Sales volumes and selling prices both took a dip at Auckland's largest real estate agency in April, while stock levels grew slightly.
Barfoot & Thompson sold 704 residential properties in April, down a third from March, but up 49% compared to April last year.
Although that's still well down (-36%) from the 1107 properties sold in April 2021 when the market was booming, the latest figures suggest sales levels have now recovered to where they were prior to pandemic restrictions being introduced in 2020, after bottoming out in last year's slump.
Prices were a touch softer with the average selling price dipping from $1,227,495 in March to $1,212,828 in April (-$14,667), while the median selling price dropped from $1,050,000 in March to $1,007,500 in April (-$42,500).
The drop in both sales and prices in April is likely little more than the usual seasonal movements, with sales and prices usually falling slightly in April as the market retreats slightly from the peak sales month of March.
The main concern in the real estate industry at the moment is the high level of stock for sale relative to the number of properties being sold, and Barfoot's figures also reflect this.
Auckland's biggest real estate agency had a total of 5770 residential properties on its books at the end of April, which was a 13 year high.
However the stock figure increased by just 29 properties in April from March, suggesting the pile of unsold properties may be starting to level off.
Unfortunately the levelling off is occurring at the same time as sales traditionally start to decline as the market heads towards winter, which means the mountain of unsold stock could weigh on the market for a while yet.
"April's trading did not match March's breakout result, but was still a solid performance," Barfoot & Thompson Managing Director Peter Thompson said.
"From a buyer-choice point of view, housing remains a buyers' market, with the [total] number of properties listed at month's end at 5770, the third month in a row that total listings have remained above 5000."
"Total listings at month's end were assisted by 1580 new listings in April, a three year high for new listings in the month of April," he said.
The comment stream on this story is now closed.
•You can have articles like this delivered directly to your inbox via our free Property Newsletter. We send it out 3-5 times a week with all of our property-related news, including auction results, interest rate movements and market commentary and analysis. To start receiving them, register here (it's free) and when approved you can select any of our free email newsletters.
75 Comments
Don't value these stats much compared to the REINZ hpi though the story is the same.
RIP spruikers.
Average prices down $14,000 - absolutely shocking!
Please don't mention that sales are up 49% compared to April 2023.
Why not ? If you understand markets, you will know that dropping prices anda low sales don't men much. Dropping prices and increasing sales is the true worry, which is what I've been warning for quite some time. More sales and dropping prices is much more of a sign for further price weakness in the future.
Let it burn 🔥
-SMG
🔥🔥🔥🔥🔥🔥🔥🔥🔥🔥🔥
It certainly looks like it’s going to be very tough for vendors this winter. Especially those who were stupid enough to borrow big dollars when rates were around 3 per cent. Where I live anything reasonable under $700k is selling. Anything over $1.5m is dead in the water unless beachfront in the preferred area. Sections are hardly selling. Those bank deposits are certainly the preferred investment.
https://www.realestate.co.nz/property/16-corta-bella-place-golflands-manukau-city-auckland/3tnlmr28
This nice, tidy brick and tile 3-beddie just sold for $1,350,000 (2021 CV 1,375,000). Nasty haircut for the vendor who bought for $1,660,000 in November 2021. Ouch, I so feel for them. The jump in their interest rates might have had something to do with the sale.
A lot of wealthy people in the area, more than likely can afford the haircut
The only way I could see anyone being happy with a $300k plus after fees loss, is if the money is now successfully laundered into NZ from elsewhere.
"Especially those who were stupid enough to borrow big dollars when rates were around 3 per cent. "
Warnings were given by the RBNZ governor on the elevated house price risks.
1) Feb 2021: https://www.stuff.co.nz/national/politics/300238808/reserve-bank-govern…
2) March 2021: https://www.stuff.co.nz/business/124430525/adrian-orr-frets-over-soarin…
3) Nov 2021: https://www.rbnz.govt.nz/hub/publications/speech/2021/speech2021-11-02
4) Nov 2021: https://www.1news.co.nz/2021/11/24/first-home-buyers-encouraged-to-wait…
If borrowers chose to ignore those warnings, that is entirely their choice. Those borrowers who borrowed large amounts are free to choose, yet they are not free to choose the consequences of their choice.
People who borrowed large amounts at or near record low interest rates may now find themselves in cashflow stress and mental stress. There is only one person responsible for the borrower getting themselves into that situation and that is the person who voluntarily chose to sign their name on the mortgage contract and agree with the terms and conditions of that mortgage contract with their lender.
From the third article: “Fewer customers have what we would describe as ‘a rainy day savings fund’ of $1000 or more, which is a pretty low bar,” she said.
I wonder how that looks now? I imagine that the number of people with a financial buffer of more than one paycheck would be minimal.
FYI,
In the year to March 2024, 33,130 people withdrew KiwiSaver money because of financial hardship, up from 19,760 in the 12 months to March 2023.
https://www.interest.co.nz/personal-finance/127511/kiwisaver-financial-…
Something something resilience.
1600 new listings. 700 sales. Yet property stock on hand was static
maybe some gave up trying to get their 2021 price?
Lots being withdrawn and placed up for rent instead.
If trading up, sell first. Its a buyers market and money talks
Agents are seeing more chains.
Good evening from 7 Mile Beach on the delightful Cayman Islands.
My associates and I, of the world banking elite are now ready to hit the residential property market.
We'll turn as many as we can to renters, as we'll buy up all the property available , rent them out to those potential first home buyers and trap them there for life ...haw haw
While you investors will be priced out of the market, as we'll keep those interest rates up high enough, so the returns will be a pittance.....haw haw
Fractional Reserve Banking - screwing the little guy since 1913
That's why the worst thing we allowed to happen was the undermining and elimination of LVT in favour of taxing the productive working folk even more of the pie.
Good deal CC -and you can tap into their collective kiwisaver accounts to fund it as the fund managers will be looker for good secure investments -win, win, win
Fractional Reserve Banking - screwing the little guy since 1913
Love your work CC. Nevertheless, I'm interested in Werner's 3 typologies
1. Financial intermediation theory of banking - linked to the loanable funds model
2. Fractional reserve banking or reserve circulation
3. Bank credit creation out of nothing
Werner suggests FRB doesn't exist and bank credit creation does actually come from nothing.
JC ol' boy, we don't worry about Werner and his 3 what-have-you's ! haw haw just as long as there more moolah coming in, than going out ! end of story.
Anyhoo, must fly - cocktails before dinner here on the Caymans ol' boy - cin cin !
Drink up son, all that alcohol is first going to your head and then to your liver as your body does its best to excrete the poison. Stick to mocktails if you want to live long with all your marbles.
I'll stick to whatever you're not having
DW mate, said tongue in cheek. CC is too busy quaffing drinks and scoffing nibbles as well as scoffing at others to read this.
I like Champagne Charlie - he is honest about his intentions
Do you genuinely not understand satire..?
Are you a dumbo... sheesh
"Sex on the Beach"?
B&Ts July report will be interesting. I’m expecting thousands of newer homes to go on the market all at once across the country when the bright line drops to 2 years.
Also when they realise interest rates arent dropping any time soon. A lot of people last year took 6 and 12 month rates, expecting to roll over to a lower interest rate about now. Well, now they are rolling over to a higher one. Should have taken the 2 year rate.
Also when they realise interest rates arent dropping any time soon. A lot of people last year took 6 and 12 month rates, expecting to roll over to a lower interest rate about now. Well, now they are rolling over to a higher one. Should have taken the 2 year rate.
Remember you cannot sue the ruling elite if you feel that they have influenced you to make decisions that you otherwise wouldn't have made if you knew their future settings.
Well, AFAIK, nobody has tried to sue central banks in this kind of scenario, even if they're essentially an independent entity with undue influence.
Agreed. Why people don't list now with settlement post the tax reduction is beyond me. Oh wait...they are.
Start of the tsunami.
Someone posted once that it was actually the date of the sale and purchase agreement which matters, not the settlement date. Which is why people may still be waiting for another month or so.
I cannot for the life of me understand the wailing and gnashing of teeth and general aura of doom and despair on this thread based off the data and charts in this article.
Yes, housing inventory is up. But that is to be expected after a global pandemic and construction boom. The increase is a correction and housing inventory is now more or less what it was in 2018-2019.
The median sale price is proving resilient and has even shown a modest increase since July 2023.
This might all change of course. But for now I'm sleeping fine.
Yeah, the amount of sad fellas on here (it does seem to be a consistent few) who crack a wee stiffy every time something remotely negative about property is reported is hilarious…it’s a cycle, we’re in the hard part of that now so things won’t look great, but at some point it will turn. Kinda dumb how this lot seem to take joy at the “idiots” who over leveraged themselves in 2021…if a young family/FHB brought a home back then, most likely on poor advice, remember ole mate Orr telling the country “low rates are here to stay” & they’re suffering now then that is horrible & I feel for them…those who got greedy & over leveraged trying to make a quick fortune doing spec builds/flipping or amassing a large rental portfolio too quickly with too much debt & are now hurting…well, a little bit less empathy for that one eh
Pretty sure Orrs comment was to "not over extend on debt while rates were low". Advise he gave several times. Completely agree on the bit about greedy over exposed getting their just deserts.
Lord Orr can say all he likes but he implicitly knows that the Ponzi is not anti-fragile. If the behaviors and attitudes of the sheeple were to be disrupted, you'd be incredibly close minded to reject that all hell could break loose.
"Pretty sure Orrs comment was to "not over extend on debt while rates were low". Advise he gave several times. "
Warnings were given by the RBNZ governor on the elevated house price risks.
1) Feb 2021: https://www.stuff.co.nz/national/politics/300238808/reserve-bank-govern…
2) March 2021: https://www.stuff.co.nz/business/124430525/adrian-orr-frets-over-soarin…
3) Nov 2021: https://www.rbnz.govt.nz/hub/publications/speech/2021/speech2021-11-02
4) Nov 2021: https://www.1news.co.nz/2021/11/24/first-home-buyers-encouraged-to-wait…
If borrowers chose to ignore those warnings, that is entirely their choice. Those borrowers who borrowed large amounts are free to choose, yet they are not free to choose the consequences of their choice.
People who borrowed large amounts at or near record low interest rates may now find themselves in cashflow stress and mental stress. There is only one person responsible for the borrower getting themselves into that situation and that is the person who voluntarily chose to sign their name on the mortgage contract and agree with the terms and conditions of that mortgage contract with their lender.
Orr is not a benevolent, all-knowing supreme being. Lecturing people on their behavior is not his role. He is in self preservation mode.
Now, assume that he's warning because he feels a threat to 'financial stability', then the question remains as to why he's suppressing the price of money in the first place.
F'more, imagine the scenario where everyone went into their shells and stopped spending and stoking the Ponzi.
What would his reaction and worldly advice be then? "Hey people, don't be down. It's drinks on me. Get out there and have a good time."
Heaping praise on his presumed wisdom and understanding of outcomes is the last thing we should be doing. We should be challenging or criticizing his and the RBNZ's actions.
"We should be challenging or criticizing his and the RBNZ's actions"
For those people in positions of influence - feel free to do that.
Most people in NZ are not in positions of influence. Commenting about RBNZ actions on a thread on the internet might make people feel better getting their emotions out, but unlikely to result in change of RBNZ policy.
There are a number of people who are not in positions of influence who are now in a bad / undesirable financial situation who have anger and want someone to blame for their current situation - a public figure is an easy target.
The person responsible for getting them into their current situation is the person they see when they look in the mirror.
People are free to choose, however people are not free to choose the consequences of their choice.
Most people in NZ are not in positions of influence. Commenting about RBNZ actions on a thread on the internet might make people feel better getting their emotions out, but unlikely to result in change of RBNZ policy.
I hear you and I understand the hoi polloi are not in a position to change or influence RBNZ policy. I don't think that means that people should not challenge or criticize ideas or the status quo. Students should challenge teachers. It's part of the learning process. Underlings should challenge their bosses. It's how constructive change happens in organizations.
“There is only one person responsible for the borrower getting themselves into that situation and that is the person who voluntarily chose to sign their name on the mortgage contract”
What a dick thing to say while people are out there struggling as a result 🤦🏻♂️, those of us who are on here clearly have an interest in the economy, but we are a minority…probably why we are on here each evening & not in the pub with a huge circle of people discussing economics 😂.
I’m not a plumber, I don’t know much about plumbing so when I have a water issue I hire one, doing some due diligence by checking reviews etc but I then trust him as a professional…if his work leaks is it my fault for signing the contract? These folks didn’t hold the bank at gun point to get their mortgage…they would’ve seen someone at the bank, or a broker, shown them their incomes/expenses & then trusted the professionals to do their job by saying we can lend you X amount…yep, ultimately you are bang on…it’s their fault…but jeez, I honestly feel a lot of people were let down by “professionals”. Some were greedy idiots who lied on their paperwork to get bigger loans, obviously my opinion on that small portion of people is very different
Agree. It’s easy to say ‘Buyer Beware’, yet we have a whole society, culture and economy wedded to the housing ponzi. The overwhelmingly dominant rhetoric, effectively never questioned by anyone in the MSM, is that ‘you can’t lose with property, mate’. And it’s not just media. I reckon 95% + plus of the population believe this, so the peer pressure and societal pressure is overwhelming.
The overwhelmingly dominant rhetoric, effectively never questioned by anyone in the MSM, is that ‘you can’t lose with property, mate’. And it’s not just media. I reckon 95% + plus of the population believe this, so the peer pressure and societal pressure is overwhelming.
That is how house prices get to levels that are unsustainable.
There are lots of lessons littered throughout history if people look. For example, in terms of significant property price falls, there are lessons to be learnt from:
1) 1582 - 1810 Amsterdam property bubbles
2) 1890's NZ land bubble
3) 1880's Melbourne, Australia land bubble
4) 1920's Florida land bubble
5) 1930's US
6) 1980's Netherlands property price fall
7) 1990's UK property price fall,
1990's Swedish property price fall,
9) 1990's Norwegian property price fall,
10) 1980's Finland property price fall
11) 1998 - Hong Kong
12) 1998 - Singapore
13) 1998 - Indonesia
14) 1997 - Thailand
15) 2008 - Ireland
16) 2008 - Spain
17) 2008 - Portugal
18) 2008 - Netherlands
19) 2008 - Italy
20) 2008 - Greece
21) 2008 - Denmark
22) 2008 - Cyprus
23) 2008 - Latvia
24) 2008 - Estonia
25) 2008 - Lithuania
26) 1990's Australia property price fall
27) 1990's central Auckland property price fall
28) 1989- 1990's property price fall in Toronto, Canada
29) 1990's Japanese property price fall
30) 1980- 1990's US savings and loan - California
31) 2005-2006 US
32) 2008 - Perth, Western Australia
33) 2009 - Queensland, Australia
"those of us who are on here clearly have an interest in the economy, but we are a minority…probably why we are on here each evening & not in the pub with a huge circle of people discussing economics"
Thank you for your comment.
This is not an issue about the economy. This is an issue about personal finance.
Most people choose to remain uninformed about managing personal finances. That is entirely their choice. There can be a price to pay for financial ignorance. Financial literacy is low amongst the general public. Most people choose to spend their time in their hobbies as this gives them enjoyment and satisfaction, rather than learn about personal finances which appears to be uninteresting. Low and poor financial literacy can result in financial choices that result in undesirable outcomes. If people don't want to be poor then learn how to make more informed choices, otherwise they are at risk. Personal finance is a personal responsibility. People are free to choose to remain uninformed about managing their personal finances, however people are not free to choose the consequences of remaining uninformed. Unfortunately the consequences can be very unpleasant, and put the borrower in an undesirable situation.
Close relatives lost all their real estate in a previous downturn due to their financial ignorance, poor financial literacy and resulting financial choices. They had to move to social housing. When they died, their estate did not have sufficient amounts to cover the cost of their funerals and their adult children had to pay. Also having grown up in a low socio economic area, I saw many families struggling. Many were in their situation as a result of poor financial choices.
These folks didn’t hold the bank at gun point to get their mortgage…they would’ve seen someone at the bank, or a broker, shown them their incomes/expenses & then trusted the professionals to do their job by saying we can lend you X amount…yep, ultimately you are bang on…it’s their fault…but jeez, I honestly feel a lot of people were let down by “professionals”
Many commenters on interest.co.nz raised warnings of elevated house price risks, but those with their vested financial selfish interests attempted to discredit these warnings.
What most people fail to understand is the inherent conflicts of interest, the huge vested financial self interest at work with financial products.
There are sales people who are employees of a business with sales targets - they are selling a financial product - they might call themselves financial "advisors", mortgage "advisors" to give them more credibility amongst their customers. They are not fiduciaries - they do not owe a duty of care to their customers.
Most buyers / consumers of financial products assume finance professionals operate under a fiduciary interest (the "duty of care" standard). In most circumstances, this is not the case and an incorrect assumption.
A bank employee / bank credit officer can calculate the maximum amount a borrower can borrow. The borrower chooses the amount they want to borrow - they can choose to borrow less than the maximum. Just because you can borrow a large amount, it doesn't mean that you should. Many chose to borrow the maximum - all chose to sign the mortgage contract voluntarily (no one forced them to sign under duress). A bank employee is looking after the financial interests of their employer, not the borrower.
A mortgage broker (trying to rebrand themselves by using the label mortgage advisor) is driven by commissions - the higher the loan amount, the higher their commission. They are financially incentivised to get the borrower to borrow the maximum amount. If a borrower is unable to borrow a sufficient amount to finance their purchase, the mortgage broker gets "creative" with the mortgage loan application, so that the borrower gets their loan and more importantly the mortgage broker gets paid. An unsuccessful loan application for a mortgage broker is time spent being uncompensated and that does not feed the mortgage broker or pay their costs.
There have been many instances of collateral damage elsewhere around the world:
1) https://www.investorschronicle.co.uk/2012/09/20/your-money/property/ove…
2) https://youtu.be/iKPG_l1P7lk
3) https://youtu.be/ugBKnP2FKDM
4) https://youtu.be/fiCXsu_4BoA
"Those who fail to learn the lessons of history are doomed to repeat them."
CAVEAT EMPTOR - these are the rules of operation in the current legal system in NZ.
Nice.
Everyone chooses their own level of personal accountability... how hard they work at skool, whether they learn the basics (not a degree) about finance, economics budgeting, retirement planning, careers...
Those that take the time to learn and work smart tend to live a much better life and have far fewer money worries than those who don't and follow the crowd.
I would argue a house is the biggest single investment a person can make. And affects every part of their life for at least 25 years. The choice to not research it thoroughly (to me) seems pretty dumb.
"Everyone chooses their own level of personal accountability... how hard they work at skool, whether they learn the basics (not a degree) about finance, economics budgeting, retirement planning, careers"
Yes.
The recognition of this is especially difficult to see for those people born into families where the caregivers are not wise or financially literate. No one gets to choose the family that they're born into.
I recall an interview of a wise father by his son. The son had a huge advantage and head start in life by having a wise father giving good advice from the day he was born.
For someone born into a low socio - economic household, there needs to be a recognition by the individual to seek out wise mentors - they could be family friends, teachers, coaches, community members, etc. The internet is also a valuable tool to access knowledge and wisdom (there is also a lot of misinformation, and marketing).
An uncle was a gambling playboy. Those cousins never really had good life guidance after their mother died at a young age. This influenced their decision making frameworks and subsequent life choices as adults.
On the other side of the family, those aunts and uncles valued education highly. Most of those cousins went on to make better life choices than the cousins on the other side of the family.
it’s a cycle, we’re in the hard part of that now so things won’t look great, but at some point it will turn.
I think everyone would agree with this, but it's almost a tautological statement and offers no argument against the so-called 'doom and gloom merchants' I think you are referring to.
In January 2021 I thought the downturn wouldn't last more than about 5 years and see a market that was up to 40% down. As time goes on I think that's unlikely. I now expect prices to actually be over 50% down at some point. Possibly around post-GFC prices in real terms. As always, watch interest rates and the money supply. The longer this goes on, the more it looks as though something is fundamentally broken and the old paradigm of juicing the 'economy' with low rates may not return - possibly for a generation or two. The question then becomes, what is your asset really worth relative to other things (such as labour or an income generating business).
The other thing we could see is prices being down a little or flat for a very long time.
I agree, I don’t think we’ve seen the bottom for house prices yet, & the drop has been pretty grunty already.
My argument against the DGM’s…it’s like an eternal footy game with the score swinging both ways…right now the DGM’s are right if you are someone who has over leveraged & can’t service your loan, have negative equity & are desperately trying to sell in a market where the buyers undoubtedly have the upper hand, interest rates won’t be cut quickly (I think…but if the bed is truly shat properly then who knows what they’ll do…they have a track record eh?), I’d pick house prices will probably plateau/stumble along for a year(ish) then start to track up most likely at 5%(ish) annually assuming they don’t do dumb shit with the rates/lending terms again so compounding we’d see “peak” prices again in a few years…I think it’s a pretty extreme view to truly believe that long term house prices won’t go up & these people won’t see capital gains if they can get through this…if the situation saw house prices hold their current nominal price over the next 10 plus years then NZ is totally f**ked anyway & it won’t be peoples worst problem…hmm, actually 🧐
What worries me more is our population growing largely/quickly & far less houses are getting built, lending has been difficult so there will be pent up demand from those eager to be home owners…we’ve seen decent wage growth so we won’t need “2.99%” rates to be the spark that sets fire to the next up cycle…if chalkboard rates drop a couple of percent then I think there’s a decent chance the madness will begin again…& the spruikers take the lead…until the scoreline changes etc etc…unfortunate, but that’s where I think we’re heading…how good would affordable housing be in a stable economy for our kids to grow up in.
Not sure about that, guy on TV3 news not 10 minutes ago telling us its now impossible to build a new house in Auckland now with all the delays, 2 years or something, good luck with prices dropping.
"if the situation saw house prices hold their current nominal price over the next 10 plus years then NZ is totally f**ked"
Why would NZ be totally fucked if house prices hole their nominal price for 10 years?
"it’s a cycle, we’re in the hard part of that now so things won’t look great, but at some point it will turn. "
How long will it take to return to its peak? Some property markets can take a while to return.
https://fred.stlouisfed.org/series/QJPN628BIS
For those who bought at the peak, they may have been unable to hold on.
For those who bought at the peak and were able to hold on and are now nearing retirement, what will their quality of life be like in retirement? Will they have sufficient funds for a decent quality of life in retirement?
This property market still hasn't returned to its peak after 32 years. Still -26% from peak, after 32 years.
For those who don't know, in that property market, on an equivalent cashflow basis (i.e Peaker vs Trougher), it would have been better to rent FOR 18 YEARS and save the difference compare to a buyer at the Peak.
After 18 years the house price would have fallen sufficiently for the renter to buy on a 100% cash basis with extra cash in the bank still leftover.
“This property market still hasn't returned to its peak after 32 years. Still -26% from peak, after 32 years.”
32 years after the peak…it sounds like you went 88mph past the clock tower in a DeLorean 😂…clearly I’m missing something sorry, when I said peak I meant ‘21/‘22, & the price drops since then have been substantial, & will most likely continue for the rest of this year & maybe into ‘25…but I’d be pretty confident that a purchaser from 2021 will see some capital gains when they sell in 2053.
Again, my apologies if you are referencing data that indicates that housing prices peaked in the early 90’s & are yet to recover.
Just to clarify.
My comments were referring to the property market in Japan and how they still haven't recovered for a buyer at the peak in 1991.
An extreme example, but it does highlight how property prices can get way out of line.
CN…sorry, fair call, my reply was a bit of dick move…but was in jest.
Like most countries our birth rates are dropping & our population is ageing, but Japan’s has been grunty, we’re still seen as a decent safe wee island down the bottom of the world so I don’t think we will still see population (housing demand) growth for the foreseeable future?
It’s funny watching the “middle of the road” cope merchants try to spin the inevitable as a “flesh wound”
They never saw this coming and refuse to own it.
Hilarious.
"They never saw this coming and refuse to own it."
Cognitive dissonance.
People can choose to ignore, dismiss or deny reality, however people are unable to choose the consequences of their choice.
Can we get Olly Newland back into this website? He's more funny than TA.!
‘Big Daddy’
lol
He's still a member too. Not only is he entertaining but he comes with decades of experience! I remember him from his days running Landmark Corporation.
Did he ever pay back those poor mums and dads who bought shares in the company he ran and which failed?
Nothing to do with winter & weather the Autumn be great.
Start of the 2 year down turn.
One factor that these stats doesn't take into account is that the houses that are selling are 'the cream of the crop'.
In what is clearly a buyers market it is natural that even the densest of buyers will be opting for top-shelf properties rather than the tired-looking run-of-the-mill..
In other words, the stats should be providing some kind of quality classification so one can compare like with like. In this market RVs alone don't cut it. These stats are far too generic.
It would be interesting to see a statistic on the number of houses withdrawn from the market after not selling. However its not in the banks or real estate firms to disclose that hence the info doesn't seem to be available
Do we have the same issue here ? I mean companies that buying out houses.
(3) Wall St PANICS Over Mega Landlord Bans - YouTube
You can pay rent for a year, 800*52=42K, wait for your 1M dream house to decrease 5% and then buy it.
In total you'll save 8K hahaha....
You can pay rent for a year, 800*52=42K, wait for your 1M dream house to decrease 5% and then buy it.
In total you'll save 8K hahaha.
Some other items are missing from the rent vs buy calculation above:
Assuming for buyer today:
1) $800,000 mortgage
2) $200,000 equity
House purchase price: $1,000,000
A) Savings differential of rent vs own
a) Cost of ownership - total $69,469 per annum
i) Mortgage payments on $800,000 @ 7.0% pa over 30 years on P&I is $64,469 per year
ii) rates, insurance maintenance costs are probably another $5,000 - $6,000 per year.
b) Cost of renting as above - $42,000
So the renter saves $27,469 (more than the $8,000 mentioned above)
B) interest income on the equity deposit of $9,600
$200,000 deposit x 6.0% = $12,000 (say $9,600 after 20% tax)
C) For the Trougher buyer, the mortgage will be lower by $87,069
House price: $950,000
Equity deposit: $237,069 ($200,000 + interest of $9,600 + savings of $27,469)
Mortgage: $712,931
D) The Trougher buyer who pays $50,000 less to purchase the property can borrow $87,069 less compared to Peaker.
Trougher can pay SAME mortgage payments as Peaker of $64,469 per year resulting in reduced interest paid over the lifetime of the mortgage on the smaller loan outstanding.
The Trougher buyer can repay their mortgage fully in 22 years.
In the next 7 years that Peaker is still paying their mortgage of $64,469 per year, the Troughers can save this money, so 7 years x 64,469 = $451,284 in savings (assuming a 0% interest rate) that Peaker won't have.
Never let the facts get in the way of a good Spruik
People can be blinded due their own biases. They are unable to see what others see.
This can result in decision making frameworks and choices that lead to outcomes and consequences that are undesirable and even unpleasant.
We welcome your comments below. If you are not already registered, please register to comment.
Remember we welcome robust, respectful and insightful debate. We don't welcome abusive or defamatory comments and will de-register those repeatedly making such comments. Our current comment policy is here.