Home values in Auckland have increased 17% in the last 12 months, Wellington values up 1.5% says QV

The average home within the former Auckland City Council boundaries is now worth more than $1 million, according to the latest figures from Quotable Value.

According to QV the average residential property's value within the former Auckland City's boundary was $1,003,144 based on sales over the three months to the end of June. That was up 5.1% compared to the three months to March and up 18.3% compared with 12 months earlier.

The average property's value on the North Shore was just under the million dollar mark at $988,000 (up 15.9% for the year), although coastal properties on the Shore had an average value of $1,128,224 (up 15.1% for the year), making them the most valuable in the country.

The cheapest place to buy a home in the Auckland region is Papakura where the average home's value is $511,075, up 18.5% for the year, followed by Franklin where it was $518,827, up 10.6% for the year.

Across the entire Auckland region the average value of all residential properties was $840,165, up 17% compared to a year ago.

Nationally the average home's value was $520,585 over the three months to June, up 9.3% compared to a year earlier.

However housing values rose far more modestly in other main centres.

In the Wellington region, the average value was $459,366, up just 1.5% compared to a year earlier, while in Christchurch average home values increased by 3.2% for the year to $474,269.

There was also strong growth in Tauranga, where the average value was $485,561, up 7.3% for the year and in Hamilton where it was $381,793, up 4.4% for the year although prices in the city's north east were up 5.3% and in the north west they were up 5%.

Aucklanders create 'degree of panic' in BOP

QV national spokesperson Andrea Rush said large number of Aucklanders were flocking to buy homes in Tauranga, Hamilton and the western Bay of Plenty, pushing up property values in those places.

"There are reports that of those present at open homes in Tauranga, as many as 60% are regularly from Auckland, while around 15% of all buyers in the Hamilton market are now from Auckland," she said.

"Home values in Tauranga City have accelerated by 4.1% over the past three months and 7.3% year on year and for the first time they have ticked over levels seen in the previous peak and are now 0.8% higher than they were in 2007. Values in the Western Bay of Plenty have also risen by 3.9% over the past three months, 4.8% year on year but they remain 3.3% below the previous peak of 2007," Rush added.

QV Tauranga registered valuer David Hume said homes in Tauranga and Papamoa are selling more quickly than they have done for several years and value levels are now considered to be at or above the 2007 peak. The high numbers of Aucklanders turning up at open homes has "created a degree of panic for local buyers not wanting to get priced out of the market."

"The $300,000 to $500,000 range is seeing the biggest demand, also fuelled by historically low interest rates," said Hume. “A much higher proportion of properties are being sold at auction as real estate agents are struggling to correctly price properties. There has also been a sharp increase in sales in the $1 million plus range, as lower value benchmarks increase. Real estate agents reporting a 100% increase in sales in this price bracket in comparison to 2014.”

“In the Western Bay of Plenty, the market is strengthening, sales volumes are up across the board and buyers are coming from far and wide," said Hume.

See the chart below for QV's average property values in all parts of the country.

Territorial authority Average current value 12 month change% 3 month change %
Auckland Region  840,165 17.0% 5.5%
Wellington Region 459,366 1.5% 0.5%
Main Urban Areas  619,250 11.5% 4.4%
Total NZ        520,585 9.3% 3.6%
       
Far North 307,368 3.7% 1.5%
Whangarei 348,590 4.6% 0.4%
Kaipara 350,907 4.2% 1.5%
Auckland - Rodney 730,774 8.4% 3.3%
Rodney - Hibiscus Coast 722,321 8.3% 2.8%
Rodney - North 740,723 8.5% 3.9%
Auckland - North Shore 988,124 15.9% 5.6%
North Shore - Coastal 1,128,224 15.1% 5.2%
North Shore - Onewa 803,207 18.8% 6.5%
North Shore - North Harbour 946,419 14.0% 5.5%
Auckland - Waitakere 670,454 19.4% 7.1%
Auckland - City 1,003,144 18.3% 5.1%
Auckland City - Central 862,943 15.4% 4.4%
Auckland_City - East 1,254,506 17.4% 4.9%
Auckland City - South 915,976 21.4% 6.1%
Auckland City - Islands 825,724 12.7% -0.6%
Auckland - Manukau 699,425 17.1% 5.7%
Manukau - East 917,703 14.7% 5.4%
Manukau - Central 534,266 17.6% 7.0%
Manukau - North West 585,259 20.2% 5.4%
Auckland - Papakura 511,075 18.5% 6.3%
Auckland - Franklin 518,827 10.6% 4.8%
Thames Coromandel 522,424 3.0% 0.3%
Hauraki 259,033 9.1% 3.1%
Waikato 305,103 6.2% 4.1%
Matamata Piako 284,629 3.5% 0.1%
Hamilton 381,793 4.4% 2.2%
Hamilton - North East 484,686 5.3% 2.9%
Hamilton - Central & North West 357,632 5.0% 3.1%
Hamilton - South East 347,755 3.9% 0.6%
Hamilton - South West 335,524 3.7% 2.6%
Waipa 359,264 5.5% 1.7%
Otorohanga 206,953 5.4% 2.9%
South Waikato 128,306 2.3% 2.8%
Waitomo N/A N/A N/A
Taupo 345,003 0.7% 0.4%
Western BOP 435,732 4.8% 3.9%
Tauranga 485,561 7.3% 4.1%
Rotorua 272,508 1.5% 1.4%
Whakatane 304,273 2.2% 3.0%
Kawerau 107,763 3.5% 3.0%
Opotiki 199,049 -3.4% -1.1%
Gisborne 227,197 -0.8% -0.9%
Wairoa 151,762 -3.8% 2.8%
Hastings 309,570 3.1% 2.5%
Napier 330,156 1.6% 0.4%
Central Hawkes Bay 217,232 3.3% 1.8%
New Plymouth 359,696 2.5% 0.7%
Stratford 200,786 0.2% 4.6%
South Taranaki 186,156 1.7% 1.0%
Ruapehu 130,895 -5.4% 1.2%
Wanganui 183,866 2.1% 1.8%
Rangitikei 142,338 -3.7% 0.5%
Manawatu 241,579 0.7% -1.5%
Palmerston North 291,459 2.2% 0.7%
Tararua 153,906 0.8% 2.5%
Horowhenua 206,465 0.3% 0.9%
Kapiti Coast 383,255 2.2% 1.3%
Porirua 383,240 1.3% 1.1%
Upper Hutt 337,345 0.4% 0.1%
Hutt 377,698 1.3% 0.8%
Wellington 546,577 2.0% 0.4%
Wellington - Central & South 553,747 0.8% 0.2%
Wellington - East 591,617 3.9% 0.0%
Wellington - North 479,607 1.5% -0.1%
Wellington - West 629,262 3.6% 2.1%
Masterton 243,092 2.9% 1.4%
Carterton 263,341 1.9% -3.9%
South Wairarapa 304,239 1.4% 0.6%
Tasman 415,394 1.2% -1.0%
Nelson 413,239 3.2% 0.7%
Marlborough 352,449 1.3% -0.3%
Kaikoura 372,890 1.8% 5.5%
Buller N/A N/A N/A
Grey 211,916 -2.1% -3.1%
Westland 231,952 -0.1% 1.4%
Hurunui 346,065 1.6% 2.2%
Waimakariri 417,649 3.1% 0.6%
Christchurch 474,269 3.2% 0.5%
Christchurch - East 357,719 3.9% 1.3%
Christchurch - Hills 642,357 0.7% 0.9%
Christchurch - Central & North 555,394 3.5% 0.6%
Christchurch - Southwest 452,374 2.8% -0.5%
Christchurch - Banks Peninsula 488,100 5.5% 2.2%
Selwyn 518,329 2.7% -0.1%
Ashburton 325,146 0.5% 0.0%
Timaru 301,508 7.7% 1.0%
MacKenzie 310,324 8.6% -2.1%
Waimate 203,954 5.9% -2.9%
Waitaki 229,553 4.2% 2.0%
Central Otago 328,285 4.8% 2.7%
Queenstown Lakes 719,562 8.3% 0.5%
Dunedin 296,048 2.6% 1.6%
Dunedin - Central & North 305,077 2.7% 0.6%
Dunedin - Peninsular & Coastal 278,122 6.7% 4.1%
Dunedin - South 284,685 1.4% 3.4%
Dunedin - Taieri 305,221 2.5% 0.5%
Clutha 167,959 0.6% 0.2%
Southland 212,794 3.1% 4.7%
Gore 178,920 0.7% -2.3%
Invercargill 208,191 -1.6% -0.2%

 

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110 Comments

A friend tells me that the house in Pakuranga that he sold in February for just over $1m has been sold again in June for an additional $200k.
Where are the IRD?
If the buyers and then sellers are even registered as taxpayers is the question also.

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10

Have your friend ring the IRD tip line with the property details.
They'll probably check if tax is due.

the seller may not be even in NZ, hence why the IRD wants to register ppl?

What makes you think the IRD haven't already taxed the transaction?

Any income on a sale in June 2015 would fall into the 2016 tax year. If the taxpayer uses an accountant to prepare their tax return, it wouldn't be due until 31 March 2017.

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"There are reports that of those present at open homes in Tauranga, as many as 60% are regularly from Auckland, while around 15% of all buyers in the Hamilton market are now from Auckland," she said.

Amazing how there seem to be stats on city of origin but it's too difficult to track country of residence.

Funny that

Funny haha!

The Jafas are reaching down as far as Dunedin, is what my son who is living there and looking to buy a house there says..all being snapped up.

Lock up your Real Estate Agents. The Aucklanders are coming to town!

The bubble will pop any moment now in the last 5 years...

All's good in landlord land.

How good is it in Auckland first-timer landlord land?

Same as always I reckon, Machiavelli. If a 'first-timer' landlord is a long-term investor in the market, with long-term finance arranged, they will do very well.

Yes you need new entrants to keep the Ponzi game going. When the music stops hope you find a chair.

Yes they will. But they need to be mentally prepared for the ups and downs of the property cycle. Or maybe it's different this time.

Certainly, lots of ups and downs. I do think too, that, when this current boom peters out, there will be a prolonged period of time when house values will level out.

Wrt Auckland's situation, this is a market/tale worth thinking about - great graphs too;

http://www.newgeography.com/content/002517-how-phoenix-housing-boomed-an...

A girlfriend of mine was foreclosed on - she had >30% equity in her house but lost her job (a new one as a valuer she had just taken on there) and lasted 18 or so months before the bank intervened.

All's good in the Double Grammar Land also...I should sell my property for over $4mil and FLOCK to Tauranga haha!

You chose that for your handle?

A unit in my street sold for $480k a year ago and $600k last week. At this rate it'll be worth a million dollars in a few years.

I'm not buying in Auckland any more. I don't mind a bit of negative gearing for a few years until cashflow turns positive but positive cashflow on most properties sold nowadays will take decades to achieve.

Despite my past bullishness and confidence I am now resigned to the fact there will have to be tears. Dare I say it, but bring on the correction.

If there is a correction then you certainly will cry. So will everyone else. I said many months ago that the Auckland property market was too big to fail. Everyone is exposed to it now wether you like it or not.

Some will cry but many will not, just like I won't be. Prices would have to drop 50% to see me under water. I've got my rental streams locked in for the rest of my life - 30 years until retirement age. That was my goal.

Now, off to Hamilton!

Good, good. See you in Hamilton...I'll try to leave you some houses to buy.

So you are not a Boomer then

I straddle Gen x and Gen y I guess. My boomer parents didn't get into property investment sadly but it was a no-brainer from my point of view. The boomers who did, have had a blessed run.

Excellent point there Onwards.

The doom, gloom and despondency crowd on interest.co.nz like to pontificate and lecture those who have bought a house. But, despite their superiority complexes, they will be as much involved in the state of the economy as the property owners should their warnings of a collapse eventuate.

But there is a key difference of course. Long-term property investors will always be providing one of life's essentials. So they will survive. The anti-property brigade could be invested in who-knows-what. Their investments might vanish completely.

Indeed, the anti-property brigade on interest.co.nz should be hoping there is no collapse in the market. 'Cause it's them who will suffer most.

Looks like us PIs have got them by the ...?

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15

..you two need to go offline and find a room..

Why would a property crash affect cashed up people with holding investments in strong growth diversified companies? Whose ..lls. are you holding might pay to check.

I guess I would be classified as a gloomster. Yes, there is much glee in middle NZ since it was discovered that rental property is the path to wealth, more than most could ever had expected. And with the inertia of the critical mass who have "seen the light", prices are in a slipstream. Nevertheless, pumping a country's resources into rental houses seems careless and foolhardy to me.

"bought A house" yes A house not dozens of them

Machiavelli. I have always thought your posts are careful and considered. Unlike some of the other boastful landlords here in interest.co
If you are saying 'enough' -- then that is a view worth thinking about.

"Boastful landlords" KH !

Heck, of whom are you thinking? I didn't think there were any boastful landlords about. Certainly by my observation they are all far too busy working hard and looking after people who lease their houses to be boasting.

After that vacuous reply YL. I was clearly thinking of you. But there are others.

Disappointing that you only thought about me after my question to you :( It's my job is to stir up the doom, gloom and despondency brigade on interest.co.nz and generate posts on the site.

I knew it! Then you take the money and buy more rental properties... Smart. very smart! You have the perfect scheme... I can't fault it in any way, shape, manner or form... You have formed the perfect financial circle.... Boo yoo casha! I tip my hat to you sir and marvel...

Too kind KH. I am not a gambler or a big risk taker. I think people getting into property need to think about at which point a property purchase goes from being an investment decision to a straight out gamble.

I believe there are very valid reasons as to why Auckland's property prices have been climbing over the past few years but those reasons are now priced in (I think??!!). So what is the basis of continued price rises?

At the moment it is looking like sky city casino out there (or what I imagine it looks like inside). It's hard to see the event that will slow it down. But History suggests it always is, until it hits you in the face.

However standard yields of 4 - 8% on that $480k property, approx 19k- 38k will take several years to achieve the 84k (after 30% tax) from the sale. Why would a landlord hold at such rates, especially with zero risk (cash now).

I guess we will get the called for interest rates cuts whether we can survive them or not since Treasury put a downer on certain aspects of the RBNZ's macro-prudential policy implementation and the finance minister all but demanded Wheeler lower rates to match induced low CPI inflation.

Thoughts from a pissed off 37 year old. Last night went to an auction for a little 1.5 bedroom unit in St Heliers. CV was 415. Max realistic rent is probably 500pw. Previous owner purchased it for 490 in 2011. It went for 755. OMG I just couldn't justify it. There was a kiwi girl crying with her mother consoling her. I was pretty chilled out, and wasn't prepared to pay more than 710 even though the bank will give me more. I don't really want another house in Tauranga but I might just go get one anyway. At least the yields are better. I'll wait for the inevitable correction in Auckland. I guess the last time the crisis hit it was Auckland and costal property that got hammered the most. Provincial areas did okay but they’ve flat lined ever since. At least with the provinces you haven’t lost purchasing power in the last few years.

I wonder if anyone realises how much damage this is doing to the NZ economy. I'm a landlord and a tenant. As long as I don't live in my own house I'm not buying all the things that a house proud home owner would buy. I'm basically a non-participant in the economy. I spend all my days thinking hard about how to maximise my tax deductions. I live like a pauper buying second hand stuff all time because I know that at any time I might up and leave Auckland. There’s nothing tying me down here and there seems to be no opportunities here anymore.

Hi fat pat. Would you not be better off spending all your days "thinking hard about how to maximise" your profits? Often it seems to me people put tax minimising ahead of profit maximising. They would be better off if their thinking were the other way around?

are you saying that I should just focus on capital gain in Auckland? You're advocating that I throw caution t the wind and speculate with a highly leveraged gamble. You realise that the prices of real estate in Auckland are totally divorced from rental yields, or from the incomes of the top 10% I think doctors, lawyers and engineers would struggle to buy that 2 bedroom unit I was looking at.

You know at least with Tauranga its based on fundamental rental yields for the time being. The new CV's will be coming out soon. Come October the LVR will be relaxed and locals will be able to pay more for property. I am focused on profit.

No fat pat, I am not saying you should focus on capital gain in Auckland. In fact not anywhere.

I am happy to increase my profits - my taxable profits. So what if I pay more tax?

I believe I will better off if my business thinking is more on how to increase my profit, not on how to best minimise my tax.

I can tell you are pissed off! By the way, I reckon you are right about Tauranga at the moment and better yields make it easier to have a better cash-flow there.

"Your Landlord" You really are a bit of a philanthropist.

Eh? Not at all... I hope. Sounds like that's being pompous anyway.

Seriously, fat pat, I am obviously wealthier if I earn sufficient money such that I have to pay $10 million in tax each year, than if I only have to pay $10 thousand in tax each year. So I try and think about how to maximize my profits more than trying to think about minimizing my tax.

Nothing 'philanthropist' about that.

I can only guess that lots of people dislike government and paying tax sufficiently such that they are motivated to spend more time thinking about how to minimize tax payments, rather than spend time thinking about better ways to maximize profit.

Sure, I don't like lots of things about governments, but I know which thinking I prefer.

I was joking YL. Seriously I follow the IRD rules to the letter but I invest in property for only 2 reasons.

1. I want to get my past, present, and future wealth away from the corrupt and collapsing fiat banking system.

2. I would prefer to pay less tax than other people.

There I said it - at least I'm honest about it.

Trouble is, you need a whole of lot of people who are unable to do the same to succeed, and you need them to stay that way.

Yes I agree. It's a terrible system. I guess everyone has to do whatever they can to maximize their wealth, even if it (ie renting a house to someone) contradicts their political and moral view point.

I don't think about how to minimise tax as it sets the mind focusing the wrong way. I do try to be careful not to overpay, as they is no benefit to doing so and the IRD and government don't see anyone gets rewarded or that the money is put to good use. The tax rate is already too high but focusing on minimisation is just asking for trouble as many of the justice system are not financial literate and are immediately suspicious of anyone that the government or law accuse of evasion or avoidance.

sheesh. Why do I feel like the kid who pulled out a 'double happy' in the classroom while the teacher was looking. Yes you're right "pay tax is good". Tax minimisation, negative gearing PAYE, trusts etc is bad. I wont state the obvious in future.

perhaps it's to do with self-perception? Or was that sarcasm ;)

Got to remember, while talking to each other on forum we're also talking to the floor. That includes a lot of people looking for ideas, others who are trying to evaluate stuff they're already heard in other places, it also includes IRD and government who have duty of diligence to keep an eye on places like these discussion areas.
So we can either police the place (we're not), let the nanny state police us (no), or we can be open and clear about what we talk about. The downside is what your just found, if you talk about a valid point, you'll be followed up by others "keeping the record straight".

And yes, "pay tax is good" - if it's the right tax (on available excess) and if it's not overdone.
That's why tax evasion is so bad, it just results in government wasting more money chasing it, putting everyones' taxes up further and giving good excuses for them to use punitive action, cloak-and-dagger privacy invasion, and taxpayer harrassment. Which I assume you already know but silent readers may not.

for me, running one set of books is irritating enough, without running extras :|
I have better things to do with my own time than posting accounts.

I do use Trusts but it can be tricky - especially as mentioned somewhere that the judges overseas such cases tend to have poor financial or accounting literacy and are completely unanswerable to reason.

Tax minimisation is an option. But going through your property and classifing everything that isn't part of the permanent structure (light roses, light switch, hotpoints, doors, toilet pan, carpet, lino, deck fixtures) can be used to get a depreciation discount on your taxes, but really how much are you saving - In a legal world where the judge thinks it's your responsibility to have fire alarms to protect someone elses family (rather than them protect their own family against their own environment and activities). Is the saving (on a hourly basis) really worth the effort. Most of can just be pooled and written off in one go and would get written in the books as depreciation or repairs upon replacement anyway.

Would like to hear how you figure the negative gearing is effective though. I have found that apart from a few strategic purposes (eg to "jump" on to the property ladder, or near existing properties) it very rarely works out to be favourable. I'm currently considering a 3bd in a strategic spot on 100% finance, wouldn't work out to be negative gearing on gross, but the insurance might be. So I'm curious about your case for negative gearing. Place I'm looking at is 205k, $300/wk expected, rates $55/week, no local collective.

Hi Cowboy, yes all valid points, and no I've never gone overboard with chattel depreciation. I don't use negative gearing either, no point with a trust. However I know some of the younger guys at work, the few that actually own property, are heavily negatively geared and claiming losses against their PAYE tax. It seems crazy to me that the tax system punishes home owners by not affording them the same deductions that property investors have access to. Actually it seems crazy to me that any such deductions should be allowed at all.

I guess once your property portfolio starts generating taxable income you think to yourself, "hang on, this is supposed to be cost neutral. I must not have enough leverage?". Then you go out and buy another house right? That way you're targeting equity and not income. Given the Piketty effect it's the capital that people are targeting. That's the way I think. It's probably the way "your landlord" thinks if he's being honest. An extreme distortion is the fact that well heeled investors are now leaving their million dollar crappy houses in Auckland empty and solely targeting capital gain. Actually when you look at the huge number of rentals available in St Heliers then perhaps that's the only thing keeping rent's from going sideways in those areas.

I mentioned on this website a while ago the woman in my tearoom, who incidentally is just a technician, and who's always complaining about being poor. She was boasting that she's making 3/4 of a million dollars in capital gain - per year!!. See what I mean - she targets capital not income. She's a classic baby boomer. Good on her I guess, but I can't help feeling bitter and twisted about how easy the boomers had it.

It could depend where her investment comes from. Many boomers are doing incredibly well off inherited property. It often came without debt and what was one the cheap outskirts of town in Grandma's day is now central city. I'm surprised that we don't see more brownfield developers offering sharepackets instead of cash for some of those better locations.

You're right about the taxable income. A similar effect comes through when one gets return on the foreign exchange. And that's why I laugh at people who say capitalists have money.
So you got a taxable return (after 3 - 10 years).... now what are you supposed to do with it?

Chances are if you're the type of person who invests, consuming it gets seems soooo wrong.
And anyway to have room to invest chances are you've already set your lifestyle up based on sacrifices.
And ! It's not like it's a fortune either. Especially as you say the capital gain especially in Auckland of 40 - 150k in a year...compared to what? $30/week? now you're finally swinging positive. Heck Vegas here I come..$30...maybe Skycasino... or perhaps the pub.

Obviously the thing to do is use it to deleverage faster..... but if I'm already at the optimum use-of-money curve whats the point in that? (actually that's the best thing to do if there's nothing else IMO)

But if you think about it - why would you buy another house?
Generally it's because it was a successful vehicle to use already, so why not go with a proven plan? Better the shark infested waters you know.
If the income was truly excess, then one could take risk, shares etc. Could start up a own business. but. That all involves entirely new skillsets, diversification good, deviation from core business bad.
And if you don't actually need the cashflow..... (eg not hiring staff) why not go for the more passive income? Especially if you know your market. (and commercial, industry, and residential are very different horses to ride, just in case others don't know that).
And if you listen to the Rich Dad guy Richard K, you've got one passive income stream, so the next step is to add extra tranches. If you've got some positive cashflow, how many can you afford to have?
and it does spread your risk if you're not over exposed. After all, you did get those first properties for a particular reason didn't you?

With regards to my FX stuff, when I make a profit I have to ask myself what am I supposed to do with it. It's all funds I've written off (like a gambler coming too the table) so it's not like I need the nut to take home. So I invest it? since it's unexpected income... where's the best place to reinvest... very much a touch of the double or nothing, so it does need a risk umbrella (tap/skim). However FX is all about leverage so no deleverage value there.

Re: home owner.
If you are operating your business at arms length it should quickly become obvious why they don't get deductions.
you don't get deductions for your families clothing, your families food, the petrol you use driving around for your purposes, and _no-one_ gets a write off for there own housing needs. they are all personal consumables. That's why we act to reduce that nut, the less home costs, the more there is to make sure the kids are healthy and have a future, and the more that is available for growth investments. Something that sadly not all members of the family consider themselves responsible for, or even of importance...but as the breadwinner it falls on you with no escape.

Whereas a rental is a business activity, for income thus is entitled to all the same deductions as a sole proprietorship/partnership/company. The Trust arrangement should also help in keeping things at arms length, and is a good start point to make sure your trust is properly "fenced" from your personal assets/behaviour.

When the family lives in the Trust property it does get difficult and while historically recognised, it wouldn't surprise me to see "primary" vs "secondary" tiers of housing use getting defined in the near future.

That's why some people who are truly committed the future financial performance cross rent properties to each other, living in each others houses. paying rent, but allowing each party to claim expenses. The family rent is not deductible but can be set market low as each party wears the excess expenses that they can claim on. But is that any different from setting up a "Chinese loans" or other company collective - all which have legitimate deductions for those willing to undertake the hassle and risk?

That is barely 11.5% rise in value per year based on 490,000 in 2011. I was under the impression that average value increase in Auckland has been far higher than that.

I don't think the Chinese are really interested in cross leased units with no land. With regard to those units, I've noticed that it's mainly Kiwis who are desperately trying to grasp the last rung of that rising ladder.

The cross lease is a bit of a legal mine field for any development or holding

I'd quit Auckland Pat. Don't spend your best years living like a pauper, participating in the ponzi and thinking up ways to avoid tax. Sell up and enjoy life in the provinces!

I think I found the mentioned unit in St Heliers. Nicely done-out but $755 is beyond ridiculous!

Yep that's the one on Speight Road. It had a few weird peculiarities but it was nice. Move to Tauranga? Yes its a dream for me and I would if I could. Unfortunately I have a very niche job. Perhaps one day.

755 might seem ridiculous but if it sells for 10% more next year that's 75k gross. Jutst one property. well above median gross wage even in Auckland...

That's the upside but what's the downside risk on a property like that? Given that the you can only rent it for 500pw. My guess is that in a downturn you could lose 200K easy. It's risky business

"if"

and you don't think there will be a correction in Tauranga as well?

From what I have seen, the biggest corrections (the ones that last longer and drop further in percentage in the long term) are ALWAYS in places where the only reason people buy is because they are being kicked out from their local areas.

So I think we'll see big drops in Pukekohe, many areas in Hamilton and many areas in Tauranga.

I'm not a speculator (a.k.a property investors), but if I was I would buy in desirable areas and areas where there are quality JOBS nearby because when the correction happens unemployment will hit and the areas where jobs are lost will be completely undesirable to live.

It is true what you say that coastal areas got hammered the most, but the nearby sea was not the factor driving down the prices. In my opinion the factor was JOBS.

A correction is simply a financial/speculative market going down again to meet the real productive economy. And productive economy is where production is..

By the way, I don't see many loaded Chinese bidding in Tauranga (I live in Tauranga). In fact I mostly see mum and dad investors mainly from Auckland.

The worse is that those "investors" tend to compare Auckland prices with everything, hence as used to a huge bubble as they are, a little bubble like the one we have in Tauranga (with prices 6.8 times the household income) might even seem appealing!

http://www.nzherald.co.nz/bay-of-plenty-times/news/article.cfm?c_id=1503...

Bubbles everywhere and global economy uncertainty and going towards deflation despite QE and low interests.. My opinion in such scenario: CASH IS KING

Tauranga buildings don't command the same potential expansion. Check the video of that Chinese building going up in 19 days. You'd be lucky if a New Zealand Council even got to the plans/RMA in that time in New Zealand. Auckland is begging for a make-over and as growth into a modern city by international standards (I've got some friends in those infamous "in-fill" buildings...)
In Auckland there is future rent potential and capital gain from developing the site as well as a stranglehold on commercial lifeblood of New Zealand. It's no secret that there's a lot of NZ eggs in that basket and that makes it pretty safe with a internationally timid government in charge.

Yes Muntijaqi I agree with what you’re saying about buying property backed up by high quality jobs. That’s traditionally been the investors paradigm. However, as I said before the prices in Auckland are now so high that even the top 10% DINKS like myself are almost locked out. A lot of my colleagues don't own property so wont participate in the future which is a worry.

With regard to Tauranga – perhaps the investment paradigm is changing. You shouldn’t target jobs. Target the baby boomers instead. Buy specifically north facing high end properties (In tauranga that would be Cherrywood rise, Matua peninsula, Bethlehem etc.) with good views. That might be the next best thing. Those assets are backed up by the massive accumulated wealth of the baby boomers who will choose to live there in the next 10 years or so.

I have over half a mil as a deposit and it's still not worth me buying, not even kidding

Go and buy 5 houses in Hamilton and rent in Auckland (if you live here).

Keep your grasping hands out of Hamilton as by and large owner occupiers can still buy there. Confine your excesses to Auckland, we want to get rid of housing investors in NZ not increase them

If I had that sort of money I'd quit Auckland and semi-retire in a nice small town. Oamaru is lovely and cheap!

Not that I was ever in Orcs, and Oamaru is to cold for me, but yeah, get the money together to buy your own home with cash, and a few leveraged rentals for passive income, job dun.

Napier is warmer

"Losing the least amount of money may be the best source of success this year,"
Something could upset the apple cart here, there ...and everywhere!
http://www.afr.com/markets/losing-money-is-inevitable-in-2015-as-global-...

.

Interesting article.Could the QE be counteracted by deflation. Are we going to see a slow crash, slowed by QE?

The idea is QE counteracts dis-inflation and eventually deflation. "slowed be QE", Yes In 2009 QE was done and its held the economy at broadly flat going nowhere, without it we'd have been in the doo doo.

I've heard it said that QE actually causes deflation. Diluting the money supply with new loans pushes asset prices up. All the money in the economy gets sucked into asset speculation as people try to protect their wealth. The velocity of money goes down. People lose their jobs and the economy contracts. Commodities and petrol gets cheaper while wealth preserving assets like real estate hyperinflate. Its like stagflation on steriods

Well I have heard it said John Key is a commie, for me both ideas are fanciful to say the least.

Meanwhile in the world of established economics, no, QE is a tool to try and prevent deflation, it is used because the "velocity of money" has indeed slowed. Kind of interesting that such actions get turned on their heads ie where the cure is blamed as the cause, when in reality this mess is caused by un-restrained greed.

Conventional economics has nothing to do with the real world. You've seen Steve Keens work, you've probably read his book debunking economics. That guy should be given the Nobel Prize in economics. The only way to accurately model an economy is with dynamic simulations. You keep posting stuff from that muppet Krugman? why? perhaps you are Paul Krugman. . are you Paul Krugman?

While I agree on Steve Keen, I dont agree that some conventional economics has nothing to do with the real world as actually the Keynesian school's models have held up rather well.

You dont always need to accurately model the real world the model only has to be accurate enough to predict the outcome or direction the economy takes from a policy shift. So say austerity is implemented the Keynesian models say that would cause dis-inflation and maybe deflation. Meanwhile the other schools believed it was the "confidence fairy" that would see a recovery. Well the Keynesian models have proved accurate enough on the outcome while the confidence fairy never appeared.

If you think Krugman is a muppet yet he has got much right then I wonder on your views on say the Aynn ryands, who have got just about every prediction (like hyper-inflation and godl going to $3000+ wrong) must be utter scum?

But that's like saying that you can model the heavens with the earth at the centre - Copernicus not required, just a few little corrections, that's Krugman he's the pre Copernicus corrections man.

I'd say that you absolutely do need an accurate model of the economy. If decisions are predicated on incorrect theory, then at best the results will be unpredictable. At worst the theory, whether it's Keynesian or Austrian, will be appropriated by the kleptocrats and plutocrats to advance their own selfish ends. To some extent I think that's what's happened. Imbalances like inequality have crept in and they've been dismissed as anomalies which couldn't have been foreseen, but that's not true.

What do these policy levers like QE, ZIRP, property tax deductions etc. do long term? are they making us wealthy and egalitarian, or a poor wealth divided miserable people with islands of opulence. I think it's pretty obvious. Personally I do everything I can to increase my wealth, and the wealth of my family, but I'm angry with my circumstances, and I'm sad for New Zealand.

In regard to Keynesian vs Austrian. Perhaps we should have let the banks go under in 2007. Perhaps we need a debt jubilee. Perhaps if some of that had happened we'd now have 20% interest rates I'd be living in the same country as my partner and we'd be able to afford to buy a house and have a family in Auckland. Hard to say. All I can see now is clouds on the horizon. Extremely low interest rates and sky high asset prices with deflation setting in.

No it isnt. In fact you prove my point. They tried to follow dogma on the sun revolves around the earth and could not do it. The second one sat down thought about it and built a simple model on the earth revolving around the sun predictions were easy.

In terms of modeling the economy the model only has to be sophisticated enough to model one or 2 levers are once. So lets drop the OCR, result the economy accelerates and we see inflation, rinse and repeat, this is a very simple model and works except when in the zero bound trap, ie the OCR is at 0%.

"At worst the theory, whether it's Keynesian or Austrian, will be appropriated by" 8><--- Actually politicians to further their dogma and own ends, we agree I think in this essentially ie I see this as very true. However the level of model doesnt matter it will be usurped and twisted and deformed.

The problem with allowing the banks to go (by themselves) under is the banks and the transfers underpin the entire society and economy. If they freeze up then within 3 days we have no banks worldwide and then no one eats. This is why the OBR was brought into existence. Now after that event, they banks should have been nationalised and the CEO's/directors sacked and the share holders suffered losses. This didnt happen because the same banks fund the political parties and keep them solvent, so we the tax payer and our children are getting screwed over.

Debt Jubilee, this is what happened in the past and it worked so I actually agree with Steve Keen on this and in fact I expect it to happen.

20% interest rates, just consider that businesses have to borrow to produce goods so 20% to a depositor means 25% if not 30% retail. It cannot happen (be sustained), the economy would fail and big time.

How myths get peddled - So easy to forget

There were 5 emergency programs

1. Immediate $700 payment to everyone with a Social Security number
2. TARP - Troubled Asset Relief Program - purchases of dead assets
3, QE1
4. QE2
5. QE3

The TARP program shifted the most dangerously exposed assets out of the hands of merchanteers, those asset that would collapse in price or capitulate and set off a chain reaction and deflate the entire economy

While that didn't get the economy going again it prevented a wholesale collapse

QE programs were buying of treasuries and lowering interest rates to inflate house prices. Didn't exactly work out that way because those who were foreclosed were unable to start buying houses again without any equity or to get liar loans again

It's a real rabbit hole that one. There are other explanations that seem perfectly plausible but get ignored.

One that I'm aware of is that it was not the Fed actions that saved the US banking system but the decision by US Congress to allow the banks to mark their loan books to model rather than having to mark to market. This allowed them to acknowledge bad debts slowly over time against profits rather than having to acknowledge them when they occurred. Warren Buffet called this "mark to myth". John Hussman advocates this theory well.

There is another theory that QE is largely contractionary in effect, ie does the exact opposite of what we are told it does. Since the bank holders of US Treasuries go from owning an asset yielding 3% to having cash yielding 0% (ie they exchange a savings account balance at the Federal Reserve Bank yielding interest to a current account balance yielding no interest) then the overall result is less money flows from the government sector to the non government sector. Warren Mosler puts this well.

Basically, many of the official announcements are smoke, mirrors, lies and deception designed to keep us in our place and preserve the status quo. These may or may not be well intentioned and actually in our best interests. The problem is that it causes us to distrust the very institutions upon which a civilised society depends.

This is excellent evidence of what I was saying about the folly of "higher education" being a "tremendous social benefit/social capital" as spouted by the intelligensia.

These policies where proposed and passed by selected _experts_ in their field. With top of the line education and training.

Even without the benefit of hindsight...
1) What is $700 really going to do? Many people will just spend it, and it will give no significant debt relief to the troubled. When spend it will enter the systems of the "trickle up" network. What is the "trickle up"? Well remember trickle down? To get wealthy one doesn't work for themselves and sell labour. Getting wealthy involves "setting a net" or network of small income tranches. Shares, interest, property, patients, a sinecure job such as a directorship or Board honorarium, or high-up management position that receives a portion of others labouring profit. These net's catch little pieces of income without requiring labour sold, and thus not limited by labour and redirect it to the top - a "trickle up" process. Similar is the case of rentiers operating capital machine in factories, merchants taking a margin from pre-processed inventory, or farmers taking a margin on the animals or plants sold, a small amount of margin on each item, trickling up to the owner.
Insert $700 and the bottom...in a few cranks of the money velocity machine and whats left all appears at the top.

2. Perfect example of the Intelligensia at work with the theory-induced blindness. The system is broken, so they use their privileged positions to shore up all the broken decisions in the expectaton the problem will vanish. All it does is turn bad decisions into profitable decisions thus relieving any pressure to fixed the broken system. What outlier data? What bad calls? there's no proof because the magic wand made it all go away
worse: What consequences? There isn't a problem, it was "just an event" from poor planning and won't happen tomorrow because we're still here today.

3. so we'll bury our heads in the sand pile....
4. even deeper....
5. until the problem fixes itself.

That's your "tremendous benefit of higher education" and "leadership" at work folks.
Where's the pressure and the mandates to solve the problem? (instead of media and flag changing games)

Seriously though Steven - I don't think you're Paul Krugman. One of the things highlighted by Keen is the fact that rising indebtedness in an economy, say the debt to GDP ratio, results in a declining "Workers share of wages". This is something which is outside the realm of thinkable thought in conventional economics yet happens in the real life economy. You cant blame the failure of conventional economic theory on some concept of unrestrained greed.

Are you serious? who said I was PK? Oh lets put up a straw man shall we.

Debt to GDP is a different argument. Will history show QE as a failure? quite possibly if mainly because the underlying problems were not fixed in the time bracket offered by QE.

What conventional economic theory has failed btw?

I can certainly blame the present mess as substantially down to greed and I do.

This mess is now totally in the realms of unsustainable craziness, presided over by politicians who are either so corrupt or stupid (or both) that it is hard to believe that even a halfwit would vote for them. In the meantime they have structured matters so that this trajectory will not change for quite a while. I hope that prices double or even quadruple again. That way when the bubble does finally burst, the hurt will be so deep and wide that our rather foolish population never forgets the lesson that they are going to recieve.

Could the foolish people please put their hands up, so we know who to blame.

So you acknowledge there is a problem?

Not at all. The housing market is mutual gains from voluntary exchange. There is no third party deciding prices. It's willing buyers and willing sellers. I just want to identify the 'foolish people' you write of.

Which would be fine if we did not allow foreigners to totally skew the market price. Then house prices would reflect what the LOCAL market would allow, as it should be, investors would not have the upper hand and we would still be a country where the majority of homes were owned by the occupier, as it should be

Here. Bought one of these house thingies once, turned out to leak like sieve.

So I shall in future stick to shares and at least lose money with modicum of grace. Plaster over untreated timber, etc, Nightmare. So 90's.

up
13

When will the media stop writing House Porn ?

When will you stop reading it?

Going for detox soon.

"China’s main stock index lost 5 per cent on Wednesday, shrugging off an interest-rate cut by the central bank over the weekend. The market has now tumbled 22 per cent since hitting a seven-year high on June 12.
Shanghai kicks off this morn with another 1% fall , regardless of the implicit 'we will do whatever it takes' from the PBOC. When markets do finally 'go' they can go fast and hard......(PS: Make that 2% down since is started typing!!)

Who will want the investment houses if people start losing their job? I know people who have hung on to two houses (unrented) other than the house they intend to keep, waiting for the flow on effect of Chinese money to the provinces.

Someone will always want properties that come to market (for whatever reason that is) - it's only, and always, a matter of price.

That wasn't necessarily the case in the most recent US crash as bank lending dried up, of course, in conjunction with the property bust. There just weren't big numbers of cashed up buyers to halt the decline. Many foreclosed properties just remained empty for years as the banks gradually wrote off the debt.

Its not just cashed up buyers, if property (or any asset class) is in a slide you don't buy in while you're sure it's still falling. that's why it's so hard to cash out in a fall, no-one with any sense will buy in until they think it's ready to bottom out. Buying in, unlike the selling out process, is always optional (the equation/reaction is asymmetrical)

....this approach is widespread now and would also explain the lack of supply now occurring in the likes Hamilton. All holding back expecting the Auck effect to spread. Quite understandable I guess..

You need to type fast to stay relevant when discussing the China stock market BW.
Now 3.5% down - sorry me bad - Now 4.8% down.

Stuff it look for yourself
http://www.google.com/finance?cid=7521596

Is the Chinese economy collapsing?

Chinese borrowing almost 25% to buy shares-
http://www.bloomberg.com/news/articles/2015-06-30/hidden-china-stock-deb...

Shanghai down 8% so far today.... A third of borrowed money still owed just gone...

Almost 2.5 trillion wiped off the Chinese Markets!

http://www.bloomberg.com/news/articles/2015-07-02/chinese-stocks-just-lo...

Yip this is going to end well!

Chinese accusing everybody and their uneaten dog of manipulating the market as it tanks. http://economictimes.indiatimes.com/markets/stocks/news/china-points-fin...

No mention of the manipulation using public funds to keep it propped up (today it bounced back from 7% down to be square at lunch). It would be limit down each day without that. The risk and loss is being transferred from private investors onto public funds.

Anyone who wants to see a modern day bubble collapse check out the Shanghai Index. Coming to a city near you soon.

Go South Waikato!! You can do it!

Though said by a British Conservative cabinet minister, since housing is more affordable in the UK, and London is more affordable than Auckland, it applies more so to New Zealand:-.

"For centuries, to be exiled - to be sent away - was considered to be an extreme penalty, reserved for the most serious of offences against the community," Mr Clark said.

"Yet in many parts of our country it has become normal for young people to leave, though not out of choice. This might be to find work, but more-and-more, it is to find a home that they can afford."

http://www.bbc.co.uk/news/uk-politics-33351686

we've just sold up and cashed out. our auckland house more than doubled in five years. now moving overseas. personally we can say hooray. but wtf for nz society at this rampant house/debt inflation. lordy.

Who bought it?

That's some nice profit. Cha-ching!