With interest costs rising faster than rents and capital gains turning negative, many Auckland property investors will be facing some tough choices

With interest costs rising faster than rents and capital gains turning negative, many Auckland property investors will be facing some tough choices

By Greg Ninness

It could be crunch time for many Auckland landlords, with the costs of rising mortgage interest rates likely to be greater than the extra income they are getting from rising rental income.

The problem is likely to be particularly acute for property investors who borrowed heavily and were prepared to accept very low or even negative cash returns as they chased capital gains in a market where interest rates were at record lows and prices were rising strongly.

But that situation has now reversed. Auckland property prices are slowly declining and mortgage interest rates are rising, a situation that could force some landlords to sell as they face a cash crunch.

Take for example Glen Eden in West Auckland, a suburb that has been popular with property investors for many years.

According to the Real Estate Institute of NZ, the lower quartile selling price for three bedroom houses sold in Glen Eden in the six months to December last year was $642,750.

And Ministry of Business Innovation and Employment tenancy bond figures show that over the same period, the median rent for a three bedroom house in Glen Eden was $465 a week ($24,180 a year before allowing for any vacancy).

Move that forward to the six months ending March this year and the lower quartile price in Glen Eden had dropped $15,750 to $627,000, while the median rent had increased $15 per week to $480 a week, or $780 a year.

Less attractive

That combination of falling property prices and rising rents should have made buying an investment property in Glen Eden a more attractive proposition for investors, but it didn’t.

From an investor’s perspective buying an investment property there now is likely to be less attractive because of the effect of rising interest rates.

The average of the two year fixed mortgage rates offered by the major banks in September last year was 4.42%. By March this year that had increased to 4.84%.

 If an investor had purchased a house in Glen Eden for 642,750 in August last year with a 40% deposit, they would have needed a mortgage of $385,650.

If the mortgage was interest-only, the interest payments at 4.42% would be $17,046 a year.

You could add on about another $1650 a year in rates, taking the investor’s outgoings on rates and interest costs to $18,696 a year.

If it was rented at the median rent for three bedroom houses in that area over the second half of last year it would bring in annual rental income of $24,180, leaving a cash surplus of $5484.

But that would be reduced by any periods of vacancy and the costs of insurance and maintenance, plus any other sundry expenses such as property management fees.

Those expenses can vary widely between properties, and could be higher than the $5484 cash surplus.

So the investor could be left with bugger all if he/she is lucky, and possibly even a cash shortfall, which would have to come out of the investor’s back pocket.

Now let’s look at how the numbers stack up if the investor bought the house this year at the six months to March lower quartile price, which had come down $15,750 to $627,000.

 With a 40% deposit they would only need to borrow $376,200, which is down $9450.

The average mortgage rate would have increased to 4.84%, taking interest-only mortgage payments to $18,209, with rates adding another $1650.

The median rent would have increased by $15 a week giving gross rental income of $24,960 a year, an increase of $780.

That would leave a cash surplus of $5101 a year before allowing for vacancy, insurance, maintenance and sundries, so the investor’s potential losses would have increased by $383 a year.

When the capital loss of $15,750 is also taken into account it’s starting to look like the house in Glen Eden has gone from being a poor investment to a bad one.

And it’s not just Glen Eden where this is happening.

According to Interest.co.nz’s Residential Investment Yield Indicator, the indicative gross rental yield in Glen Eden for the six months to March this year was 4%.

Any areas with indicative yields below 4% would likely show a worse result under the same scenario outlined in the example above, meaning investors would likely be facing even bigger losses. Areas with indicative yields above 4% would probably perform slightly better.

The Indicator monitors indicative yields in 10 Auckland suburbs where there is a high level of rental activity, and three of them, Orewa, Glen Eden and Massey/Royal Heights had yields on 4%, five had indicative yields below 4%, and two (Papakura/Drury and Pukekohe had yields above 4%.

A widespread problem?

That suggest the problem of landlords facing cash losses in Auckland could be quite widespread.

And if the current trend of interest costs outpacing rent rises continues, the problem will get worse and possibly become severe for some investors.

That could leave some between a rock and hard place.

Do they staunch their cash losses by selling the property and risking a potential capital loss, which would be magnified by disposal costs such as agent’s commission and legal fees?

Or do they hang on, endure the cash losses every month and hope that things pick up again at some time in the future?

Either way, the market appears to be at a turning point and some Auckland investors are likely to be facing some tough choices.

What the figures above highlight is just how poor an investment Auckland rental property has become as investors have chased capital gains.

Now with interest costs rising and any capital gains disappearing and possibly turning into capital losses, many investors could be wondering if they should sell and take whatever gains they have already made.

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90 Comments

36
up

Poor Auckland landlords. We could start a give a little campaign?

lol

17
up

OMG ! ... we have reached " Peak Capital Gains from Auckland Houses " ...

... it's madness , simply madness .... the Gods of tax free profits have abandoned us .... what will become of us all ... lawdy lawdy ....

Smack smack , snorkel .... yum .... think I'll start on a fresh bag of Gummy Bears .... tee heee heeeeee ....

What about the capital gain you are sitting on from your unit on the gold coast.

Buggar its gone too!
http://m.nzherald.co.nz/nz/news/article.cfm?c_id=1&objectid=11861295

Crikey that's going to get interesting......Lots of Kiwis either married or in relationships with Aussies but kept their NZ citizenship.....joint partnerships in the family home etc......

dp

Thanks for the link. Up to half the capital gain could be gone in the OZ if you sell after 2019... hmmm could lead to more houses for sale & less buyers by then which = lower values

Landlords are heavily subsidized by the state with massive tax write offs, accommodation supplements and tax free capital gains. I presume they will now want the state to also cover their losses on capital loses.
Any landlord who goes to the wall is another house a family can buy.

I find it bizarre that people claim our housing market is a free market when you consider all of the externalities. As soon as it looks like something will occur that will drive the market to equilibrium, government jumps in with another externality so they can say, look it's a supply problem! BS, you're hiding the truth with your irrational policies.

If it's a free market, no more externalities, let the free market do it's thing. That means no more subsidies. If that means tenants can't pay increased rent, good. The landlord needs to sell. We can keep hiding the truth because it will eventually come out. That is we have over priced housing based on cheap credit and mass immigration - and both won't last forever...

Maybe the government needs to setup a fund for them to help them through the hard times, like they do for farmers when there are droughts etc. Tounge in cheek of course.

15
up

If only there was a charity where I could sponsor one of these unfortunate landlords for only $50 a month.

Oh, wait, there is. It's called the Accommodation Supplement.

10
up

Where is the Alternative Opportunity Cost of the 40% deposit built into those calculations above? 40% deposit of $274,145 on one example is an additional cost at 3% deposit rate of $8,224 - completely nullifying the 'bugger all' return?

At lot of 'investors' have borrowed against equity in existing home - so paying 5.5% on the $274K - so out at least $15K

11
up

And a very large number of ' investors' were not purchasing property in the lower quartile, making the yields significantly worse, and the upfront costs significantly worse. Auckland property was so 2016! And getting tothepoint lets see how smart investors are as Auckland housing values collapse.

10
up

There's a lot of people that think they are investors but don't even understand return on investment let alone calculate it.

Doesn't ROI for our Darklords = Capital gain + tax deduction + rental subsidies - interest only mortgage payment....?

By the time you take taxes and inflation into account that opportunity cost flew out the window into negative territory.

There are lots of options for investing that will give you a better return than 3%, you would get more on term deposit, plenty of dividend focused stock will give you 6+%

26
up

I can't wait to buy a cheap house from a bankrupted landlord, I almost feel sorry for them...

Yeah! Nah! I feel nuthin.... though they'll have to drop by at least another 40% before my $90k deposit and my $95k a year salary can afford a median priced house... and we all know $95k a year salary is just a little above minimum wage...

Interest rate rises are going to be great news in the long run, hopefully reducing the attractiveness of property investment over other asset classes.

11
up

I just can't believe it was allowed to get this out of control. The government has been using these unsustainably low interest rates too, in showing that housing affordability isn't that bad, and that an affordable house is 650k. But once interest rates go up, an affordable house is going to be a lot less, unless wages increase.

22
up

"With interest costs rising faster than rents and capital gains turning negative, many Auckland property investors will be facing some tough choices"

Headline should have been :

'With interest costs rising faster than rents and capital gains turning negative, many Auckland property investors will be facing some tough choices as also their support and promoter national will not be able to act to protect them being election year'

31
up

the national party will annouce an increase in the accomodation supplement in the budget,
which will mean an increase in rents as the ability to pay more increases.
lets talk about this subsidy ( transfer) from the taxpayer to the landlords if anything it should be held where it is why should the taxpayer have to pay housing investors more?

14
up

Too true - this article really emphasises the parasitic nature of landlords by highlighting the rising rents when capital value is falling. I am still an advocate of rent controls, and none of the arguments I have heard has dissuaded me off that point. I do not see why private investors should be able to look to the tax payer to pay their return on any business decision they made. That goes for the banks too. The Government propping them up is just utterly wrong. I note in the 90 second today the bank dividend per share is $2 (those that were mentioned anyway). Clearly banks are not hurting at all. They need to be more responsible and accountable.

10
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Typical national when they announce increase in accommodation supplement it will be more to help the landlord than the rentals.

For national to act their has to be a catch.

Its a dangling carrot, one that will rot in their hands if you dont vote for them.

16
up

I think you have to ask the bigger question, how did wages in this country get so bad we needed handouts from the government as top ups in the first place ? Too many company profits going into the pockets of too few and not being passed down, that's why.

I don't think the problem is our wages. Our wage growth isn't that bad. I think the bigger problem is the rising costs, and lack of competition in many areas. The housing crisis is also meaning that house prices are largely dictated by what the interest rate is, and what mortgage people can afford to service. Also KiwiSaver first home withdrawal, and other grants, has also helped to pump up prices a bit. Rents are tied to house prices, in terms of the percentage the ROI needed for it to be worth the investor taking that risk.

One aspect of the accommodation supplement missed by many commentators is the significant regional differences. A $500 per week rental in Auckland gets $100 more in accommodation supplement than a $500 rental in the Manawatu. Both places have $500 a week rentals but the Auckland rental is vastly less attractive than the Manawatu one. The accommodation supplement therefore becomes a subsidy not only of landlords but also manufacturers. In a previous role I monitored the loss of jobs from provincial New Zealand and I believe the accommodation supplement is a major factor in causing the relocation of industry to Auckland. The reality is that Auckland has grown significantly compared to other areas - and is more dominant as a city relative to population than most other countries in the world.

Consider also the unfairness of the scheme. It's asset tested. So saving for a home and renting, no supplement when you hit $8,100. Whereas a homeowner can still get it when they may have 100s Ks in equity. More bias against renters due to silly policy. Unbelievable how certain citazens keep getting smashed...whilst others, namely landlords, keep getting spoon fed.

Landlords are "spoon fed" by the Government simply because most politicians have multiple rental houses and naturally wish to look after their investments.

I recall back in the late eighties/early nineties when the govt began either renting off private owners to provide social housing. It was at a time when this idea that every man and his dog should aspire to become a landlord was in its infancy. It seems since then, the provision of social housing has been pretty hit and miss, all along while more and more people needed assistance for housing. I would actually think that the whole situation that we have arrived at today was just the evolution of the process that began back then.

It's probably a little early now for landlords to feel the pinch but yes, time will come later in the year for those who were reckless to be in trouble.

"who borrowed heavily and were prepared to accept very low or even negative cash returns as they chased capital gains in a market where interest rates were at record lows and prices were rising strongly"

For those still chin deep in debt, simply proves that greed and stupidity are not mutually exclusive. Some will be hiding behind 5 year fix/interest only, its all good mate. That will expire at some stage...

If they fixed for five years then they are paying the top interest rate, and obviously cashflow isn't a priority.

I guess some Investors may have fixed rates for 3-5 years at low rates already, so they may not feel the pinch for some time to come. Be interesting to see what happens in the coming years, after the election. Although replacing Turkeys with Turkeys is not really going to achieve much...

14
up

Yeah nah
A ban on foreign buyers will put a halt on the inner suburbs price rises. May even reverse them as locals will only pay what they can afford.
An extension on the bright line test to five years will further reduce speculation.
Elimination of negative gearing another reason to not make marginal investment in the rental game.
Also if a new government does get a mass building program of affordable homes for FHB, then who is gonna buy those crappy old rentals at the current over the top asking prices?
These current turkeys gonna be served up cold at Christmas..

Crappy old rentals. You nailed it!!

You increase the brightline test and then people will find it more costly to move around. Why go and work and live somewhere even to fill a gap in the labour market etc when if you buy a house to accommodate yourself for that period and then get done like a hot dinner at the IRD because you relocate to the next area/job etc?

The brightline test does nothing more than place a freedom on movement and liberty! It's nothing more than a pay as you leave policy!!!

10
up

Err...bright-line test only affects property which isn't the sellers "main home". Not sure how you got to your argument...

You should see the crap that is being dumped on the Christchurch market at the moment. All "crappy old rentals". What is even more interesting is the increasing number of "overseas vendors". I guess the foreign investors have gotten wind of the falling prices and are quickly deserting to greener pastures. Once they realise that Auckland prices are falling too, the stampede for the door will crush them.

Yes of course If interest rate rises and rents don't rise much, then some will have some troubles, but we all have been aware of that in Auckland.
It is not all doom and gloom in NZ for investors as most around Other parts of NZ are doing quite nicely.
Interest rates are lower now that what they are currently paying as well.

Not really sure what is the purpose of this article . Why did Greg go to all this length in detailing some Landlords' current or future misery .. is that pity,concern or rubbing it in...?
However, although it just sounds like stirring the pot with some useless information ( as every investor is different) ... his conclusion should be Good News to all FHB as it seems that there will be lots of houses under $650K on the market in close proximity to CBD and Auckland industrial business districts... So why is everyone still crying about this spilled milk? ... If all goes to plan, these houses will worth $550K or less come September especially when the FED increases interest rates in June.... and if Labour wins, they might go down to $480K .. Yay, returning 5%+ to investors
Oh, BTW whether the accommodation supplements goes to landlords or Motels is beside the point - WINZ pay market prices when they lease houses to lodge their customers otherwise they have to build or buy the houses to accommodate them.

Eco Bird, that's a bit brutal ! Although I agree with you, it's hard to see the point. Also most landlords are not going to suffer for a long time yet as most are on fixed rate mortgages and even with rising interest rates they will be paying less if they renew say a 2 or 3 year mortgage in 2017.

I view the whole article as a lengthy typical Interest.co.nz comment. Yeah Landlords are going down, down down..whoo yeah.....well that's what the writer hopes and what the writer is trying to make happen. It's kind of weird as there really doesn't seem to be enough data at the moment to prove this. Most Landlords expect there to be ups and downs, highs and lows and tend to squirrel resources away for the expected hard times.

"Most Landlords expect there to be ups and downs, highs and lows and tend to squirrel resources away for the expected hard times."

That may be historically true, but i don't think we can paint all of the current landlords with the same brush

18
up

I have been listening to these people running property investment seminars advertising on the radio.
When prices were increasing in Auckland at about 20% they were they were telling people that then was the time to buy and basically get rich on the tax free capital gains.
Now, I notice, they are telling people now is the time to buy because they can get a better priced rental property as the market has come back.
They cannot have it both ways. There are a lot of gullible people out there!!

Much like people writing "Get Rich Quick" books or running share or property seminars the question you should be asking is: "If it's that simple why aren't you earning a living doing it yourself rather than sharing this "secret" with me?"

Since the beginning of time there's been snake oil salemen, carpet baggers and a long line of desperate "hopers" willing to drink from their cup.

A fantastic snake oil salesmen documentary and the fools that give them money. You have to think yourself rich.
https://www.youtube.com/watch?v=DPARaL3F498

Only difference is a Get Rich Quick book usually costs $40, not $10,000.

When you get these awful entities trying to draw people in who would otherwise not even consider then you have to know it's all about to go pear shaped, just exactly as it all did in '87.

There are always those landlords/investors who end up donkey-deep in debt.

If they, through their poor judgement, end up losing their properties then that's tough......

But it does create opportunities for other investors - who are always waiting in the wings.

11
up

I will be hoping it is NOT investors waiting in the wings, but all the many young people and families who have been waiting for house prices to return to affordable levels. In a housing crisis, I don't know how property investors, who are already wealthy and own multiple properties could possibly consider buying additional properties. It's morally bankrupt. Shame on all of them.

It will only be dopey investors who seek to buy. Every other investor who sees negative cashflow and declining capital value won't buy. Why would you. Where is the money in that purchase.

That's short-term thinking, KH - which is also shortsighted.

Buying when the market is in a downswing yields the greatest long-term rewards. Astute investors are very familiar with this approach. (It's called a "counter-cyclical" strategy.)

“The biggest mistake investors make is to believe that what happened in the past is likely to persist. They assume that something that was a good investment in the recent past is still a good investment.”

– Ray Dalio, founder, Bridgewater Associates,

"tothe[oint" You do realise I hope that the upswing in your cycle could be a few decades away = not that I would make any prediction at all.

One thing i have learnt is not to hold on to a non performing asset / investment. best to cut your losses and invest in a better performer while you wait.

I agree with KH

I'm hoping there's no one in the wings, due to no one wanting to catch the falling knife. That way will exacerbate the drop more, hopefully discouraging the bubble like mentality in the future.

Thanks for the article Greg. Perhaps it would be more beneficial for Investors to realize how much their Capital Value is dropping rather than comparing rental yields, which looks like most Investors haven't really given a hoot about for the Auckland market as all they've really been interested in is capital gains.

What would be very interesting to see, is how much Auckland's house prices have performed over the last six months?

The maths lQQks a lot worse with the old 20% deposit, but most investors in that situation are happy to prop up the mortgage out of their own paycheque and of course interest is still a business expense and paid before tax is calculated.

I've seen some evidence of Orckland investors liquidating but I doubt it will become common. The fact is some people are smart and hardworking, they can afford to take these kind of risks because they earn big money and in the long run they will own an investment that will provide passive income into retirement.

Well said skudiv.I'm sure plenty of property investors in Auckland are working hard and making plenty of income.although it's a good idea to mix capital growth and a good yield to help out with the morgage.I'd never buy at a four percent yield. Seven percent would be the lowest I'd accept.then look for capitol growth over time.

It's not just landlords who will suffer from rising interest rates, FHB who bought in the last 2 years will hurt too

Everyone suffers from Interest rate rise -- landlords will recoup most of it through the increase in rents in the last 2 years or so, they know a good party does not last for ever ... Contrary to common and wishful belief, I expect house prices to take off again in October this year - recover the loss that prices have made during the first 9 months and end the year breaking even or at most down by no more than 5% for the year - I think that next summer will see another round of price increases ... why? simply because supply is still short and the demand is there and the chinese will come back ( they are the ones waiting in the wings, not only the investors) - all waiting for the dust to settle and back to business after the elections - Nothing will change in the next 12-18 months to make a significant dent in house prices -- by then, $650K will sound very affordable !! -- - Labour will be just like the Nats and will do / continue the same policies or actions albeit manicured and wearing different makeup and wigs ... Mr little sounds much like Mr English when squeezed in a corner and put on the spot for details -
At the end of the day, I guess what Can be done , Will be done .. the rest is politics to hold or regain power !! ... Alas, some people were put off from buying when prices were 20% cheaper than today and now all is crying wolf again, fooling them yet again that the market will drop by 20% or more ... Indeed, Rich Dad Poor Dad is a good book.

Chinese are not waiting in the wings.

Their government has setup an agency that specifically battles capital flight, and established strict rules since January 2017 that Chinese nationals are not allowed to purchase foreign property unless they want to end up in jail.

This is not called waiting in the wings. They are not even allowed to be in / on / near / by the wings.

So if you think millions of Chinese will suddenly risk jailtime to buy $800k mansions in Otara or Ranui, then I've got bad news for you...

I wonder if NZ agencies are cooperating with Chinese agencies, by sharing names of those potentially committing a crime. One suspects not. One suspects NZ businesses will see and hear nothing if they can at all help it.

We do have a fair number of China's most wanted safely ensconced in Auckland houses, after all.

Eco Bird, I think you are absolutely spot on

@NationalBird: Ok bird brain what makes you think that the Auckland property market is going to magically switch to a sellers market in October?? To quote tour statement: "I expect house prices to take off again in October this year".

Well at least you've recognized that it's Chinese foreign buyers that have pushed up the Auckland market far beyond local wage growth. But I very much think you're waiting in vain for their return any time soon, or should we ignore the advice of; Reuters, Forbes, Bloomberg and the FT who all state that China's Capital flight restrictions will remain in place for the foreseeable future. Basically China has far bigger plans ahead that don't involve the folly of over investing in NZ unless it's for food production.

Bloomberg: China Spins a Global Food Web From Mozambique to Missouri
https://www.bloomberg.com/news/features/2017-05-22/china-spins-a-global-...

Say Hi to Ted for us won't you.

Objectivity of discussion starts by moving away from this silly denial and recognition banner and slogan used by Politicians to motivate their cheerleaders ... it doesn't change anything!!

If we believe everything published by MSM and ignore the facts on the ground then you are correct and we will often fall for their exaggerations and limitations let alone agendas ... I don't, and always view things with an open minded approach and do my own research ...

Chines ( and other immigrants) are holding their buying as the market has too many variables at the moment and it is like that every Election year ( maybe other than last one as Nat had a much better chance to be elected) ... Anyone familiar with chinese business culture knows that Gov regulations have some reduction effect on money flow outside the country - and all it does is it increases the cost of money smuggling -- BUT it cannot stop it, it is a huge business!! ... pity that some of us still think that market dynamics there work according to our rules and ethics !!

Forget about How and Who is buying ... Auckland housing market will be tipped to the upside if only 5000 "immigrants" decide to buy in the next 12 months (albeit by single digit rates) .... let alone FHBs or people moving in from the regions etc ...

the shortage in supply DID NOT go away, it is actually almost steady if not worsening -- stock on hand (for sale) has increased because almost all buyers are waiting for the election results thanks to the uncertainty that some poly parties have created. The cost of new built are getting more expensive by the minute ... and the Uni-plan in Auckland needs another 12 months to get sorted out and gain developers' confidence to start building, if they find or arrange finance !!! ... Almost all the old crappy 50s,60s,and 70s houses sold for $700 - 800K last year have now come back down as people re-assess their real value -- Most of these are now on the market for around 600k (popular like the plague) these are affecting median and average prices which is playing to the tune of the Crash Hopeful and headline chasers...

last year Most folks here predicted a crash and some semi-economists started explaining what dooms day would look like ..
well 10 months later we are almost 5% down in most of Auckland suburbs (10-15% in the crappy stock), and Up by 5% in others.

In my view, whether we like it or not, The property market is still buoyant and will continue to be until supply catches up with demand and the gap is reduced ... !!.

Look bird brain the Auckland property market is falling regardless of any supply issues that's very easy to see from the latest auction results where there's not that much selling above the million mark. And I'm sure those who did struggle to buy at over inflated prices are going to be kicking themselves in a few months time when prices drop further.

Plus the Chines as you call them (Chinese) no longer have access to freely available credit which was one of the main property price drivers. Obviously you have not looked at their Government plans most of which have now changed to focus on more localized ventures such as building new cities in China.

China has clearly demonstrated how it can control capital flight when it needs to, and those measures are going to remain in place for quite some time whilst it restructures its economy away from manufacturing and in to new technology.

Just think if National had introduced a Foreign Buyers tax even a year a go we wouldn't be in this mess!

Message to all First Time Buyers; DO NOT BUY NOW! Wait for the Auckland property market to bottom out, its got a lot further to fall.

Good advice CJ009, we are all waiting for it to fall ... albeit for very different reasons of course ...

Make a note of your comments and we shall re-visit this 3 monthly ... hope you are right :) !

Three months you say, looking forward to it Eco Bird. ;)

Bloomberg: China’s Debt Bomb
https://www.bloomberg.com/quicktake/chinas-debt-bomb

ANZ-research speaks to your comment directly in their May publication Eco-Bird

"The battle continues as a fundamental mismatch between supply (flat-lining consents)
and demand (net migration is still strong) which points up for prices, goes head-tohead
with broader “conditions”, including affordability and rising interest rates, which
say down. We continue to side more with the latter as being more influential over the
coming years. Of course supply matters too, but the interest rate effect looks set to
dominate. If a shortage of supply were the major influence on the market, rents would
have taken off many years ago; they haven’t. "

http://www.interest.co.nz/sites/default/files/embedded_images/ANZ-Proper...

I don't think there would be any reason to believe that the banks are "crash hopefuls" or "headlines chasers" so perhaps we shouldn't be so quick to dismiss their view on the property market. The thing on which we can all agree in regards to banks, is that they don't like to lose money, and make rather a lot of effort not to.

CJ099 there's no need to insult others who do not agree with your opinion (by calling them "bird brain"), it actually reflects poorly on you

My comment was fairly mild and I would normally use a fully structured argument with supporting links, though when encountering certain people before you tend to recognize the best way to get through to them. Especially when they've gone in to a long rant with nothing to support their logic which has obviously come from their own vested interests.

Talking of vested interests Yvil; didn't you claim to be an Architect at one stage?

I think you are missing the long term drivers - wage decline and ageing population.

New Zealand is some what protected by these two western world factors, with population growth and low level of manufacturing, but we can not get away from the affordability factor.

Taking inflation into consideration we should expect prices to fall from 13x average wage to 6-8x average wage. this may be done in stages, the first drop is evident.

My best guess is there will be 3 price drops over the next 2 to 3 years, depending on quality of the house these drops could be significant.

If it only falls by 20% we can consider ourselves lucky, we dodged a bullet.

This app can't come soon enough for some landlords.

http://www.radionz.co.nz/national/programmes/ninetonoon/audio/201844661/...

Basically you bid against others to rent a property, nothing like extracting every last cent out of the tenant.

And who will pay the cost of using this app? Will it spell the end of RE coys involvement in renting properties?
Interesting days indeed!

You keep telling yourself that Eco Bird. Rich Dad Poor Dad is a good book is it? That sums you up my friend. Clap clap.

... didn't Robert Kyosaki , the Rich Dad / Poor Dad author ... later on , team up with a certain Donald Trump to write some more of these enlightening books ?

Donald Trump ... hmmm ... that name seems to ring a bell ...

I picked the book up at an op shop for a dollar, read it.

It basically just says "to make money start a business or invest in property".

Then Kiosaki has another 7 or 8 books in his series that simply repeat that, but his audience still seems to buy and enjoy them.

While the core message in the first book is true, it's encumbered with Robert's self-promoting fluff, and there are definitely better investment books out there.

Correct, the first book was inspiring ... the rest are not so

Rich Dad Poor Dad changed my life. After reading it took me 10 years to become a "Rich Dad" and I no longer work for a living. The key message in the book is how to think about money and the value in creating financial freedom for yourself rather than working for a living. In that respect its still the #1 investment book I recommend people to read. Its not a "how to" investment book, but a book on the psychology of money. Some people get it and it changes their lives (like me), others fail to grasp the message and are disappointed because there is no step by step guide to get rich quick so dismiss it.

If you own residential property and rent it out, then your financial freedom comes at the cost of others', in fact that is how it pretty much works, regardless

Das Kapital

Tui12,

Quite right. These books are written for the gullible.

The party has come to an end

To seal it. National has to go.

This election will be a fight between house owner speculators - so called investors vs rest of NZ

Agreed. Nats policys are all about pumping houses for their voting block. Not in that block....to bad.