Barfoot and Thompson Auckland house sales volumes fall 1.5% in October from September but average price rises 1.1%

Last year, vendors were ‘waiting for the market to improve’. Now they are looking at it and asking “Was that it?” - (..sales volume up 30%, from  October 2010) - and have decided, “Yes it was”….and are now heading for the exit. It’s likely to get a might congested in that property-selling door, this year….”Leapfrogging” ( vendors trying to make sure theirs is the best offer price by anticipating what the neighbor is going to list for) is the next step. The top end may have already started down this road ...".. a feature during October was the number of new homes listed.."  and".. this average price was affected by the strong interest in the high end of the market..."

4999 Akl  houses for sale ,be in quick while stocks last .

PS -   Would be interesting to know  sellers reasons for selling up , I guess they are off to Liquifchristchurch to help with the rebuild

Prices moving up quickly in the good suburbs, but now also edging up in other suburbs ie South Auckland - also up substantially on last year.

Look to the building sector still sliding down the slope to ruin....National helped it on its way with the gst spike killing off too many who had planned to build. Now Key faces having to slash gst on all new builds and all reno materials and on labour if he is to save the industry.

Everyone now measures the gst pain when it comes to doing reno work or going ahead with that new build, especially when it is so plainly obvious English will chop 33% off the tax theft in an effort to keep the sector from becoming a corpse.

That's a huge amount to risk throwing away on any work when the gst cut is likely post the election. Bad enough that people borrow to pay the gst on the new build but to have to pay rates on the tax as well.....and then pay gst on top of the thieving rates bill.....what an utter scam.

And where does this stolen gst go?....why straight into the pot to be paid out to the National Party rump landlords as a subsidy...all aimed at keeping the house prices jacked to the hilt...to save the bubbles to save the banks that farm the country for fatter profits.....

Rich NZ'ers dont need to sell anything to invest in SOE sales if they so wished.

They have been unscathed by the recession are coming out of it in better shape than before.

Perhaps you should get out and meet some rich NZers!

C'mon folks .... get your 5% deposit together and get out there and invest in that sh*tbox that you would never live in yourself

That's the way..... use as much OPM as you can, mortgage it to the hilt, now you talkin' !

Just watch that great "cash flow" roll in from the rents from the punters ..... ohhh financial bliss :)

Don't forget those great capital gains ..... you're sound asleep while your property churns out profits at a compounding rate of knots .... eye eye capt'n

Wait are you waiting for ! .... c'mon do it for your country !  you will be providing homes for all  n' sundry to ease your social conscience of being a "slumlord"

That's the way ..... tie up as much of people's net income in rents as you can, as we need that so you can pay the mortgage !

"pay the mortgage" ..... we love those 3 words,as they mean PROFITS !

Who cares about the general economy, R&D, new business and industry, innovations, value adding to primary products, higher incomes etc  when everyones disposable income is coming our way ... yes our way, thru you the Landlord !

See it's all worked out .... we do "live in your world" ... although it may be 1500km away across the ditch, but that's a minor technicality :)

See you at that open home.....our brokers will be standing by !

I watch statistics that don't seem to be published, but are there, if you pay attention.  Here are some good metrics I use, making for a very sick market, according to these indicators:

--uncertainty meter- current reading- very high- what is certain today?

--private listing meter- noticed the increase of "private sales" lately?  This is usually due to a disconnect in the market- often a seller that must cover the cost of paying off the mortgage AND paying the real estate agent.  If the 2 add up to a larger number than the market will pay, then the "owner" (read- renter from the bank) must try to sell it, on their own, to pay off their debt, and walk away without banruptcy. 

--changes to the way that listings are described.  I spoke with an agent recently who said he has specific instructions to no longer list as "mortgagee sale" any property owned by the bank.  Why they are doing this is blatantly obvious- so people like Barfoot and Thompson can go on and say "very few mortgagee sales."  Ha ha.  They're there.  They just aren't calling them that, anymore.  They've been doing the same thing in America for some time now, drip-feeding their dregs into the market, slowly.  We'll just call them "auctions" so as to not scare the suckers- we mean "buyers." 

--Auction clearance rates- houses go to auction- but do they actually sell?  Very anemic, at the mo, in spite of this being the "selling season" now going into the holidays- "that was it?" Well put! :)

--a catalyst for the last mania was low interest rates.  Today interest rates are at record lows, even lower than before the last boom, yet prices are still flat- too much debt, already!  Look to America, where you can get a 30 year fixed mortgage for less than 5%, and prices are still going down!  Too much debt!  Too much "shadow inventory"

--hidden desperation in listing descriptions- See how they rise.  How can you sell "I'm going bankrupt, unless I can rid of this darned millstone of debt" without seeming TOO desperate?  Check number of listings with key words like "circumstances changed"  (translation- husband lost job or had hours cut, or same for spouse), "packed up and ready to go" (translation- bank keeps bothering us for money that we don't have, won't you PLEASE take this turkey off our hands?), or the all too often seen, "moving overseas" (translation- off to Australia, where I can actually find a job, doing something other than selling dresses at a dress-shop or prepare flat-whites), or the obvious "Off to Perth" (translation- we are now out of money, so may as well make a fresh start)

--turnonver of retail establishments- previous tenant goes out of business, ask new tenant- how's it going?  REALLY?  How's it going?  How eager are people to spend?

--responses elicted when you ask someone "hey, I'm looking at buying some real estate.  Do you want in on the deal?  Safe as houses, I swear....ya can't lose with real estate, maaate."  Then get out your watch and time how long it takes for people to stop laughing or staring at you, funny.  The time has grown over recent months.  Real estate is quickly becoming a hated investment.  People are taking money they do have and paying down debt.  Eliminating risk. 

--have salaries gone up, lately?  Not from what I'm hearing.  But hey, Auckland is "special."  Let's see how that works out for you, now that you must sober up from the RWC.  Go All Blacks!  Now, back to reality.... oh sh-t...how much do we owe on that rent house?  Multiply that by the number of people calling themselves "investors."  More like "speculators." 

--count the number of people excited about the recent tax law changes affecting property investment.  Has it risen?  There's more shadow inventory. 

--Commercial vacancies and sales- how's business, folks? 

--how long between tenancies?  Real estate follows JOBS, and jobs follow BUSINESS!  Am I the only one who knows this simple fact?  Where are the jobs coming from?  Where will they be coming from in the future?

--Worldwide- metric of number of demonstrations, uprisings, etc, leading up to some real nasty events.  Are we at peace, really?  Sufficient to sustain even our pre-boom pricing?  Just because you owe $500K and "have to get $500K" when you sell, doesn't mean the market gives a sh-t about what you "need."  The market is the market, and I'm sorry, but a 1% rise is very anemic.  How many of these buyers of luxury homes are wealthy Asians, trying to get out of their dictatorship countries, before they go to war?  Would you pay any price to get to a relative safe-haven, like NZ, if you had the means?  Where else would you go?  Chile?  Few places are safe from the ravages of what's coming.  Nobody talks about it, but we all know it's there.  See Kim dot com.  Not an idiot.  Also certain members of banking families, quietly moving here.  Why now? 

--Averages tell you very little, anyway.  And for the average guy right now, life isn't easy, and he must make due with less than he had last year. 

--yes, there will always be exceptions.  Upper-end neighborhoods will be better protected, because of who lives there, but they are not totally immune.  "You pays your money and takes your chances."  Everybody needs a place to live, even rich listers who can afford to pay cash for their homes- a small minority of the overall market, yet holding enough power to skew the averages to the upside with their all-cash, luxury home purchases.  Meanwhile, the dumpy, tired 3 bedroom, 1 bath home that "has potential" sits on the market, forever, price reduced, "circumstances changed", etc, ad infinatum. 

--Comparing the number of rentals compared with last year- did anyone notice the spike 6 months ago?  And then big drop about 2 months ago (to sell again)?  Or was it just me?  What do you do when your house doesn't sell?  You rent it!  Renters are spoiled for options now.  Hence my screen name. 

--Who would want to be a renter to the bank, "buying" the turkey on the wrong side of the street, when, for the same money per week (and no upkeep headaches), you could rent the palace on the right side of the road?  And leave any time, whenever you want?  And not have to deal with selling your house in a down market?  It wll probably be this way for at least the next 5 years....anemic "growth" if you even want to call it that.  Sorry, 1% is not "growth"- it's FLAT.  

--A FLAT market does one of 2 things, eventually, it screams up or it crashes.  What is the catalyst for the former?  There are far more for the latter, unless you are a fool.      

--What all supposedly "educated" consumers and "investors" should be aware of is the hidden or "shadow" inventory, currently building, into the market.  Where is it?  How is it being accounted for?  If it is not being accounted for, that's because they are HIDING it, because it is BUILDING!  All you have to do is look to America, where banks sit on over 5 years of inventory, and 13% of all homes are vacant.  What makes us so special?  But we have Australia!.... uh, oh. 

--All of the so-called "experts" have been wrong about just about everything, really.  What would make you think that "this time it's different?" 

--the only time a market really changes is once there is TOTAL CAPITULATION.  Hasn't happened yet.  Might be a few years away.  People are still holding on, tying a not, etc trying to stay afloat.  About 1% is falling off the boat, drowning in debt.  That 1% represents a LOT of inventory, especially as it grows to 2%, etc.  Banks are keeping it quiet, so as to not scare the sheep.  Quiet before the storm, head in the sand, (insert your metaphor), etc.  Denial is the phase just before the REAL crash happens.  We may already be in it.  I believe we are. 

--It takes about 2 years for the whole process of writing down debt on a house happens, for the bank to take back the house, re-price it (quietly) and "feed" it in the market, repricing it to meet the market.   Sellers are now trying to sell their overpriced turkeys, marking them down to what they owe on the debt, listing privately instead of with an agent, and they will untimately LOSE.  The market always wins, regardless of what your personal circumstances are, or what you think your house is worth. 

--Those currently in denial about their financial situtation represent a huge, awaiting waterfall of inventory that will hit the market, sooner or later.   A large percentage of these "owners" will lose their homes to the bank, and will be re-sold at a discount, by the bank (though the bank will try to keep that a secret).  

--Banks hate losses.  The best they can hope for is a flat market, with as many people servicing their debts as possible.  Taking back houses in mortgagee in possession is part of the game, and must be played STEALTHILY, so as to not bankrupt the bank iteslf.  Keep the sucker's payin!  Don't scare the flock!  Feed the foreclosed houses in slowly!  We don't want to bring down the whole neighborhood, and our good paying customers with it!  Look what happened in America, where people mailed in their keys!  We don't want no "jingle mail!"  That doesn't mean it won't happen.       

--How many people do you know bragging about what a great deal they got on their house?  I talked to a guy yesterday who was almost in tears about their financial dire straights, regarding their "lifestyle block" bought just before the top of the market.  What percentage of the entire market are people like this a part?  Overleveraged?  Debt higher than the value of the property?  How long do you think they will "tie a knot and hang on?"  I say 2 years, and I've been saying that for 2 years, so I think we are in it now, actually.  After this so-called "selling season" - about to leave with a whimper, not a bang, banks wll be taking possession of far more homes in the winter, writing them down, and putting more homes in the same neighborhood "underwater" or owing more than the house is worth.  

--have you had a look at the financial health of banks, lately?  If you aren't scared, I'll be scared for you. 

Good on SK for his or her half hearted attempt to continue the spinning and spruiking but where are all the other real estate agents and mortgage brokers etc such as MortgageBelt? Funny how they are all keeping a low profile for once.

Perhaps because month after month the figures show a strong market in Auckland - and stable market in the rest of NZ - and if nearly everyone on this site prefers to ignore facts - people tire of the same yes it is, no it isnt routine.

"How did you go bankrupt?" Bill asked. "Two ways," Mike said. "Gradually and then suddenly." ( Ernest Hemmingway). Time takes it's toll. And property holders will suffer by contagion. Any one individual may not 'have' to sell, but others will ( or the bank will do it for them) and prices will the head towards a 'suddenly' moment....

It's a shame none of you bought a house in Mt Eden/Herne Bay/Westmere/Grey Lynn at the "peak of the market" in 2007 isnt it.

I suppose you wouldnt have been able to afford it - well if that was the case then - you definitely can't now.

There was a big drop in the number of Wellington properties listed on Trademe a few months ago but it looks like the numbers are drifting up again. When we sold there were around 4600 listed, this dropped to around 3800, now back up to 4370ish. Many of these properties have been listed for YEARS without selling, ie large leaky style homes, overpriced lower end homes etc. Having said that, vendors just refuse to budge, and it will take a large drop in employment figures to motivate them I guess. Lucky for them the employment situation is on it's way up....

                            Oct-11       Oct-10

  Central          642,623       567,182

  Eastern          817,933      705,115

Is there anyone who does not consider this to be a good performance over a year of Global Financial Crisis?

Wow SK - does that mean I'm part of the 1%?  And no, I do not live in Oamaru (nice place though it is).

Once again we see figures to show the property market is not collapsing.

Once again we have the broken record mutterings of people telling us the collapse is 'coming'.

Columns like this are entertaining. The doom, gloom and despondency brigade get more and more desperate to justify their views.

Relatively speaking, there are so few houses being built that the possibility of a collapse gets remoter by the day.

Bernard implied house prices were going to continue to boom in his moaning 'letter' to John Key the other day. Even Bernard is a housing bull now.

"Melbourne is heading for a bust.

People with an interest in other markets may not be too concerned but it must be remembered that Melbourne is a very large market, it is therefore possible that any problems in Melbourne will lead to contagion. The last thing Australia needs at a time of global instability is for one of its major city’s housing markets to send tremors through the financial system."

Now this is 'just another opinion' but will New Zealand, and by extension Auckland, be imune fro any Australian fallout?

"The average sales price in October rose to NZ$553,765 from NZ$547,883 in September and NZ$524,004 in October last year".

Nah, can't be true. It's been clearly stated many times on this site: house prices will fall 20 to 90 percent !

New RVs for Napier out today:  My land value has just gone up from 170,000 to $195,000.  OK, admit the  Improvements/House flatlined,  Still not bad given the recessionary environment.  

Hope this factual news is not too upsetting to anyone.

So we are all agreed that the following result over the last year is rather good really.

In that case everyone on this site who has moaned and bleated on and on about the impending collapse - has hearby been proven incorrect, bitter and boring.

                             Oct-11       Oct-10

  Central          642,623       567,182

  Eastern          817,933      705,115

Well, I intend to lodge an objection on the Improvements - as I have spent 18 months re-landscaping every weekend  -  breaking concrete, planting trees, new lawns, fences etc ...so is far more saleable, and improved value.   Not that I intend to sell,  but .... if /when I persuade the better half to move to Aus, I'm off (as have had 2 job offers in Aus in 12 months) .....   but yeah,,  can't avoid tax  -  but low cost, high work improvements on your property - sweat equity - can help you financially ... 

Great news for B&T...Cubans allowed to trade property for the first time.....!

Who knows what a new Key government will go for.

Maybe the new financial order will raise interest rates. Key & Co could allow the $ to fall because price rises can be forgotten before the next election.

So $3.00 petrol and $6.00 milk is no concern until 2014.

Put those in the mix with a 2% extra mortgage rate and it will all hum.

Key will happily slum it in Hawaii, or Omaha or even Parnell but will give up the commute to Welly and leave it to Double Dipton  and ilk

As this report by Barfoot covers Auckland, their biggest marketplace, they show positive in good suburbs.

But in other areas there is a very different picture. I know heaps of sellers with their houses on the market for years, and cannot sell.(Too high expectations).

Recently I got this information published by Ray White Warkworth. And Warkworth area is not Otara.

Check it out. Quite some losses. Scroll also down to the very bottom, this property was bough Dec.10 for 1,4 mill. and sold now for 1 mill. in September. I would not like to be in their shoes, they also lost the money for the agency. Funny enough, it is again newly listed for sale for 1 mill.

edit:
Here is the link:
http://www.rwwarkworth.co.nz/Resources/rwwarkworth/PDFs/October_2011_Wh…

I don't see houses as being different than most products - that is, a good quality, well maintained, tidy, presentable and desirable will sell and you may make a buck.

However, my observations of both the properties and their finances are that large numbers of landlords  entered the market with a budget based on meeting minimal outgoings (interest/rates etc) only with no surplus of funds factored to modernise or update said properrty.

Hence, we have a build up of poorly maintained and dated rubbish that will soon finding it's way to market. And I suspect there are heaps of them.....middle and low incme earners, including beneficiaries, who were suckered into this game by the banks......they simply cannot afford to stay in the game.

Interesting reading Gertraud T. - thanks.   The striking thing about the report is that the downward trend is consistent across all price bands.

And here's the detail broken down by suburb.

http://www.barfoot.co.nz/Info/Market-Info/Analysis/October-2011-Market-Analysis.aspx

Average prices in the Eastern Suburbs of Auckland are up 15.9% (!) in October from a year ago to NZ$817,933.

Now we know where the tax cuts went for those on higher incomes. Into buying more/bigger houses, leveraged up with debt.

That's not my idea of economic transformation.

cheers

Bernard

big big drop according to those stats in Rodney. Me - I don't believe the massive drops there, nor the massive gains in the city. This is what using averages does. It distorts. Lets see what the median figues show

notwithstanding this, what benefits has cutting the OCR to record lows had other than boosting the property market?

I would suggest very little 

I actually agree with Sk thats superior property is still a good investment even in a recession if you buy at the right price.

We have a property in Santa Monica, LA which was valued at 2.2 million in 2007, which should be at its peak. We do not have it on the market however on occassion asked if we will sell it, actually been offered 2.9 in september for it. This is during the worst economic situation in Califonia ever. Some people have the money regardless.

fair comment, if we sell will look at alternative means of exchange :-)

Lets face it Wolly it is a relativity game. We can sell at what ever and will be relatively better of here than most.

Quite right...each to their own...I'd rather own a batch in a sunny spot on a coast on the Med close to a high speed link to the UK......and tootle round the best spots in a big campavan for 6 months each year.

Younger brother of a mate, in late teens, got a job at Gladstone in Aussy, walked into $28/hr and plenty of over-time. But can't make ends meet because of the outrageously high costs of renting in the town, so looking to move on. Realises how cheap relatively rents are in NZ- he was previously in Wellington.

The math on renting vs buying gets even uglier when you factor in the down payment on the house. 

For a $500K house with 20% down, that's $100,000 out of pocket- and now earning 0% interest. 

But wait!  There's more! 

If you don't make your $3700 a month payments on the remainder of the $400K, you could LOSE your $100,000!  What a bargain! 

I think I'll stick with the $2000 a month renting, for the same house, without the burden of ownership, thank you very much.  Take the savings and have a life, other than paying excessive interest to banks.

As usual Olly Newland was bang on with his predictions. Look what he says in his latest article:

"Should Investors Stock Up Now?

Interesting to note in this article that the Minister Of Housing reluctantly agrees with what I predicted last year.

I said that rents would rise because of ill thought tax changes to deprecation rules in last years budget.

If the Minister wants to know what so few people are buying state houses the answer is simple. Renting is (or was) cheaper than buying . Look at the facts in the article more closely. It is obvious that the housing shortage is worsening

As the queues for a state houses and rental housing get longer and longer, rents will continue to rise.

Extract:



“A report by the Housing Shareholders Advisory Group last year found there was a 70,000 house shortfall across the country.”



Now why would that be? Would disincentives to supply rentals be a factor? You bet it is. The removal of depreciation from investment properties has greatly exacerbated an already chronic shortage and now the chickens are coming home to roost.



And just in case you think I am being political, housing under the last Labour government was made unaffordable for many as house prices doubled in just 4 years.



In a nut shell, investors should be buying up as much stock as they can sensibly afford. You don’t have to be a rocket scientist to work out that a shortage of rentals coupled with low interest rates, tax disincentives and an increasing demand can only lead to one thing: Higher rents- and that, my friends can only be a good thing for investors."

Housing under National



DANYA LEVY



05/11/2011



“National swept to power in 2008 promising to restore the “Kiwi dream” of home ownership.



It was to allow state housing tenants to buy their homes and enable first home buyers to build houses on sections provided for free for up to 10 years.



And it did just that. Unfortunately few people took up the offer.



To date 78 families have bought their own state house and just 32 plan to build houses on land provided under the Gateway programme.



It is now being scrapped, but Housing Minister Phil Heatley stands by letting tenants buy their own homes, saying it is funding 78 new state houses.



The Government now recognises it has to focus on programmes that help more people, he says.



Another of National’s election pledges was to retain existing tax rules and deductions for rental property owners.



That hasn’t happened; the Government has stopped property investors claiming depreciation on their buildings.



Mr Heatley admits many in the housing sector believe that increased rent prices.”



link: http://www.stuff.co.nz/national/politics/policies/5913416/Review-Housing-under-National> 

Happy Renter is lucky that stupidity isn't crime and ignorance isn't a disease because he (or more likely "she") doesn't have a clue.

The rents that the State House tenants pay is Government subsidised based on their income. The lower the income the lower the rent  ( or the greater the subsidy). Open market rents are the only true way to calculate what a rent should be as between a willing buyer and willing seller  (i.e. landlord and tenant).

Happy Renter  is typical of her ilk. Everything should be paid by the Government and everyone should be able to get Government money so long as somebody else pays for it.

It is also a fantasy to assert that if a house does not sell it becomes a renter. 99% of the time the seller either stays put or sells for a more realistic price. And in the unlikely event that it should become a renter it will be back on the market within months.

Very few people can walk away from their home and equity for very long. 

Then she blunders into quoting Jessie Livermore as some sort of Guru. For her information Livermore was so clever at playing the market that he was bankrupted on 4th March 1934 and some eight months later while in bar getting drunk he wrote "my life has been a failure" over and over again. Then walking into the mens room, drew out a pistol, held it to his forehead and pulled the trigger dying instantly aged 63 on Thursday 28 November.

If this is an example of what Happy Renter uses to bolster her far left wing views then she had better go back to history school and write out  100 times " Other people should not be made to pay for my life style".  

Better still she should write out 100 times "I am a renter and will never amount to anything"

If the National govt under John Key had any merit other than being just a bit better than Labour....which they don't.....they would end the market distortions caused by the accommodation supplements which in reality are no more than subsidies to landlords and serve only to distort the rental market. The rents are driven higher and higher by landlords who direct their tenants to the govt dept to get the subsidy...(oops sorry supplement).

By causing this distortion, the govt subsidy encourages the accumulation of rental empires...and this in turn drives out the first home buyers, forcing them to rent...thus boosting the amount of the annual subsidy which in turn is stolen from taxpayers....so it lowers the disposable income of the first home owner and low income family...again throwing them into the rental market.

The govt and other fools would argue that rents would not fall if the subsidy went...that the number without a roof would go up....utter rubbish.....the demand would dive lower and the rents would chase after the tenants....all it takes is a govt with the guts to do it.....this will not be National...their form of socialism has landlord subsidy written all over it.

The rental empires are encouraged by the banks....the banks play a role in training the landlords to take advantage of the stupidity of govt....so in the end the banks dictate to govt that the subsidy is critical in the effort to protect the property bubble that was built on imagined credit and serves to feed the bank the fat profits.

This is the game going on. The banks determine what the property market will be by dictating govt policy and determining RBNZ bank regulations and monetary policy....with one aim in mind...fatter bank profits. All this is possible because we have a gutless RBNZ and govt.

This is not a nation...it is a bank owned farm.

Best comment Wolly - soo far - today !

FYI from a reader via email:

Many thanks.

Good questions that I'm not really qualified to answer.

Best bet for that type of local detail is a real estate agent, although they are obviously going to encourage you to buy something.

My general thought (which is not intended as financial advice for you) is that brick and tile and weatherboard bungalows are seen as more valuable than anything that might be leaky (ie monolithic cladding or plasterboard).

Here's some recent figures on what prices have done in the various parts of Auckland, although it's not as specfic as the suburbs you mention.

http://www.barfoot.co.nz/Info/Market-Info/Analysis/October-2011-Market-Analysis.aspx



It shows central suburb and eastern suburb prices are up 13% and 16% respectively in October from a year ago.

My view is these are the richest suburbs in New Zealand and have just received big tax cuts. Some of that money is being ploughed into property values (bulked up with borrowing).

Also, there's a lack of new supply going into the market and the leaky building disaster has also wiped out a bunch of supply.

Future house prices depend on these issues of taxes, house supply and the wider economy.

I'm concerned about slow growth in the future and a potential rise in unemployment, but it's just my view. Lots of others are much more positive.



All your call.

cheers

Bernard

I don't know about other aus cities but here in Adelaide there's probably half the media obsession with house prices that there is in nz.
I still love nz but in many ways its a pretty one dimensional little island

And Look where that obsession got the uk.... into a big hole

I think it's more that the traditional manufacturing base of the country has been destroyed - but anyway....

You are totally depended on the "greater fool" theory of real estate investing, propped up by myth, that soon will be crashing down.  I suggest getting out while you can, because you might be buying you new home a lot cheaper than you think. 

http://www.greaterfool.ca/

My suggestion- sell your house, while there are still enough suckers (excuse me "wannabe homeowners") around, and rent the house you want in One Tree Hill for the next few years, for the same money you are paying now for your 2 bedroom, and save up for the downpayment on said "dream house" AFTER the crash, because there will be plenty of desperate sellers/banks in the market at that time, looking for people to take over their now-hated "investments."   This includes One-tree hill.  No place will be immune from the tide when it shifts and leaves the bay. 

Have your wages gone up, lately?  Think they will any time soon?  That's my point, and therein should be your answer.  Either pay goes up or costs go down.  I'm in the camp of the latter, obviously.  The only way costs go down is the cost of money goes down- which means lower interest rates or LOWER HOUSE PRICES.  

I believe Kate's reply is a bit misinformed.  A piece of land with a house on it, that needs to be demolished, is worth LESS than a piece of land with nothing on it.  Few people want that headache.  Much less a bank offering a loan to do it all.  Good luck.  

Or you can keep listening to the "expert" economists, like Barfoots, and place your whole financial future on these clowns, all spruikers. 

If you are looking to Bernard for financial advice for what is arguably your largest "investment," then how can you not look yourself in the mirror and say you are not concerned about the state of the real estate market, or its future?  If you believe you will "miss out" on lower prices, then you really do deserve to have all of your hard-earned money taken from you by the market.  Sorry, but how naive can you get?

Do you really think someone will pay you (read- a bank lending someone who qualifies, because NOBODY has $400K lying around in their bank account) $400K for your house if, say, Europe explodes?  or Israel starts a war with Iran?  Maybe... if you are lucky to sell to asylum seekers, but as "regular buyers" they will probably DISAPPEAR very quickly if any of those scenarios play-out. 

If anything, I urge caution.  Renting isn't that bad.  There are many benefits.  "Experts" are usually wrong.  Few have been right- twice.  Most get lucky once, and build a carreer around saying "see! I was right (once)." 

I suggest taking a DAY to study the OZ property market and the Chinese property market before deciding just how high price in One Tree Hill can get in the next 3 years. 

Here's a start- how long do you think the religion of property will last, before the market shifts 180 degrees?  Wouldn't be the first time it's happened.   http://www.abc.net.au/news/2011-10-25/housing-stress/3599936/?site=melb…

If your house is worth today the same as it is 3 years from now, i would say "congratulations."  Please think for a second- it's a roof over your head- nothing more, nothing less.  It's 4 walls and a roof!  All owned by the bank! 

Happy Renter,

Perhaps you should consider that Bernard and his team are running a financial and economic advice website/blog and would like reasoned comments based on the real world in which we live -  not the existential, survivalist, zero debt/credit virtual 'world' that compels your rantings.

Interest.co.nz, I'm sure,  would like a mix of financial advice from a range of commentators - unfortunately it seems to have attracted a host of doom and gloom merchants that offer nothing to a visitor to this site seeking financial tips for investment, savings or wise living.  You have to live in the reality of the current system - as flawed as it may be.

The house owner / seeker was seeking realistic advice:  such as Stay in your current home, pay down as much debt on it, and maybe add a 3rd bedroom with another 40k - rather than the transactional cost of 16k agents fees, 1500 Solicitors, 1000 moving costs and any break fees.    Also: To live in your own home allows a debt-free home in retirement - achievable for most.

Renting and Self-sufficiency, as attractive as it sounds, is not a pathway to prosperity. Unless you've already made your fortune then you can experiment with your alternative lifestyle/s.

Please define "real world."  I'll be waiting. 

"You have to live in the reality of the current system - as flawed as it may be."

I couldn't agree more! :)

6 months ago I had a chat to an ASB chap about the economy; property etc. and posted here that he was really excited about the 're-incentivisation' (i.e.  change to bonus schemes etc)' that the property lending division was promoting, and that the market and interest rates were about to 'head up!"..... Whoa! What a difference 6 months makes.... Over lunch yesterday, the same chap was listless, downbeat and has recognised that the bounce in lending that he foretold has failed to materialise. Distressed loans are now concentrated upon and he actually sees interest rates headed down... along with the property market. Finally, reality appears to be dawning on even the most 'optimistic' of professionals. As an aside, he also mentioned that Kiwibank's less seasoned mortgage portfolio might be something to keep an eye on.....

I find it quite bizarre that the Auckland Herald keeps printing these articles about people complaining that their new Ratings Valuation has gone down and that it's affecting their property values. In the old days people only complained when the valuation went up, because it meant that they would have to pay higher rates.

STEVEN said:

So standby for 50%+ loses on property.......my favourute pic will be SK and Bigdaddy in their shared under the bridge cardboard insulated "condo" shots.......

It's tough being the villan. Sorry to burst your bubble of bitterness - but it would take a much higher rate of losses that 50% to put me under the bridge.