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June report shows slight worsening in home loan affordability, but set to improve
New Zealand home loan affordability worsened slightly in June from May as the median house price nudged up faster than incomes, the Roost Home Loan Affordability report shows.
However, affordability is set to improve through July as average two year mortgage rates have dropped slightly and house prices are expected to be flat to falling.
The national median house price rose 0.7% to NZ$352,500 in June from May, but remains down 2.2% from a record high of NZ$360,500 in March. This drove a slight deterioration in home loan affordability given the average 2 year mortgage rate was flat at 7.19%.
The Roost Home Loan Affordability report measures the affordability nationally and regionally for income earners and households, taking into account house prices, interest rates and incomes. Affordability improved significantly in Auckland, Northland and Queenstown as house prices dropped, but worsened in Christchurch where prices rose.
Affordability was best in Southland, Otago and Manawatu/Wanganui, while the Central Otago Lakes region continues to be the least affordable. Affordability is better than its worst levels hit in early 2007 near the peak of the housing boom and interest rates, but has broadly deteriorated in the last 12 months as house prices rebounded in the wake of interest rate cuts in late 2008 and early 2009, the monthly measure calculated by interest.co.nz in association with Roost found.
However, the national deterioration is not expected to extend into July as fixed mortgage rates have dropped and house prices are subdued.
“Fixed mortgage rates fell early in July after a fall in wholesale rates, which will improve the affordability equation for home buyers who choose to fix rather than float,” said Roost spokeswoman Margaret Smith.
“But the key for affordability in coming months will be house prices and whether the Reserve Bank continues to increase the Official Cash Rate,” Smith said.
Related Topics
The Reserve Bank lifted the Official Cash Rate to 2.75% from 2.5% on June 10 and economists expect it to increase it again to 3% on July 29. Banks passed on the hike in the form of higher floating mortgage rates in late June, but in early July they cut longer term fixed mortgage rates by 0.25% to 0.75% in line with lower wholesale rates as markets worried about a double-dip recession in the global economy.
Most home owners are still on fixed mortgages, but an increasing number are choosing to float given floating rates at just under 6% are still cheaper than longer term fixed rates at around 7%.
The Roost Home Loan Affordability measure for all of New Zealand showed the proportion of a single median after tax income needed to service an 80% mortgage on a median house rose to 61.8% from 61.4% in May and remains above its 56.1% level from June 2009.
The average 2 year fixed mortgage rate, which has been among the most popular with borrowers in recent years, was flat at 7.19% in June. But since the end of June the average two year fixed rate has dropped to 6.98%, suggesting an improvement in affordability to come if house prices are flat or falling. Average variable mortgage rates rose to 6.02% in June from 5.86% in May.
Variable rates are expected to rise to well over 6% by the end of 2010 as the Reserve Bank increases the Official Cash Rate. Affordability hit its worst level of 83.4% in March 2008 just after house prices peaked and 2 year mortgage rates were close to 10%.
Many home buyers jumped in March, April and May of 2009 to take advantage of lower interest rates and look for bargains, which improved the number of houses sold and boosted prices. But short term mortgage interest rates flattened out in late March 2009 and longer term mortgage rates have bounced from their early 2009 lows. House sales volumes flattened off in the last three months of 2009 and early 2010 as first home buyers and rental investors stayed away. The OCR hike in June and the May 20 budget moves to remove depreciation as a taxable expense for property investors has seen house sales drop a further 20% during May and June.
Affordability is now very difficult in Auckland, Wellington, Christchurch, Hamilton and Tauranga for those on a single median income, but homebuyers in smaller provincial cities will find home ownership much more affordable. Affordability for the typical first-home-buyer also worsened slightly in June from May.
The proportion of a single after tax pay needed to buy a first quartile house rose to 53.8% from 52.9% in May and is up from 48.9% in June a year ago. This measure is for a median income earner aged 25-29 buying a first quartile home. Interest .co.nz thinks the ‘affordable' threshold is 40% for such a home buyer. Meanwhile, affordability for households with more than one income worsened slightly to levels last seen at the end of 2008.
This measure of a ‘standard typical household' found the proportion of after tax income needed to service the mortgage on a median house rose to 41.4% in June from 41.1% in May and 37.3% in June a year ago. This measure assumes one median male income, half a median female income aged 30-35 and a 5 year old child that receives Working-for-Families benefits.
This remains near the worst level of standard household affordability since November last year and significantly above the 35% trough seen in January, February and March of 2009, when buyer demand returned to the housing market. Any level over 40% is considered unaffordable for a household, whereas any level closer to 30% has coincided with increased buyer demand.
The survey’s measure of a ‘standard first-home-buyer household' found the proportion of after tax income needed to service the mortgage on a first quartile home rose to 26% in June from 25.5% in May and is up from 23.5% in June a year ago. It has worsened from its best levels of 22% in February and March last year when some first-home-buyers returned to the market.
This measure peaked at 35% in June 2007. This measure assumes a first home buyer household includes a median male income and a median female income aged 25-29 with no children. Any level over 30% is considered unaffordable in the longer term for such a household, while any level closer to 20% is seen as attractive.
Southland remains the most affordable region for home buyers with a standard affordability measure of 32.6%, while the Central Otago Lakes (Wanaka and Queenstown) region is the least affordable on 78.4%.
174 Comments
As usual for affordability
As usual for affordability reports this one is largely irrelevant. Housing affordability is a function of house prices and incomes. Interest rates are only a factor in the short term as demonstrated by the drop in early 2009.
I'm not going to say house are more affordable just because floating rates dropped, that would only occur if house prices fell or I got a pay rise.
Bulitt But what if interest
Bulitt
But what if interest rates rise or fall in some structural way, thus changing the long run average.
You could argue that the consistently low interest rate policy run by Greespan and Bernanke, coupled with mass securitisation and the growth of the wholesale 'hot' money markets, reduced interest rates for almost a decade, making housing appear more attractive.
Now that cheap 'hot' funding has gone and interest rates, at least relative to the Official Cash Rate, are likely to be higher.
Tough to measure, but worth thinking about.
cheers
Bernard
Yes I would agree if there
Yes I would agree if there was a structural change but what indications are there that changes in the past month have been of that variety.
Sustained low interest rates in living memory have been a result of two reasons, 1) a japan style drawn out deflation or 2) US start of this decade keeping rates too low for too long which is now generally recognised as being a mistake and will either result in possibility 1 or interest rates going up. I dont see either of those being relevant to the current New Zealand scenario with regards to interest rates structurally falling (as opposed to the OCR which I agree has had a structural shift.
.
The
Hey Bernard. Totally off
Hey Bernard. Totally off topic but I thought you might be interested in the following article on whats going on behind the rupert murdoch "paywalls" at the Times online:
http://www.newser.com/off-the-grid/post/502/whats-really-going-on-behind...
"not only is nobody subscribing to the website, but subscribers to the paper itself—who have free access to the site—are not going beyond the registration page. It’s an empty world."
Anyway - hope this site can stay free.
Thanks for the link I had
Thanks for the link I had also heard it had been a disaster.
Years and years ago I used to take the Times (hard copy), but gradually began to think less and less of it. Then I actually got to know a couple of Times journalists and was rather shocked (perhaps I should not have been) to find they were idiots with a vastly inflated view of their analytical abilities. I switched to occasionally reading the Times online, which of course stopped when they went behind a paywall. I don't miss it - but then so much of the mainstream media has become irrelevant, dumbed down dross.
The Sunday Times became a comic sometime around the time their chief scientific/medical editor started a campaign based on the view that AIDS was not caused by HIV.
The Economist is still quite
The Economist is still quite good, so long as you're not interested in non-financial news, or any non-financial news without a rabidly Ayn Randian slant to it.
Yes The Economist is still a
Yes The Economist is still a useful read.
I was moved to find out what happened to the ST columnist I mentioned above, one Neville Hodgkinson.
Here is his profile:
http://www.reviewingaids.com/awiki/index.php/Neville_Hodgkinson
This idiot was the ST chief medical writer for a number of year in the 1990s. It says all you really need to know about the paper.
Sam No worries there
Sam
No worries there Sam.
With support from the good people at Roost and others we'll be able to stay free.
cheers
Bernard
All I can say is thank a
All I can say is thank a goodness this report comes from a reliable source, and not some spruiking real estate industry spinmeisters, and... Oh wait...
No Top 10 today Bernard?
No Top 10 today Bernard?
Here we go. My apols.
Here we go. My apols. Swamped. Back on stream tomorrow.
http://www.interest.co.nz/news/top-10-10-nz-mint-fresh-air-albany-fed-fi...
cheers
Bernard
Why does it matter where
Why does it matter where house prices go for investors?
If you buy cashflow positive then it doesn't really matter where house prices go. Am I wrong?
You should be Minister of
You should be Minister of Finance.
Actually, I suspect you already are.
I'm looking for advice not
I'm looking for advice not comedians.
Where can you buy for
Where can you buy for cashflow positive at the moment unless you are not borrowing any money to buy them. Also why would you buy something that is obviously trending down in value in this current market. What is wrong with money in the bank with rising deposit rates. All you are doing is risking losing capital if you buy at present.
Even ' no borrowing' is a
Even ' no borrowing' is a cost. It has to be compared to the alternative use of those funds. 'Cashflow' has to compared aginst' other cashflow' to get a real number on whether it makes sense or not.
Houses aren't productive and
Houses aren't productive and therefore not a very good alternative use for funds. Just ask anyone who took out a whacking great mortgage in 2007 on "investment" property such as, say, a one bedroom apartment in Gisborne, or a house in Tokoroa.
You should have seen the surf
You should have seen the surf in Gisborne on Saturday, surely that counts for something
hey! I bought a house in Tok.
hey! I bought a house in Tok. I bought it for 72k in 2005 with a sitting tennant..Most of the time we got the rent..120 per week..but it was a worry .When the tennant left i gave it a good makeover.Then three sixteen year olds moved in ,they tell the social that they cant live with ma and pa no more and get paid to move out .Apparently it was party central..and the Real Estate wouldn't give the neighbours my phone no.,to give them a wake up call, apparently the agent was one of the parents friends.In fairness they never missed a day of rent.They got their marching orders,and after I cleaned the engine oil from the carpet. and gave the place a very good makeover,i vowed to sell it
The first real estate agent put it on for 180k this is 2007 sixteen months later it sold for 120k after the agents cut i got 113k i breathed a sigh of relief and vowed never to do something that stupid again. After all the work it was a modest gain,but very stressfull.
5.8% R/E comission! R/E fee
5.8% R/E comission! R/E fee should have been about $3k. Still maybe they threatened to move their son into your spare room , otherwise!
Unless the cashflow alters! A
Unless the cashflow alters! A property is a fixed financial commitment for the duration of the hold. The income from it can be, and often is, variable.
Every fundamental suggests
Every fundamental suggests that residential property prices must fall, and indeed they are.
Those prices won't stop falling until they are back in-line with the inflation and CoL-adjusted average income, so it'll be a while yet.
The only thing which can prevent property prices falling any further is if banks start handing out idiot-mortgages once again, and there's no reason to believe that will happen again soon, if ever.
None of that means you can't buy property now, but remember that even when the property you've just bought has decreased in value, your mortgage (if you get one) hasn't.
If you are in a position to purchase property right now without need of a mortgage, you'll still be paying more for it than if you'd waited a while.
Most are picking that there will be a lot of true bargains available in a year or three for people, so long as they're not already mired in debt.
Hope this helps.
Elliot do your own sums and
Elliot do your own sums and then make a decision, if it stacks up go for it, regards
Elliot, I have just spoken to
Elliot, I have just spoken to a proprietor of a real estate firm in a large provincial capital who has just been speaking today to the CEO of the national chain which her firm belongs to and he said to her the property market in Auckland is just like the rest of NZ. Absolutely stuffed and going backwards fast. This is not the time to buy anything even to live in as prices are going to continue to drop well into next year as confirmed by Westpac recently.
Lucky i bought in 2001
Lucky i bought in 2001
That's where prices are going
That's where prices are going to go back to for a lot of properties, 2001. Some are already well on the way to there.
Try the 1990s.
Try the 1990s.
No matter how you interpret
No matter how you interpret the figures the simple fact is that house prices remain steady with a very slight upwards bias - but again within the margin of error. 18 months ago I stated that the market would stay flat utterly confounding all those doom merchants who continually forecast falls in prices up to 40%. Flat markets are the investors dream as there are always some people who believe that the sky is falling and sell out cheap. It happened the same in the mid 90's, the late 80's and the late 70's . There is nothing new under the sun.
A-SPRUIKING WE WILL
A-SPRUIKING WE WILL GO!
A-SPRUIKING WE WILL GO!
HI-HO A MERRY-O,
A-SPRUIKING WE WILL GO!
There don't seem to be many
There don't seem to be many spruikers left now.
Nobody sells in a downward
Nobody sells in a downward market unless the bank tells them they 'have too' or they choose too to pay raising personal debts. Your so full of It Olly. Got your sections of the moon have you? Such optimism and delusion at the same time is really telling. Where's IRD i wonder, time for an audit
"house prices remain steady
"house prices remain steady with a very slight upwards bias"...bollocks OllyN...enuff of the sprooking BS and start with the truth....prices have fallen massively in some areas and bugger all in Auckland giving the false idea that across the country all is quiet and steady as she goes with property.
Wally- happy to debate the
Wally- happy to debate the issue so long as the subject is dealt witrhout abuse and insults . You are right in that smaller centres have taken a hit as have beach side properties and sections sited by weed infested lakes. The housing market is made up of scores of different markets. Antique, retro, 60's, apartments, units, life style, town house, family, farmlets,modern, luxury, nasty leaky etc etc . All these run at different speeds at different times, going in and out of fashion according to the times. Therefore staistics should be viewed with great care.
Sorry Olly but Auckland is
Sorry Olly but Auckland is taking a hit now. A close colleague who owns a real estate franchise spoke to the CEO of the head office in Auckland today and he told her the market in Auckland was shocking and getting worse by the day. This has happened pretty quickly by the sounds of it.
Why would Auckland be exempt. It is full of people who took on too much debt in the 2000's for their big homes,rentals,renovations,overseas holidays,batches,boats,cars and chattels.No different from the rest of the country but probably more of them as a percentage of the population as they found their house values going up and they had to spend it all rather than just consolidate.Like many farmers. The day of reckoning has come.
Thats so true most of the big
Thats so true most of the big defaults will be in Auckland.and all with the people on big salaries who thought they were bullet proof.
Good to hear it OllyN!. Why
Good to hear it OllyN!. Why didn't you post the above comment in your first statement which was pure sprooking. In future I hope you include a clear statement as to which part of the market you are talking about. As for where the economy goes, unless you intend to pay down the 250ooooooooo in debt, which I doubt, it would be wiser to expect the cost of debt to rise across the western world and for that to drive down the demand for property and lead to lower prices over time.
Antique, retro, 60's,
Antique, retro, 60's, apartments, units, life style, town house, family, farmlets,modern, luxury, nasty leaky etc etc
All dropping like a stone in Gisborne
http://realwalker.com/userfil
http://realwalker.com/userfiles/2nd%20Quarter%202010%20Sales.pdf
The buyer of the apartment
The buyer of the apartment who paid 75ooo will be paying rates on a valuation of 346ooo.. until the rates are reset...! wow
might take a while as only a
might take a while as only a few apartments in the complex went into mortgagee sale.
I went house shopping in 2001 with a budget of $50000 and plenty of choice
"I went house shopping in
"I went house shopping in 2001 with a budget of $50000 and plenty of choice"
And those days are on the way back.
This shows how stupidly the
This shows how stupidly the prices were driven up over a short period of time and without a corresponding increase in incomes in NZ. They certainly could fall back a long way from the 2007 highs to a level not many would want to think about.
They will fall back, there is
They will fall back, there is nothing else they can really do when you give it some thought.
As you said the prices went way higher than incomes ever got and people just can't afford them even the people who already paid them!
Those are the guys I feel sorry for because they thought that big expensive dream house they bought with that giant mortgage was a great investment when it's really an anchor round their necks now.
Gee, LAQC owner - that
Gee, LAQC owner - that attachment is a dose of reality. It would be interesting if there was a further column detailing the year of and price paid in the last prior purchase for each property.
Unfortunately people struggling at the moment deserve to know that money can be lost on houses. Disheartening as it would be, if paying a mortgage is only putting you in further debt, losing a bit of equity now might be better than losing everything - and still coming out of it with no house and an on-going debt in the future.
They can and will go
They can and will go bankrupt...Its a get out of jail card free and many will take it,esspecially if one in a partnership takes the fall..then they can be born again!
you can ask/demand a review
you can ask/demand a review which will slack a whole lot of people off , starting with otherwho havnt sold yet, developers of nearby....
It used to be boats that were
It used to be boats that were a hole in the water into which you poured money..At some time you have to cut your losses,and start again.
Anon "Sorry Olly but Auckland
Anon "Sorry Olly but Auckland is taking a hit now".
Again we have a problem defining "Auckland". The cheap boxes in South Auckland and other nappy valleys all made of ticky tacky are falling heavily no doubt. Check out the mortgagee sales and see where most of them are. Like wise other working class areas. But you try to buy a nice house in a more afflluent suburb and the story is different . Just as there are multi levels of different houses, there are multi levels of different suburbs, streets, sides of streets, with and without views or aspects, close to schools, transport and siops - or not as the case may be. All these classes get mixed up in the general statistics which makes these skewed and often misleading.
Dont worry Olly you can come
Dont worry Olly you can come and live with me when the bank sells your empire. I like the little guy. The banks are managing the fall in property values and it would fall faster than the 5% a year for the next 3 years if they let it. Back room deal between politicians + banks + RB - O Newland= managing 5% per year for at least 3 years. The threat = piss us off where out of here(Aussie Banks)
yeah right
yeah right
wait 3 years.You'll see. pre
wait 3 years.You'll see. pre 2000 RE prices
RJ: - I doubt if my bank will
RJ: - I doubt if my bank will sell me up- the most i owe them is $20,000 on a bad day.
Olly, Olly, Olly...you're so
Olly, Olly, Olly...you're so used to telling porkies when trying to fool regulators and distract investigators and evade creditors that you simply cannot help yourself anymore.
oh I get it $20.000 a day is
oh I get it $20.000 a day is what your interest bill is capitalising at!!
LAQC is it
LAQC is it
I was so looking forward to
I was so looking forward to you coming!! Does that mean I have to take in The Man instead??
so bernard once again the sky
so bernard once again the sky is falling business's are gonna fall over mortagee sales on ever corner because interest rates going up at the rates you forecast thats what we'll be looking at then we'd be looking at sailing hard and fast into deep recession , and on house prices of course they had a correction coming you cant have 20 and 30 % returns for 3-4 years and not expect some sort of correction when the average over the last 20 or more has been 7% i'll give you guys some advice stop bickering about who's right and who's wrong and go and buy yourselves some bargains theres plenty out there in all areas ,one thing everone can agree on is rent havent gone up for a long time so they ain't gonna go backwards and if bernard , some crazy fluke !, then there only gonna go up , so go find a good yield forget capital gain forget all yhe science and get back to the basics good yields !
No such thing as a bargain
No such thing as a bargain Andrew. When you make an offer and it is accepted that is the market price on that day for that property especially in a dropping market. That price that you just had accepted is the price the valuers have to use in their valuations on similar homes in that location from that day on until the next sale which is of course going to be lower in this dropping market so then your have lost on what you thought was a bargain. Now you will say it is not a buyers market and it is not dropping. Tell that to my two clients who have cried with relief in the last week when I told them their house was sold and the one who shrieked with relief when she got the same news. I work at the coal face and talk to all kinds of people in the property industry all over the country. I believe the market is getting very close to a major correction and it is not going to be a movement up believe me.
The
It's only a "sky is falling"
It's only a "sky is falling" calamity to those who were too dumb and greedy and naive to see it coming.
To everyone else it's an inevitable and natural correction to an unsustainably overheated market.
Only the suckers haven't been counting down the bubble's days since around 2005 or thereabouts.
so bernard once again the sky
so bernard once again the sky is falling business's are gonna fall over mortagee sales on ever corner because interest rates going up at the rates you forecast thats what we'll be looking at then we'd be looking at sailing hard and fast into deep recession , and on house prices of course they had a correction coming you cant have 20 and 30 % returns for 3-4 years and not expect some sort of correction when the average over the last 20 or more has been 7% i'll give you guys some advice stop bickering about who's right and who's wrong and go and buy yourselves some bargains theres plenty out there in all areas ,one thing everone can agree on is rent havent gone up for a long time so they ain't gonna go backwards and if bernard , some crazy fluke !, then there only gonna go up , so go find a good yield forget capital gain forget all yhe science and get back to the basics good yields !
It's only a "sky is falling"
It's only a "sky is falling" calamity to those who were too dumb and greedy and naive to see it coming.
To everyone else it's the inevitable and natural correction to an unsustainably overheated market.
Only the suckers haven't been counting down the bubble's days since around 2005 or thereabouts.
no no business is going to do
no no business is going to do good andrew.Export business. Unless we make some business infrastucture decisions we will remain a low wage economy exporting logs and other commodities- alright for some. I hope John Key was talking to the Chinese about such things as the advantages of processing logs in NZ before shipping etcetcetc We have milling technology that makes this viable We just need more courageous decisions and we will skill up in other areas as well .
as long as we continue to
as long as we continue to have a population with a welfare state mentality and high govt spending we will remain low wage because bussines cant reinvest in infrastructure when the tax so high i think to that point whe're starting to head in the right direction finally , but what a great enviroment to invest in property govt pays rent , I'VE GOT TENANTS WHO HAVE JOBS AT YET WINZ still pay their bond they get behind in rent winz catches it up ...... i cant lose , but unfortunatley the country cant win
yes exactly right. We need
yes exactly right. We need real change, not posturing. If we dont 90% of money spent in this country will be directly or indirectly to the Govt.
yip work in oz invest in nz
yip work in oz invest in nz 20% on your money and plenty of govt money to gaurentee your return
So arrogant Andrew. But don't
So arrogant Andrew. But don't get too confident. Both countries you mention are both on the cusp of a major correction in asset values simply because too many people in NZ and Australia have borrowed too much money in their quest to obtain assets and now it is pay back time. The potential buyers have worked it out and they are getting tougher and smarter by the day. And there is now not enough of them to take up the property on the market and to boot the Banks are not lending to these buyers as easily as it used to be. I had a client in on Friday to look at a contract and she said she had noticed that a lot of the properties on the market were landlords trying to get rid of their stock. And a lot of it was rubbish. This is in a busy provincial capital in NZ. If you had any clues you would hold off like her as the market has turned in both confidence and sentiment quite dramatically in the last four weeks in NZ.
Real Estate firms owners and
Real Estate firms owners and Directors(those drawing wages) are out telling salespeople(not drawing wages) to keep on doing what they are doing because things are going to burst into life during spring-fat chance
Be fair: spruiking is all
Be fair: spruiking is all they know.
As a long time investor in
As a long time investor in property I am enormously encouraged by your comment that landlords are getting out of the market. It means less houses to rent, so making competition for my still available houses more intense.
This will see rents rising in the future and stronger cashflows for investors.
Thank you.
Good to see the PIs haven't
Good to see the PIs haven't stopped kidding themselves.
With house prices falling across the board many tenants are looking very hard at buying within the next year or so.
The only reason many of them have been renting is because greedy pig PIs and speculators drove prices insanely high.
Now a lot of those PIs and speccers are facing ruin, which is good news for the "losers" they have been laughing at for so long, because those people will be buying the PIs property for much less than many of the PIs paid for it.
So with a rapidly growing glut of property on the market unsellable at current asking prices, and tenants ready to jump ship as those prices continue to fall as the glut increases, any landlord silly enough to raise his rent may as well just torch the place and hope the arson investigators don't figure it out.
Good luck with that.
The landlords sell their
The landlords sell their property either to an investor or a tenant who is a first home buyer. So the property is always occupied. I don't think an investor would like to keep a property vacant.
So what we will be seeing is that investors bail out in the next 2 years and more tenants buying their first home at prices lower than what it is today.
One group usually overlooked
One group usually overlooked in the headlong rush to quite rightly bash greedy PIs and parasitic RE swine is that containing young couples who were suckered by friends or relatives or drunks at parties into believing that 'property prices can only ever go up' and that they 'must buy now now now, before it's too late' if they ever want to own a home.
Not all of these kids have fairy god parents who can bail them out, and so they are struggling just to keep up with interest payments, often compounded by a lay-off or redundancy and maybe new babies too.
As for the others, sure, I'd happily see a huge meeting of PIs and property speculators and RE scum where afterwards they take to the Auckland harbour bridge en-mass and then throw themselves over the side, preferably while the Deodar is waiting below, manned by armed cops who will put any who survive the fall out of their misery.
a RE agent told my wife in
a RE agent told my wife in the weekend that we needed to get in and buy before the OCR goes up again, because prices will skyrocket then---mum was right "everyminute.......a new one born
Is this what we can
Is this what we can expect here in Spring as the inventory increases?
http://www.dailymail.co.uk/news/article-1295806/House-prices-fall-flood-owners-rush-sell.html?ito=feeds-newsxml
http://www.google.com/hostednews/ukpress/article/ALeqM5g5xY1Y3ouqhRKgA34EMxvnD56f0Q
No, no, no! When the Spring
No, no, no!
When the Spring comes there will be a veritable flood of savvy and discriminating buyers racing to secure a bargain for themselves, leading to a severe housing shortage and prices are sure to rise, so you better get in now, before it's too late, because there's never been a better time to invest in property!
And remember:
"YA CAN'T LOSE WITH PROPERTY, MAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAATE!!!!!!!!!11"
After all, 99 drunken party guests out of 100 can't be wrong!
Lol - Maaaate thats still as
Lol - Maaaate thats still as funny as ever. The extra a's just make it funnier.
Yes Australia has only put
Yes Australia has only put off the day of judgement ,with that twenty grand to first home buyers .Now when their rude awakening comes it will be as bad as ours.I was in Southport a month back, and the squeeling can be heard in every real estate window.But there prepensity to look for good news instead of facts is as bad as ours.The East Coast is more over leaveraged than, Auckland. At the moment it's ' Recession busting sales' fourty shops have gone out of business in Pacific Fair in the last three months.The rents were to high for the stores to pay.
Live in Aussie?...The mines out west seem ok if you can stand it....but Aussies give Aussies the jobs in hard times, and the kiwi would be wise to twang up his accent and say he's from gympie.
retirement homes for wealthy
retirement homes for wealthy returning auwis'- there is an opportunity
night all , stop worrying and
night all , stop worrying and get to sleep oh and bernard keep the hands on top of the blankets
rj you may have somethin
rj you may have somethin there !
the trick is dont follow the
the trick is dont follow the masses
the trick is dont follow the
the trick is dont follow the masses
I believe now is a good time
I believe now is a good time to buy a residential property as an investment.
Interest rates are benign, new house building is at low levels below population growth, tenant demand is strong.
The correct strategy to adopt is that of a long-term approach, intent on income. Capital growth will be a few years away yet. Most people who post on this site are speculators and that strategy is a poor choice at present.
Regards.
Dear desperate property bull,
Dear desperate property bull, nobody other than yourself is listening to your pathetic spin anymore.
And nobody is going to buy property now when they know prices are going to be falling for a long time yet.
Sell whatever it is you have on your books as soon as you can, and for whatever you can get (which will be a lot lower than even your 'worst case scenario'), and just accept the inevitable mighty loss as a lesson in how fundamentals don't give a toss about your hype.
here here
here here
anon i think you may better
anon i think you may better suited to share market investment
anon i think you may better
anon i think you may better suited to share market investment
you could be right. Shares in
you could be right. Shares in baycorp or lenders of last resort for desperate PI's. I thought you were going to bed .That quick!! You The Man
cant sleep till the worlds
cant sleep till the worlds out right
sorry thats meant to read put
sorry thats meant to read put right
my wife says I lack
my wife says I lack concentration as well when I am distracted. Why do they need all the huggy huggy stuff after . Cant there just be more
Why hug when you can do it?
Why hug when you can do it? That's my question RJ
Any who.. The housing market. It's over valued if people aren't prepared to pay what the asking price is. That's happening now and it'll gain more momentum. 600k asking with offers of 500+k, no acceptance, in a year 500k asking price offers of 450k. Maybe a sale... £150k lower than the initial bubble price. Will we see this?
yes we will.
yes we will.
Another reason not to
Another reason not to purchase property is the fees charged by greedy RE agents, accountants, solicitors etc. A huge great rip off these days.
I remember solicitors especially used to tout themselves as the person to see for advice etc before purchase. These days there's no advice before the cheque book is opened. Their service to the public is non-existant now. They rank with RE agents in my view. Never used to be this way.
I take point with calling
I take point with calling real estate agents greedy, as they don't get paid unless they sell.
Well actually they do get paid, as they claim car / telephone / cellphone / computer / home office space.......... they claim this from the us tax payers when they don't make a profit.
Greedy b.....ds
"I take point with calling
"I take point with calling real estate agents greedy, as they don't get paid unless they sell."
One of the reasons they were so keen to drive prices ever higher back in the days when banks were still lending the funny-munny mortgages: the higher the price, the bigger the commission.
Just not the same now that nobody is buying and prices are falling like a stone. Hopefully they didn't drink all the Dom they ordered in the good old days because it's going to be a long time before they can afford any more.
You should shop around as I
You should shop around as I know of at least one solicitor who gives prompt service and only charges if the offer is accepted and proceeds. I should know as I am one of them.
Shop around to find a
Shop around to find a solicitor who gives prompt service and waits before he charges?
Ha.
Haw Haw
Some solicitors don't charge
Some solicitors don't charge the moment you walk through the door.
But when the bill is sent out the customer pays retrospectively, from the first minute of contact, even if the solicitor says "no charge" until a contract is completed.
They are like RE agents...gouging the customer for all they can.
Peter MacDonald the outgoing
Peter MacDonald the outgoing President REINZ,no honest,unbiased,reasoned,factual monthly updates ,possibly a post for Olly et al.Jumping ship?
Would the REINZ really want
Would the REINZ really want to be represented by someone such as Olly Newland?
Bernie Madoff would be less damaging to their image and reputation.
http://www.telegraph.co.uk/fi
http://www.telegraph.co.uk/finance/economics/houseprices/7898771/Housing-market-suffers-in-UK-US.html
But that couldn't happen here, could it?
No, because this time it's
No, because this time it's different!
It won't happen in the North
It won't happen in the North Shore City for sure. Nothing seems to shake the confidence in that area. Investor paradise.
Umm, my North Shore rental,
Umm, my North Shore rental, which (I rent, not own) is going for a mortgagee sale - G.V 450,000 but the real estate agent tells me off the record they will be happy to get 350,000. Thats over 20% off. The times are changing I think!
P.S. even then its still overpriced for what I pay in rent.
What is your rent per week
What is your rent per week cant say.
$500, so even with a LTV of
$500, so even with a LTV of 60% you don't get much yield, plus its a new build townhouse with cheap fittings but in a good area.
What's it clad with, Cant
What's it clad with, Cant say? Because that will be the determinant of what anyone is prepared to pay. Rent/Yeild have less and less to do with monclads these days.
I have no idea. Its brick on
I have no idea. Its brick on the outside and gib inside. It's part of a collection of townhouses, the house on the end of our row went for 500,000 6 months ago.
Brick is good. Just saying,
Brick is good. Just saying, the units over the road are empty and no one wants to buy them as they are some sort of platersboard, and everyone is worried about them being leaky. I don't know if they are or not. But neither do any of the buyers.
So using a pen and matchbox
So using a pen and matchbox you should be able to put a true value on it Can't Say! . On the day of the auction, be sure to pay the local gang in booze to come round and park up for the day!...that way you can cut another 20% off the cost and send the other buyers running for the hills.
If it works out cheaper to
If it works out cheaper to buy than rent then I will be looking. Going to the Auction (first time) in a few weeks so it will be an interesting experience!
Hi VeeDub - Just had a read
Hi VeeDub - Just had a read of the article ..... it will never happen here in the "shakey isles", the "fundamentals" are all in line hahaha that's a joke ! and the gummint will never let the big 4 banks fail ... they have their "trump card", pump in lotsa "funny munny" by way of the leaky homes rort and the greedy BB PI's will be back to square one, spending up large and pushing the prices back up to "never never land" while the real estate agents will be waiting for those spring blossoms to dot the trees and come out with statements like "for the discerning, astute Spring buyer" .....do we have a deal for you" !!
What a load of absolute BS !! I would love to see property prices crash, JUST so all that BS and rhetoric that has been spewed forth by so many of these clowns over the past few years will actually be seen for what it is .... just BS and rhetoric !
We actually need a private company that can collate ALL sales, based on the SALE price of each property and strata them, so to eliminate any outliers ... therefore just the FIGURES and they will speak volumes ! ... I for one have had enough of all this crap and just want the figures !
Big time property
Big time property investors are thinking of scaling back or selling off.
http://online.wsj.com/article/SB10001424052748704720004575377341957716712.html
Some ask the question who is
Some ask the question who is going to buy a property when the market keeps dropping?
Several thousand every month and that will continue to happen as you need shelter.
Big price drops are not happening at all as many here keep hoping.
Tenants are not buying the property they are renting as they need a good size deposit.and they haven'y got one
There will always be a need for rental property owned by investors as there is a generation that is technically insolvent.
Rental property will always be one of the safest investments.
Spoken like a desperate PI or
Spoken like a desperate PI or RE drone.
Every month fewer people are buying property, and those few that are pay less than those who purchased the previous month.
The only thing keeping some prices from utterly collapsing is the blind intransigence of those sellers who prefer to believe it is still 2006.
Eventually even they will have to reduce their prices (and by the time they do it will have to be by a lot) or withdraw their property from the market if they can afford to.
The few buyers in the market at present are seeing their options grow stronger and more varied on an almost daily basis, and the pressure to buy is easing just as rapidly.
The bubble has burst and your never-ending party is, well... ending. Get used to it, get over it, then move on.
Sales in Nelson are pretty
Sales in Nelson are pretty dead as other people have previously reported.
We went to an open home for an upcoming auction at the weekend for house with great harbor views etc. Previous owner paid over $1M .... now telling agent to "just sell the bloody thing" and agent is saying we should totally ignore CV $910K and just make an offer.
Then today we looked at a rental house with CV $700K and nice view over Tasman bay ... rent $520/wk. This agent says sales are real slow + it's also slow to let rentals. People are all staying put .... I guess like deer frozen in the headlights who don't know what to do.
I also found an interesting report in the BNZ 12th July weekly outlook last week with a graph showing house prices are 40% over valued + this great comment:
"We are not surprised by the lack of pick-up in the
housing market. And much of this relates to our
judgement that house prices remain well above any
long-term fair-value metric one cares to look at.
This includes the well-documented tendency of home
prices to run at approximately three times the level of
household income - over time, and across countries.
Not relevant to New Zealand? Think again. We broadly
followed this rule of thumb for the many years to about
2003. Then something went nuts. It still looks a bit nutty."
http://www.bnz.co.nz/binaries/m120710.pdf
If banks are being this honest and glum I hate to think what will happen to house prices in the next few years.
And I know a few very successful local RE agents taking extended holidays at the moment because the market is so dead and they can't sell anything.
Fortunately we sold our house back in May before things really started to tank - now we're planning to rent for a year or two and then grab a bargin :)
Christchurch prices are going
Christchurch prices are going up according to the Roost report not dropping as many of you are saying.
Could the experts please advise me what an affordable 3 bedroom permanent material property on a full size section should be worth. i.e. What price level it should be before you would consider buying.
If prices dropped by a large amount so that the renters started buying then there would just be another property bubble.
People renting today don't save money. I should know as I have had rental properties for many years.
Mate, if your mum catches you
Mate, if your mum catches you playing on the computer at this hour, you're going to be for it!
Get back into bed and go to sleep, otherwise you'll be very grumpy at school tomorrow.
Same dumb comments,
Same dumb comments, belittling people.
Your're not a solicitor are you?
My rent is half that of the
My rent is half that of the average mortgage and I live in a fantastic place in one of the best parts of this city. My savings are building up faster than your debt, which is really saying something.
Better yet, as your debt compounds, the value of your "assets" drops by the day, while my total continues to increase, and I don't have to concern myself with paying interest on debt, or rates, or property maintenance, etc etc.
With the amount of cash I have I could probably buy a decent house now without a mortgage, but why waste it when I can wait a year or so and pick up an even nicer place for even less from one of the vast number of upcoming "distressed seller" and mortgagee sales?
:-)
Why do people that bemoan
Why do people that bemoan property investment always go on about how much cash they have saved while they continue to rent.
If you can afford to rent and afford to save money and have enough to buy n overpriced home then you must be receiving huge income.
I think it is wishful thinking.
Poor The Man, finally waking
Poor The Man, finally waking up to the fact that we're all laughing at him. Keep saving your pocket money, and one day you may be able to get that skateboard you've been dreaming about.
And, to all the negatives
And, to all the negatives about owning houses, let's hear somone justify renting at retirement age, as Brent said earlier.
Pete, he doesn't have any
Pete, he doesn't have any assets. He's a schoolkid who lives with his mummy and daddy. BH has already blocked his previous sockpuppet accounts ('The Man', 'Rich PI Troll', others), although he still pops those up now and again when he finds a proxy server with an IP address BH hasn't yet banned.
When the school holidays began he suddenly posted throughout the day, then disappeared when he had to go stay with the rellies for a while. Now that the holidays are over he's back to his after-the-homework-and-before bedtime schedule.
But don't be fooled, he's a wee boy and totally clueless about finance and is really just trolling. Unfortunately he's not very entertaining, which is a shame. Some trolls are clever and amusing, but not this loser. Ah well.
Not a schoolkid. Wish I
Not a schoolkid. Wish I was.Must have the day off school.
Just one more thing to endear
Just one more thing to endear PIs to this government:
http://www.nzherald.co.nz/nz/news/article.cfm?c_id=1&objectid=10660068
It's almost as if the guy is
It's almost as if the guy is trying to make property investors look bad!
Seriously, what does he hope to accomplish with this? He already got off bloody lightly!
"Happy" renters are getting
"Happy" renters are getting Increasingly nervous, they seem to be bracing themselves:
http://www.trademe.co.nz/Community/SiteAnnouncements/Announcement/895.htm
Average rent in central
Average rent in central Auckland up 8% last year, and another 10% + coming year http://images.trademe.co.nz/tm/announcements/full/137001155.jpg
Free falling interest rates,
Free falling interest rates, severe shortage of rental properties....I hate to slap you in face folks but you missed out again.
Ha ha ha. Careful...the
Ha ha ha. Careful...the grumpies will start calling you a troll soon!
Thanks Anon at 11.47 and anon
Thanks Anon at 11.47 and anon at 11.51 for those links.
Long-term investors will see positive trends there.
Winter is coming to an end
Winter is coming to an end soon. Spring will be bring back the shine again as people feel happier as the days get sunnier. It's psychological. Everyone is holding back now waiting for spring, which is why winter market has dropped.
You are dreaming. Buyers are
You are dreaming. Buyers are acutely aware the market is dropping and so are the banks who want valuations on most buys. Finance is not easy to obtain and that is not going to suddenly improve in spring. Westpac believes we are going down this year and next year. Are you better qualified than them.
Are you better qualified than
Are you better qualified than Westpac? They say a 2% drop for next two years and yet several on here are hoping for much larger. Once again are they more qualified?
What will happen will happen. People are still buying for their own benefit because they like to own and not be under control of a landlord. There will always be renters because they can't afford to buy and service a loan, just the way it will always be.
"Westpac 2nd July report also
"Westpac 2nd July report also implies house prices should drop over 10% based on very low sales volume, rather than 2% per year in their comments."
It makes me chuckle when I
It makes me chuckle when I see that 'renters are poor people who can't afford to own a house 'etc. Renters rent for a variety of reasons. Affrodability being one, but not exclusively so. Frankly, I don't know anyone who rents 'because thay can't afford not to'
"Brent" is actually "The Man"
"Brent" is actually "The Man" and "Rich PI Troll". (BH banned-and-blocked him.)
He was trying to stir crap here last night but nobody would talk to him so he left.
Different people. We are not
Different people. We are not the same. Believe it or not, if it makes you happy.
Hey, this looks like an
Hey, this looks like an intresting forum, with some pretty honest opinions. Buy, dont buy investment property? We have a young family own our own home and looking to get into the investment market (maybe). We think we have found some bargans, maybe 2005 prices? Below CV. Still the numbers do not stack up, borrowing vs rent! So top up from us required. Whangarei area. Intrested in your thoughts.
Just keep renting and
Just keep renting and saving for as long as possible. Not like property prices are going to sky rocket overnight or ever so you have plenty of time to make a decision. I reckon mid next year things should have settled. Most highly leveraged PI's will have been forced to exit the market as the impact of the budget hits over the next 12 months so there might be some real bargins at the lower end of the market.
We are freehold thanks to some capital gains on a couple of investment properties we had, but want to upgrade at some point. Ideally we want to build in about 5 years time.
Stay out of the market Whg.
Stay out of the market Whg. It is dropping in value by the week and this will pan out well into next year as told to us by Westpac about two weeks ago. Wait for the QV and REINZ figures due out in mid August which will tell us what happened in July. From where I am sitting in a busy provincial legal office the figures for July will be worse than June and I am getting proof of that fact from bank staff,colleagues throughout the country and even agents. The market is not going to be fixed by spring. Too much debt on the part of the vendors, too much housing stock on the market and buyers not getting finance easily is going to make sure this period of decline in sentiment and values has some time to run out.
Dear Moron, Does Westpac
Dear Moron,
Does Westpac have a crystal ball?
Regards,
GOD.
No. But they do make the
No. But they do make the lending descisions. Same thing?
Not at all, you see banks
Not at all, you see banks primary objective is to lend, that how they make money. And is it their prediction of a whopping 2% drop that you are referring to?
Plus inflation and their 2%
Plus inflation and their 2% will be conservative as evidenced by the current drop in market sentiment. Why would you buy now and borrow to do it.
As lenders whose collateral
As lenders whose collateral is property dependent, do you really think, that they think 2% is all there will be?! Their expectation is 'as high as 10%' ( read their report) but their hope is for 2%
Let me know when it happens.
Let me know when it happens.
Do you honestly think banks
Do you honestly think banks would be lending if they were convinced that property prices were going to crash?? I got a new mortgage last week, easy credit. I bought at auction and it was very competitive. Families want the security of owning their own home. I guess conspiracy theorists like yourself who dont have friends or any sort of life are happy to rent.
Families do not have to own
Families do not have to own to have a home. It's not the tenure that makes a home.
Thats just what people who
Thats just what people who cant afford to own say to make themselves feel better.
Really? What do you say."
Really? What do you say." Look dear we own a 'home' with a mortgage attached. Now we fell like a real family".
No, more like "Now we can
No, more like "Now we can renovate the kitchen and the bathroom, and the kids bedrooms, and make the place exactly how we want it, and feel like it is no one's but ours."
But hey, i'm sure renting is awesome.
That's fine for you gay
That's fine for you gay people who just LOVE all the fabulous interior design stuff, but straight men don't give a crap about feng shui, dining room layouts and bathroom colour schemes.
Really? Because it sounds
Really? Because it sounds like you are pretty insecure about your sexuality there fella! And its generally the wives that take care of the interior design stuff. But I wouldnt expect you to know about that, i'm pretty sure you are single and miserable.
Banks are loaning far less
Banks are loaning far less than they used to, too a lot fewer people, and the conditions are much tighter.
But at the end of the day, they can't really lose.
The bank will almost always recover its money, one way or another, so the risk is very low.
Really, the risks are very
Really, the risks are very low? Is that why the world's banking system is only just beggininng to recover from a global meltdown caused by a collapse in the US housing market?
It is becoming quite obvious that you have no idea what you are talking about.
Hmm so is your office busy or
Hmm so is your office busy or not? You imply that you are heavily involved in the legal side of the sale & purchase of real estate, but then say that house sales are falling fast. Which would mean your office would not be busy. I'm sure that if sales fall as much as you want them to then your office will be making cut backs in the very near future. Sorry about your job - but still happy out falling house prices. The legal profession have milked the property bubble just as much as RE agents and speculators.
You are right. The office is
You are right. The office is no where as busy. I am not worried as there is always some work to do. Bank managers tell me that all they seem to be doing is talking to stressed home owners who are trying to incorporate their personal debts like hp's into their home debt. We are seeing some of that but also the relationships breaking down as the financial strain is starting to take its toll on a lot of them. Small businesses are also under some strain and are finding it hard to get the finance to keep them going. The banks are nervous about lending to anyone or anything that has rising debt levels such as overdrafts.
Some will say why would a lawyer be talking like this on a venue such as this. Mainly because I see a lot of rubbish being put on it by both sides. It is hard out there for many people and it is getting harder to sell anything whether it be a house or business.
Dear PI who is obviously
Dear PI who is obviously financially stretched and a tad nervous. I think Westpac know more than you. They certainly would not call anyone a moron but one would expect that of a PI as generally I have found them to be of average ability therefore have average incomes therefore need to do the PI thing.
Dont worry, you have nothing
Dont worry, you have nothing to be nervous about. You have zero wealth now and that will remain the case throughout your life. Enjoy the simple life.
Thanks the Man
Thanks the Man
God I hate the way my name is
God I hate the way my name is used whenever someone is pro property and against the negatives on this site.
I have been reading but not writing so get it right.
More fun just reading and seeing how ridiculous a lot of the comments on this are.
Wally for one goes on about his pension. If he had invested wisely in property during his lifetime he would be financially self sufficient and have no worries, instead of waffling on about precious metals.
ex agent. Well he is another class act!!!
An excellent comment as usual
An excellent comment as usual TM.
Yes very well said The Man.
Yes very well said The Man.
ui
ui
Rich PI Troll. Good to see
Rich PI Troll.
Good to see you still around.
I know they will say we are the same. Wait for it!!
They could put a policy to
They could put a policy to make second house or third house purchase higher cost... then it would be only people who need the dwelling to buy...
The interest rates should not be touched so that people can still survive to pay back mortgage.
It is not OCR that helps the housing price, it would be other policies, taking German as the example.
Stopping sucking common people's money by hiking the interest rate...
William
Hell its well overdue. Let it
Hell its well overdue. Let it rain hell out there and teach all of the greedy bastards a thing or two as the only place they understand about is the wallet
How important or relevant is
How important or relevant is CV in determining current house value?
"How important or relevant is
"How important or relevant is CV in determining current house value?"
The only value that matters is how much potential buyers are willing and able to pay.
a little to discussion, but
a little to discussion, but anyway...
Just purchased my first non-apartment house after wanting, but unable to do so for 10years. My budget: starting with a 3. My requirements: 500m or less to the sea, with or potential for good sea views, 2-car garage, 2-3bdrm, minimum 800sqm, potential to add value, public trnsprt options to the CBD up to 50min. Was looking seriously since Jan this year. Watched prices fall, then found something I really liked. 3 offers presented, and just got it by sticking to guns and correclty presuming all other offers were conditional. For my current lifestyle, rents start at approx 400pw, and now about to move into my own home at only 500pw. Median prices aside, many like me can live with short term correction, it's the 'getting in' that's been tricky! This behaviour has to help economy!
You should have waited longer
You should have waited longer . Housing value deflation is here and is gathering steam. All you have done is borrowed more than you would have had to had you waited and you are going to lose quite a bit of equity over the rest of the year and next year as the current trend takes it course. What you would have paid in rent is going to be an insignificant amount compared to what property prices are going to drop down to in the foreseeable future. Why do New Zealanders have this inane desparation to make a bank their landlord when it made more sense to rent and save some real money as the market drops in value.