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Barfoot & Thompson's sales volumes subdued in July but prices held their ground, inventory the highest for July since 2011

Property
Barfoot & Thompson's sales volumes subdued in July but prices held their ground, inventory the highest for July since 2011

Barfoot & Thompson's sales volumes were subdued in July but prices remained largely stable for Auckland's largest real estate agency.

Barfoot sold 830 residential properties in July, down 8% from the 903 it sold in June, but 11% ahead of the 747 it sold in July last year.

It's the second lowest number of sales for the agency in the month of July since 2011, reflecting the generally quiet market conditions prevailing this winter.

The median price of all the homes the agency sold in July was $810,000, exactly the same as it was in June and in July last year.

The average sales price was $912,487, which was down slightly from June's $928,842, but slightly up on the July 2017 average of $908,319.

Generally Barfoot's median and average prices have remained within a narrow band over the last 12 months, with small monthly movements either up and down, suggesting prices overall have remained largely stable during that period.

However something to keep an eye on as the market heads towards spring are new listings and inventory levels.

Barfoot listed 1057 additional properties for sale in July, which was the lowest it has been in the month of July since 2011.

At the same time the agency's inventory - the total number of properties it has available for sale - was 4115, the highest it has been for the month of July since 2011.

That suggests buyers still have plenty to choose from, even with the decline in new listings, which could give them an advantage when negotiating with vendors.

"July is traditionally when prices reach their low point for the calendar year, and with sales numbers holding up the signs are there that not only is the market weathering winter well, it is setting itself up to be active in the coming spring," Barfoot & Thompson Managing Director Peter Thompson said.

Barfoot Auckland

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76 Comments

It will be interesting to see REINZ (median) for July. The coming spring listing influx will likely pile on further inventory and price pressure. As a number of commentators predicted earlier this year, inventory would remain stubbornly high over winter amid legislative changes, tighter lending standards and buyer caution.

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My prediction is that the REINZ stratified index will have Auckland up 0.5% YOY for July.

BTW, are you still predicting a 5% drop in Auckland YOY for December?

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BuyLowSellHigh, sure am :-) Note that (unadjusted) for inflation or seasonal factors, Auckland's median is already down YOY -0.7% according to REINZ.

At the beginning of the year interest.co invited all commentators to make their predictions here; https://www.interest.co.nz/news/91515/year-ahead-year-big-changes-calam…

Whatever the outcome for 2018, like other commentators, I'll have another crack forecasting 2019. It's interesting stuff!

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Good on you for being bold, but good grief your predictions make for miserable reading!

NZX-50 falls to 6100 by December – It is currently at 8892. Let’s hope it drops by 31% so you are right.

Unemployment at 6.75% - We’re at 4.5% currently. I don’t think we got to 6.75% even during the GFC. Only a 50% rise in unemployment required for you to be correct.

Dow Jones 25,326.16 buy October - Only a drop of 30% within two months to reach your prediction of 18000.

US warships visible from North Korea beaches - After Kim and Trump's meeting the US has cancelled their war games with South Korea and North Korea has just returned the remains of US troops from the Korean War.

Honestly Poppy, do you see a theme here?

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BuyLowSellHigh, rather than hyperventilating over others predictions, have the courage to make some longer term predictions yourself! Last December you also had the opportunity but maybe not the courage? Anyway, I sure hope my predictions don't come true.

Note there's also a global trade war developing that hardly anyone predicted. There is rising fiscal tension in Europe, $500 Billion of liar loans in wait in Australia's steadily declining property market. These issues have the potential to wreck entire economies, crash share markets, property, you name it!

You might also want to take a look at John Mauldens train wreck series.

I hope your feeling better now that youvé got "whatever" off your chest ;-)

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I'll have a go for 2019

"I sure hope my predictions don't come true" - Don't worry, they won't.

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BuyLowSellHigh, all good, I respect the rather unfortunate limits of your acumen. Adverse events, present opportunities. You might want to take a happy pill and look on the bright side :) Anyway, how did you come to chose your username? Have you ever actually bought something low and sold it high?

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Adverse events do indeed present opportunities. Have a good weekend Poopy.

Skellerup - Hi bought low and sold high. Not property though - I don't sell that.

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Hopefully not too far off topic but on that note- why sell skellerup seems a solid company- i've been a holder the last 2 years, and had fantastic results. It sounds like you have to- nice work and good on you taking profits. Interested to hear if there's anything i should consider... cheers.

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Good on you, yes it’s a top notch company. I sold up to help towards renovating a house.

I created an account with Foresyth Barr to get access to their monthly publication (might actually be available without an account) - it has all their stock recommendations. I figure they have more resources and expertise to pick winners, so I basically just trust them and buy what they recommend. Haven’t dabbled in shares for a few years now though.

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ah fair enough then

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ah fair enough then

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Hi BuyLowSellHigh,

You write, "Not property though - I don't sell that." That comment jogged my memory.......

I recall, some years (decades?) ago, property guru Sir Robert Jones commented that "Never Sell" was an even more important maxim than "Location, Location, Location" when it comes to making property decisions.

In reality, of course, people do sell property. But very often, it's to raise the funds to upgrade to a better property.

In any case, I imagine that both these messages have now well-permeated the minds of the vast majority of NZers (and those abroad) who have an interest in property........

It's hard to think of two wiser/smarter rules. They have stood the test of time and are pretty much ironclad.

TTP

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RetiredPoppy please don’t accuse BuyLowSellLow of having acumen
It fails to comprehend anything but the most glaring obvious
Transpose the word simpleton for acumen & you’ll be spot on
How’s the housing market going Aucklanders ?
I’m informed by my Chinese friends in Shanghai they’re holding back to wait & see if they can snare bargains

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Unemployment hit 7.1% in March 2012. 6.76% in December 2009. Between March 2009 and March 2014 unemployment was consistently above 6%.

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BuyLoeSellLow that’s why you’re living at the end of the world I guess
Instead of criticizing Retired people like RetiredPoppy why not learn to code & create something of value
Oh yes … you cannot think laterally can you

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It's a bit confusing as the Barfoot site says that they have over 1700 RE professionals and another section suggests 2400.. So not sure what it is exactly, but either way if there were only 830 sales last month between them all, then it looks like it'll be 'beans on toast' for many this month!

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Yep, tough times are coming for that industry

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If this is anything to go by then things could really tough.

http://www.cityam.com/290152/countrywide-seeks-gbp140m-shore-up-balance…

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'Industry' implies it creates value

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Hi Nic Johnson,

Sadly, it's also 'beans on toast' for those who don't own a property........

In fact, it might be margarine on toast - without the beans. )-;

TTP

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How’s that dry toast going then TTP? You own no property, yet claim to be the master of property. LOL. Or is that stale bread for you? Double LOL.

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Hi blue meanie,

You write, "Or is that stale bread for you?"

Alas, I only get stale bread on a good day........ usually it's mere crumbs for me.

But I do envy those with sizeable property portfolios.

I'm no "master of property" either - and have never claimed to be.

Am merely a student of markets - and content to watch life's passing parade of investors.

Do try to be correct with your facts in future, blue meanie.

TTP

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Thanks Greg for the good balanced reporting

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With all this inventory coming on the books I would suggest it is time to watch this 30 second video and do the same. https://www.youtube.com/watch?v=Nuu0EMOEyR8

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Simply click on the Average Price tab and look how prices behaved in the last 3 years between July and December " every year " ...Trend is your friend as they say :)

B&T is a specimen of this market showing July ( the bottom of the market) is stable ...

Get ready for the ride buyers , blink and you will miss out Again.

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And the YoY shows less than 0.5% gain for average price and 0% gain for median price. I'll note carefully that the sales composition has seasonality factors. The higher end properties have more sales seasonality, which gets reflected in the average and median property seasonal variations. I'd place a bit more faith in the REINZ hpv data, which hasn't yet been released for July. The June data shows that Auckland median home value decreased by 0.5% YoY. That is indicative of the present trend, not monthly variations in average (or even median) sales prices. If that was actually true, then you shoulda bought last month in Hastings, as the median sales price in Hastings increased by 11% (ref: https://www.nzherald.co.nz/hawkes-bay-today/property/news/article.cfm?c… )

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:) ... I see that you are still treating Property Investment like Shares ... Chalk and Cheese really..

We do not count our losses or gains monthly ... 5 years could be a good measure, 10 years is the best measure ...

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Eco Bird, in the absence of capital gains in Auckland combined with recent legislative changes, its interesting watching spruikers language morph to "property investment is very long term" and "when buying an Auckland rental, expect to be negative geared for the first 5-7 years" Personally, I see this as a good reason why more disillusioned Mum and Dad spec landlords will sell up and take aim at term deposits. Rates of up to 4.2% pa before tax over the same period is highly attractive right now. Its also worth noting that our banks are flush with locally sourced deposits, NZ banks are funded 75% by domestic deposits, the rest offshore. Bank deposits certainly appear popular.

https://www.rbnz.govt.nz/financial-stability/overview-of-the-new-zealan…

It's interesting how the Australian parent banks are sitting on a $444 Billion funding shortfall in domestic deposits leaving them more highly dependant on offshore funding sources. Quite a different picture!

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Eco Bird,

You were the person to bring up the short term six month trend on average sales price sales trend between July and December, not me. I've seen how longer term trends can show poor returns on property investment.

It is clear that you feel differently. Just don't use non-applicable information (for example, a six month trend that is seasonal in nature) to defend your long term assessment. You come across as rather uninformed when you make these arguments here.

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LOL, I am not defending anything Yankiwi, we are not in a court of law or a classroom trying to prove who is right !! lol, so get over your bias and chill mate ...

the 6 months is a repetitive trend, long term returns and gains are totally a different story ... you are mixing oil with water to prove that property investment is Bad..well good on you, I will stick to my " uninformed " status ... as apparently cannot compete with " well informed " people like yourself lol.

End of discussion,

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Just a quick correction to your erroneous attribution. I am not attempting to prove that property investment is "Bad". I am however noting that sometimes it makes a lot of sense to be vested in property, and sometimes not so much. In fact, sometimes it can be a horrible investment, just as it can sometimes be a great investment. My bias is that I see both aspects. From your postings here, you see only the good aspect.

As to your six month repetitive trend. what the chart shows is for six months there is an increase in the average/median selling price followed by six months of declines in the same metric. At least, that is true for recent years. Prior to this, this metric cyclic annual movement was superimposed on a larger increasing trend. The causes for the annual cycling are due to increasing cyclical sales on higher end properties as compared to lower end properties, which changes both the average and median sales numbers, although the home values are not changing to anywhere the same degree. Pointing at this cyclical change as evidence of an improving market is rather sophomoric.

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“End of discussion.” Real mature bludger boy. Get in there and stiff those lazy low lifes that rent from you. Get in there and make it hurt. You know you’ll feel more of a man if you can snaffle your renters last penny. Make yourself feel good. Get in there. It’s okay, you’re doing right for yourself. Think of that whiskey. You can do it. Get in there. Must be time to raise the rent that 10%. You deserve it. You know you do. LOL.

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We do not count our losses or gains monthly ... 5 years could be a good measure, 10 years is the best measure ...

That's what you would like to think, but actually you're wrong. How do we know this? Well we know that the wealth effect is linked to how we feel about our self worth. New car sales have been booming. We cannot accurately measure the relationship with perceived self worth, but we do know that incomes and savings are flat and even possibly falling, regardless of which SEC you sit in. This is one of the positive spin offs of property bubbles, but if it goes pear shaped, you will see consumer spending fall.

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........15 years I calculated that mine almost tripled in price. Its not going to happen again though, the record run is going to stop. Expect some decline and now static house prices for years.

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Wow!
~7.5% pa growth.

You must be a genius, Carlos!
We are all so envious!

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Homes.co.nz puts our house value at 16% above what we paid for it this time last year. I'm expecting a letter from Andrew King any day now recognizing my efforts and a nomination for some sort of award.

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I actually read your comment wrong, I just read this bit "Simply click on the Average Price tab and look how prices behaved in the last 3 years" and went ahead and clicked on the tab and started looking around. I was then going to right a post about how mediocre the returns are for the last 3 years.

I will still do it, even though it isn't the gist of your comment, I think it's still interesting.

July 2015 average price was $827359
July 2018 average price is $912,487

$85,128 gain over last 3 years, total 10.28% gain, or 3.43% per year.

For Medians:
July 2015 average price was $757,00
July 2018 average price is $810,000

$53,000 gain over last 3 years, total 7% gain, or 2.33% per year.

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If you're highly geared that's still likely a reasonable return, depending on how well you're covering your costs. But LVR restrictions I guess make that gearing much less available than it otherwise would be.

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Ummm.... if you are highly geared then it is likely that your net return is on the order of an equivalent term deposit (if you are lucky) due to the cost of money. Paying the interest on the mortgages that are required to be highly geared kinda reduces the net return, especially after accounting for rates, maintenance, insurance, etc. I was a little surprised as to the amount of rates that are being paid in Auckland now...

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The interest on the mortgage is paid by the tenant/lessee in the form of rent, so no, it does not reduce the return.

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It should work that way...

The typical median priced home in Auckland put out to rent has a negative cash flow, which means that the rent payment covers just a portion of the mortgage payment, even before the rates/insurance/maintenance costs.

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Penfold, you forget that people don't generally buy properties in full cash. If the purchase was made with 80% mortgage:
the buyer used only $165'472 to buy the average priced house and made a gain of $85'128 which is a 52% return in 3 years.

52% return in a period of average house value growth!!!

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The wonders of leverage cut both ways. Now calculate what happens to the average buyer if there's a ten per cent drop in prices.

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Try 46% gain over the last 3 years since the new RV. Prices on the North Shore have tracked the RV almost perfectly. The good times of me waking up to the news that my house was earning more than me each week have ended. The party is over.

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Maybe the banks will step in for a bit of stimulus of there own.
RBA Cash rate is 1.5%. ANZ Australia now offering 3.65% Variable rate for new Mortgages at better than 80% LVR. Growth in Australian home loans fell to a four-year low of 5.6 percent in June. Meanwhile RBNZ Cash rate 1.75% and ANZ New Zealand variable rate 5.79%.

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The median priced Barfoots sale is now $ 30000 less than two years ago. This is the second month in a row where median prices are now below those of 2 years ago. The average price is next. Put another way there is a very high likelihood that if you have purchased an Auckland home in the past 30 months and put it to market you will be writing the purchaser a cheque.Record migration,record mortgage rates record prices and apparently record house shortages alongside low build and prices are falling. An economics case study

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Always good to look at data critically. And yes, only by looking at median, mean, and volume do you start to get a basic understanding. Furthermore, the data doesn't really fit with what we would expect to be the drivers of higher medians and average sales transactions.

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Record migration,record mortgage rates record prices and apparently record house shortages alongside low build and prices are falling.

I guess 3% is such an utterly insignificant number it's not even worth mentioning.

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Three percent month on month for nine years is substantial. Even you should know that Sir John Key.

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It is pretty pointless property investors or people who lov3 property commentating on Interest.co at the moment.
There are just so many people that are wanting the prices to drop just because they are not currently homeowners.
Doesn’t matter what the property investors say, they just get BS given to them.
Doesn’t worry “The Man” one iota whether anyone appreciates what I write at all, but what I will say is that what I do say is always accurate and truthful, despite what several say!
If you want to stay in the same financial position as you currently are then do nothing and you will remain where you are or go backwards, your choice really.

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There are just so many people that are wanting the prices to drop just because they are not currently homeowners.

Think about what you've said in the context of a democratically elected government.

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The democratically elected government is currently formed by 3 parties that were far less popular than the previous government, to the detriment of most New Zealanders

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Well my house was one that sold in July. Glad to be out of the market to be honest, all the doomers on here finally got to me. Cannot argue with the numbers however, not only was it a place to live 24/7 it turned out to be a good investment. I do see very dark clouds on the horizon for those up to their necks in debt.

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Of course if you are up to your neck in debt you will be in trouble!
The thing is that most people aren’t and interest rates are going nowhere anytime soon if at all.
Reality is that it is good that the housing market is taking a breather.
This government has caused most of it with there aim to put people who don’t own homes into them.
Reality is that if you haven’t bought onevup to now then you probably won’t in the foreseeable future due to the Banks criteria.
Twyford has gone very quiet hasn’t he because he knows he is onto a loser with this KiwiBuild

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Carlos67, I agree with you that there are several "dark clouds" on the horizon but I really hope for your sake that you will not be priced out of the market in 10 years time and regretting selling.

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He’s smart, he sold at the top and can now do other things with his money. Why would he be priced out in 10 years, is this because average prices in 10 years will be 15x income and household debt to income 225%? It’s just not going to happen

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Friends sold out of an Epsom home in 2004 with the same thought. After putting up with crappy rentals they panicked and ended up buying into the Bays at a higher price. No one can predict the future with any accuracy.

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Rex Pat, agreed. No one can predict the future with accuracy however, where humans greed/fear is involved, history does have a habit of repeating itself. This provides valuable clues and guidance of future probabilities. I think Carlos67 sold at a good time to someone who bought at a bad time.

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The current conditions in the residential real estate market in Auckland are very different to those in 2004. House valuations are coming off record levels on some metrics, while at record levels on other metrics. Household debt levels are or at near record levels. The NZ economy is 10 years into this upward cycle.

The risk and price vulnerability in Auckland real estate is much higher now than in 2004.

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We bought our current home in early 2009, at an auction where we were only bidding against vendor bids and it didn’t reach reserve. We negotiated on the day and it was ours. If you recall the World’s financial system was on its knees. I felt sick at the time. 9 years later the CV is over $1.5 million higher. Bernard Hickey predicted we would be down $300,000 plus.

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Sure, and if prices were to return to closer to long term average ratios you would probably be close to $1,000,000 down, about a 30% drop or so. Drops of that nature can happen. The view always look good from the top of the bubble, and our bubble is a doozy. You bought well, but whether those gains are permanent is yet to be seen.

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I've always said that I'd like to see Auckland house prices back to 2002 levels. So no, if you bought in 2009 the gains are definitely not permanent. However, if you bought in the 90's then I'm confident to say you're a winner.

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Given the cash reserves that we Boomers have in the bank this prophecy would see us like feudal lords. Nothing would be built as the cost to build a house would exceed the combined price of an existing house/land package. Builders would become Uber drivers. The COL would have no tax to throw to its troughers though so things would get a bit iffy security wise. Might have to invest in some razor wire in the rose garden.

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Yes wouldn't it be awesome? Buy several houses for 200k and rent them out for $600 a week to more than cover the mortgage interest and capital.

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Except you're dreaming to think you'll find suckers to pay $600 per week if the economy tanks that much for houses to drop that far. You'll be lucky to find employed people to rent them.

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RexPat you are 100% correct, be mindful not let people with no experience and no success but a lot of envy influence your good judgement

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Out of interest did your experience match the DGM postings here e.g. a sale way be low CV?

My wife is my sounding board. I posed questions around what she would think if in hindsight we lost up to $1,000,000 in equity. Her reply was that it was our home and no other area in NZ interested her to live in. Plus she intends to live there for another 30 years so it’s money tied up no matter what.

What are you going to do with the freed up capital?

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Yeah, see your comment above, when the prices go up that’s all money in the bank, when they go down it’s all about having a home. Funny. I can pretty much guarantee if you lost $1,000,000 of equity in your home you wouldn’t be shrugging your shoulders, no one would.

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It’s all about options. If our property dropped from $2.5 million to $1.5 million then our children would likely be able to look after their own housing needs, giving us more freedom. If the property values stay high then we need to look at helping them and could never take equity out. Not sure which I prefer.

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When the current crisis escalates and we have a correction, a property with a CV of $2.5M now will be worth around 800k or less in postcode 1071, ideally.

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Special circumstances with my sale Rex, details I cannot go into at this stage. Sufficient to say I got 5% below current CV but 5% more than what it was valued at by the RE. Basically your getting 10% less than the current CV on the North Shore if you look at the actual sales figures.It very much depends on the quality of the house, if its monoclad then your screwed. In case everyone is not aware, banks are no longer giving you a mortgage if its monoclad regardless.

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It sounds like you did well and are happy with the outcome. Good to hear some real experience as opposed to confirmation bias here as each report comes out.

The current Core Logic value from our bank is 98.7% of CV as at 29/7. It seems to update every week or so. Given that there hasn’t been consented work since 1999 they would only have that and our 2009 purchase price to work on so I guess it’s an educated guess. We may find out how accurate it is in 2048.

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You can be sure if the Ozzy property market is starting to slide then ours will too a much faster rate.

Melbourne overtakes Sydney as weakest housing market in latest CoreLogic data
http://www.abc.net.au/news/2018-08-01/corelogic-housing-price-downturn-…

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CJ099, despite annual falls, gross rental yields for houses are still 2.7-3.0% for Sydney and Melbourne respectively! Term deposits rates of up to 3.5% are available vs NZ @ 4.20% (both Rabo 5 YR)

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Great news for Sydney FHB's.

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