A jump in the number of properties being auctioned but only 31% sell under the hammer

Got something for sale mate .... 

Good post! 

The majority of readers out there can't contemplate a 50% drop in house prices.  But I can vouch that they can, as I experienced such a drop in 1979. I had bought my first house in 1967 aged 19. I paid $11,500 (in new decimal currency) for a tired old house on a 1/4-acre section on the main road of a southern Auckland suburb just north of the main shopping centre.  I remember having a saved deposit of about $3,500 from an afternoon paper round and odd jobs, and borrowed about $8,000 from a solicitor's trust account. I was talked into the purchase by my father who was at the time a reasonably successful real estate agent after leaving teaching.  

I had a bad experience renting it to the black-sheep son of a Pukekohe businessman and his wife and three sons. I left it in the hands of my father to manage and went on a year or so's OE.  On my return I found the inside of the place was virtually wrecked, the more so because I had put much time and effort into doing it up.  My father had never inspected it while I was away.  So, I had to set to and start over doing the place up again and then renting it out again, this time to a couple with four children.

I must confess that I never did feel comfortable being a landlord, especially to families with children.  I new it must be a struggle for them to pay the rent and all the other expenses. Now at the age of 76 years I have come to the conclusion that if you're comfortable being a landlord then deep down you must be a hard-hearted bastard and not the kind of person I'd readily take to.

Anyway, I digress.  In 1978 the motel owner next door offered me $44,500 (thereabouts) so I sold it to him and was glad I had relinquished being a land-lord.

However, at about the same time my father had swapped the family home for a bungalow with a large section opposite the place I had sold.  He convinced me that I should put the funds I had netted from my house sale into the development of this land which would accommodate about fifteen home units. So we had plans drawn up and with a little extra help from the ANZ we proceeded.  We struck drainage problems just as the footings of the first batch of three units were due to be poured. It turned out that part of the section had been a filled-in creek. The council inspector stopped the pour and made us get an engineers report on the ground stability. This report required us to sink a number of concrete piles at intervals into just about every section of the footings. This unexpected expense put us months behind, and, to make matters worse the rain pelted down for weeks on end and the drillers and concrete trucks had a heck of a time trying to get the job done. 

And so the job dragged on well into the winter of 1979.  While I actually managed to get materials and tradesmen at very good prices, that was only because unbeknown to me a recession had stealthily set in.  The weather delayed the build and the ANZ bank manager was soon visiting the site with a worried look on his face.  Finally he said, just as we were finishing the build that we must sell them straight away to repay the loan.  They proved difficult to sell despite their prime location and in the end we could only get  the value of the money we owed the bank.....$90,000 from memory.  A year or so earlier we could have sold them for nearly twice that and it wouldn't be for another 15 to 20 years that those prices were seen again.

So yes, house prices could indeed crash from here on in.  And a 50 % or so drop in price could be repeated.

Investors are only a small per cent of buyers. If someone loves the home and the location as an owner-occupier, then they will offer what they have available.If 2 or more owner-occupiers want to buy, then that will push the price up.

Someone will pay the overvalued price for this property.  Why? Just because they can and they want it.

Dimwit