don't have a dishonest bone in my body, and so hope the "making up facts" jibe wasn't directed at me.

Jimmy - if an 8% gain in house prices since January is anaemic then what will you say in a years time when they are well past the November 2007 false peak?

Veedub - looks like you will be well and truly left behind!

@Russell, don't really care that much. I would just as happily retire in the south of Goa or Thailand for a fraction of the cost. Lots of people do, the cost of living is WAAAAAY less than here and the weather's better too :-) How is that getting left behind???? Add to that, I have not a care in the world currently, and that feels good.

Russell,

"Jimmy "“ about 30% of homes have no mortgage. Only a small number would be geared beyond 60% so the rent vs owning calculations are not at all relevant."

With opinions like that no wonder we have a bubble. Prices are set at the margins. Thats right, those entering the market provide fuel for the market. How many FHBs have >20% deposits??

Russell Says:

"Jimmy "“ if an 8% gain in house prices since January is anaemic then what will you say in a years time when they are well past the November 2007 false peak?"

The 8% is a dead cat bounce helped by artificially low rates. Low rates will be gone by this time next year, so will big capital gains.

Small Kev,

"life goes on and the game has just started "“ again."
as per Rusell, I can see why we have a bubble. It takes a lot of ignorance. Do the maths on household income ratios and try to imagine what will happen if we continue the same house price appreciation as the last 30 (but especially the last 10) years. We will be devoting over 100% of incomes to houses. I guess we can send our kids to work, and we can work weekends if we are not doing that already, and I guess we could go shoot possums for food. It will be worth it though to buy property, even if it costs 10* as much to own as it does to rent. Because you can put up a picture if you like.

on the same day, in the same city, the businessmen seemed to know something that the average JAFA ( and i'm one) Lego toy for R/estate doesnt!

what could that be?

read this fresh link and think http://www.nbr.co.nz/node/114428

and then consider....the IRD are coming for most investors and the median Auck. price is up because there's been more million dollar properties sold thereby skewing the price percentages...check the stats!
sales are down 5%....oooooh

and that was our people for today and now it's back to you, sainso, in the studio !!

agree Rob,

teh IRD are coming and so is the govt with tax changes. Prices have moved to some degree to refelect the tax distortions. Removing these will deal to some portion of the bubble, sentiment and rates with deal to the rest.

I highly doubt my landlord will cash up in the near future - they're BBs (on the older side) and this is their retirement fund. Ironic really. But it's their business if they do, I won't chuck a tanty. I'd simply find somewhere else to rent if it happened. Jimmy's first option sounds better though :-) and I've had itchy feet forever that I don't scratch nearly as much as I'd like to.

@ Small Kev - wow, you're very observant. And thanks for pointing that out to me - might be time to change my lingo!

On Campbell Live tonight - 2 years ago Housing NZ bought a 5 bedroom home in Hamilton's St Andrews for $530,000 and it has been empty ever since. So even the government are contributing to the supply problem pushing up rents and house prices. Unbelievable but true!

Now they are selling it - will they be taxed on the profit?

I totally agree with Kieran
The housing recovery this year is undeniable but I very much see it as a low interest rate fuelled blip.
The economy is still crap. Talked to a lot of business owners recently who are still pretty pessimistic. There is nothing in our economy - save housing - that is strong at the moment.
I don't for a minute believe we are going to have another housing crash or even drop of more than 10%. But I could easily see another dip of 5-10% once interest rates continue to climb, and as the economy fails to pick up beyond a very slow and sluggish recovery. Immigration is likely to drop off in 2010 as kiwis start migrating again to a faster recovering Aussie, and as fewer students / immigrants come here due to the currency

Matt in Auck - I thought you must have bought a house and been to busy mowing lawns and cleaning gutters to be blogging on the net..... ;)
You could be right, which is why I always said sideways crab market for 5 years from 2007. Up a bit, down a bit = sideways. I'm not so sure about the immigration drop-off that you & Kieran are predicting though, National will be pretty keen to stoke the fire in time for the 2011 elections.....

Matt in Auck - interest rates for mortgages will reach record low levels at some point in 2010 - floating probably around 4% or less. If the economy is crap interest rates will come down. NZ Home buyers are very confident that the future of floating mortgage rates is they will remain low or go lower - why else would they be buying or do they all want to "hang pictures."

Matt in Auck and Murray,

Small falls and sideways movements are both plausible scenarios. i dont know why you think larger falls are out of the question though. Surely tax changes would add a bit more downward pressure on top of interest rates rises. And I dont think anyone could seriously think we (or the world) are out of the woods. The best analogy for the world economy is a comatose drug addict who received an adrenalin rush to the heart to start the heart again. The patient is borderline critical/stable with a real proscpect of another heart attack, and best case prospect of slow painstaking recovery. Who knows what is out there? All you can say for sure is that teh more debt there is the more harm when something happens. We are carrying 20% more debt now than 2 years ago. There are 700 trillion dollars of derivatives still out there which wind back to around 7 trillion of assets (whose value is not even required to be marked to market). What happens if all our foreign debtors suddenly pull the plug? It happened to Iceland. If our banks are so strong why the need for Aus/NZ to gurantee deposits and provide liquidity? We are exposed, thats for certain.

So what do i think will happen, I dont know. All I can say is the plausible outlooks for property range from flat to a massive crash. I am hoping for the latter, but either way its better off not to buy.

Cheers Revs, time to look for my dream bit of land by the beach before the next boom :)

To all, I have read these blogs everyday since late 2008; I really enjoy the discussion and I have learnt more about economics and interest rates than any uni lecture could. Many thanks.

Certainly the housing bust/crash for this cycle has been and gone and if the floating rate does reduce further as some bloggers suggest this will increase access of funds and share, commodity and house prices will all rise. All investment markets love certainty and for proerty this comes in the form of Allan Bollard saying floating rates will not raise until 2nd half of 2010.

For me personally I like mortgages as my form of savings. I always used fixed interest rates and ASB allow me to take 10K chunks off my mortgages at any time to allow me to reduce debt. For me my business allows good cash flow which allows me to pay the $200 a week to up on all my rentals while my tenants pay the bulk of my mortgage.

For me house price volatility doesn't affect me. I have no fear of going bankrupt as I am confident I can make my repayments and I always buy and hold. In less than 20 years the propertys are all mine producing a great rental return each week.

I still would miss out on my daily dose of interest.co.nz

regards

http://www.propertytalk.com/forum/showthread.php?p=198106#post198106

jimmy - "the plausible outlooks for property range from flat to a massive crash." - I don't think your "massive crash" will ever happen, governments & central banks will make sure of that. I would say the plausible outlooks for property in NZ in the next few years range from down a few percent to up 20 or 30% as per Infometrics predictions. The plausible outlooks for the next decade range from a small gain to the next boom where prices will be double 2007 by 2017.......

28_yr_old - "In less than 20 years the propertys are all mine producing a great rental return each week" - that's a great attitude to buy rental property with and one that usually gets overlooked - the simple idea's are always best! Many here confuse investing with trading and are hung up on what prices might be next year.....
Personally, I still like to start with a positive cashflow as it speeds up the process, and this is harder now than it used to be but still not impossible. All properties go cashflow positive in time though, I just prefer to jump the queue a bit!....

Joe Blog I have never said anywhere to fix for five years, Im not sure where you get that from. My advice to mortgage holders has always been to sell pay off the mortgage, rent and put your money in the bank earning 4-6% interest rather than -0% capital gain for the last 2-4 years or float and pay off as much principle as possible before higher rates kick in. I can't understand how anybody would think interest rates might come down. The 5 year fixed rate is around 9% banks have a better information on where rates will be than joe blogs on the street and that doesen't mean they expect floating rates to be 9% in 5 years it means they expect floating interest rates to average 9% over the next 5 years which means they expect 9-11% rates at some stage.
Also I note that the barfoot figures are average (mean) not median which is easily distorted by a few higher prices. For example if 10 properties sold for 1,1,2,2,2,2,3,3,10,20 the average is 4.6 but the median is 2 if the next month the figures were the same but 7th house sold for 10 instead of 3 the average would go up to 5.3 but the median would still be 2 so it could just mean there has been a few more higher priced houses sold without effecting the median figures much.

Murray I agree with you about positive cashflow but where are they? If you really search hard you might find a few 8-10% yeilds in a low decile area like otara or taumaranui or gore but the tenants in those areas are very high risk and high maintanace so any investment gain is well deserved but a rental in a average decile area would struggle to get a 5% yeild at best and would require at least 5% capital gains each year just to break even without a 5% gain you would be making a loss, whats the point in taking such a big risk when you could safely earn 4-6% gauranteed in a bank account or even more in the share/bond market with a little bit of financial literacy.

Sam the Man - how good is your maths?

NZ median price Jan 09 $325,000
NZ median price Sep 09 $350,000

increase = 7.69%
how dare Russell round that up to 8%.....

Sam the Man

The must trusted official source - QV says prices up 8% since January!

Inflation is minimal - not even an issue in NZ. Lower mortgage payments make up for it twenty fold anyway.

My mortgage payment is 40% lower than it was a year ago - fixed for 5 years at 5.95%
Costs me way less to own my house than rent it - in fact around 40% of it's rental value.

Mortgage will be paid off in less than 8 years! Then my only housing cost will be rates, insurance and a bit of maintenance. Fully renovated and in Sept 2008 I paid $80,000 less than the last couple purchased it for in 2007 - LOL!

No loss of purchasing power - the price of anything imported is plummetting. A buddy paid $4,800 for his 42 inch Plasma 3 years ago. I just got a 50 inch for $1,400.

No worries here mate!

"Sam the Man "“ how good is your maths?

NZ median price Jan 09 $325,000
NZ median price Sep 09 $350,000

increase = 7.69%
how dare Russell round that up to 8%"¦.."

Oh ok, so if median price is up 7.69% that means an individual houses value during the same period is up 7.68%?

QV index data is the only data that will give you an idea on how the price of an individual house varies over time.

This index as i stated before is up 2.7% from lows after falling 9.7% from highs.

'Gain in house prices', and you use a median monthly sales value to tell you this.

Heres a chart of an individual properties value during the period of 'huge' house price gains:

http://img337.imageshack.us/i/beachhouse.jpg/

[URL=http://img337.imageshack.us/i/beachhouse.jpg/][IMG]http://img337.imageshack.us/img337/2973/beachhouse.jpg[/IMG][/URL]

Yeah mate, thats a big recovery, better go up the mortgage and buy another landrover

I know we've been around this buoy before, Murray re Japan. But here's an interesting article written (2007) before the US crash, predicting same because of the disconnect between rental fundementals and house prices, and it again seems to indicate a massive drop in Japanese house prices between 1990 and today, somthing in the magnitude of 60% peak to trough. ( see graph in body of article).

http://efinancedirectory.com/articles/The_Dangerous_Disconnect_Between_H...

Sam - regarding your link above.... I've usually found QVs "E-Valuer" to be about as accurate as throwing darts blind-folded - they valued one of my properties last year at $375k when I would have been lucky to get $300k.....

John KEY, NATIONAL, ACT, and the IRD...et al... read this internet link below.

tp://www.walletpop.com/blog/2009/11/03/the-taxman-cometh-irs-audits-likely-on-the-rise/?icid=sphere_newsaol_inpage_walletpop

If you want more taxpayers money to pay YOUR debts..., here is a great idea from the USA, where they have an even bigger problems than YOUSE GUYS..

Do not wait...Rodney is right.....

JONKEY...YOU NEED TO DO SOMETHING....ACT.

I suggest that flippers are for swimming, not a NON-TAXABLE quick buck on house sale after a shon-KEY renovation and paint job.

You could start with the house nearby that sold 10 times in as many years.

BUT..... I suggest you start on the people whose main task was to exploit the IRD's lazyness in miss-managing the paint & QUICK FLICK brigades cash cow of late, in total.

The IRD had better get cracking....we need not borrow so many BILLIONS if they did their job RIGHT....(YEAH RIGHT).

All sales in the past 10 years are eligible...

I could even suggest you might even use some of those 1.7 million civil serpents and bludgers to do this task, instead of TAXING the same old working idiots more and more.

Include anyone who built and sold on quickly off plan, including All houses, offices and Commercial.

MCMANSIONS are where the IRD should start, so many were built and on-sold.

It is an IRD departments dream JOB, after all....and a long suffering TAXPAYERS right to share the LOAD....and the LOOT back into the STATES coffers, where it rightly belongs.

PIGS might Fly.....first....

Might even pay a little of the SNOUTS IN THE TROUGH wages...... BILL.

If you need any more ideas...JUST ASK.

They are staring me in the face as is BANKRUPTCY for a lot of people, if you keep on wasting time and the honest TAXPAYERS money.

Taxable Business is necessary to keep the rest of us going.....not going out of business.

KEY.....YOU LOT ARE A WASTE OF SPACE...all 1.7 million of you bludgers.

In that I agree with RODNEY....even though his SNOUT is buried just as deep, his observations were correct.

PORKIES, spin and fine words and jaunts overseas...do not fix our economic problems.

ACTIONS do.

PS...

Don't get me started on OBAMA...he is a another of the same persuasion.

America may be waking up to that reality it seems.

How about you NZ...

WAKEY WAKEY.

Murray,

Do you honestly believe that house prices are going to double in the next 10 years. If so you average Auckland house price is going to $910k. That's the average! Let's assume average incomes double in this period (no precedence in NZ for this). So your average household earning $110k will be servicing a debt of somewhere in the vicinity of $700k (assuming 20% equity).

I can't think of any scenarios except extremely low interest rates and record wage growth where a doubling of house prices is feasible.

Can you explain how you think the average household is going to afford the average house in Auckland of $910k. What in the economy will cause wages to grow by so much? If minflation then please explain how interest rates will affect repayments because as we know interest rates go up in high interest environments.

Please don't suggest that the average household will buy the lower decile priced houses - this is a common argument I hear but it is nonsense because where do the lower decile income people then live. That's why averages have to be used.

Without labouring the point, Murray, the graph acknowledges the discrpancy between the 6 largest cities in Japan, and all Japanese property - last average point at about $125k; that's why there are two lines on the graph showing that... and sure...ALL statistical information is subjective, just like the Ekatahuna average house sale price is in the same set of stats. as the Ponsonby ones. Even in NZ we all seem to have a favourite R/E Index to follow! You have one belief about the history of the Japanese ( and New Zealand) property, I have another. That's what makes a market.

"Sideways relative to inflation at best" - possibly. My biggest reservation is that a lot of people told me EXACTLY the same things in 1990 & 2000.... time will tell....

IMO house prices have pretty much about done their dash for now. The main bull market is over in this asset class. If you weren't in at around 2000 or before you've missed the boat.

Realestate recently has had an extra shot in the arm with low interest rates in the past year, but once they return to 'normal' house prices will go sideways for the next decade at best. Evidence suggests that many first home buyers jumped in during this time, being 'marginal' borrowers at best, fixed at low rates and will suffer when loans reset.

For investors, realestate is a bad investment now full stop. With a little research you can find better places that will give a (waaaay) better return. Bull market is dead if its capital gains your after.

For FHB.. just stay renting, stay out of debt, stay mobile, follow the money and go enjoy your life.

Each to their own, Murray. Depending on 'where', $770 pw gets you a standard rental housing way above what that amount of purchasing power gives you. In Chch you can easily get a 5 y.o. executive house listed for ,say, 750k for $ 450 ish p.w. Assuming a 20% depo. your $770 p.w ,some P&I, ( let's forget about forgone advantage on the $150k depo, that can offset some of the "P" repayment amounts in this calc. ) is about that, exclusive of 'all the extras". So you get the same 'home' for $16 grand a year less.

Agreed, Murray. That's a net 3% to B/E. And I have even less idea than the next person as to what will happen to the taxation regime. I can only repeat my previous post that the IRD IS getting up to speed on past transactions under the existing laws. So for me, it's full purchase price in the Bank at a lowly 5%, 4% after tax, and I shall wait and see, like eveyone else!

Kind words, Murray. I retired, far to early, 20 years ago. So for me, it's about freedom as much as it is about a domicile. So that's why it's just numbers to me, and why, as I've said, I don't believe they work. Cheers.

Harriet - fair enough. I "retired" at 32, but I wouldn't say it was too early! I prefer the term landlord over retired, as it's still a bit like a job at times - I just don't have strict hours!...
I still see a lot of opportunities where the numbers do work, though admittedly a decade of stronger income & rent growth and weaker property growth would bring things a bit more in line....

These figures and graphs are not surprising, they mimic all the other markets that are crashing. Anything that is closely tied into banking will suffer the worst, and that's going to be mortgages and house prices. Recovery is happening but it is slow.

excellent article as usual by Martin Hawes in today's Herald:

http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=1060...

he's saying you should want at least a 10% rental yield from apartments and 7% form houses

Not many of those scenarios around

but still the gullible plunge into property!!!!
(note for Murray et al - this is not a dig at you - you obviously got your properties when it still stacked up. But it doesn't anymore)

Bank Manager - well I take Alexander's comments with a grain of salt. This is the man who said last year property prices could possibly fall 30% only if unemployment rose above 6%. we are well above that now and heading for 7% plus
Using simple supply / demand models to argue house prices is flawed in a weak economy. Limited new supply of housing to the market will not increase prices if wage growth is minimal, unemployment is growing etc. Its a simplistic argument.

Take this analogy. A major conflict breaks out in central Europe. droves of kiwis flock home urgently, sensing the risk. The economy here and elsewhere dives, unemployment rises to over 10%

Technically, in that situation, net migration would boom. Those who believe in pure supply / demand economics would say houseprices would boom again. But they wouldn't because of the economic / social issues. Of course in that scenario many of the returning kiwis would live with family or friends, just as many of the young students struggling to find work now are doing so. this shows the weak simplicity of the net migration increase = housing boom argument

Of course we don't face such an extreme scenario. but you see my point - the flaw of looking at supply / demand in isolation from other factors

Matt, I don't know about Auckland but out here in the provinces there's plenty of houses giving 7 & 8% returns. I prefer 9 - 10% though, since our interest rates average around 8%.
One thing with yields though, they're only relevant to investors and not owner occupiers who still make up the majority of buyers.....