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Barfoot and Thompson reports lower house sales in July, but higher average prices as more expensive houses sell
Auckland's largest real estate agency group, Barfoot and Thompson, has reported a fall in house sales in July from June to a level 17.3% below sales a year ago.
But it reported a 2.2% increase in the average house sale price to NZ$534,389 in July from June, due to a larger number of houses selling in the bracket over NZ$750,000.
These are first figures to be reported for July and suggests another weak month for sales in the wake of property tax changes in the May Budget and the two Official Cash Rate Increases over June and July.
Quoteable Value and REINZ are expected to release national value, sales and volume figures for July over the next 10 days.
Barfoot and Thompson Managing Director Peter Thompson said the Auckland market had found its winter 'ticking over' point.
“For the past few months turnover and average prices have moved in a tight band,” said Thompson.
“Properties are continuing to sell, particularly if they are priced to meet the market, while there is a steady stream of new listings giving buyers a good level of choice," he said.
“It’s a typical situation that can develop in mid winter, especially during periods when economic activity is quiet."
Related Topics
There were 644 properties sold by Barfoot and Thompson in July, down 21 from June and down 17.3% from July a year earlier.
July’s average price of NZ$534,389 was also 5.3% above the average in July last year.
“We are attributing the increase in average sales price to a higher than usual number of homes selling at more than NZ$750,000 in July. The percentage increase was modest, but enough to push the average price higher." Thompson said.
There were 1,267 new listings at Barfoots in July, up 6.1% on June. This was almost twice as many new listings as sales for the month.
Barfoots said it had 5,759 properties listed in August, in line with those at the start of July. This suggests many listings were withdrawn after not being sold.
“Until winter is behind us, we anticipate market conditions will remain the same as at present.”
Barfoots reported its average weekly rental during July rose NZ$5 to a record high of NZ$408, up NZ$20 from July last year and above the NZ$388 through 2008 and 2009.
“Average rents have definitely increased since the start of the year,” said Thompson.
“Landlords are facing higher operating costs and this is leading to rents going up.”
Barfoot said it rented out 775 properties in July up 12.3% on June and in line with rentals in July last year.
See our interactive chart series for Barfoot and Thompson's figures here and below.
284 Comments
woo hoo.
woo hoo.
Excuse me the first. I am
Excuse me the first. I am usually the first.
You've been letting your game
You've been letting your game slip I'm afraid
Too worried about my gold to
Too worried about my gold to post.
I know the feeling I have
I know the feeling I have been scared stiff since 2001
still a lot over june two
still a lot over june two years ago
So...prices up in last month.
So...prices up in last month. Prices up in last year. Lettings as high as ever and rents up $20 (5.1%) in last year.
So where is the collapse every doomster has been telling us about for months and months and months?
"Oh...it's going to happen" I hear you say. But you said that last year.
The collapse is in the number
The collapse is in the number of sales. When there is little activity to hold prices it is a clear sign that downward pressure is in play and number of sales made is down 17 1/2 percent.
Also the increase in supply of properties shows greater seller needs.
Over supply + limited buyer satisfaction with current prices = a price fall.
The interesting thing about the article for me was how B&T explained the market price increase through more property sales valued over $750,000 - B&T are probably thinking prices will move down wards or else they wouldn't have explained the increase to lower valued home owners.
B&T are probably hoping for prices to fall (as well as Bernard Hickey), to get some money through their books.
I agree. If the house sells
I agree. If the house sells for $20000 less it is only a loss of $400 dollars or so for the agent. $20000.00 by 4% halved with the agency proprietor. If they don't sell it it is thousands not coming in.
Oh right so even though
Oh right so even though average prices increased, you moronic renters are still claiming that the market is crashing because volumes were low in the middle of winter?? You idiots are so pathetic it is actually amusing to watch. Bernard and his band of losers desperately willing a property crash to eventuate, and meanwhile every month ticks by and property prices remain stable, while yet another finance company goes down the gurgler. When are you retards just going to accept that property is and always will be THE BEST INVESTMENT!!!!!!!!!!!!!!!!!!!!
Hey angry monkey, what's with
Hey angry monkey, what's with the anger issue today?
Haven't you been fed your banana?
Other baboons stole your undies?
So if there were high volumes
So if there were high volumes at much lower prices, does that mean the market is picking up? It must do right, because its the sales volumes that determines the state of the market, not prices. Right??????
Lower property prices -
Lower property prices - that's a relative term, you could argue that house prices have increased 10% over the last month because or NZ$ has improved against the US$ and it is the US$ which is the international trading currency.
If there were high volumes at today's prices nobody would saying the sky Is Falling.
I wish some of you property junkies could see past your noses - there are other opportunities which offer a much better investment at the moment and that is way there are not many buyers.
Check out the interactive
Check out the interactive chart showing average prices. They are still below where they were three years ago.
cheers
Bernard, Its no secret that
Bernard, Its no secret that prices are still a touch below the peak reached in 2007. Since then the world has experienced the greatest financial meltdown since the 1930's so the performance of property relative to other asset classes during that time has actually been quite good. Property prices have effectively been flat for the last 3-4 years, which means the next 3-4 years or so for property will most likely be very good.
Good day.
Where's wally? I agree with
Where's wally?
I agree with the rents increasing in Auckland, mine are all up this year
Remember Crockers saying
Remember Crockers saying their lowest vacancy rate on rental properties ever, last month?
These B and T rent figures back up Crockers observation.
Rising rents are helping replace capital gains (for the longer-term investor, that is)
Re house prices: the market is treading water at a lower level of activity, but certainly no collapse in prices.
Not a bad market performance given a terrible recession I think.
Gives one confidence to purchase.
HA! a fake Wally methinks...
HA! a fake Wally methinks...
That's probably why he wasn't
That's probably why he wasn't first.
The real Wally must be out
The real Wally must be out collecting nuts for the coming nuclear winter
If these figures had been
If these figures had been bad, the doom, gloom and despondency brigade would have been crawling all over this report Bernard has posted.
Where are you all?
Waiting the splendid show
Waiting the splendid show when the spring supply tsunami hits the market with bugger all preapprovals or demand in sight.
It will be worse than 2008. Without even most of fire sales listed as mortgagee sales hidden well away from the stats...
We've said it all
We've said it all before...this is only the beginning of the long,slow slide into house price reality!
Can't you guys read. Average
Can't you guys read. Average price up because there were more sales of houses over the price of $750k which pushes the AVERAGE price up. The kind of dumps you guys rent are in over supply and no one wants them or if they do they cannot get finance. People with money can always afford the more expensive houses. But they are in a minority. I was speaking to a hot shot young agent yesterday who said it is currently the worst conditions he has experienced in the last three years and he is telling people who think it is going to improve in spring to sell now as there are going to be an avalanche of listings in spring which will drop prices even more.
Can't be that young then if
Can't be that young then if he's been in the game for so long.
As far as Real Estate agents
As far as Real Estate agents go, it's aways a good time to sell (He's probably telling potential buyers that it's a good time to buy!).
To be fair don't Barfoots
To be fair don't Barfoots only sell properties in the North of the North Island? The "mainland and those south of the Bombay in the NI could have a difffernt story...
Look who is giving us the
Look who is giving us the figures. Would an agent ever tell us the full truth? At least they admit the average price is up because of more expensive houses being sold. The cheaper houses where most people are at are obvioulsy not selling.
You'll have to ask one
You'll have to ask one maybe an EX AGENT.
Here's the thing though. their is a saying that those who can't, teach. could be be also said that those who can't anymore, blog negatively?
Small towns in the south
Small towns in the south island are dying again. During the bubble years they began to recover, or at least they were dying much slower, but now that the bubble is history it's looking like the towns will be soon too.
Quite a few people gambled on a rural resurgence but it looks as if they lost the bet. A pity they're still stuck with the mortgages on all those properties they snapped-up at high prices and which they would be lucky to give away now.
A few months ago very little
A few months ago very little was selling and what sold went at low prices. Now that those with some cash realise that the top end of the market is going cheap too, they are picking up a few bargains here and there. It's not the sale amount which is boosting that end of the scale, it's the number of sales: A few at low prices looks better than almost none at low prices.
What happened in the '90's
What happened in the '90's when the 'higher end' properties started hitting the market and selling below their purchase price, here and in Aussie, ~ dragging the averages up ? But this time it will be different, of course!
".. when it was offloaded by the New Zealander Sir Robert Jones for $8.5 million.The ...house sale represented a significant loss for Sir Robert, who bought it for $11 million ...from Maree Reynolds, the wife ... chairman of Chase Corp. The ... sale was virtually the last prestige boom-time sale before the ... government's interest rate policy dampened the overheated residential market for many years."
Agreed. The sale price
Agreed.
The sale price compared to the most recent g.v would be more useful than averages etc.
Congratulations once again,
Congratulations once again, the way you can put a negative spin on anything. If the average is up it is up. These are the figures for the sold property. So if there were a ton of cheaper properties sold to first home buyers and investors and the average dropped from last month then hell you would be saying the end is nigh.
Just get on with life and let whatever happen, happen and stop feeling sorry for yourselves and admit you continue to be wrong.
What solace you get out of hoping the market deteriorates I can't fathom.
The market is quiet but once again you need to do your homework.
If you think that everyone needs to sell so that prices will drop you are sadly mistaken.
If prices did crash then the investors will swoop and rental returns would be great and another escallation will occur because property is and always has been the safest investment.
Have a nice day!!
If the market crashes the
If the market crashes the investors who generally have a lot of debt on their properties will not be buying. They will be getting sold off by their banks mate.
Realistic not negative. You
Realistic not negative. You should think things through a bit more before you make a knee jerk comment The Fool. B and F only cover the north. I do not say they are going to crash. Just a long and steady decline over five to ten years. ASB confirmed a further 3% drop over the rest of this year on Monday. But you know better than them.
ex. ex. ex. ex.agent. I
ex. ex. ex. ex.agent. I didn't realise that ASB were buying every property in N.Z. Are their predictions going to be any more accurate than Bernard Hickey's wide of the mark predictions.
At the end of the day you can predict anything you want but as we all know anylysts are wrong more than they are right.
Most economists get it wrong just like the investment advisors who recommended investing in all the failed finance companies and they are meant to be experts as well just like you think you are.
So ASB must be right!!!
Stick to your knitting.!!!
Which is real estate. I am
Which is real estate. I am enjoying it come back in price to levels it might be worth looking at again but that will be years away.
ex. agent. What level would
ex. agent. What level would you look at? How much would you pay for an investment 3 bedroom property and how much rent would you be looking for?
Give me your expertise and I will compare.
Thanks
No rules the Fool. I would
No rules the Fool. I would just wait for the market to bottom and might buy again. When will I know that. When people are confident about buying again and that is some way off. I would even let the market just come off the bottom a bit to be certain.
ex agent. No rules? you
ex agent. No rules? you really are full of it.
If you had any any idea about property you would be able to quote figures, but as you can't your credibility has gone out the window.
I doubt whether you ever were an agent at all.
Waste of time talking as you have no expertise or knowledge whatsoever.
Or, you could stop the
Or, you could stop the hysterical flailing and consider that perhaps it's risky to apply arbitrary rules to complex situations involving multiple variables.
ex agent, why are you
ex agent, why are you commenting on an industry you have no involvement in?
You have said yourself you sold up and got out of both owning a real estate branch and owning houses. With no involvement in the industry now you have too much to say for yourself.
I only comment on the industry I am involved in, you should only comment on industries you are involved in.
If the RE market got too hard for you and you cut and run you have no right to comment at those still in the industry. They are still there...you have given up.
You talk a lot about giving up, don't you?
The Fool I have day to day
The Fool I have day to day contact with agents all over the country still as well as valuers and bankers. I just put together their information which confirms what is printed such as the B&F report today. It is terrible out there in the RE market and getting worse by the month. Just because you do not read the news or talk to people about the market does not mean it is not happening. This in only the beginning of a long and steady decline in sentiment,confidence and values. it was built on too much debt and greed. Now the bad levels of debt have to be worked out of the whole systerm before it is stabilised. Anyone who is heavily leveraged needs to sell down and reduce it before the banks step in and do it themselves.
Too much debt caused by banks
Too much debt caused by banks throwing money at anyone who walked in the door.
So why is property not going up in leaps and bounds like it did during the bubble years? Interest rates are very low, unemployment is relatively low so perfect conditions for big price increases. The only difference I can see between now and back then is the banks have tightened lending.
So was the bubble built not on immigrants queuing up to buy into paradise but rather banks lending lots of money to kiwis who were flat out selling houses to each other?
Both really but it was all
Both really but it was all built on too much debt, not enough equity and incomes have not gone up enough to justify the prices and the amount being borrowed. There is a lot more pain to come.
ex agent. Did you talk like
ex agent. Did you talk like you do now when you supposedly owned a real estate office?
No wonder you had to get out. How and why anyone would have worked for someone like yourself defies belief.
I don't think you ever owned anything except your own dreams of owning a property one day.
Give me some figures as to what you would pay for a property and its likely rental return. If you ever had anything to do with real estate you should be able to.
Show me the evidence that the
Show me the evidence that the market is crashing?
In Ch.Ch. there are very small numbers of mortgagee sales and prices are holding up even on these sales.
Steady as she goes and ultimately the prices will continue to go up just as history shows.
Well the mortgagee sale of
Well the mortgagee sale of the house I'm renting isn't going very well - 2nd last open home last weekend and NO ONE turned up, real estate agent says its as quiet as he's ever (10 plus years) seen it, and then had 20 Barffot and Tomphson agents round yesterday all saying the same! Mortgagee sale is next week so lets see. So far, 1 person has come to see that house in a month and this is with 100,000 off GV
Too many on the market in
Too many on the market in that price range I would think and a lot of them are shitters. Buyers are not as stupid as they used to be and are watching the market come back towards them. You would be mad to buy anything at present unless you bought and sold in the same market and were selling down.
Hello Cant say. All the
Hello Cant say.
All the 'happy renters' wont be so happy if the PI owning the house they happily rent wants to sell or is forced to sell in this tough market.
'Happy renters' wont be too happy having to move all the time!
'Happy renters' better not wish too much ill of PIs.
I'm a happy renter too and I
I'm a happy renter too and I have been for years. I'm happy because I pay a buttload less in rent per month than most are paying on their mortgages.
Guess what I do with all the money I'm not wasting on a crazy mortgage?
That's right, it's saved and my nest egg is big and getting bigger all the time.
What am I going to do with the nest egg?
Chances are that within 1 or 2 years I will buy some investor's house at a mortgagee sale and will get it bloody cheap, much much less than the idiot investor paid for it.
So that's why for now I remain a very happy renter.
You will be need to wait for
You will be need to wait for more than 1 to 2 years Agog.
This downturn in sentiment and confidence has years to run yet.
So you are actually calling
So you are actually calling yourself a future IDIOT investor right? begs the question I suppose... does the mere fact of just thinking about investing in property make you and IDIOT or only when you purchase. Hmmmmmm....the word "drop kick" comes to mind...please engage brian next time you blog.
Sorry should say "brain"..
Sorry should say "brain".. Brian is already engaged. :-)
Maybe if the PI had paid his
Maybe if the PI had paid his Mortgage he would not be in this situation. BTW the renters contract is still binding even if there is a forced sale.
Cant say. What is the
Cant say. What is the current G/v and how much rent are you paying? So it gives us an idea of the return.
Thanks
GV 450,000 rent $500pw
GV 450,000 rent $500pw
Ten years ago I was renting
Ten years ago I was renting in a place in one of the flasher suburbs of Wellington that was on the market for the best part of a year. Open home after open home with no interest whatsoever. Every so often the owner would take it off the market and try to find tenants, but he was an idiot who overpriced it, so it just sat there empty, haemorrhaging money. The depressed and pessimistic real estate agent would pop down to my place for a cup of coffee and a whinge about how delusional the owner was.
Thank you Cant say, as good
Thank you Cant say, as good to hear "real stories" from the coal face ..... not rhetorical BS, hype and spruiking from "the Fool" et al.
many have said property is
many have said property is not a liquid asset. they are correct - it is a solid investment all day long, provided you can afford it, or those that live there can. Rents aren't exactly going to drop, property prices will do what they do - just remember in the 80/20. 90/10. 95/5. 99/1. rule that the majority doesn't always win, and just because some people can not afford something there will always be those who can afford that and some more...
Get your heads around the
Get your heads around the fact that Barfoot article above ONLY RELATES TO THE AUCKLAND MARKET!!
but i bet it reflects the upcoming figures on the rest on NZ..in fact, my spies tell me that it will be a lot worse when you key in all the provincial markets.
rock on ,elves!
One major north island city.
One major north island city. Normally 70 or so empty rentals per day, now 150. Rents down from $320 to $270/$280 for a three bedroom. That is from a property manager to me direct last Monday. Not going up everywhere.
Anon at 12.42p.m. What was
Anon at 12.42p.m. What was the major city? Rents at $270/280 p.w. how much do you pay for a house there? Could be worth looking at!!
$300k or so so still to
$300k or so so still to expensive for us investors.
An interesting thing about
An interesting thing about these figures is that we have heard from many posters how rents can't rise because they are tied to income and incomes are not rising, or going to rise.
Yet, these figures show rents up $20 a week in the last 12 months.
Seems rents can rise in an environment of no/low wage growth.
Where does that rent growth
Where does that rent growth come from, though? If it's the 'higher end' that's selling ( so this repeort indicates) it makes sense that they are renting something comensurate with their expectations ( higher rent outgoing available, as they may have banked the cash and have more disposable income as a result?), and if 'whoever they sold their property to' becomes a landlord, it also makes sense that the rent they charge will be above the average? Stats. can be interpreted in many ways. It's only like-on-like rent that can show a difference in general rent levels.
I wonder how sustainable that
I wonder how sustainable that growth is. Budgets can absorb another $20 for a while, but with the CoL rising in most other areas, it'll inevitably get squeezed. A common pattern that played out in the US crash was an initial short-term rise in rents as landlords desperately tried to cover their mortgages, followed by a sustained decline as the recession bit and they failed to find tenants willing or able to pay.
Historically, tenants pay
Historically, tenants pay about 28% of their income in rents. This property boom has seen tenants paying down to about 22% of their income in rents.
Tenants can certainly pay more in rents and it will only be bringing rents as a % of income closer to the long-term mean.
"Tenants can certainly pay
"Tenants can certainly pay more in rents and it will only be bringing rents as a % of income closer to the long-term mean."
Get stuffed.
You're the fool who is now dying a lingering property debt death, not your tenants, so why should they have to pay the price for your stupidity?
This is economic natural selection at work: the financially weak are going to be culled. Those who are financially sound enough to survive without raising their rents (or even being able to reduce them) will probably be able to keep their tenants.
Those greedy suckers who over-extended themselves and now think that raising rents will save them from their own folly are going to property investor hell.
This is as it should be.
Landlords with debt need
Landlords with debt need tenants a lot more than cashed-up tenants need landlords.
Get stuffed yer self blackie.
Get stuffed yer self blackie. You ten ants have had it too cheap for too long. About time you gen-whatevers starting paying the BB'ers a fair return to live in their houses.
And don't argue or the BB'er will toss you out on the street.
Why do you think that ratio
Why do you think that ratio has dropped? Because landlords have been kind and asked for lower rents? No. It's because people have had to spend more of their disposbale income on other things, like food and petrol. There is only so much disposable moneyper person. Borrowing for more appears to have come to an end. So once its allocated to necessities...that's it, as far as rent rises go.
Average price up, rents up
Average price up, rents up 10% in Central Auckland (Trade me figures), severe shortage of rental properties (Trade me, Westpac,Dominion), new buildings construction at very low levels, interest rates low...make conclusion. "Happy" renters better brace themselves for more to come!
Still better to rent than
Still better to rent than borrow today and watch the prices continue to drop. That would hurt. Paying interest to the bank is just rent using another word.
Anon at 2.11p.m. Depends
Anon at 2.11p.m. Depends what you are paying in rent compared to house value. I guarantee that if you owned rather than rented all your life you will have a far superior retirement.
What's with this '
What's with this ' retirement' thing? Who knows what will happen tomorrow, let alone X years time! There are no guarantees, of anything. Just realtime calculations and strategies based on the current facts. No matter what it is, just because it has been , doesn't mean it will be. Ask Telecom, for instance, about that. Copper wires, no one will ever be able to replicate the network? Who needs them now like they did 10 years ago...
I don't think you understand
I don't think you understand - for someone renting and considering buying, the price they buy at matters in much the same as the decision of a PI in adding to a portfolio matters. If you think the price is going to be lower in a month, you don't buy today. Its not necessily about making a long term commitment to renting.
Also, did you realise that price have collapsed in the US, in particular in fringe areas? Property is not a winner everywhere at all times, and once you accept that as a starting point you may come to different conclusions about your own portfolio (or maybe not - the point is that "property will go up and give me a good return" is not an objectively justifiable statement).
Ian C. Are you a renter? My
Ian C. Are you a renter? My point is this. If you have been able to buy previously you will have built up equity in your property and will have it paid off before retirement. If you have rented all your life it has been money going down the gurgler as to building up an asset. The property owner apart from rates insurance etc has no other outgoings while the renter still has the rent to pay. Out of a pension if they rely on it is huge.
Cheers
If someone is renting, and
If someone is renting, and putting the cost difference between renting and paying a mortgage, into a savings account each week they are also building up "equity".
And when the cost of renting is cheaper than the interest payable on a mortgage its not a bad way to go.
One of the reasons many people are better off with a mortage is simply because its the only way they can "save". The bank will make you pay your mortgage but they won't force you to save each week ;) But for those with self discipline to save its not required.
As a matter of fact, I have
As a matter of fact, I have been renting but have recently bought a house (not sure what that makes me - haven't got to settlement yet so I guess I am still a "renting loser", based on what others have posted). Ignoring any argument around why I would buy, given my negativity, I can confirm that such is the maths in common central Auckland suburbs that my monthly housing outgoing will more than double (despite a 35% deposit), because my rent implied a 3% yield (note: some of the increase is buying a nicer house than I rent). I was saving a lot, and investing it conservatively, and can confirm that I did no worse by renting from 2007-2010, despite some modest price increase in the relevant suburb. Arguably I missed an opportunity to buy for less 12 months ago, but c'est la vie.
However, I consider all that irrelevant. A smart guy called Bill Gross calls first home buyers "plankton" for the housing market - if they can't enter the market because prices are too high, the market will wither until the price/affordability relationship recovers. I think prices are too high, especially compared to rents, in many areas of the market. Not all - naturally I am focused on where I live.
House prices are not
House prices are not dropping, they are rising, same as rents. See article above.
Hello Property Persons.....
Hello Property Persons..... how are you..? it's wet outside today isn't it... it's a great day to give those negative johnnies a taste of your medicine.... or buy a property perhaps..... it's good to know if they leak...... has that bad Mr Hickey been upsetting you....? he stole Christmas you know...... at least that's what Mark Hubbard said.
Anyhoo you have had such a bash of late.... I thought I stop and ask if your ok... out there, especially you Mr Man.
"...it's good to know if they
"...it's good to know if they leak.." Had to get the needle and thread to work on my sides after that one !
Christov. Thanks for the
Christov. Thanks for the concern, Doing just fine down in Ch.Ch.
What bash have we had? True property investors are comfortable in what they are doing.
You have to be tough skinned and realistic to be an investor so a few abusive comments from people on here would never offend.
How can I tell a True
How can I tell a True Property Investor from one of those False Property Investors? Do you wear magical underpants with a big PI on the front?
Its Average prices and when
Its Average prices and when BT clearly states that there were Higher sales in the $750k range, means that on an adjusted basis, prices would have been lower
Would be interesting to know
Would be interesting to know how all the publicity in the media about leaky buildings in the last 3 years has affected the market (80,000+ properties owners would be quite keen to get rid off asap). A lot of buyers in the past have been immigrants who were not aware of what they are getting into, but with immigration falling, where do they find suckers now ?
Govt is funding the repairs,
Govt is funding the repairs, so there'll be a lot more properties on the market in about 6 months
So; Will you be a buyer of a
So; Will you be a buyer of a 'fixed' one?
nope, im saying that the
nope, im saying that the market is going to be flooded with more properties for sale!!
Gottcha! Misunderstood your
Gottcha! Misunderstood your meaning!
The problem with the leaky
The problem with the leaky homes solution is that it depends on banks lending most of the money required. The government guarantee isn't much use if the borrower don't meet the banks' usual criteria and most don't.
The banks and government are still in talks. Until that impasse is breached, leaky homes will remain a problem. The solution appears to be either a government grant or the banks taking equity in these houses, or a combination of the two.
Here's more here from Gareth on this.
http://www.interest.co.nz/news/will-banks-support-govts-financial-assistance-package-leaky-home-owners
cheers
Bernard
Personally, we're steering
Personally, we're steering clear of modern houses built mid-80s to mid 2000s. No doubt there are plenty of sound ones, but it's easier to just not look at them. I'd rather own a draughty but solid old bungalow and insulate it.
Good plan. I stayed clear of
Good plan. I stayed clear of any houses built between early 90s and mid 2000s when I was looking. A mate of mine who has done 1,000+ building inspection for weatherproofing advised me to stay clear of anything build in period, just not worth the risk.
30 something. Seems a bit
30 something. Seems a bit silly to me. You must have had a lot of shoddy builders wherever you were if you are that wary. Brick and tile with eaves etc. are fine.
Watch out for older renovated
Watch out for older renovated houses. We had a solid kauri villa that was sound everywhere except for the attached extra bedroom that leaked and rotted away quietly.
Something which always amuses
Something which always amuses me about those who claim that the NZ property market WON'T follow the US property market into oblivion, is whenever reports surfaced back in the bubble years about how well the American property market was doing, Kiwi PIs always rubbed their hands together and crowed about how "Where America goes we follow!"
When the American bubble is in full swing, "NZ is sure to follow!", but when the American bubble is bursting, "NZ is different!"...
LOL!
.... another story from the
.... another story from the "coal face", I was going to go to an auction this morning, here in Auckland City, but couldn't make it due to business commitments.
It was a very new townhouse (separate building) with 3 bdms, 2 btms etc, well made with no obvious 'leaky building' problems, in an excellent suburb right next to the CBD.
I phoned the agent to ask what it sold for, they were looking in the high 700's BUT not one offer with the agent saying they were very keen to sell and would definetly consider lower offers...
So all you property spruikers, if it is such a great market, why aren't you out there buying, buying, buying !! ??
I know this property 3 years ago would of been snapped up......
800K for a townhouse seems a
800K for a townhouse seems a bit much?
It's hard to see how it could
It's hard to see how it could realistically be worth that price unless the wall cavities are stuffed with cocaine.
"stuffed with cocaine" - haha
"stuffed with cocaine" - haha brilliant!
But it is Auckland
But it is Auckland remember.Everything is big there especailly the egos. This story is not unusual these days. So called nice property but no offers so the vendors get serious and drop it hard to get some traction.
Did ya chuck in an after
Did ya chuck in an after auction bid at $550k C.H.? It'll get a laugh ( nervous, tho); then a silence, then a call early next week to see if there's a chance of 'getting together'.
Here's an email received from
Here's an email received from a friend this weekend. His company has transferred him to a South Island semi-resort place and right now he's commuting between there and his home in a small city not far away. (I've toned down some of his more colourful language.)
===========================================
"We've been sniffing around [the] village for property recently before we all make the move next year.
Last week I made a vague offer miles below asking on a reasonably nice but ludicrously overpriced section up the back of town.
The RE lady did all the usual smug, smirking, "Ho ho, that's ridiculous...immigration and interest rates and...and...and!" type [rubbish], but you could see she was just shocked that someone was even interested in buying anything now, and you could smell the fear in her office.
So I left without bothering to try to negotiate (I wasn't really serious, I just liked [mess]ing with them and watching them pee their desperate little pants).
She called me today to tell me that the seller was ready to consider my offer...aren't I lucky?
But I informed her that we'd tentatively agreed to buy another mortgagee property instead.
Of course I made sure to tell her it was bigger and better and half the price (which it is, only I'm not really buying it of course, since even at half the price it's still twice as much as it's actually worth.)
An hour later she called me back to say that the seller was ready to consider ANY offer I made."
============================================
Aside from this, my friend has no particular interest in the property game, so I thought his observations were interesting.
Tekapo?
Tekapo?
:-)
:-)
excellent idea and just the
excellent idea and just the price I had in mind !! :)
Then why didn't you? maybe
Then why didn't you? maybe the same reason they want to sell it.? is their any resource issues going on around the site. I.E a carpark going up next door. the tinny house / gang house across the raod. Could be any number of reasons...pick one.
Crazy Horse. Why would you
Crazy Horse. Why would you pay $700K for it. Sounds amazingly expensive to me.
What are your building costs per square metre up in Auckland and the price of a section.
Can see why there were no offers.
Can you now see why me paying
Can you now see why me paying $650 p.w. is saving me about $18k p.a. when the asking price for my unit ( it's not even a townhouse, and has $8k p.a. Body Corp fees) is $725k ( down from $825k 2008, though!)?
Nicholas. How can you afford
Nicholas. How can you afford to be paying $650p.w. My tenants for good quality property pay between $260 and $360 per week and I am positively geared.
Was paying $480 in Regent's
Was paying $480 in Regent's Park, but left I Jan. Too cold down there! But How? Easy, really. Sold up in...Christchurch... 2008; put the cash in the bank and it covers everything, even at these rates. Wife's back at school, here ( only place her course is available in NZ) and I while away my hours chatting with ...you!
Nicholas. Pleased for you.
Nicholas. Pleased for you. You would need $1million invested at the Bank getting approx 5% less tax to cover your $650 per week rent. If you had that you should have bought residential investments in Ch.Ch. and that amount would be returning you approx $1200 per week, double what you are getting.
It is definitely costing you money with your money just sitting in the Bank!!!
Horses for course, I guess.
Horses for course, I guess. The couple that bought my property, based on the sale of the place next door some months ago, are down by about $250k. So I prefer to work my sums back into that factor. As you know, I see that situation continuing, so I'm happy with a holding yield. I've never been a PI, unlike you; only ever had a house as a home, so see things differently to you.
Nicholas. I can't understand
Nicholas. I can't understand how the people that bought your house in 2008 are down by $250K. The market in 2008 was pretty low back then and prices would be higher now than then, I would guarantee.
You may have undersold your property on the face of it..
Couple had just got their
Couple had just got their money out of Hanover ( whew!), and wanted a 'safe' place to put it. Without being too harsh on your views, they believed that property only goes up. The husband even asked me "why are you selling this!" He looked at me funny-like when I gave him the views I now post on here. Market was still okay Feb. 08. Not the peak of Oct 07, but still heaps better in that location than now.
I am a twat who thinks that
I am a twat who thinks that if I continue to pretend that people with $1m in the bank only earn 5% interest everyone will finally begin to believe it.
The Man at 4.21., Not posted
The Man at 4.21., Not posted by "The Man" Please use your own name you clown. So what interest rate can you get for $1million from the Bank? Not much over 5%.
My five year term-deposit
My five year term-deposit rate is 7.9%, although that's only $850,000, and not $1,000,000.
Who's that with, Strategic
Who's that with, Strategic Finance?
One of the "big four" banks.
One of the "big four" banks.
Peter. Are you saying that
Peter. Are you saying that you can get 7.9% now for 5 years.? In a trading Bank?
You must have had it on for a few years. The mortgage rates are under 6% floating so you won't be getting that now Peter for new money.
No, I negotiated that rate
No, I negotiated that rate only a few weeks ago.
My other TDs which are due to mature in a few months are at a higher rate again, but they were setup back when interest rates in general were much higher than today.
IIRC, I had a small ($30k) short term (18 mo) TD running over at the National Bank in 2007 which paid 8.6%, but of course they are lower now.
Music to my ears, Peter.
Music to my ears, Peter.
It helps to have a "tame"
It helps to have a "tame" contact at the desk, but persistence almost always pays dividends.
Banks are far more flexible and negotiable than most people are aware, especially if you have a fairly sizable deposit or investment to wave around in front of them.
Peter Can you confirm that
Peter
Can you confirm that you managed to roll over a 5 year term deposit with National Bank at 7.9% in the last couple of weeks?
Their advertised rate is 6.75% here http://www.interest.co.nz/saving
Are others seeing this?
I frankly don't believe the banks are paying 120 basis points over their advertised rates for term deposits. If that's true, that's an explosive story.
cheers
Bernard
Hello Bernard. Please reread
Hello Bernard.
Please reread my message. Although my earlier TDs (c. 2004-2007) were with National Bank, my current ones are not.
If you visit the relevant pages on the bank's(any bank's) website you will see they offer "special rates" for deposits over a certain amount. (It varies depending upon the bank.)
To the person below who claimed it was "rubbish", I suggest you give your bank a call and tell them you wish to deposit $1,000,000 for five years, and then also tell them the rate you wish to receive.
(At which point the old saw 'Seller goes high, buyer goes low' will come to mind.)
Peter, Many thanks. Well
Peter,
Many thanks. Well done. That 7.9% is a great rate for a 5 year term deposit.
A lesson for us all. Haggle hard with our banks, particularly if you have a NZ$1 million sitting around.
Now I need to get working on that first NZ$1 million...
cheers
Bernard
Bernard. You know Peter is
Bernard. You know Peter is having us on!!!
Can you follow up with National Bank and confirm that they will pay 7.9% at the moment. I bet that they won't. I will put some there way if they are but I say Peter is not telling the truth.
Just a thought. Does that
Just a thought. Does that fact that only $250k is covered by the extended GG have anything to do with a larger amount, than that ,attracting a better rate?
In fact, on further thought;
In fact, on further thought; aren't some big banks going to forego the GG completely? and are they going to pass the fee directly on their larger customers instead?
Another lesson to learn for
Another lesson to learn for the schoolboy calling himself 'The Man'.
That $20 saved pocket money doesn't make you an expert on bank interest rates.
Anyone who has had any decent level of savings could have told you the same thing Peter has...and in fact they have, over the last couple of months, but you don't want to hear it because your mummy and daddy keep telling you that the only investment worth having is houses.
Why is it do you think that banks advertise special interest rates for high-value depositors?
It's because people with a big chunk of change to bank are highly attractive to banks.
Go and ask the lady in the school office tomorrow if she'll let you use her telephone during little playtime and ring the banks...ask them how much interest they'll pay grown-ups when they have lots of cash.
But of course you won't do that, because you're afraid to discover that everything your mum and dad told you about the supremacy of houses is wrong.
Bernard H. Best National Bank
Bernard H. Best National Bank will give for 5 years is 6.85% per annum for large amounts.
I think alot of your followers on here don't tell the truth!!!
Anon Good Nurse. You should apologise!!
The Man, I think there's a
The Man, I think there's a lot of porkies told on this site. You've just proved that Peter was writing nonsense. His replies to Bernard H' s questioning yesterday were evasive.
Seems a lot of these negative, non-PI types are desperate to boost their cases and so they start making things up.
He stated above that it
He stated above that it wasn't National Bank. You may have got your information from the wrong source. So as it stands, nothing proved either way.
There wont be that much
There wont be that much difference in these BIG 4 banks though!
Kakapo. You know he is
Kakapo. You know he is talking rubbish. He said one of the Big 4 banks. National will be the same as the ANZ. Bnz rates and Westpac will be very close.
I have close affiliation with trading banks so I do know what I am on about.
Prove to me a Bank will pay to me more on deposit than what they receive in mortgage rates!!!
If you can I will sincerely apologise!!!
I'm sceptical too, and won't
I'm sceptical too, and won't believe it unless he fronts up to BH with documentation. Unless that happens, we can suspect all we like, but without hard evidence we don't know for sure either way. Put it this way - it hasn't been completely disproven.
Kakapo. Yeah right!!! If it
Kakapo. Yeah right!!! If it was the case Bank's would go broke. Yes you can get a slightly better rate for large amounts but as I have said previously with the trading banks it is only .1 to .2% and that is capitalising LOL.
Well, the existence of
Well, the existence of leprechauns hasn't been 100% disproved either, but we can still make the judgement that they're extremely bloody unlikely. Without having access to the full records of all the banks, it has to go in the 'very unlikely but possible' file.
Kakapo. I would believe in
Kakapo. I would believe in leprechauns a long time before believing in Peter's 7.9%.
Maybe, just maybe, Pete's got
Maybe, just maybe, Pete's got Aussie T/D's as well and got them confused? Best I can come up with!
Nicholas. Might be Zimbabwean
Nicholas. Might be Zimbabwean Term Deposit instead!!! He is not telling the truth and you know it.
Peter you are talking
Peter you are talking rubbish. None of the big Banks would be paying you that much.
So you'd only have about 3
So you'd only have about 3 years to run on that on. Shame!.Still; the rollover might be at par if Bernard is right!
You understand the difference
You understand the difference in risk though, yes? You can buy a listed property trust for 8% plus cash yield too, and that's well managed and passive.
Ian C. Yes and they don't
Ian C. Yes and they don't always return 8% either. I can get 8% plus 10% capital gain and I have control.
The good ones tend to
The good ones tend to increases dividend over time (recent falls are largely due to the one-off impact of tax changes). That number is cash yield, tax paid (for NZ investors), post all expenses and with negligible tenancy risk. The unitholder benefits from a combination of capital gains and (for some of the trusts) development profit. You don't "control" the investment - perhaps a blessing and a curse, as personal time spent would be nil.
You can also buy retirement villages (eg Ryman or Metlifecare) which not only have a return profile based on residential house price values, but the additional benefit of potential development profits (especially Ryman) and that the agreements with the occupants effectively skew the house price appreciation returns in favour of the company.
I will rise to the bait on
I will rise to the bait on the 10% capital gain - on what planet do you live? 10% is (a) not expected or (b) justified based on historical evidence (including bubble evidence).
Ian C. On average doubles
Ian C. On average doubles every 10 years. Look at the stats.
Well, for a start doubling
Well, for a start doubling every 10 years is only 7% per annum.
Secondly, if you adjust for inflation (I favour working out real returns and then applying a "normal" inflation level of 2.5%, then price doubled in 10 year periods only including those ending during the current bubble (ending in any of 2006-2010) and at no time in any 10 year period previously in New Zealand.
So prices don't really double every 10 years, and if that's part of your assessment when buying properties you are paying too much.
IanC. How is doubling every
IanC. How is doubling every every 10 years as being 7%? If something goes from 100 to 200 in ten years is that not 10 for every year so that makes it 10% average for each of those 10 years doesn't it?
Compound interest.
Compound interest.
Anon at 7.12p.m. Property
Anon at 7.12p.m. Property doesn't go up at a set rate each and every year. Sometimes it can be flat and other years it could be 12% but on average it works out at approx 10% over that 10 year period approx which is 10% doesn't compound.
It is compounding - think
It is compounding - think about it. I know it'll hurt, but try. You're not calculating the percentage on the original purchase price every year. You're calculating it on the original purchase price+the previous years' gains. That's compounding.
Kakapo. What you on? I am
Kakapo. What you on? I am not talking compounding at all.
if something is $100 and it goes to $200 over that period it has gone up $100. Right.
So on average over that 10 years it has gone up $10 each and every year. Right?
So from A to B it has gone up on average 10%.
Oh in the name of
Oh in the name of sanity.
Doubling over ten years is approximately 7%, because it's compounding.
Look:
Start with 100
+10% = 110.
+10% = 121
+10% = 134 (rounded slightly)
+10% = 147 (rounded)
+10% = 162 (rounded)
+10% = 178 (still rounded)
+10% = 196 (rounded)
See? It takes roughtly 7 years to double, at 10%. If you get a calculator out and repeat the exercise using 7%, it'll take 10 steps to double.
Of course it compounds! How
Of course it compounds! How can it not, when this years increase is based upon last years price!
Flipping hell. Some years it
Flipping hell. Some years it may not go up at all so I am not saying it goes up each and every flipping year. some might be 1% some might be 2% some might be 8% get it?
Yes, it varies. Nobody's
Yes, it varies. Nobody's denying that. But to double in 10 years it averages to 7%, not 10%. I spelled it out for you step by step. But don't take my word for it - go get a calculator and prove it to yourself.
Nothing to do with
Nothing to do with compounding of original amount anyway not worth any more going on about.
Healthy debate.
Maths, ur doin it rong.
Maths, ur doin it rong.
Go google the "rule of 72".
Go google the "rule of 72". We'll wait here.
"The Man" you are just
"The Man" you are just showing your true clours of how "out of touch" you are with real estate prices in Auckland and other areas of the country. I don't claim to know anything about the CHC market, so how would you know anything about the AKL markert??
Also you have now said it yourself ...."you wouldn't buy it at that price" and neither would I, so we agree. That is why so much property in NZ has to come down in price.
You have now proved yourself to be "the Fool", as you yourself say property is priced too high.
CAPITAL GAIN IN NZ PROPERTY ... WHAT CAPITAL GAIN AND WHO FROM ???
Crazy Horse. I have never
Crazy Horse. I have never said that I know the market outside of Christchurch and why do I need to know as I don't invest up there.
If you want to call me "the fool" I will accept that gracefully although it upsets me terribly.
My property is cashflow positive and giving great incomea and is appreciating so if that makes me "the fool" then I am happy for you.
With all due respect 'the
With all due respect 'the Man", you have not answered my question ... Where are capital gains in residential property, going to come from, in the next 2-3 years ?
You have repeatedly said in your posts, that there is capital gain in this current market, so I would like you to name at least 3 drivers of this illusion of yours.
Thank you and I look forward to your reply.
Crazy horse. I am commenting
Crazy horse. I am commenting on the Ch.Ch. market and history previously shows it to continue to increase. Who would have said 20 years ago it would be where it is today.?
In that case, how can you be
In that case, how can you be so confident in predicting the next 20 years?
Kakapo. Don't know where it
Kakapo. Don't know where it will be but I do know it will be higher.
@ "The Man" thank you for
@ "The Man" thank you for your reply 04 Aug, 7:10pm
I will rephrase my question, as follows:
For the Christchurch market, what are 3 drivers that will give positive capital gains in the next 2-3 years ?
Thank you
Just have a look at
Just have a look at realestate.co.nz - you'll soon get an idea for Auckland pricing. For instance, it's hard to buy a standalone 3br house without compromises (eg half site or falling down) within 6-8km of the city centre (on the Auckland side) for less than $650-700k. Its all land value too - building costs not materially different to other parts of the country. Or, in "Auckland City", over 35% of houses for sale at the moment (and this ratio is rising) have a price range set which means they come up in a search with $1m as the lower bound...
Auckland's the strongest market in the country at the moment, and you're about to make the comment that "it overpriced". Delicious. Are you going to change to arguing that rising prices are NOT an indication of a strong market, if its expensive?
You should go and buy up all
You should go and buy up all the property you can right now.
Let us know how you get on.
Don't forget to update us again sometime next year too.
Sorry - I wasn't clear.
Sorry - I wasn't clear. Simply pointing out the lack of logic in The Man's line of argument.
IanC. Point is that I can't
IanC. Point is that I can't understand why people in Auckland would want to pay those prices.
I think if that is what you have to pay then you should be moving south where quality of life is superior and prices are far more reasonable and property is profitable.
And my point is (and I think
And my point is (and I think this escapes the Anon who responded to mine above, but I can see why you might think I was supporting AKL property) that you (The Man) can't look at the Barfoots stats and say "see, property is fine", then say "Auckland is too expensive". Barfoots is Auckland.
I actually think that based on all your posts in the last few months that you may well think property is generally overpriced ... but there are bargains out there. You are, however, simply referring to this as a "buying opportunity" (possibly not recognising that if all houses repriced to become "bargains" we'd see a 10-20% price fall. Other people (including me) look at the same situation and see a strong likelihood of that material correction which has been a long time coming.
Ian C. I have asked
Ian C. I have asked previously what yield investors in Auckland were likely to be getting at the moment. If they are not getting at least 6% then I don't consider it a particularly good investment unless it has been purchased at a great price with early upside.
My point is do the homework and know what you are doing just like any investment opportunity.
Don't knock property investment per se.
I'm not knocking property
I'm not knocking property investment per se - diversified residential property is a good investment as part of someone's range of investments, as long as its at the right price. Like I say elsewhere, I think you agree and all we disagree on is how much lower prices need to be.
Auckland yields would typically range between highish single digits in low socio-economic areas to less than 4% in expensive areas (especially closer to the city). Units are higher. A 6% yield only works if you assume low interest rates (ie, broken economy) and capital growth (ie, fixed economy).
Anon at 3.40p.m. Based on
Anon at 3.40p.m. Based on what ? More affordable housing and much happier people going by you.
They reported a 2.2% increase
They reported a 2.2% increase in the average house sale price to NZ$534,389 in July from June, due to a larger number of houses selling in the bracket over NZ$750,000.
If the RE industry can tell us that stratification information now, why do they not do it all the time?
I completely agree Miles.
I completely agree Miles. Further, by definition if the average price goes up then of course more expensive houses are being sold. I don't see how stratification is useful, the only thing that helps is "same house sales", but that assumes no money spent on the house in the interim. To answer your original point, I think Barfoots was basically just alerting everyone to the fact that even they (despite their agenda) recognise that prices are likely to fall on the back of dropping volumes. They didn't want to be accused of blatently talking the market up again when its clear its falling.
"Its clear its
"Its clear its falling".............even though there is no actual evidence of it falling yet???????
What barfoot are saying is
What barfoot are saying is that there is a mix change causing the average to increase slightly (i.e. more large properties this month), but that like-for-like property values are flat or declining. Sure I'm reading between the lines a bit, but implying a mix changes is extremely unusual for a real estate agency.
I don’t want to say I
I don’t want to say I told you so- but I told you so:
Auckland rents on the up
NZPA
Last updated 14:13 04/08/2010
Rents are rising in Auckland as landlords try to recoup higher costs, real estate agent Barfoot and Thompson says.
The biggest real estate agency in Auckland said its average weekly rental reached a new all-time high, increasing by $5 to $408, in July.
This is $20 a week higher than the average for July last year, which at $388 was the average weekly rent throughout 2009 and 2008.
"Average rents have definitely increased since the start of the year," said managing director Peter Thompson.
"Landlords are facing higher operating costs and this is leading to rents going up."
Link: http://www.stuff.co.nz/business/3990259/Auckland-rents-on-the-up
Straight after this years budget I predicted that rents would rise because of the ill conceived depreciation changes followed by unintended consequences.
extract:
Of course there will be consequences. Bill (call me 'Slasher') English says Treasury has admitted that rents may rise by 'one or two percent' as a result of the new rules. Well I've got news for Bill and all the Noddies in Treasury: Rents will rise all right -- but more like 15%-20% over the next two to three years would be closer to the mark in my estimation.
read the full article here:
http://www.empowereducation.com/Olly_column_Jun2010.bz
For the smuggeroos among you who boast that you are happy renters I will give you another prediction:
Within 2-3 years you will standing on the front lawns of the few properties which are available to rent, bidding furiously against the multitude just to get a roof over your heads.
You have been warned,
Good work Olly. Hey Bernard,
Good work Olly. Hey Bernard, why dont you write a negative article about the dire prospects for renters??? Oh thats right, you only report one side of the story.
Anonymous/OllyN You'll see I
Anonymous/OllyN
You'll see I include the rents information in the article above.
Have a look here at the most comprehensive data series on rents in New Zealand from the Department of Building and Housing.
http://www.interest.co.nz/charts/real-estate/rents-median
Check out what's happening with Auckland median rents for both 3 bedroom houses and 2 bedroom apartments.
Auckland 3 bedroom apartment rents across the entire market (not just Barfoots) have risen from around NZ$400 in mid 2007 to around NZ$460 in mid 2010, which is around 15%. Disposable household incomes rose around 10% in Auckland over that period.
Auckland 2 bedroom apartment rents have risen 10% from NZ$300 to around NZ$330 over the same period, in line with income growth.
Nationally, rents have risen around 7% from NZ$280 to around NZ$300 over the last 3 years, which is actually less than disposable income growth of 10.7% over the same period.
Very happy to report all these facts. We'd invite readers to have a good look at that interactive chart above.
My point is that rents tend to rise in line with disposable incomes, unlike house prices, which were able to rise faster than disposable incomes in the last decade because of easy, cheap credit.
That easy, cheap credit has now gone.
I doubt landlords will be able to lift rents much faster than disposable incomes over the long term.
cheers
Bernard
It's a no-brainer. Unlike
It's a no-brainer. Unlike purchase prices, rents can't become unshackled from the reality of earnings long-term because they can't be puffed up through availability of too-easy credit. Why is this so difficult for some people to grasp?
Why is it impossible for
Why is it impossible for idiots like you to grasp the fact that house prices are miles below replacement cost, there is very little development funding, therefore bugger all new houses are being built. And that is why house prices will remain well supported at current levels. The property crash has happened, prices have been stagnant for three years now. Its done, old news. Now is the time to buy, as a housing shortage in the major cities is beginning to emerge. Thats what you fail to grasp.
"...the fact that house
"...the fact that house prices are miles below replacement cost...". Why is that? OllyN tells us that this can't happen!
So what magical force are you
So what magical force are you invoking that supposedly means replacement cost can never drop?
Replacement cost already has
Replacement cost already has dropped. But the reality is the economics of buying bare land and building in the cities does not stack up at the moment, even if a developer could get funding, which they cant. And for this reason property prices will remain well supported. I'm not making a wild open-ended prediction like Bernard does, i'm just summing up the reality of the situation in NZ's cities at the moment.
But don't you think that
But don't you think that rather than a stalemate in which nothing gets built and even genuine non-speculative demand isn't met, it's more likely that build costs will drop to meet the market? There's no component in building cost that can't fluctuate in response to circumstances. Land prices can drop, materials can be discounted if that's what it takes to sell them. Builders can reduce their margins if circumstances demand. Councils would be better off to reduce fees than collect none at all.
That last comment is at odds
That last comment is at odds with every possible model of economic behaviour, including both rational and irrational.
Do you want to explain that a
Do you want to explain that a little further? Bernard will pounce on any news that is even remotely negative for property, yet on hearing the news that rents are increasing, which is positive for landlords and negative for renters, he has no comment. He is the most pathetically biased, unbalanced commentator in NZ media.
I mean Olly's sensationalist
I mean Olly's sensationalist comment that renters will be bidding against each other on the lawns of houses for an ever decreasing pool of properties. I can't imagine a series of circumstances - rational or irrational - that would make that widespread and enduring.
IanC, I reckon OllyN is
IanC, I reckon OllyN is correct. I'm picking a real shortage of property to rent and a "que" will result.
Australia has a very similar operating housing market to ours, and they have seen chronic rental shortages and ques on the front lawn.
Yes, me thinks he was beaten
Yes, me thinks he was beaten up by a house when he was at school. Hey it maybe thet he is just the "SIMON COWELL" of/on interest.co.nz
Late to the party, OllyN.
Late to the party, OllyN. Have a read through the posts of the day, and you'll see all your point have already been tackled.
Auckland rents are going up
Auckland rents are going up because landlords serve notice to require that. What is not reported is how tenants are responding. Any change induces a review of the situation by the tenant. So some tenants think time to go. The following tenant may pay the higher amount but some either that or another landlord will be left with an empty house for a while. A 2.5% increase in rent is quickly offset by no tenants for a short while.
Ultimately the capability to put rents up depends on the ability of the tenant to pay. That depends on the economy which is relatively sick. Will rents go up then down? Yields of course will go up significantly as house prices drop. But that is only useful to a long term LL or to a new investor.
Has anyone considered the
Has anyone considered the fact that new construction is going to be 2.5% more expensive come October the 1st and that’s just GST, what about the increasing prices of materials! So even with emigration flat the population will naturally grow putting pressure on existing stock. By the time everyone starts jumping in again the market is on its way back up. Bernard is New Zealand’s leading financial joke, the sky is falling chicken little.
Clutching at
Clutching at straw...clutching at straw...clutching at straw...
Sam, Many thanks. I remember
Sam,
Many thanks. I remember telling Mark Hotchin in July 2008 that I thought property prices would fall 30%. He said I was crazy and it would never happen.
He was essentially telling me to stop saying such radical, dangerous things. He wrote me off as a joke.
His development properties are now worth significantly less than he valued them then. Perhaps 60-70% less.
You make a good argument about GST and population growth. The problem though is the banks have stopped lending at the same rate they were and house prices don't rise without the extra credit growth.
The other option is for people to live with friends and family if they can't afford to buy or rent. That's what we're seeing in Auckland.
cheers
Bernard
Arrand: You obviously havent
Arrand: You obviously havent bothered to read by post let alone understand it. Put simply my post draws attention to the fact that I predicted the rise in rents while the rest of you were asleep or bickering over when civilisation as we know it willl end.
But this is just the beginning.
It won't be long before the the head lines will be screaming about huge rent increases and naughty landlords rorting the market etc .
At least there are some pleasure still left in life and rising rents is one of them.
Newland: You think that if
Newland: You think that if you shout your richmastery type slogans then all those horrid little "negative" fundamentals will go away.
Let us know how that works out for you.
Yeah, pump that flaccid
Yeah, pump that flaccid market. Pump it hard. Or pimp it hard. Whichever.
Dont worry Olly as I said I
Dont worry Olly as I said I have room at my place when"the bank comes acallin"
Hey Olly come and see all the
Hey Olly come and see all the empty rentals where I live. The family over the road are off to Perth tomorrow. The agent tells me inspite of the 4 weeks notice they have no one to rent the property to
I just walked past four
I just walked past four houses with 'To Let' signs in the front windows in the course of a three minute walk encompassing two streets. I counted them.
The moral of that story is,
The moral of that story is, dont live in such a shitty neighbourhood. Right Olly?
4 empties X 3 minutes. Walk
4 empties X 3 minutes. Walk for an hour. Olly you do the math.
Also consider that those were
Also consider that those were only the obvious ones with placards in the front windows.
Must be one of those 8 house
Must be one of those 8 house towns with 50% of all houses vacant and prices plummeting.
Auckland CBD is getting interesting. For years there's been over 800 units advertised on Trademe, now there's under 600. it's not like people can pack into these either as some are so small it would be physically impossible. I guess having 0 units built in the last few years plus replacement cost 2x the sale price means none will get built for a while either.
As someone at Council pointed out (when confronted with evidence that town planning rules were making housing unaffordable) the poorer people can just move to Waitakere and Maukau cities as this is what happens overseas. That's probably how rents can increase faster than incomes. It is what happens overseas in NY, Asia etc. Rents are only out of whack with the incomes of those who can't afford to live there, who then move farther out.
RJ: I did say 2 - 3 years
RJ: I did say 2 - 3 years for the shortage to bite. And where are these empty rentals? Taihape? Tokoroa? South Auckland? Be patient. The shortage may be slow in coming but it will come.
Headline News: Olly Newland's
Headline News: Olly Newland's rent rise prediction comes true!
whoopdee do!
Many were predicting rents would increase, including me even as a property bear
Even with these small increases renting is way cheaper than buying. Remember too that rents were very flat for a long time - over the last 5 years they haven't increased much at all, way below inflation
They need to rise a lot more yet - and house prices need to fall - before average yields start returning to favourable levels
I'm paying $550 for a nice 3 bedroom Villa in Remuera - thats about half of what I'd be paying if I bought the place
Rents cannot rise much.
Rents cannot rise much. Incomes aren't increasing unlike the cost of living.
If rents continue to rise people who can't or don't want to buy a house in NZ will move to Australia.
So landlords lose tenants, and only a few will be able to replace them because the pool of available accommodation will exceed the pool of available tenants.
Kiwis are world famous in NZ for shooting the gap when times are tight (or for just about any reason), so why do landlords assume NZers will hang around and pay ever increasing rents out of ever diminishing incomes when they can instead jump aboard the next flight to Australia?
Property is falling in value and price, so quite a few of today's tenants will be tomorrow's homeowners, reducing the pool of available tenants even further.
Those unable to leave and unable to buy will not be able to afford increased rent on stagnant incomes, so the taxpayer will have to pitch in via increased accommodation benefits.
Even with all the various tax rorts and dodges of which the PIs gleefully avail themselves they too will have to cough up; if the govt ever grows a pair of balls and KOs the rorts and dodges then being a PI will become an epic fail.
Anybody heard of REINZ
Anybody heard of REINZ president Peter"spruiky" MacDonald lately. Strangely quiet.Maybe he is "collecting the data" i.e 500 bits of data x 7%(market turnover)= 35 sales X my%of the market =??? crap somethings gone wrong!!
Guys like Olly and Alexander
Guys like Olly and Alexander are living in the past.
Times have changed.
The conventional wisdom has changed.
The world has changed.
Put simply, we are living in exceptional economic times. We live in the shadow of a massive speculative bubble. The vast majority of the western world is in the doldrums. The baby boomers are ageing and soon retiring.
The boom will not return.
The new reality is years and years of mediocre economic growth (1-2%) and stagnant house prices (drops in real terms).
Those who cling to the OLD conventional wisdom will fail
The "conventional wisdom"
The "conventional wisdom" could well become hyper inflation. Go figure that one out.
What does hyperinflation lead
What does hyperinflation lead to OllyN? The destruction of asset prices. Nothing is worth anything. There is no monetary value to an asset, whatever it is. "That's my house, tenant, pay the rent or get out. Here's the rent sir. Some fabulous dollars for you". Better to have a correction of asset prices, and debt retirement, through a managed regime of deflation. That way, we are all better off. All things will cost less!
Further, holding real assets
Further, holding real assets is better than cash if you have hyper-inflation, but not if you can't raise rents fast enough to meet the new interest payments in the early days...
sorry, almost zero chance of
sorry, almost zero chance of hyper inflation
what makes you think hyper inflation is a possibility? I haven't heard any credible agrument suggesting that will occur
not that I believe we will see deflation like some on this website...I think its likely to be business as usual inflation in the 1-3% range
Its all good posting about
Its all good posting about how prices are falling, in chch I have no evidence of this. Have been helping a friend try to buy a 3 bed / full section / double garage property in a reasonably large suburb he wants to live in for approx $270k. Similar property would have been 130k in 2001-2003 and maybe 290k at the peak but is proving impossible. The ones that make it to advertising sell quick and no chance af a decent haggle. Could go any way from here price wise but getting in for 7% or less is going to save them big time over the course of the mortgage.
Seriously. I've seen what you
Seriously. I've seen what you get for $270k in Christchurch. 75 year old w/board ( untreated) just getting some sort of rent, hoping for the land to go up before the bulldozer is put through and a new set of town houses goes up. Two problems. (1) Wouldn't want to have to live in it , and good luck getting the rent out of whoever you do put in and (2) there are bugger all developers about at the moment. And those that are already have enough land on their books waiting for the right time to do their own bulldozer work.
Last weekend looked at 3, one
Last weekend looked at 3, one fully renovated and a nice weatherboard one in very good condition, one shitter on 1000 sqm subdivisable section (250 would probably buy it) and one large solid weatherboard with block large garage / workshop. Needed internal work to tidy up but probably would add considerable value. All in south brighton (the good part) a block from the beach. I think you need a happy pill sir!
Oh, and no townhouses there,
Oh, and no townhouses there, L2 land not L3
Prices in south Brighton have
Prices in south Brighton have always been quite a bit higher than those you are quoting, specially in the boom. The market always stiffs there in winter; should get a few decent listings by October, then again at the end of the Christmas school holidays. Be careful with ones backing on to the forest: high tides can reach the back door if you're lowlying! And the r.e. agents out that way are particularly feral.
Trying from bridge st down to
Trying from bridge st down to rocking horse road, where prices go up steeply. Have kept an eye on that area for a few years, few friends own POR's and rentals there. Some really good buying around 300k. All my property is st martins/sydenham/beckenham, L2 and L3. Not "the man" either thanks, good to hear he has some cash positive property though :-) I think he maybe the only one apart from Olly who owns a house on here? Does Bernard rent? Not that it is any of my business anyway!
You are a good fellow for
You are a good fellow for helping your friend the Man.
i think deflation has already
i think deflation has already started in the kiwi housing market!
why buy today when it'll be cheaper tomorrow?
doubt hyperinflation will occur in nz and if anything we may end up in the japaness doldrum of years of wallowing deflation.
hyperinflation= terrible for borrowers.
deflation =..wonderful for cashed up savers.
olly, old chap..time for a cocoa and bedtime for you, isn't it?
it's after 7pm
Rob of the North: Sorry
Rob of the North: Sorry mate- still got two of everything and all working. Got to go now. Pam Corkery needs me urgently.
They'll drop as more supply
They'll drop as more supply comes on to the market in spring. And then those will get low offers cause buyers will have other options. Investors will probably look at other investments out of property for a few years.
The Man - that was a
The Man - that was a fascinating insight!
Are all optimists of linear persuasion?
A doubling via compound interest is not '10% PA'.
Which immediately renders questionable the basis for your other claims......
Maybe the first valid argument I've seen for National Standards - certainly more valid than the person pushing them.
powerdownkiwi. Once and for
powerdownkiwi. Once and for all who the hell is talking compound interest?
100 divided by 10 is flipping 10. That's it. End of discussion.
OMG I'm dying
OMG I'm dying here.
Seriously dude, go google the rule of 72.
Ha ha ha ha ha ha ha
Ha ha ha ha ha ha ha ha!
Yes, 'The Man' is the uber investor!
Nobody understands the fundamentals of high finance like 'The Man'!
HA HA HA HA HA HA HA HA HA HA HA HA HA HA!
What a blow this would be to his reputation and credibility if he had any of that.
It's pure comedy gold.
It's pure comedy gold.
Anon Good Nurse. Thanks. Got
Anon Good Nurse. Thanks. Got to go know the fundamentals as well as any.
Cheers
Thanks for the laugh (at your
Thanks for the laugh (at your expense)!
In future we'll know to treat
In future we'll know to treat any numbers he gives us with deep suspicion.
Not me. I've been dismissing
Not me. I've been dismissing out of hand his numbers and claims ever since he first began trolling this site.
Yeah, but now he's proved
Yeah, but now he's proved it.
Hey, The Man! Another test for you:
You buy a house for $100,000. The valuation goes up 20% the first year. The second year it goes down 10%. How much is your house now worth?
What happened with all
What happened with all speculators waiting for house prices to collapse? No more Wally’s, Jimmies and ex. Agents waiting for house prices to drop so they can repeat it all over again. Things are not going their way this time
How's the weather in Denial?
How's the weather in Denial?
Alen the rise in unemployment
Alen the rise in unemployment today confirms sadly just how sick the economy is. The housing market is not going to crash. It is simply going to go down in value in a steady fashion over the next five to ten years and no manner of talking it up can stop the momentum which is well underway. This will be confirmed by QV next week when the July figures come through. There is too much debt already in it which needs to be worked out of the system and people now are wisely avoiding any large amounts of debt. More sellers than willing buyers can only mean one thing I am afraid and it is not rising values.
This is sweet revenege for
This is sweet revenege for the long suffering middle classes of Auckland. These 750k plus properties were all 1m plus properties at the height of the bubble. I know of friends with good jobs who previously were forced to live in ex-state house boxes who can now start to think about buying a house that align with their job descriptions.
BH - did B+T report any stratified medians? Still puzzled as to why anyone would be interested in means?
Working class hero, No
Working class hero,
No stratified medians from Barfoots. We'll see these from REINZ on August 13 (next Friday). We'll have Quotable Value figures on Monday.
cheers
Bernard
educational to say the least
educational to say the least
Within 2-3 years you will
Within 2-3 years you will standing on the front lawns of the few properties which are available to rent, bidding furiously against the multitude just to get a roof over your heads.
You have been warned,
That can't be coming from Olly Newlands and if so he's got to be going senile!
Kakapo - the Man probably
Kakapo - the Man probably values it at $205,193.50
You nay- sayers make me
You nay- sayers make me laugh. In a little while you lot will be sitting in the dark and mumbling " i wish i had take advantage of the down market"
All successful traders buy in gloom and sell in boom .