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Weekly mortgage approvals at non-holiday period lows
Figures from the Reserve Bank show the number of home loans approved over the past two weeks have sunk to lows not seen outside holiday weeks since the central bank started compiling weekly data in 2003.
Just 5,241 home loans were approved in the week ending July 2, down from 5,384 the previous week. Both weeks recorded only about half the level of loans approved in some weeks during the boom times in 2006 and 2007. Last week’s figure is down from 7,078 in the week ended July 3, 2009 and is a 21.5% drop based on a comparison of the most recent 13 weeks of data compared to the same 13 weeks last year.
At NZ$679.9 million, the value of home loans approved last week was 25% less than the NZ$911 million approved in the week ended July 3, 2009.
And the NZ$677.7 million worth approved in the week ending June 25 is the lowest value of approvals for a week that doesn’t include a public holiday or fall during the Christmas-summer period since September 2008, when the Global Financial Crisis was taking a grip.
Shaun Riley chief executive of Mike Pero Mortgages the country's largest mortgage broker, told interest.co.nz his firm's business was down about 15% year-on-year.
"It was a quiet start to the year and we thought that there might have been a few people waiting to see what happened in the Budget," Riley said. "And then the Budget happened and we expected a bit of pick up that didn't eventuate."
He expected approvals to remain slow over the rest of winter but said he had an "inkling" some pent up demand might emerge with spring.
'The Budget was perhaps not as bad for (property) investors as they thought it was going to be. (And) even though interest rates are creeping up, people earning over $60,000 are going to get a bit of a pay rise in October," Riley said.
Related Topics
He also noted that lenders were becoming more flexible. Although many had been reluctant to lend more than 80% of a purchase price over the past couple of years, the "appetite" was starting to return for loans of 85% and even 90%.
"And for a customer that can be underwritten by a mortgage insurer up to 95%," Riley said.
"(So) when demand does come back, it's slightly easier to get approval than it was this time last year."
The latest Reserve Bank weekly figures follow the release on Monday by Barfoot and Thompson, Auckland's largest real estate agency, which showed June house sales volumes at 665 down 23% from 861 in June a year ago and down 16% from May. At NZ$523,058 the average price was down 3.6% from May and up 0.25% from June a year ago. See full story here.
ASB economist Jane Turner predicts housing market activity will remain very weak throughout the remainder of 2010, reflecting waning demand. Turner says tax changes in May's Budget around depreciation rules have reduced the attractiveness of holding investment property at the margin. On top of this, slowing net migration and rising interest rates will reduce support for housing demand with house prices falling slightly this year.
And Westpac economists say the Budget changes have reduced the fundamental value of property with house prices likely to fall by about 2% this year and next year.
* This article was first published in our email for paid subscribers earlier today. See here for more details and to subscribe.
222 Comments
LOL. Now what could this
LOL. Now what could this possibly mean for the housing market? Even the spruikers at Pero's are struggling to see any upside to this data.
But maaaaaaaaaaaaaaaate,
But maaaaaaaaaaaaaaaate, didn't you hear? There's a housing shortage looming and prices are gonna go SKY HIGH, so maaaaaaaaaaaaaate, ya better get in now, before it's too late! Ya just can't lose with property, maaaaaaaaaaaaaate!!!!
Are you a comedian by trade?
Are you a comedian by trade? Everyone just loves that "maaaaaate" routine. It's so orignial. You should copy right it before Mike King or Ewen Gilmore take it.
We can hear your nerves being
We can hear your nerves being hit from here.
That "we can hear your
That "we can hear your nerves" and "we can smell your fear" routine is classic as well. You really should write these down in a note book.
Tranquilisers may help you
Tranquilisers may help you get some sleep.
Alcohol doesn't work after the first few nights I've been told, so go see your doctor and tell him you're a property investor.
(S)he'll immediately prescribe some very powerful sedatives, because you're at risk of panicking yourself to death.
Good luck, we wish you well.
Stop it - i'm getting the
Stop it - i'm getting the stitch from laughing so much.
I was having trouble sleeping, but that was down to the mattress and bubs. We bought a new latex matress - last year which is magic. Bubs is sleeping 7-7 so I'm getting around 9 hours a night. If anything it's a little too much sleep.
Not sure why you think I'm a PI though. I gave it a go and banked just short of $200K, but that was in the cashflow positive days. Definetly wouldn't do it again now I have a family. Too much risk.
But it means that we have only have to fork out less then $300K of our own money for our current place and want to upgrade so falling house prices are good for us and in the mean time we are saving $25-30K pa on rent and banking most of that even on one income. Add to that the $15K i get from a commericial property I inherited a share of and things are pretty relaxed at the moment.
If telling yourself that
If telling yourself that stuff helps, then by all means go with it!
Classic. Do you have a team
Classic. Do you have a team of writers or do you come up with this stuff yourself.
Not sure what I'm telling myself that makes you so angry or threatend that you need to hate on me - That I was lucky to cash in my capital gains prior to 07 because we went overseas. That I was lucky to meet my lovely wife and have a happy and healthy baby boy. That I get paid well enough to support said family. And if you stand back and look at things we aren't that well off. $500K in the bank would be good, but that should happen in the next 10 years or so.
Is that really worth hating on me for? Can't we all just get along? I'm sorry if my cutting edge sarcasim of your comments has insulted you in anyway.
Like a lot of people, you
Like a lot of people, you were suckered by the whole "Ya Can't Lose With Property!" nonsense and bought a house at the top of the market. Now the market is shrieking into the abyss, taking property values with them, and the values are going to stay down where they ought to be for a very long time, so those who paid top dollar won't be getting their money back any time soon. Why you're taking your frustration out on people who didn't make the same mistake as yourself one can only guess.
Lol "frustration" - another
Lol "frustration" - another comedian. You guys should team up - you just forgot to tag the "maaaaate" line on to "you can't lose with property".
Since you seem to be interest in my situation as well - We are mortgage free and the trade up to our next home will cost us less if the market carries on as it is. Our current home cost us $480K in Dec 08 paid for with $180K of capital gains and $300K of our own money. The $300K we have invested in our home is saving us rent of $25-30K pa which is going in the bank and earning us interest. I'm happy to give up that $180K as it was just luck on our part and could probably be considered a hedge. I also have a share in some commercial property, a bit of cash, and $20K in shares.
If I was going to tell myself stuff to make me feel better then I would add $1.25M in the bank and a house in France and tell you how I was buying and selling properties left, right and centre and making $100K a pop. There are thousands of people better off then we are, but, as you and your team mate illistrate, they may not be as happy.
The only person interested in
The only person interested in your own circumstances is you.
Are you going to volunteer your entire life history on any pretext?
What a boring, self-absorbed attention-seeker you are.
If that were true we wouldn't
If that were true we wouldn't be having this conversation over and over on numerous threads. Seems that everytime I post something you want to have a chat. Fine by me - I like you. You do seem to lack empathy though so I provide more detail to make it easier for you which seems to upset you.
See, shorts, we've all heard
See, shorts, we've all heard the same story too many times, mate.
Obvioulsy not if you continue
Obvioulsy not if you continue wanting to banter with me about it. It's also a free country and I'm not hurting anyone so I can say what I want really. I don't think you really have a problem with it as you seem to enjoy chatting with me.
"Both weeks recorded only
"Both weeks recorded only about half the level of loans approved in some weeks during the boom times in 2006 and 2007."
It wasn't a "boom", it was a "BUBBLE"!
How many times does it have to be said before you grasp something so bloody basic, Gareth?
Went to an auction in
Went to an auction in Wellington a couple of weeks ago. 9 properties up (mostly apartments and townhouses).
Starting bids 20-30% below rv. One bid in the whole auction and the vendor rejected it as it was so low. very nasty.
Obviously the place wasn't
Obviously the place wasn't worth what the vendor thought it was. If the price is right it will sell - and the price wasn't right.
The news just gets better for
The news just gets better for property. I better buy some rentals before prices rocket back up.
By going to the bank to get
By going to the bank to get the money from the new leverage that comes from the equity increase in the ones you already own?
Good luck.
Anyone seen the front page
Anyone seen the front page story from the Dom Post? The spam filter went all hyper-vigilant and wouldn't let me link, but the headline is: Wellington Apartment Market Close To Freefall.
Apparently they built way too many high-level apartments, and can't get tenants even with heavy discounts and bait. Whoever would have seen that coming, when Wellington is so obviously swarming with homeless executives?
amalgam, Ultimately both
amalgam,
Ultimately both booms and bubbles come to an end.
True enough, but booms can
True enough, but booms can have lasting beneficial effects, while bubbles generally harm economies.
Booms are usually productive, be they based upon a big new gold or oil strike for example, or the founding of, say, the personal computer industry.
When has a bubble ever helped more than it's hindered?
Gareth, Your point about
Gareth,
Your point about booms and bubbles both coming to an end is irrelevant to the question - that was about whether you understood the difference between a boom and a bubble.
The floor is yours.
Is 'Baby Boomer' incorrect
Is 'Baby Boomer' incorrect terminology also? Should it be 'Baby Bubblers'?
LOL!!!
LOL!!!
HA ha ha - like it Josh :-)
HA ha ha - like it Josh :-)
Bernard - the time might be
Bernard - the time might be upon us where you could increase your 15% price drop prediction back to 30%.
Yes, indeedy. Where's that
Yes, indeedy. Where's that Jetstar website...
"Jobs growth in Australia far surpassed market forecasts in June..A total of 45,900 jobs were added during the month.."
Worst figure since 2003. Is
Worst figure since 2003. Is that really surprising??? 2003 wasn't a bad year for housing. Does this tells us anything??? Mortgage approvals are lower than when NZ was buying houses like crazy, so we aren't crazy on housing at the moment, doesn't mean its all doom and gloom.
It means that the NZ
It means that the NZ residential property market is poised to fall long and hard. Everything is pointing to that and there's absolutely no sensible reason to believe it's not going to happen.
That was since the records
That was since the records were first kept only.
Houses weren't selling all that much in 2003, it was in 2005 and 2006 that things went really nuts so if sales now are lower than 2003 then you know they are way down.
And remember that's only since they started keeping the records back in 2003 so it's likely even worse than it seems.
Looks like the property cycle has come round again to the sell if you can phase.
"And for a customer that can
"And for a customer that can be underwritten by a mortgage insurer up to 95%," Riley said.
I wonder how many realise that the mortgage insurance doesn't help them one iota if they default and can't pay. If the bank sells at mortgagee sale and there is a shortfall on the amount owed to the bank the insurance company will pay the bank the deficit. The bank will be whole but then the insurance company will come after the borrower/mortgagor for the deficit. The insurance premium is basically a fee for the privilege of being able to borrow 95%. Nothing more.
Thx, mate! I didn't know
Thx, mate! I didn't know that.
anonymous - get a brain. It
anonymous - get a brain. It is the worst since RECORDS BEGAN in 2003
This is partly due to peoples
This is partly due to peoples current reluctance to borrow, but also has a lot to do with banks current reluctance to lend - even at low debt to equity ratios.
They seem to be dropping interest rates to encourage borrowing on one hand, and shooting themselves in the foot by restricting lending with the other hand!
Very reminiscent of around year 2000...
Yes Murray, you're correct
Yes Murray, you're correct when you say that people don't wish to borrow now, when personal debt is already high and property values are dropping like a stone with no end in sight.
You are also correct when you say banks aren't lending the way they were during the property bubble. (They created the bubble with that lending.)
It isn't correct in my opinion to say or think that this is all a prelude to another bubble.
Its year 2000 all over agian,
Its year 2000 all over agian, happens every 10 years.....
Amalgam and a number of other
Amalgam and a number of other commentators are correct Vaughn with all due respect.
There is a massive difference between a boom and a bubble - and those making comments in the public arena need to be clear on this serious issue in my view.
We ciould explain it simply by stating that Apples IPad sales are booming due to genuine demand, but that too many housing markets around the world are in varioys stages of bubbles due to artificial regulatory scarcities creating them. Mike Inselmann, the CEO of the respected construction industry research firm in the United States explained this very well within a recent speech I referred to in Scoop: "Americans are slow learners about housing bubbles".
Another example - Texas boomed - California bubbled. Indeed the Dallas Federal Reserve wrote an important paper some 2 years ago with the title "Why Texas boomed but did not bubble".
New Zealand of course is clearly a bubble - and a fizzing one at that - as nobody with half a brain believes the values any more.
Hugh Pavletich
www.PerformanceUrbanPlanning.org
Christchurch
BRING BACK THEMAN
BRING BACK THEMAN
Auckland prices are still
Auckland prices are still holding especially on the North Shore. What gives?
Dreamers are what gives. They
Dreamers are what gives. They tell themselves it's still 2006.
I'm not convinced on that
I'm not convinced on that one. I suspect (like many others have theorised already here) that the smart (lol) money is getting out before it's too late, and those higher priced properties have been keeping the median price up there, but it won't last forever, reality is setting in. It would be very interesting to hear peoples stories of properties that have been sold more than once in the last 3 years....anyone willing to share?
South African jokers ...
South African jokers ... thats what is keeping the North Shore up . They are a big slice of the immigrants coming into Auckland and their currency is the strongest it has been in 3 years . The are buying up houses to live in.
That was then, this is
That was then, this is now.
Immigration to NZ has slowed to a trickle, while immigration out (especially to Australia) has become a raging torrent.
More SAers and ZAers are leaving than are arriving.
As will be my family soon, and that of all our friends.
A few years ago we worked hard to get friends and family accepted into NZ but we no longer bother because most not yet here are looking elsewhere.
Do not take offense when I say most of us feel that NZ has not been a big step up from our Homeland.
I have a freehold home in
I have a freehold home in Auck, cash and some shares. I've been looking for a holiday home for a while now. I had been anxious to buy incase I missed the boat, however in the last year my attitude has changed completely and although there are many suitable places for sale I'm afraid of buying a property in a falling market.
Now I have a decision to make: buy and be prepared for many years of declining or stagnant values or keep my cash in the bank and perhaps buy more shares? Answer seems obvious I guess.
I wonder how many more people out there have the funds but are reluctant to buy into a falling property market?
i'm in the same boat. i'm
i'm in the same boat. i'm moving to auckland and have 400k in cash that could go on a house but i'll rent instead. i probably will buy eventually but not now or in the near future.
Smart move. You will buy a
Smart move. You will buy a better home and borrow less when you eventually buy. Keep a close eye on the business news. Do not believe any agents or people with a vested interest in the housing market as they just want to get a fee or commission off you.They will not care if the house you buy goes down in value after you buy it. They just move onto the next buyer.
cashed up or washed up dont
cashed up or washed up dont ask for investment advice here!tragic central not party central.
I've been keeping a sharp eye
I've been keeping a sharp eye on the suburb of Torbay on Auckland's North shore for a year-and-half now. In the last six months listing have increased from a weekly average of 100 +/- 10 to 150 +/- ten. Prices have dropped very little, but NOBODY is buying that's for sure, the odd house yes, but overall absolutely static. I have it from a B+T real-estate agent that those houses that are selling are going for about 10-20% below the asking price.
I was going to buy a family home in Torbay at the beginning of this year but then I discovered this website - put the jeebies into me!
Good on you. Keep disciplined
Good on you. Keep disciplined and keep saving. I believe you will have to wait for years for it to bottom in NZ. The longer you wait, the better the house you will eventually get and the less you will need to borrow. I just wish more New Zealanders would read the news and take in the fact that the market is now doing what many thought would happen earlier in the 2007 to 2009 years,ie move back to basic fundamentals. Prices of houses falling back to what people can afford and still live a normal life. Talk to a bank manager and if they are honest they will tell you they are doing a lot of refinancing for people who are combining all their personal loans with their housing loans. People borrowed too much for big homes,rentals,cars, batches and home chattels. Now they are paying the price and are sorting out their debt and certainly not adding to it. Talk to any honest agent and it is the quietest it has been in years especially the last month or so. Just watch those house prices drop and the speed of those drops accelerate as more and more bad news gets into the media.
Thanks to reading these
Thanks to reading these commentaries I've massively increased the payments on the mortgage I have ($130k left from a $315k house in Mount Wellington bought in 2004) and hope to have it paid off in two years. I consider myself a financial idiot but have gained a lot from this site. One learns quickly not to get their information from real-estate agents that's for sure, have a few friends who are really up the creek without a paddle. While we bought our $315k house they opted for the $600k plus houses in Grey Lynne and Mount Eden. They are hurting likely you couldn't imagine...
People were greedy for
People were greedy for rentals and were stupid in terms of the house they bought to live in. They borrowed too much for both and now can only watch it fall away in value, some down to negative equity. The hype was just like pre 87 share market crash. People thought they were missing out. As most did not have anywhere enough cash they borrowed a lot of the purchase prices. Just like hire purchase contracts there comes a day of reckoning and that day is here now. The news is going to get worse by the week and the vendors are going to have to drop their asking prices to levels they currently would not contemplate. If you need to sell sell now. Spring is not going to save you. There is not one positive factor out there in the market to keep property values where they currently are. They will continue to slide as confirmed by Westpac last week for at least two years.
2% price slide a year
2% price slide a year (westpac prediction). Get out while you can!!!!!! Seeming there is a 4% ish real estate fee on selling your property now it makes prefect sense!
A mate sold his 600k + house
A mate sold his 600k + house in Grey Lynn, and lost 10k, but had also spent 30k on it, so lost 40k + the fees to sell & move. Now he and his wife have moved into another friends house in the same area and couldn't be happier as they now have money to go out and have a life. I guess they were lucky to get out when they did even if they lost a bit of $'s
Property market is tanking,
Property market is tanking, that's for sure...wait until Govt sorts out supply side issues, particularly planning laws, then that will really turn the music off at the party...
Seems at present sellers are
Seems at present sellers are holding high hopes for the price they will achieve, depends how much they have to sell. Maybe selling now for the lower than expected value will be better than selling in two years?
I agree with this although
I agree with this although some people have no pressing need to sell it must be remembered, although who knows what their situation will be like in a couple of years....maybe then they will need to sell and they'll lose a lot in the process.
People who are feeling the pinch now should sell up and move on asap because holding out in the hope of better prices in a few months or years (assuming they can) will probably break them once they discover they won't be able to sell for anywhere near as much then as they may get now.
JDR - here are some examples
JDR - here are some examples - it's patchy:
36 Calliope Rd, Devonport
Sold $820,000 Feb 2007
Sold $1,140,000 Apr 2009
PROFIT $320,000
1/25 Ariho Tce, Devonport
Sold $510,000 Jul 2009
Sold $696,000 Apr 2010
PROFIT $186,000
2 Derby St, Devonport
Sold $1,100,000 Feb 2008
Sold $1,020,000 Jun 2010
LOSS $80,000
12 Kiwi Rd, Devonport
Sold $925,000 Apr 2007
Sold $880,000 Jun 2010
LOSS $45,000
1a Mays St, Devonport
Sold $767,000 Sep 2009
Sold $830,000 May 2010
PROFIT $63,000
16 Patuone Ave, Devonport
Sold $772,000 Jun 2007
Sold $755,000 May 2010
LOSS $17,000
1/50 Old Lake Rd, Narrow Neck
Sold $375,000 Sep 2006
Sold $438,000 Mar 2010
PROFIT $63,000
There was a huge amount of speculative activity in the Devonport area and before 2008 some huge profits made ie:
50 Tainui Rd $200,000 profit from a 10 month hold
2 Derby St had SO much work
2 Derby St had SO much work done on it, and they still lost $80,000 in 28 months.
I'd hazard a guess the same is likewise for the others you list in Devonport, but I don't know the ones you list from direct personal experience.
Your details though interesting (I guess you're work is real estate related to get such facts from REINZ?) are meaningless without knowing what refurbishments were done.
And let's face it, any one that knows Devonport well, knows that so many houses are refurbished, and thus the buy and sell price is all but meaningless.
But please do keep posting the Devonport sales figures, as they are usually only available to 'the industry insiders', so we mere mortals can't make a knowledgeable decision so easily.
Cheers from a long time Devonport resident, who's bought many properties here and been in the 'real estate industry' over the years.
Here's an interesting one: 6
Here's an interesting one:
6 Moira St, Ponsonby
Sold $670,000 Feb 2007
Sold $565,000 Apr 2009
Sold $697,500 May 2010
Someone panicked and sold in 2009 and lost $105,000 then the next owner made $134,500 in 12 months.
On the properties sold at a
On the properties sold at a profit you would need to find out whether any improvements were made to them by the owners before they sold them which meant they could charge more. I am a solicitor in a large provincial capital and I am generally finding that people who bought in 2006 t0 2007 and who are selling now are selling at a loss. A lot of people seemed to be more stressed financially than ever before and a lot of sales involve people who are breaking up and selling the house to go their different ways. Financial pressures have been the last nail in the coffin for their relationships. It is very sad to see all this happen. In a lot of cases it was not necessary. I think they have run before they could walk from a financial point of view.
An equally plausible
An equally plausible explanation is that an over-extended buyer sold out for whatever they could get in April 2009 and someone who was unable to read the market paid too much for it in May 2010, just as property was about to begin falling in earnest. If they borrowed heavily to buy it, the May 2010 buyer may well put the place back on the market again soon.
UK houses are just starting
UK houses are just starting their second leg down - according to the Halifax House price measure prices have fallen in 4 of the last 5 months:
http://www.telegraph.co.uk/finance/personalfinance/7878766/House-prices-...
Think NZ will be different?
Yeah right.........
This one worth a look
This one worth a look too:
http://www.telegraph.co.uk/finance/personalfinance/7874276/Prepare-for-t...
Interesting article Sure
Interesting article Sure Thing, esp the bit below where the more equity you have the lower the interest rate on your mortgage.
"There are some very competitive fixed mortgage rates around at the moment. If you have a deposit or equity in your home of 25 per cent or more, it is possible to get a fixed-rate mortgage at less than five per cent for 10 years, or less than three per cent for two years.
Yorkshire Building Society is offering a 10-year fixed rate at 4.99 per cent, as long as you have 25 per cent equity in your home, while Britannia is offering a five-year fixed rate at 4.19 per cent, again with 25 per cent equity. Both deals have fees of around £1,000"
Savings rates of around 2.5% don't look that flash though
Regards
Rapidly falling interest
Rapidly falling interest rates and housing shortage will take care for slowing housing market.
Desperado, why don’t you come
Desperado, why don’t you come to your senses?
You been out ridin’ fences for so long now
Oh, you’re a hard one
I know that you got your reasons
These things that are pleasin’ you
Can hurt you somehow
THIS TIME IT'S
THIS TIME IT'S DIFFERENT!!!!!!!!!!111111
House prices in Hong Kong
House prices in Hong Kong have increased 10% from previous year , China 10%, Australia 9%, Singapore 5%...you think we will be different? yea right.
From what I am reading China
From what I am reading China and Australia are either coming off their peaks or are about to. Like here incomes did not go up as house prices went up. You obviously are better qualified than the analysts at Westpac. Maybe you do not ready the news.
Shanghai down 55% with a
Shanghai down 55% with a projected 30% further to go, according to the news yesterday.
Don’t your feet get cold in
Don’t your feet get cold in the winter time?
The sky won’t snow and the sun won’t shine
It’s hard to tell the night time from the day
You’re loosin’ all your highs and lows
Ain’t it funny how the feeling goes away?
Haha nice. I hate the
Haha nice. I hate the negative people constantly commenting like only they can be right! Reading their comments they think everything is black and white, forgetting the complexities at play.
The trouble is you've been
The trouble is you've been living in la-la land for almost a decade, a place where you think dreams always come true and good things will happen just by wishing for them.
Your bubble was founded on nothing, and has now founded on the Reef of Fundamentals.
The reason you are so desperate is because you have no Plan B, since you "just knew everything is gonna be great forever coz this time it's different!!!"
The so called positives are
The so called positives are black and white also although now the news is against them on a daily basis. They can only dream of what they were once worth and be fearful of where it is going. Not negative,just realistic.
What is a shame is the lack
What is a shame is the lack of appealing alternative investment avenues for folks holding cash. It would be great to see debates on here about specific NZ listed companies apart from finance companies.
Apart from Wally discussing FPH a while back (take a bow Wally) I can't recall any.
It would be great to see sensible discourse on the management, markets and prospects of listed NZ companies. Even discussion on the performance of different KiwiSaver providers would be helpful. The same posters saying the same things about residential property is not exactly an incentive to frequent this forum.
Have you had a look at Ryman
Have you had a look at Ryman Healthcare Vera which is a leading providor of retirement villages in New Zealand. We have a population which is aging very fast. Ryman can only continue to grow and its dividend will also grow at it has over the last ten years.
Ryman is really just a high
Ryman is really just a high quality exposure to NZ residential house prices.
Run by professionals with a
Run by professionals with a good balance sheet unlike most property investors in NZ.
China's housing market is "on
China's housing market is "on the brink of collapse"
http://www.housingwatch.com/2010/07/08/china-real-estate-market-braces-f...
"measures have slowed real
"measures have slowed real estate sales, although prices have continued to climb, but at a slower rate"...collapse or media hype?
Ask yourself where the investment and effort will be directed now that it is leaving property...that's when you realise western assets are being seen as candy in the hands of babies by Chinese buyers.
All very interesting reading
All very interesting reading and i am no expert at all. what really concerns me and my family is when all the baby boomers all decide to sell up!!!
Me and really my kids are left with the baggage and a flooded market which highly likely will bring prices down. My kids will be paying and i will have no pension!!
It's 'Baby Bubblers' not
It's 'Baby Bubblers' not 'Baby Boomers'.
If you want to know what the
If you want to know what the market is doing in your area, ask your accountant an in general question about how their real estate agent clients are going and whether it's worth retraining as an agent.
So if property investment is
So if property investment is over-valued, stocks are over-valued (well heading downwards) and precious metals are over-valued then what is left to put your money into?
The matress
The matress
Whoops, mattress (dyslexic
Whoops, mattress (dyslexic fingers)
Cash, term deposits, etc?
Cash, term deposits, etc?
Either. Deflation will
Either. Deflation will enhance the purchasing power of any cash or near cas equivalent.
Maybe even heaven forbid a
Maybe even heaven forbid a well diversified portfolio of quality assets. Stocks overvalued, what every single stock in the world is overvalued? Property is overvalued, what, every single residential, commercial, industrial property is overvalued?
Tracker funds for some local and Australian shares, some residential property, a REIT perhaps, international shares through your Kiwisaver ,the odd direct share, some bonds of quality paying 7%+, cash in the bank, earning 6%+ on term, buy some gold, get some copper to keep Wally happy, make sure you are not paying to much tax, dont get greedy, dont get scared, save more than you earn. If you do that over a 20 year period, I guarantee you will invest successfully. If everything tanks, then we are in a deflationary environment and you are going to be at least as well off as everyone else.
It is as simple as that.
you mean sledyxsic
you mean sledyxsic
So once we come out of
So once we come out of "deflation" and there are bargains to be had...
Which asset class would you buy first up? Quality stocks, residential real estate high grade bonds (government and corporate) or precious metals.
Here's a novel idea for ya:
Here's a novel idea for ya: "Buy only what you can afford".
And only invest money that
And only invest money that you can afford to lose!!
Deflation in Japan has been
Deflation in Japan has been 20 years long now, so you may have a long wait. I think that the Oldman was getting at is that there is always opportunity around. Take your time, diversify and buy quality. There will be opportunities in all those areas right now, and your circumstances will dictate your best option.
The only sure thing is Don't you draw the queen of diamonds, boy ,She'll beat you if she's able.
You know the queen of hearts is always your best bet.
Playing with the queen of
Playing with the queen of hearts ain't really smart!
There probably won't be
There probably won't be another good time to buy for several years. Japan is a good example. It's not a safe investment until the world comes out of economic winter, and hopefully not with a war. If we have war, then all bets are off. It could very well happen. How will people be with their mortgage payments if the price of fuel doubles? If something in Iran happens, not good for all prices, including food. I am actually planning on investing in food storage. It's not really funny any more. All this talk about gold being in a bubble should be revisited when gold is $5000 an ounce, and nobody has any to buy. They ran out of gold and silver in Germany recently when they announced the Greece bailout. You can't print gold or silver. I think your idea of saving cash is not sound because it can be printed out of existence. See Zimbabwe. See Marc Faber. I recommend everybody buy precious metals and now food, sell your homes and rent. I'm not saying this to be negative. It's just a cycle, as they always are. No emotion. I still have a property that I have been trying to sell for 3 years. Fortunately it has no mortgage. It looks like i will be keeping it through the Depression. When will we stop calling it the Great Recession? What a joke. It's a Depression. Happens every 80 years or so. We are not immune. Nobody is. All of you should sell-up and rent for the next several years. Rent too high? Give the landlord the keys and walk. You don't have to wait for a sale, or pay commissions. Rents are going down with job losses. Simple math.
I just met with a real estate agent specializing in rural property. She hasn't sold a property in 8 months. 8 months!!!
This from jsmineset.com This guy knows precious metals better than anybody. Precious Metals adjust their value based on decreasing value of paper, as the governments collectively print more of it. The thing is, they do better in deflation...as your purchasing power increases tremendously. Gold might go down 10%, but housing goes down 40%...which would you rather have?
Dear Friends,
Gold is headed to $1650 USD and beyond. All your concerns in retrospect will be seen to have been concerns caused by manufactured noise.
Time and time again you have seen this. Time and time again gold will not be stopped.
Nothing has changed. Nothing has been rescued. The can that is being kicked daily down the path is going to turn around and bite the kickers.
Gold is the only insurance.
Regards,
Jim
This picture sums it all up- what shape recovery will we have? V U or ski slope? http://jsmineset.com/wp-content/uploads/2010/07/image2.png
If everyone rents who will
If everyone rents who will own? Wang Ju?
Josh I think less people will
Josh I think less people will rent and those people no longer renting will either buy a home which is going to get a lot cheaper to buy as the next few years go buy. Some friends or family members will even get together to pool their savings and incomes to buy a house together. Cheaper houses owned by more owner occupiers can only be good for the country especially those who could not buy them at the prices that peaked in 2007.
Jim I am a bear on property
Jim I am a bear on property but even I find your comment over the top and a little too dramatic to say the least. If you want people to read your comments and actually agree with what you are saying at least write something that is realistic. Some people might be thinking you have got into P today before you wrote the above. Calm down and people might think you more credible.
If gold goes down 10% like
If gold goes down 10% like you say. Why would you buy it?
You don't make any sense with that comment. Why not hold cash and buy it when it's 10% cheaper if you are so sure you want to hold something that gives you no cashflow.
Gold is purely speculation of capital gains.
I just don't get all this buy
I just don't get all this buy gold hoo haa. Sounds like a load of rubbish to me.
The world is coming to and end... buy gold....
If I went to the local dairy to buy a loaf of bread, do you think they would accept my 1 oz gold coin?
Even if they did, the change
Even if they did, the change would probably be worthless.
I'm sure my local dairy
I'm sure my local dairy would take cold.
Get into Kiwisaver Elliot if
Get into Kiwisaver Elliot if you havent already
I've been in Kiwisaver 7
I've been in Kiwisaver 7 months now since I started working full time. With superlife, 50% cash 50% bonds.
Why get into Kiwisaver and
Why get into Kiwisaver and give your money to a financial planner?
Only a fool gives their hard-earned money to someone else to invest.
We will revisit this
We will revisit this conversation in a year, when all of you will be wishing you had bought some gold and silver. It's all about protecting purchasing power at this point. The days of buying a house with 50 ounces of gold or 500 ounces of silver I think will return sooner than many people expect. You can call it blasphemy now, but let's re-visit the conversation in a year's time. I suggest doing some homework outside of NZ financial news.
Look outside the island to what is happening in financial markets that lend NZ money. Where do you think your mortgage money comes from? It's borrowed from other countries, who are really in a lot of trouble right now. In the future you can expect either higher or lower interest rates, but the effect will be the same- lower prices due to higher costs of holding property. It won't make a bit of difference if you own proeprty and your tenants lose their jobs and move out- or worse- you have to evict them. I know these things, and it's not fun. If you want to know where PI is going, you have to look at jobs and lending. Both are contracting. Who will buy the houses? Who will pay the rent? How many more homes will come for sale as people that bought at the peak go into foreclosure? How many are waiting for the other shoe to drop? It will drop... then more property for sale and forced sales. Too much debt.
Then have a look at Australia. We are tied at the hip. If their market tanks- so do we. Most of our banks are Aussie owned. Who does all the the lending? Aussie banks! That's who! If their balance sheets go in the toilet from crashing Aussie real estate, do you think that puts those banks in the mood to lend in New Zealand? I think not. This means less lending and more foreclosure any way you look at it. The RBNZ will lower rates to slow the crash or foreign banks will raise the cost of lending. Both are really bad signs for real estate.
I predict Westpac will be bankrupt in 2 years because of their exposure to the Aussie real estate market.
Notice how one of the "official" writers of this site picked up on the exact chart I posted a few weeks ago, now agreeing with me that the NZ market following a classic bubble pattern. We are in the denial phase now but panic is soon to ensue. If you haven't sold yet, you should. It might already be too late. I've been there and it sucks to have absolutely nobody interested in your property. I hope you don't have a mortgage if you plan to ride it out, or enough cash in the bank to pay off your mortgage if you have to. I prefer gold and silver, because banks can't print it. It must be mined. Hyperinflation is bound to happen, but not yet, but soon. If you can survive the transition to hyperinflation, then real estate will survive and adjust in value accordingly, but it will pale in comparison to precious metals, if history is any guide.
I suggest having a look at the Lugwig Von Mises institute, ot listen to Marc Faber, amongst others, for some more perspective. And to answer the question about buying a loaf of bread with a 1 ounce piece of gold, I wouldn't use a 1 oz gold coin to buy bread, I'd use silver, and buy many loaves with 1 oz. I did mention storing food for the same reason, because I think it is about to get a lot more expensive, along with many other commodities, like gold, silver, and oil. The markets don't care what any of us think. They are going to do what they are going to do.
Cash and bonds are bad ideas... so is kiwisaver, because you can't predict how much money the central bank will print. Stocks might be ok, as they will adjust like real estate, but in deflation, you can't beat the solid purcahsing power maintained by precious metals. Have a look at a stock called "Homestake Mining" during the last Depression, if you want some history. Then check out Hyperinflation in Zimbabwe and Wiemar Republic. Then have a look at what happened to Argentina. Then check out a book called "Penniless Billionaires." The US is next, soon. Would you really want to keep your investments in cash? Do you really have that much faith in paper money? In the Wiemar Republic, it took a wheelbarrow full of cash to buy a loaf of bread. A few ounces of gold would buy you a house. There is a video on youtube of Zimbabwean's panning for gold to buy food, because their money is worthless. Are we really different?
Cheers?
Mary Holm on
Mary Holm on Gold
http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=10657709
http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=10654415
It's a shallow analysis
It's a shallow analysis 28/29....hope people realise Holm is doing a glossing gossip across topics!
Wally is bashing Holm's
Wally is bashing Holm's articles, so I'm going to assume that she isn't promoting investment in precious metals.
(No, I haven't read the articles yet.)
Mary Holm is an idiot. Her
Mary Holm is an idiot. Her articles aren't worth reading.
No, her articles are idiotic,
No, her articles are idiotic, Mary Holm herself is most likely much more clever than you. But at least she puts her name to her opinions.
Personally I think Mary
Personally I think Mary Holm's knowledge of investing is completely inappropriate for the economic futures we face - her analysis of investing in precious metals was laughably one-dimensional.
Her slavish worship of Kiwisaver is also going to backfire badly. There are going to be a lot of bitterly disappointed people who find themselves tied in to schemes that perform woefully as conventional investments crumble and the government retrospectively is forced to reduce the benefits of investing in the scheme - that 'free' $1000 a year contribution won't be on offer by 2015 at the latest. To see the latter at work look no further than the changes the UK is being forced to make - upping the age of retirement and slashing the benefits pensioners recieve:
http://blogs.telegraph.co.uk/finance/ianmcowie/100006865/savers-hit-by-m...
Take control of ALL your financial affairs - and that includes pension provision.
"Her articles aren't worth
"Her articles aren't worth reading." as opposed to your articles i suppose? Can you send me the link to your latest column?
Read this... It'll make you
Read this... It'll make you think, maybe help you realize how bad its gotten. Rotten to the core.... I've been following this for years. You are late to the party---excuse me, funeral.
http://davidmstewart.com/testing/wordpress/index.php/2010/05/21/obama-co...
Gold is the enemy to the ultimate power- the banks who can make money from nothing and charge interest. then take your house when you can't pay.
http://globalresearch.ca/index.php?context=va&aid=20056
so what will society look
so what will society look like? Will individual land ownership mean anything? will Gus coach NSW
A bit of history for you
A bit of history for you youngsters out there that shows that buying a house is the best thing you will ever do even if you "think" prices are going down. We bought our first house in the UK in 1971 for 4,950 pounds (500 pound deposit), sold it one year later for 10,500 pounds (at the time of the oil crises). Did some work on the house and sold it in 1983 for $47,500 pounds and then bought a house for 58,000 pounds. Sold that house in 1994 for 217,000 pounds when were living in Japan, that house sold in 2007 for 950,000 pounds. From 1994 to about 1997 all the talk was that houses would never be a investment again. My advice is to buy when you can and in 10 years time you will look back and realize you had a bargain even "if" it drops in the next year or two. Over the last forty years there have been many times when it has been tough but over time (Look at my 40 year example) house ownership really works. Please do not listen to the doomsters, I have seen it all before and no I am not a Real Estate agent.
Great post Keriwin. I agree
Great post Keriwin. I agree 100% that over time property is a good place to be in. It's a long-haul thing and if a person manages their finances they will be okay.
In 1970 New Zealand's average house price was about $10700. By 1980, the average house price was about $31000, by 1990 about $90000, by 2000 about $165000.
A great place to invest in the long-run.
Keriwin, some idle thoughts,
Keriwin, some idle thoughts, you bought your house in 1971 and sold at a profit in 1972. It was 1971 that a sharp recession hit the world's economy ( you may remember IOS and Bernie Cornfield's collapse then, also Penn Central's collapse at the time).
Goes to show a profit can be made even if economies are not doing well.
In that time from 1971 to
In that time from 1971 to 2007 you and me did not experience the global financial crisis that we have experienced since 2008 and it is not finished. You sold at a great time in 2007. Trying to sell property in England right now is not easy. I have friends in a lovely Shropshire village selling a 600k pound home experiencing that right now. In 2010 all over the world the average person has too much debt and a lot of them are not wanting to take any more on. The banks are being cautious in their lending and the world's finances are still in a pretty vulnerable position overall. Westpac came out last week and said house values are going to drop over the next two years in New Zealand. I dare you to put your money where your mouth is and buy an expensive house in New Zealand now. If you do you are both brave and some would say a fool.
Great effort to produce
Great effort to produce that long comment at this time of night Happy Renter; I agree with some of what you say.
RJ...society will be terrible if someone doesn't fix NSW. I don't think it's going to be Gould though.
Mind you, if it means I don't have to put up with his commentating then I'm all for him as coach!
Just read Happy Renter's
Just read Happy Renter's above. How about buying a house with a garden. You can then have chickens, a pig at the bottom and grow your own veggies. You wont need gold and silver then. How do you think we survived the post war years. Now that really was a bad time, and guess what you could buy a house then for 400 pounds. I just remembered an "old" guy of 32 telling me I was mad having a 4,450 pound mortgage in 1971....
When I bought a property in
When I bought a property in 1989, my boss then aged about 38 and mortgage-free said to me" gee I wouldn't want a $50000 mortgage".
i'm sitting here in a pair
i'm sitting here in a pair of shorts on a beach in warm thailand typing this and very content that i sold my house in early 2006 for around 150% profit and have rented ever since using the interest from my house money to pay the rent.
as the Strolling Bones sang "tiiiiime is on my side " so rather than trying to catch a "falling knife" i think i'll just surf the market down and if i like a place over the next 18 months i'll offer 20% below asking price at least which should factor in future declines...right..time for fresh coconut drink and some seafood
Be careful though rob of the
Be careful though rob of the north, too long out of the housing market and you might become an 'exile on main street'
I spoke to a chartered
I spoke to a chartered accountant in a major North Island city last night who said it was extraordinary just how many of his clients have or are in the process of selling up and going to Australia for work. He is just one professional experiencing that obviously.
You must have missed the part
You must have missed the part about how he's sitting on a Thai beach paying his rent from the interest earned on his savings from selling his house near the peak of the bubble.
It doesn't sound like he cares too much whether or not he buys another house in Wally's "Noddyland".
BTW rob, yes, we all hate your guts.
never happen,owl..i'm a
never happen,owl..i'm a street fightin' man who knows that you can't always get what you want..but if you try sometime,you might just find..you get what you need...which in my case is a sensibly -priced house near the ocean on the northside..
Price inflation is a monetary
Price inflation is a monetary phenomenon of print money. As you print, you have to give more paper to buy same said assets. 1971 was the year that the US broke its promise to tie the dollar to gold. It was $35 an ounce then. Ten years later it was $800 an ounce. How does that compare with your so-called great house investment in the UK?
Fast forward to today. Gold has gone from $250 an ounce to $1200 an ounce where it is today. Is that because gold is that great? Or because the governments are printing toilet paper?
Profits don't matter much if the money you get doesn't buy much. Gold is the only parachute in this economy of deception.
Actually, by '71 the US$
Actually, by '71 the US$ value was backed by less than 25% the implied backing of gold. All Nixon did was what had been going on for decades, and removed the last peg.
Gold went from $35 to $800.
Gold went from $35 to $800. Just another bubble. $800 to $250. Just another burst. $250 to $1260. Just another bubble. $1260 to ????? Just another.....etc
Then the best thing for you
Then the best thing for you to do Vera is stay away from gold. Do not buy any. Buy property! That's never in a bubble, especially in Noddyland.
Thanks for the advice Wally
Thanks for the advice Wally but at the moment I think I'll pass on both. You must share your wolf roasting story with us sometime.
Happy Renter, you are
Happy Renter, you are obviously very smart so you can do the sums. My 500 pounds deposit ($1,500 ish) in 1971 has grown to roughly $2 million now. Yes there is inflation and I did increase my mortgage from 4,450 pounds to 6,000 pounds in 1972 to buy our second home, I increased it to 7,500 pound to pay for a 3 room loft conversion in 1979. In 1983 I took an enormous risk in 1983 and took out a 30,000 pound mortgage to buy our third home for 58,000 pound (the one that was sold in 2007 for 950,000 pounds) , we sold that in 1994 for 217,000 pounds mortgage free. We did not buy another house while we lived in Japan (1988 - 1998). We bought a 5.2 hectare orchard here in 1997 for $275,000 we have since chopped off 2 sections which in this depressed market are only worth $150,000 each annd the main house is worth over a million in this market. we bought a second 5 acre house in 2003 for $257,000 changed the borders and sold the house and 3,000 sq metres in 2009 for $360,000 (I was on at $425,000). Bought a third 3 1/2 acre house in 2005 for $445,000, it produces $370 a week rent and $11,500 a year in avocado sales. We chopped off 1 acre a it is now worth $550,000 to $600,000 but why would I sell it, my 40 years of experience tells me it will be worth over a million in 10 years.
The answer is buy when you want, over time it will work. A good tip is to buy a house that needs work and learn DIY, you will make money if you are not paying labour.
So happy renter where did I go wrong?
I have seen gold stagnate for years on end and we don't now when that will happen. You can live in a house but what do you do with gold?
Keriwin...wonderful story,
Keriwin...wonderful story, many thanks for what is one of the most inspiring posts on this site. It's great to read of a success story here.
The gold bubblers forget that as well as capital gains on your properties over the years you would also collect years of rents if you had rented out your properties. The rents and capital gains combined swamp the gold capital-only returns.
Thank you for sharing your story with us...well, if no one here appreciates your story than thank you for sharing it with me.
All the best to you.
Nothing against your
Nothing against your strategy. I have had an awful lot of real estate myself. I just don't think now is the time to accumulate it as an asset. If I were to buy any, I would buy lower-income area property for a higher return. Right now the simple math says that it is cheaper to rent than it is to own, and prices are stagnating at best. Adjusted for inflation in price of everything else, it is falling. It will be some years before it is safe to invest again in RE.
I think you have a good thing going with what you have. I like the idea of subdividing for sure. I know very much about DIY and "sweat equity," and agree that the quick money is in buying something nobody else wants and turning it into a palace with your own hands. However, it is not very often that house prices rise faster than inflation. RE is a place to park money and slowly build net worth. It's just not very liquid.
It was real estate investing that got me interested in what affects interest rates, which led me eventually to market cycles and demographics. It also made me appreciate history, and I now eat that up. I think everybody should, because you can do your best to avoid the same mistakes made before. There really is nothing new under the sun.
As for gold? If all paper assets were to be gold backed, as thing USED TO BE, gold would be between $50,000 and $100,000 per ounce. What else is there that is an agreed store of value amongst nations? NZ should exploit some of its resources, by the way. Its a far better way to make a living than praying for more tourists.
The problem with asset prices right now, your home included, is that we don't control how much money is out there. That's determined by the banks who print money. Right now the debts of countries are so high, that they are literally impossible to pay. So the option are either 1) default and suffer the consequences or 2) "extend and pretend" print money and defer #1 to the next politician. That's what's happening in the US. Not pretty. Chinese goods are going to become a lot more expensive for Americans, whose only export now is lawsuits and debt.
I think we are in a defensive phase. Now is the time to get ready for a long winter. In the end there will be some bargains when the dust settles. The dust is stirring right now.
What can you do with gold? You can buy things. But you say that you want to keep your property to sell it for $1M. That could be the case, buy what if $1M buys you only a postage stamp. This is no joke. This has happened before...look up a story in the book "Penniless Billionaires" or google for "Weimar hyperinflation."
2 choices- default on debt and all prices crash, or hyperinflation and you don't know what your money is worth any more. Hyperinflation is actually worse of the 2. If we have/had a Depression just like the last, then investing would be simple- you'd invest in gold mining. Did you check out Homestake Mining? It did quite well in the last Depression.
Hi, sorry I missed this
Hi, sorry I missed this post, sorry I am not very good at this. Yours is a good post. I just think you have to live somewhere and it might as well be your own home so you can do what you want to do with it. I know all about high inflation we have had our fair share of it over the years, but house prices have always matched it. You have to have a job and it seems things are starting to be more stable on that front. CNBC reported on Friday that banks are starting to hire again. that is a good early sign for improvement. Don't get me wrong I think the UK and USA are in deep long term trouble (my daughter lives in NY) but i think NZ has a great long term future within Asia. I agree about our mineral wealth, Lets just hope John Key has the bottle to tell the greenies where to go.
Keriwin between the 2002 and
Keriwin between the 2002 and 2007 house values went up a far greater percentage than the cpi and wages/salaries all over the world including NZ. That is the problem we now face. It was not justified. House prices primarliy went up because it became fashionable to have housing investments and for some that meant buying 10,20,30 even over a hundred. That is called greed. When people do that they compete with each other like the farmers did as to who had the most farms. Houses did not go up with inflation. Incomes did not go up like house prices. The increase in house values because they went up in value so much more percentage wise compared to the cpi increases between 2002 and 2007 those increases cannot be justified. That is the problem we now have and that is why they are going to go down in value for some time. To catch up with cpi in real terms and wages/salaries in real terms.If they don't catch up people will not be able to afford them.
"...[W]e lived in Japan (1988
"...[W]e lived in Japan (1988 - 1998)."
Interesting. Where in Japan? My wife is Japanese and we lived there around that same time, and off-and-on for a few times since. Where were you based?
Happy Renter, you are
Happy Renter, you are obviously very smart so you can do the sums. My 500 pounds deposit ($1,500 ish) in 1971 has grown to roughly $2 million now. Yes there is inflation and I did increase my mortgage from 4,450 pounds to 6,000 pounds in 1972 to buy our second home, I increased it to 7,500 pound to pay for a 3 room loft conversion in 1979. In 1983 I took an enormous risk in 1983 and took out a 30,000 pound mortgage to buy our third home for 58,000 pound (the one that was sold in 2007 for 950,000 pounds) , we sold that in 1994 for 217,000 pounds mortgage free. We did not buy another house while we lived in Japan (1988 - 1998). We bought a 5.2 hectare orchard here in 1997 for $275,000 we have since chopped off 2 sections which in this depressed market are only worth $150,000 each annd the main house is worth over a million in this market. we bought a second 5 acre house in 2003 for $257,000 changed the borders and sold the house and 3,000 sq metres in 2009 for $360,000 (I was on at $425,000). Bought a third 3 1/2 acre house in 2005 for $445,000, it produces $370 a week rent and $11,500 a year in avocado sales. We chopped off 1 acre a it is now worth $550,000 to $600,000 but why would I sell it, my 40 years of experience tells me it will be worth over a million in 10 years.
The answer is buy when you want, over time it will work. A good tip is to buy a house that needs work and learn DIY, you will make money if you are not paying labour.
So happy renter where did I go wrong?
I have seen gold stagnate for years on end and we don't now when that will happen. You can live in a house but what do you do with gold?
Keriwin I notice you have not
Keriwin I notice you have not replied to the comment at 9.51 this morning. I do not think you can. We are in extraordinary times, times that you and me have never experienced before in the years 1971 to 2007. In that time there was a lot of inflation. From 2002 to 2007 there was a huge increase in property values all over the world caused by cheap assets in the first place, cheap borrowing rates and a lot of greed as people literally fought to get as much property as they could. In 2008 that sentiment reversed. People were talking depression. Certainly we are still going through an economic period that is literally the most devastating period of economic turmoil since the actual depression in the 1930's. We have a long way to go as the Economic Monetary Fund stated recently. People who know more than me and you say we are going down again before we start recovering as a world economy. You keep going on about what your properties are worth today. You just cannot do that at present as it is a strong buyers market. Talk to agents, bankers, mortgage brokers,lawyers and people in the market itself and they all say the same thing. The market this year in NZ has been bad, in the last three to four weeks it has gone really dead and they all say it is going to get worse and spring is not going to give instant growth in sale prices. You need to put a property on the market and get an offer on it that is unconditional and then get it settled before you can say a property is worth so much. We are in extraordinary times. People I know thought they had sold their farm to chinese buyers who have defaulted at settlement. This is now going to court to get sorted out. Valuers can only work on what has sold recently. If you buy something for a certain price that is now the benchmark for the type of property you have bought. That is the market price even if you thought it was bought at a bargain.
" People I know thought they
" People I know thought they had sold their farm to chinese buyers who have defaulted at settlement. This is now going to court to get sorted out."
This is not the first time this sort of situation has been reported on this site. Is it less than rare? Do we have to worry if we have sold to an offshore person? And is there any recourse if they are out of the country?
"From 2002 to 2007 there was
"From 2002 to 2007 there was a huge increase in property values all over the world caused by cheap assets in the first place..."
If you're referring to houses as having been cheap assets, you're entirely incorrect. Houses were not inexpensive before the bubble and they weren't undervalued. For the most part property prices then were largely inline with the fundamentals, such as incomes, interest rates, inflation, and the cost-of-living.
It was only when the bubble inflated, with all the hype and hysteria that went with it, that property prices increased without good reason, and it was only the willingness of banks to loan too much to too many with too little to buy property that cost too much which allowed prices to continue to rise and the bubble to keep expanding.
Once the world economy began to contract as a result of the so-called credit crunch, and banks finally ended their highly-questionable lending practices, effectively bursting the property bubble, people began to recognise the mess they (and the economy) were in.
Few are able to get the necessary funds from banks now to continue buying property, and even fewer wish to. It's a time to take stock of personal circumstances and situations, pay down debt, and save.
That means the property bubble is doomed, and property in-general is a very poor investment option.
Sorry I posted it twice,
Sorry I posted it twice, you guys have a real advantage over me with technology.
'All good things take time.'
'All good things take time.' Press, and wait, for the post to take. It eventually does! It's more Bernard's speedy site, than a technology thing; but he's working on it!
I just posted something and
I just posted something and I list it, bummer.
Things are tough at present, but it has been worse in the past. If you have a job things are not so bad and unemployment seems to have peeked. All the lawyers Real estate agents you talk to have all got the hand in your pocket, do not worry about them and just get on with your life. we lived though IMF bailouts, rise of Opec, IRA terrorism, collapse of the pound, high unemployment. 3 day week and lots more. When I was a kid we had ration books and no shoes.In 1971 we had 500 pounds as a deposit on a 4,950 pound house (10%) in one year it went up to 10,750 so my 500 pound increased to 5,250 pounds. My wages went from 26 pounds a week to 40 pounds a week. Inflation has and always will be a house buyers best friend.
NZ has a great future as we have real gold (water) and billions of Asians who want our stuff. Old europe citizens and Americans will be flocking here in the future. I could have gone to live anywhere when I retired in 1998 and I chose NZ simply because it is the best place on earth and I have been to most places.
Just buy a house when you are ready and time and inflation will take care of the rest.
Gold, well my 500 pounds ($1,500) has increased 1,333 times to $2 million over 40 years. If Gold was US35 in 1971, times that by 1,333, it should now be US$46,655.
Keriwin if you actually exist
Keriwin if you actually exist and are not The Man posing as Keriwin you do not get the point and you certainly have not even tried to answer it as you cannot. You just blindly say the same old thing "you cannot miss with property."
People who boought in 2006/2007 are generally now selling at a loss and some of them are actually quite big losses. I know because I am a professional associated with the RE industry. Those losses are getting worse by the week at present. It is dead out there. Even agents will tell you that,the honest ones that is. Westpac are saying that.Going down over the next two years. People are off to Aussie again by the droves. People are still being laid off even in banks and RE firms. Interest rates will rise over the forseeable future. Mortgagee sales are still very prevalent and people are still being made bankrupt like never before. The main factor against property continuing its incessant climb is our incomes in Nz. They have not gone up in the same fashion as house values. I think you should be very careful about telling young people to go out and buy a home right now. As long as they continue to save good deposits they cannot lose in a dropping market by holding off and renting as when they buy they will get more bang for their buck and they might even be able to borrow less. You need to get your blinkers off and focus on what is really happening. The world is in an almighty big recesson like we have never seen since the 1930's and it is going to hang around for sometime yet. Governments worldwide ,businesses and individuals have an almighty amount of debt to tackle before we start recovering. I do not think we will see anything like the growth in values of assets and excesses in borrowing again in our lifetime. It is alright for you and me to encourage people to buy when you and I have a lot of fat to fall back on as we have been in the market a long time.It is all about timing. Now is not the time as values are going to go backwards for some years yet. Only a fool would buy now.
Here's the biggest change,
Here's the biggest change, Keriwin, from your own figures.
"In 1971 we had 500 pounds as a deposit on a 4,950 pound house ... My wages went from 26 pounds a week ..."
£26 X 52 = £1,352. £4,950/£1,352 = 3.66
So that mean you only needed 3.66 years worth of your own single income to pay off your house.Today the average single income is about $50k and the average house about $350k. The ratio is over 7 times the yearly single income to buy a New Zealand house. The housing market on those figure alone is twice as unaffordable now, as when you started. And don't give me that bit about "it's household income, today". It was back in 1971, when couples got married and started down the road of life together. At what stage is unaffordable, totally unaffordable? I'd suggest that stage is now.
Well done Anonymous. You
Well done Anonymous. You cannot compare the market today with the market in 1971. Keriwin is just living in the past when times were actually more prosperous than they are now. People might think we are better off than those in the seventies but the average person now has hp,credit card,store card and car debt as well as house debt. You did not have that in the seventies. The financial stress today in society far exceeds the stress of years ago. Asset values are certainly under pressure.
Oh poor Anonymous, things are
Oh poor Anonymous, things are so tough now, not like the easy 70s and 80s and 90s.
The biggest change to all our
The biggest change to all our lives! Easy credit. No wait, debt......
"Bankcard. Issued in Australia and NewZealand from1974 . It was a joint venture of the Australia's largest banks, and was the nations first mass-marketed credit card. Before 1974, only Diners Club and American Express were available and these were either restrictive, or only accessible to the wealthy"
Sorry I have to go out now as
Sorry I have to go out now as I am a volunteer Duty Manager at "The Centre" in Kerikeri tonight. I will reply to you all in the morning before I go to church.
Let us know how "Liberace
Let us know how "Liberace Live from Heaven" goes down in Kerikeri.
We did not sell many tickets
We did not sell many tickets but it was a great act. We had two full houses for the Irish dancers yesterday, it was a busy night.
Keriwin must be a really neat
Keriwin must be a really neat guy as he goes to church and he does charitable work. We should all believe everything he says. I must buy some investment properties as soon as possible before I miss out on the capital gain I will get. Those people who are negative on property are not to be believed. I bet they don't go to church.
Yes, that's right, run away
Yes, that's right, run away when you cannot answer the questions without looking even greedier and more clueless than you already do.
"The Man/Rich PI Troll/Keriwin/too many other sockpuppets to name..."
lol - such funny angry people
lol - such funny angry people on here lately. Chill out bro. They are probably just taking the piss and laughing at us getting all agro.
Just take other peoples life
Just take other peoples life experiences to help you look through what for you is a tough time. I am not trying to annoy anyboby. We have had really bad times in the past and ther will be more bad times in the future so you have to just do what is best with a long term perspective not just a year or so. We don't know what next year will bring. What happens if we find billions of barrels of oil or that Mt Egmont is made of gold.
We do know what is happening
We do know what is happening next year Keriwin. Westpac says house prices are going to go down just like this year. And you have the gall to come on this site and tell people they should buy property now. Do you know more than Westpac. From what I have experienced in your simplistic views and your grammar I think not. There is not one good reason why any more property should be bought at the moment. All the factors out there point to a continued drop in values for some years to come. Only a fool would buy now. QV will confirm that tomorrow.
You believe what banks say?
You believe what banks say? Where have you been.
Thanks for calling me
Thanks for calling me simple, I told everybody I have mild dislexia. But we a great engineers and thinkers outside the square, that is what we need in NZ and its good to have some pen pushers to flower up our thoughts. I think I am the one who retired at 49 and I only ever owned one house at a time. Hard work, time and inflation always has and always will be the way to win. Timing and the future, none of us know that.
How can you say "time and
How can you say "time and inflation always has and always will be the way to win." and "Timing and the future, none of us know that" in the same post? You can't have it both ways!
because you will always get
because you will always get a pay rise no matter what even if it is less than inflation. This will always make your mortgage a smaller percentage of you income
i've just been sitting in
i've just been sitting in the clifftop reggae bar on kata beach in sthn thailand watching the waves roll in mixed with abit of monsoon rain.... drinking beer chang and eating green papaya salad with prawns and chilli crab and feeling so sad that i can't be with you all back in the colonies where you worry about the most unusual things...one of the Anonymous posters above is the reason why i keep dropping in here as the humour he /she ( maybe he/she is a transgender..who knows in this age?) he/she displays is excellentiissimo..liberace.live from keri keri..how come i missed that on ticketek?
even wally seems a bit subdued for an ole retired civil servant trying to eke out a basic living pruning grapes in the vineyards of marlborough...the truth of the matter is we're at the mercy of economic forces far bigger than us lil dreamers in n.z...gold will dip as global hedgers cash into liquidity and then it'll rock back..if it gets to $1500..bale..don't be greedy...don't buy gold, buy where they makes the stuff like NCM on the ASX...actually ROL and IGR are your best bet as they're on the way up and well managed..maybe SBM.
property in n.z...well, get over it and find something new to mutter to your maaaaaates at the bbq cos she's all over rover and heading to be as about as popular as shares were after the '87 crash...no biggie...don't base any of your financial judgements on the past and turkeys that talk about real estate "wheels' going round etc...we're heading into a new financial age and no-one has the map...there definitely will be another big crash over the next 18 months as the traders globally still haven't learnt their lesson...local pty will wallow for another 5 years but even though i'm chilling up here in the Land of Smiles i have every faith in john key, steven joyce ( the next PM) to set the playing field up for nz to survive the next decade.
right...time for a swim and practice singing " brown girl in the ring"...more humour and discourse pse
wasn't keriwin that talking
wasn't keriwin that talking green frog in the muppets?
you got it.
you got it.
Does Bernard Hickey remind
Does Bernard Hickey remind you of C3PO. Jim Hickey played C3PO years ago
Simple math for own vs
Simple math for own vs rent
$450,000 average house, average interest rate 7%, payments of principle and interest of $2993 per month. Plus rates, plus insurance make total of approximately $4000 per month. This is not adding the $20K + for real estate commission when you sell in less than 5 years ON AVERAGE.
Rent same house = $400 per week X4.3 = $1935 per month, saving $2000/month in the bank earning interest, or buying gold, which moves with inflation, just like houses.
Right now in the US, this is exactly what is happening. People are MAILING their keys back to the bank, and renting another house down the street for half.
Simple maths just doesn't
Simple maths just doesn't add up (pun intended) for the average Kiwi home lover. ;-)
Sorry but your maths are
Sorry but your maths are wrong you only looking at year one. Do a spread sheet for the next 10 years using inflation forecasts and you will find the mortgage is the same but the rent will go up. Then do the same over 30 years and you will be shocked.
In America the banks own the debt so you can just walk away, but here you own the debt so you can't do the comparison. My daughter rents a shoebox in NY and pays US$1800 a month and that is cheap.
Gold does not move with inflation. I posted the proof of that yesterday.
I am not sure how $2993 plus
I am not sure how $2993 plus rates+insurance becomes approx $4000?
they call it jingle mail in
they call it jingle mail in the States..
.buggared if know why it is but it's legal to just post the keys back to the bank and walk away over there..no one pursues you for the debt..wouldn't happen here.
btw the US is starting to experience another big housing fall.....one day soon first home buyers here will be able to get back into the kiwi dream as houses will just drop,drop,drop to around 2000 levels...and young owners will praise the govt.of the day for helping that.. and wait till bill delivers next years budget..more taxes coming on second homes or properties...i know these things 'cos i've got crystal balls, you see!
meanwhile back in the
meanwhile back in the jungle:
"Just last month China signed more than $8.8 billion of new commercial and mining deals with resource giant Australia, despite its southern neighbor’s onerous new resource profits tax laws. The Middle Kingdom’s voracious industrialization inhaled around $41.7 billion worth of Australia’s minerals in 2009, including almost $20 billion of iron ore and concentrates.
Last year China also became Brazil’s number one trading partner when it agreed to lend $10 billion to Petrobras in return for guaranteed oil supply over the next decade. Other projects between China and its South American BRIC counterpart included a $5 billion steel plant at the Acu port in Rio de Janeiro state. That deal represents China’s largest ever investment in Latin America’s richest resource economy and its biggest foreign steel-plant investment."
Petrobas?....aren't they the ones that are going to start drilling off our east coast around tolaga bay?
dairy farms..'oil...where's wally?
o.k...another beer Chang ,please..rock on elves!
Good on ya Rob of the North,
Good on ya Rob of the North, watch out for those lady boys ;) Keep looking out for that Hibiscus Coast mansion
Unfortunately not everyone can 'cash up' and have the cool holidays, most people in NZ work hard for a fairly average pay packet and just want a roof over their heads for them and their families. People need a house to live in whether it been rented or mortgaged.
HAPPY RENTER, good on you for renting and I do not dispel your sums on renting vs buying (although the avg price in NZ is 350K not 450k). There was a post on this blog a few days back by someone gleeming that they were only paying $550 or $580 per week while the neighbouring place was empty and looking for someone to rent it. Shikes!$580 a week! Are you living in Buckingham Palace?For $580 a week that pays all the repayments (interest top up, rates, maintenance, insurance etc)on my three rentals or is slightly more than the weeky mortgage repayment on my modest family home. Wow.I hope you get a free herald, Xmas ham and lawns down for $580. I think alot of people want the house their folks, older peers live in, so they rent it and then moan they can't buy it.Just my humble view
Also read here that it's important to pay down debt and save. Yes I agree with this notion. My question is what if everyone stops spending/consuming on everything but the bare basics in life? I get a little confused with the RBNZ, 2 years ago they were saying stop spending and start saving, now they are saying we need to spend our way out of the recesssion. Hon Bill English and co also chime in and slam the property market in one breath and next breath describe the property market as an economic indicator of our success and recovery??
Have a great Sunday all, regards
At $580 a week, it might have
At $580 a week, it might have been half the cost of making a mortgage payment in the same neighborhood living in the same type house. While the suckers make their loan payments, this guy is free to leave any time he likes. Trees don't grow to the sky forever. Bubbles pop.
I agree TOTALLY with this statement by Rob"
"we're heading into a new financial age and no-one has the map"
Classic! I said something similar to that for some time now! I have delved into history, and can use that as a guide. Final analysis? WE'RE STUFFED!!!
All that governments around the world are doing right now are putting off the day of reckoning on to the next administration or generation, and printing money. That printed money is SUPPOSED to trickle into our pockets by new loans getting made by banks, but THAT HASN'T HAPPENED. The banks are more interested in their own survival than what you and I think. They are re-investing the money in government securities for guaranteed income and slowly cutting loans, hoping nobody notices... Well, I notice, and pretty soon a lot more will too in this country who are, as of now, quietly getting desperate. It's probably happening on your street right now. i know it is where I am. A lady a couple of doors down is trying to sell her house for less than the amount of the loan- and no buyers. She can't pay the real estate commission either. The bank will end up with it and take a loss. But hey, the bank can count on YOU making good on your payments, right? Even if your house goes down in value another 20%? When that happens, how long do you think it will be before more of your neighbors are in the same boat as this lady? She is just first in line, and first to relief from bankruptcy for her debts. Better people to start now and not fool themselves.
So you got old Bill telling us all to "do our duty" and spend spend spend. Same was said in America- "do your duty and go spend." How's that working in America? Ask your average homeowner there, whose neighbor just got foreclosed and house sold for half price, driving the value of of said homeowner's house into the ground, below the value of his mortgage. Guess what's next? That's right - JINGLE MAIL....as more and more people are doing what's called "strategic default." They walk away, mail the keys to the bank, or simply stop paying as wait for the next shoe to drop. There's more to the story, as a lot of these defaulters actually still live in their homes for some going one 2 years for FREE. Meanwhile they keep the money for what would have gone to mortgage payments. As time goes on, this will make sense for more and more kiwi's. Eventually the bank has the sheriff kick them out of the house, but they get free rent until that time- and that can be months and months. People don't care any more. Why work for the bank to make good on payments when the banks are paying themselves huge bonuses? It will be years of overpaying on a mortgage before home prices are more than the value of the mortgage for so many in NZ right now. Bankruptcy, and then renting, is easier. They can buy their house back 5 years from now for probably the same price or less, assuming the economy is actually better then (doubtful at this point).
The laws favor the banks waaaaay too much in this country. On the flip side, it will cause an uproar in the future as more and more people will get stuck in their homes, as the value of their homes falls below the value of their mortgage. They will be chained to the house making those payments, and many will as their "duty" and people like Bill English will smile and say "good on ya." However, the banks won't be lending, so there won't be too much buying, so prices go down relentlessly, making existing homeowners very restless. In the end, I think we will see "strategic default" here as well. People will have to do the math and ask "how much more will I be paying to support this house for the next 3 years vs renting?"
Because doesn't it take 3 years to fully discharge a bankruptcy in NZ? Better that then being a bank's bitch for the rest of your life! I think we will see this, if America is any indicator, especially as the crash in OZ becomes headline news. Who will buy then? Who will lend then? ANZ? BNZ? National Bank? etc? Won't they be DEVASTATED by their losses in OZ? Oh wait, they have to shore-up their balance sheets, so no more money for you, but please keep making your payments on time, thank you very much. Nobody can buy your property if they can't get a loan to buy your property, so you hope that you can keep your job so you can make your payments. That's why I tell everybody to "get liquid," and buy shiny little things. History repeats. We are in unprecedented times.
In fact, the bankruptcy laws are a bit better here than they are in America. There was a major overhaul of the rules in 2005 that favored the banks (the banks made a major contribution to Bush, apparently). I think things could get very ugly soon there, and people could possibly take up arms as they lose everything and banks continue to pay themselves bonuses. As George Celente says "When people lose everything, they lose it." "It" being their minds. There is nothing more dangerous than a person with nothing more to lose.
Boy you must be 100+ to now
Boy you must be 100+ to now how the past will affect the future, funny I have been around a few years and must have missed reading the news. It is nice to know that some of you now exactly what is happening. Please explain what happens when 4 million people cant pay their mortgage, I presume the banks will evict them?
That was me; and it's $650
That was me; and it's $650 p.w. I pay. It's the 'empty' they are trying to rent for $580. But It still make a vast difference.
The empty is also on the 'for sale' market for $725k. Do those same sums as the previous poster and it still way cheaper to rent ( Oh, and the Body Corp. fees here are 8k p.a.) Rough sums say "I rent @ $650; owning would be $1130 p.w. "
You should have sold those
You should have sold those three rentals when the market peaked in 2007 and paid off part or all of your debt on the house you live in. Now the value of all four houses is going to go back to levels you cannot or will comprehend and you are going to have quite a bit of debt on them when you average it out over the four houses. You think you are clever but in fact you have missed out on a big opportunity to sell down and reduce debt overall. You are so tunnel visioned and focused on helping your kids you could not see it. So many did but I suspect they have more vision than you. I don't think we will be reading your usual rubbish in a few months time as property prices continue coming down. I bet you are hoping Westpac are wrong. I think their forcast was for a two year drop back in values if I recall. Real investors can read the market and are flexible. I know of many who took their profits in 2007 to 2009 and are waiting now for the next cycle.It is going to be a long wait. Like the Springboks you took it for granted and failed to read the market downturn.
Next cycle? It's the New
Next cycle? It's the New Normal, anon. There isn't going to be a next cycle that invloves where we have just been. The last 25 years have seen us hit the peak of any cycle you care to look at. It's all downhill from here; with no recovery back to former highs. No need to buy property for many, many, many years.
Anon- I' was Mortgage free on
Anon- I' was Mortgage free on my family home after 3 years aged 28 and will be on another rental in 3 years. You call it tunnel vision but I have a plan, hope you have a pension plan. Springboks failing to read the downturn....sorry you lost me there
You say your payments on the
You say your payments on the home you live in are at least $580 a week. As I said you could have taken your profits in 2007/08 and paid all or part of that off. Sounds like you did the opposite to the smart people who sold all or part of their properties and go some debt off the table as property goes into its negative cycle. I suspect you have bought recently as you have a reasonable mortgage on the house you live in. Now that was not smart. Unfortunately people like you who think you can never lose with property cannot think flexibly,outside the square,expansively. Your tunnel vision in fact does not allow you to take advantage of the market peaks and troughs and boy are we going into one now. When I compared you to the springboks I was comparing your bragging with their confidence. That caused them to lose last night and your cockiness will cause you a big loss in wealth. You failed to read the signs. Tomorrows QV results will only enforce that fact.
Tell me where in history
Tell me where in history owning a house over10 years or so has been a bad buy. I seem to have missed it in the last 40 years
Because we have just avoided
Because we have just avoided something called a depression and are still in the worst recession since the 1930's depression and have a long way to go to get out of it.Some even think a double dip is possible. I hope not.You and I have never experienced this level of fiancial turmoil before. The next five to ten years are going to see prices of houses go down in value and I include inflation which erodes all our wealth. Why buy now when in ten years or so time you can buy so much cheaper. You might then get some gain then but I think all gains in yours and my lifetime are going to be very minimal as the ability to get credit and confidence will never be achievable in our lifetimes like it was in the 2002-2007 years. There is too much damage around us caused by so many people borrowing so much money. It is going to take a long time to work that damage out of the system. If you see it different you are the eternal optimist who does not live in the real world. I know as I work with the casualties of this greed everyday.
But didn't you hear? "This
But didn't you hear?
"This time it's different!"
Maaaaaaaaaate!
In the Thirties you could buy
In the Thirties you could buy for 100 pounds. But you are much smarter than me because you know the next ten years will be bad
"we need to spend our way out
"we need to spend our way out of the recesssion"...fat chance of that when we also need to save our way out of debt!
"We need to spend our way out
"We need to spend our way out of the recession."
Yep, that's as stupid as the tripe all those sleazy sales types used to spew at the property investment seminars about "the power of positive-thinking".
They want the gullible punters to go on believing that between 2003-2007 things were "great" simply because people were "positive", and not because the banks were rubber-stamping all those funny-funny mortgages for any clown who asked for one
"Forget the fundamentals and the facts! Just think positive and all your will dreams come true!"
Hope those real estate
Hope those real estate companies saying the markets are stable.. READ THIS!!
We had several years of
We had several years of splurging waste with a lack of taste..now we will have several years of cutting back and taking losses..all the while with fewer bosses...business closures and departing Kiwi...higher taxes and govt theft thru inflation across the nation...lookout savers your stash of cash, is soon to be a pile of ash.
Yes I do exist and I live in
Yes I do exist and I live in the Far North.
Two things that have changed in the last fourty years.
1. When we got married in 1971 the banks loaned 3 1/2 times the main earner and up to 1/2 the main earner, however most wives only worked part time or not at all. Life has harder in those days, we did not have disposable nappies and automatic washing machines and driers then. We also made do with second hand furniture TV etc and we never had a phone. Today your generation must have it all and it must be up to date. I know because I have a 30 year old son and a 32 year old daughter. The second thing is now all women seem to work so the banks lend against two incomes which I think will the increase the lending ratio from 3.66 to nearer seven.
You say people are selling at way below valuation, well the simple answer is don't sell, sure some have to and that is a shame but over time you will be well ahead.
I also read Tony Alexandra and this week he wrote a great piece about the economy which you should all read, I know you will say he works for a bank but he uses actual data.
You say in our day we never had credit cards etc, well that is right we bought everything with saved cash. there is nothing stopping you from doing the same, you don't have to keep buying new and having the latest of everything.
I am just saying you can't time the market so if you have a job just buy a house, time and inflation will take care of the rest.
By the way I lived in Oxford and worked as an engineer in the car industry at the time when the Japanese were rising. We employed about 25,000 people in 1966 and that is now down to 3,000. In my are Overseas Manufacturing where there were 400 of us in 1979 we closed several of our factories I saw us reduce down to 32 in a single day, it is never nice to see grown men cry. So we have known really bad time but they always end.
Sorry must get off to church. Have I answered all the questions?
"just buy a house". Yeah.
"just buy a house". Yeah. And while they're at it, just buy the island of Antigua and just buy a Boeing 747 to get to work. Talk about missing the point, which is that prices are now grossly inflated in relation to wages. All those red herrings about how those younguns want everything new and flash are just self-congratulatory myths. You're so puffed up and complacent - how would you have managed if prices in 1971 had been four or five times what they were, but you were still on the same 26 quid a week? Hmmm?
You know what kakapo...we
You know what kakapo...we might be seeing real wages fall...making the bloated valuations in the property ponzi scheme seem even more pie in the sky stupidity. I'm picking the revenue numbers are getting sicker by the month. English may soon have no option but to swing the axe on state sector pork...the UK destruction of wasteful state splurging socialism could well see a repeat down here in Noddyland and that will mean falling wages...leading to falling revenue on lower spending and before bill knows what's up the revenue coins in his double dip pockets will have fallen thru an ole.
I don't think there's any
I don't think there's any 'might' about it. Real wages have been declining for decades.
Nominals are about to fall as
Nominals are about to fall as well, if my wife's friend is any example. She's up in Auckland this week, and has been offered a replacement contract as her old one expired on 30/6. It's for $20k less p.a. ! Same job, same hours , same conditions. But the Co. can't aford it's wages bill.
"We'd love yo to stay, but, well, there's lots looking for this job". What a dilemna.
Whoever could have guessed
Whoever could have guessed that increased unemployment, concentration of jobs in the minimum-wage ghettoes of food service and retail, reduction in real wages and removal of manufacturing and industry from the economy would have led to decreased revenues? No wonder our leaders were poleaxed by that staggering development.
Sorry for not pressing the
Sorry for not pressing the reply button, I am just learning how to do this. After the war life was hard, more than you can believe. you bought second hand grew your food as there was rationing and you just made do, No lattes and meals out, not even a phone and house prices were based on just the man working now it is based on men and wives working so hence the price has gone up.
"We did not buy another house
"We did not buy another house while we lived in Japan (1988 - 1998)."
Okidoki, Keriwin. Factor in that 'you did'. You seem to have been an advocate of owning houses in all the other times of your lives. So where would you be now, financially, if you had? That Japanese soujorn from property probably saved your bacon! Why didn't you buy in Japan in '88? Probably because it was overvalued; too expenseive for you, otherwise your would have. After all, you bought when you came to New Zealand. Why? Because it was ' cheap' then. The figures of rent/buy made sense to own.
Would you have advcised a colleague in Japan in 1988 to ' just buy' and hold? If so, they'd be pretty angry with you now.
There's a time to buy; a time to hold and a time to sell. It's only the latter than makes any sense at all in New Zealand. today; at these prices in any way you want to look at them.
Not a great response Keriwin.
Not a great response Keriwin. You are living in the past. You have to look at living in todays world. Most women I know work part time and on a lower hourly rate than male counterparts. Houses are being sold below 2007 market values and that is now their valuation and for the houses in that area of a similar type. You cannot look fondly back to what your house was worth in 2007. We are still in a global financial crisis and some talk of a double dip. Heaven forbid what that will do to asset values. It sure will not increase them. Inflation does not increase you worth,it actually erodes your worth. Your dollars do not buy more. They buy less. Just because your house was worth $100,000 in 1990 and now is worth $400,000 it does not mean you are worth $300,000 more than you were in 1990 as inflation has eroded the value of each dollar. you might be worth say $200,000 in real terms if you are lucky.It depends on what inflation there has been over the last twenty years. Lastly a lot of people have to sell their homes or rentals now as they bought them at inflated prices and borrowed a lot of money to do it. They followed your advice. As a result they are in financial trouble. Will you bale them out. I hope your children are not taking your advice and buying property now as they are going to be very disappointed. But you know more than Westpac.
Sorry it should say 1/2 the
Sorry it should say 1/2 the second earner, stupid key board...
Strategic default
Strategic default representing 1/4 of all foreclosures in US, as more people do the math here, same will happen eventually. Good article about real people. Positive thinking not working for a lot of people right now.
http://money.usnews.com/money/personal-finance/real-estate/articles/2010...
Morning all! Here is a true
Morning all! Here is a true anecdote for you. My sister and her husband rent a nice place on the north shore and on Monday last week they had a major plumbing problem so they called B&T (I think it is) who are managing the tenancy and the landlord had to spend heaps to fix it. On Thursday B&T called to say the landlord told them he was going to have to raise their rent because the house was costing him so much money and he's not making anything out of the deal. So Friday they went looking for a new place and found one not far away near the beach front and very tidy, better than their current house and with excellent sea views plus lower rent. My sister emailed B&T to give notice on the place they are in and within an hour B&T was on the phone to say that the landlord had changed his mind about the rent increase. My sister had already agreed with the owners of the new place to move in so she told B&T 'sorry, we're out'. B&T called back again in half an hour to say the landlord would match the rent of the new place, but my sister and BiL so like the newer house that they are definitely moving. It's really silly of their landlord because they are ideal tenants. They have no kids or pets and are both well paid professional people. They lived quietly in that same house for almost five years and kept it immaculate. For the last three years they have been saving for a house and now they will be able to save more as well as having a better place to live.
But I thought rents were
But I thought rents were going up? Look at all the extra costs that the new tax rules are going to add; the GST rises; and the interest rate rise. Someones got to pay for all of those, and it's going to be ....
In case you haven't noticed,
In case you haven't noticed, the economy isn't doing so well lately, and people's prospects aren't all that bright right now. Many simply cannot afford any rent increases thrown at them.
Landlords who assume their tenants have no other choice but rent their investment properties are soon going to discover the hard way just how wrong that notion is.
Bravo! I couldn't have said
Bravo! I couldn't have said it better myself! You are a word artist!
Here's one- the market doesn't care what you and I think...and neither do your tenants, for that matter. All you positive thinkers out there can buy all the great, bargain property on the market right now. But wait! The bank won't lend you the money, you say?
I have a neighbor who has rented the same place for 5 years. His landlord just raised his rent $30 a month on some lame-ass excuse that he "isn't make enough money on the property." As if that's the tenant's problem!!! He's looking for a better place now, because in that price range, the world is now his oyster. We just shifted as well. We went from living in someone's converted back yard to having a view, more space, and lower rent! Oh, and now we have a wood stove. The last place only had a crappy natural gas stove that sucked the heat up the stove pipe.
This is just another example
This is just another example of stupid a lot of investors have been in loading themselves up with so much debt on their rentals and just how desparate they are to keep it all hanging together. They did not show a lot of good judgment and intelligence when they put their heavily leveraged portfolios together and when they deal with their tenants who they need to keep it all going. It is only going to get worse for them as property prices continue to drop and costs go up and the banks get more edgy. Wait for the bottom which is years away.
LOL. Mobile rang and I asked
LOL. Mobile rang and I asked wife to answer it for me. "Press any key" I said. She pressed the Hang Up key. " Not THAT key, I cried, ANY key.." ??
Was she the one who told the
Was she the one who told the system 7 help desk that she had been round the house and closed all the windows but the computer still refused to do anything?
Mine 1.35pm was supposed to
Mine 1.35pm was supposed to link here. I wonder why it didn't?
Hmmmmm....Replies not linking
Hmmmmm....Replies not linking to original posts, Bernard.
Buy a mac! You'll never look
Buy a mac! You'll never look back.
..and so it came to pass
..and so it came to pass that a sense of forbodeing and shivering went through the 'sheeple" of the land....they sensed a rustling noise in the long grass and a low growling sound as if something was sharpening up it's fangs and would soon crash down upon them?
they pawed the ground of their over- priced properties and wondered what tomorrow would bring?
then suddenly...a sense of falling ,falling ..panic set in!
they pressed the "hangup" key and nothing happened!!!!!
they pressed the "john key" and still nothing happened........!!....zzzz....buzz...
.across in the distant valleys they could hear the sound of laughing and happy people that they had always looked down up...."blody useless renters" they used to mutter under their 'sheeple" breathes...but now they wished they'd listened to Darth Hickey and sold when the omens were foretold...too late...here come the warm jets!!!!!
another beer Chang please ,chiquita!
Hi Anoyomous at 10.41 am,
Hi Anoyomous at 10.41 am, you prove my point about inflation and time when you have the mortgage in 1990 it does not go up in time so in 2000 it is the same but your wages will have gone up so your mortgage is a much smaller potion of your income. That has happened thought history and will carry on until the future.
I now Europe and the USA are in a mess but we are now more aligned with Asia and you youngsters all have a great future here, it might feel tough at present but it is a fleeting moment in time. Buy now if you want a home, enjoy learning DIY to improve the place and in 10 years you will be happy you did, sure it might go down for a year or two but none of us really know that .
By the way by company were paying $14,000 a month to rent a "Western" style house in Tokyo and I was earning 10% interest tax free in Nz as I was a Japanese resident. The biggest mistake of my life was to sell in 1994 for 217,000 pounds, as I said it sold for 950,000 pounds in 2007. But you should never look back but learn from your mistakes.
By the way nobody has commented on what I said about gold in 1971 and now, come on Happy Renter you want to look at a gold bar in somebody else's house but be careful in two years time they might kick you out, much better to buy and have a long term project.
In my twenties I always said I would retire at 40 and my work mates laughed at me but if you work hard on your home and at work it can, I retired to NZ at 49 and I knew nothing about rental houses before then.
The last two tenants in my Avocado house were English Families who escaped the old world and are renting until they sell there houses until they can sell. With the cutbacks in the UK they will be arriving on these shores by the boatload.
They are going to go down for
They are going to go down for a decade or so Keriwin. Why would you buy one now. If you wait you will get more bang for your buck and you will have a smaller mortgage. Landlords are currently subsidising tenants who can just keep saving and wait for the bottom of this cycle. When will the bottom be. When the whole world has recovered from the huge debt problem it has to work through.Sovereign and personal debt. This is going to last a long time. Don't you read the news. Even China now is on the cusp of a property implosion. They like the rest of the world have speculated big time on property using debt of course. The number of people coming from the UK has really slowed down because of our strong currency. I should know as I deal with a lot of them as they come to the city I live in. People are in fact leaving NZ and mainly going to Australia and taking advantage of our strong currency. If I was you I would stop encouraging people into the property market at present because they are going to be annoyed when they see their valuations in a few years. You should never advise people to do something investment wise unless you know what you are talking about. It might just make your life uncomfortable otherwise.
Just read my post, sorry
Just read my post, sorry about spelling and grammer but I am just a simple engineer and I have mild dislexia.
Keriwin says :"your wages
Keriwin says :"your wages will have gone up so your mortgage is a much smaller potion of your income"
That's the problem! They haven't kept up.
And re the cut backs in the UK? Well that means less disposable income there. Less property buying ans selling; less money to be spent in NZ buying a house here. Although, why one would I don't know, given the bargains now on offer closer to home in Spain and Portugal. Euro is down; property is down and family is close. New Zealand ? Why?
Keriwin said: "...[W]e lived
Keriwin said: "...[W]e lived in Japan (1988 - 1998)."
Interesting. Where in Japan? My wife is Japanese and we lived there around that same time, and off-and-on for a few times since. Where were you based?
You telling me that nobody
You telling me that nobody had a pay rise between 1990 and 2000 in NZ, sorry I don't believe you. Any pay rise makes your mortgage a smaller percentage of income, just do a small forward looking spreadsheet over say the next ten years and give yourself a small rise each year, yes food etc will go up but your mortgage WILL go down as a percentage. Time & inflation really is the key.
My sister lives in Spain, now that country really have a problem, problems you lucky Kiwis have no idea about. 40% youth unemployment, enough new houses to supply the population for the next 4 years, and loads of Brits trying to get out as fast as they can, ditto Portugal.
The Brits coming here in droves are renting until they can sell in the future.
Also on CNBC this week they were saying that Banks in the UK and USA are starting to hire again. I will check it out as I am off to NY and Boston next week for three weeks.
Immigration statistics in
Immigration statistics in regard to British migrants show a marked decrease in the numbers arriving in New Zealand, as do tourism numbers from UK and this has accelerated in the past three months.They are not coming in droves or boat loads . Interestingly Chinese visitors to New Zealand are flat also. If in doubt check government websites to clarify your view.Or did you literally mean boat people.
It is summer over there.
It is summer over there.
I first lived in an
I first lived in an apartment next to the British Embassy. It was called Hanzomon Sanbanco, in 1988 it was the most valuable land in the world, but that is another story of why Japan is where it is today. When my family came over we moved to where the International schools were i.e. St Mary's and Seisen International School were. Both my kids graduated High school in Tokyo.
I had an office inside Honda R & D Utsunomiya, Tochigi, A office In Honda plants in Susuki near Nogoya and Sayama near Tokyo as well as an office at Rover Japan. My average commute was 4 hours each way.