Newland sounds distinctly worried - as he should be.

Its happening all over the world .
http://news.bbc.co.uk/2/hi/business/10603905.stm
http://online.wsj.com/article/SB10001424052748703283004575362533872370078.html
http://www.belfasttelegraph.co.uk/business/business-news/gloom-shrouds-northern-ireland-housing-sector-14874851.html
http://www.khaleejtimes.com/DisplayArticle.asp?xfile=data/business/2010/July/business_July251.xml&section=business&col=
Going Down Down Down. 

Hi Olly, this is on the nail. Basically it covers full circle where other commentators have only ranted on about a segment. Every action has a reaction and the knack is to get the balance. This collection of Bureaucrats (including councils and the reserve bank) all seem to be making dodgy decisions on their own agendas without thinking "bigger picture"  It is a worry. As a landlord I am actively selling up simply to reduce financial impacts to me personally through things I have no control over. I will put my money under the mattress. What good is that to the economy. Sigh!

That's interesting - an article which highlights the reality but protests the fact that those pointing out the reality should be loathe to do so - but it certainly didn't stop him pointing out that reality to the poor sod of a commercial property owner that he bought a building from at a 50% below valuation recently.
 
But on whole I agree - every arm of government has done stupid things in their attempt to address New Zealand's response to this global crisis.  Asset price deflation is headed our way whether we like it or not, and Olly is right - the government's actions are just a kick in the teeth for every New Zealander (aside from the forest owners).
 
My advice in the short term - buy trees.

Olly is upset that the system is unwinding...the gravy train is off the tracks...no more bubble economics...well Olly, it was fun on the way up and plenty of people made fortunes thanks to the stupid RBNZ and brainless Labour govt....now the shoe is on the other foot as they say and it would be wrong to expect brilliant govt and superb reserve bank policies...far wiser to expect poor govt and poor RBNZ policies on the way down.
 

“Why did this occur? Because people are hesitant to borrow and the banks are choking on money that people are hoarding instead of spending whether it be on houses or whatever.
If the banks cannot on-lend they go broke. It is as simple as that.”
 
Wow, are you really this stupid or just being wilfully ignorant to try and dupe people into believing the garbage you spout? As a country we borrow (mostly via the Aussie banks) a huge amount of money from overseas to prop up the current housing bubble. The interest payments are simply being getting sucked out of the NZ economy, just to keep an asset bubble alive.
Wait until the core funding ratio starts ramping up to 75% and we will see how much cash “banks are choking on”. Stick to areas where you have at least some expertise please Olly.

"... if that really happened hundreds of thousands of Kiwis would be out of work, much of our economy and industry would come to a virtual halt, the banks would collapse and New Zealand would be reduced to a nation of ragged beggars left to shuffle through the two dollar shops and rifle garbage bins."
It would have been good to have some reasoned justification for this statement in the article. As it is, the whole thing is just another pile of gobshite from Olly.

May 31st and we got this:
"Olly Newland explains why he thinks there's never been a better time to buy property"
Today we get this:
"The gathering storm of "arrant, dangerous nonsense"
Figure it out for yourself!
 

These deluded commentators seem to believe that if property prices fell by 20% to 30% (as some have predicted) then they, and their children would be able to buy a house more cheaply in the future and that would be a wonderful thing. They think a massive drop in the market would make housing 'more affordable'.
What they cannot understand is if that really happened hundreds of thousands of Kiwis would be out of work, much of our economy and industry would come to a virtual halt, the banks would collapse and New Zealand would be reduced to a nation of ragged beggars left to shuffle through the two dollar shops and rifle garbage bins.
Very emotive but can you provide some logic behind this statement, for example why would a housing price fall put 200,000 plus NZ workers out of work, and why would it cause Australian banks to fail?
 

Load of vague, contradictory, incoherent, unsupported nonsense, full of faulty logic and unsupported assertions. 

Apartment? There are close to 3,000 vacant apartments in auckland central at last count. Shoeboxes are probably close to their minimum price and I see little change of them gaining in value anytime soon, barring a massive turnaround in migration/internation student numbers (which have been stagnant for the last 4 years).

Seems to me Olly has only managed to cement in place the fear that needed some leadership. Now the word is screaming through the market that the great Olly is seriously worried....jeez with things THAT BAD the last thing to do is borrow and splurge on property....the collapse MUST be an absolute certainty....why else would Olly be so desperate !!!

With few exceptions the media historically has placed a positive spin on the real estate market. The advertising revenues dictate this. It is rare for any media agency in New Zealand to give  an honest view of a failing real estate market,and now that we appear to have reached a turning point Olly is (and quite possibly many others are upset) that their view point is not being trumpeted as loudly. House sales for June out in two minutes . Maybe Olly has reason to be confident?

 What a load of rubbish!  Couldn't be bothered reading the whole article!  Waste of time posting it on Interest.co.nz

A few good points by Olly but also some rubbish.
Apartments generally are appalling investments. The better (and more expensive) ones typically offer crap yields (5% if you are lucky), the crap shoebox apartments can potentially offer better yields (maybe 7%) but capital gains will be non existent and capital losse are likely. 

Wally and others  "Now the word is screaming through the market that the great Olly is seriously worried....jeez with things THAT BAD the last thing to do is borrow and splurge on property....the collapse MUST be an absolute certainty....why else would Olly be so desperate !!!"
On the contrary I have never been happier and less desperate.  I am snaffling up bargains and making deals for myself and for many others that would have been the stuff of fairy tales a few years ago. But I can see the wider picture and it does irritate to see unfairness perpetrated against the less fortunate in the community. 

Aucklands not sounding too good accorind to Reinz
 
Auckland
After falling in April to $470,000 and $455,000 in May the Auckland district median house price has eased further in June to $445,000 which is just 2.3 per cent up on the median price of $435,000 a year ago. At 1,645, total sales were down on the 1,887 sales in May and fewer than the 2,032 sold in June 2009.
The median sale price for a North Shore City home decreased from $550,000 in May to $539,000 in June, but while it is up on the median of $523,250 in June 2009 it is the same as the median price in June three years ago. Sales totalled 315, a decrease on the 353 houses sold in May and down on the 396 sold in June 2009.
Sales volume was down in Waitakere City at 204 sold in June compared with 238 in May and is also a decrease on the sales of 279 in June 2009. The median price reduced to $379,500 from $400,500 in May (June 2009: $355,000).
After rising to $550,000 in March the median price for an Auckland City house has fallen back to $495,000 in June from $520,000 in May (June 2009: $477,500). And 559 houses were sold in June, a decrease on the 675 sales in May and down on the 655 in June 2009.
In Manukau City the median price eased back to $419,000 from $438,000 in May and $432,000 in April, and is still significantly down on the $441,000 median a year ago. The number of sales decreased from 363 in May to 346 last month (June 2009: 415).
The 56 sales in Papakura in June were two up on the number sold in May (June 2009: 61). After rising to $337,500 in April the median price is back up to $321,250 from $306,500 in May. But is still down on the June 2009 median of $329,000.
The median price for a Metropolitan Auckland house has continued to fall from $475,000 in April to $465,000 in May to $448,000 in June. Though this is an increase on the median price of $440,750 in the same month a year ago it is less than the June 2007 median of $450,000. Sales of 1,480 were a decrease on the 1,683 houses sold in May and 1,806 in June 2009.

OllyN
Agree with you re removal of depreciation on buildings and plant. A few companies I follow on the NZX have said their profits will be reduced, even after accounting for the lower corporate tax rate. Cant see how this is a good thing, most certainly an unintended consequence!!!

This will http://msn.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=10658580hurt

Maybe those of you who bash property would instead rather invest in gilt edged bank deposits:
Investors lose 13 per cent in closed ASB trusts
By Tamsyn Parker

An Auckland couple whose investment with the ASB has shrunk by 13 per cent say they are angry the bank is closing down 10 trusts withoutgiving them a chance to recoup their loses.

link: http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=10658620

Olly's "article" typifies most commentators' perspectives - his view on things is consistently tinted by the lenses in his glasses. He will see things he wants to see and ignore data counter to his perspective. And he seems completely unaware of his biases, which only goes to make me even more distrusting of his conclusions. But, on this he is not alone. Too many people making too many dogmatic judgements, thinking that everyone else is an idiot and presuming on their own "independent" and "objective" perceptions.
However, I'll give Olly this - i do enjoy his raves. They are certainly entertaining.
However, I hope he doesn't make his property investment decisions using the same amount of excessive emotionalism he displays in his writing.
 

Using Kiwis never ending “Real Estate Mentality” today again. Bloggers talking about properties like crazy- clever Bernhard- keeps your blog busy. 
If such subjects contribute to help and improve our unbalanced economy - I doubt.
As I understand, listening and reading your articles you self condemn an over heated property market.

But then I think Kiwis in general like “The Spinning in a Circle.”
 
WK

Ollie you have contradicted yourself .Your opening paragrapph suggests predictions of a collpase in property is not imminent , is dangerous talk , etc etc . Then you tell of buying a property for HALF its registered value. That's a collpase in anyone's language . If you asked the seller of that property  for his view , I am sure he would say the market HAS collapsed. Its all relative the truth is that all property is in trouble right now. I can see we are on the cusp of a meltdown, we are struggling to sell an investment property in West Auckland . Costs of borroing are going up , finance is neigh impossible to find, buildings are empty, and the recession is far from over. Middle income Kiwi's are broke and cant afford rentals and are moving in with the folks. Frankly , I dont share your optimism, but I wish I did have such a rose tinted view.    

Olly,
You're a hero. A century of comments up before lunch.
Hoping you can bat on through tea to the close of play and bring up a double ton.
cheers
Bernard

It will be interesting to watch the market crush Olly's opinion in the next 2 years.  If I'm wrong, then I will pay 10% more for property than I should if I were to buy today.  No big deal.  Better that than buy and have prices drop another 20%.  That's the problem with calling market bottoms.  It's never a bottom until the trend reverses and starts going the other way.  Right now you are seeing on a chart that prices are touching where they were 2-3 years ago.  That's called a "double top" in technical analysis.  From here the price either has to absolutely EXPLODE to the upside (extremely rare), or begin a crash is a selling panic (more likely).  Olly would do very well to read the works of Jesse Livermore, probably and arguably the most successful of all stock market speculators in history.  He loved to sell things short, and the sad thing is, so few people even know what that means.  If you sell short, you make money when a stock crashes.  If I could sell short the real estate market, I would.  Right now. 

Like the sharemarket, FX, hedge funds etc.  . Noone knows when housing market will hit the bottom, we can only look back at the data knowing that it has bottomed out.  In the mean time, everyone can have a go at guessing it (some will be educated guesses).  
So if you want to take the risks (Like Olly) then have a go, you only got yourself to blame and your banks if they want to go for a ride!  If Olly made a bundle, good on him...!

Thank you Bernard for your kind words.  One of the few comments that makes 100% sense and good reading besides my own.  

So no plans to address the many contradictions, unsupported assertions, and plain old self-serving nonsense that have been pointed out?
It's an interesting habit you have of declaring that prices aren't dropping, EXCEPT for the properties you buy, which seems very inconsistent, selective and dishonest.  Unless Planet Olly somehow operates independently from the universe the rest of us are living in?

Uh chicken or egg scenario?
"They think a massive drop in the market would make housing 'more affordable'. What they cannot understand is if that really happened hundreds of thousands of Kiwis would be out of work".
What you are saying (I think) is if a housing collapse happened we wouldnt be able to afford to buy...where it may actually be the case that because we enter the Second Great Depression we cant afford to buy so then house prices collapse.
Not sure which is which looking to see what happened in the 1st GD may show us which happens first. 
and in fact it might well be that we get a negative spiral effect, chicken, egg, chicken, egg.....etc....all the way down...to a 40~50% loss, maybe even more. I recall reading that the drops were 89% for some things during the 1st GD.
Saving v spending.....our economy has mis-directed itself...ie we now cannot survive if we stop spending and the only way we can keep spending is taking on more debt.....I hate to use the word "common sense" but common sense should tell us at some point we cant take on any more debt....indeed at that point with no spare cash we cant pay off the existing debt so in effect the economy stagnates, it just happens later....we are then very vunerable to an un-expected cost we cant meet or an increase in interest rates...just a small thing could tip us as individuals into failure to pay.  Govn's are probably more resilient in theory...but if many of the above tax payers are indebted and the Govn then effectively raises taxes to pay for its debt, we tax payers default on something....
I think the Govn is right to try and get us off the property band wagon and right to do it gently as possible....in terms of wealth, property is too much of a financial / speculative gain and not a worked for gain....that has to change if we are to become a robust and solid economy.
 
 
 
 
 
 

Leave Olly to it. The Government, that he so roundly critisizes, has determined what will happen to the property market in New Zealand. He can ignore their advice at his peril.

Two dollar shop provide value for money.People from all works of life shop there.People think wisely these days and save.People don't bother much about brand name.

Good ramble, Anton. But 'it's the leverage' is the counter to your piece. Buy at 80% LVR, lots of them, and reap the rewards on someone elses money. Sounds great, in the good times. But it will mean financial and lifestyle anihilation for many, in the years to come.

Olly, you have basically said that NZs ecomony is currently a big bubble fueled over the last 8 years by the property price hike. Therefore if it burst and property prices fell, it would mean terrible things for the economy. Well yes you are probably right, and is exactly what has happened in Ireland. It is not a case of whether it will happen, but when it will happen. Hopefully it won't get as bad as ireland. The houses in NZ on average are rubbish quality wise, unless you get an architecturally designed well detailed high spec building, whcich there are few of.
Prices may be higher than they were, however in real terms when you take into account inflation, and what you could have got if you had that same money in the bank, houses have lost ground over the last 2-3 years.
 

 a predictable set of response to that old dinosaur,bullfighter(or should that be bullsh-tter) Olly's appearance here on the rack!
if olly's getting scared,as is apparent in his rave, then we really are on the skid slope downhill,...but i sold up in 06 and am renting and waiting to buy so it's all  a plus from where i sit?
 
BTW OLLY..IT'S NOT ARRANT, AS YOU HAVE IN YOUR HEADLINE..IT'S ERRANT !!

Posted this result before.. Just a reminder we are nowhere near as bad, and in the US only -5.3 !!!  One would have thought minus 20 or something!
Global house prices
Year to March 2010 (country, percentage change)
1. Hong Kong +27.1
2. Singapore +23.9
3. Taiwan +18.5
4. Australia +16.6
5. Israel +12
6. Finland +11
7. Sweden +9.6
8. China +8.2
9. Norway +7.6
10. Britain +5.4
16. New Zealand +1.5
27. United States -5.3
Source: www.globalpropertyguide.com.

 Meanwhile over on the official OLLY Channel we find out why Olly is talking up a storm..to sell more rubbish to the uncertain, the financially iltterate and the tea-leaf readers.
read on:"

Post-Budget Special Briefing - Audio CD set available NOW

When the rules change, the ’right’ strategy might change too. ANY change to the property market presents new challenges, risks and opportunities. 
This is not a time for panic or reflex action. It’s time to get advice from those you can trust.

This Audio CD set gives you the chance to listen in on a straight-talking, feet-on-the-ground session with three genuinely experienced property investors and experts. They each share their views of the changes and their implications, and the way forward -- paying attention to their own areas of expertise. 

After their briefing (about an hour) listen to them answer and discuss questions raised by members of the more than 100 strong audience of local investors.

This special LIVE recording evening is an opportunity for anyone interested in today’s property market (owners, investors and those intending to be) to get the benefit of their broad experience and long view ... read a review of the evening (and contents of the Audio CDs) here.
Get your copy of this Audio CD set ($69 + P&H) at our website here ... or call 09 535 2415.
^Top

Olly Newland's July column: "The Gathering Storm"

In this column, I would like to cover a variety of topics, as the last few weeks have been crammed with 'news' and opinions about the property market — and much of it arrant, dangerous nonsense.
Some folk in the news media and posters on various websites have had a field day predicting the imminent collapse of the property market. They continue to be spectacularly wrong, it should be noted.
These deluded commentators seem to believe that if property prices fell by 20% to 30% (as some have predicted) then they, and their children would be able to buy a house more cheaply in the future and that would be a wonderful thing. They think a massive drop in the market would make housing 'more affordable'.
What they cannot understand is if that really happened hundreds of thousands of Kiwis would be out of work, much of our economy and industry would come to a virtual halt, the banks would collapse and New Zealand would be reduced to a nation of ragged beggars left to shuffle through the two dollar shops and rifle garbage bins.
Jobless and with an economy in ruins it wouldn't matter if houses were a third of their present price. They would still be unaffordable.
 
 
mercifully abridged blah blah

Perhaps a little overly emotive by Olly, RotN, but probably the spirit of the thing is about right. Oh. And the bit he so badly fails to mention: Those with cash will be in the box seat. Sell while ye can!!
"...thousands of Kiwis would be out of work, much of our economy and industry would come to a virtual halt, the banks would collapse and New Zealand would be reduced to a nation of ragged beggars left to shuffle through the two dollar shops and rifle garbage bins.
Jobless and with an economy in ruins it wouldn't matter if houses were a third of their present price. They would still be unaffordable.
"

 shucks wally...fade out the chicken guts and try the residue at the bottom of a good glass or merlot..works for me...crazy ole world,huh?

Olly , thanks for your response to my comment . I get the gist of your article , dont get me wrong , and I like to see someone with something positive to say about property . I  want to be as positive as you are. My gut feeling however is not optimistic and I am paying down all my debt as fast as I can and selling marginal investments . My concerns are around interest rates and secure jobs (incomes) . Our property  investments are cash negative at a mortgage rate of 7,75 % and we are getting closer . I have fixed some of them . My wife and I dont have the income we had three years ago to service a big shortfall , and tenants are struggling to pay rents on time. Some have lost their jobs and some are on short -time . Wealthy Asian immigrants from HK, South Korea  and Singapore no longer arriving , the poorer ones are coming in now from Phillipines and Indonesia, with no money to buy or pay a decent rent . The world economy is a shambles and it could wash up here especially if Aussie Banks have to raise expensive cash offshore , and Kiwi's are caught in the crossfire . I also dont see a property crash however , because everyone has to be housed, but things could get much tougher for us before they get any easier  

Olly,
 
Weren't you talking DOWN property prices during the best years of the boom?  Now, when its pretty obvious the next leg is down, you seem to be bullish on property?
 
No wonder Bob Jones called you Omelette Olly in one of his books, egg on face coming up soon I'd say!

I agree with Olly that rents WILL rise a bit in the next couple of years - but nowhere near enough to return property to being a good investment overall.
I DO think the talk of increasing rents is exaggerated,. As Olly rightly states, the benefits of the tax cuts will be more than wiped out by the increased costs of living. People simply won't have enough money to afford very significant rental increases. Instead, they will tend to stay at home my mum and dad longer, or crowd into flats a bit more than they otherwise would have. Remember many university graduates over the last year or two are struggling to even get jobs - this will be reducing demand for rental properties

In addition, as migration turns around there will be less demand for rental properties

I think Landlords dreaming of significant rental increases are dreaming

From Andy: "I don't expect any great collapse in property prices just sideways movement for a number of years"
 
Andy, no offense, but name ONE TIME that this has EVER happened in history?  The only time that prices go sideways for any amount of time is when they are bouncing on the bottom of the graph in a Depression.  Prices go UP or they go DOWN, rarely sideways.  Especially at high prices.  True of any asset

Attn Auckland Property Experts: Can you please advise approx. people have been paying for an investment property in an average suburb in Auckland and the rent they were likely to achieve. i.e. rental yield! Not a difficult question if you know the market as many think you do.

This is all that I get on here is that people are paying too much and the prices are coming down.
What do people pay in Auckland and the return please!!!

Depends on the level of expertise. Can pay as little as $220K and get a return in the vacinity of $330 p.w. if you look around and prepared to work!

Les: Your first link concerns farming loans and although I am considered an expert on all manner of pure property investment, farming is a mixture of life style, home and business so best answered by a farming expert.

Your second link does not work for some reason. I think what you are saying is that LVR's should be different for different classes of property. Higher for homes, less for second homes, different again for business premises as against pure investment. If I read you right the banks are doing that now in any event.

Typically a bank will go up to 80% and more sometimes for home owners while investors may be limited to 70-75%. Again different classes of apartments get different levels for loans and whether its unit title, cross lease, strata, bare land or stand alone can also make a difference.

"What they cannot understand is if that really happened hundreds of thousands of Kiwis would be out of work, much of our economy and industry would come to a virtual halt, the banks would collapse and New Zealand would be reduced to a nation of ragged beggars left to shuffle through the two dollar shops and rifle garbage bins."
 
Yeah what ever (w)Olly, That's why we in the 'know' call it a "false economy".

Like a lot of other spruikers make a lot of cashflow from running seminars for the uneducated, one such seminar is coming up soon where the promotors will gross $125k for two days work, the spruikers all work in conjuction to suck in as many suckers as they can for a day of total BS. Spruikers subsidise there properties or cover their cashflow deficits by running seminars, seminars are a huge cashflow for spruikers in times like these where there may be huge deficits on the 100's of properties they may or may not have bought during the boom years.
Yes the seminars are a huge help to the spruikers cashflow....Buyer beware......Yes it;s cheap but pack in 300 suckers and what do you get a huge cash transfer to the spruiker and not much else.

Wow a thread talking about property prices, how novel.

Justice: I am not scared at all. Indeed I am thrilled at the way the market is working in my favour. Investment in anything is all about timing. I have used the ups and down of the market over the years to profit and there is no need to be squeamish about it. Some times you win and some times you lose. No body ever said the business has to be nice.

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It is so interesting to read everyone's comments. Some of them it is really worth to read them, some of them could be for entertainment.
 
I think whatever you do, it all has risk. Everyone has their own choices for investment. I still think the properties are the best long term investments amount others. I will keep invest in properties if I have money or bank allow me to borrow more.

Too many people in this country rely on others too much. We all have the same opportunities to prosper by getting off our butts and doing extra to improve our lot. The reality is that the people who continue to bemoan the property investors would really love to be in the same position but haven't bothered to try. While the doers are out making the most of their time the others are doing nothing constructive. I see it thru most of my tenants .

So what if the residential property market colapses? I have still got to live in my house with my wife and three kids. I have equity in the house and I will not sell into a collpased market if I dont have to, and I am sure most Kiwi's are in the same position. I dont see what the issue is here

KB a large part of the population are not in your position. PI"s have a lot of debt on their rentals,many have borrowed the lot for negative gearing or they just did not have the cash for a deposit. Also there are a considerable number of people who borrowed heaps to buy a home to live in instead of going up in steps. They like some of the PI"s have credit card,hp and car debt. Something has to give especially as values drop.

Anyone who says values have increased in the last 12 months is truly ignorant. Talk to anybody actually buying and selling property and the facts are the market here nationwide is shocking.

Enormous discounts from desperate vendors are available daily and any experienced agent will tell you the market has just about stopped completely for everything except the very bottom end.
For Olly to be talking a market this bad up is truly sad.
Mind you he helps people sell property so this is a good way for him to uncover desperate vendors I guess.