Time to buy! You better get in quick, before it's too late!

As I wrote many times, we are living in fast moving and changing times. I abandoned taking charts and surveys into consideration, but make comments on a daily base, experiencing the world – hell-o!
What’s happening when the “Farting Iceland Geyser” keeps going for another 12 months ?
The Rugby World Cup is actually happening ?
Fuel prices go up to US$ 100.- plus ?
US and Europe economies are collapsing (riots) ?
Major gold discovery :-) ?

All those “tourists” flocking to NZ need shelter ?

Exactly Justice !

..and an 11% plus economic growth in China’s economy will travel and buy here in beautiful NZ ?
..and “Aussies” sweating in heat and droughts” - without water ?
..and Islands just going under ?

All need shelter !

New Zealand increased weight will turn the globe even faster and then 3.9. 2015 (my birthday) - baeng - NZ gone too heavy !

People, careful with old economy books, charts, statistics % and “wise” bankers wearing goggles !

Cars are good enough for shelter ...

People live in cars as housing gets tighter:
http://www.stuff.co.nz/nelson-mail/news/3593732/People-live-in-cars-as-h...

And theres currently 140 rental listings in the same town:
http://www.trademe.co.nz/browse/property/regionlistings.aspx?mcat=0350-5...

Justice said:

"I could survey 1000 people on whether they think the sun will rise again tomorrow, will it change the event either way?"

Ammmm ,what to say. I think this is a very poor analogy - in fact a ridiculous statement to be frank, I'm sorry Justice. Property behaviour is strongly affected by sentiment / intent. Sentiment at present is clearly negative, even amongst many investors, this is likely to rub off on the market and actual market behaviour...and prices.

Phil K. - I am strongly opposed to WFF. But before you get your knickers in a twist what I and many others would argue here is that we would scrap WFF and reduce other bureaucracy, then the country could better afford tax cuts and people like yourself would be in the same position if not better with tax cuts rather than a handout. The big problem with WFF is it is highly inefficient, and involves a massive (and therefore costly) bureaucracy to manage.

Hey I fully sympathise with you. I had my first child when I was 26, it was really really hard on a low-moderate income at the time. I really wish I could have had some assistance. But my wish would have been for taxes to be much lower rather than getting a handout.

@David 7:01pm

Very boastful David but we have to be honest here as all those properties came about because of my seminars failures!.....

Instead of sitting around whinging because some parents are getting a helping hand with some of your tax, how about you try to become slightly less creepy and maybe start a family.

L.

O.

L.

:D :D

I know three people who have deposits and the income to buy a house,but they all have decided not to buy this year they are waiting to see what happens to the market.

Some good advice here!

Right now I have around $80k saved up and in term deposits. Houses don't look too attractive at the mo but I want to get more from my money than bank's typically offer. However I want to minimise risk as much as possible because it took me a long time to save this and who knows if I will be ina position to do it again so readily.

What do you guys reckon I should do with it? The sharemarket is a mystery to me but I'm open to almost suggestions within reason. The bank is safe but returns are pretty low, but...it's safe... :)

Over to you.

@Phil K: “What is it with the WFF hating?” Simple, NZ cant sustain WFF and paying ppl to have kids…it is your choice to have children (as it was mine) you should be supporting them free of WFF…this is a piece of social engineering that is plain crazy, there are too many ppl in the world to feed.

Baloney! You're being terribly disingenuous here, or else you are ignorant: When people say "back in my day we didn't need WFF!" they conveniently ignore the fact that compared to incomes back then homes were affordable and general living costs were lower. In real terms incomes have hardly changed but the cost of everything has skyrocketed.

And do some reading before you spout off the whole "too many people in the world" shite, because that Malthusian nonsense has been thoroughly discredited for a long time. The Earth is easily capable of sustaining a far greater population than it already does. Poverty, starvation, deprivation all have political causes.

What makes me laugh is how those who complain about "socialist" assistance and benefits are always the first to demand that the "bluddy guvmint" do something for them when things don't go their way.

@Adelphi: You are risk adverse, and not very knowlegdable so bank deposit is probably the safest thing...Shares, no I wouldnt...Im selling all mine this week, I expect an implosion....bank deposit in this situation IMHO is the safe bet...

" 12% expect house prices to rise (down considerably from 65% in September) "

Hmm, that's more like it. It is usually the minority who are able to see beyond the "common sentiment" and as a result foresee what's going to happen. Even 12% seems too high...

W. Kunz, last I looked nobody was starving to death here in NZ. However we are facing a tax crisis as the number of old people expecting to collect a state-supplied pension rapidly increases in years to come. Seems to me that what this country needs is more young folk, ready to enter our workforce and pay the tax everyone else is planning to spend on shandys down at the bowling club. Or are you planning to top yourself for the common good?

@Matt - out of interest, in what way is WFF highly inefficient? Do you mean from the perspective of its management or the way the money "handed out" is used? Also when you say you'd prefer tax cuts to WFF, how would this compare? From what I've read about possible tax cuts, the plan would be to cut the highest tax rates (good for me btw, just not sure how it'd help people on lower incomes who arguably need a tax cut more than I do). Also the way I understand it, the specific purpose of WFF isn't to help just anyone but families with dependant children. By reducing tax rates, especially the highest one, you are more likely to increase the take-home pay of high-income, single professionals rather than young families. Fine by me, but I just don't see how it is at all comparable to a social welfare scheme like WFF.

@Adelphi - sharemarket is a bit like a game of poker (or the lottery), even more so in the last couple of years. So I would only advise to invest in the sharemarket whatever money you are prepared to lose! But hey, if you get lucky you could make a lot.

"Seems to me that what this country needs is more young folk, ready to enter our workforce in the years to come."

Try thinking a bit deeper maybe...here's a help, every year we grow the economy we have to grow the crude oil supply, we cant grow the oil supply any more, and in fact its set to decline.....therefore our economy will decline,therefore the last thing we need is more ppl...

"old people expecting to be collect a state-supplied pension rapidly increases."

The same ppl who seem determined to not save for their own pension today but sponge off future generations...not terribly moral.

regards

Try thinking a bit deeper maybe…here’s a help, every year we grow the economy we have to grow the crude oil supply, we cant grow the oil supply any more, and in fact its set to decline…..therefore our economy will decline,therefore the last thing we need is more ppl…

This oil fixation of yours is a mite tedious, not to mention plain wrong. People will adapt. They always do.

The same ppl who seem determined to not save for their own pension today but sponge off future generations…not terribly moral.

Try and think beyond the next financial quarter just for once. The old folk of today -- the ones you blame for everything -- will be gone soon, and the youngies who supported them will be the old folk. Hopefully they will have been mad keen savers, or maybe not. Whatever the case, somebody has to pay the bills, and that won't be easy if we don't have enough earners earning.

W. Kunz, you don't think, I think.

Hello
Reading that interest rates may go up,If rates went up who would be able to pay for them.People are struggling out in the real world,the everyday Ma in Pa kettles have no money left at end off the week.
Do the pie graph on the cost off running NZ,the whole system is sucking the country dry.
Lifting interest rates will only slow things down even more.Everything is costing more,living costs are increasing.Business people can't sell goods to people who have no money to spend.Most people in the my area are banking on the world cup as turning point to make decisions on spending.
keep the floating rates low so people can get back on there feet.

@The Bank Manager Is Clueless: "This oil fixation of yours is a mite tedious, not to mention plain wrong. People will adapt. They always do."

Easter Island?

They adapted well...

History is filled with civilisations that failed to adapt and/or collapsed....

"oil fixation" indeed, its the single biggest paradigm shift in 100 years, it is a risk to our way of life/ lifestyle. The past we always moved from less efficient energy sources or less efficient processes to more, this time we will be moving down...

"adapt" indeed, adaption takes time, we are failing to start to adapt...

"The old folk of today — the ones you blame for everything — will be gone soon" BBs, not for 30 years, that isnt soon, and the problem is the debt they want to leave behind for their children and grandchildren...that isnt moral.

"next financial quarter just for once" I think 5 ~ 10 years ahead...hence my Peak Oil "fixation"

"somebody has to pay the bills"

Indeed those that create the bills should pay for it, at least the bulge bit

"and that won’t be easy if we don’t have enough earners earning." We wont and thats just the start of it...

You are totally ignorant of the world....

@Murray: If you dont use fertilizers, ok, Commercial food production does, then there is the oil (deisel) for planting, transport and harvesting, fertilizer, pesticides all gas or oil based....it all adds up and its all published to read.

regards

@TBM,

You said interest rates for 3-5 years would be around 6% by now. This hasn't happened. Any comment? Does this affect your estimates for house prices going up?

Lentils for breakfast , steven ?

Would it cheer you up when the world doesn't end in a fiery maelstrom of riots / pestilence / & starvation : Or would you be hacked off that you'd gotten it wrong ?

This is all a bit off topic, I guess we're all bored of talking about houses...

steven: "the problem is the debt they want to leave behind for their children and grandchildren…that isnt moral" - That's unfortunate for you if your parents are going to burden you with a large debt. I'm genX, and most BBs I know have freehold properties.
I know of some who have mortgaged their property to fund their genX kids business which has failed, or to fund their education only to find they are now tripping around the planet and not using their qualification at all. A lot of people in every generation fritter their time & money away, and then blame everyone else for it...

"If you dont use fertilizers, ok, Commercial food production does, then there is the oil (deisel) for planting, transport and harvesting, fertilizer, pesticides all gas or oil based…"

There is a big move at the moment towards organic produce. Also a lot like us that grow a lot of our own - I like to know my veges haven't been sprayed with every synthetic chemical known to man... good riddance to all that stuff, I say.
As for transport, we've had the technology for over a century for electric vehicles which are far more efficient than burning fossil fuel, but it won't happen until the oil tycoons have sucked every last penny out of the black gold...
Just curious again, can anyone enlighten me about the wisdom of sucking oil out of the planet and replacing it with seawater? I know what would happen if I replaced the oil in my car with water...

Adelphi : Bank accounts are safer than the sharemarket and precious metals . And that is why you are getting low returns , on your term deposits . You are paying for the fact that your capital is nearly 100 % safe . Step into stocks or gold , and the warm glow of being in Ira Goldstein's company , vanishes lickety split !

But Matt...surely you realise the WFF scam and the thieving govt taxes and local council rates theft are all part of the plan to control inflation!...jeeeeez of dear...if the peasants are ever allowed too much of their own money, everyone knows they will rush out and splurge on stuff to grab what they can before the next bunch of morons enter the Beehive and bugger the game. The peasants must be under control Matt. Labour know that. National too.

I wonder how many Chinese were included in the QV survey?

murray says

"Just curious again, can anyone enlighten me about the wisdom of sucking oil out of the planet and replacing it with seawater? I know what would happen if I replaced the oil in my car with water…"

Murray it is called "well stimulation". Basically repressurises/ or maintains pressure and guess what oil floats. Averages (give or take) approx 10% either more time or xtra production. Incidently the trick is not to do it to soon (ie Russian fields in 80,90s etc) for xtra production but to do it on only mature fields(nearly buggered).

A mate of mine works in Treasury.

He's been hearing that alot of MP's have been selling their houses since mid 2009

Can MP's be done for insider trading? Have they been warned of tax changes and have exited before everybody else figures it out?

Crazy old world hasn't chnaged I suppose

For those people who are against WFF concept and their premise that they didn't have such WFF in the old days. But hold on, back in those days we had NZ Rails, Post Office, Post Bank, Bank of New Zealand etc. Where one can walk off the street and get a job courtesy of the tax payers. Without those tax payer subsidied organisations where would you be today...

@ Today I'm Anonymous - 9:27 am.
The pollies haven't been tipped off any more than you or I, sir. They probably just read the sage writings on this site, and made their own informed descisions !

@JaD & Matt - Thanks for enlightening me. I must say that since I have been reading some of the blogs here I have been rather puzzled at all the anger or at least resentment towards families who dare receive a "WFF handout". Don't get me wrong, I am not saying that it does any good to the country to spend something that we can't afford. But I am wondering why it is the one subsidy/benefit (or whatever you call it) that is always targeted in people's rants and why the recipients are without fail called bludgers. Your (and my) taxes go to pay for a whole lot of things, many of which I am sure we'd like not to pay for, not just WFF. So why is WFF so much worse for the country than, say, all the of tax money spent (wasted?) on rehabilitating criminals, supporting people on the dole or sick, dealing with health issues caused by alcoholism, smoking or obesity etc?

Also as far as I know it is a fairly recent thing, and yet wages for the same job/qualifications were already much lower than in other 1st world countries well before it was put into place. So the argument made by someone on another thread that the reason why wages are so low is because people are able to accept lower wages thanks to the WFF handout they get and therefore pull wages further down doesn't hold.

Again, not saying it is a good system but wondering why this particular scheme gets slammed so much. The way I see it, my husband and I were both on the top tax rates for over 10 years from the first month we started working, and paid a whole lot of taxes for a whole lot of people and issues we had nothing to do with. At some point after having kids and a lower income as a result we were entitled to this "hand-out". Well, you know what I don't feel too bad about it! Plus in the meantime I have been doing a whole lot of things to try and make sure you (among others) get your money back x10. Not to mention the lower income isn't forever and soon we'll be back to paying a whole lot of taxes for a whole lot of people and issues that we truly have nothing to do with. So I ain't losing sleep over my bludger status! To me WFF is specifically intended to support families, unlike tax cuts accross the board.

Martinv: "Then look at the population growth in the world, currently doubling every 40 years or so. So in 80 years (approx one human lifetime) at current growth rates there will be 28 billion people instead of the approx 7 billion now. Another 80 years later, over 100 billion people. Keep going… When do you think population growth will stop? At some point it must stop"

Good luck with trying to stop 100 billion people from breeding.... ;)
I agree though, that at some future point it might get limited by a lack of resources...

Martinv: “Then look at the population growth in the world, currently doubling every 40 years or so. So in 80 years (approx one human lifetime) at current growth rates there will be 28 billion people instead of the approx 7 billion now. Another 80 years later, over 100 billion people. Keep going… When do you think population growth will stop? At some point it must stop”.

Never fear, it's already slowing down due to too many chemical traces in our environment - plastics and higly processed food. Latest medical journals indicated that sperms count in male is dropping !

@ Martinv - "Anyone know of populations of humans who have successfully manipulated population growth at the breeding stage (apart from the Chinese)?"
Isn't that what the contraceptive pill did/does for our generation in 1963 Martinv?

hello
i'm new to this site and already i'm very confused.
chinese ,wff, and lots of different ideas?
i have a good income and am a cash buyer.
when is a good time to buy a house because you all go round in circles.
whats' the answer?

thanks gingerman...reminds me..tea and biscuits time?!

@Nicholas Arrand, re: contraceptive pill being used to control population growth at the breeding stage since the early 60's.

Doh! Of course you are right; not sure how I missed that!

WFF bitching? Here's what amuses me about stuff like this: The people who complain about bludgers and beneficiaries ripping off the taxpayer think nothing of doing the same via property rorts.

Think about that --- Here you are jumping up and down again as usual because you hate the idea that somebody somewhere is benefiting from tax dollars even as you gleefully exploit every tax loophole you can.

Chances are that the cost of welfare beneficiaries and parents getting WFF is positively DWARFED by revenue losses resulting from tax manipulation by corporate interests and property invester/speculators.

But don't let that stop you hypocritically whining about, say, some divorcee with three kids getting financial assistance, as you sign some paperwork for your accountant to enable him to claim back a huge chunk of tax dollars on some bogus write-off or other.

There's a difference between the birth rate that Martinv was referring to ("..manipulated population growth at the breeding stage..) , Murray, and population growth.

Bryson Says:

April 19th, 2010 at 12:42 pm
WFF bitching? Here’s what amuses me about stuff like this: The people who complain about bludgers and beneficiaries ripping off the taxpayer think nothing of doing the same via property rorts.

Think about that — Here you are jumping up and down again as usual because you hate the idea that somebody somewhere is benefiting from tax dollars even as you gleefully exploit every tax loophole you can.

Chances are that the cost of welfare beneficiaries and parents getting WFF is positively DWARFED by revenue losses resulting from tax manipulation by corporate interests and property invester/speculators.

But don’t let that stop you hypocritically whining about, say, some divorcee with three kids getting financial assistance, as you sign some paperwork for your accountant to enable him to claim back a huge chunk of tax dollars on some bogus write-off or other.

Thank you Bryson, that is easily the best post in this thread!

@Didge: "Highly efficient techniques have already been used in densely over populated places such as Burundi and Rwanda."

Indeed.....6.5Billion to 2Billion by 2050 isnt going to be bloodless...

regards

This is quoted from an article by the famous Canadian environmentalist and geneticist David Suzuki. It is, one hopes, simple enough even for those dreamers who do not understand the dangers of exponential population increases.
http://www.climatechangecorp.com/content.asp?ContentID=5240
"I am going to show you why it is suicidal to think we can keep growing forever. Let me give you a test tube full of food for bacteria, that represents our world. I am going to put one bacterial cell into that test tube (representing us), and it is going to divide every minute; that is exponential growth. So at time zero you have one cell; one minute you have two; two minutes you have four; three minutes you have eight; four minutes you have 16. That is exponential growth and at 60 minutes the test tube is completely full of bacteria and there is no food left, a sixty minute cycle.

When is the test tube only half full? Well the answer of course is at 59 minutes; but a minute later it is filled. So at 58 minutes it is 25% full; 57 minutes 12½ % full. At 55 minutes of the 60 minute cycle it is only 3% full. So, if at 55 minutes one of the bacteria said to its companions that they had a population problem, the other bacteria would be incredulous because 97% of the test tube would be empty and they had been around for 55 minutes. Yet they would have only 5 minutes left. So bacteria are no smarter than humans and at 59 minutes they realize they only have a minute left. So they give massive amounts of money to scientists, and in less than a minute those bacterial scientists invent three test tubes full of food. That would be like adding three more planets for our use. So it would seem that they (and we) would be saved.

What actually happens is this - at 60 minutes the first tube is full; at 61 minutes the second is full; and at 62 minutes all four are full. By quadrupling the amount of food and space, you buy two extra minutes! How do we add even a fraction of 1% more of air, water, soil or biodiversity? We cannot. The biosphere is fixed and finite and every biologist I have talked to agrees with me, we are past the 59th minute. So all those leaders saying that we have to keep the economy growing are saying we have to accelerate down what is a suicidal path.

@waymad: "first rule of war", true but failing to plan is planning to fail...hence why I say central policy and not central planning. The Soviet block's doctrine v Nato's, I'd rather Nato's where you give the officers on the ground the goals and let them make the decisions...

regards

Looking at the population growth rates (http://en.wikipedia.org/wiki/Population_growth), most of Europe + US have either negative growth rates or a growth rate below 1%. The only areas with a growth rate at 2% or more are countries that already have very limited food supplies. Shouldn't that take care of much of the issue? Generally speaking men have been rather bad at distributing food where it is needed, can't see why that would change and without food, well, growth rate is bound to drop in those areas too...

RT,
Quote:
# Roger Thompson Says:
April 19th, 2010 at 8:12 am

Adelphi : Bank accounts are safer than the sharemarket and precious metals . And that is why you are getting low returns , on your term deposits . You are paying for the fact that your capital is nearly 100 % safe . Step into stocks or gold , and the warm glow of being in Ira Goldstein’s company , vanishes lickety split !
unquote

A gold coin pays NO interest, and therefore by your logic safer than a bank account.
It's good to see a lack of understanding on this subject as it disproves instantly the claims of a bubble in gold.

Here's my argument which explains why I think Bernard is wrong every time he says "the big 4 banks are safe":

Bernard Hickey again claims "The big four banks are safe" - Why I think he is wrong
http://neuralnetwriter.cylo42.com/node/2719

Jeepers Steve ! A squirrel pays no interest either ....... But they're not safer than cash in the bank , either . Gold is not safe , Steve . It is a tradeable precious metal , at the daily whims of the market-place . As are stocks .

In the situation of someone saving a deposit for a specific purpose ( with a limited time-frame ) cash in term deposits is a sensible option . Gold is not . Share are not . Finance companies are not . For once , Bernard is 100 % right !

[ and I made no comment about " bubbles " . That was your addition to the thread ]

.........and would you kindly say who you are referring to by the crack : " a lack of understanding on this subject " ......... As if you know it all ?

@Didge - good point. Although I haven't seen too many Ethiopians around so for many immigration must remain a desire rather than a reality at present.

@Justice - Are you saying that people's sentiments & opinions has nothing to do with what happens? It seems clear looking at the way things unfold (sharemarket crashes, property bubbles etc) that sometimes not much more than a general change of feeling or confidence is needed for these events to occur. A snowball effect isn't unheard of, and it's not always based on facts or reality. In fact people's behaviour tends to be a bit irrational at times!

@RT - I mostly agree with what you say about gold but I wouldn't trust the big banks that much either (hence I spent all I had on my house!).

Elley : Alot of Americans trusted their houses more than munny in the bank . Many are now 40 % down the gurgler , thanks to the " property never falls " mantra . It can fall , and did . What makes you believe that we in NZ are immune from a housing market melt-down ?

An excellent argument Elley . I am sure that you guys will benefit enormously from owning your house , rather than renting .

But my premise that " cash is king " in times of uncertainty , has not been refuted . And I'd bet London-to-a-brick that we're currently within a period of greater financial uncertainty , than is the norm .

[...] Blogging On Interest Rates, Economics & Business in New Zealand [...]

Steve : I did not say anything about " a bubble in gold " ! I said that gold is a freely traded commodity , and as such , volatile . If Adelphi wants peace of mind , gold is not an investment to make . Cash in the bank is .

Sorry if my " paper-bag mantra " offends you . Commonsense does annoy some folks . Cash in the bank is the commonsense approach for investors such as Adelphi who are trying to protect a nest-egg built up as the deposit for a house .

Roger,
You didn't answer one of my questions.

Why?

Roger you don't offend me with your paperbug mantra. I think it's dangerous and wrong.
You are trying to tell people that currency in a bank account is safe, that it is the way to save their nest egg.
I think you are wrong, and that it is dangerous advice.

My suggestion to anyone wanting to buy a house is to wait for at least 4 years. Put at least 10% of your savings into gold & silver. Consider your savings as mainly a medium term investment. Keep some currency as short-term in case you lose your job etc.

Roger, since you refuse to answer my questions, I'll answer them for you:

1. What is the fractional reserve ratio of banks in Australia & NZ? There isn't one, the banks decide themselves what they think is reasonable. It could be 10%, it could be 1%.
2. How big a fall in house prices would it take to put all the banks underwater? Not a lot probably.
3. How many currencies devalued by at least 50% in the last 7 years? 90.
4. What does the DOW-Gold ratio chart show? The swing between a bull market in financial assets and a bear market. We've had a long bull market, now is the time for the bear market. That's why gold is now in a long-term bull market.

I repeat in case you missed it, 90 countries had currencies that lost more than 50% of their purchasing power.
Tell the citizens of those countries currency is safe in the bank.