Quotable Value says values stabilised in January, but doing better in main centres than provincial areas

Quotable Value says values stabilised in January, but doing better in main centres than provincial areas

By Bernard Hickey

Government owned valuation group Quotable Value (QV) has reported residential property values stabilised nationally in January.

But it said prices were doing better in Auckland, Wellington and Christchurch than in provincial cities such as Hamilton, Tauranga and Dunedin.

QV said values across New Zealand were down 1.5% in the three months to January from a year ago, compared with a 0.9% fall in the three months to December.

Values are now 5.8% below the market peak of late 2007, it said.

This is the same decline from the peak as was seen in December.

“Despite overall New Zealand values stabilising in recent months, there is considerable variability between areas. Values across the combined main centres have been stabilising, while across combined provincial and rural areas values have continued to slide” said QV.co.nz Research Director Jonno Ingerson.  

“There is also variability between the main urban areas. Auckland has been stable for several months and values are now only 0.6 percent below the same time last year. In the Wellington area values have been rising since October after declining steadily in the six months prior and are now 2.5 percent below last year," Ingerson said.

"Christchurch is the only main centre where values are above the same time last year at 0.3 percent as demand for houses in areas undamaged by the earthquakes has lifted prices," he said.

"The remaining main centres have generally declined over the past year and values in Hamilton are now 3.4 percent down on last year, Tauranga down 2.2 percent, and Dunedin down 3.7 percent” said Mr Ingerson.

"Values are below the same time last year in Whangarei (-4.4 percent), Rotorua (-3.3), Gisborne (-5.2), Wanganui (-2.6), Palmerston North (-3.3), Queenstown Lakes (-3.3) and Invercargill (-3.8). Values are slightly below last year in Hastings (-1.6 percent) and New Plymouth (-1.5), and similar to last year in Napier (-0.1). The only centre to remain above last year is Nelson where values are 1.4 percent up. "

See the full report attached here. See the spreadsheet of regional and provincial values here. See more regional detail from QV's release below:

Auckland

QV’s Residential Price Index for January shows that property values have decreased by 0.6% over the past year in the Auckland region. Regions across Auckland are tending to behave differently, although generally values remained fairly stable over recent months.

Ms Glenda Whitehead of QV Valuations said; “Even though year-on-year values have been negative, there was relatively limited market movement in the Auckland region in the latter half of 2010.  The low sales and listing volumes in December and January are of concern, but being a traditional holiday period at the end of a slow year, not overly surprising”.

“One trend that continued throughout 2010 was quality homes in sought after areas selling well. Poorly presented homes in fringe areas haven’t sold nearly as well.  We continue to see evidence of downward pressure on values of plaster homes built in the 1990s and early 2000s” said Ms Whitehead.

Ms Whitehead said “People are considering property decisions and gathering information, but appear to be waiting for a signal or change in the market.   We are aware that there are some first home buyers taking advantage of the ‘Welcome Home Loan’ package supported by Housing New Zealand.  In the South Auckland area there appear to be plenty of buyers looking, but they are being cautious and are not in a hurry to commit. Potential buyers will purchase at the right price, however there still seems to be differences between buyers and sellers expectations of value”.

QV’s Residential Price Index is calculated using sales data from the 3 months leading up to the month being reported. It is not the same as the average sales price, which fluctuates in line with the mix of properties selling in upper or lower price brackets. The average sales price for the Auckland region in January was $547,898.

QV’s Residential Price Index for January shows that property values have decreased by 3.4% over the past year in Hamilton. Values continue to fluctuate in a narrow band.

Mr. Richard Allen of QV Valuations said; “Values across all locations within Hamilton eased back over the past month. Traditionally the onset of spring and summer results in a lift in activity and a surge in sales volumes. This doesn’t appear to have happened, with Hamilton’s residential market remaining quiet but there are signs it has bottomed out. At the moment the lack of demand is due to uncertainty in the economy and confidence in its recovery.”

QV’s Residential Price Index is calculated using sales data from the 3 months leading up to the month being reported. It is not the same as the average sales price, which fluctuates in line with the mix of properties selling in upper or lower price brackets. The average sales price for Hamilton in January was $352,289.

Tauranga

QV’s Residential Price Index for January shows that property values have decreased by 2.2% over the past year in Tauranga. Values have continued to be fairly stable in the more recent past, although some fluctuations are evident.

Mr. Shayne Donovan-Grammer of QV Valuations said; “Over the last couple of months values have continued to soften.  At this stage there are no indicators that suggest the market will improve in the coming months. Whilst there is a lack of activity, it is not uncommon for this time of year. Speculative property, namely apartments and sections which were developed during the economic heights a few years ago, are in oversupply and therefore are experiencing the worst during the current downturn.”

“There has been a noticeable migration of both buyers and tenants to locate near well regarded schooling leading into the new school year. As the city grows it will become more of a factor in buyers’ decision making in coming years” Mr. Donovan Grammer said.

QV’s Residential Price Index is calculated using sales data from the 3 months leading up to the month being reported. It is not the same as the average sales price, which fluctuates in line with the mix of properties selling in upper or lower price brackets. The average sales price for Tauranga in November was $400,041.

Wellington

QV’s Residential Price Index for January shows that property values in the Wellington region have decreased by 2.5% over the past year.  Following the decline in values through 2010, the index has recently recovered somewhat.

Mr. Kerry Buckeridge of QV Valuations said; “Values in the Wellington region are showing positive signs.  This is as a result of Wellington and Porirua posting value gains, however, Hutt City and Upper Hutt have dropped slightly.”

“To date sales volumes have been lower compared to this time last year, though indications from the market are that a good number of listings have appeared recently.  Across the Wellington region properties appear to be selling well provided they are priced appropriately.  We are beginning to see multiple offers on good properties – a situation we have not seen for quite a while” Mr. Buckeridge said.

“In summary, it is still very early in the year and therefore not possible to draw firm conclusions on the direction of the market for the year ahead. However, there are some signs giving cause for cautious optimism both in terms of sales volumes and values” Mr. Buckeridge said.

QV’s Residential Price Index is calculated using sales data from the 3 months leading up to the month being reported. It is not the same as the average sales price, which fluctuates in line with the mix of properties selling in upper or lower price brackets. The average sales price for Wellington in January was $465,926.

Christchurch

QV’s Residential Price Index for January shows that property values in the Christchurch has increased by 0.3% over the past year.  Following the Earthquake values were fairly stable, with even some improvement more recently.

Mrs Melanie Swallow of QV Valuations said;“Values appear to have recovered slightly since the September earthquake and aftershocks.  The increase in activity and sales volume is positive, although it needs to be treated in context.  An increase in demand for property in relatively unaffected suburbs has had a very small corresponding lift in sale prices, which is what we expected to see. The statistics and anecdotal evidence are in support of this”.

“Since the initial delay in activity as a result of earthquake, we are now seeing more listings coming to market, more buyer enquiry and a clear increase in activity, particularly in the entry level sector” Mrs Swallow said.

“There is strong interest overall for well priced and good quality homes in suburban Christchurch at present. In the upper end of the market there have been a few million dollar plus property transactions recorded. Both the lifestyle and holiday home markets reflect the sluggish economy.  Some lifestyle areas continue to remain flat, but this trend was evident pre-earthquake.  The holiday home market is also very static with low sales volumes” Mrs. Swallow said.

QV’s Residential Price Index is calculated using sales data from the 3 months leading up to the month being reported. It is not the same as the average sales price, which fluctuates in line with the mix of properties selling in upper or lower price brackets. The average sales price for Christchurch in January was $374,153.

Dunedin

QV’s Residential Price Index for January shows that property values in Dunedin have decreased by 3.7%.  Values have continued to decline over the past couple of months.

Mr. Tim Gibson of QV Valuations said;“The start of 2011 has seen a cautious residential property market in Dunedin City.  Falling values and sales volumes have been experienced across all suburbs, except for central and northern city where values have remained steady. QV’s statistics are also showing sales volumes are 10% less over the whole city than for the same recorded period in 2010”.

“We have seen someoptimismin the residential market for January with open homeenquiresbeing strong. However, there has been a shortage of good quality homes listed in Dunedin city. This has seen values in the top-end of Dunedin’s residential market steady in comparison to lower price brackets. This is one of the reasons why values in central and northern Dunedin are performing better than elsewhere” Mr. Gibson said.

Mr. Gibson said “It appears that the market has become more weighted infavourof the purchaser.   There are reports of numerous sale prices being renegotiatedfollowing problems identified in a LIM (Land Information Memorandum) or builder’s reports, where in a stronger market the vendor would be reluctant to renegotiate.”

“Overall, we will have to wait-and-see what value trends will be for 2011, as it is currently a bit too soon to be making any major prediction” Mr. Gibson said.

QV’s Residential Price Index is calculated using sales data from the 3 months leading up to the month being reported. It is not the same as the average sales price, which fluctuates in line with the mix of properties selling in upper or lower price brackets. The average sales price for Dunedin in January was $267,716.

(Updated with quotes from Jonno Ingerson, charts, links to full report and regional detail.)

We welcome your help to improve our coverage of this issue. Any examples or experiences to relate? Any links to other news, data or research to shed more light on this? Any insight or views on what might happen next or what should happen next? Any errors to correct?

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103 Comments

I've been saying Auckland is flat and not crashing for a while now :) Where's Wolly?

What a blow to the egos of BH and all the whingers and whiners on this site.

House prices have continued to hold up despite a double dip recession, the collapse of virtually all finance houses and the doom and gloom predictions that many posters put up on this site.

You lot, especially the smug renters, will be climbing over each other soon enough to buy back into the market  as rents esculate and prices take off through the shortage of supply, and improving economy.

To late for most of you.

The ship has already left port.

 

Er...prices are down 5.8% from the peak almost 4 years ago. Meanwhile CPI inflation was 13%.

That's a real price fall of almost 20% over 4 years.

Doesn't sound like a huge success to me.

And I doubt those who bought in early 2007 were expecting that...

cheers

Bernard

Bernard, were your original 30% / 15% predictions 'inflation adjusted'. If so I think that is a bit meaningless, because if you buy a house with a big mortgage, the value of your debt is decreasing with inflation just like the value of your house. For most people it is only when the dollar value of their house goes down that it is of a concern.

Also that peak was very short lived - there are probably only six months worth of buyers that are curently down in dollar terms.

Jimbo .... wait , we are not yet through the GFC , not by a long shot .

New Zealand sidestepped the dramatic fall in property prices elsewhere , through a combination of of extremely low interest rates , and pent up demand from migrants.

This has ameliorated the blunt effects of the recession , but it means many debtors are living on Dr Bollards lfe support.  

After he election ,  Interest Rates will go up , and migration is slowing, so we may yet see a long slow decline in house prices.

New Zeland and Aussie house prices are still way out of kilter with incomes by international standards.

We have all been warned about this unsustainable situation.  

Our 'extremely low' interest rates are still high compared to most other countries.  Maybe these 'extremely low' interest rates will now be the norm as they have been elsewhere for the last 15 years.

Are you mad,  our rates are really high,  my brother in the UK is paying less than 2% and in the USA you can fix for 25 years for about 4%.

Err Bernard, following your logic, if someone deposited say 50k in bank, after a year didn’t earn 1.5k but actually lost 2k, right?  Why you discouraging people from saving? 

But if you bought in a good location in late 2008 and early 2009 when 5 yr rates were at their lowest then you still have a smile :) not everyone bought at the peak BH

Er...Bernard or should that be Error Bernard!

For starters check the chart above! Let's see how long it takes you to fix that one (ah it's corrected now so well over 4 hours it seems!)

Next it's been THREE years since the market peak.  Clearly counting to three must be hard work!

And most importantly what is your definition of success?

If you were lucky enough to sell your mortgage free home right at the peak of the market and go out renting in an equivalent house at 5.5% of your sale price.  Surely that would mean you would've been better off?

Short answer: No.

Long answer: Even if you put the money in the bank and were lucky enough to average a 6% gross return.  You would after paying 5% in sales fees and 30% in tax on your investment income and after shelling out 5.5%PA on rent (while saving the 0.5%PA or so on rates and insurance) still have 7.5% less cash than you sold the house for.

Of course if you'd stayed in your home not taken on any hassles of renting or moving you'd be in a home worth 5.8% less than you might have got had you sold at the perfect moment.  But staying put sounds a lot more straightforward.

Of course if the property you sold would have rented at say 8.5%, you could easily have been 10% worse off by selling.

Moral is Bernard has plenty of Er..ors.

 

The secret, Chris-J, was to be flexible, and not  try rent an 'equivalent', but suitable alternative, and so end up paying 2.24% of the after-costs sale price of the home, and lock in the proceeds for 5 years at 8.9% at the peak of the market .

Nice interest rate NA! Gotta love those long term interest rates.

You must have $1 million+ in the bank at that rate so you can earn that $2000 a week you need to live on :)

To be fully open, I got a strip of maturities at that same rate 1-5 years for 20% of principal each. So, I've actually only got 40% left at the 'nice' rate! But, hey, that's 2 years left, before I see the real hike in rates. Till then the balance is at a lowly 6.23% weigthing. ~ and I expect that to deteriorate as ther OCR drops, short term. But seriously; that's why I simply say to others "Do the sums!". They'll tell you what to do......

There is still a massive debt burden out there. If everyone keeps their jobs and their incomes then these loans might be largely paid off.

Things get interesting if we go into a recession or real interest rates increase. If banks try to recoup their losses through mortgage sales then house prices will drop. There is some  evidence that they are reluctant to do this as mark-to-market would kill their balance sheet.

Aw c'mon old-timer big daddy whos ya daddy etc...get on the prgramme and stop being a voice in the wilderness!

the only place rentals are scarce is in CENTRAL auckland and as for prices holding their own...well, again only in parts of auckland and wellington and only using skewed median prices which only an old timer would think was reality?

Well up here in Kerikeri where we have been hammered in the last couple of years.  I have just had to get new tenants and to my surprise I had a choice of 3 and managed to put the rent up for the first time in three years.  New tenant told me ther is a shortage of 3/4 bedroom houses now.

Well I have to agree with you there BigDaddy. Given the price stability in the housing market that is clearly evident over the last 12 months, coupled to the modest change in house prices which have taken place since 2008, it's self-evident that most here in spite of their rhetoric to the contrary, don't know what they are talking about when it comes to residential property. Just a lot of try-hards and blow-hards in my humble opinion.

And I hasten to add that I am not a property investor, I own no residential or commercial properties other than one house that I have owned for 19 years. And I have no intention of changing that anytime soon. So I think that qualifies me to be an impartial observer in this debate.

Define, ".. try-hards and blow-hards.." first for me please , David, before I respond further. 

Well I would have thought it was obvious:-

Armchair experts

A person who's read a book.

A know-it-all

et al.

 

Ah. So mine was a rhetorical question then.

Prices now down 1.5% year on year. What a blow to the property bulls the figure is getting bigger and bigger... Summer is meant to be the real estate prime time with sales and prices climbing, in this market all summer has done is give a breather to the price falls which will continue for years to come as nz has borrowed in scales similar to ireland and Spain and simply can not pump enough credit into housing anymore to keep bubble a float.

Umm. Bernard, if you are going to muddle in inflation figures into real prices just to make the figures fit how about doing the same for the boom period?

Stick to real figures because  we all know that house prices got ahead of inflation over the boom and now its catch up time with wage demands looming, rents and prices rising and hyper inflation just around the corner.

And why bang on about the "peak"  in house prices. Why not talk about the average for the last year of the boom- and the year before that while you are at it.

Peaks ( and troughs) do not a statistic make. It's trends that matter.

Apples should not be compared to oranges.

 "...rents and prices rising and hyper inflation just around the corner"

You have not a clue what you are talking about BD. Do you not realise the inflation you admit is coming, will send rates up the wall....and that rising rates will smash the property sector...can you not see that?

Ha, ha I laugh my head off – again a daily, almost hourly NZhousing issue - sailing houses to each other  - making us richer or at least a few Asians and some fewer others.  

I remember not that long ago at least some people in this country talked about production.

This economic saga is just going around the circle – without any financial progress for the wider population.

 

And let's not forget, this is not a recession...it is the now permanent economic state and will remain so for many many years to come. There are no indications that the declines will stop.

Those able to walk away from the unemployment in the regions are heading for the cities and that is the drive keeping the cities going. Those owning rental properties in the regions are desperate to sell out.

The export earners who were smart enough to tell the banks where they could shove their credit, will not be too keen to risk their returns on chasing land unless prices are about 50% below the peak. That rural collapse has been underway for some time. At some stage it will reach the cities.

Don't forget, Bernanke has primed the interest rate gun and one day that bond bubble of his will implode, sending rates through the roof. ....anyone still wanna borrow money to buy property?

 

BH, were you an accountant in your past life?  You are very good at manipulating figures (creative accounting). 

Well thats 2.2% rise in Auckland central over Dec/Jan period.

I'll take that.

surprise surprise

Prices are flattish, but over the peak summer period

Expect small declines through to Spring

Expect prices to be flattish (in nominal terms - dropping in real terms) at best for next couple of years as :

- Interest rates will only rise from here

- house prices to income ratios are unsustainable

- First home buyer demand will be muted due to poor affordability and tighter bank criteria

- Investor demand will be muted due to poor yields and tax changes

- The economy remains sluggish

- immigration stays low and continues to be dominated by students and elderly Chinese 

 

 

 

To see the scary truth on property in nz go to stats nz page and compare household/private debt graph (this is the debt everyone is worried about and could sink nz as it did for Ireland Greece etc ) with house price graph over same time. Youl see the graphs are the same. There has been no increase wealth or true justifiable property value increases, just a ton of debt pumped into the sector by dodgy greedy bankers trying to sell mortgages and harvest interest at ever increasing rates for the rest of there lives

Leave BH alone!!!!

1. BH, he started it... !!!!

2. We are doomed so might as well pile some more debts (or spend all your money).  lets go out with a whimpy fizz or a big bang - your choice!

Rod Oram/Kathryn Ryan - Nine to noon

KR:Are we setting the scene for another boom

RO:Yes (supply your own adjectives to describe the sound after this)

(out of time)

 

House prices are too high for younger people to ever dream of owing a home

I am activley encouraging my eldest to leave New Zealand to go to Australia after she has finished studying .

There is nothing to keep her here .

Incomes in Oz are 30 to 40% higher , GST is lower, so she has a better chance of saving for her first home.

Incomes here are too low and taxes too high for her to get onto the property ladder for at least 10 or more years and rents are too high to save .

Without kids , she cannot receive any benefits such as Working For Families , child care grants and all sorts of lefty  handouts.

Frankly, for a young person with a Masters degree in her field , Australia is a better prospect than NZ .

Which is all very tragic, because  losing our youngest and brightest  means we will never catch up with Oz  

Cheer up Boatman.  Plenty to look forward to in OurTeaRoar.  No nasty cyclones, bush fires, and....Australians!

Advise her to live in a water tight, snake proof, spider proof and fire/wind proof boat.

And that is a REAL problem .. remember a few weeks ago BH banging on about BBs and what a drain on society they are or will be .. connect a few dots here .. an article on Kiwisaver had immigration as a topic on house prices .. and another topic on the number of Chinese migrants bringing their 55+ year old parents in .. in effect 20+ year olds are leaving and being replaced by 30+ year old migrants who in turn bring in their 55+ yo parents. How long can that substitution/replacement 10 year gap go on for ?

Another example is business lobbyists clamouring for trained experienced migrants (ie 30+) while refusing to take on cadets, apprentices, trainees (ie the 20+) which intensifies the problem

The 55+Chinese cannot collect our Super for 10 years but if resident they sure can bug the Health system.

Apparently they do make good babysitters for the  kids so both parents can work in the takeaway and so they can teach them lots of Mandarin.

If a 56yr old chinese comes here, lives here for 10 years, has paid no tax due to private income from China, they can then claim NZ Super from the age of 66yrs?

It is not uncommon for Chinese parents, in China, to retire (at an age they choose) and then their children are responsible for maintaining them.  Perhaps that is what we should do here.  Do away with National Super and have extended families being responsible for their own elderly.  Problems of National Super would disappear overnight. ;-)

Hmmmm...probably quite a few old farts would go missing as well.

Yep Wolly.  There is significant respect for the elderly in Chinese families so over there the elderley mostly survive. :-)  Can't say the same about NZ. 

Elderly Chinese immigrants being brought out to NZ under the countries family reunion immigration policy is a real concern that I have, and I don't think the average wealth destroying hand wringing lefty has a clue to the extent that their feel good policy is a real financial liability for this country.

For those who are knowledgeable about Chinese culture and the imperative of having the grandparents at home to baby sit the kids (and the expectation that the family looks after the old) will understand the ticking time bomb that this presents to our health and welfare systems. For those of you who don't know health care in China is not free nor is it paid for by the State, if you get sick, you pay, so the advantage in coming to NZ for elderly Chinese is incalculable and extends far beyond just being reunited with the family. Free Medicine!

I think at a minimum it is absolutely urgent that the Govt. amends the residential requirements for National Super. In addition to the requirement that an applicant must have been ordinarily resident in NZ in the 10 years immediately prior to their application should come an additional requirement that a further 10 years of residence in NZ should have also occurred at any time since the age of 18. Let’s keep National Super for those who have paid taxes in this country.

I came here at 49 and will we due for a NZ pension Dec 2014, NZ wii get a lot of this pension money from the UK and remember this goes both ways.

True Keriwin but we don't have a reciprocal agreement with China because there is no national super there. :-)  Therefore perhaps it should be if you come here on a family visa from a country we do not have a reciprocal agreement with and have not paid tax here for a min of 10yrs, then no NZ super is payable to you and your family has to support you in your old age.

So the boat has sailed, BigDaddy, Yep! That's right! Bon Voyage. But you're timing is wrong. ( or rather OllyN's was, when he wrote his book. He was right , you know, back in '04 (?);  just ahead of the times). You've misssed the sailing that OllyN had you booked on. That was the one that departed 3 years ago, and it's only got a very few passengers on it. It's the boat that's headed in the direction of financial survival; not the one that's about to set sail crowded with the desperate remnants of the Property Investors Club of New Zealand. That one's overcrowded, and won't get far in these 'stable' waters before the storm hits,  and the boat sinks. Loss of life is going to be terrible.......

Why does everyone think BH is manipulating figures and claiming only real money levels matter and not inflation adjusted figures?

If you put your money under the pillow it is losing value as it's purchasing power erodes.  Money sunk into a house that does not go up in value is exactly the same, your equity is losing value and your mortgage is costing you more than an rental would. 

If in 2007 you had put your house desposit in the bank and rented rather than buying a house and paying a mortgage you would be better off by close to 20% as BH rightly points out.

Wrong. If you have a mortgage then the amount of debt you have is decreasing with inflation just like the value of your house is - depending on the % of mortgage you have the two almost cancel each other out.  BH is right that you would have lost money (depending on where and what you bought), and that you probably would have been better off renting, but not to the degree of 20%.

Also, if you are a new home owner and the dollar amount of your house drops by 20% you are in the poo because you are probably in negative equity. But if the dollar amount drops by 5% and the real amount drops by 20% over time, you probably aren't in negative equity. So the two are completely different scenarios and I noticed Bernard was quite reluctant to quantify if his predictions were going to include inflation at the time.

BH he would make the grade for a politician - never commit yourself to anything factual and always leave the back door opened.  he wil get my vote one day when I am old and twisted!

But why do you think your debt is decreasing with inflation?

It's decreasing because you're paying 7% a year or so on your mortgage vs inflation of 2% and rental yields of around 4%.  The amount you are overpaying compared to a rental is about 3% a year so your debt is not reducing with inflation for free, you are well and truly paying for the privilege.

Similarly your equity that could have been in the bank on term deposit would have been earning about 3% after tax.  So both your equity and your mortgage are costing you 3% a year compared to the alternatives which over 4 years comes to 12.5% add to this the 5.8% decline in prices and you are not far from a 20% loss.

And.....the real value of a mortgage only 'drops' if there is an increased capacity to service it. ie: wages rise. If wages remain static, and price inflation occurs, then the mortgage holder is far worse off,;as the cost of daily items increases; his wages remain dormant and he has less left to pay off that mortgage payment with! In all likelyhood, his mortgae payments will have nominally risen ,as well, as the real price of money is reflected in rising interest rates.

Yeah but try telling that to the spruikers lol, I think its funny that they try to make you think that if you don't buy an over-priced house you've missed out and you will never be able to buy one, its a load of rubbish and people are wising up.

Actively discourage immigration but do chase our diaspora.

That would be a vote winner for either major party at this election and help relieve the housing deficit, if it actually exists.

David what makes you any different from how you describe  NA. I hasten to say I also only own one house which I live in. Many commentators on this site are in the same position as you and me. Are they all try hards and blow hards?

 

They are when they have all been predicting a calamitous collapse in property prices, which simply has not happened. Bunch of Chicken Littles if you ask me. And by the way, if property prices suddenly do go down in say one or two years, you get no brownie points for that from me. I shouldn't have to wait 5 years for your sorry predictions to come true! What sort of nonsense is that? That's no different to a weather forecaster proclaiming "I told you so I’m so cleaver", when after 5 months of saying it will, it finally does rain in Auckland.

Seriously guys you've got it all wrong, property is the best and only way to get rich lol

Yes, plenty of people have done very well out of property, that's why there's all this pent up resentment held towards them, the bastards

Smug renter signing in.

My residential rent hasn't increased since 2007.  My commercial rents haven't either, and, truth be told, I may have been able to negotiate harder and reduce them but I'm more interested in the long term relationship and they were modest to start with.

In addition, I've made very nice (unleveraged) returns in shares during that time through purchases made from late 2008 - mid 2009.

In some cases, 10 times my money or more.

Unlike the property ponzi where the underlying asset is mediocre and most of the return is actually leverage rather than the underlying asset, the last few years have offered fantastic opportunities for the cash rich to make superb unleveraged returns by buying from weaker hands.

I have no regrets at all about avoiding direct property (although I have some REIT interests) but will happily post when I buy a house one day.  Don't hold your breath, I doubt it will be soon.

 

 

FTW

Well done!

2 things hold people back, fear and greed. Anyone who has been too greedy will be now feeling the pinch, but anyone  too fearful is going to let life's opportunities glide by them.

Looks like Bernard's home suburb of Mt Eden is recession proof with house prices well above the previous peak of 2007:

http://www.nzherald.co.nz/property/news/article.cfm?c_id=8&objectid=10704403

"The swathe of suburbs between Mt Eden and Pt Chevalier fill the top six spots, with Hillcrest, on the North Shore, rounding out the list.

The list was compiled by Jonno Ingerson, research director for qv.co.nz, who used recent sale prices to calculate the average percentage change in value by suburb over the past three years.

That percentage grew in Mt Eden, Pt Chevalier, Ponsonby, Grey Lynn, Westmere and Kingsland and remained stable in Hillcrest. Elsewhere it fell.

Mt Eden-based Ray White sales manager David Reid said the local market was "crazy", with listings drawing multiple offers."

 

hmm vested interesting in trying to drum up more sellers?

why do people get happy when house prices go up? Seems illogical to me

Because the majority of property investors are on average to low incomes and they need capital gain to get ahead. They do not have the savings to buy their rentals with significant equity/deposits so a lot of them are very highly leveraged and therein lies the problem when the market goes backwards. They do not have the income/savings to support their portfolios when things get rough. More and more of them will be forced to sell and because many of them bought crap at the peak they will sell for a loss and at times the debt secured by those properties being sold will not be paid off in full. Rich Mastery and others like them have a lot to answer for. Some have made some good paper profits.Others have lost plenty. This drama has some time to play out yet.

well I agree with your comments except a high income in this country still does not get you ahead unless your are enterprising so your comment of low-mid income I don't think is applicable.

Anyone would think, going by some comments, that Bernard should turn his website into a place to promote real estate as a way to certain riches, rather than use his skills as an economic reporter to bring news about wider economic matters.

There are probably only 200,000 people that constructively contribute to our economy, and property investors are not amongst them.

They probably think of thenselves as capitalists but, by virtue of its name, that takes capital. Whereas the property investor is a leech that uses other peoples money in the assumption of infinite capital gains.

I have tried lobbying Bernard to introduce a sharemarket section to this website  , after he introduced Amanda and the KiwiSaver section . ........ Given time , and enough hectoring , us pro-business bloggers may get our day in the sun .......... (  .. but not until after the bloody property bubble bursts ! ) .

........ Good on yer , scarfie .

Well I get sick of any thread that relates to property getting all the attention, they regularly go over 100 posts.

Probably good for Bernards site traffic though.

But just goes to show how immature the country is in investment.

It is okay though, I manage to learn enough from the scraps of non property threads.

The Hickster  got Bernard Doyle of JB Were on , to discuss the downward spiral of the NZ sharemarket , the double-shot interview . And as fine as Mr Doyle's thoughts were , the thread garnered far fewer comments by bloggers , than an average spruik from Barfoot & Thompson does ....... And only a fraction of the response that Big Daddy Olly Newland gets to any one of his articles .

Sad , but true .

Always imagined that this site was popular in real estate offices... access to the rates etc.

The original US 'Free Trade' agreement  double shot interview was the one that seemed the most worthy / least commented on. A referendum issue? Not one a short term political party should be agreeing to on our behalf. Must have missed something again.

what's happening?

Bernard seemed a little resigned in his video, even a tad bullish on housing.

Rod Oram when questioned on National Radio answered "yes" to a possible new housing boom (although I take that with a grain of salt - at a philosopical / theoretical level the man is very good - at a more practical market economics level I am not so sure) .

Herald reporting rental madness.

But sorry, I am still not convinced

Bernard you seemed  a bit resigned - where do you see prices going next 2-3 years????  

Matt how can anyone realistically think that property can go up in value over the next few years when the average new zealander is struggling to cope with the their basic costs such as food petrol  and power. On top of that a significant number of them are also struggling with their debts they built up over the silly mid 2000's.  Our average incomes are pathetic by western world standards to boot. I predict gradual drop in values months by month for some years to come. No sudden big falls unless there is a big shock  such as another 9/11 or a major economy such as Italy or France default in some way. Hopefully that will not happen as the consequences are too serious to contemplate. 

 

I agree

Matt

 

Which other western worlds have better income averages than New Zealand to call ours Pathetic?

Australia, America, Holland, Germany, Canada and France for a start. We are getting further and further behind and our best and brightest are going offshore for those better incomes including our doctors, teachers and nurses. And who can blame them. All we have thought about is property accumulation and not about superannuation. Australians have 1.3 trillion dollars in their super schemes. We have 4 billion in kiwisaver.

Agreed Australia is ahead, but I am not sure how you think France and Germany have better average incomes, relative to what the average person can actually do with that money. These are big countries you are talking about and of course you are going to have better oportunities there, or at least perceived to be.

Also, I would certainly hope Aus would have more in their super pot, they have been doing it for a long time now, and they also have a signifcant population different to us.

And what is the population of Australia and what is it of NZ, ex agent?  Also how long has Aussie had compulsory super and what is it rate of decduction from salary and what is NZs? Overall given the differences NZ's not doing too badly.

Hollands income tax rates are higher than ours:

The brackets are now 2.35%, 10.85%, 42% and 52%. The first two brackets also contains the Social Security payments (contributions to schemes like AOW, ANW and AWBZ), making it effectively 33.5%, 42%, 42% and 52%.

Their gst outside of food and essentials is higher:

For the value added tax there are two categories: foods and essentials, and non-foods and luxuries. These two categories have rates of 6% and 19%, respectively.

Corporate tax rates are lower:

20.0% for the first € 275,000 and above that a corporate tax rate of 25.5%

The Netherlands also has a wealth tax:

Possessions like savings, shares, houses etc. over € 20,315. are assumed to have an annual 4% yield which is taxed at 30%, regardless of the actual annual yield achieved. Things like furniture, cars etc. are excluded.

So all that lovely income is taken up by tax

Awesome!!

CO my wife is dutch and she gets back occasionally and there is no doubt they have a higher standard of living than ours as their incomes are so much bigger. And the elderly are very well looked after. They are highly taxed but you can do that when the incomes are so much higher than ours. Not all of them but a lot of them. In 2001 wehn we were there a Honda Accord cost twice what they were costing here because of taxes but they could still buy them. Says a lot.

I am sorry but alot has changed since 2001 and you antedotal evidence does not make it common place.

My family have a high standard of living here too, does that mean the rest of the country is because my family is?

 

 

I also have dutch family in Holland ex-agent.  Their super is tied to what you have paid in -the more you have paid in the bigger you get paid out.  They also seem to have parliments that don't survive the terms they are elected for.

Err......wrong ex agent

Kiwisaver funds are 7 billion not 4.  Yes you can earn more in Australia as a medical professionsal however many of the locations are far flung and very rural. Would you want to work in the desert somewhere isolated?Also the average NZ wage for Kiwi Drs is better than the average Aussie Drs. Yes the Aussie $ is better than the Kiwi $ but the cost of living and housing is much higher over there.

http://www.interest.co.nz/kiwisaver/kiwisaver-records-eight-fold-increase-two-years-while-other-managed-funds-are-cannibalised

http://www.nzherald.co.nz/nz/news/article.cfm?c_id=1&objectid=10704257

4 billion or 7 billion who cares when comparing with 1.3 trillion. More NZers going to Aussie than Aussies coming here so that speaks for itself.  It will just put more pressure on values here as people sell up and get going over there. People who go over there and some with virtually nothing in their pockets seem to have that house under their belts pretty quick,something they were finding it hard to achieve here. Who can blame them for chasing their dream of home ownership. Us NZers have this huge need to see our houses going up in value consistantly. Is it because so many of us are income poor.

You have that arse about face ex agent.. we are income poor because housing costs have shot through the roof.....

Exaclty, due to over priced housing, I cant afford to buy a boat, instead I spend my money on a mortgage

It might have been a share in a tourist boating venture that created jobs and brought you a return that could be taxed....but not any more because the money goes to the bank and the bank sends it overseas as divs to shareholders who think it's just bloody fantastic that the NZ govt is so utterly friggin dumb enough to allow the banks to own the economy and extract the lovely fat profits.

Well thanks to QE, at 7 Feb. my non performing assets which I was not able to unload before 2007 are now all above their 2007 nominal values, so maybe there is second chance to flick them.

Currently it is diffcult to secure a satisfactory, consistent real rate of return if you invest a dollar tomorrow morning in any passive investment. I see PI as a passive investment, I have some properties and the real return is determined by the work on the buy in price. So property currently has, in relative terms, not been badly performing compared to many passive investments.

So except for the few who have the money, opportunity and knowledge/ability  to invest via a private placement in a mid-sized go getter company....I don't see the consistent returns out there for the risk, investors look for 20-25% as a min. and any in their right mind should look for the same.

 

 

I

 

 

 

You've not been looking in the right place.... forget New Zealand equities: the market here is  too thin with insufficient liquidity  an issue for many stocks, notwithstanding the poor  management many companies are inflicted with.... eg PGW, ALF, GPG and others. No wonder  Joe Public think equities suck, there are  only a handful of really good publicly listed companies  listed on the NZX IMO. Last year there were 2 listings here I recall, one was a candle maker, which pretty well sums it up (symbolically).

But if you look at the ASX ..... since early 2009, investors have enjoyed an almost once in a lifetime surge back in resource equities. Higher risk investors buying equities then, in  some of the midcap gold miners, copper and iron ore miners, shale oil extraction,  rare earth and uranium explorers have seen gains of 500-1000% plus in 12-24 months. For people who are prepared to do their  own home work there are always opportunities. Don't listen to brokers.

For NZ see www.sharetrader.co.nz and www.shareinvestorforum.com    

and for AU  www.hotcopper.com.au

On a more personal note I set up several online broking accounts for  various family members through 2009 with relatively small amounts of seed money (all of it from me in the case of teenage and university attending children),,... the idea was to be part experiment, part educational and ultimately in time to perhaps help to pay off  their student loans.  The best return has been 173% for a 22 month period, the poorest 27% for 18 months (mother-in law!). 

If values have "stabilised" then that is a bad sign...it points to the recession extending far far into the future....there can be no real progress until housing returns to being affordable. That will not happen until the govt decides to stop protecting bank profits and the manner in which the banks are "farming" the whole economy.

 

If the housing market is dead then so is the economy,  always has been and always will be.  Time and inflation will make owners very happy over time and renters will stay poor as they always have.

Yet I personally know two multimillionaires, and both are 'renters'. Neither is interested in owning a home, or houses or other property as investments.

Even "poor" little me has several hundred thousands in the bank and no debt whatsoever. Nope, I don't own a house either, and I don't want to own a house.

Incurring large debt as a result of borrowing to buy wooden boxes which require constant and ongoing costly maintenance and management is not at all attractive. 

You need to realise that not everyone is obsessed with houses, and that some people can see property for what it is, so choose to invest in something productive instead.

In my humble opinion, property is simply the bottom-of-the-barrel option, and it's for the financially ignorant and/or fearful.

If only we had more Droolers in parliament ........ And fewer Dribblers .

Bravo , you good thing !

But if you owned some properties with no debt and had several hundred thousands in the bank/in bonds, you could drool better

Not if the properties are going down in value Me and if they are not auckland central properties that will be the case.

Drooler - you MUST get with the program, here in Enzud it's property, property and more property !  It is the great KIWI mantra !

I gaurantee you on this blog,  not one PI owns shares etc ..... they have all their investment in one asset class, property....... this is stupidity IMHO.

EVERY asset class has a cycle and the cycle for property is on the DOWN ...it  is NOT realising the capital gains it once was... while the return on investment in minimal.... plus all the maintenance, rates, fees, tenant replacement, problems with tenants, late night call outs from neighbours, tradesmen ripping you off because they think you are a "rich" landlord, rent arrears and the sob stories that go with them, leaky building issues with some properties etc etc etc ..... need I go on.

One property is enough for me ..... besides it's just a "roof over your" not a superannuation plan.

As a business proposition, the numbers just do not add up for property and the REAL winners are the BANKS.

So for all you PI's out there .... keep lining the banks pockets - that is why THEY love residential property so much.

 

 

YES! Are you my long lost clone brother?

 Thank you Justice ...... just a realist who can see beyond the "hype" ..... the trouble with residential property in Enzud is that there are so many with a "vested interest" in this market, therefore the "warped" media, "skewed" bank economists, "twisted" politicians, "bent" banks, "crooked" lawyers,.......not forgetting the "distorted" PI's themselves ......

Again, totally agree. The whole 'bandwagon' has gone off a cliff long ago but.........because they ALL haven't hit the bottom yet they feel nothing is wrong! Or are they starting too?

Why be a multimillionaire and none knows about doesn’t make sense either - give it away for charity, to save the whales or me - to be a happy millionaire.

I rent (by choice) and I'm not poor. The simple fact of the matter is that this country has too much of its capital tied up in residential property, rather than in other investments-  or businesses that can provide export earnings and jobs or a return on foreign investment. Much of the interest that you pay on your mortgage goes straight off shore to multinational banks with a permanent  adverse effect on our balance of payments... $billions.

So what you are saying is .. a large chunk of Government provided rent assistance is going to landlords (PIs) who in turn use it to pay the mortgage interest, which goes to the banks who in turn remit it overseas.  So the net effect is, the government is feeding the foreign debt burden via rent assistance.

Some of it goes to the shareholders in the banks icon...the rest is used to continue porking the mortgage market to keep the bubble intact to retain the valuations to protect the covered bond scam to be able to borrow cheap to keep feeding the mortgage bubbles.

mmmm...was interested to view a unit in Hillcrest

http://www.trademe.co.nz/Browse/Listing.aspx?id=341609059

However I was informed that the unit got sold. When I asked the price, agent said $325,000. RV was 280.

I have looked at other sales figures and asking price too, and I find that 2 bedroom units are asked and sold around 1.1/1.2 the RV price.

However as soon as you looking at 3 bedroom houses near the $400K mark, I find that vendors are willing to ask for close and less than the RV(.95-.9)

So still deciding what market I want to go for? The ones which are slightly affordable but overpriced, or the ones where I have to pay more but are more realistic in their asking price.

I was under the impression, that given the depressed housing markets, units price would fall faster than house price.

 

 

 

I recall about 18 months ago doing some figuires for someone looking to buy a rental property, cost $300,000. Borrowing the whole purchase price (int only)  the total costs with rates and Insurance  was approx $500 per week and guess what the rental appraisal was: $320 per week.

As I put is simply to these people: you are paying your tenants $180 per week for the pleasure of them living in your property.

Suggested that if they had an extra $180 per week then they might want to apply this in reducing  mortgage on owner occupied property, become debt free quicker and not have the problems associated with being a landlord.

While this is bit of a simplist approach as it doesn't allow for tax issues associated with LAQC's etc it does illistrate the level at which some people approach investing. Just because the "Jones"down the road are doing it it doesn't make it right.

Which reminds me that I have not seen much talk from the "Rick Mastery"property people for a while.

 

PS I am not anti property as I own two (small commercial ones)  which are cashflow positive and the ownership company pays tax on its profits. I would rather make real money and pay tax and retire debt with any capital gain a bonus.