agents i speak to seem to endorse there is more activity in the housing market, mainly due to pent up demand of buyers needing to get on with their lives after vaccillating over the last year.

i think we'll see a double combo of more vendors listing now 'cos they think things are on the up and the normal spring flush of listings.
this should bulk up the listings shortage but i'm picking it'll take until march next year, after an xmas madness of piling on household debt to the existing debt ratios,for the market to level back down as reality bites again.

a chain is only as strong as it's weakest link.
actually, i think it's wives and women driving this latest upsurge !

rock on elves!

Agree with rob of the north

Lots of movement in the suburbs in the $300-450K range will all listings getting snapped up

will also hold out until March 2010 to try and pick up a bargain then

I wonder what floating rates will be then?

More importantly ( well for some!); Where do you see the New Zealand economy in March 2010, 28-year-old?
My coach always told me, there are two ways to play at life:
(1)It doesn't matter whether you win or loose, it how you play the game
or
(2)The end justifies the means.
"With opition one there are winner and loosers", he said
"With option two, we all loose"
I guess Wall St and Threadneedle St sum up (2).
Enjoy your bargains next year.

Wally Good point as always.

Plus we know that the RBNZ is in denial about where mortgage rates are going to be.

Bolly has told the market with his hand on his heart that rates will stay low until at least late 2010. So their forecasts have to assume that. Otherwise their would be an amazing disconnect between their policy & their forecasting.

However, most economists don't believe Bolly will be able to sustain low rates. Plus of course the markets are making up their own minds, & longer term rates are going up gradually regardless of Bolly's protestations.

Will watch with interest

It is official that the house price will keep droping even though it may not drop as much as the RBNZ previous predicated.
11-12 drop from EBNZ,
15 drop from Bernard Hichey
Upto 25% drop in some suburbs from Kieran Trass

If your going to spend, spend your money on the mortgage, this is the best time to pay off your mortgage with rates being at a all time low

Interested

You're quite right. We are mortgaging ourselves to the hilt to avoid missing out. We're fine. We can pay now when the floating mortgage rate is 6%. What happens when it goes back to 10%?

Perhaps Bollard should keep it at 6% forever to save us? No worries.

Actually, we could take more debt on if that was going to happen. We actually have about NZ$170 billion of mortgage debt against a housing stock worth NZ$568 billion.

That's a collective loan to value ratio of 30%. That's nothing. We could borrow so much more. Why don't we borrow so much more and get NZ Inc's LVR up to 70%?

No one seems to be noticing overseas. The Australians are underwriting our economy through our banks anyway. They'll let us go on like this won't they?

Until they don't.

And then all hell will break loose.

Ever wondered what might happen if our currency collapsed and interest rates spiked to 15%? That's what would happen if our credit ratings were downgraded a few notches.

We'd look like Ireland and Iceland.

No worries though.

It won't happen....

cheers and good luck to you all
Bernard

@ Bernard

But then we wouldn't be able to pay for our internet connections, and your own revenue would drop no matter what outrageous headlines and thoughtless predictions you came up with - you would be in a pickle too, unless you sold the whole lot off to your trademe friends before the black hole came and swallowed us all...

actually i would be more worried about Cern, talking about black holes... although i would never do my calculations on less than 10% anyway...

LOL Philly.....

@ Philly

It's the small rudder that steers the big ship, I just like to know Bernard is facing the right way when he swings on the wheel, being that at times some are closer to the rocks than others.

If and when Bernard says I am not welcome here so be it, but until then, like others, i can submit my honest opinion, and hopefully, in the process, prevent a few lemmings from jumping off Bernard's cliff.

It's all about education, I learn new things everyday, but for me what is commonsense, might be new or insightful to someone else, that too is why I do read others postings, including yours...

I think the website you referred me to is like preaching to the converted, the greedy and the get rich quick folk - and what is the point of that?

Look who's talking,
Phill, president of "First Home Buyers assoc."!

Hey Walter : You got that off a Monty Python song , a classic , " and I'm worried about the baggage retrieval system they've got at Heathrow ! "

Yes Bernard : We may be in the calm eye of the financial storm . On the drop of a dime the Ozzie banks could turn from being our underwriters into being our undertakers ! Wooly Bully Bollard needs to wake up . And slumbering alongside him is our Minister of Finance , Wild Bill . They're asleep at the wheel a'la Alan " I'm not responsible " Greenspan .

Well you're all welcome here and we enjoy the company.

Walter, deep breath mate. Have a quick dip in that lovely Kaikoura sea of yours, always seems to help me clear my thoughts.

To all: Bernard is currently watching Bollard in from of the select committee so will update story if anything juicy comes out of it

Cheers

Alex

@Roger
Roger I never thought you had some. :-)
http://www.hairboutique.com/tips/tip21045.htm

Walter : You should attach a price sticker to the stuff on your studio floor : You could get paid and have your floor cleared simultaneously ! ( Bruce Willis is " the man " according to the squeeze , lucky that she likes baldies ! )

I'm the one (artist & immigrant) with the price sticker on the back - it says $10.25 - mate.

Tenders are great, Veedub! Last one I (nearly) got invloved with about 2 years ago "allowed" me to send my 10% cheque along with the bid - just to make sure I was serious, like- and they said that if my tender was unsuccessful they would get the money back to me in about a week. Errr..... no thanks....

Just a note to say Pres of Prop....A.J. ....Mark Hubbard and associated persons of that strategy. Congradulations you have won the DAY and will bask in the benifits of the Status Quo... which begs a question.
Property
If.... it is a strategy, then is it an (A) get in at the right time and exit at the right time type...or(B) is it just a perpetual there is always profit in real estate type so leverage your way to a portfolio...... assisted by your friendly benevolent banker who wants nothing more than to see you happy and flourishing.

Ask yourself this what eventually, is the strategy of the money lender ? what is the strategy of the underwriter to the lender ?

The lenders must always convince the underwriters that the strategy is under control and behavior of the eventual borrowers is predictable... therefore the outlay is low risk.

They achieve the above not by following the trend... but by creating and controlling the trend.
Do however please remember that Bill, Bolly, and the boys at some future date will put their hands up and say Hey!! Hey! we said it was all unbalanced ,we said stop what your doing ,................as we sat on our hands.

On another note the small talk about carry trade..uradashi.. maturity having an effect on the currency........ I dont think so...I'm sure the boys have assured the depositors they have that under control too!

"If"¦. it is a strategy, then is it an (A) get in at the right time and exit at the right time type"¦or(B) is it just a perpetual there is always profit in real estate type so leverage your way to a portfolio"¦"¦ assisted by your friendly benevolent banker who wants nothing more than to see you happy and flourishing."

I've always wondered about the soundness of the strategy. Instead of the "buy low, sell high" basis, it seems closer to "buy high, sell even higher or keep leveraging until the Rapture." It does appear, on the surface, an investment strategy destined for disaster, but the success stories can be heard on every street corner in the Antipodes.

"I understand there are nearly 400000 rentals properties in NZ and would guess most are private landlords. If LAQC was taking away who would want to be a landlord considering the potential nightmares with houses.
If landlords pulled the pin the collapse would be a massive issue for the country."

I agree. Talk about catch 22. I think the issue highlights the need for reduction of and leveling of taxation on all asset classes. The same can be said for income taxes. The sooner the market does the talking the better.

To help fuel house sales, the RB has said that prices will rise a bit. Heck this says to many buy now, or you will end up paying more later, or you miss out. They would have been better not to say anything.

5% off peak by xmas in Auck / Chch I think, some silly prices being achieved here. Once interest rates really start rising the last buyers will come off the fence and fix long term pushing prices further. Household spending on property costs surely is down, as fixed rates roll over its easing the pressure on budgets, people are staying in there comfortable homes and fixing on lower rate hence few properties for sale.

Steptoe (Steps) Says:
September 10th, 2009 at 11:57 pm

"Old Jewish proverb " To become rich, my son, work hard, buy property and never sell it." Which is fine, until someone comes and takes it, and everything else you have, off you.
Notice the proverb doesn't go on about "borrow all you can, my son"¦.."

I remember one of these TV programs a few years ago made by TVNZ, the Real estate agent on it said that really the only way that you can make large amounts of money is to get into property. Working on a Salary (unless you are on a executive salary) will never earn you the sort of money you can get from property. Now I notice that a lot of these new NZ TV programs are about how to manage your money and keep your house, when you are spending more than you are making. It is interesting how the TV programs change to match the housing market and the economy.

A broad capital gains tax is not in the works because it will kill equities and other investments along with property. Bollard is passing the ball back to English rates unchanged (a Hollywood at that). What I expect is a change in the tax code to wind down LAQC for residential properties.

The sharp increase in Gold tells me there is fear in boardrooms and cabinet tables around the world. Many governments want their physical gold out of the US and London. This speaks volumes about a large expected disruption in markets around the world. On the side - silver is a bargain for investors with shovels.

Bollard is smart to hold the fort on the OCR. October could be a rough month, leaving room to maneuver if everything starts to tank. China stockpiling of resources and investment in resources is starting to look a lot like Japan before Pearl Harbour. In the short term, oil should follow gold up; a strong NZD will be of some benefit there.

Doesn't anyone else see the whole "sale by tender" as a way of real estate agents making sure they make sales? Alternatively they are just no good at putting a price on a house in which case why are we paying them a small fortune to sell them?

I still don't understand how we are still paying 3.95% of the sale price when property prices have risen so much but the cost to the agency hasn't. I see agents 'having a bad year' who are making $150,000 plus. I think we need to make a bigger stand against that.

A sale by tender is not a guaranteed sale - I've seen several where none of the offers has been accepted. In those cases, the land agent is just using it as a tool to set the price.

It works like this - set a short tender date, get the offers in, sit on the deposits for a week, and then re-advertise at an asking price of maybe 10% above the highest tender. They'll probably get it, because of all the people who won't look at a tender.

For the RE agent, where's the downside?

Can anyone point to any evidence anywhere (aside from the real estate institute) that house prices are getting out of hand. Turnover is still massively down from its peaks and the latest mortgage debt figures show less than 1% growth.
The market has stabalized at a 10% fall not a 15% fall
Its ridiculous to have this very good site hijacked by people hand wringing over something that happened several years ago, worldwide.
Higher interest rates didnt stop the last boom, CGT in the UK, US didnt work. The Australian banks are not going to abandon a profitable NZ business, the suggestion is laughable and to label them reckless lenders bears NO scrutiny judging by their latest profit figures.
More fertile ground in how the public sector is crowding out the private sector, the terrible state of our capital market depth, the total lack of action by the commerce commission to enforce regulations. We need alternative places to invest, its not a huge amount of fun being a landlord.

"Its ridiculous to have this very good site hijacked by people hand wringing over something that happened several years ago, worldwide" what the heck are you on about David?

okay, that blurted out, will go back under the radar, and be my more humble self, least i get a serving of humble pie of my own. i only want to educate, not instruct, as it allows choice, or, phrased otherwise, my favourite, due diligence...

What's going to happen when the baby boom landlords sell up to enjoy their retirement: out of their bigger houses and rental properties? All at the same time. Looks like a good time to be taking the profits now before they're taxed hideously.

Lot of people I know, especially the self-employed and professionals with practices, are basing their DIY retirement plans on variants of property, sometimes just selling the big house, buying a townhouse or cheap land in the country, and keeping the cash difference to live off. It looks wobbly as a strategy now. Suppose they could take in boarders or foreign students instead....

I'm with you Veedub. There are better places in the world, and I refuse to spend all our money on a poorly built, ugly, overpriced NZ box just out of fear of "missing out". Some things are better missed out on. Let us see what the next few years will bring and try to enjoy the better things of life while we wait. Biff out the TV, read some poetry, grow things.
Note to self...must stop reading financial blogs waiting for something to happen. We are well and truly "through the Looking Glass' now in a world where nothing is as it seems.

President of Property

We'd love you to stay and keep commenting. Sorry it's taken me so long to call in to this thread.
We love a good debate and all our regular commenters, even the ones we don't agree with.

cheers
Bernard

@ veedub, yr blinkers must have been stuck on, possible to purchace 30-50% off rv oct08-jan09. Dont know what you call a bargain but now that looks pretty good to me. At the time it looked like a risk, and 5.99% interest didn't look like the bottom either.

Maybe I'm being silly , but if you read David's post carefully , he makes very good sense . Are you guys jumping the gun a bit , on his comments . Read it again !

Harriet : Bernard would've needed a cattle-prod to get some response out of Bollard . Is the guy totally comatose ? Gums flapping 19 to the dozen , but he's not actually doing anything . AB needs to either get active , or just shut the feck up !

@harriet, so a property or any purchace that fell 30% then rebounded 20% wasn't a bargain? Sure the people trying to buy now think it is?!? Was a pretty small window of 6 months really. Pre purchase opportunity 10% interest, post 5.4% too. BARGAIN

Nothing is a bargain if you can't afford it. There are no guarantees, as you acknowledge, that at any given time an asset will have a future determined price.... otherwise it wouldn't be selling at a level different to 'current market'.
Hindsight makes us all rich, cavemen. Would you be making similar comments if the price of houses had dropped 30% again from the earlier lows? I suggest that you might, only if you could have afforded it in the first place and still believed in the asset appreciation.

@ Caveman - I never saw anything remotely like that in Wellington. Can't speak for the rest of the country though. Maybe properties were 10% off their RV/CV at best, but in my eyes that doesn't make them a bargain because they were/are still overpriced. This is an isolated case - I viewed one property that had an RV of $520,000 (and that was hideously overpriced) - it's been on the market for in excess of 6 months now and is still on the market, at $420,000 but STILL no-one will buy it - BECAUSE IT'S STILL OVERPRICED!!! The RE agent told us on the quiet that the vendor would probably consider close to $400k but I still wouldn't buy it. It's a poorly built, stupidly designed piece of crap. Clearly I'm not the only one who thinks that or it would've sold.

So Caveman, would you call that a bargain?

y.Yes - there has just been a property boom.

z. Oh. It's been has it?

y.Yes. You just missed it. Went past just on a year ago.

z.When's there a new one?

y. Well, could be anywhere from 2 to 10 years away. Will be different then though - you know it'll be a later model with more advanced structures to build it and finance it.

prosperopink, only on the NZ and Aussie property markets. Otherwise I am a copper bull, indeed a commodities bull in general. Only a pandemic 1918 level or a middle east nuclear conflict would change my mind. I'll let go the chair leg now.

"David mixed his massages a tadge at the beginning"
That's why I posed my question to you Roger.

Well veedub, if its been in a property magazine or has a sign out the front I would probably not buy it anyway, at least 10 other interested parties have turned it down already before going to print if its any good.

From 21% fall to "raising a bit". Guess, in couple of months will again modify prediction to "moderate rise of 15% over 12 months", or something like that.

caveman - "yr blinkers must have been stuck on, possible to purchace 30-50% off rv oct08-jan09. Dont know what you call a bargain but now that looks pretty good to me. At the time it looked like a risk, and 5.99% interest didn't look like the bottom either"

You're right, and I've said it before - Jan 09 there were some properties (mostly mortgagee) selling 30% down and you could get 5.95% fixed for 5 years. It's hard to see that window coming around again any time soon. The pessimists thought prices and interest rates had further to go.......

AVOID ! That's the missing word . Avoid residentail property , caveman . Houses are not " bargains " , anywhere near these levels . Hickey's 30 % was accurate to where prices need to fall just to reach fair value . In the USA they've gone lower than that . Take the missus and a bag of cash and head stateside , if you absolutely must " invest " in another cave . Swing your big wooden club at anyone in NZ who tries to convince you into residential real estate here .

Wotcha saying Wally ? I missed the story . Summit from the Labour summit ? Phil -in had an inspiration ? ( about bloody time ! )

cavey : Good plan . Article in today's SSTimes may suit you . Bearish on commercial and apartment real estate . Still glimmers of hope in smaller projects . As long as the LAQC system exists , you'll make out just fine .